<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
(Mark One)

[X]  Annual report pursuant to section 13 or 15(d) of the Securities Exchange
     Act of 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                       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 333-52657

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

              Delaware                                  13-3987915
    (State or other jurisdiction                     (I.R.S Employer
        of Incorporation or                         Identification No.)
            organization)


                                950 Third Avenue
                            New York, New York 10022

               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:  (212) 593-2009

Securities registered pursuant to Section 12(b) of the Act:   None

Securities registered pursuant to Section 12(g) of the Act:   None

    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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

    The aggregate market value of the common stock of Indesco International,
Inc. held by non-affiliates of Indesco International, Inc. is inapplicable as
the common stock of Indesco International, Inc. is privately held.

    The number of shares of common stock of Indesco International, Inc.
outstanding on March 1, 2000 was 200.

                      DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Company's Registration Statement on Form S-4 (File No.
333-52657), the Company's Form 10-Q for the quarterly period ended July 5, 1998,
and the Company's Form 10-K for the fiscal year ended December 31, 1998.
<PAGE>   2
                           INDESCO INTERNATIONAL, INC.

                       INDEX TO ANNUAL REPORT ON FORM 10-K

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999



                                                                           PAGE
                                                                           ----
                                     PART I

Item 1.  Business.......................................................     2

Item 2.  Properties.....................................................     7

Item 3.  Legal Proceedings..............................................     7

Item 4.  Submission of Matters to a Vote of Security Holders............     7


                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder       8
         Matters........................................................

Item 6.  Selected Financial Data........................................     8
Item 7.  Management's Discussions and Analysis of Financial Condition
         and Results of Operations......................................    10

Item 7A. Quantitative and Qualitative Disclosure About Market Risk......    14

Item 8.  Financial Statements and Supplementary Data....................    14

Item 9.  Changes In and Disagreements With Accountants and
         Financial Disclosure...........................................    14


                                    PART III

Item 10. Directors and Executive Officers of Registrant.................    15

Item 11. Executive Compensation.........................................    16

Item 12. Security Ownership of Certain Beneficial Owners and Management.    17

Item 13. Certain Relationships and Related Transactions.................    18


                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form       20
         8-K............................................................


                                       1
<PAGE>   3
                                     PART I

ITEM 1.  BUSINESS

         As used in this Annual Report on Form 10-K ("Form 10-K"), the terms
"Company" and "Indesco" refer to Indesco International, Inc., a Delaware
corporation, and its subsidiaries, AFA Products, Inc.("AFA"), Continental
Sprayers International, Inc. ("CSI") and AFA Polytek, B.V. ("Polytek").

THE COMPANY

         The Company, created by the combination of CSI, AFA and Polytek, is a
leader in the design, manufacture and sale of liquid dispensing products,
primarily plastic trigger sprayers, used in household consumer product
applications (hard surface cleaning, laundry and lawn and garden products) and
in industrial applications (automotive, janitorial and sanitation markets). The
Company's products are sold to (i) multinational, national and regional
manufacturers of brand name and private label consumer products and (ii)
independent distributors of containers and packaging products. The Company
generated net sales of $102,861,000 for the year ended December 31, 1999 and
$107,565,000 for the year ended December 31, 1998 (reflecting results for the
twelve months ended December 31, 1998 for the Company, AFA and Polytek and
results of CSI for the eleven month period beginning February 1, 1998, the
effective date of the acquisition by the Company of CSI.) On a proforma basis,
after giving effect to the acquisition of CSI as if it had been effected on
January 1, 1998, the Company generated net sales of $112,411,000 for the twelve
months ended December 31, 1998. (See Notes to the Company's Consolidated
Financial Statements for further description of the Company and the transactions
leading to the acquisitions of its subsidiaries.)

         North America is the principal market for trigger sprayers, accounting
for approximately two thirds of the estimated 1.8 billion units sold worldwide.
The North American market includes large multinational and national
manufacturers of brand name consumer products, smaller manufacturers of brand
name, private label and specialty products for consumer and industrial use and
marketers of general-purpose liquid spray containers that are sold in empty
form. The large consumer products manufacturers are served directly by a limited
number of trigger sprayer producers that can meet their high volume, product
innovation and consistent quality requirements. Other customers are served both
directly by trigger sprayer manufacturers and indirectly by independent
distributors that can process smaller volume orders and provide more
personalized service support. Outside North America, the principal market for
trigger sprayers is in Western Europe, which consists of major multinational
customers and smaller manufacturers of consumer products.

         CSI is a leading supplier of trigger sprayers to large national and
multinational consumer products manufacturers. CSI also manufactures and sells
finger-actuated plastic pumps for nationally branded soaps and lotions. AFA is
focused on serving independent container and packaging distributors as well as
smaller manufacturers of brand name and private label consumer products. AFA is
the nation's leading supplier of trigger sprayers to independent distributors,
which typically purchase in smaller volumes but at higher margins than large
multinational consumer products companies. Polytek produces and markets trigger
sprayers principally in Europe, and also performs custom injection molding
services for European manufacturers of plastic packaging, consumer and
industrial products.

         Subsequent to the acquisition of CSI in February 1998, the Company
began the process of integrating the operations, sales, and marketing of its
three subsidiaries. To utilize more efficiently the Company's domestic and
foreign manufacturing and assembly capacity, the Company (i) in November 1998,
moved its U.K. assembly and distribution operation to the Polytek facility in
the Netherlands and (ii) in December 1998, the Company began the transfer of its
El Paso, Texas and Juarez, Mexico production to AFA's North Carolina and Costa
Rica plants. The Company closed its Texas and Mexico plants in June 1999. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".

         The Company, incorporated in August 1997, is a wholly-owned subsidiary
of Indesco Holdings Co. ("Parent"). The Parent was formed in July 1997 to
acquire, through a wholly-owned subsidiary, certain assets and

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<PAGE>   4
liabilities of AFA, located in Forest City, North Carolina. Concurrent with this
transaction, a stockholder of the Parent and an affiliate of another stockholder
of the Parent acquired the outstanding capital stock of Polytek, based in The
Netherlands. In February 1998, the Company acquired, through a wholly-owned
subsidiary, certain assets and liabilities of CSI, a division of Contico
International, Inc. (now known as Newcastle Industries, Inc.). Concurrent with
the CSI acquisition, AFA and Polytek became wholly-owned subsidiaries of the
Company.

THE PRODUCTS

         TRIGGER SPRAYERS

         Trigger sprayers are essential components of commonly used products in
household and industrial applications throughout the world. CSI's trigger
sprayer products are known for having external vents, low actuation force,
consumer customized spray patterns and a broad range of product compatibility.
In addition, these sprayers are available in custom colors and with three nozzle
options: standard spray, fully adjustable spray or stream and foamer. All of
CSI's trigger sprayer products can be outfitted with customized shrouds that
enable customers to create a distinctive look for their packaging while
permitting CSI to employ a standard sprayer manufacturing platform to enhance
manufacturing cost effectiveness. CSI also has developed two basic models of
sprayers for use in chemical, janitorial, beauty supply, plant and garden and
other commercial applications. Both models are highly reliable and have
excellent longevity and chemical compatibility.

         CSI's T-1000(TM) trigger sprayer model is currently marketed in Europe
through Polytek. The T-1000(TM), which is designed to reduce manufacturing
costs, incorporates a patented "Quick Twist"(TM) closure system that improves
customer fill line efficiency, eliminates leakage during shipment of the
customer's products, and eliminates "back-off" (i.e., the undesirable loosening
of the screw closure system typically used in all conventional trigger sprayer
products.)

         AFA introduced the first trigger sprayer in 1959. Today, AFA's product
line includes seven basic sprayer models and over ten product line extensions.
Its trigger sprayers can be supplied with a variety of features, including
adjustable nozzles, turreted nozzles, a three way nozzle configuration, foaming
capabilities, high output, quick priming, a high torque cap, and non-leakage
protection during shipping. AFA also offers its customers a choice of over 150
different colors. Polytek manufactures three of the seven basic trigger sprayer
models offered by AFA, which is consistent with market demand in Europe. In
addition, the Company is now offering the CSI T-1000 (discussed above) and
T-8500 trigger sprayers in Europe. The T-8500 and the T-1000 are both being
manufactured at the Polytek facility.

         DISPENSING PUMPS

         Finger actuated pump dispensers have long been utilized in commercial
applications, such as the food service industry, and gained popularity in
consumer applications with the introduction of liquid soap in the 1980s. Pump
dispenser usage has grown considerably in recent years, as new applications have
been developed, most notably in the markets for hair and skin care products.

         The Company through CSI currently offers two types of liquid pump
dispensers: one for consumer applications and one for industrial applications.

         The consumer dispenser unit provides accurate quantity dispensing and
is compatible with most liquids. This product is sold to several large customers
in the high-end segment of the liquid soap and hand lotion markets. CSI's
industrial pump dispenser is a versatile pump that can handle high-viscosity
liquids. It has an adjustable output and is constructed of polypropylene and
stainless steel for maximum chemical compatibility. This product is currently
used for cleaners, waxes, solvents and germicidal detergents.

         In 1999, the Company began to market its Luxor(TM) pump dispenser, a
new low-cost, lightweight unit with improved valve technology. The Company is
assembling the product by hand in its Costa Rica facility pending the completion
of a high speed assembly machine, which is currently being built by a third
party equipment manufacturer. This machine will enable the Company to assemble
the product using high speed technology. The Company believes that this product
can provide a superior alternative in the market for liquid pump dispensers.

                                       3
<PAGE>   5
         CUSTOM MOLDING SERVICES

         The Company, through its Polytek operation, provides custom molding
services to European manufacturers of a variety of plastic components for both
consumer and industrial products. Polytek satisfies its customers' demands by
offering design and technological support, high volume capacity, ISO 9001
designation and competitive pricing. By providing a "complete package" of custom
molding capabilities, Polytek has developed strong relationships with several
large multinational companies.

MARKETING AND DISTRIBUTION

         In North America, sales to major national and multi-national consumer
products manufacturers are made on a direct basis through the Company's own
sales organization. Sales to smaller manufacturers and certain end users are
made directly and through the Company's network of approximately 35 independent
container and packaging distributors. AFA has maintained long-standing
non-exclusive relationships with its North American distributors, most of which
for over ten years. In Europe, a majority of Polytek's trigger sprayers are sold
to and through distributors and commission paid agents. In 1999, the Company
began marketing CSI trigger sprayers through Polytek. The Company's products
also are sold in the Pacific Rim market through licensing arrangements under
which it receives royalties. In 1999, the amount of such royalties was
immaterial. Most of the Company's business in this market is in Japan, Thailand,
Australia and New Zealand.

CUSTOMERS

         The Company has over 200 customers. Approximately 47% of the Company's
consolidated net sales for the twelve months ended December 31, 1999 were to its
ten largest customers. (See "Management's Discussion and Analysis of Financial
Condition and Results of Operations").

COMPETITION

         The markets for the Company's products are highly competitive. In North
America, the Company competes primarily with Calmar Inc., a subsidiary of St.
Gobain, and the Specialty Products division of Owens-Illinois, Inc. The European
markets for the Company's products are highly fragmented. In addition to the
presence of one North American competitor in Europe, Calmar Inc., there are a
number of other competitors, including Spraysol, Canyon Corporation and Guala.

         The Company believes that it competes on the basis of its strong
customer relationships, its reputation for quality, reliability, performance and
prompt delivery, and the price of its products. In addition, many of the
Company's major customers are multinational companies that compete on a global
basis with worldwide brands and place increased emphasis on global sourcing of
input materials and components. Management believes that the Company's ability
to serve these customers globally from its North American and European
production bases will continue to be an important competitive factor.

RESEARCH AND DEVELOPMENT; INTELLECTUAL PROPERTY; PATENTS

         The Company has over 300 patents, over 200 of which are active. Many of
the Company's products are protected by patents and the Company is continually
exploring opportunities for new patentable products through research and
development. In 1999, Research and Development expenses totalled $1,918,000.
While the Company believes that its patents are important to its business and
enhance its competitive position, the Company does not believe that the loss of
any one particular patent would have a material adverse effect on its business.

RAW MATERIALS

         The principal raw material used by the Company is plastic resin,
primarily polypropylene. Plastic resins are available from a number of suppliers
in the United States and in Europe. Approximately 15% of the Company's cost of
sales in 1999 was attributable to purchases of plastic resin. To date, the
Company has been able to obtain sufficient quantities of plastic resin for its
requirements. The Company has long-standing relationships with its



                                       4
<PAGE>   6
major suppliers.

ENVIRONMENTAL COMPLIANCE

         The Company is subject to various evolving federal, state and local
environmental laws and regulations governing, among other things, the emission,
discharge, generation, handling, storage, transportation, treatment and disposal
of hazardous and non-hazardous substances and wastes. Failure to comply with
these laws could result in substantial fines and penalties. Moreover, it is
possible that the Company could be required to remediate a site to meet
applicable legal requirements. The Company believes, although there can be no
assurance, that liabilities, if any, relating to environmental matters will not
have a material adverse effect on its future financial position or results of
operations.

EMPLOYEES

         At January 31, 2000, the Company had approximately 1,570 employees, of
whom approximately 1,464 were engaged in manufacturing and manufacturing
support, 16 were engaged in product sales and the balance were employed in
various administrative capacities. Management considers the Company's
relationships with its employees to be satisfactory.

BACKLOG

         The Company's backlog of orders was approximately $4,500,000 as of
March 15, 2000. The Company expects that all of its present backlog will be
filled within the next three months.

INTERNATIONAL OPERATIONS

         See Note 13 to the Company's Consolidated Financial Statements for
financial information regarding foreign and domestic operations of the Company.

DESCRIPTION OF INDEBTEDNESS

(a) New Credit Facility.

       General. As of September 29, 1998, the Company, AFA and CSI entered into
       a new credit facility (as amended, the "New Credit Facility") with First
       Union National Bank ("First Union"). The New Credit Facility replaced the
       revolving credit facility with NationsCredit Commercial Corporation
       ("NationsCredit") (See "Management's Discussion and Analysis of Financial
       Condition and Results of Operations - Liquidity and Capital Resources").

       Collateral. Indebtedness under the New Credit Facility is collateralized
       by a first priority collateral interest in all accounts receivable,
       inventory, machinery and equipment (including molds) of the Company and
       each of its domestic subsidiaries. In addition, the Company and each of
       its domestic subsidiaries has granted a negative pledge with respect to
       certain other assets, including real property, general intangibles and
       intellectual property (including patents).

       Interest. Indebtedness under the New Credit Facility bears interest at a
       floating rate based (at the Company's option) upon (i) LIBOR, plus an
       Applicable Margin ranging from 1.25% to 2.25% or (ii) the Base Rate (the
       greater of the Prime Rate announced by First Union or the Federal Funds
       Rate plus 0.50%) plus an Applicable Margin ranging from 0% to 1.00%.

       Borrowing Base. The availability of borrowings under the New Credit
       Facility is subject to a Borrowing Base equal to the sum of (i) 85% of
       eligible accounts receivable, (ii) 60% of eligible inventory, (iii) 75%
       of the orderly liquidation value of selected eligible machinery and
       equipment, (iv) 80% of the cost of certain new machinery and equipment
       and (v) 60% of the cost of the conversion of certain existing machinery
       and equipment. The lender has the right to set reserves which can limit
       the amount of borrowing base availability.

                                       5
<PAGE>   7
       Covenants. The New Credit Facility requires the Company (on a
       consolidated basis, including all domestic subsidiaries and Polytek) to
       meet certain financial tests at the end of each fiscal quarter, including
       a Funded Indebtedness to EBITDA Ratio and a Fixed Charge Coverage Ratio.
       The New Credit Facility also contains covenants that include, without
       limitation: (i) required delivery of financial statements, other reports
       and borrowing base certificates; (ii) limitation on liens; (iii)
       limitations on mergers, consolidations and sales of assets; (iv)
       limitations on incurrence of debt; (v) limitation on permitted capital
       expenditures; (vi) limitations on restricted payments; (vii) limitations
       on investments and acquisitions; (viii) limitations on transactions with
       affiliates; and (ix) limitations on changes in the Company's line of
       business.

       Events of Default. The New Credit Facility provides for customary events
       of default.

       Effective March 30, 2000, the Company further amended its New Credit
       Facility with First Union National Bank. The March 2000 amendment, among
       other things, (i) reduces the Revolving Credit Commitment to the lesser
       of the Borrowing Base or $25 million, (ii) effects certain changes to the
       Borrowing Base (iii) waives compliance with the Funded Indebtedness to
       EBITDA ratio through the quarter ending December 31, 2000, (iv) grants
       First Union a security interest in certain U.S. real property and in all
       of the U.S. intellectual property of the Company and its domestic
       subsidiaries, (v) pledges the stock of the Company's domestic
       subsidiaries, (vi) reduces the Capital Expenditure limit (as defined in
       the New Credit Facility), (vii) increases by 0.25% the Applicable Margin
       on Eurodollar loans (currently 2.50%) and on Base Rate loans (currently
       1.25%) and (viii) establishes, effective April 30, 2000, a monthly
       reserve of $1,178 against the Borrowing Base, which reserve reduces to
       zero after each semi-annual payment of interest under the New Notes (See
       Description of Indebtedness -- Senior Subordinated Notes). In addition,
       the amendment sets new financial covenants, including minimum quarterly
       EBITDA levels for the year 2000 and thereafter, and maximum Funded
       Indebtedness to EBITDA levels (determined on a rolling four-quarter basis
       as of the last day of each fiscal quarter) commencing with the fiscal
       quarter ending on March 31, 2001. See Amendment to Loan and Security
       Agreement and Waiver, dated as of March 30, 2000, filed as Exhibit 10.3
       to this Form 10-K.

(b) Senior Subordinated Notes

       On April 23, 1998, the Company issued $145,000,000 of 9.75% Senior
       Subordinated Notes due April 15, 2008 (the "Old Notes") which have since
       been exchanged for New Notes, as defined below. The net proceeds were
       used by the Company to refinance U.S. indebtedness, including borrowings
       incurred in connection with the acquisition in February 1998 of
       substantially all of the assets of CSI. Interest on the Old Notes was
       payable semi-annually on April 15 and October 15, commencing October 15,
       1998.

       The Old Notes were redeemable at the option of the Company, in whole or
       in part, on or after April 15, 2003, at certain specified redemption
       prices, plus accrued and unpaid interest thereon through the redemption
       date. In addition, at any time on or before April 15, 2001, the Company
       was entitled to redeem up to 35% of the initial aggregate principal
       amount of the Old Notes with the net proceeds of one or more equity
       offerings at a redemption price equal to 109.75% of the principal amount
       thereof, plus accrued and unpaid interest, if any, through the date of
       redemption; provided that at least 65 percent of the initial aggregate
       principal amount of the Old Notes remained outstanding. The terms of the
       Old Notes required the Company to make an offer to purchase all
       outstanding Old Notes at 101% of the principal amount thereof, plus
       accrued and unpaid interest through the date of purchase, upon a change
       of control of the Company.

       The Old Notes were unsecured senior subordinated obligations of the
       Company and were subordinated in right of payment to all existing and
       future senior indebtedness of the Company, including indebtedness under
       its revolving credit facility. The Old Notes were ranked pari passu with
       all existing and future senior subordinated indebtedness of the Company,
       were ranked senior to all other existing and future Subordinated
       Indebtedness of the Company and were fully and unconditionally
       guaranteed, jointly and severally, on an unsecured senior subordinated
       basis by each of the Company's existing and future U.S. subsidiaries (the
       "Subsidiary Guarantors"). The Old Notes were also effectively
       subordinated to all existing and future senior indebtedness of the
       Company's subsidiaries.

       On August 17, 1998, the Company filed with the Securities and Exchange
       Commission a registration statement on Form S-4 with respect to its 9.75%
       Senior Subordinated Notes due April 15, 2008 ("New Notes") which were
       fully and unconditionally guaranteed, jointly and severally, on an
       unsecured senior subordinated basis, by the Subsidiary Guarantors. On
       September 16, 1998, the Company concluded its exchange offer and the New
       Notes were exchanged for $145,000,000 aggregate principal amount of the
       Old Notes. The New Notes are subordinated in right of payment to all
       existing and future Senior Indebtedness, including indebtedness under the
       New Credit Facility and, except for certain transfer restrictions and
       registrations rights relating to the Old Notes, are identical in all
       material respects to the Old Notes.

                                       6
<PAGE>   8
(c) ABN/AMRO Loan

       Polytek has a credit facility with the ABN-AMRO Bank, The Netherlands.

(See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" and Note 6 to the Company's
Consolidated Financial Statements.)

ITEM 2.  PROPERTIES

    The Company manufactures products at its plants, which are located in Forest
City, North Carolina, St. Peters, Missouri, and Helmond, The Netherlands. The
Company also has hand assembly operations in Costa Rica.

    Consistent with the Company's previously announced plans to integrate its
three subsidiaries and consolidate its operations, in November 1998, the Company
consolidated its UK operations into its Helmond, The Netherlands, facility. In
1999, the Company completed the closure of its Texas and Mexico plants. See
"Management's Discussion and Analysis of Financial Condition and results of
Operations" and Note 12 to the Company's Consolidated Financial Statements.

The following table sets forth information with respect to the Company's
facilities:

<TABLE>
<CAPTION>
          LOCATION               SQUARE FOOTAGE          OWNERSHIP                            FUNCTION
          --------               --------------          ---------                            --------
<S>                              <C>                     <C>                           <C>
Forest City, North Carolina          146,000              Owned                        Injection molding,
                                                                                       automated
                                                                                       assembly, distribution
St. Peters, Missouri                 124,000              Owned                        Injection molding,
                                                                                       automated
                                                                                       assembly, distribution,
St. Peters, Missouri                  25,000              Leased                       Offices

Helmond, The Netherlands             110,000              Owned                        Injection molding,
                                                                                       automated
                                                                                       assembly, distribution
El Paso, Texas                       101,000              Building owned, subject      Being held for sale
                                                          to landlease

Cartago, Costa Rica                   39,615              Owned                        Manual assembly,
                                                                                       distribution
Juarez, Mexico                        35,000              Owned                        Being held for sale

New York, New York                     2,900              Leased                       Executive Offices

St. Louis, Missouri                    9,500              Owned                        Mold and die
                                                                                       construction
</TABLE>


    The Company's facilities are in good condition and adequate for its present
operating needs.

    Plastic components are produced at the Company's own manufacturing
facilities. In addition, the Company manufactures certain other components used
in its products; the remaining components are purchased from outside suppliers.
The Company's products are assembled automatically on assembly machines built to
the Company's specifications and, at its facilities in Costa Rica, by hand.

ITEM 3.  LEGAL PROCEEDINGS

    The Company has from time to time been involved in legal proceedings related
to the ordinary course of its business, none of which has had a material adverse
effect on the Company. The Company is not currently involved in any material
legal proceedings and maintains property, general liability and product
liability insurance in amounts that it believes are consistent with industry
practices and adequate for its operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    Not applicable.

                                       7
<PAGE>   9
                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    There is no established public trading market for the common stock of the
Company. As of March 1, 2000, there was one record holder of the common stock of
the Company.

    The Company has not declared or paid cash dividends to its stockholder. The
Company anticipates that all of its earnings in the near future will be retained
for the development and expansion of its business and, therefore, does not
anticipate paying dividends on its common stock in the foreseeable future. The
Company's indenture which governs the terms of the Company's 9.75% senior
subordinated notes (the "Indenture") and the Company's New Credit Facility
contain provisions which restrict the ability of the Company to pay dividends on
its common stock. These restrictions provide that the Company may not declare or
pay any dividend to the holders of its capital stock, unless, at the time of
such payment, (i) there is no Default or Event of Default (as defined in the
Indenture), (ii) the aggregate amount of all dividends and other Restricted
Payments (as defined in the Indenture) does not exceed 50% of the Company's
Consolidated Net Income (as defined in the Indenture) plus other net cash
proceeds received by the Company from the first day of the fiscal quarter during
which the Company's notes were issued through the date of the most recent
quarterly financial statement and (iii) the Company could incur Additional
Indebtedness (as defined in the Indenture) pursuant to Section 1010 of the
Indenture.

ITEM 6.  SELECTED FINANCIAL DATA

INDESCO INTERNATIONAL, INC. AND SUBSIDIARIES

    The following table sets forth selected historical financial data of Indesco
International, Inc. and Subsidiaries (and its predecessors) on a consolidated
basis. The balance sheet data as of December 31, 1999 and 1998 and the statement
of operations data for the twelve months ended December 31, 1999 and 1998 are
derived from the financial statements of Indesco International, Inc. and
Subsidiaries included elsewhere in this Form 10-K. Such data for the 1998 fiscal
year reflects statements of operations data for AFA and Polytek for the twelve
months ended December 31, 1998 and for CSI for the eleven month period
commencing on February 1, 1998, the date of the Company's acquisition of CSI.
The balance sheet data as of December 31, 1997 and the statement of operations
data for the seven and five month periods ended July 31 and December 31, 1997,
respectively, are derived from the audited historical financial statements of
AFA Holdings Co. (now known as Indesco Holdings Co.) and WTI, Inc. and
Subsidiaries (the predecessor of AFA Holdings Co.).

    The data below should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements and notes thereto included elsewhere in this
Form 10-K.



                                       8
<PAGE>   10
<TABLE>
<CAPTION>
                                                                                                 INDESCO                  INDESCO
                                                                                               INTERNATIONAL,         INTERNATIONAL,
        (DOLLARS IN THOUSANDS)                   WTI, INC. AND                                   INC. AND                 INC. AND
                                                  SUBSIDIARIES                                 SUBSIDIARIES FOR     SUBSIDIARIES FOR
                                                    FOR THE             AFA HOLDINGS CO.         THE TWELVE        THE TWELVE MONTHS
                                                  SEVEN MONTHS           FOR THE FIVE            MONTHS ENDED              ENDED
                                                      ENDED              MONTHS ENDED            DECEMBER 31,           DECEMBER 31,
                                                 JULY 31, 1997         DECEMBER 31, 1997           1998(1)                  1999
                                                 -------------         -----------------           -------                  ----
<S>                                              <C>                   <C>                     <C>                 <C>
STATEMENT OF OPERATIONS DATA:
     Net Sales                                      $  32,988              $  20,108              $ 107,565              $ 102,861
     Cost of Sales                                     23,864                 16,595                 79,923                 78,460
                                                    ---------              ---------              ---------              ---------
     Gross Profit                                       9,124                  3,513                 27,642                 24,401

       Operating Expenses                               4,205                  2,862                 21,124                 16,734
                                                    ---------              ---------              ---------              ---------
     Income From Operations                             4,919                    651                  6,518                  7,667
     Interest Expense                                   2,295                  2,231                 15,527                 16,762
     Other Income, Net                                   (803)                   (54)                  (156)                  (159)
                                                    ---------              ---------              ---------              ---------
     Income (Loss) Before Extraordinary
            Item and Provision (Benefit)
            for Income Taxes                            3,427                 (1,526)                (8,853)                (8,936)
     Provision for Income Taxes (Benefit)                 354                   (152)                     1                     (3)
                                                    ---------              ---------              ---------              ---------
     Net Income (Loss) Before
            Extraordinary Item                          3,073                 (1,374)                (8,854)                (8,933)
     Extraordinary Item - Loss on Early
            Extinguishment of Debt                       --                     --                    7,005                   --
                                                    ---------              ---------              ---------              ---------

     Net Income (Loss)                              $   3,073              $  (1,374)             $ (15,859)             $  (8,933)
                                                    =========              =========              =========              =========
OTHER DATA:
     EBITDA(2)                                      $   8,242              $   4,279              $  22,599              $  18,271

FINANCIAL POSITION DATA:
     Current Assets                                 $  18,155              $  18,395              $  29,622              $  27,682
     Current Liabilities                               15,220                 12,885                 19,446                 18,582
     Working Capital                                    2,935                  5,510                 10,176                  9,100

     Property, Plant and Equipment                     15,022                 28,009                 65,510                 65,253
     Total Assets                                      44,365                 60,887                171,406                165,846
     Long-Term Obligations                             25,528                 44,786                163,416                167,832
    Total Stockholders Equity (Deficit)                 3,617                  3,216                (12,103)               (21,103)
</TABLE>

(1) Statement of Operations Data of the Company for the year ended December 31,
    1998, includes the results of operations of the Company, AFA and Polytek for
    the twelve months ended December 31, 1998 and the results of operations of
    CSI for the 11-month period beginning February 1, 1998, the date of its
    acquisition by the Company ("the Acquisition Date").

(2) EBITDA represents income before interest, income taxes, depreciation,
    amortization, one-time charges (e.g., plant closedown costs), and
    extraordinary items. Management believes that EBITDA is a measure commonly
    used by analysts and investors to determine a company's ability to incur and
    service its debt. EBITDA should not be considered as an alternative to, or
    more meaningful than, net income, cash flows from operating activities or
    other income or cash flow statement data prepared in accordance with GAAP,
    or as a measure of profitability or liquidity. EBITDA does not necessarily
    indicate whether cash flow will be sufficient for cash requirements. The
    calculation of EBITDA does not include the commitments of the Company for
    capital expenditures and payment of debt and should not be deemed to
    represent funds available to the Company.


                                       9
<PAGE>   11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

RESULTS OF OPERATIONS.

         The accompanying 1999 condensed consolidated statements of operations
of the Company include the results of operations of the Company, CSI, AFA and
Polytek for the twelve months ended December 31, 1999. The accompanying 1998
condensed consolidated statements of operations of the Company include the
results of operations of the Company, AFA and Polytek for the twelve months
ended December 31, 1998, and the results of operations of CSI for the
eleven-month period beginning February 1, 1998, the date of its acquisition by
the Company ("the Acquisition Date") ("the 1998 Twelve Month Period"). The 1997
condensed consolidated statement of operations reflect the financial results of
WTI, Inc., the owner of AFA and Polytek prior to the acquisition by the Company
("WTI"), for the seven months ended July 31, 1997 and the financial results of
the Parent for the five months ended, December 31, 1997, which include the
results of AFA and Polytek.

         The results of operations of WTI and Parent in 1997 do not include any
results of operations for CSI. Accordingly, the Company's results of operations
for 1999 and 1998 are not directly comparable to those of WTI and Parent for
1997.

         All dollar amounts are presented in thousands.

TWELVE MONTHS ENDED DECEMBER 31, 1999.

         The condensed consolidated operating results, expressed as a percentage
of sales, of the Company for 1999 and the 1998 Twelve Month Period are presented
below.


<TABLE>
<CAPTION>
                                                                INDESCO                  INDESCO
                                                             INTERNATIONAL            INTERNATIONAL
                                                               INC. AND                 INC. AND
                                                             SUBSIDIARIES             SUBSIDIARIES
                                                             TWELVE MONTHS            TWELVE MONTHS
                                                                 ENDED                    ENDED
                                                           DECEMBER 31, 1999        DECEMBER 31, 1998
                                                           -----------------        -----------------
<S>        <C>                                             <C>                      <C>
           Net Sales                                            100.0%                    100.0%
           Cost of Sales                                         76.3                      74.3
                                                                -----                     -----
               Gross Profit                                      23.7                      25.7

           Operating Expenses:
               Selling, General & Administrative                 11.7                      11.2
               Research and Development                           1.9                       1.0
               Amortization of Intangibles                        2.7                       2.5
               Plant Closedown Costs                               --                       5.0
                                                                -----                     -----
                                                                 16.3                      19.7
                                                                -----                     -----
           Income from Operations                                 7.4                       6.0

           Interest expense and other income                     16.1                      14.2
           Provision for Income Taxes                              --                       0.1
                                                                -----                     -----
           Income (Loss) Before Extraordinary Item               -8.7                      -8.3

           Extraordinary Item -
              Loss on Early Extinguishment of Debt                 --                      -6.5
                                                                -----                     -----
           Net (Loss)                                            -8.7%                    -14.8%
                                                                =====                     =====
</TABLE>


         Net sales in 1999 were $102,861, a decrease of $4,704, or 4.4%, as
compared to net sales of $107,565 for the 1998 Twelve Month Period (i.e., sales
of AFA and Polytek for twelve months and CSI for eleven months). On a proforma
basis (i.e., assuming that the acquisition of CSI had been completed as of
January 1, 1998), net sales would


                                       10
<PAGE>   12
have been $112,411 in 1998. Lower sales in 1999 were due to three main factors.
First, as previously reported, the consumer products business of a significant
CSI customer was sold to another company that purchases trigger sprayers from
one of the Company's competitors. This resulted in the loss of those sales by
CSI starting in the third quarter of 1998. Second, decreased sales in 1999 were
due to the fact that the Company had sales in 1998 related to inventory ramp-up
by customers of the Company for new product introductions which subsequently
leveled off. Third, 1999 sales reflects a full year of the impact of lower
selling prices, introduced in the third quarter of 1998, for certain products in
response to competitive pricing pressures.

         Cost of sales in 1999 was $78,460 (76.3% of sales), as compared to
$79,923 (74.3% of sales) for the 1998 Twelve Month Period. Higher cost of sales,
as a percentage of sales, was primarily due to several factors. First, the
Company's St. Peters operation experienced manufacturing difficulties due to the
loss of sales described above and the resultant layoff of plant personnel in
1999. Second, both the Forest City and Polytek operations experienced
manufacturing difficulties due to (i) the integration of molding and assembly
operations from the Company's El Paso and Juarez facilities (which were both
closed in June 1999) into its Forest City facility and (ii) the transfer of the
Company's UK assembly operation to Polytek. Overall, such manufacturing
difficulties included lower throughput and overhead absorption, use of outside
molding, increased labor costs and interrupted production caused by the movement
of equipment between sites.

         Operating expenses were $16,734 in 1999 and $21,124 in 1998, the latter
amount including $5,344 of a one-time charge for costs related to the closedown
of the Company's El Paso and Juarez facilities, which was completed in 1999.
Excluding this one-time charge, operating expenses increased $954 from 1998 to
1999. While Selling, General and Administrative expenses ("SG&A") in total was
relatively unchanged between years, 1999 SG&A includes costs of approximately
$1,500 relating to a suit brought by the Company against a competitor to enjoin
that competitor's infringement of the Company's patent. In March 2000, the suit
was settled. In addition, operating expenses included R&D expenses of $1,918 in
1999, an increase of $850 over 1998 R&D expenses of $1,068, which is
attributable to accelerated development of new product initiatives.

         Interest expense in 1999 was $16,762, an increase of $1,235 over
interest expense of $15,527 in 1998. The increase results from higher average
balances of interest-bearing debt outstanding in 1999.

         No U.S. tax liability has been incurred for the twelve months ended
December 31, 1999. Provision for taxes that have been recorded in 1999 relates
to state minimum taxes. The Company has recorded a full valuation allowance in
connection with its consolidated net operating loss.


TWELVE MONTHS ENDED DECEMBER 31, 1998.

         Operating results expressed as a percentage of sales of (i) the Company
for the 1998 Twelve Month Period, (ii) WTI for the seven months ended July 31,
1997 and (iii) the Parent for the five months ended December 31, 1997 are
presented below. As discussed above, the 1998 and 1997 financial information
presented below is not directly comparable year to year.


                                       11
<PAGE>   13
<TABLE>
<CAPTION>
                                                                         AFA HOLDINGS               INDESCO
                                                                             CO. AND             INTERNATIONAL,
                                                   WTI, INC. AND          SUBSIDIARIES              INC. AND
                                                    SUBSIDIARIES           FIVE MONTHS            SUBSIDIARIES
                                                    SEVEN MONTHS              ENDED               TWELVE MONTHS
                                                       ENDED              DECEMBER 31,                ENDED
                                                   JULY 31, 1997              1997              DECEMBER 31, 1998
                                                   -------------              ----              -----------------
<S>                                                <C>                    <C>                   <C>
    Net Sales                                          100.0%                100.0%                   100.0%
    Cost of Sales                                       72.3                  82.5                     74.3
                                                       -----                 -----                    -----
        Gross Profit                                    27.7                  17.5                     25.7

    Operating Expenses:
        Selling, General & Administrative               12.7                  14.2                     11.2
        Research and Development                          --                    --                      1.0
        Amortization of Intangibles                       --                    --                      2.5
        Plant Closedown Costs                             --                    --                      5.0
                                                       -----                 -----                    -----
                                                        12.7                  14.2                     19.7
                                                       -----                 -----                    -----
     Income (Loss) from Operations                      15.0                   3.3                      6.0

    Interest expense and other income                    4.6                   9.8                     14.2
    Provision for Income Taxes                           1.1                  -0.8                      0.1
                                                       -----                 -----                    -----
     Income Before Extraordinary Item                    9.3                  -5.7                     -8.3
    Extraordinary Item -
       Loss on Early Extinguishment of Debt               --                    --                     -6.5
                                                       -----                 -----                    -----
     Net Income (Loss)                                   9.3%                 -5.7%                   -14.8%
                                                       =====                 =====                    =====
</TABLE>



         Net sales for the 1998 Twelve Month Period were $107,565 and include
CSI sales of approximately $54,300 for the period from the Acquisition Date
through December 31, 1998. Net Sales in 1998 reflect the impact of (i) the loss
of a significant customer in the third quarter of 1998, (ii) lower selling
prices, introduced in the third quarter of 1998, for certain products in
response to competitive pricing pressures, (iii) reduced purchases by a large
custom molding customer of Polytek in the third quarter of 1998 due to decreased
demand for its products in the Russian market (the reduction in sales
represented about NLG 2,500 ($1,300) in lost sales to Polytek for the twelve
months ended December 31, 1998) and (iv) in the fourth quarter of 1998,
softening of demand for new products introduced in the second quarter of 1998,
and adjustments by customers of their inventories for year-end.

         Cost of sales for the 1998 Twelve Month Period were $79,923 (74% of
sales) and include CSI cost of sales of $39,500 for the period from the
Acquisition Date through December 31, 1998. Factors adversely affecting cost of
sales in 1998 include (i) reduced manufacturing efficiencies resulting from the
loss of the high volume, consistent production for the significant customer
discussed above, (ii) reduced absorption of fixed manufacturing costs on lower
production levels and (iii) a one-time step-up of $850 of inventory which was
expensed in 1998. Continued reductions in the cost of certain raw materials
partially offset these adverse factors in 1998.

         Gross profit of $27,642 (26% of net sales) for the 1998 Twelve Month
Period was impacted by the factors adversely affecting cost of sales and the
reduction in selling prices, both of which are discussed above.

         Selling, general and administrative (SG&A) expenses for the 1998 Twelve
Month Period, which were $12,068 (11% of sales). Amortization of intangibles for
the 1998 Twelve Month Period is principally related to goodwill arising from the
acquisition of CSI and AFA. The Company recorded a one-time charge of $5,344 for
costs related to the closedown of its El Paso, Texas and Juarez, Mexico
facilities which was completed during 1999.

         Interest expense for the 1998 Twelve Month Period was $15,527, which
included $9,700 of interest expense related to the $145,000 Senior Subordinated
Notes bearing interest at 9.75% incurred from April 23, 1998 (the issuance date)
through December 31, 1998. The remaining amount relates to interest and
financing fees in connection with the Company's various borrowings, which bore
interest at rates ranging from approximately 5% to 11.5%.

                                       12
<PAGE>   14
         No U.S. tax liability has been incurred for 1998. Provision for taxes
that have been recorded in the 1998 Twelve Month Period are related to income
from foreign operations and state minimum taxes. The Company has recorded a full
valuation allowance in connection with its U.S. net operating loss.

         In the 1998 Twelve Month Period, the Company recorded an Extraordinary
Loss on the Early Extinguishment of Debt in the amount of $7,005, comprised of
$6,054 of deferred financing costs and $951 of prepayment penalties, resulting
from early termination of various financings.

FIVE MONTHS ENDED DECEMBER 31, 1997

         The Company's net sales for the five months ended August 1, 1997 to
December 31, 1997 were $20,100 and cost of goods sold were $16,600, or 82.6% of
net sales. The cost of goods sold was impacted by a one-time write-up of
inventory pursuant to APB 16 of approximately $1,700, or 8.5% of net sales.
Selling, general and administrative expenses for the same period were $2,900, or
14.4%. During the period from August 1, 1997 to December 31, 1997, net cash
provided by operating activities was $1.4 million. For the same period, the
Company used approximately $700 for capital expenditures. The Company acquired
AFA for approximately $46,900 and Polytek for approximately $800 and refinancing
of debt of approximately $7,900.

         The Company believes that its operating results for the seven months
ended July 31, 1997 and for the five months ended December 31, 1997 are not
comparable to its operating results for the year ended December 31, 1996 nor to
operating results expected to be achieved in the future due to, among other
things, the acquisitions made in 1997 and 1998, the finance costs and write-offs
incurred in connection with such acquisitions and the one-time write-ups
pursuant to APB 16.

SEVEN MONTHS ENDED JULY 31, 1997

         Net sales for the seven months ended July 31, 1997 were $33,000 and
cost of goods sold were $23,900 million, or 72.4% of net sales. Selling, general
and administrative expenses for the same period were $4,200, or 12.7% of net
sales. During the seven months ended July 31, 1997, net cash from operations was
$5,800. For the same period, the Company used approximately $2,500 for capital
expenditures.

LIQUIDITY AND CAPITAL RESOURCES

         For the year ended December 31, 1999, the Company's operating
activities generated net cash of $3,161 (the combination of the $8,933 net loss,
$9,993 of non-cash items added back, and $2,101 net increase in working
capital). In that period, the Company had capital expenditures of $8,722 which
was principally related to (i) the purchase of molding equipment in connection
with the transfer of manufacturing operations from the Company's El Paso and
Juarez facilities to its Forest City facility, (ii) completion of the conversion
of certain of the Company's assembly equipment which had begun in 1998, and
(iii) purchase of assembly equipment and molds related to the Company's new
Luxor lotion pump. For the year ended December 31, 1999, the Company increased
its net borrowings under bank credit agreements and capital lease arrangements
by $3,864.

         At December 31, 1999, the Company had available excess borrowing
capacity of approximately $12,000 and $4,000, respectively, under its credit
facilities with First Union and ABN-AMRO Bank. As of March 30, 2000, after
giving effect to the March 2000 Amendment, the Company had excess borrowing
capacity of $11,600. (See Note 6 to the Company's condensed consolidated
financial statements for description of existing indebtedness.)

         Effective March 30, 2000, the Company further amended its New Credit
Facility with First Union National Bank. The March 2000 amendment, among other
things, (i) reduces the Revolving Credit Commitment to the lesser of the
Borrowing Base or $25 million, (ii) effects certain changes to the Borrowing
Base (iii) waives compliance with the Funded Indebtedness to EBITDA ratio
through the quarter ending December 31, 2000, (iv) grants First Union a security
interest in certain U.S. real property and in all of the U.S. intellectual
property of the Company and its domestic subsidiaries, (v) pledges the stock of
the Company's domestic subsidiaries, (vi) reduces the Capital Expenditure limit
(as defined in the New Credit Facility), (vii) increases by 0.25% the Applicable
Margin on Eurodollar loans (currently 2.50%) and on Base Rate loans (currently
1.25%) and (viii) establishes, effective April 30, 2000, a monthly reserve of
$1,178 against the Borrowing Base, which reserve reduces to zero after each
semi-annual payment of interest under the New Notes (See Description of
Indebtedness -- Senior Subordinated Notes). In addition, the amendment sets new
financial covenants, including minimum quarterly EBITDA levels for the year 2000
and thereafter, and maximum Funded Indebtedness to EBITDA levels (determined on
a rolling four-quarter basis as of the last day of each fiscal quarter)
commencing with the fiscal quarter ending on March 31, 2001. See Amendment to
Loan and Security Agreement and Waiver, dated as of March 30, 2000, filed as
Exhibit 10.3 to this Form 10-K.



                                       13
<PAGE>   15
         The Company uses EBITDA (defined as income before interest, income
taxes, depreciation, amortization, one-time charges and extraordinary items) to
measure its operating performance and ability to incur and service its debt.
EBITDA should not be considered as an alternative to, or more meaningful than,
net income or cash flow statement data prepared in accordance with GAAP, or as a
measure of profitability or liquidity. EBITDA does not include commitments by
the Company for capital expenditures and payment of debt and, therefore, should
not be deemed to represent funds available to the Company. EBITDA for the year
ended December 31, 1999 was $18,271 as compared to $22,599 for the 1998 Twelve
Month Period (i.e., the results of operations of the Company, AFA and Polytek
for twelve months and CSI for eleven months). On a proforma basis (i.e.,
assuming that the acquisition of CSI had been completed as of January 1, 1998),
EBITDA in 1998 would have been about $1,500 higher. The $5,828 decrease in
EBITDA from 1998 on a proforma basis to 1999 was due to lower sales, increased
cost of sales as a percentage of sales, and higher R&D expenses in 1999.

         Management believes that net cash generated by operations, together
with amounts available under the credit facilities with First Union and ABN-AMRO
Bank, will be adequate to fund the payment of interest and principal on the
Company's outstanding indebtedness as well as its capital expenditure plans and
working capital requirements.

         Management believes that inflation did not have a significant impact on
operations.

YEAR 2000 COMPLIANCE

         In 1999, the Company successfully completed its program to establish
Year 2000 Compliance with respect to its core software systems and manufacturing
equipment in which a microprocessor is used. The Company did not encounter any
significant issues, and the overall cost to achieve Year 2000 Compliance was not
material to the Company.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENT

         The information provided in this Annual Report on Form 10-K contains
certain forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Such forward-looking
statements are based on the beliefs of management, as well as assumptions made
by and information currently available to the Company's management.

         When used in this document, the words "anticipate", "believe",
"estimate" and "expect" identify forward-looking statements. Such statements
reflect the current views of the Company with respect to future events and are
subject to certain risks, uncertainties and assumptions that could cause actual
results to differ materially from those reflected in the forward-looking
statement. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated or
expected. The Company does not intend to update these forward-looking
statements.

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

    Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    See the Index to Consolidated Financial Statements on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

    None.

                                       14
<PAGE>   16
                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following table sets forth information with respect to each of the
Company's directors and executive officers. All directors hold office until the
next annual meeting of stockholders and until their successors have been elected
and qualified. All of the Company's officers are elected by the Board of
Directors and serve at the discretion of the Board of Directors.

<TABLE>
<CAPTION>
        NAME                      AGE             POSITION
        ----                      ---             --------
<S>                               <C>            <C>
  Yehochai Schneider              66             Chairman of the Board of
                                                    Directors
  Ariel Gratch                    48             Chief Executive Officer and
                                                    Vice Chairman
  Amiram Ezroni                   66             President
  Peter Giallorenzo               42             Vice President and Chief
                                                    Financial Officer, Treasurer
                                                    and Secretary
  L. John Clark                   58             Director
</TABLE>


         Mr. Schneider has been the Chairman of the Board of Directors of the
Company since February 2, 1998. He also is the Chairman of the Board of the
Parent. Mr. Schneider has over 40 years experience in manufacturing, management
and corporate transactions. Since 1981, he has been involved in the acquisition
and operation of several businesses, including AFA, various divisions of J.P.
Stevens, and Waynesboro Textiles, Inc. Mr. Schneider is a shareholder of WTI and
served as its Chairman until the Company's acquisition of AFA and Polytek. Prior
to 1981, he served as Chief Executive Officer of A & E Plastik Pak Co., a
plastic container business that he co-founded in 1956.

         Mr. Gratch has been the Chief Executive Officer and a Director of the
Company since February 2, 1998. He was also the President of the Company from
February 2, 1998 through December 15, 1999. He also is the President and a
Director of the Company's parent corporation and the Vice Chairman of AFA. Mr.
Gratch has fifteen years of experience in structuring and financing the
acquisition of companies in the United States and Europe. From 1980 through
1998, Mr. Gratch was a senior member of the New York law firm, Gratch Jacobs &
Brozman, P.C., specializing in mergers and acquisitions of mid-sized industrial
companies. Presently, Mr. Gratch is a non-practicing principal of the firm.
Since 1992, he has acted as principal in the acquisition and management of
various manufacturing businesses and commercial real estate operations. From
1985 through 1996, Mr. Gratch served on the Board of Directors of Tyco Toys, the
third largest toy company in the United States prior to its purchase by Mattel.
Mr. Gratch has also served on the Board of Directors of several private
companies, including Glenoit Mills, Inc., a textile and consumer goods company
(from 1989 to 1995).

         Mr. Amiram Ezroni was appointed President of the Company on December
15, 1999. Mr. Ezroni served as Senior Vice President of Israel Aircraft
Industries ("IAI"), with reported revenues of $3.5 billion, from 1964 to 1990.
Mr. Ezroni had executive responsibility for its two major divisions. For the
past six years, Mr.Ezroni was the President and CEO of Rogosin Enterprises
Ltd., a company with facilities in North Carolina and Israel, having
investments in tourism and in the manufacture of tire cord fabric. Mr. Ezroni
has served as a member of the Board of Directors of several industrial
companies as well.

         Mr. L. John Clark was appointed as a Director of the Company on April
1, 1999. Mr. Clark has over 20 years experience with various multinational
companies. Currently, he is one of the founders of Compass Partners
International, a strategic advisory private equity firm specializing in large,
complex, control position investments. From 1991 through 1996, Mr. Clark was
Chief Executive of BET Public Limited Company, a multinational group in the
support services and outsourcing businesses, based in London, with reported
revenues of $4.2 billion, and comprised of 160 companies and 120,000 employees
worldwide. Mr. Clark is a member of the Board of Directors of Kvaerner ASA, a
$10 billion Anglo-Norwegian conglomerate. He has previously served on the
Boards of Rolls- Royce PLC, BET Public Limited Company, Coremark International
Inc. and Yale and Nutone Inc.

         Mr. Peter Giallorenzo was appointed Vice President & Chief Financial
Officer of the Company in September 1998. From 1988 through August 1998, Mr.
Giallorenzo was Senior Vice President and Chief Operating Officer of Taro
Pharmaceuticals U.S.A., Inc. Mr. Giallorenzo is a Certified Public Accountant in
the State of New York.


                                       15
<PAGE>   17
ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS

         None of the directors who are officers of the Company has received or
will receive any compensation for their service on the Company's Board of
Directors. The Company anticipates payment of compensation to non-officer
directors for their services, including attendance at meetings, the amount of
which has not yet been determined but is not expected to be significant.

COMPENSATION OF EXECUTIVE OFFICERS

         The following table sets forth all compensation awarded to, earned by
or paid to the Chief Executive Officer and all other executive officers (the
"Named Executive Officers") for their services to the Company for the years
ended December 31, 1999 and 1998.

                     SUMMARY COMPENSATION TABLE



<TABLE>
<CAPTION>
                                    {     ANNUAL COMPENSATION           } {       LONG-TERM COMPENSATION      }

                                                                          {       AWARDS         }  { PAYOUTS }
                                                               OTHER                   SECURITIES
                                                               ANNUAL     RESTRICTED   UNDERLYING       LTIP         ALL OTHER
  NAME AND PRINCIPAL                  SALARY                COMPENSATION    STOCK     OPTIONS/SARS     PAYOUTS     COMPENSATION
       POSITION            YEAR      ($)(1)      BONUS ($)        (2)       AWARDS          (#)          ($)         ($) (3)
       --------            ----      ------      ---------        ---       ------          ---          ---         -------
<S>                        <C>      <C>         <C>         <C>           <C>         <C>              <C>         <C>
Ariel Gratch
   Chief Executive         1999     500,000        --- (5)     ---           ---           ---           ---           843
   Officer                 1998     458,478     200,000                                                                253
Amiram Ezroni
   President (4)           1999         ---        ---         ---           ---           ---           ---           ---

William L. Driggers (6)
   Chief Operating         1999     156,000        ---         ---           ---           ---           ---        14,583
   Officer                 1998     140,763     75,000         ---           ---           ---           ---         1,603
Peter Giallorenzo
   Vice President and      1999     200,000        ---         ---           ---       60,000 (7)        ---         7,614
   CFO                     1998      72,826      8,333         ---           ---           ---           ---           253
David Guinta
   Exec. Vice President-
     Marketing and Sales   1999     150,000        ---         ---           ---           ---           ---         2,011
                           1998      63,193     40,000         ---           ---           ---           ---           253
</TABLE>



(1)  For 1998, amounts represent salaries earned for (a) Messrs. Gratch and
     Driggers for the period commencing on February 1, 1998 through December 31,
     1998, (b) Mr. Giallorenzo for the period commencing on August 24, 1998
     through December 31, 1998 and (c) Mr. Giunta for the period commencing on
     July 27, 1998 through December 31, 1998. On an annualized basis, 1998
     salaries for Messrs. Gratch, Driggers, Giallorenzo and Guinta were
     $500,000, $156,000, $200,000 and $150,000, respectively. See Employment
     Arrangements.

(2)  While certain officers received certain perquisites, such perquisites do
     not exceed the lesser of $50,000 or 10% of such officers' respective
     salaries and bonuses.

(3)  1999 amounts shown include the following: (a) Company payments of term life
     insurance premiums: $735 for each of Gratch, Driggers, Giallorenzo and
     Guinta, (b) Company payments of Accidental Death & Disability insurance
     premiums: $108 for each of Gratch, Driggers, Giallorenzo and Guinta, (c)
     Company contribution of $2,340 to Mr. Driggers 401(k) Plan; $1,071 to Mr.
     Giallorenzo's 401(k) plan; and $1,168 to Mr. Guinta's 401(k) plan, and (d)
     automobile allowance payments of $5,700 to each of Mr. Driggers and Mr.
     Giallorenzo.

                                       16
<PAGE>   18
(4)  The Board appointed Mr. Ezroni as President on December 15, 1999. Mr.
     Ezroni did not receive any compensation in 1999.

(5)  Notwithstanding the terms of his employment agreement, Mr. Gratch waived
     his right to receive a bonus for the fiscal year ended December 31, 1999.

(6)  As of January 2000, Mr. Driggers resigned from his position and is no
     longer employed by the Company.

(7)  See "Management Incentive Plan" below.

Also see Employment Arrangements.

MANAGEMENT INCENTIVE PLAN

    In 1998, the Parent adopted an equity incentive plan (the "Stock Option
Plan") for management and certain other employees of the Company and its
subsidiaries (other than Messrs. Gratch or Schneider). The Stock Option Plan
authorizes grants of stock options and stock appreciation rights with respect to
approximately 10% of the Parent's outstanding common stock on a fully-diluted
basis. Of the aggregate options or stock appreciation rights, approximately 90%
are allocated to senior management personnel of the Company and its
subsidiaries. Under the terms of the Stock Option Plan, options become
exercisable upon the occurrence of a Liquidity Event, as defined in the Stock
Option Plan, which generally relate to (i) an initial public offering of the
Parent's stock, (ii) a sale of 30-80% of the Parent's shares to a non-affiliated
party, or (iii) a change of ownership of the Parent. In 1999, 320,000 stock
options were granted to employees of the Company pursuant to the Stock Option
Plan.

401(k) PLAN

    The Company maintains a 401(k) plan (the "Plan") pursuant to which all
domestic salaried and hourly employees, after completing six months of service
with the Company, can elect to defer Federal Income taxation on up to 15% of
their total annual compensation, including salaries and bonuses, by having such
amount contributed by the Company to the trust established under the Plan rather
than paid to the employee. The Company will make contributions each year in an
amount equal to 25% of the employee's deferral contributions, up to a maximum of
6% of the employee's total compensation. Company matching contributions vest at
the rate of 25% for each full year of service. Company contributions for the
named executive officers have been included in the Summary Compensation Table
set forth above.

EMPLOYMENT ARRANGEMENTS

         Mr. Gratch has entered into a five-year employment agreement with the
Company, dated as of February 4, 1998, which contains customary employment
terms. The agreement provides for a base annual salary of $500,000, a minimum
guaranteed bonus of $200,000 and additional incentive compensation based on
increases in the Company's consolidated EBITDA. The agreement is automatically
renewable for two additional five-year terms unless otherwise terminated by the
Company or Mr. Gratch. Mr. Gratch participated in deliberations of the Board of
Directors with respect to the employment agreement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The Company is a direct wholly-owned subsidiary of Indesco Holdings Co. (the
"Parent"). The following table sets forth certain information regarding the
beneficial ownership of the Common Stock of the Parent, as of December 31, 1999,
by (i) each director of the Company, (ii) each of the executive officers of the
Company, (iii) all executive officers and directors of the Company as a group
and (iv) each person who is the beneficial owner of more than 5% of the
outstanding Common Stock of the Parent. Except as indicated in the footnotes to
the table, the persons named in the table have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by them
and the address of each such person is in care of the Company's offices at 950
Third Avenue, New York, New York 10022.


                                       17
<PAGE>   19
<TABLE>
<CAPTION>
                  NAME AND ADDRESS                        NUMBER              PERCENTAGE OF SHARES
               OF INDIVIDUAL OR ENTITY                   OF SHARES                 OUTSTANDING
               -----------------------                   ---------                 -----------
<S>          <C>                                        <C>                   <C>
 Ariel Gratch(1)(3).................................    7,155,000                      86.7%
 Yehochai Schneider.................................    1,095,000                      15.0
 AFA International Limited(2)(3)....................    5,110,000                      70.0
 Waldock Limited(1)(4)..............................      950,000                      11.5
 All directors and executive officers of the
 Company as a group (5 persons).....................    8,250,000                     100.0%
</TABLE>

(1) Includes 1,095,000 shares of Common Stock held by Mr. Gratch, 5,110,000
    shares of Common Stock held by AFA International Limited and 950,000 shares
    of Common Stock issuable upon exercise of the warrants held by Waldock
    Limited. Mr. Gratch has voting control over the shares of Common Stock held
    by AFA International Limited and the 950,000 shares of Common Stock issuable
    upon the exercise of the warrants held by Waldock Limited. Mr. Gratch
    disclaims beneficial ownership of the shares of Common Stock held by AFA
    International Limited and by Waldock Limited.

(2) The outstanding capital stock of AFA International Limited is owned by a
    trust for the benefit of members of the family of Mr. Gratch.

(3) Concurrently with consummation of the sale of the Old Notes, AFA
    International Limited and Ariel Gratch advanced to the Parent an aggregate
    of $2.5 million to fund the repurchase by the Parent from NationsCredit
    Commercial Corporation ("NationsCredit") of outstanding warrants to purchase
    875,000 shares of its Common Stock. The Parent has the option to repay the
    amount so advanced by delivery to AFA International Limited and Mr. Gratch
    of the repurchased warrants.

(4) Waldock Limited owns currently exercisable warrants to purchase an aggregate
    of 950,000 shares of Class A Common Stock. The warrants were granted on July
    29, 1997 and, unless sooner redeemed, expire July 29, 2007. The outstanding
    capital stock of Waldock Limited is owned by a trust for the benefit of
    members of the family of Mr. Schneider.

The Parent also has authorized a class of Preferred Stock, having a liquidation
and redemption value of $10.00 per share, that provides for payment of
dividends, out of funds legally available therefor, at an annual rate of 7% of
the liquidation value thereof. An aggregate of 1,094,000 shares of such
Preferred Stock were issued to AFA International Limited and Warcop Investments
Ltd., the former stockholders of Polytek upon receipt of the outstanding capital
stock of Polytek. Of such shares, 820,500 were issued to AFA International
Limited and 273,500 shares were issued to Warcop Investments Ltd. Warcop
Investments Ltd. is an affiliate of Mr. Schneider.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Effective February 4, 1998, the Company entered into a management agreement
with a company affiliated with Mr. Schneider that provides for annual payments
of $300,000 and expires on July 29, 2008, subject to renewal for successive
five-year periods. Pursuant to the new management agreement, Mr. Schneider's
affiliated company advises the Company on matters relating to strategic and
financial planning and provides financial and administrative services to the
Company as is necessary.

    From time to time in the ordinary course of business, AFA purchases certain
metal springs for use in trigger sprayers from Spring & Wire Designs LLC
("S&W"), a company affiliated with Messrs. Gratch and Schneider. In 1999, AFA
purchased for an aggregate of $1,214,000 approximately 49% of its metal springs
requirements from S&W at competitive prices. The Company anticipates that S&W
will continue to supply these components at competitive prices to AFA.

    In 1999, Polytek purchased molds of approximately $189,000 and maintenance
services of approximately $217,000 from Brotool B.V. ("Brotool"), in which
Polytek held shares. In October 1999, Polytek sold back to Brotool its shares in
Brotool for a total amount of NLG 1,238,000 (US $542,000). The loss on sale of
the shares was not material.

    The law firm of Gratch Jacobs & Brozman, P.C., of which Mr. Gratch is a
non-practicing principal, provides legal services on an ongoing basis to the
Company and its subsidiaries. During 1999, the Company paid fees of


                                       18
<PAGE>   20
approximately $637,000 to Gratch Jacobs & Brozman, P.C.

    In connection with the acquisition of AFA, AFA International Limited and
Waldock Limited made loans to AFA in the principal amounts of $1,000,000 and
$2,000,000, respectively. On February 4, 1998, Parent assumed AFA's obligations
in connection with said loans, and as evidence thereof, issued unsecured
subordinated notes (the "Subordinated Notes") to AFA International Limited and
Waldock Limited in the original principal amounts of $1,000,000 and $2,000,000
(plus interest on such principal amounts accrued from July 29, 1997 through
February 4, 1998), respectively. The Subordinated Notes bear interest at 11.5%
per annum, and the principal thereof is prepayable at any time at the option of
the Parent and, unless sooner prepaid, will mature on May 15, 2008.

    Concurrent with the acquisition of CSI, Polytek became a direct wholly owned
subsidiary of the Company. The Parent agreed to issue to AFA International
Limited and Warcop Investments Ltd. (a company affiliated with Mr. Schneider),
820,500 shares and 273,500 shares, respectively, of a new class of Preferred
Stock of the Parent having a liquidation and redemption value of $10.00 per
share and providing for dividends at an annual rate of 7% of the liquidation
value thereof. See "Security Ownership of Certain Beneficial Owners and
Management."

    In connection with a credit facility in July 1997, the Parent issued to
NationsCredit warrants to purchase, at a price of $0.01 per share, up to an
aggregate of 1,750,000 shares of Common Stock of the Parent (equivalent to 17.5%
of its outstanding Common Stock on a fully-diluted basis), at any time up to
July 29, 2007. Concurrently with the cancellation of such credit facility, the
Parent repurchased all of those warrants for a cash payment of $5.0 million as
part of a general renegotiation of various of the terms of the Company's
arrangements with NationsCredit. Funding for such repurchase was provided by (i)
distribution to the Parent by the Company of $2.5 million and (ii) the advance
to the Parent by AFA International Limited and Mr. Gratch of a like amount in
cash. The advance of those funds was evidenced by unsecured promissory notes of
the Parent bearing interest at the rate of 11.5% per annum. The principal amount
of such notes are prepayable at any time at the option of the Parent, either in
cash or by delivery of half of the warrants so repurchased from NationsCredit,
and, unless sooner prepaid, will mature on May 15, 2008.

    The Parent and its U.S. subsidiaries (including Indesco) have entered into a
tax sharing agreement providing (among other things) that Parent shall pay the
federal income tax liability of the consolidated federal income tax group that
includes Indesco and such subsidiaries and that Indesco and each such
subsidiary, subject to certain limitations, will make payments to Parent on
account of income taxes, in an amount determined as if Indesco and the
subsidiaries filed a consolidated federal income tax return that did not include
the Parent.


                                       19
<PAGE>   21
                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a)(1) The Financial Statements listed on page F-1 are filed as part of this
Form 10-K.

(a)(2) Index to Financial Statement Schedules: None

(a)(3) Exhibits
    The exhibits listed on the accompanying Exhibit Index presented below are
filed as part of this Form 10-K.

(b)       Reports on Form 8-K: None


                                                   EXHIBIT INDEX
<TABLE>
<CAPTION>
                                                                                                                  SEQUENTIALLY
        EXHIBIT                                                                                                     NUMBERED
        NUMBER                                            DESCRIPTION                                                 PAGE
        ------                                            -----------                                                 ----
<S>     <C>              <C>
        3.1(a) --        Certificate of Incorporation of Indesco International, Inc., as amended.*

           (b) --        Certificate of Incorporation of Continental Sprayers International, Inc., as amended.*

           (c) --        Certificate of Incorporation of AFA Products, Inc., as amended.*

        3.2(a) --        By-laws of Indesco International, Inc.*

           (b) --        By-laws of Continental Sprayers International, Inc.*

           (c) --        By-laws of AFA Products, Inc.*

          4.1  --        Indenture, dated as of April 23, 1998, between Indesco International, Inc., AFA
                         Products, Inc. and Continental Sprayers International, Inc., as subsidiary guarantors,
                         and Norwest Bank Minnesota, National Association, as trustee.*

          4.2  --        Form of Notes.*

          4.3  --        Form of Subsidiary Guarantees.*

          4.4  --        Registration Rights Agreement, dated as of April 23, 1998, between Indesco
                         International, Inc., AFA Products, Inc. and Continental Sprayers International, Inc.,
                         as subsidiary guarantors, and NationsBanc Montgomery Securities LLC.*

          10.1 --        Loan and Security Agreement, dated September 29, 1998, by and among Indesco
                         International, Inc., AFA Products, Inc., Continental Sprayers International, Inc.
                         and First Union National Bank.**

          10.2 --        Amendment to Loan and Security Agreement and Waiver, dated March 24, 1999, by and among
                         Indesco International, Inc., AFA Products, Inc., Continental Sprayers International, Inc.
                         and First Union National Bank.***

          10.3 --        Amendment to Loan and Security Agreement and Waiver, dated as of March 30, 2000, by and among
                         Indesco International, Inc., AFA Products, Inc., Continental Sprayers International, Inc.
                         and First Union National Bank.

          10.4 --        Management Agreement, dated as of February 4, 1998, between Indesco International,
                         Inc. and Gadraz, Inc.*

          10.5 --        Employment Agreement, dated as of February 4, 1998, between Indesco International,
                         Inc. and Ariel Gratch.*

          10.6 --        Tax Sharing Agreement, dated as of August 1, 1997, among Indesco International, Inc.,
                         Continental Sprayers International, Inc. and AFA Products, Inc.*

          10.7 --        Supply Agreement, dated as of April 23, 1998, Spring & Wire Designs LLC and Indesco
                         International, Inc.*

          21   --        Subsidiaries of Indesco International, Inc.*


          27             Financial Data Schedule
</TABLE>

* Previously filed as an exhibit to the Company's Registration Statement on Form
S-4 (File No. 333-52657) and incorporated herein by reference.

** Previously filed as an exhibit to the Company's Form 10-Q for the quarterly
period ended July 5, 1998 and incorporated herein by reference.

***Previously filed as an exhibit to the Company's Form 10-K for the fiscal year
ended December 31, 1998 and incorporated by reference herein.

                                       20
<PAGE>   22
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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.

                                         Indesco International, Inc.

                                         By:  /s/ Peter Giallorenzo
                                             -------------------------
                                                  Peter Giallorenzo
                                         Title:   VP & CFO
                                         Date:    April 14, 2000


    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE                                 TITLE                                  DATE
---------                                 -----                                  ----
<S>                                    <C>                                 <C>
/s/ Ariel Gratch
------------------------               CEO and Director                    April 14, 2000
Ariel Gratch                           (Principal Executive Officer)

/s/ Amiram Ezroni
------------------------               President & Director                April 14, 2000
Amiram Ezroni

/s/ Peter Giallorenzo
------------------------               Vice President and                  April 14, 2000
Peter Giallorenzo                      Chief Financial Officer
                                       (Principal Financial and
                                       Accounting Officer)
/s/ Yehochai Schneider
------------------------               Director                            April 14, 2000
Yehochai Schneider
</TABLE>



                                       21
<PAGE>   23



                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                                       <C>
 INDESCO INTERNATIONAL, INC. AND SUBSIDIARIES
   Report of Independent Accountants                                      F-2
   Consolidated Balance Sheet as of December 31, 1999 and
     December 31, 1998                                                    F-3
   Consolidated Statement of Operations for the year ended
      December 31, 1999 and December 31, 1998                             F-4
   Consolidated Statement of Stockholders Equity (Deficit)
      for the year ended December 31, 1999 and December 31, 1998          F-5
   Consolidated Statement of Cash Flows for the year ended
      December 31, 1999 and December 31, 1998                             F-6
 Notes to Consolidated Financial Statements                               F-7

 AFA HOLDINGS CO. AND SUBSIDIARIES
   Report of Independent Accountants                                      F-29
   Combined Balance Sheet as of December 31, 1997                         F-30
   Combined Statement of Operations for the five month period
      ended December 31, 1997                                             F-31
   Combined Statement of Stockholders' Equity for the five
      month period ended December 31, 1997                                F-32
   Combined Statement of Cash Flows for the five month period
      ended December 31, 1997                                             F-33
   Notes to Combined Financial Statements                                 F-34

 WTI, INC. AND SUBSIDIARIES
   Report of Independent Accountants                                      F-47
   Consolidated Balance Sheets as of July 31, 1997 and
      December 31, 1996                                                   F-48
   Consolidated Statements of Operations for the seven month
      period ended July 31, 1997 and the years ended December
      31, 1996 and 1995                                                   F-49
   Consolidated Statements of Stockholders' Equity for the
      seven months ended July 31, 1997 and for the years
      ended December 31, 1996 and 1995                                    F-50
   Consolidated Statements of Cash Flows for the seven month
      period ended July 31, 1997 and for the years ended
      December 31, 1996 and 1995                                          F-51
   Notes to Consolidated Financial Statements                             F-52

 CONTINENTAL SPRAYERS AND AFFILIATES
   Report of Independent Accountants                                      F-70
   Combined Balance Sheets as of May 31, 1997 and 1996                    F-71
   Combined Statement of Operations for the years ended May
      31, 1997, 1996 and 1995                                             F-72
   Combined Statements of Divisional Equity for the years
      ended May 31, 1997, 1996 and 1995                                   F-73
   Combined Statements of Cash Flows for the years ended May
      31, 1997, 1996 and 1995                                             F-74
   Notes to Combined Financial Statements                                 F-75

 CONTINENTAL SPRAYERS AND AFFILIATES
   Report of Independent Accountants                                      F-79
   Combined Balance Sheet as of January 31, 1998                          F-80
   Combined Statement of Operations for the eight months ended
      January 31, 1998                                                    F-81
   Combined Statement of Divisional Equity for the eight months
      Ended January 30, 1998                                              F-82
   Combined Statements of Cash Flows for the eight months ended
      January 31, 1998                                                    F-83
   Notes to Combined Financial Statements                                 F-84
</TABLE>




                                      F - 1
<PAGE>   24
                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Indesco International, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows present fairly, in all material respects, the financial position of
Indesco International, Inc. and Subsidiaries at December 31, 1999 and 1998, and
the results of their operations and their cash flows for each of the two years
in the period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.



                                             PricewaterhouseCoopers LLP

New York, New York
March 30, 2000













                                      F-2
<PAGE>   25
                  Indesco International, Inc. and Subsidiaries
                           Consolidated Balance Sheet
                           December 31, 1999 and 1998
                             (Dollars in Thousands)


<TABLE>
<CAPTION>
                            ASSETS                                               1999             1998
                                                                                 ----             ----
<S>                                                                           <C>              <C>
Current Assets:
     Cash and Cash Equivalents                                                $     377        $   1,569
     Accounts Receivable, Net of Allowance of $70 and $45, respectively          14,275           13,941
     Inventories                                                                 12,623           13,447
     Prepaid Expenses and Other Assets                                              407              665
                                                                              ---------        ---------
         Total Current Assets                                                    27,682           29,622

Property, Plant and Equipment, Net                                               65,253           65,510
Excess of Cost Over Fair Value of Net Assets Acquired, Net                       59,470           60,953
Patents and Other Intangibles, Net                                                7,557            8,113
Deferred Financing Costs                                                          5,463            6,165
Other Assets                                                                        421            1,043
                                                                              ---------        ---------
     TOTAL ASSETS                                                             $ 165,846        $ 171,406
                                                                              =========        =========


               LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
     Current Portion of Long-Term Debt and Capital Lease Obligations          $     871        $   1,085
     Credit Facility                                                              1,827            3,613
     Accounts and Drafts Payable                                                  8,951            7,602
     Accrued Interest Payable                                                     2,945            2,945
     Other Accrued Expenses                                                       3,988            4,201
                                                                              ---------        ---------
         Total Current Liabilities                                               18,582           19,446

Long-Term Debt and Capital Lease Obligations                                    167,832          163,416
Deferred Income Taxes                                                               535              647
                                                                              ---------        ---------
     Total Liabilities                                                          186,949          183,509
                                                                              ---------        ---------

Commitments and Contingencies

Stockholders' Deficit:
     Common Stock, Authorized 3,000 Shares of $.01 Par Value; 200 Shares
         Issued and Outstanding                                                      --               --
     Additional Paid-in Capital                                                   5,062            5,062
     Accumulated Deficit                                                        (26,166)         (17,233)
     Accumulated Other Comprehensive Income                                           1               68
                                                                              ---------        ---------
         Total Stockholders' Deficit                                            (21,103)         (12,103)
                                                                              ---------        ---------
           TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                        $ 165,846        $ 171,406
                                                                              =========        =========
</TABLE>




                 See notes to consolidated financial statements.


                                      F - 3
<PAGE>   26
                  Indesco International, Inc. and Subsidiaries
                      Consolidated Statement of Operations
                     Years Ended December 31, 1999 and 1998
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                         1999             1998
                                                                         ----             ----

<S>                                                                   <C>              <C>
Net Sales                                                             $ 102,861        $ 107,565
Cost of Sales                                                            78,460           79,923
                                                                      ---------        ---------
     Gross Profit                                                        24,401           27,642

Operating Expenses:
     Selling, General and Administrative                                 12,067           12,068
     Research and Development                                             1,918            1,068
     Amortization of Intangibles                                          2,749            2,644
     Plant Closedown Costs                                                    0            5,344
                                                                      ---------        ---------
         Total Operating Expenses                                        16,734           21,124
                                                                      ---------        ---------
               Income From Operations                                     7,667            6,518

Other (Income) Expense:
     Interest                                                            16,762           15,527
     Other                                                                 (159)            (156)
                                                                      ---------        ---------
         Total Other Expense, Net                                        16,603           15,371
                                                                      ---------        ---------
Loss Before Extraordinary Item and Provision for
Income Taxes                                                              8,936            8,853
Provision for Income Taxes                                                   (3)               1
                                                                      ---------        ---------
Loss Before Extraordinary Item                                            8,933            8,854
Extraordinary Item - Loss on Early Extinguishment of Debt                     0            7,005
                                                                      ---------        ---------

     NET LOSS                                                         $   8,933        $  15,859
                                                                      =========        =========
</TABLE>






                 See notes to consolidated financial statements.




                                      F - 4
<PAGE>   27
                  Indesco International, Inc. and Subsidiaries
            Consolidated Statement of Stockholders' Equity (Deficit)
                     Years Ended December 31, 1999 and 1998
                             (Dollars in Thousands)


<TABLE>
<CAPTION>
                                                                                              ACCUMULATED
                                                               ADDITIONAL                        OTHER           TOTAL
                                                 COMMON         PAID-IN        ACCUMULATED   COMPREHENSIVE    STOCKHOLDERS'
                                                  STOCK         CAPITAL          DEFICIT         INCOME      EQUITY (DEFICIT)

<S>                                             <C>            <C>             <C>           <C>             <C>
BALANCE AT JANUARY 1, 1998                      $    242        $  4,320        $ (1,374)       $     28        $  3,216

Comprehensive Loss:

     Net Loss                                         --              --         (15,859)             --         (15,859)

     Translation Adjustment                           --              --              --              40              40
                                                --------        --------        --------        --------        --------

Total Comprehensive Loss                                                                                         (15,819)

Contribution of Subsidiary Equity                   (242)            242              --              --              --

Parent Debt Converted to Equity                       --           3,000              --              --           3,000

Return of Capital to Parent                           --          (2,500)             --              --          (2,500)
                                                --------        --------        --------        --------        --------

BALANCE AT DECEMBER 31, 1998                    $     --        $  5,062        $(17,233)       $     68        $(12,103)

Comprehensive Loss:

     Net Loss                                         --              --          (8,933)             --          (8,933)

     Translation Adjustment                           --              --              --             (67)            (67)
                                                --------        --------        --------        --------        --------

Total Comprehensive Loss                                                                                          (9,000)


BALANCE AT DECEMBER 31, 1999                    $     --        $  5,062        $(26,166)       $      1        $(21,103)
                                                ========        ========        ========        ========        ========
</TABLE>




                 See notes to consolidated financial statements.



                                      F - 5
<PAGE>   28
                  Indesco International, Inc. and Subsidiaries
                      Consolidated Statement of Cash Flows
                     Years Ended December 31, 1999 and 1998
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                             1999             1998
                                                                                             ----             ----
<S>                                                                                        <C>              <C>
Cash Flows From Operating Activities:
     Net Loss                                                                              $   8,933        $  15,859
     Less: Extraordinary Item                                                                     --           (7,005)
                                                                                           ---------        ---------
                                                                                               8,933            8,854
                                                                                           ---------        ---------
     Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
         Depreciation                                                                          7,696            7,087
         Amortization                                                                          2,749            2,645
         Loss (gain) on disposal of Property, Plant & Equipment, net                             152               --
         Plant Closedown Costs                                                                  (583)           5,344
         Deferred Income Taxes                                                                   (21)             115
         Equity in Earnings of Affiliate                                                          --              (39)
         Changes in Operating Assets and Liabilities:
              Accounts Receivable                                                                 79           (7,652)
              Inventories                                                                        341            1,776
              Prepaid Expenses and Other Assets                                                 (135)             914
              Accounts and Drafts Payable                                                      1,468            2,777
              Income Taxes Payable                                                                69             (357)
              Other Accrued Expenses                                                             279            1,335
                                                                                           ---------        ---------
                    Total Adjustments                                                         12,094           13,945
                                                                                           ---------        ---------
     Net Cash Provided by Operating Activities                                                 3,161            5,091
                                                                                           ---------        ---------

Cash Flows From Investing Activities:
     Acquisition of CSI, Net of Cash Acquired                                                     --          (93,568)
     Expenditures for Property, Plant and Equipment                                           (8,722)         (12,924)
     Proceeds From Disposal of Property, Plant and Equipment                                      --               87
     Proceeds from Sale of Investment in Affiliate                                               611               --
     Increase in Patents and Other                                                               (78)            (563)
                                                                                           ---------        ---------
     Net Cash Used by Investing Activities                                                    (8,189)        (106,968)
                                                                                           ---------        ---------

Cash Flows From Financing Activities:
     Proceeds From Senior Subordinated Notes                                                      --          145,000
     Proceeds From Term Loans                                                                     --          135,000
     Repayment of Long-Term Debt                                                              (2,323)        (173,643)
     Payments of Deferred Financing Costs                                                         --          (12,116)
     Net Borrowings Under Revolving Credit Agreements                                          6,187           10,629
     Return of Capital to Parent                                                                  --           (2,500)
                                                                                           ---------        ---------
     Net Cash Provided by Financing Activities                                                 3,864          102,370
                                                                                           ---------        ---------

Effect of Exchange Rate Changes on Cash                                                          (28)              25
                                                                                           ---------        ---------
     Net Increase in Cash and Cash Equivalents                                                (1,192)             518
Cash and Cash Equivalents at Beginning of Year                                                 1,569            1,051
                                                                                           ---------        ---------

     CASH AND CASH EQUIVALENTS AT END OF YEAR                                              $     377        $   1,569
                                                                                           =========        =========
</TABLE>


Supplemental Disclosures of Cash Flow Information:
<TABLE>
<CAPTION>
                                                 1999            1998
                                                 ----            ----
<S>                                            <C>             <C>
        CASH PAID DURING THE PERIOD FOR:
            Interest                           $ 16,062        $  8,790
                                               ========        ========

            Income Taxes                       $    (62)       $    314
                                               ========        ========
</TABLE>

Non-Cash Investing and Financing Information:

During fiscal 1999 and 1998, the Company entered into capital leases for
machinery and equipment aggregating $105 and $2,269, respectively.

During fiscal 1998, Parent debt of $3,000 was converted to equity


                 See notes to consolidated financial statements.


                                      F - 6
<PAGE>   29
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)

(1) ORGANIZATION AND BASIS OF PRESENTATION

Indesco International, Inc. (the "Company"), is a wholly owned subsidiary of
Indesco Holdings Co., formerly Afa Holdings Co. ("Parent"). The Company
manufactures and sells finger activated liquid dispensing devices ("trigger
sprayers") primarily in the United States and the Netherlands. The Parent was
formed in July 1997 to acquire, through a wholly-owned subsidiary, the assets
and liabilities of AFA Products, Inc. ("AFA"), located in Forest City, North
Carolina. Concurrent with this transaction, a stockholder of the Parent and
affiliate of another stockholder of the Parent acquired the outstanding capital
stock of AFA Polytek B.V. ("Polytek") based in The Netherlands. Afa and Polytek
were formerly operating subsidiaries of W.T.I., Inc. ("WTI" or "Predecessor").
In addition, effective February 1, 1998, the Company acquired certain assets and
liabilities of Continental Sprayer and Affiliates ("CSI"), a division of Contico
International, Inc. for approximately $94 million (see Note 3). Concurrent with
the CSI acquisition, Polytek became a wholly-owned subsidiary of the Company.

The accompanying consolidated balance sheet as of December 31, 1999 includes the
accounts of the Company and its subsidiaries (AFA, Polytek and CSI).

The accompanying consolidated statement of operations of the Company includes
the results of operations of the Company and its subsidiaries (AFA, Polytek and
CSI) for the year ended December 31, 1999. AFA and Polytek, for the year ended
December 31, 1998 and the results of operations of CSI from its acquisition on
February 1, 1998 through December 31, 1998.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany account and transactions have
been eliminated in consolidation.

REVENUE RECOGNITION

The Company recognizes revenue upon shipment of its products to customers.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect (i) the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and (ii) the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. Significant estimates in the financial statements relate to the
allowance for uncollectible accounts receivable, the allowance for slow-moving
and obsolete inventories, the recoverability of long-lived assets, the allowance
for sales returns and the valuation allowance for deferred tax assets.

RECLASSIFICATION

Certain prior year items have been reclassified to conform to current year
presentation.

CASH AND CASH EQUIVALENTS

The Company considers highly liquid investments with an original maturity of
three months or less at the time of purchase to be cash equivalents.




                                      F - 7
<PAGE>   30
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)

INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined at the
first-in, first-out (FIFO) basis. Cost includes material, labor and applicable
manufacturing overhead.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is provided primarily on
a straight-line basis over the estimated useful lives of the assets. Maintenance
and repairs are charged to income as incurred and betterments that extend the
useful life are capitalized. Upon retirement or sale, the cost and accumulated
depreciation are eliminated from the respective accounts, and the gain or loss,
if any, is included in income.

If events, or changes in circumstances indicate that the carrying amount of
long-lived assets may not be recoverable, the Company estimates the future cash
flows expected to result from the use of the asset and its eventual disposition.
If the sum of the expected future cash flows (not discounted and without
interest charges) is less than the carrying amount of the long-lived asset, an
impairment loss is recognized.

RESEARCH AND DEVELOPMENT

Company sponsored research and development expenses related to present and
future products are expensed as incurred.

EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED

Net excess of cost over fair value of net assets acquired (goodwill) is being
amortized on a straight-line basis over a period of thirty years. Amortization
charged to operations amounted to $2,117 and $1,958 for 1999 and 1998
respectively. Accumulated amortization amounted to $4,190 and $2,035 at December
31, 1999 and 1998, respectively.

The Company assesses the recoverability of this intangible asset by determining
whether the amortization of the goodwill balance over its remaining life can be
recovered through forecasted future operations. Impairment is evaluated by
comparing future cash flows (undiscounted and without interest charges) expected
to result from the use or sale of the asset and its eventual disposition, to the
carrying amount of the asset.

PATENTS AND OTHER INTANGIBLE ASSETS

The cost of patents acquired and other intangible assets, consisting primarily
of an exclusive sales agreement and royalty agreements, are being amortized
using the straight-line method over the estimated useful lives ranging from
twelve to fifteen years. Amortization expense amounted to $632 and $652 for 1999
and 1998 respectively. Accumulated amortization amounted to $1,389 and $818 at
December 31, 1999 and 1998, respectively.

DEFERRED TOOLING

From time to time, the Company purchases certain molds and equipment (tooling)
to meet specific customer product requirements. These tooling costs are
capitalized by the Company and are amortized into operations over the estimated
life of the sales contract period. Amortization charged to operations for 1999
and 1998 was $95 and $35, respectively.

DEFERRED FINANCING FEE

Costs incurred to obtain financing are amortized using the straight-line method
(which approximates the interest method) over the term of the related debt.



                                      F - 8
<PAGE>   31
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)


INCOME TAXES

The Company uses the asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets and liabilities are
computed annually for differences between the financial statement and tax basis
of assets and liabilities that will result in taxable or deductible amounts in
the future. Such deferred income tax assets and liability computations are based
on enacted tax laws and rates applicable to periods in which the differences are
expected to affect taxable income. A valuation allowance is established when
necessary to reduce deferred tax assets to the amount expected to be realized.

FOREIGN CURRENCY TRANSLATION

Assets and liabilities of Polytek are translated at exchange rates in effect at
the balance sheet date ($.4567 per guilder at December 31, 1999 and $.5328 per
guilder at December 31, 1998). Items of revenue and expense are translated at
average exchange rates during the period ($.4838 per guilder for the year ended
December 31, 1999 and $.5041 per guilder for the year ended December 31, 1998).

Translation adjustments, resulting from translating the Polytek (for the fiscal
year 1999 and 1998) and the CSI United Kingdom (for the fiscal year 1998)
financial statements into dollars, are reported in the equity section of the
accompanying balance sheet under the caption "Accumulated Other Comprehensive
Income."

ADVERTISING COSTS

All costs relating to marketing and advertising the Company's products are
expensed in the period incurred. Total advertising expenses for 1999 and 1998
were approximately $43 and $36, respectively.

FINANCIAL INSTRUMENTS

Financial instruments which potentially subject the Company to credit risk
consist primarily of cash and cash equivalents and trade receivables.

Although cash balances are held at various financial institutions, such balances
may, at times, exceed insurable amounts. The Company believes it mitigates its
risks by investing in or through major financial institutions. Recovery is
dependent upon performance of the institution.

Credit risk with respect to trade accounts receivable is generally diversified
due to the large number of entities comprising the Company's customer base. The
Company performs ongoing credit evaluations of its customers' financial
condition. Approximately 47% of the Company's consolidated net sales for the
twelve months ended December 31, 1999 were to its ten largest customers. No one
customer represents more than 10 percent of revenues.

The carrying amount of accounts receivable, accounts payable and accrued
liabilities approximates fair value because of the short maturity of these
financial instruments. The fair value of long-term debt approximates the
carrying amount as the related interest rates represent current market rates.






                                      F - 9
<PAGE>   32
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)


(3) ACQUISITION OF CONTINENTAL SPRAYERS INTERNATIONAL

Effective February 1, 1998, the Company acquired CSI for $92,947 in cash, paid
outstanding debt of AFA of $39,567 and paid fees of $5,721. Such amounts were
paid through the issuance of term loans of $135,000 and borrowings under a
revolving credit facility.

The CSI acquisition was accounted for using the purchase method of accounting.
The Company increased the value of inventory by $850 in accordance with
Accounting Principles Board Opinion No. 16 and has recorded fixed assets and
identifiable intangibles at their appraised fair market value. The excess of the
aggregate purchase price over the fair market value of net assets acquired of
approximately $55,000 is being amortized over 30 years. Unaudited proforma
results of operations of the Company before extraordinary items for the year
ended December 31, 1998 as if the transaction had occurred on January 1, 1998
are as follows:

<TABLE>
<S>                                                     <C>
               Net Sales                                $112,411
                                                        ========
               Net Loss Before Extraordinary Item       $  9,177
                                                        ========
</TABLE>

(4) INVENTORIES

The components of inventories are summarized as follows:

<TABLE>
<CAPTION>
                                      December 31,   December 31,
                                         1999           1998
                                         ----           ----

<S>                                   <C>            <C>
                  Raw Material          $ 3,252        $ 3,418
                  Work-in-Process         5,267          5,015
                  Finished Goods          4,104          5,014
                                        -------        -------
                                        $12,623        $13,447
                                        =======        =======
</TABLE>

(5) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, summarized by major classification and estimated
useful lives for depreciation purposes, is as follows:

<TABLE>
<CAPTION>
                                                       USEFUL       DECEMBER 31,    DECEMBER 31,
                                                    LIVES (YEARS)       1999            1998
                                                    -------------   ------------    ------------
<S>                                                 <C>             <C>             <C>
Land                                                                  $  2,538        $  2,499
Buildings                                              30 - 40          14,241          14,311
Machinery and Equipment                                 5 - 10          53,453          42,596
Furniture and Fixtures                                  5 - 7            3,431           3,056
Vehicles                                                  5                 23              23

Construction in Progress                                  --             7,174          11,754
                                                                      --------        --------

                                                                        80,860          74,239
Less: Accumulated Depreciation and Amortization                        (15,607)         (8,729)
                                                                      --------        --------
      Property, Plant and Equipment, Net                              $ 65,253        $ 65,510
                                                                      ========        ========
</TABLE>

Construction in progress primarily consists of additions and improvements to
buildings, molds and machinery. Property, plant and equipment includes
approximately $1,588 for assets recorded under capital leases.


                                     F - 10
<PAGE>   33
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)

(6) DEBT

DEBT CONSISTS OF THE FOLLOWING:

<TABLE>
<CAPTION>
                                                                   1999           1998
                                                                   ----           ----
<S>                                                              <C>            <C>
Working Capital line of credit, Dutch Guilder
("NLG")  denominated, bearing interest at 4.75 percent (a)       $  1,827       $  3,613
                                                                 ========       ========

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

Revolving credit facility, dollar denominated bearing
interest at 8.73 percent (b)                                     $ 18,245       $ 12,058

Senior subordinated notes, dollar denominated
bearing interest at 9.75 percent (c)                              145,000        145,000

ABN/AMRO loan, NLG denominated, bearing
 interest at 6.10 percent (d)                                       3,009          3,962

Senior mortgage note, NLG denominated, payable
in quarterly principal installments (NLG 175 or
US $79 per annum), bearing interest at 5.50 percent (e)               959          1,212

Capital lease obligations, NLG denominated,
bearing interest at rates ranging from 5.5
percent to 7.75 percent                                             1,490          2,269
                                                                  -------        -------
                                                                  168,703        164,501
Less:  Current Portion                                                871          1,085
                                                                 --------       --------
      TOTAL LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS         $167,832       $163,416
                                                                 ========       ========
</TABLE>

WORKING CAPITAL BORROWINGS

(a) Netherlands

Borrowings under the guilder denominated line of credit have a maximum limit of
NLG 11,000 ($5,024 at December 31, 1999 and $5,861 at December 31, 1998).
Interest payments on the NLG denominated line of credit are due quarterly, or
with respect to interest due on short-term loans borrowed under the line of
credit, at the end of the short-term loan period. Borrowings under the NLG line
of credit are collateralized by a lien on certain real property of Polytek. This
line of credit contains certain covenants, the most significant of which relates
to minimum net worth requirements.

LONG-TERM DEBT

(b) U.S.

Effective February 1, 1998, the Company consummated the CSI acquisition,
refinancing the AFA debt of approximately $40 million in its entirety and
acquired all of the capital stock of Polytek. Funds used for the CSI acquisition
and the refinancing of the AFA debt were provided by a credit facility comprised
of (a) term loans, which consisted of (i) a $70 million principal amount Tranche
A Term Loan, bearing interest at LIBOR, plus 3.75 percent; and (ii) a $65
million Tranche B Term Loan, bearing interest at LIBOR, plus 5.50 percent, and
(b) a revolving credit facility (the "Revolving Credit Facility").





                                     F - 11
<PAGE>   34
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)

NEW CREDIT FACILITY

General - As of September 29, 1998, the Company, AFA and CSI entered into a new
credit facility (the "New Credit Facility") with First Union National Bank
("First Union"). The New Credit Facility replaced the Revolving Credit Facility
with NationsCredit Commercial Corporation ("NationsCredit"), provides for up to
$30 million of borrowings from time to time for a term of five years and
includes a subfacility for the issuance of letters of credit up to a maximum
aggregate amount at any one time outstanding not to exceed $2 million. The
Company's initial borrowing under the New Credit Facility, on October 1, 1998,
was approximately $4.9 million, the proceeds of which were used to repay all
outstanding indebtedness (together with certain fees and expenses) of the
Company under its Revolving Credit Facility with NationsCredit.

Collateral - Indebtedness under the New Credit Facility is collateralized by a
first priority collateral interest in all accounts receivable, inventory,
machinery and equipment (including molds) of the Company and each of its
domestic subsidiaries. In addition, the Company and each of its domestic
subsidiaries has granted a negative pledge with respect to certain other assets,
including real property, general intangibles and intellectual property
(including patents).

Interest - Indebtedness under the New Credit Facility bears interest at a
floating rate based (at the Company's option) upon (i) LIBOR (for either one,
two, three or six months), plus an Applicable Margin ranging from 1.25 percent
to 2.25 percent or (ii) the Base Rate (the greater of the Prime Rate announced
by First Union or the Federal Funds Rate plus 0.50 percent) plus an Applicable
Margin ranging from 0 percent to 1.00 percent.

Borrowing Base - The availability of borrowings under the New Credit Facility is
subject to a Borrowing Base equal to the sum of (i) 85 percent of eligible
accounts receivable, (ii) 60 percent of eligible inventory, (iii) 75 percent of
the orderly liquidation value of selected eligible machinery and equipment, (iv)
80 percent of the cost of certain new machinery and equipment and (v) 60 percent
of the cost of the conversion of certain existing machinery and equipment. The
lender has the right to set reserves which can limit the amount of borrowing
base availability.

Covenants - The New Credit Facility requires the Company (on a consolidated
basis, including all domestic subsidiaries and Polytek) to meet certain
financial tests at the end of each fiscal quarter, including a Funded
Indebtedness to EBITDA Ratio from the closing date through June 30, 2000 of
6.25:1.0, decreasing incrementally to 4.5:1.0 at July 1, 2002 and thereafter,
and a Fixed Charge Coverage Ratio of not less than 1.0:1.0 for any fiscal
quarter. The New Credit Facility also contains covenants that include, without
limitation: (i) required delivery of financial statements, other reports and
borrowing base certificates; (ii) limitations on liens; (iii) limitations on
mergers, consolidations and sales of assets; (iv) limitations on incurrence of
debt; (v) limitations on permitted capital expenditures; (vi) limitations on
restricted payments; (vii) limitations on investments and acquisitions; (viii)
limitations on transactions with affiliates; and (ix) limitations on changes in
the Company's line of business.

        Effective March 30, 2000, the Company further amended its New Credit
Facility with First Union National Bank. The March 2000 amendment, among other
things, (i) reduces the Revolving Credit Commitment to the lesser of the
Borrowing Base or $25 million, (ii) effects certain changes to the Borrowing
Base (iii) waives compliance with the Funded Indebtedness to EBITDA ratio
through the quarter ending December 31, 2000, (iv) grants First Union a security
interest in certain U.S. real property and in all of the U.S. intellectual
property of the Company and its domestic subsidiaries, (v) pledges the stock of
the Company's domestic subsidiaries, (vi) reduces the Capital Expenditure limit
(as defined in the New Credit Facility), (vii) increases by 0.25% the Applicable
Margin on Eurodollar loans (currently 2.50%) and on Base Rate loans (currently
1.25%) and (viii) establishes, effective April 30, 2000, a monthly reserve of
$1,178 against the Borrowing Base, which reserve reduces to zero after each
semi-annual payment of interest under the New Notes. In addition, the amendment
sets new financial covenants, including minimum quarterly EBITDA levels for the
year 2000 and thereafter, and maximum Funded Indebtedness to EBITDA levels
(determined on a rolling four-quarter basis as of the last day of each fiscal
quarter) commencing with the fiscal quarter ending on March 31, 2001.



                                     F - 12
<PAGE>   35
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)

(c) Senior Subordinated Notes

On April 23, 1998, the Company issued $145,000 of 9.75 percent Senior
Subordinated Notes due April 15, 2008 (the "Old Notes"). The net proceeds were
used by the Company to refinance U.S. indebtedness, including borrowings
incurred in connection with the acquisition in February 1998 of substantially
all of the assets of CSI, as previously mentioned in Notes (1) and (3). Interest
on the Old Notes was payable semi-annually on April 15 and October 15,
commencing October 15, 1998.

The Old Notes were to be redeemable at the option of the Company, in whole or in
part, on or after April 15, 2003, at certain specified redemption prices, plus
accrued and unpaid interest thereon to the redemption date. In addition, at any
time on or before April 15, 2001, the Company could redeem up to 35 percent of
the initial aggregate principal amount of the Old Notes with the net proceeds of
one or more equity offerings at a redemption price equal to 109.75 percent of
the principal amount thereof, plus accrued and unpaid interest, if any, to the
date of redemption; provided that at least 65 percent of the initial aggregate
principal amount of the Old Notes remains outstanding. Upon a change of control,
the Company would be required to make an offer to purchase all outstanding Old
Notes at 101 percent of the principal amount thereof, plus accrued and unpaid
interest to the date of purchase.

The Old Notes were unsecured senior subordinated obligations of the Company and
were subordinated in right of payment to all existing and future Senior
Indebtedness of the Company, including indebtedness under its Revolving Credit
Facility. The Old Notes were ranked pari passu with all existing and future
senior subordinated indebtedness of the Company, were ranked senior to all other
existing and future Subordinated Indebtedness of the Company and were fully and
unconditionally guaranteed, jointly and severally, on an unsecured senior
subordinated basis by each of the Company's existing and future U.S.
subsidiaries (the "Subsidiary Guarantors"), (see Note 13). The Old Notes were
also effectively subordinated to all existing and future Senior Indebtedness of
the Company's subsidiaries.

On August 17, 1998, the Company filed with the Securities and Exchange
Commission a registration statement on Form S-4 with respect to its 9.75 percent
Senior Subordinated Notes due April 15, 2008 ("New Notes") which are fully and
unconditionally guaranteed, jointly and severally, on an unsecured senior
subordinated basis, by the Subsidiary Guarantors, (see Note 13). On September
16, 1998, the Company concluded its exchange offer and the New Notes were
exchanged for $145,000 aggregate principal amount of the Old Notes. The New
Notes are subordinated in right of payment to all existing and future Senior
Indebtedness, including indebtedness under the New Credit Facility and, except
for certain transfer restrictions and registrations rights relating to the Old
Notes, are identical in all material respects to the Old Notes.

(d) ABN/AMRO Loan

Polytek has a credit facility with the ABN-AMRO Bank, The Netherlands. This
credit facility includes a loan of up to NLG 8,500 ($3,864), requiring quarterly
payments of $97 through 2007. This Note is collateralized by a lien on certain
real property of Polytek. This Note contains certain covenants, the most
significant of which relate to minimum net worth requirements.

(e) Senior Mortgage Note

In connection with the construction of a manufacturing facility, Polytek
obtained a NLG 3,500 ($1,591) mortgage from ABN-AMRO Bank, The Netherlands.
Borrowings under this Mortgage Agreement are collateralized by a lien on certain
real property of Polytek.




                                     F - 13
<PAGE>   36
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)

AGGREGATE ANNUAL MATURITIES

Aggregate annual maturities of debt (including capital lease obligations) at
December 31, 1999 are as follows:

<TABLE>
<S>                                                <C>

                           2000                    $    871
                           2001                         850
                           2002                         843
                           2003                      19,042
                           2004                         468
                           Thereafter               146,629
                                                   --------
                                                   $168,703
                                                   ========
</TABLE>

(7) EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF DEBT

In conjunction with the acquisition of CSI, the Company repaid outstanding debt
of approximately $40,000 in February 1998, refinanced its term loan borrowing on
April 23, 1998 and refinanced its credit facility on September 29, 1998 (see
Notes 1 and 3). As a result, the Company expensed $6,054 of deferred financing
costs and $951 of prepayment penalties as an extraordinary loss.

(8) INCOME TAXES

The loss before provision for income taxes consisted of:

<TABLE>
<CAPTION>
                                                                 1999            1998
                                                                 ----            ----
<S>                                                          <C>             <C>
     United States                                           $  8,716        $ 15,656
     Foreign                                                      220             203
                                                             --------        --------

                                                             $  8,936        $ 15,859
                                                             ========        ========
The provision (benefit) for income taxes consisted of:

     Current Tax Provision (Benefit):
           U.S. Federal                                      $     --        $     --
           State and Local                                        101             133
           Foreign                                                (83)           (247)
                                                             --------        --------

               Total Current Tax Provision (Benefit)               18            (114)
                                                             --------        --------
     Deferred Tax Provision consisted of:
           U.S. Federal                                            --              --
           State and Local                                         --              --
           Foreign                                                (21)            115
                                                             --------        --------

                 Total Deferred Tax Provision                     (21)            115
                                                             --------        --------
     Provision for Income Taxes                              $     (3)       $      1
                                                             ========        ========
</TABLE>





                                     F - 14
<PAGE>   37
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)

U.S. income tax benefit at the statutory tax rate is reconciled below to the
overall U.S. and foreign income tax expense:

<TABLE>
<CAPTION>
                                                                         1999            1998
                                                                         ----            ----

<S>                                                                    <C>             <C>
      Tax at U.S. Federal Income Tax Rate                              $ (3,127)       $ (5,391)
      State Taxes, Net of Federal Income Tax Effect                          66             124
      Impact of Foreign Tax Rates and Credits                              (104)           (132)
      Loss Not Currently Deductible                                       3,161           5,577
      Other Items, Net                                                        1            (177)
                                                                       --------        --------

            Income Tax Expense                                         $     (3)       $      1
                                                                       ========        ========

 Deferred tax assets and liabilities consisted of the following:

      Deferred Tax Assets:
          Operating Losses                                             $ 14,102        $  5,577
          Plant Closedown Costs                                             944           1,263
          Asset Basis Differences                                           374             886
          Accruals Not Currently Deductible                                 218             608
          Other                                                              30             456
                                                                       --------        --------
               Deferred Tax Assets                                       15,668           8,790
                                                                       --------        --------

 Deferred Tax Liabilities:
          Depreciation and Amortization                                   3,488           2,448
          Other                                                              --              99
                                                                       --------        --------
          Deferred Tax Liability                                          3,488           2,547
                                                                       --------        --------
Valuation Allowance                                                      12,715           6,890
                                                                       --------        --------
          Net Deferred Tax Liability                                   $    535        $    647
                                                                       ========        ========
</TABLE>


The net income taxes refunded during 1999 was $62. The Company has U.S. net
operating loss carryforwards of approximately $22,000, expiring in years 2012
through 2019. The net deferred tax liability of $535 relates to foreign taxes.

The Company has established valuation allowances in accordance with the
provision of FASB Statement No. 109, "Accounting for Income Taxes." The Company
will review the adequacy of the valuation allowance in the future years and
recognize only those benefits as the reassessment indicates that it is more
likely than not that the benefits will be realized.

(9) COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company is obligated under various noncancellable operating leases which
expire at various dates through 2004.

Future minimum annual rental payments in excess of one year at December 31,
1999:

<TABLE>
<S>                                       <C>
                               2000       $1,340
                               2001        1,183
                               2002        1,137
                               2003        1,006
                               2004            1
                                          ------
                                          $4,667
                                          ======
</TABLE>

Total rent expense charged to operations was approximately $527 and $155 for the
years ended December 31, 1999 and 1998, respectively.




                                     F - 15
<PAGE>   38
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)


EMPLOYMENT

The Company has an employment agreement with one of its officers. The agreement
which expires in 2003 and is automatically renewable for two additional
five-year terms provides for a minimum salary level, minimum guaranteed bonus
and additional incentive compensation based on performance criteria. The
commitment for salaries as of December 31, 1999 was approximately $500 per year.

LITIGATION

There are pending claims and litigation against the Company arising in the
ordinary course of business. Management believes, on the basis of its
understanding and advise of counsel, that these actions will not result in
payment of amounts, if any, which would have a material adverse effect on the
Company's consolidated financial position, results of operations or cash flows.

(10) RELATED PARTY TRANSACTIONS

MANAGEMENT FEES

Effective February 4, 1998, the Company entered into a management agreement with
an affiliate of one of the shareholders of the Parent that provides for annual
payments of $300 and expires on July 29, 2008, subject to renewal for successive
five-year periods.

During 1999 and 1998, the Company recorded management fees and certain expenses
of $300 and $308, respectively. As of December 31, 1999, all fees and expenses
had been paid.

TRANSACTIONS WITH PARENT

On February 4, 1998, the Parent assumed $3,000 of notes payable due to certain
shareholders of the Parent by AFA, which amount has been recorded as a
contribution of capital. In April 1998, the Company returned capital to the
Parent in the amount of $2,500 from the proceeds of its debt offering.


TRANSACTIONS WITH AFFILIATES

The Company purchased molds from an affiliate for approximately $189 in 1999 and
$429 in 1998. The affiliate provided certain repairs and maintenance at a cost
to the Company of approximately $217 in 1999 and $250 in 1998. Included in
accounts payable in the accompanying balance sheet at December 31, 1999 and 1998
is approximately $ 68 and $55 respectively, relating to these assets and
services provided by the affiliate. In October 1999, the Company completed a
transaction in which it sold back to the affiliate all its shares of the
affiliate for a total amount of NLG 1,238 (US $562). The loss on sale of the
shares was not material.

PROFESSIONAL SERVICES

The law firm of Gratch Jacobs & Brozman, P.C., of which one of the Parent's
shareholders is a non-practicing principal, provides legal services on an
ongoing basis to the Company and its subsidiaries. For the years ended December
31, 1999 and 1998, the Company incurred fees of approximately $637 and $1,068,
respectively, from Gratch Jacobs & Brozman, P.C.




                                     F - 16
<PAGE>   39
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)

(11) EMPLOYEE BENEFIT PLANS

401(K) PLANS

The Company offers an employee savings plan (the "Plan") under Section 401(k) of
the Internal Revenue Code. The Plan covers substantially all U.S. full-time
employees and the Company matches 25 percent of each employee's contribution up
to 6 percent of annual compensation.

The Company's matching contributions under the Plan was approximately $145 for
the year ended December 31, 1999.

RETIREMENT PLAN

Polytek has various pension plans covering substantially all employees. Polytek
funds all costs through insurance contracts which provide for retiree benefits
under the terms of the plan; there were no unfunded or overfunded benefit
obligations. Pension expense for the year ended December 31, 1999 was
approximately $627.

PARENT COMPANY STOCK OPTION AGREEMENT

During 1999, the Parent issued stock options to certain employees of the Company
to purchase approximately 320 shares at $0.75 to $2.00 per share. The impact of
such option grants is not material.

(12) PLANT CLOSEDOWN COST

In 1998, the Company finalized and approved a plan to closedown its El Paso,
Texas and Juarez, Mexico manufacturing facilities. These facilities were closed
in June 1999. The estimated cost of this plan was approximately $5,344, which
was reflected in operating expenses in 1998. The estimated costs consisted of
employee separation costs of $1,100, asset impairments of $3,978 and other exit
costs of $266.

During 1999, the Company sold and disposed of certain assets of its El Paso,
Texas and Juarez, Mexico facilities and incurred related severance costs. The
remaining reserve of approximately $600 reflects the estimated loss on the sale
of the El Paso facility.




                                     F - 17
<PAGE>   40
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)



(13) SEGMENT DATA AND SUPPLEMENTAL CONSOLIDATING FINANCIAL STATEMENTS

The Company evaluates the performance of its operation by evaluating the
profitability of its three major operating subsidiaries, AFA, CSI and Polytek.
AFA is a U.S. supplier of trigger sprayers to independent distributors, who
typically purchase in small volume but at higher margins than larger
multi-national consumer product companies. CSI is a supplier of trigger sprayers
to large national and multi-national consumer product manufacturers. U.S. and
foreign multi-national consumer product manufacturers are provided products
manufactured in the Company's Polytek facility located in the Netherlands. In
1999 and 1998, sales outside the United States approximated $30,800 and $31,780,
respectively. Information relating to these operations is presented in the
supplemental consolidating financial statements below.

The New Notes (described in Note 6) are fully and unconditionally guaranteed,
jointly and severally, on an unsecured senior subordinated basis, by the
Subsidiary Guarantors. Polytek is a non-guarantor subsidiary.

-       The Company has not presented separate financial statements and other
        disclosures concerning the Subsidiary Guarantors because management has
        determined that such information is not material to the holders of the
        New Notes; and

-       the Subsidiary Guarantors are wholly-owned subsidiaries of the Company
        and have fully and unconditionally guaranteed the New Notes on a joint
        and several basis.

The following consolidating financial statements include the accounts of the
Company, the Subsidiary Guarantors, and the non-guarantor subsidiaries.






                                     F - 18
<PAGE>   41
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)


                    SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
                                DECEMBER 31, 1999
<TABLE>
<CAPTION>
                                                                                           NON-
                                                                                        GUARANTOR
                                                              GUARANTOR SUBSIDIARIES    SUBSIDIARY
                                                             -----------------------
                                               INDESCO
                                            INTERNATIONAL,      AFA
                                                 INC.         PRODUCTS        CSI         POLYTEK       ELIMINATIONS    CONSOLIDATED
                                                 ----         --------        ---         -------       ------------    ------------
<S>                                         <C>               <C>          <C>          <C>             <C>             <C>
ASSETS

Current Assets:
    Cash and Cash Equivalents                 $     214       $      51    $    (170)    $     282        $      --      $     377
    Accounts Receivable, Net                      9,526          12,648       13,208         3,766          (24,873)        14,275
    Inventories                                      --           6,281        3,625         2,717               --         12,623
    Prepaid Expenses and Other Assets               121              --           25           261               --            407
                                              ---------       ---------    ---------     ---------        ---------      ---------

        Total Current Assets                      9,861          18,980       16,688         7,026          (24,873)        27,682

Property, Plant and Equipment, Net                  347          21,729       33,722         9,502              (47)        65,253
Excess Cost Over Fair Value of Net
Assets Acquired, Net                                 --          11,590       51,592        (3,712)              --         59,470
Patents and Other Intangibles, Net                   15           3,907        3,635            --               --          7,557
Deferred Financing Costs                          5,463              --           --            --               --          5,463
Deferred Tax Asset                                   --           2,041        8,099            --           (9,856)           284
Investment in Subsidiaries                       17,856              --           --            --          (17,856)            --
Loan Receivable - Intercompany                  129,428              --           --            --         (129,428)            --
Other Assets                                         --             127           10            --               --            137
                                              ---------       ---------    ---------     ---------        ---------      ---------

    TOTAL ASSETS                              $ 162,970       $  58,374    $ 113,746     $  12,816        $(182,060)     $ 165,846
                                              =========       =========    =========     =========        =========      =========
</TABLE>




                                     F - 19
<PAGE>   42
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)


                    SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
                                DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                                              NON-
                                                                                            GUARANTOR
                                                                   GUARANTOR SUBSIDIARIES   SUBSIDIARY
                                                                   ----------------------
                                                     INDESCO
                                                  INTERNATIONAL,     AFA
                                                       INC.        PRODUCTS      CSI          POLYTEK    ELIMINATIONS   CONSOLIDATED
                                                       ----        --------      ---          -------    ------------   ------------
<S>                                               <C>              <C>         <C>          <C>          <C>            <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
    Current Portion of L.T. Debt and Cap. Lease     $      --      $      --   $      --    $     871     $      --      $     871
    Obligations
    Credit Facilities                                      --             --          --        1,827            --          1,827
    Accounts and Drafts Payable                           193          3,464       4,733        2,671        (2,110)         8,951
    Income Taxes Payable                                    5             37          63           --            --            105
    Other Accrued Expenses                             26,705            475       7,612        1,990       (29,954)         6,828
                                                    ---------      ---------   ---------    ---------     ---------      ---------

        Total Current Liabilities                      26,903          3,976      12,408        7,359       (32,064)        18,582

Advances from Parent                                       --         39,927      91,583           --      (131,510)            --
Long-Term Debt & Capitalized Lease Obligations        163,245             --                    4,587            --        167,832
Deferred Income Taxes                                      --          2,041       7,815          535        (9,856)           535
                                                    ---------      ---------   ---------    ---------     ---------      ---------

    Total Liabilities                                 190,148         45,944     111,806       12,481      (173,430)       186,949

Stockholders' Deficit:
    Common Stock                                       (2,500)         3,000          --          242          (742)            --
    Additional Paid-In Capital                             --          5,521      15,795          510       (16,764)         5,062
    Accumulated Deficit                               (24,678)         3,909     (13,855)        (418)        8,876        (26,166)
    Accumulated Other Comprehensive Income                 --             --          --            1            --              1
                                                    ---------      ---------   ---------    ---------     ---------      ---------

        Total Stockholders' Deficit                   (27,178)        12,430       1,940          335        (8,630)       (21,103)
                                                    ---------      ---------   ---------    ---------     ---------      ---------
    TOTAL LIABILITIES AND
            STOCKHOLDERS' DEFICIT                   $ 162,970      $  58,374   $ 113,746    $  12,816     $(182,060)     $ 165,846
                                                    =========      =========   =========    =========     =========      =========
</TABLE>



                                     F - 20
<PAGE>   43
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)

               SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                                         NON-GUARANTOR
                                                                GUARANTOR SUBSIDIARIES    SUBSIDIARY
                                                  INDESCO       ----------------------
                                               INTERNATIONAL,     AFA
                                                    INC.        PRODUCTS        CSI         POLYTEK      ELIMINATIONS   CONSOLIDATED

<S>                                            <C>              <C>          <C>           <C>           <C>            <C>
Net Sales                                        $      --      $  38,386    $  39,327     $  25,891      $    (743)     $ 102,861

Cost of Sales                                         (168)        28,257       29,837        21,660         (1,126)        78,460
                                                 ---------      ---------    ---------     ---------      ---------      ---------

      Gross Profit                                     168         10,129        9,490         4,231            383         24,401

Operating Expenses                                   4,336          2,741        6,552         3,105             --         16,734
                                                 ---------      ---------    ---------     ---------      ---------      ---------

      Income from Operations                        (4,168)         7,388        2,938         1,126            383          7,667

Other (Income) Expense
      Interest                                       2,729          3,843        9,718           472             --         16,762
      Other                                            (24)        (1,227)        (212)          874            430           (159)
      Equity in Income of Consolidated
        Subsidiaries                                 1,922             --           --            --         (1,922)            --
                                                 ---------      ---------    ---------     ---------      ---------      ---------

       Total Other Expense, Net                      4,627          2,616        9,506         1,346         (1,492)        16,603

       Income (Loss) Before Extraordinary
         Item and Provision for Income Taxes        (8,795)         4,772       (6,568)         (220)         1,875         (8,936)

Provision for Income Taxes                               6             54           63          (126)            --             (3)
                                                 ---------      ---------    ---------     ---------      ---------      ---------

      Income (Loss) Before Extraordinary
         Item                                       (8,801)         4,718       (6,631)          (94)         1,875         (8,933)

Extraordinary Item - Loss on Early
      Extinguishment of Debt                            --             --           --            --             --             --
                                                 ---------      ---------    ---------     ---------      ---------      ---------

         Net Income (Loss)                       $  (8,801)     $   4,718    $  (6,631)    $     (94)     $   1,875      $  (8,933)
                                                 =========      =========    =========     =========      =========      =========
</TABLE>



                                     F - 21
<PAGE>   44
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)

               SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1999



<TABLE>
<CAPTION>
                                                                   GUARANTOR SUBSIDIARIES       NON-
                                                                   ----------------------    GUARANTOR
                                                      INDESCO        AFA                     SUBSIDIARY
                                                   INTERNATIONAL   PRODUCTS         CSI       POLYTEK
                                                        INC.                                              ELIMINATIONS  CONSOLIDATED
<S>                                                <C>             <C>            <C>        <C>          <C>           <C>
Cash Flows From Operating Activities:
 Net Income (Loss)                                    $(8,801)      $ 4,718       $(6,631)    $   (94)      $ 1,875       $(8,933)
 Less: Extraordinary Item                                  --            --            --          --            --            --
                                                      -------       -------       -------     -------       -------       -------

                                                       (8,801)        4,718        (6,631)        (94)        1,875        (8,933)

 Adjustments to Reconcile Net Income (Loss)
   Provided (Used) by Operating Activities:
     Depreciation                                          13         2,882         3,099       1,702            --         7,696
     Amortization                                                       735         2,157        (143)           --         2,749
     Loss (gain) on disposal of P.P.&E                     --            77            --          75            --           152
     Plant Closedown Costs                                 --            --          (583)         --            --          (583)
     Deferred Income Taxes                                 --            --            --         (21)           --           (21)
     Equity in (Earnings) Loss of Subsidiaries
       and Affiliate                                    1,922            --            --          --        (1,922)           --
Changes in Operating Assets and Liabilities:
 Accounts Receivable                                       --        (2,232)        1,087         171         1,053            79
 Inventories                                               --          (482)          479         344            --           341
 Prepaid Expenses and Other Assets                        (76)          (66)          548        (541)           --          (135)
 Accounts and Drafts Payable                              145           466           181         676            --         1,468
 Income Taxes Payable                                       4             2            63          --            --            69
 Other Accrued Expenses                                   627           585        (2,285)        323         1,029           279
                                                      -------       -------       -------     -------       -------       -------

     Net Cash Provided (Used) by Operating
       Activities                                      (6,166)        6,685        (1,885)      2,492         2,035         3,161

Cash Flows From Investing Activities:
  Expenditures for Property, Plant and Equipment         (360)       (3,977)       (3,826)       (606)           47        (8,722)
  Proceeds from Sale of Investment in Affiliate            --            --            --         611            --           611
  Transfer of Assets                                       --        (3,159)        3,159          --            --
  Other                                                   (15)           (2)          (61)         --                         (78)
                                                      -------       -------       -------     -------       -------       -------

      Net Cash Used by Investing Activities              (375)       (7,138)         (728)          5            47        (8,189)
</TABLE>



                                     F - 22
<PAGE>   45
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)


               SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1999



<TABLE>
<CAPTION>
                                                                 GUARANTOR SUBSIDIARIES      NON-
                                                                 ----------------------   GUARANTOR
                                                    INDESCO                               SUBSIDIARY
                                                 INTERNATIONAL     AFA
                                                      INC.       PRODUCTS       CSI         POLYTEK    ELIMINATIONS   CONSOLIDATED
<S>                                              <C>             <C>          <C>         <C>          <C>            <C>
Cash Flows From Financing Activities:
 Proceeds from Senior Subordinated Notes
   and Term Loans                                    6,187            --           --            --           --          6,187
 Repayment of Long-Term Debt                            --            --           --        (2,323)          --         (2,323)
 Advances from Parent                                  500          (496)       2,078            --       (2,082)            --
                                                   -------       -------      -------       -------      -------        -------

      Net Cash Provided (Used) by Financing
        Activities                                   6,687          (496)       2,078        (2,323)      (2,082)         3,864
                                                   -------       -------      -------       -------      -------        -------

Effect of Exchange Rate Change on Cash                  --            --           --           (28)          --            (28)

Net Increase (Decrease) in Cash and Cash
   Equivalents                                         146          (949)        (535)          146           --         (1,192)

Cash and Cash Equivalents at Beginning of Year          68         1,000          365           136           --          1,569
                                                   -------       -------      -------       -------      -------        -------

 CASH AND CASH EQUIVALENTS AT END OF PERIOD        $   214       $    51      $  (170)      $   282      $    --        $   377
                                                   =======       =======      =======       =======      =======        =======
</TABLE>




                                     F - 23
<PAGE>   46
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)


                    SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
                                DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                              GUARANTOR SUBSIDIARIES
                                                              ----------------------
                                              INDESCO                                    NON-GUARANTOR
                                            INTERNATIONAL,       AFA           CSI         POLYTEK &
                                                 INC.          PRODUCTS        U.S.        CSI EUROPE    ELIMINATIONS   CONSOLIDATED
<S>                                         <C>               <C>           <C>          <C>             <C>            <C>
ASSETS

Current Assets:
    Cash and Cash Equivalents                 $      68       $   1,000     $     365      $     136       $      --      $   1,569
    Accounts Receivable, Net                      8,802          10,409        14,829          3,731         (23,830)        13,941
    Inventories                                      --           5,799         4,104          3,549              (5)        13,447
    Prepaid Expenses and Other Assets                67               1            38            559              --            665
                                              ---------       ---------     ---------      ---------       ---------      ---------

        Total Current Assets                      8,937          17,209        19,336          7,975         (23,835)        29,622

Property, Plant and Equipment, Net                   --          17,552        35,946         12,387            (375)        65,510
Excess Cost Over Fair Value of Net
Assets Acquired, Net                                 --          12,009        53,431         (4,487)             --         60,953
Patents and Other Intangibles, Net                   --           4,221         3,517             --             375          8,113
Deferred Financing Costs                          6,165              --            --             --              --          6,165
Investment in Subsidiaries                       19,778              --           (63)           680         (19,715)           680
Other Assets                                    129,928             879         8,110             --        (138,554)           363
                                              ---------       ---------     ---------      ---------       ---------      ---------

    TOTAL ASSETS                              $ 164,808       $  51,870     $ 120,277      $  16,555       $(182,104)     $ 171,406
                                              =========       =========     =========      =========       =========      =========
</TABLE>





                                     F - 24
<PAGE>   47
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)

                    SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
                                DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                  GUARANTOR SUBSIDIARIES      NON-
                                                                  ----------------------    GUARANTOR
                                                    INDESCO          AFA          CSI       POLYTEK &
                                                 INTERNATIONAL,   PRODUCTS        U.S.      CSI EUROPE   ELIMINATIONS   CONSOLIDATED
                                                      INC.
<S>                                              <C>              <C>          <C>          <C>          <C>            <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
    Current Portion of L.T. Debt and
         Capital Lease Obligations                 $      --      $      --    $      --    $   1,085      $      --      $   1,085
    Credit Facilities                                     --             --           --        3,613             --          3,613
    Accounts and Drafts Payable                           48          1,937        4,180        1,582           (145)         7,602
    Income Taxes Payable                                   1             35           --           --             --             36
    Other Accrued Expenses                            26,077            953       10,269        2,774        (32,963)         7,110
                                                   ---------      ---------    ---------    ---------      ---------      ---------

        Total Current Liabilities                     26,126          2,925       14,449        9,054        (33,108)        19,446

Advances from Parent                                      --         40,423       89,505          (63)      (129,865)            --
Long-Term Debt & Capitalized Lease Obligations       157,058             --                     6,358             --        163,416
Deferred Income Taxes                                     --            811        7,815          647         (8,626)           647
                                                   ---------      ---------    ---------    ---------      ---------      ---------

    Total Liabilities                                183,184         44,159      111,769       15,996       (171,599)       183,509

Stockholders' Deficit:
    Common Stock                                      (2,500)         3,000                       242           (742)            --
    Additional Paid-In Capital                            --          5,521       15,795          510        (16,764)         5,062
    Accumulated Deficit                              (15,876)          (810)      (7,287)        (261)         7,001        (17,233)
    Accumulated Other Comprehensive Income                --             --           --           68             --             68
                                                   ---------      ---------    ---------    ---------      ---------      ---------

        Total Stockholders' Deficit                  (18,376)         7,711        8,508          559        (10,505)       (12,103)
                                                   ---------      ---------    ---------    ---------      ---------      ---------
    TOTAL LIABILITIES AND
            STOCKHOLDERS' DEFICIT                  $ 164,808      $  51,870    $ 120,277    $  16,555      $(182,104)     $ 171,406
                                                   =========      =========    =========    =========      =========      =========
</TABLE>





                                     F - 25
<PAGE>   48
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)

               SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                            GUARANTOR SUBSIDIARIES    NON-GUARANTOR
                                                            ----------------------    SUBSIDIARIES
                                             INDESCO         AFA            CSI         POLYTEK &
                                          INTERNATIONAL,   PRODUCTS         U.S.        CSI EUROPE     ELIMINATIONS   CONSOLIDATED
                                               INC.

<S>                                       <C>              <C>           <C>          <C>              <C>            <C>
Net Sales                                   $      --      $  30,410     $  49,133      $  28,238       $    (216)     $ 107,565

Cost of Sales                                      --         21,646        35,008         23,480            (211)        79,923
                                            ---------      ---------     ---------      ---------       ---------      ---------

      Gross Profit                                             8,764        14,125          4,758              (5)        27,642

Operating Expenses                              1,905          2,375        12,451          4,393                         21,124
                                            ---------      ---------     ---------      ---------       ---------      ---------

      Income from Operations                   (1,905)         6,389         1,674            365              (5)         6,518

Other (Income) Expense
      Interest                                  2,406          3,743         8,835            543                         15,527
      Other                                        13           (205)           33             64             (22)          (117)
      Equity in Income of Consolidated
        Subsidiaries                            6,984             --            --            (39)         (6,984)           (39)
                                            ---------      ---------     ---------      ---------       ---------      ---------

       Total Other Expense, Net                 9,403          3,538         8,868            568          (7,006)        15,371

       Income (Loss) Before
       Extraordinary Item
         and Provision for Income Taxes       (11,308)         2,851        (7,194)          (203)          7,001         (8,853)

Provision for Income Taxes                          1             64            93           (157)             --              1
                                            ---------      ---------     ---------      ---------       ---------      ---------

       Income (Loss) Before
       Extraordinary Item                     (11,309)         2,787        (7,287)           (46)          7,001         (8,854)

Extraordinary Item - Loss on Early
      Extinguishment of Debt                    4,567          2,438            --             --              --          7,005
                                            ---------      ---------     ---------      ---------       ---------      ---------

         Net Income (Loss)                  $ (15,876)     $     349     $  (7,287)     $     (46)      $   7,001      $ (15,859)
                                            =========      =========     =========      =========       =========      =========
</TABLE>




                                     F - 26
<PAGE>   49
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)

               SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                                 GUARANTOR SUBSIDIARIES
                                                                 ----------------------   NON-GUARANTOR
                                                    INDESCO        AFA          CSI       SUBSIDIARIES
                                                 INTERNATIONAL   PRODUCTS       U.S.       POLYTEK &
                                                      INC.                                 CSI EUROPE     ELIMINATIONS  CONSOLIDATED
<S>                                              <C>             <C>         <C>          <C>             <C>           <C>
Cash Flows From Operating Activities:
 Net Income (Loss)                                 $ (15,876)    $    349    $  (7,287)    $     (46)      $   7,001     $ (15,859)
 Less: Extraordinary Item                              5,518        1,487           --            --              --         7,005
                                                   ---------     --------    ---------     ---------       ---------     ---------

                                                     (10,358)       1,836       (7,287)          (46)          7,001        (8,854)

 Adjustments to Reconcile Net Income (Loss)
   Provided (Used) by Operating Activities:
    Depreciation                                          --        2,409        3,154         1,524              --         7,087
    Amortization                                          --          767        2,023          (145)             --         2,645
    Plant Closedown Costs                                 --           --        5,344            --              --         5,344
    Deferred Income Taxes                                 --           --           --           115              --           115
    Equity in (Earnings) Loss of Subsidiaries
     and Affiliate                                     6,984           --           --           (39)         (6,984)          (39)
Changes in Operating Assets and Liabilities:
 Accounts Receivable                                  (8,802)      (6,476)     (14,829)       (1,256)         23,711        (7,652)
 Inventories                                              --          924          116           731               5         1,776
 Prepaid Expenses and Other Assets                       366          112          345            91              --           914
 Accounts and Drafts Payable                              48          803        1,965           106            (145)        2,777
 Income Taxes Payable                                      1           35           --          (393)                         (357)
 Other Accrued Expenses                              (19,787)        (478)       6,830         2,727          12,043         1,335
                                                   ---------     --------    ---------     ---------       ---------     ---------

      Net Cash Provided (Used) by Operating
        Activities                                   (31,548)         (68)      (2,339)        3,415          35,631         5,091

Cash Flows From Investing Activities:
 Acquisition of CSI                                  (93,568)          --           --            --              --       (93,568)
 Expenditures for Property, Plant and
   Equipment                                              --         (691)     (11,410)       (2,326)          1,503       (12,924)
 Proceeds from Disposal of Property, Plant and
   Equipment                                              --           25           14            73             (25)           87
   Other                                                  --           --         (563)           --              --          (563)
                                                   ---------     --------    ---------     ---------       ---------     ---------

      Net Cash Used by Investing Activities          (93,568)        (666)     (11,959)       (2,253)          1,478      (106,968)
</TABLE>



                                     F - 27
<PAGE>   50
                  Indesco International, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             (Dollars in Thousands)


               SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                                 GUARANTOR SUBSIDIARIES   NON-GUARANTOR
                                                    INDESCO         AFA                     SUBSIDIARY
                                                 INTERNATIONAL    PRODUCTS      CSI          POLYTEK      ELIMINATIONS  CONSOLIDATED
                                                      INC.
<S>                                              <C>              <C>         <C>         <C>             <C>           <C>
Cash Flows From Financing Activities:
 Proceeds from Senior Subordinated Notes
   and Term Loans                                    280,000            --           --            --             --       280,000
 Repayment of Long-Term Debt                        (135,000)      (38,000)          --          (643)            --      (173,643)
 Payments of Deferred Financing Costs                (12,116)           --           --            --             --       (12,116)
 Net (Repayment) Borrowings Under Revolving
   Credit Agreements                                  12,058        (2,542)          --         1,113             --        10,629
 Return of Capital to Parent                          (2,500)           --           --            --             --        (2,500)
 Advances from Parent                                (17,258)       42,134       14,663        (2,430)       (37,109)            0
                                                   ---------     ---------    ---------     ---------      ---------     ---------

      Net Cash Provided (Used) by Financing
        Activities                                   125,184         1,592       14,663        (1,960)       (37,109)      102,370
                                                   ---------     ---------    ---------     ---------      ---------     ---------

Effect of Exchange Rate Change on Cash                    --            --           --            25             --            25

Net Increase (Decrease) in Cash and Cash
 Equivalents                                              68           858          365          (773)            --           518

Cash and Cash Equivalents at Beginning of Year            --           142           --           909             --         1,051
                                                   ---------     ---------    ---------     ---------      ---------     ---------

 CASH AND CASH EQUIVALENTS AT END OF PERIOD        $      68     $   1,000    $     365     $     136      $      --     $   1,569
                                                   =========     =========    =========     =========      =========     =========
</TABLE>




                                     F - 28
<PAGE>   51

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
AFA Holdings Co. and Subsidiaries:

     We have audited the accompanying combined balance sheet of AFA Holdings Co.
and Subsidiaries (the "Company," see Note 1) as of December 31, 1997, and the
related combined statements of operations, stockholders' equity, and cash flows
for the five month period then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of AFA Holdings Co. and
Subsidiaries as of December 31, 1997 and the combined results of their
operations and their cash flows for the five month period then ended, in
conformity with generally accepted accounting principles.

Coopers & Lybrand L.L.P.

Charlotte, North Carolina
March 5, 1998, except as to the first paragraph of Note 12 for which the date is
April 23, 1998.

                                      F-29
<PAGE>   52

                       AFA HOLDINGS CO. AND SUBSIDIARIES

                             COMBINED BALANCE SHEET
                               DECEMBER 31, 1997
                                 (IN THOUSANDS)

<TABLE>
<S>                                                           <C>
ASSETS:
Current assets:
  Cash and cash equivalents.................................  $ 1,051
  Accounts receivable, net of allowances of $28.............    6,821
  Inventories...............................................    9,918
  Prepaid expenses and other................................      605
                                                              -------
          Total current assets..............................   18,395
Property, plant and equipment...............................   28,009
Excess of cost over fair value of net assets acquired,
  net.......................................................    6,365
Patents and other intangibles, net..........................    5,834
Deferred financing costs....................................    1,628
Other assets................................................      656
                                                              -------
          Total assets......................................  $60,887
                                                              =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
  Current portion of long-term debt.........................  $ 2,379
  Notes payable.............................................    4,762
  Accounts and drafts payable...............................    2,410
  Other accrued expenses....................................    3,334
                                                              -------
          Total current liabilities.........................   12,885
Subordinated debt...........................................    3,000
Long-term debt..............................................   41,154
Deferred income taxes.......................................      632
                                                              -------
          Total liabilities.................................   57,671
                                                              -------
Commitments and contingencies
Stockholders' equity:
  Common stock..............................................      242
  Additional paid-in capital................................    4,320
  Accumulated deficit.......................................   (1,374)
  Accumulated other comprehensive income....................       28
                                                              -------
          Total stockholders' equity........................    3,216
                                                              -------
          Total liabilities and stockholders' equity........  $60,887
                                                              =======
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-30
<PAGE>   53

                       AFA HOLDINGS CO. AND SUBSIDIARIES

                        COMBINED STATEMENT OF OPERATIONS
               FOR THE FIVE MONTH PERIOD ENDED DECEMBER 31, 1997
                                 (IN THOUSANDS)

<TABLE>
<S>                                                           <C>
Net sales...................................................  $20,108
Cost of sales...............................................   16,595
                                                              -------
          Gross profit......................................    3,513
Selling, general and administrative expenses................    2,862
                                                              -------
          Income from operations............................      651
Other expense (income):
  Interest..................................................    2,231
  Other.....................................................      (54)
                                                              -------
          Total other expense...............................    2,177
                                                              -------
Loss before income tax benefit..............................   (1,526)
Income tax benefit..........................................     (152)
                                                              -------
          Net loss..........................................  $(1,374)
                                                              =======
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-31
<PAGE>   54

                       AFA HOLDINGS CO. AND SUBSIDIARIES

                   COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
               FOR THE FIVE MONTH PERIOD ENDED DECEMBER 31, 1997
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                      COMMON STOCK                                  ACCUMULATED
                                   ------------------   ADDITIONAL                     OTHER           TOTAL
                                               AFA       PAID-IN     ACCUMULATED   COMPREHENSIVE   STOCKHOLDERS'
                                   POLYTEK   HOLDINGS    CAPITAL       DEFICIT        INCOME          EQUITY
                                   -------   --------   ----------   -----------   -------------   -------------
<S>                                <C>       <C>        <C>          <C>           <C>             <C>
Balance, August 1, 1997..........   $242        $         $4,320                                      $ 4,562
                                                                                                      -------
Net loss.........................                                      $(1,374)                        (1,374)
Translation adjustment...........                                                       $28                28
                                                                                                      -------
Comprehensive income.............                                                                      (1,346)
                                    ----        --        ------       -------          ---           -------
Balance, December 31, 1997.......   $242        $         $4,320       $(1,374)         $28           $ 3,216
                                    ====        ==        ======       =======          ===           =======
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-32
<PAGE>   55

                       AFA HOLDINGS CO. AND SUBSIDIARIES

                        COMBINED STATEMENT OF CASH FLOWS
               FOR THE FIVE MONTH PERIOD ENDED DECEMBER 31, 1997
                                 (IN THOUSANDS)

<TABLE>
<S>                                                           <C>
Cash flows from operating activities:
  Net loss..................................................  $(1,374)
  Adjustments to reconcile net loss to net cash provided by
     operating activities:
     Depreciation...........................................    1,605
     Amortization...........................................      256
     Deferred income taxes..................................     (180)
     Changes in assets and liabilities:
       Accounts receivable..................................     (248)
       Inventories..........................................    1,434
       Prepaid expenses and other...........................       31
       Accounts and drafts payable..........................     (600)
       Other accrued expenses...............................      524
                                                              -------
          Net cash provided by operating activities.........    1,448
                                                              -------
Cash flows from investing activities:
  Expenditures for property, plant and equipment............     (661)
                                                              -------
          Net cash used in investing activities.............     (661)
                                                              -------
Cash flows from financing activities:
  Repayment of debt.........................................     (770)
                                                              -------
          Net cash used in financing activities.............     (770)
                                                              -------
Effect of exchange rate changes on cash.....................       34
                                                              -------
Net increase in cash and cash equivalents...................       51
Cash and cash equivalents at beginning of period............    1,000
                                                              -------
          Cash and cash equivalents at end of period........  $ 1,051
                                                              =======
Cash paid during the period for:
  Interest..................................................  $ 1,378
  Income taxes..............................................        0
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-33

<PAGE>   56

                       AFA HOLDINGS CO. AND SUBSIDIARIES

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                             (AMOUNTS IN THOUSANDS)

1.  ORGANIZATION:

AFA HOLDINGS CO.

     AFA Holdings Co. ("AFA") manufactures and sells finger activated liquid
dispensing devices ("trigger sprayers"). AFA was formed in July 1997 to acquire,
through a wholly-owned subsidiary, the assets and liabilities of AFA Products,
Inc. ("Products"), located in Forest City, North Carolina. Concurrent with this
transaction, Dejanu B.V., acquired the outstanding capital stock of AFA Polytek
B.V. ("Polytek") based in The Netherlands. AFA and Polytek are collectively
referred to herein as the "Company." Products and Polytek were formerly
operating subsidiaries of W.T.I., Inc. ("WTI"). AFA and Dejanu B.V. are under
common control and have been presented on a combined basis.

     The acquisition of Products for an aggregate purchase price of $46,938
(including expenses of $1,926), and the acquisition of Polytek for approximately
$800 and refinancing of debt of approximately $7,900, resulted in the following
changes in financial position:

<TABLE>
<CAPTION>
            ASSETS:                               LIABILITIES AND EQUITY:
<S>                              <C>          <C>                              <C>
Cash and receivables...........   $7,526      Current liabilities............   $5,620
Inventories....................   11,223      Bank debt......................   48,771
Fixed assets...................   28,646      Subordinated debt..............    3,000
Patents........................    6,000      Other liabilities..............      942
Other assets...................    2,885      Equity.........................    4,562
Goodwill.......................    6,615
                                 -------                                       -------
                                 $62,895                                       $62,895
                                 =======                                       =======
</TABLE>

     The WTI businesses were acquired through U.S. dollar bank debt of $38,000,
subordinated debt from shareholders of $3,000, an equity investment of $3,752,
issuance of warrants with a value of $810 to various lenders and borrowings
under lines of credit.

     The acquisitions have been accounted for using the purchase method of
accounting and, accordingly, the purchase price has been allocated to the assets
purchased and liabilities assumed based upon the fair values at the date of
acquisition.

ACQUISITION OF CONTINENTAL SPRAYERS AND AFFILIATES

     Effective February 1, 1998, AFA acquired certain assets and liabilities of
Continental Sprayers and Affiliates ("CSI"), a division of Contico
International, Inc. CSI also manufactures and sells trigger sprayers. AFA
acquired CSI for $92,947 in cash, paid outstanding debt of Products of $39,567
and paid fees of $4,980. Such amounts were paid through the issuance of term
loans of $135,000 and borrowings under a revolving credit facility.

     The assets acquired and liabilities assumed of CSI based on the December
31, 1997 value thereof are as follows:

<TABLE>
<S>                                                          <C>
Cash and receivables.......................................  $   767
Inventory..................................................    5,309
Fixed assets...............................................   27,789
Other assets...............................................    1,135
Goodwill...................................................   60,639
Payables...................................................   (2,692)
                                                             -------
          Purchase price...................................  $92,947
                                                             =======
</TABLE>

                                       F-34
<PAGE>   57
                       AFA HOLDINGS CO. AND SUBSIDIARIES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

     The acquisitions have been accounted for using the purchase method of
accounting. The Company has increased the value of inventory by $850 in
accordance with Accounting Principles Board Opinion No. 16 and has recorded
fixed assets and identifiable intangibles at their net historical book value,
pending completion of appraisals. Differences, if any, between these amounts and
the amounts resulting from appraisals and valuations of these assets, which have
not yet been completed, will be reflected as adjustments to goodwill, which may
increase or decrease related depreciation and amortization charges.

     Concurrent with the acquisition of CSI, Polytek became an indirect
wholly-owned subsidiary of AFA. AFA agreed to issue to AFA International Limited
and Warcop Investments Ltd. (a company affiliated with a shareholder), 820,500
shares and 273,500 shares, respectively, of a new class of Preferred Stock
having a liquidation and redemption value of $10 per share and providing for
dividends at an annual rate of 7% of the liquidation value thereof. As a result
of the common control of AFA and Polytek this transaction has been recorded at
its historical cost basis.

     Condensed pro forma unaudited combined results of operations of AFA, CSI
and Polytek for the years ended December 31, 1997 and 1996 as if the
transactions had occurred on January 1, 1996 are as follows:

<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                                         ------------------------
                                                            1997          1996
                                                         ----------    ----------
<S>                                                      <C>           <C>
Net sales............................................     $114,531      $113,139
                                                          ========      ========
Net income...........................................     $  1,424      $    493
                                                          ========      ========
</TABLE>

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF COMBINATION

     The combined financial statements include the accounts of AFA and Polytek
and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated.

REVENUE RECOGNITION

     The Company recognizes revenue upon shipment of its products.

INVENTORIES

     Inventories are stated at the lower of cost or market. Cost is determined
on the first-in, first-out (FIFO) basis.

PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost. Depreciation is provided
primarily on a straight-line basis over the estimated useful lives of the
assets. Maintenance and repairs are charged to income as incurred and
betterments that extend the useful life are capitalized. Upon retirement or
sale, the cost and accumulated depreciation are eliminated from the respective
accounts, and the gain or loss, if any, is included in income.

     If events or changes in circumstances indicate that the carrying amount of
a long-lived asset may not be recoverable, the Company estimates the future cash
flows expected to result from the use of the asset and its eventual disposition.
If the sum of the expected future cash flows (undiscounted and without interest
charges) is less than the carrying amount of the long-lived asset, an impairment
loss is recognized. To date, no impairment losses have been recognized.

RESEARCH AND DEVELOPMENT

     The cost of research and development expenditures is expensed as incurred.

                                       F-35
<PAGE>   58
                       AFA HOLDINGS CO. AND SUBSIDIARIES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Significant
estimates in the financial statements relate to the allowance for uncollectible
accounts receivable, the allowance for slow-moving and obsolete inventories, the
allowance for sales returns and the valuation allowance for deferred tax assets.

INCOME TAXES

     The Company uses the asset and liability approach to financial accounting
and reporting for income taxes. Deferred income tax assets and liabilities are
computed annually for differences between the financial statement and tax bases
of assets and liabilities that will result in taxable or deductible amounts in
the future. Such deferred income tax asset and liability computations are based
on enacted tax laws and rates applicable to periods in which the differences are
expected to affect taxable income. A valuation allowance is established when
necessary to reduce deferred tax assets to the amount expected to be realized.

FOREIGN CURRENCY TRANSLATION

     Assets and liabilities of Polytek are translated at exchange rates in
effect at the balance sheet date ($.4935 per guilder at December 31, 1997).
Items of revenue and expense are translated at average exchange rates during the
period ($.4990 per guilder for the five months of 1997 presented). Translation
adjustments, resulting from translating Polytek's financial statements into
dollars, are reported in the equity section of the accompanying balance sheet
under the caption "cumulative translation adjustment."

EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED

     Net excess of cost over fair value of net assets acquired is being
amortized on a straight-line basis over a period of thirty years. Accumulated
amortization was $90 as of December 31, 1997. The Company assesses the
recoverability of this intangible asset by determining whether the amortization
of the goodwill balance over its remaining life can be recovered through
forecasted future operations. Impairment is evaluated by comparing future cash
flows (undiscounted and without interest charges) expected to result from the
use or sale of the asset and its eventual disposition, to the carrying amount of
the asset. To date, no impairment losses have been recognized.

PATENTS AND OTHER INTANGIBLE ASSETS

     The cost of patents acquired and other intangible assets, consisting
primarily of an exclusive sales agreement and royalty agreements, are being
amortized using the straight-line method over the estimated useful lives of
fifteen years. Accumulated amortization was $166 at December 31, 1997.

DEFERRED FINANCING FEE

     Costs incurred to obtain financing are amortized using the straight-line
method (which approximates the interest method) over the term of the related
debt.

                                       F-36
<PAGE>   59
                       AFA HOLDINGS CO. AND SUBSIDIARIES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

DEFERRED TOOLING

     From time to time, the Company purchases certain molds and equipment
(tooling) to meet specific customer product requirements. These tooling costs
are capitalized by the Company and are amortized into operations over the
estimated life of the sales contract period.

CASH EQUIVALENTS

     The Company considers demand deposits and time deposits with original
maturities of three months or less as equivalent to cash.

RECENTLY ISSUED ACCOUNTING STANDARDS

     The Company has adopted Statement of Financial Accounting Standards No.
130, Reporting Comprehensive Income. This statement requires that an enterprise
classify items of other comprehensive income by their nature in the financial
statements and display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the equity
section of the balance sheet.

     Statement of Financial Accounting Standards No. 131, Disclosure About
Segments of an Enterprise and Related information, is effective for years
beginning after December 15, 1997. This statement requires that a public
business enterprise report financial and descriptive information about its
reportable business segments. Management of the Company believes that the future
adoption of this statement will not have a significant impact on the Company's
combined financial position, results of operations or cash flows, but will
result in additional disclosure.

3.  INVENTORIES:

     The components of inventories as of December 31, 1997 are summarized below:

<TABLE>
<S>                                                           <C>
Raw material................................................  $2,172
Work-in-process.............................................   3,346
Finished goods..............................................   4,400
                                                              ------
                                                              $9,918
                                                              ======
</TABLE>

4.  PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment, summarized by major classification and
estimated useful lives for depreciation purposes, is as follows:

<TABLE>
<CAPTION>
                                                               USEFUL        DECEMBER 31,
                                                            LIVES (YEARS)        1997
                                                            -------------    ------------
<S>                                                         <C>              <C>
Land....................................................                       $ 1,293
Buildings...............................................       30 - 40           7,940
Machinery and equipment.................................        5 - 7           10,095
Molds...................................................          7              8,469
Furniture and fixtures..................................        5 - 7            1,582
Vehicles................................................          5                  3
Construction in progress................................         --                225
                                                                               -------
                                                                                29,607
Less accumulated depreciation...........................                        (1,598)
                                                                               -------
Property, plant and equipment, net......................                       $28,009
                                                                               =======
</TABLE>

                                      F-37
<PAGE>   60
                       AFA HOLDINGS CO. AND SUBSIDIARIES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

     Construction in progress primarily consists of additions and improvements
to buildings, molds and machinery.

5.  DEBT:

     Debt consists of the following as of December 31, 1997:

<TABLE>
<S>                                                           <C>
WORKING CAPITAL BORROWINGS(A):
  Working capital line of credit -- dollar denominated,
     bearing interest at 9.22% at December 31, 1997.........  $ 2,541
  Working capital line of credit -- guilder denominated,
     bearing interest at 4.75% at December 31, 1997.........    2,221
                                                              -------
          Total working capital borrowings..................  $ 4,762
                                                              =======
LONG-TERM DEBT:
  Senior mortgage note -- dollar denominated, bearing
     interest at 9.72% at December 31, 1997(b)..............   28,000
  Senior mortgage note -- dollar denominated, bearing
     interest at 10.97% at December 31, 1997(c).............    6,000
  Senior mortgage note -- dollar denominated, bearing
     interest at 11.86% at December 31, 1997(d).............    4,000
  Subordinated note payable -- dollar denominated, bearing
     interest at 11.5% at December 31, 1997(e)..............    2,000
  Subordinated note payable -- dollar denominated, bearing
     interest at 11.5% at December 31, 1997(f)..............    1,000
  ABN/AMRO loan -- guilder denominated, bearing interest at
     6.1% at December 31, 1997(g)...........................    4,090
  Senior mortgage note -- guilder denominated, payable in
     quarterly principal installments of $86,363 (175,000
     guilders), bearing interest at 5.5% at December 31,
     1997(h)................................................    1,209
  Installment notes payable -- guilder denominated, bearing
     interest at rates ranging from 7.1% to 7.75%...........      234
                                                              -------
                                                               46,533
Less current portion........................................    2,379
                                                              -------
          Total long-term debt..............................  $44,154
                                                              =======
</TABLE>

  (a) WORKING CAPITAL BORROWINGS:

     At December 31, 1997, the Company had loan and security agreements (the
"Agreements" or "Term Loans") with a U.S. lender and Dutch bank that provided
for working capital lines of credit, denominated in both dollars and guilders.

     Borrowings under the dollar denominated working capital line of credit,
which had a maximum amount of $7,000 were limited to 85% of eligible accounts
receivable (as defined), and 60% of eligible inventories (as defined).
Borrowings under the guilder denominated line of credit had a maximum amount of
11,000 guilders ($5,429 at December 31, 1997.)

     Interest payments on the dollar denominated working capital line of credit
are due monthly, beginning September 1, 1997 at a rate of LIBOR plus 3.25%. The
due date of the dollar denominated working capital line of credit is July 29,
2004. The dollar denominated working capital line of credit agreement contained
certain covenants, the most restrictive of which limit capital expenditures, set
forth maximum leverage ratios and set forth minimum debt coverage ratios and
earnings requirements.

                                      F-38
<PAGE>   61
                       AFA HOLDINGS CO. AND SUBSIDIARIES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

     Interest payments on the guilder denominated line of credit are due
quarterly. Borrowings under this line of credit are collateralized by a lien on
the facility. This line of credit contains certain prohibitions, the most
significant of which relate to minimum net worth requirements.

LONG-TERM DEBT

  (b) TERM LOAN -- TRANCHE A -- DOLLAR DENOMINATED

     At December 31, 1997, the Company had a Term Loan payable of $28,000 to a
bank. Quarterly installments of varying amounts are due beginning April 1998
through July 2004. Interest payments are due monthly, beginning September 1,
1997 at a rate of LIBOR plus 3.75%. The Term Loan agreement contained certain
covenants, the most restrictive of which limit capital expenditures, set forth
maximum leverage ratios and set forth minimum debt coverage ratios and earnings
requirements.

  (c) TERM LOAN -- TRANCHE B -- DOLLAR DENOMINATED

     At December 31, 1997, the Company had a Term Loan of $6,000 to a bank.
Quarterly installments of $1,500 are due beginning July 2003 through July 2004.
The Term Loan agreement contains a clause requiring quarterly payments to begin
upon repayment in full of the Term Loan described in (b) above. Interest
payments are due monthly, beginning September 1, 1997 at a rate of LIBOR plus
5.00%. The Term Loan agreement contains certain covenants, the most restrictive
of which limit capital expenditures, set forth maximum leverage ratios and set
forth minimum debt coverage ratios and earnings requirements.

  (d) TERM LOAN -- TRANCHE C -- DOLLAR DENOMINATED

     At December 31, 1997, the Company had a Term Loan payable of $4,000 to a
bank. Quarterly installments of $1,000 are due beginning July 2004 through July
2005. The Term Loan agreement contains a clause requiring quarterly payments to
begin upon repayment in full of the Term Loan described in (b) and (c) above.
Interest payments are due monthly, beginning September 1, 1997 at a rate of
LIBOR plus 5.90%. The Term Loan agreement contains certain covenants the most
restrictive of which limit capital expenditures, set forth maximum leverage
ratios and set forth minimum debt coverage ratios and earnings requirements.

     Warrants, with a value of $525, were issued in conjunction with execution
of this Term Loan and are recorded as deferred financing costs. Under the terms
of these warrants, the bank was granted the option to purchase 175 shares of
Class B Common Stock at an exercise price of $.01 per share. These warrants
expire on July 29, 2007. No options have been exercised under these warrants as
of December 31, 1997.

  (e) SUBORDINATED NOTE PAYABLE -- DOLLAR DENOMINATED

     On July 29, 1997, the Company borrowed $2,000, with interest at 11.5%, from
Waldock Limited, an entity affiliated with a shareholder of AFA. The principal
amount of the loan is due the earlier of July 30, 2005 or the date on which the
Term Loan has been paid in full. In accordance with certain covenants contained
in the Term Loan agreements, interest payments have been deferred. Accrued
interest payable on this obligation amounted to $98.

     Warrants, with a value of $285, were issued in conjunction with execution
of this note and are recorded as deferred financing costs. Under the terms of
these warrants, Waldock Limited was granted the option to purchase 95 shares of
Class A Common Stock at an exercise price of $.01 per share. These warrants
expire on July 29, 2007. No options have been exercised under these warrants as
of December 31, 1997.

                                      F-39
<PAGE>   62
                       AFA HOLDINGS CO. AND SUBSIDIARIES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

  (f) SUBORDINATED NOTE PAYABLE -- DOLLAR DENOMINATED

     On July 29, 1997, the Company borrowed $1,000, with interest at 11.5%, from
AFA International Limited, an entity affiliated with a shareholder of AFA. The
principal amount of the loan is due the earlier of July 30, 2005 or the date on
which the Term Loans have been paid in full. In accordance with certain
covenants contained in the Term Loan agreements, interest payments have been
deferred. Accrued interest payable on this obligation amounted to $49.

  (g) ABN/AMRO LOAN

     Polytek has a credit facility with the ABN AMRO Bank, The Netherlands. This
credit facility includes a loan of $4,195 (8,500 guilders) requiring quarterly
payments of $105 (213 guilders) through 2007. This note is collateralized by a
lien on the facility. This note contains certain prohibitions, the most
significant of which relate to minimum net worth requirements.

  (h) SENIOR MORTGAGE NOTE

     In connection with the construction of a manufacturing facility in 1991,
Polytek obtained a 3,500 guilder mortgage from ABN Bank, The Netherlands.
Borrowings under this mortgage agreement are collateralized by a lien on the
facility.

     In connection with the acquisition of CSI, the Company refinanced its
dollar denominated bank debt ((a), (b), (c) and (d) above) with a new credit
facility which provides for up to $135,000 of term loans and a $30,000 revolving
credit facility, that have various interest rates based upon type and level of
borrowings. The facility contains certain covenants, the most restrictive of
which limits capital expenditures, sets forth maximum leverage ratios, debt
coverage and income ratios.

COLLATERAL AND DEBT COVENANTS UNDER LOAN AGREEMENTS OUTSTANDING AT DECEMBER 31,
1997

     Under the terms of the various financing arrangements described above at
December 31, 1997, substantially all of the Company's assets are pledged as
collateral, including, but not limited to, the stock of the various
subsidiaries. In addition, the various agreements contained restrictive
covenants, as defined therein, including limits on capital expenditures and
transactions with related parties, maintenance of certain minimum levels of cash
flow earnings and leverage ratios, among others.

AGGREGATE ANNUAL MATURITIES

     Aggregate annual maturities of debt after December 31, 1997 are as follows:

<TABLE>
<S>                                                          <C>
1998.......................................................  $ 2,379
1999.......................................................    3,616
2000.......................................................    3,756
2001.......................................................    4,756
2002.......................................................    5,756
Thereafter.................................................   26,270
                                                             -------
                                                             $46,533
                                                             =======
</TABLE>

                                      F-40
<PAGE>   63
                       AFA HOLDINGS CO. AND SUBSIDIARIES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

6.  INCOME TAXES:

     Pre-tax loss, for the five months ended December 31, 1997, consists of:

<TABLE>
<S>                                                          <C>
United States..............................................  $(1,159)
Foreign....................................................     (367)
                                                             -------
          Total pre-tax loss...............................   (1,526)
                                                             =======
Current expense............................................  $    28
Deferred benefit...........................................     (180)
                                                             -------
                                                             $  (152)
                                                             =======
</TABLE>

     The income tax provision differs from the amount computed by applying the
U.S. federal statutory income tax rate of 34% to the pre-tax loss. The computed
amount, for the five months ended December 31, 1997, is reconciled to the income
tax benefit as follows:

<TABLE>
<S>                                                           <C>
Tax at federal statutory rate...............................  $(519)
Increase in valuation allowance.............................    417
Other.......................................................    (50)
                                                              -----
          Income tax benefit................................  $(152)
                                                              =====
</TABLE>

     The approximate tax effect of temporary differences that gave rise to the
Company's deferred income tax assets and liabilities at December 31, 1997 is as
follows:

<TABLE>
<CAPTION>
                                                         ASSETS    LIABILITIES     TOTAL
                                                         ------    -----------    -------
<S>                                                      <C>       <C>            <C>
Property, plant and equipment..........................              $(1,008)     $(1,008)
Intangible assets......................................                  (91)         (91)
Net operating loss credit carryforward.................  $ 775                        775
Accrued management fees................................     49                         49
Accrued incentive......................................     53                         53
Other..................................................      7                          7
                                                         -----       -------      -------
Total before valuation allowance.......................    884        (1,099)        (215)
                                                         -----       -------      -------
Valuation allowance....................................   (417)                      (417)
                                                         -----       -------      -------
          Total deferred taxes.........................  $ 467       $(1,099)     $  (632)
                                                         =====       =======      =======
</TABLE>

     The deferred tax assets and liabilities are broken down between current and
noncurrent amounts in the accompanying balance sheets according to the
classification of the related asset and liability or in the case of tax loss
carryforwards, based on their expected utilization date.

7.  EQUITY:

AFA HOLDINGS

     Class A -- Class A common stock has 100% of the voting rights and is
convertible (at the option of the stockholder) into Class B stock on a share per
share basis. As of December 31, 1997, there were 730 shares of Class A common
stock outstanding and 5,000 shares authorized, with a par value of $.01.

     Class B -- Class B common stock is non-voting and is convertible (at the
option of the stockholder) into Class A stock on a share per share basis. There
are no Class B shares outstanding and 3,000 shares authorized, with a par value
of $.01 per share.

                                      F-41
<PAGE>   64
                       AFA HOLDINGS CO. AND SUBSIDIARIES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

POLYTEK

     Common stock -- As of December 31, 1997, there were 980 shares of common
stock outstanding and 2,000 shares authorized with a par value of $247 per
share.

8.  OPERATING LEASES:

     The Company is obligated under noncancelable operating leases for certain
machinery and equipment and telephone equipment. Minimum annual rental payments
are as follows:

<TABLE>
<S>                                                           <C>
1998........................................................  $298
1999........................................................   269
2000........................................................   181
2001........................................................    80
2002........................................................    53
                                                              ----
                                                              $881
                                                              ====
</TABLE>

     Rent expense was approximately $180 for the five month period ended
December 31, 1997.

9.  RELATED PARTY TRANSACTIONS:

INTEREST ON SUBORDINATED DEBT

     Included in interest expense for the five month period ended December 31,
1997 is approximately $147 relating to debt owed to shareholders. As of December
31, 1997, accrued interest of $147 on this obligation has been classified as a
noncurrent liability in the accompanying balance sheet.

MANAGEMENT FEES

     Included in operating expenses for the five month period ended December
1997 are approximately $291 for management fees and certain expenses paid or
payable to entities affiliated with the shareholders. As of December 31, 1997,
the balance of unpaid fees, which has been included in other accrued expenses in
the accompanying balance sheet, approximated $125.

     Effective February 4, 1998, the Company entered into a new management
agreement with an affiliate of one of the shareholders that provides for annual
payments of $300,000 and expires on July 29, 2008, subject to renewal for
successive five-year periods.

TRANSACTIONS WITH AFFILIATE

     The Company has a 41% ownership in an affiliate, which is accounted for
using the equity method. Earnings of the affiliate are not material to the
operations of the Company. During the 1997 period presented, the Company
purchased molds from the affiliate for approximately $283. During the five month
period ended December 31, 1997 the affiliate provided certain repairs and
maintenance at a cost to the Company of approximately $70. Included in accounts
payable in the accompanying balance sheet at December 31, 1997 is approximately
$81 relating to these assets and services provided by the affiliate.

PROFESSIONAL SERVICES

     The law firm of Gratch, Jacobs & Brozman, P.C., of which one of the
shareholders is a senior member, provides legal services on an ongoing basis to
the Company and its subsidiaries. During fiscal 1997, the Company paid fees of
approximately $364,000 to Gratch, Jacobs & Brozman, P.C.

                                      F-42
<PAGE>   65
                       AFA HOLDINGS CO. AND SUBSIDIARIES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

10.  EMPLOYEE BENEFITS PLANS:

401(k) PLAN

     Effective July 1, 1996, AFA Products adopted an employee savings plan under
Section 401(k) of the Internal Revenue Code. The plan covers substantially all
full-time employees and the Company matches five percent of each employee's
contributions up to six percent of annual compensation. During the five month
period ended December 31, 1997, the Company expensed $10 in matching
contributions.

RETIREMENT PLAN

     Polytek has various pension plans covering substantially all employees.
Polytek funds all costs through insurance contracts which provide for retiree
benefits. Under the terms of the plans, there are no unfunded or overfunded
benefit obligations. Pension expense for the period ended December 31, 1997 was
approximately $309.

11.  FOREIGN OPERATIONS:

     Information regarding the Company's operations in The Netherlands for the
five months ended December 31, 1997 is as follows:

<TABLE>
<S>                                                          <C>
Sales......................................................  $ 8,198
Net income.................................................     (215)
Total assets...............................................   12,074
</TABLE>

12.  SUPPLEMENTAL CONDENSED COMBINING FINANCIAL STATEMENTS

     On April 21, 1998, AFA issued $145,000 aggregate principal amount of 9 3/4%
Senior Subordinated Notes (the "Notes") due 2008, the proceeds of which were
used to pay down debt incurred in various acquisitions (see Note 1). The Notes
are fully and unconditionally guaranteed, jointly and severally, on an
unsecured, senior subordinated basis by Products. Polytek is a nonguarantor
subsidiary.

     The following condensed, combining financial statements include the
accounts of AFA and its wholly owned subsidiaries Products and Polytek. Given
the size of Polytek relative to AFA on a combined basis, separate financial
statements of the guarantor are not presented because management has determined
that such information is not material.

                                      F-43
<PAGE>   66

                 SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEET
                               DECEMBER 31, 1997
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                          AFA               AFA
                                          AFA        PRODUCTS, INC.       POLYTEK
                                     HOLDINGS CO.     (GUARANTOR)     (NON-GUARANTOR)   ELIMINATIONS   COMBINED
ASSETS                               ------------    --------------   ---------------   ------------   --------
<S>                                  <C>             <C>              <C>               <C>            <C>
Current assets:
  Cash and cash equivalents........     $               $   142           $   909                      $ 1,051
  Accounts receivable..............                       4,089             2,796             (64)       6,821
  Inventories......................                       6,723             3,195                        9,918
  Prepaid expenses and other.......                         130               475                          605
                                        ------          -------           -------         -------      -------
          Total current assets.....                      11,084             7,375             (64)      18,395
Property, plant and equipment,
  net..............................                      19,295             8,714                       28,009
Intangibles, net...................                      16,805            (4,607)                      12,199
Investment in subsidiary...........      2,651                                             (2,651)
Other assets.......................                       1,692               592                        2,284
                                        ------          -------           -------         -------      -------
Total assets:......................     $2,651          $48,877           $12,074         ($2,715)     $60,887
                                        ======          =======           =======         =======      =======
Liabilities and Stockholders'
  equity
Current liabilities:...............     $
  Current portion of long-term
     debt..........................     $               $ 1,750           $   629                      $ 2,379
  Revolving credit facility........                       2,542             2,220                        4,762
  Accounts payable.................                       1,134             1,275               1        2,410
  Other Accrued expenses...........                       1,550             1,849             (65)       3,334
                                        ------          -------           -------         -------      -------
          Total current
            liabilities............                       6,976             5,973             (64)      12,885
Revolving credit facilities........                      36,250             4,904                       41,154
Subordinated debt..................                       3,000                                          3,000
Deferred income taxes..............                                           632                          632
                                        ------          -------           -------         -------      -------
          Total liabilities........                      48,226            11,509             (64)      57,671
                                        ------          -------           -------         -------      -------
STOCKHOLDERS' EQUITY
  Common stock.....................                                           242                          242
  Additional paid-in capital.......      3,810            3,810               510          (3,810)       4,320
  Retained earnings (deficit)......     (1,159)          (1,159)             (215)          1,159       (1,374)
  Cumulative translation
     adjustment....................                                            28                           28
          Total stockholders'
            equity.................      2,651            2,651               565          (2,651)       3,216
                                        ------          -------           -------         -------      -------
Total liabilities and stockholders'
  equity...........................     $2,651          $48,877           $12,074         ($2,715)     $60,887
                                        ======          =======           =======         =======      =======
</TABLE>

                                      F-44
<PAGE>   67

            SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF OPERATIONS

                      FIVE MONTHS ENDED DECEMBER 31, 1997
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                               AFA
                                                           AFA               POLYTEK
                                     AFA CO.         PRODUCTS, INC.           (NON-
                                    HOLDINGS           (GUARANTOR)         GUARANTOR)         ELIMINATIONS          COMBINED
                                    --------         --------------        ----------         ------------          --------
<S>                             <C>                 <C>                 <C>                 <C>                 <C>
Net sales......................   $                   $      12,011       $       8,198       $        (101)      $      20,108
Cost of sales..................                               9,897               6,799                (101)             16,595
                                  -------------       -------------       -------------       -------------       -------------
     Gross profit..............                               2,114               1,399                                   3,513
Selling and administrative
  expenses.....................                               1,712               1,150                                   2,862
     Income from operations....                                 402                 249                                     651

Other expense (income):
     Interest..................                               2,020                 211                                   2,231
     Other.....................                                (459)                405                                     (54)
                                  -------------       -------------       -------------       -------------       -------------
          Total other
            expense............                               1,561                 616                                   2,177
Loss before income tax
  provision....................                              (1,159)               (367)                                 (1,526)
Tax benefit....................                                                    (152)                                   (152)
                                  -------------       -------------       -------------       -------------       -------------
Loss before equity in loss of
  consolidated subsidiary......                              (1,159)               (215)                                 (1,374)
Equity in loss of consolidated
  subsidiary...................          (1,159)                                                      1,159
                                  -------------       -------------       -------------       -------------       -------------
Net income.....................   $      (1,159)      $      (1,159)      $        (215)      $       1,159       $      (1,374)
                                  =============       =============       =============       =============       =============
</TABLE>

                                      F-45
<PAGE>   68

            SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOWS

                      FIVE MONTHS ENDED DECEMBER 31, 1997
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  AFA                   AFA
                                            AFA             PRODUCTS, INC.            POLYTEK
                                       HOLDINGS CO.           (GUARANTOR)         (NON-GUARANTOR)          COMBINED
                                       ------------         --------------        ---------------          --------
<S>                                 <C>                   <C>                   <C>                   <C>
Cash flows from operating
  activities......................      $                     $       456           $       992           $     1,448
Cash flows from investing
  activities:
     Capital expenditures.........                                   (258)                 (403)                 (661)
                                        -----------           -----------           -----------           -----------
     Net cash used in investing
       activities.................                                   (258)                 (403)                 (661)
Cash flows from financing
  activities:
     Change in line of credit.....                                    (85)                                        (85)
     Repayment of long term
       debt.......................                                                         (685)                 (685)
                                        -----------           -----------           -----------           -----------
     Net cash from financing
       activities.................                                    (85)                 (685)                 (770)
Effect of exchange rate changes on
  cash............................                                                           34                    34
                                        -----------           -----------           -----------           -----------
Change in cash and cash
  equivalents.....................                                    113                   (62)                   51
Cash and cash equivalents,
  beginning of period.............                                     29                   971                 1,000
                                        -----------           -----------           -----------           -----------
Cash and cash equivalents, end of
  period..........................                            $       142           $       909           $     1,051
                                        ===========           ===========           ===========           ===========
</TABLE>

                                      F-46
<PAGE>   69

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
WTI, Inc. and Subsidiaries:

     We have audited the accompanying consolidated balance sheets of WTI, Inc.
and Subsidiaries (the "Company") as of July 31, 1997 and December 31, 1996, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the seven month period ended July 31, 1997 and for the years
ended December 31, 1996 and 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of WTI, Inc. and
Subsidiaries as of July 31, 1997 and December 31, 1996, and the consolidated
results of their operations and their cash flows for the seven month period
ended July 31, 1997 and for the years ended December 31, 1996 and 1995 in
conformity with generally accepted accounting principles.

Coopers & Lybrand L.L.P.

Charlotte, North Carolina
March 5, 1998.

                                      F-47
<PAGE>   70

                           WTI, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                      JULY 31, 1997 AND DECEMBER 31, 1996
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                              JULY 31,    DECEMBER 31,
                                                                1997          1996
                                                              --------    ------------
<S>                                                           <C>         <C>
                                       ASSETS:
Current assets:
  Cash and cash equivalents.................................  $ 2,391       $   837
  Accounts receivable, net of allowances of $43 and $29,
     respectively...........................................    5,909         6,499
  Inventories...............................................    9,496        10,314
  Prepaid expenses and other................................      359           608
                                                              -------       -------
          Total current assets..............................   18,155        18,258
Property, plant and equipment...............................   15,022        16,004
Excess of cost over fair value of net assets acquired, net
  of accumulated amortization...............................    1,321         1,761
Patents, net of accumulated amortization....................    4,236         4,734
Deferred income taxes.......................................    3,224         1,285
Other assets................................................    2,407         2,759
                                                              -------       -------
          Total assets......................................  $44,365       $44,801
                                                              =======       =======

                        LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
  Current portion of long-term debt.........................  $ 4,944       $ 8,066
  Accounts and drafts payable...............................    2,811         2,201
  Income taxes payable......................................    1,975           988
  Other accrued expenses....................................    5,490         6,058
                                                              -------       -------
          Total current liabilities.........................   15,220        17,313
Long-term debt..............................................   15,176        16,045
Accrued interest to stockholder.............................   10,352         9,030
                                                              -------       -------
          Total liabilities.................................   40,748        42,388
                                                              -------       -------
Commitments and contingencies
Stockholders' equity:
  Class A common stock, $1 par value; 123,000 shares, issued
     and outstanding........................................      123           123
  Class B common stock, convertible, $1,000 par value, no
     shares issued..........................................
  Additional paid-in capital................................    9,047         9,047
  Accumulated deficit.......................................   (2,771)       (5,844)
  Cumulative translation adjustment.........................   (2,782)         (913)
                                                              -------       -------
          Total stockholders' equity........................    3,617         2,413
                                                              -------       -------
          Total liabilities and stockholders' equity........  $44,365       $44,801
                                                              =======       =======
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-48
<PAGE>   71

                           WTI, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                              SEVEN MONTH         YEAR ENDED
                                                              PERIOD ENDED       DECEMBER 31,
                                                                JULY 31,      ------------------
                                                                  1997         1996       1995
                                                              ------------    -------    -------
<S>                                                           <C>             <C>        <C>
Net sales...................................................    $32,988       $54,133    $55,238
Cost of sales...............................................     23,864        39,868     41,971
                                                                -------       -------    -------
          Gross profit......................................      9,124        14,265     13,267
Selling, general and administrative expense.................      4,205         7,389      7,877
                                                                -------       -------    -------
          Income from operations............................      4,919         6,876      5,390
Other expense (income):
  Interest expense..........................................      2,295         4,275      4,489
  Foreign currency (gain) loss..............................       (545)         (230)       170
  Royalty income............................................       (133)         (178)      (165)
  Other.....................................................       (125)          133       (256)
                                                                -------       -------    -------
          Total.............................................      1,492         4,000      4,238
                                                                -------       -------    -------
Income before provision for income taxes....................      3,427         2,876      1,152
Provision for income taxes..................................        354           354        880
                                                                -------       -------    -------
          Net income........................................    $ 3,073       $ 2,522    $   272
                                                                =======       =======    =======
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-49
<PAGE>   72

                           WTI, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE SEVEN MONTH PERIOD ENDED JULY 31, 1997
                 AND THE YEARS ENDED DECEMBER 31, 1996 AND 1995
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                            CLASS A   ADDITIONAL                 CUMULATIVE        TOTAL
                                            COMMON     PAID-IN     ACCUMULATED   TRANSLATION   STOCKHOLDERS'
                                             STOCK     CAPITAL       DEFICIT     ADJUSTMENT        EQUITY
                                            -------   ----------   -----------   -----------   --------------
<S>                                         <C>       <C>          <C>           <C>           <C>
Balance, January 1, 1995..................   $123       $9,047       $(8,638)      $   (42)       $   490
Net income................................                               272                          272
                                             ----       ------       -------       -------        -------
Balance, December 31, 1995................    123        9,047        (8,366)          (42)           762
Net income................................                             2,522                        2,522
Translation adjustment....................                                            (871)          (871)
                                             ----       ------       -------       -------        -------
Balance, December 31, 1996................    123        9,047        (5,844)         (913)         2,413
Net income................................                             3,073                        3,073
Translation adjustment....................                                          (1,869)        (1,869)
                                             ----       ------       -------       -------        -------
Balance, July 31, 1997....................   $123       $9,047       $(2,771)      $(2,782)       $ 3,617
                                             ====       ======       =======       =======        =======
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-50
<PAGE>   73

                           WTI, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                              SEVEN MONTH       YEAR ENDED
                                                              PERIOD ENDED     DECEMBER 31,
                                                                JULY 31,     -----------------
                                                                  1997        1996      1995
                                                              ------------   -------   -------
<S>                                                           <C>            <C>       <C>
Cash flows from operating activities:
  Net income................................................    $ 3,073      $ 2,522   $   272
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Depreciation...........................................      1,926        3,153     3,103
     Amortization...........................................        594        1,317     1,333
     Deferred income taxes..................................     (1,939)      (1,441)       (5)
     Other, net.............................................       (118)         (54)      (47)
     Loss (gain) on sale of property, plant and equipment...        (21)           3       (39)
     Foreign currency transaction (gain) loss...............       (545)        (230)      170
     Changes in assets and liabilities:
       Accounts receivable..................................        694          (83)      677
       Inventories..........................................        172           53      (270)
       Prepaid expenses and other...........................        293          706       208
       Accounts and drafts payable..........................        891       (1,402)     (694)
       Other accrued expenses...............................       (581)       1,202     2,676
       Other, net...........................................                      36
       Income taxes payable or refundable...................      1,389          391      (679)
                                                                -------      -------   -------
          Net cash provided by operating activities.........      5,828        6,173     6,705
                                                                -------      -------   -------
Cash flows from investing activities:
  Expenditures for property, plant and equipment............     (2,498)      (2,218)   (3,604)
  Proceeds from disposal of property, plant and equipment...         23            2        49
  Investment in affiliate...................................                                 2
  Expenditures for tooling..................................        (69)         (84)   (1,010)
                                                                -------      -------   -------
          Net cash used in investing activities.............     (2,544)      (2,300)   (4,563)
                                                                -------      -------   -------
Cash flows from financing activities:
  Net (repayment) borrowings under revolving lines of
     credit.................................................     (1,775)      (2,864)    1,162
  Proceeds from long-term debt borrowing....................      1,321        2,978       600
  Repayment of debt.........................................     (1,174)      (4,110)   (3,968)
  Payment of bank financing fees............................                    (162)      (35)
                                                                -------      -------   -------
          Net cash used in financing activities.............     (1,628)      (4,158)   (2,241)
                                                                -------      -------   -------
Effect of exchange rate changes on cash.....................       (102)         (62)       89
                                                                -------      -------   -------
Net increase (decrease) in cash and cash equivalents........      1,554         (347)      (10)
Cash and cash equivalents at beginning of period............        837        1,184     1,194
                                                                -------      -------   -------
          Cash and cash equivalents at end of period........    $ 2,391      $   837   $ 1,184
                                                                =======      =======   =======
Cash paid during the period for:
  Interest..................................................    $   580      $ 1,513   $ 1,961
  Income taxes..............................................      2,817        1,040     1,564
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-51
<PAGE>   74

                           WTI, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (AMOUNTS IN THOUSANDS)

1.  DESCRIPTION OF THE COMPANY AND CURRENT BUSINESS OPERATIONS:

     WTI, Inc. (the "Company") was formed in 1988 by Waynesboro Textiles, Inc.
("Waynesboro"), Berkshire Partners and affiliates ("Berkshire") and AIG
Insurance Company and affiliates ("AIG").

     WTI, Inc. has a wholly-owned subsidiary, AFA Products, Inc., based in
Forest City, North Carolina, which in turn has a wholly-owned subsidiary, WTI
Holding B.V. ("WTI Holding"), based in Helmond, The Netherlands. WTI Holding
also has a subsidiary, AFA Polytek B.V. ("Polytek"), which is also based in
Helmond, The Netherlands.

     The Company's primary business is the manufacture and sale of activated
liquid dispensing devices ("trigger sprayers"). Manufacturing is primarily
conducted in facilities located in Forest City, North Carolina, and Helmond, The
Netherlands.

SALE OF ASSETS

     On July 31, 1997, the Company sold substantially all of its assets and
operations to AFA Holdings Co. Proceeds from the sale were used to retire
liabilities not assumed by the purchaser with the remainder distributed to
shareholders of the Company. These consolidated financial statements were
prepared immediately prior to the sale using the historical basis of accounting
followed by the Company and do not reflect the sale transaction.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated.

REVENUE RECOGNITION

     The Company recognizes revenue upon shipment of its products.

INVENTORIES

     Inventories are stated at the lower of cost or market. Cost is determined
on the first-in, first-out (FIFO) basis.

PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost. Depreciation is provided
primarily on a straight-line basis over the estimated useful lives of the
assets. Maintenance and repairs are charged to income as incurred and
betterments that extend the useful life are capitalized. Upon retirement or
sale, the cost and accumulated depreciation are eliminated from the respective
accounts, and the gain or loss, if any, is included in income.

     If events or changes in circumstances indicate that the carrying amount of
a long-lived asset may not be recoverable, the Company estimates the future cash
flows expected to result from the use of the asset and its eventual disposition.
If the sum of the expected future cash flows (undiscounted and without interest
charges) is less than the carrying amount of the long-lived asset, an impairment
loss is recognized. To date, no impairment losses have been recognized.

RESEARCH AND DEVELOPMENT

     The cost of research and development expenditures is expensed as incurred.

                                      F-52
<PAGE>   75
                           WTI, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Significant
estimates in the financial statements relate to the allowance for uncollectible
accounts receivable, the allowance for slow-moving and obsolete inventories, the
allowance for sales returns and the valuation allowance for deferred tax assets.

INCOME TAXES

     The Company uses the asset and liability approach to financial accounting
and reporting for income taxes. Deferred income tax assets and liabilities are
computed annually for differences between the financial statement and tax bases
of assets and liabilities that will result in taxable or deductible amounts in
the future. Such deferred income tax asset and liability computations are based
on enacted tax laws and rates applicable to periods in which the differences are
expected to affect taxable income. A valuation allowance is established when
necessary to reduce deferred tax assets to the amount expected to be realized.

FOREIGN CURRENCY TRANSLATION

     Assets and liabilities of WTI Holding are translated at exchange rates in
effect at the balance sheet dates ($.4767 and $.5744 per guilder at July 31,
1997 and December 31, 1996, respectively). Items of revenue and expense are
translated at average exchange rates during the periods ($.5211, $.5919 and
$.6236 per guilder for the 1997, 1996 and 1995 periods presented, respectively).
Translation adjustments, resulting from translating WTI Holding's financial
statements into dollars, are reported in the equity section of the accompanying
balance sheets under the caption "cumulative translation adjustment."

EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED

     Excess of cost over fair value of net assets acquired is being amortized on
a straight-line basis over a period of fifteen years. Accumulated amortization
was $2,283 and $2,581 as of July 31, 1997 and December 31, 1996, respectively.
The Company assesses the recoverability of this intangible asset by determining
whether the amortization of the goodwill balance over its remaining life can be
recovered through forecasted future operations. Impairment is evaluated by
comparing future cash flows (undiscounted and without interest charges) expected
to result from the use or sale of the asset and its eventual disposition, to the
carrying amount of the asset. To date, no impairment losses have been
recognized.

PATENTS

     The cost of patents acquired is being amortized using the straight-line
method over the estimated useful lives of the patents, which range from
approximately fourteen to seventeen years. The cost of patents developed are
expensed as incurred because the economic lives are indeterminable.

     Accumulated amortization was $8,096 and $7,599 at July 31, 1997 and
December 31, 1996, respectively.

DEFERRED FINANCING FEES

     Costs incurred to obtain financing are amortized using the straight-line
method (which approximates the interest method) over the term of the related
debt.

                                      F-53
<PAGE>   76
                           WTI, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

DEFERRED TOOLING

     From time to time, the Company purchases certain molds and equipment
(tooling) to meet specific customer product requirements. These tooling costs
are capitalized by the Company and are amortized into operations over the
estimated life of the sales contract period.

OTHER INTANGIBLE ASSETS

     Other intangible assets, consisting primarily of an exclusive sales
agreement and royalty agreements, are being amortized using the straight-line
method over the related lives of the agreements, which range from five to
fifteen years.

CASH EQUIVALENTS

     The Company considers demand deposits and time deposits with original
maturities of three months or less as equivalent to cash.

RECENTLY ISSUED ACCOUNTING STANDARDS

     Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income, is effective for years beginning after December 15, 1997.
This statement requires that an enterprise classify items of other comprehensive
income by their nature in the financial statements and display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of the balance sheets.

     Statement of Financial Accounting Standards No. 131, Disclosure About
Segments of an Enterprise and Related information, is effective for years
beginning after December 15, 1997. This statement requires that a public
business enterprise report financial and descriptive information about its
reportable business segments.

     Management of the Company believes that the future adoption of these
statements will not have a significant impact on the Company's combined
financial position, results of operations or cash flows, but will result in
additional disclosure.

3.  INVENTORIES:

     The components of inventories are summarized below:

<TABLE>
<CAPTION>
                                                         JULY 31,    DECEMBER 31,
                                                           1997          1996
                                                         --------    ------------
<S>                                                      <C>         <C>
Raw material...........................................   $2,089       $ 2,429
Work-in-process........................................    3,102         3,084
Finished goods.........................................    4,305         4,801
                                                          ------       -------
                                                          $9,496       $10,314
                                                          ======       =======
</TABLE>

                                      F-54
<PAGE>   77
                           WTI, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

4.  PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment, summarized by major classification and
estimated useful lives for depreciation purposes, is as follows:

<TABLE>
<CAPTION>
                                                     USEFUL        JULY 31,    DECEMBER 31,
                                                  LIVES (YEARS)      1997          1996
                                                  -------------    --------    ------------
<S>                                               <C>              <C>         <C>
Land............................................                   $    825      $    947
Buildings.......................................   20 - 25            8,439         9,546
Machinery and equipment.........................    4 - 7            19,700        22,133
Molds...........................................      5              15,628        13,728
Furniture and fixtures..........................    3 - 5             1,156         1,271
Vehicles........................................      3                  43            43
Construction in progress........................      --                825           891
                                                                   --------      --------
                                                                     46,616        48,559
Less accumulated depreciation...................                    (31,594)      (32,555)
                                                                   --------      --------
Property, plant and equipment, net..............                   $ 15,022      $ 16,004
                                                                   ========      ========
</TABLE>

     Construction in progress primarily consists of additions and improvements
to buildings, molds and machinery.

5.  OTHER NONCURRENT ASSETS:

     Other noncurrent assets consists of the following:

<TABLE>
<CAPTION>
                                                         JULY 31,    DECEMBER 31,
                                                           1997          1996
                                                         --------    ------------
<S>                                                      <C>         <C>
Deferred financing fees................................   $  122        $  241
Royalty agreement......................................      917          1014
Investment in affiliate................................      568           554
Lease deposit..........................................       75            75
Deferred tooling.......................................      725           875
                                                          ------        ------
                                                          $2,407        $2,759
                                                          ======        ======
</TABLE>

                                      F-55
<PAGE>   78
                           WTI, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

6.  LONG-TERM DEBT:

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                        JULY 31,    DECEMBER 31,
                                                          1997          1996
                                                        --------    ------------
<S>                                                     <C>         <C>
WORKING CAPITAL BORROWINGS(A):
  Working capital line of credit -- dollar
     denominated, bearing interest at 10% at December
     31, 1996.........................................       --       $ 1,411
  Working capital line of credit -- guilder
     denominated, bearing interest at 9.8% and 7.39%,
     at July 31, 1997 and December 31, 1997
     respectively.....................................  $ 1,223         1,875
                                                        -------       -------
          Total working capital borrowings............    1,223         3,286
                                                        -------       -------
OTHER LONG-TERM DEBT:
  Senior note -- dollar denominated...................      500         1,500
  Senior mortgage note -- guilder denominated, payable
     in quarterly principal installments of $25,204,
     bearing interest at rates varying with the Dutch
     prime rate (5.95% at July 31, 1997 and December
     31, 1996(b)......................................    1,188         1,508
  Junior subordinated debt -- dollar denominated,
     stockholder, bearing interest at 14% (Note
     10)(c)...........................................    3,500         3,500
  Subordinated note payable -- dollar denominated,
     bearing interest at 13.5%(d).....................    1,907         2,298
  Senior subordinated debt -- dollar denominated,
     stockholder, bearing interest at 13.5%(e)........   10,000        10,000
  Installment notes payable -- guilder denominated,
     bearing interest at rates ranging from 7.1% to
     7.75%............................................      282           499
  Promissory note payable -- dollar denominated,
     affiliate, bearing interest at 14% (Note
     10)(f)...........................................      320           320
  Promissory note payable -- dollar denominated,
     affiliate, bearing interest at 10.25% (Note
     10)(f)...........................................    1,200         1,200
                                                        -------       -------
          Total other long-term debt..................   18,897        20,825
                                                        -------       -------
          Total.......................................   20,120        24,111
Less current portion..................................   (4,944)       (8,066)
                                                        -------       -------
          Total long-term debt........................  $15,176       $16,045
                                                        =======       =======
</TABLE>

  (a) WORKING CAPITAL BORROWINGS:

     At July 31, 1997 and December 31, 1996, the Company had loan and security
agreements (the "Agreements") with the Bank of Boston that provided for two
working capital lines of credit, denominated in both dollars and guilders.

     Borrowings under the dollar denominated working capital line of credit,
which had a maximum amount of $4,700, were limited to 80% of eligible accounts
receivable (as defined), and 50% of eligible raw material and finished goods
inventories (as defined). Borrowings under the guilder denominated line of
credit had a maximum amount of 4,754 guilders ($2,266 at July 31, 1997) and were
limited to 70% of eligible accounts receivable (as defined) and 25% of eligible
raw materials and finished goods inventories (as defined).

     On December 2, 1996, AFA Products, Inc. entered into the third amendment of
its dollar denominated working capital line of credit with the Bank of Boston.
The amendment extended the due date of the working

                                      F-56
<PAGE>   79
                           WTI, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

capital line of credit until November 30, 1997. The third amendment also
provided a new $1,500 term loan to be used to make an installment payment on the
$5,000 junior subordinated note payable to stockholder (AIG). Interest on the
extended line of credit and the new 1996 term loan is payable quarterly in
arrears beginning January 1, 1997. The 1996 term loan was due to be repaid in
1997. The amendment modifies certain financial covenants contained in the
original agreement and waives all violations of all loan covenants contained in
the original agreement through the effective date of the amendment. At December
31, 1996, the Company was in violation of the covenant limiting capital
expenditures. A waiver for this covenant violation was obtained from the bank.

     Also on December 2, 1996, AFA Polytek B.V. entered into the third amendment
of its guilder denominated working capital line of credit with the Bank of
Boston. The amendment extended the due date of the working capital line of
credit until November 30, 1997. Interest on the extended line of credit is
payable quarterly in arrears beginning January 1, 1997. The amendment modifies
certain financial covenants contained in the original agreement and waives all
violations of all loan covenants contained in the original agreement through the
effective date of the amendment.

     Substantially all of these bank borrowings were paid simultaneously with
the sale of substantially all of the Company's assets.

OTHER LONG-TERM DEBT

  (b)  Senior Mortgage Note -- Guilder Denominated

     In connection with the construction of a manufacturing facility in 1991,
Polytek obtained a 3,500 guilder mortgage from ABN Bank, Netherlands. Borrowings
under this mortgage agreement are collateralized by a lien on the facility. The
mortgage agreement contains certain prohibitions, the most significant of which
prohibit payments of dividends which would result in the net worth of Polytek
falling below 10,000 guilders ($4,767 and $5,774 at July 31, 1997 and December
31, 1996).

  (c) JUNIOR SUBORDINATED DEBT

     The junior subordinated debt is payable to AIG and has principal payments
of $1,500 due December 31, 1997 and a $2,000 principal payment due December 31,
1998.

  (d) SUBORDINATED NOTE PAYABLE

     On December 30, 1991, WTI borrowed 4,000 guilders from Parkhill Holdings
Limited, an unaffiliated entity. The loan is collateralized by a secondary
pledge of the shares of Polytek. Effective February 5, 1993, this guilder
denominated debt was converted to a dollar denominated obligation, and interest
rates were adjusted to a U.S. prime rate (8.5% at July 31, 1997 and December 31,
1996) plus 5%. In November 1996, the original maturity on the debt was extended
to December 31, 1998.

  (e) SENIOR SUBORDINATED DEBT

     The senior subordinated debt is payable to Waynesboro or its stockholders.
In November 1996, the maturity schedule for principal repayment was amended,
resulting in principal payments of $4,000 due December 31, 1998 and $6,000 due
December 31, 1999. In accordance with certain covenants contained in senior loan
agreements, interest payments on this obligation were deferred. Accrued interest
payable on this obligation amounted to $10,352 and $9,030 at July 31, 1997 and
December 31, 1996, respectively.

                                      F-57
<PAGE>   80
                           WTI, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

  (f) PROMISSORY NOTES PAYABLE

     The promissory notes payable represent borrowings from a partnership
controlled by certain shareholders of the Company. The obligations are
unsecured.

COLLATERAL AND DEBT COVENANTS UNDER LOAN AGREEMENTS OUTSTANDING AT JULY 31, 1997

     Under the terms of the various financing arrangements described above at
July 31, 1997, substantially all of the Company's assets are pledged as
collateral, including, but not limited to, the stock of the various
subsidiaries. In addition, the various agreements contained restrictive
covenants, as defined, including limits on capital expenditures and transactions
with related parties, maintenance of certain minimum levels of cash flow
earnings and leverage ratios, among others.

AGGREGATE ANNUAL MATURITIES

     Aggregate annual maturities of long-term debt after July 31, 1997 are as
follows:

<TABLE>
<S>                                                          <C>
1998.......................................................  $ 4,944
1999.......................................................    8,091
2000.......................................................    6,147
2001.......................................................       83
2002.......................................................       83
Thereafter.................................................      772
                                                             -------
                                                             $20,120
                                                             =======
</TABLE>

7.  INCOME TAXES:

     Pre-tax income (loss) consists of:

<TABLE>
<CAPTION>
                                             SEVEN MONTHS        YEAR ENDED
                                                ENDED           DECEMBER 31,
                                               JULY 31,      ------------------
                                                 1997         1996       1995
                                             ------------    -------    -------
<S>                                          <C>             <C>        <C>
United States..............................    $ 2,451       $ 2,145    $(1,044)
Foreign....................................        976           731      2,196
                                               -------       -------    -------
          Total pre-tax income.............    $ 3,427       $ 2,876    $ 1,152
                                               =======       =======    =======
Current expense............................      2,293         1,795        885
Deferred benefit...........................     (1,939)       (1,441)        (5)
                                               -------       -------    -------
                                               $   354       $   354    $   880
                                               =======       =======    =======
</TABLE>

                                      F-58
<PAGE>   81
                           WTI, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

     The income tax provision differs from the amount computed by applying the
U.S. federal statutory income tax rate of 34% to the pre-tax income. The
computed amount is reconciled to the total provision for income taxes as
follows:

<TABLE>
<CAPTION>
                                                 SEVEN MONTHS     YEAR ENDED
                                                    ENDED        DECEMBER 31,
                                                   JULY 31,      -------------
                                                     1997        1996     1995
                                                 ------------    -----    ----
<S>                                              <C>             <C>      <C>
Tax at federal statutory rate..................    $ 1,165       $ 978    $392
Tax effect of nondeductible expenses...........         55         118     126
Foreign taxes at rates other than U.S.
  statutory rate...............................         17          10      16
State taxes (net of federal benefit)...........        186         119
Increase (reduction) in valuation allowance....     (1,098)       (848)    355
Other..........................................         29         (23)     (9)
                                                   -------       -----    ----
          Income tax provision.................    $   354       $ 354    $880
                                                   =======       =====    ====
</TABLE>

     The approximate tax effect of temporary differences that gave rise to the
Company's deferred income tax assets and liabilities at July 31, 1997 and
December 31, 1996 is as follows:

<TABLE>
<CAPTION>
                                                           JULY 31, 1997
                                                  -------------------------------
                                                  ASSETS    LIABILITIES    TOTAL
                                                  ------    -----------    ------
<S>                                               <C>       <C>            <C>
Property, plant and equipment...................  $           $  (983)     $ (983)
Intangible assets...............................                 (463)       (463)
Patents.........................................     434                      434
Accrued interest................................   3,374                    3,374
Accrued rent....................................     264                      264
AMT credit carryforward.........................     447                      447
Other...........................................     151                      151
                                                  ------      -------      ------
          Total deferred taxes..................  $4,670      $(1,446)     $3,224
                                                  ======      =======      ======
</TABLE>

<TABLE>
<CAPTION>
                                                        DECEMBER 31, 1996
                                                ---------------------------------
                                                ASSETS     LIABILITIES     TOTAL
                                                -------    -----------    -------
<S>                                             <C>        <C>            <C>
Property, plant and equipment.................  $            $(1,140)     $(1,140)
Intangible assets.............................                  (525)        (525)
Patents.......................................      440                       440
Accrued interest..............................    2,823                     2,823
Accrued rent..................................      229                       229
AMT credit carryforward.......................      447                       447
Other.........................................      109                       109
                                                -------      -------      -------
          Total before valuation allowance....    4,048       (1,665)       2,383
                                                -------      -------      -------
Valuation allowance...........................   (1,098)                   (1,098)
                                                -------      -------      -------
          Total deferred taxes................  $ 2,950      $(1,665)     $ 1,285
                                                =======      =======      =======
</TABLE>

     The deferred tax assets and liabilities are broken down between current and
noncurrent amounts in the accompanying balance sheets according to the
classification of the related asset and liability or in the case of tax loss or
AMT credit carryforwards, based on their expected utilization date.

                                      F-59
<PAGE>   82
                           WTI, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

     During 1996, the Company reduced its valuation allowance by $848 and during
the period ended July 31, 1997, the allowance was reduced by $1,098.

8.  COMMON STOCK:

     CLASS A -- Class A common stock has 100% of the voting rights with the
exception of rights to certain matters as described below. As of July 31, 1997
and December 31, 1996, there were 123,000 shares of Class A common stock
outstanding and 150,000 shares authorized, with a par value of $1.

     CLASS B -- Class B common stock limits voting rights to certain specified
matters. Class B stock is convertible (at the option of the stockholder) into
Class A stock on a share per share basis. There are no Class B shares
outstanding and 150,000 shares authorized, with a par value of $1,000 per share.

     VOTING RIGHTS ON CERTAIN MATTERS -- In accordance with the articles of
incorporation, the affirmative vote of at least two-thirds of the aggregate
outstanding Class A and Class B common stock is required for certain specified
transactions, including, but not limited to, the merger of the Company with or
into another entity; the sale, lease or other disposition of a substantial
portion of the Company's assets; an initial public offering of equity
securities; and incurrence of additional indebtedness (as defined therein).

9.  OPERATING LEASES:

     The Company is obligated under noncancelable operating leases for certain
machinery and equipment and telephone equipment. Minimum annual rental payments
are as follows:

<TABLE>
<CAPTION>
                                                PAYABLE TO
                                                 RELATED      PAYABLE TO
                                                 PARTIES        OTHERS      TOTAL
                                                ----------    ----------    ------
<S>                                             <C>           <C>           <C>
1998..........................................     $121         $  353      $  474
1999..........................................                     340         340
2000..........................................                     261         261
2001..........................................                      87          87
2002..........................................                      22          22
                                                   ----         ------      ------
                                                   $121         $1,063      $1,184
                                                   ====         ======      ======
</TABLE>

     Rent expense approximated $381, $713 and $438 for the seven months ended
July 31, 1997 and the years ended December 31, 1996 and 1995, respectively,
including approximately $145 in 1997 and $249 for both 1996 and 1995 for rent
paid to an entity controlled by the stockholders of Waynesboro.

10.  RELATED PARTY TRANSACTIONS:

INTEREST ON SENIOR SUBORDINATED DEBT

     Included in interest expense for the seven month period ended July 31, 1997
and the years ended December 31, 1996 and 1995 is approximately $1,322, $2,156
and $1,969, respectively, relating to debt owed to Waynesboro or its
stockholders. As of July 31, 1997 and December 31, 1996, accrued interest of
$10,352 and $9,030, respectively, on this obligation has been classified as a
noncurrent liability in the accompanying balance sheet.

                                      F-60
<PAGE>   83
                           WTI, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

INTEREST ON JUNIOR SUBORDINATED DEBT

     Included in interest expense for the 1997 period presented is $278 and for
both 1996 and 1995 is $700 relating to debt owed to AIG. As of July 31, 1997 and
December 31, 1996, accrued interest of $80 and $63 on this obligation has been
included in other accrued expenses in the accompanying balance sheets.

MANAGEMENT FEES

     Included in operating expenses for the periods ended July 31, 1997 and
December 1996 and 1995 are approximately $295, $556 and $533, respectively, for
management fees and certain expenses paid or payable to entities affiliated with
Waynesboro or Berkshire. As of July 31, 1997 and December 31, 1996, the balance
of unpaid fees, which has been included in other accrued expenses in the
accompanying balance sheets, approximated $482 and $445, respectively.

TRANSACTIONS WITH AFFILIATE

     The Company has a 41% ownership in an affiliate, which is accounted for
using the equity method. Earnings of the affiliate are not material to the
operations of the Company. During the 1997, 1996 and 1995 periods presented, the
Company purchased molds from the affiliate for approximately $160, $43 and $487,
respectively. During 1997, 1996 and 1995, the affiliate provided certain repairs
and maintenance at a cost to the Company of approximately $117, $203 and $135,
respectively. Included in accounts payable in the accompanying balance sheets at
July 31, 1997 and December 31, 1996, respectively, are approximately $22 and $40
relating to these assets and services provided by the affiliate.

ACCRUED RENT EXPENSE

     As of July 31, 1997 and December 31, 1996, other accrued expenses includes
rent expense of $583 and $586, respectively, payable to a related party relating
to an operating lease for certain molding machines.

INTEREST ON PROMISSORY NOTE PAYABLE

     Included in interest expense for the seven month period ended July 31, 1997
and the years ended December 31, 1996 and 1995 is approximately $100, $168 and
$66, respectively, relating to interest on funds advanced to the Company from an
affiliate. Accrued interest, which is computed at the rates of 10.25% and 14%
from the date of the advances, approximated $381 and $290 at July 31, 1997 and
December 31, 1996, respectively, and is included in accrued expenses on the
accompanying balance sheets.

11.  OTHER INCOME (EXPENSE):

     Other income consisted primarily of royalty income. In prior years, the
Company became involved in litigation with one or more of its competitors
regarding alleged patent infringements and ultimately reached out-of-court
settlements with those competitors. Royalty payments under two different
settlement agreements of $50 were received by the Company in 1996 and 1995, and
are recorded in other income in the accompanying consolidated statements of
operations.

12.  EMPLOYEE BENEFITS PLANS:

RETIREMENT PLANS

     Polytek has various pension plans covering substantially all employees.
Polytek funds all costs through insurance contracts which provide for retiree
benefits. Under the terms of the plans, there are no unfunded or

                                      F-61
<PAGE>   84
                           WTI, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                             (AMOUNTS IN THOUSANDS)

overfunded benefit obligations. Pension expense for July 31, 1997 and the years
ended December 31, 1996 and 1995 was approximately $241, $441 and $461,
respectively.

401(k) PLAN

     Effective July 1, 1996, AFA Products adopted an employee savings plan under
Section 401(k) of the Internal Revenue Code. The plan covers substantially all
full-time employees and the Company matches five percent of each employee's
contributions up to six percent of annual compensation. During 1997 and 1996,
the Company expensed $20 and $9 in matching contributions.

13.  CONTINGENCIES:

     The Company is a defendant and plaintiff in several disputes and legal
actions in the normal course of business. In the opinion of management, the
resolution of these matters will not have a material adverse impact on the
financial condition or the future results of operations of the Company.

14.  FOREIGN OPERATIONS:

     Information regarding the Company's operations in The Netherlands is as
follows:

<TABLE>
<CAPTION>
                                             SEVEN MONTHS        YEAR ENDED
                                                ENDED           DECEMBER 31,
                                               JULY 31,      ------------------
                                                 1997         1996       1995
                                             ------------    -------    -------
<S>                                          <C>             <C>        <C>
Sales......................................    $13,401       $23,698    $30,675
Net income.................................      1,172         1,328      2,483
Total assets...............................     15,734        19,172     21,866
</TABLE>

15.  SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL DATA:

     The following summarizes the Company's consolidating balance sheet as of
December 31, 1996 and consolidating results of operations and cash flows for the
years ended December 31, 1995 and 1996 and the seven month period ended July 31,
1997.

                                      F-62
<PAGE>   85

          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

                        SEVEN MONTHS ENDED JULY 31, 1997
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                               AFA
                                    WTI, INC.              AFA               POLYTEK
                                  (PREDECESSOR       PRODUCTS, INC.           (NON-
                                     TO AFA)           (GUARANTOR)         GUARANTOR)         ELIMINATIONS        CONSOLIDATED
                                  ------------       --------------        ----------         ------------        ------------
<S>                             <C>                 <C>                 <C>                 <C>                 <C>
Net sales......................   $                   $      19,626       $      13,401       $         (39)      $      32,988
Cost of sales..................                              13,708              10,195                 (39)             23,864
                                  -------------       -------------       -------------       -------------       -------------
     Gross profit..............                               5,918               3,206                                   9,124
Selling, general and
  administrative expenses......             134               2,643               1,428                                   4,205
                                  -------------       -------------       -------------       -------------       -------------
     Income from operations....            (134)              3,275               1,778                                   4,919
                                  -------------       -------------       -------------       -------------       -------------

Other expense (income):
     Interest..................             (24)              2,089                 230                                   2,295
     Other.....................                              (1,374)                571                                    (803)
                                  -------------       -------------       -------------       -------------       -------------
          Total other
            expense............             (24)                715                 801                                   1,492
                                  -------------       -------------       -------------       -------------       -------------
Income before income tax
  provision....................            (110)              2,560                 977                                   3,427
Tax provision..................                                                     354                                     354
                                  -------------       -------------       -------------       -------------       -------------
Income before equity in income
  of consolidated subsidiary...            (110)              2,560                 623                                   3,073
Equity in income of
  consolidated subsidiary......           3,183                 623                                  (3,806)
                                  -------------       -------------       -------------       -------------       -------------
Net income.....................   $       3,073       $       3,183       $         623       $      (3,806)      $       3,073
                                  =============       =============       =============       =============       =============
</TABLE>

                                      F-63
<PAGE>   86

          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

                        SEVEN MONTHS ENDED JULY 31, 1997
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                    AFA               AFA
                                             WTI, INC.         PRODUCTS, INC.       POLYTEK
                                        (PREDECESSOR TO AFA)    (GUARANTOR)     (NON-GUARANTOR)   CONSOLIDATED
                                        --------------------   --------------   ---------------   ------------
<S>                                     <C>                    <C>              <C>               <C>
Cash flows from operating
  activities..........................        $                   $ 4,237           $1,591          $ 5,828
Cash flows from investing activities:
  Capital expenditures................                             (1,649)            (849)          (2,498)
  Other...............................                                (46)                              (46)
  Net cash used in investing
     activities.......................                             (1,695)            (849)          (2,544)
Cash flows from financing activities:
  Change in line of credit............                             (1,410)            (365)          (1,775)
  Proceeds from long term debt........                              1,321                             1,321
  Repayment of long term debt.........                             (1,000)            (174)          (1,174)
                                              -------             -------           ------          -------
  Net cash from financing
     activities.......................                             (1,089)            (539)          (1,628)
Effect of exchange rate changes on
  cash................................                                                (102)            (102)
                                              -------             -------           ------          -------
Change in cash and cash equivalents...                              1,453              101            1,554
Cash and cash equivalents, beginning
  of period...........................                                337              500              837
                                              -------             -------           ------          -------
Cash and cash equivalents, end of
  period..............................                            $ 1,790           $  601          $ 2,391
                                              =======             =======           ======          =======
</TABLE>

                                      F-64
<PAGE>   87

               SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

                               DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                  WTI, INC.                AFA                   AFA
                               (PREDECESSOR TO       PRODUCTS, INC.            POLYTEK
                                    AFA)               (GUARANTOR)         (NON-GUARANTOR)        ELIMINATIONS      CONSOLIDATED
                               ---------------       --------------        ---------------        ------------      ------------
<S>                          <C>                   <C>                   <C>                   <C>                  <C>
Assets
Current Assets:
     Cash and cash
       equivalents.........                           $         337         $         500                           $         837
     Accounts receivable...     $       1,870                 4,236                 3,374        ($       2,981)            6,499
     Inventories...........                                   6,394                 3,920                                  10,314
     Prepaid expenses and
       other current
       assets..............                                      64                   544                                     608
                                -------------         -------------         -------------         -------------     -------------
          Total current
            assets.........             1,870                11,031                 8,338                (2,981)           18,258
     Property, plant and
       equipment, net......                                   7,360                 8,644                                  16,004
     Intangibles, net......                                   4,734                 1,761                                   6,495
     Investment in
       subsidiary..........             2,307                10,679                                     (12,986)
     Deferred income
       taxes...............                                   1,285                                                         1,285
     Other assets..........             2,287                 2,187                 3,243                (4,958)            2,759
                                -------------         -------------         -------------         -------------     -------------
          Total assets.....     $       6,464         $      37,276         $      21,986        ($      20,925)    $      44,801
                                =============         =============         =============         =============     =============
Liabilities and
  Stockholders' Equity
Current Liabilities:
     Current portion of
       long-term debt......     $       1,500         $       5,931         $       2,135        ($       1,500)    $       8,066
     Accounts payable......                14                 1,359                   857                   (29)            2,201
     Income taxes
       payable.............                                     988                                                           988
     Other accrued
       expenses............               537                 2,855                 4,118                (1,452)            6,058
                                -------------         -------------         -------------         -------------     -------------
          Total current
            liabilities....             2,051                11,133                 7,110                (2,981)           17,313
Long-term debt:
     Credit facilities.....
     Subordinated debt.....             2,000                14,957                 4,046                (4,958)           16,045
     Accrued interest of
       stockholders........                                   8,879                   151                                   9,030
                                -------------         -------------         -------------         -------------     -------------
          Total
            liabilities....             4,051                34,969                11,307                (7,939)           42,388
                                -------------         -------------         -------------         -------------     -------------
Stockholders' Equity
     Common stock..........               123                 8,878                 9,462               (18,340)              123
     Additional
       paid-in-capital.....             9,047                                         179                  (179)            9,047
     Retained earnings
       (deficit)...........            (6,757)               (6,571)                1,951                 5,533            (5,844)
     Cumulative translation
       adjustment..........                                                          (913)                                   (913)
          Total
            stockholders'
            equity.........             2,413                 2,307                10,679               (12,986)            2,413
                                -------------         -------------         -------------         -------------     -------------
Total liabilities and
  stockholders' equity.....     $       6,464         $      37,276         $      21,986        ($      20,925)    $      44,801
                                =============         =============         =============         =============     =============
</TABLE>

                                      F-65
<PAGE>   88

          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                          WTI, INC.                AFA                   AFA
                                       (PREDECESSOR TO       PRODUCTS, INC.            POLYTEK
                                            AFA)               (GUARANTOR)         (NON-GUARANTOR)         ELIMINATIONS
                                       ---------------       --------------        ---------------         ------------
<S>                                  <C>                   <C>                   <C>                   <C>
Net sales..........................     $                     $      30,673         $      23,698         $          (238)
Cost of sales......................                                  21,715                18,140                      13
                                        -------------         -------------         -------------         ---------------
     Gross profit..................                                   8,958                 5,558                    (251)
     Selling, general and
       administrative expense......               200                 3,239                 2,879                   1,071
     Income from operations........              (200)                5,719                 2,679                  (1,322)
Other expense (income):
     Interest......................               (35)                3,717                   574                      19
     Other.........................                 4                  (312)                1,374                  (1,341)
                                        -------------         -------------         -------------         ---------------
          Total other expense......               (31)                3,405                 1,948                  (1,322)
Income (loss) before provision
  (benefit) for income taxes.......              (169)                2,314                   731
                                        -------------         -------------         -------------         ---------------
Tax provision (benefit)............                                                           354
                                        -------------         -------------         -------------         ---------------
Income (loss) before equity in
  income of consolidated
  subsidiary.......................              (169)                2,314                   377
Equity in income of consolidated
  subsidiaries.....................             2,691                   377                                        (3,068)
                                        -------------         -------------         -------------         ---------------
Net income.........................     $       2,522         $       2,691         $         377      $           (3,068)
                                        =============         =============         =============         ===============

<CAPTION>

                                        CONSOLIDATED
                                        ------------
<S>                                  <C>
Net sales..........................     $      54,133
Cost of sales......................            39,868
                                        -------------
     Gross profit..................               14,265
     Selling, general and
       administrative expense......             7,389
     Income from operations........                6,876
Other expense (income):
     Interest......................             4,275
     Other.........................                 (275)
                                        -------------
          Total other expense......                4,000
Income (loss) before provision
  (benefit) for income taxes.......             2,876
                                        -------------
Tax provision (benefit)............               354
                                        -------------
Income (loss) before equity in
  income of consolidated
  subsidiary.......................             2,522
Equity in income of consolidated
  subsidiaries.....................
                                        -------------
Net income.........................     $       2,522
                                        =============
</TABLE>

                                      F-66
<PAGE>   89

          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

                      FOR THE YEAR ENDED DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                               WTI, INC.                AFA                   AFA
                                            (PREDECESSOR TO       PRODUCTS, INC.            POLYTEK
                                                 AFA)               (GUARANTOR)         (NON-GUARANTOR)        CONSOLIDATED
                                            ---------------       --------------        ---------------        ------------
<S>                                       <C>                   <C>                   <C>                   <C>
Cash flows from operating activities....     $                     $       3,691         $       2,482         $       6,173
Cash flows from investing activities:
     Capital expenditures...............                                    (406)               (1,812)               (2,218)
     Other..............................                                     (84)                    2                   (82)
                                             -------------         -------------         -------------         -------------
     Net cash used in investing
       activities.......................                                    (490)               (1,810)               (2,300)
                                             -------------         -------------         -------------         -------------
Cash flows from financing activities:
     Change in line of credit...........                                  (2,657)                 (207)               (2,864)
     Repayment of long term debt........            (1,500)               (1,633)                 (977)               (4,110)
     Intercompany advances..............             1,500                (1,399)                 (101)
     Proceeds from long term debt.......                                   2,594                   222                 2,816
                                             -------------         -------------         -------------         -------------
     Net cash from financing
       activities.......................                                  (3,095)               (1,063)               (4,158)
                                             -------------         -------------         -------------         -------------
Effect of exchange rate changes on
  cash..................................                                                           (62)                  (62)
                                             -------------         -------------         -------------         -------------
Change in cash and cash equivalents.....                                     106                  (453)                 (347)
Cash and cash equivalents, beginning of
  period................................                                     232                   952                 1,184
                                             -------------         -------------         -------------         -------------
Cash and cash equivalents, end of
  period................................                           $         338         $         499         $         837
                                             =============         =============         =============         =============
</TABLE>

                                      F-67
<PAGE>   90

          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED DECEMBER 31, 1995
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                  WTI, INC.                AFA                   AFA
                               (PREDECESSOR TO       PRODUCTS, INC.            POLYTEK
                                    AFA)               (GUARANTOR)         (NON-GUARANTOR)        ELIMINATIONS      CONSOLIDATED
                               ---------------       --------------        ---------------        ------------      ------------
<S>                          <C>                   <C>                   <C>                   <C>                  <C>
Net sales..................     $                     $      24,734         $      30,675         $        (171)    $      55,238
Cost of sales..............                                  19,327                22,738                   (94)           41,971
                                -------------         -------------         -------------         -------------     -------------
     Gross profit..........                                   5,407                 7,937                   (77)           13,267
Selling, general and
  administrative expense...               179                 2,783                 3,581                 1,334             7,877
                                -------------         -------------         -------------         -------------     -------------
     Income from
       operations..........              (179)                2,624                 4,356                (1,411)            5,390
Other expense (income):
     Interest..............               (35)                3,832                   664                    28             4,489
     Other.................                 5                  (313)                1,496                (1,439)             (251)
                                -------------         -------------         -------------         -------------     -------------
          Total other
            expense........               (30)                3,519                 2,160                (1,411)            4,238
Income (loss) before
  provision (benefit) for
  income taxes.............              (149)                 (895)                2,196                                   1,152
Tax provision..............                                                           880                                     880
                                -------------         -------------         -------------         -------------     -------------
Income (loss) before equity
  in income of
  consolidating
  subsidiary...............              (149)                 (895)                1,316                                     272
Equity in income of
  consolidated
  subsidiaries.............               421                 1,316                                      (1,737)
                                -------------         -------------         -------------         -------------     -------------
Net income (loss)..........     $         272         $         421         $       1,316         $      (1,737)    $         272
                                =============         =============         =============         =============     =============
</TABLE>

                                      F-68

<PAGE>   91

          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

                      FOR THE YEAR ENDED DECEMBER 31, 1995
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                               WTI, INC.                AFA                   AFA
                                            (PREDECESSOR TO       PRODUCTS, INC.            POLYTEK
                                                 AFA)               (GUARANTOR)         (NON-GUARANTOR)        CONSOLIDATED
                                            ---------------       --------------        ---------------        ------------
<S>                                       <C>                   <C>                   <C>                   <C>
Cash flows from operating activities....     $                     $       4,098         $       2,607         $       6,705
                                             -------------         -------------         -------------         -------------
Cash flows from investing activities:
     Capital expenditures...............                                  (2,140)               (1,464)               (3,604)
     Other..............................                                    (982)                   23                  (959)
                                             -------------         -------------         -------------         -------------
     Net cash used in investing
       activities.......................                                  (3,122)               (1,441)               (4,563)
                                             -------------         -------------         -------------         -------------
Cash flows from financing activities:
     Change in line of credit...........                                     913                   249                 1,162
     Repayment of long term debt........                                  (2,828)               (1,140)               (3,968)
     Intercompany advances..............                                     519                  (519)
     Proceeds from long term debt.......                                     565                                         565
                                             -------------         -------------         -------------         -------------
     Net cash from financing
       activities.......................                                    (831)               (1,410)               (2,241)
                                             -------------         -------------         -------------         -------------
Effect of exchange rate changes on
  cash..................................                                                            89                    89
                                             -------------         -------------         -------------         -------------
Change in cash and cash equivalents.....                                     145                  (155)                  (10)
Cash and cash equivalents, beginning of
  period................................                                      88                 1,106                 1,194
                                             -------------         -------------         -------------         -------------
Cash and cash equivalents, end of
  period................................     $                     $         233         $         951         $       1,184
                                             =============         =============         =============         =============
</TABLE>

                                      F-69

<PAGE>   92

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of
Contico International, Inc.:

     We have audited the accompanying combined balance sheets of Continental
Sprayers and Affiliates (the "Company") as of May 31, 1997 and 1996, and the
related combined statements of operations, divisional equity and cash flows for
each of the three years in the period ended May 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Continental
Sprayers and Affiliates as of May 31, 1997 and 1996, and the combined results of
their operations and their cash flows for each of the three years in the period
ended May 31, 1997 in conformity with generally accepted accounting principles.

Coopers & Lybrand L.L.P.

St. Louis, Missouri
March 12, 1998

                                      F-70
<PAGE>   93

                      CONTINENTAL SPRAYERS AND AFFILIATES

                            COMBINED BALANCE SHEETS
                             MAY 31, 1997 AND 1996
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               1997       1996
                                                              -------    -------
<S>                                                           <C>        <C>
ASSETS
Current assets:
  Cash......................................................  $    21    $    39
  Trade receivables from Contico............................      585        279
  Trade receivables, less allowance for doubtful accounts of
     $63 and $67............................................    8,194      8,029
  Inventories...............................................    5,768      6,847
  Other current assets......................................      287        589
                                                              -------    -------
          Total current assets..............................   14,855     15,783
Property, plant and equipment...............................   30,588     32,464
Other assets................................................      485        384
                                                              -------    -------
          Total assets......................................  $45,928    $48,631
                                                              =======    =======
LIABILITIES AND DIVISIONAL EQUITY
Current liabilities:
  Accounts payable..........................................  $ 2,441    $ 4,257
  Accrued expenses..........................................    1,958      2,286
  Uncleared checks..........................................    1,519      1,216
                                                              -------    -------
          Total current liabilities.........................    5,918      7,759
Advances from Contico.......................................    5,712      8,813
Minority interest in affiliate..............................      120        119
                                                              -------    -------
          Total liabilities.................................   11,750     16,691
                                                              -------    -------
Divisional equity...........................................   34,178     31,940
                                                              -------    -------
          Total liabilities and divisional equity...........  $45,928    $48,631
                                                              =======    =======
</TABLE>

     The accompanying notes are an integral part of the combined financial
                                  statements.

                                      F-71
<PAGE>   94

                      CONTINENTAL SPRAYERS AND AFFILIATES

                       COMBINED STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED MAY 31, 1997, 1996 AND 1995
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               1997      1996      1995
                                                              -------   -------   -------
<S>                                                           <C>       <C>       <C>
Net sales to third parties..................................  $58,600   $54,086   $54,658
Net sales to Contico........................................    3,649     3,018     3,662
                                                              -------   -------   -------
                                                               62,249    57,104    58,320
Cost of sales...............................................   48,901    44,614    42,491
                                                              -------   -------   -------
          Gross profit......................................   13,348    12,490    15,829
Selling, general and administrative expenses................    6,286     6,335     6,214
                                                              -------   -------   -------
          Income from operations............................    7,062     6,155     9,615
                                                              -------   -------   -------
Other expense (income):
  Interest expense from Contico.............................      616       983     1,355
  Other, net................................................       28       142      (181)
                                                              -------   -------   -------
                                                                  644     1,125     1,174
                                                              -------   -------   -------
          Income before provision for income taxes..........    6,418     5,030     8,441
Provision for income taxes..................................      361       258       260
                                                              -------   -------   -------
          Net income........................................  $ 6,057   $ 4,772   $ 8,181
                                                              =======   =======   =======
</TABLE>

     The accompanying notes are an integral part of the combined financial
                                  statements.

                                      F-72
<PAGE>   95

                      CONTINENTAL SPRAYERS AND AFFILIATES

                    COMBINED STATEMENTS OF DIVISIONAL EQUITY
                FOR THE YEARS ENDED MAY 31, 1997, 1996 AND 1995
                                 (IN THOUSANDS)

<TABLE>
<S>                                                           <C>
Balance, June 1, 1994.......................................  $27,068
Net income..................................................    8,181
Dividends...................................................   (5,065)
Foreign currency translation adjustment.....................       19
                                                              -------
Balance, May 31, 1995.......................................   30,203
Net income..................................................    4,772
Dividends...................................................   (3,018)
Foreign currency translation adjustment.....................      (17)
                                                              -------
Balance, May 31, 1996.......................................   31,940
Net income..................................................    6,057
Dividends...................................................   (3,851)
Foreign currency translation adjustment.....................       32
                                                              -------
Balance, May 31, 1997.......................................  $34,178
                                                              =======
</TABLE>

     The accompanying notes are an integral part of the combined financial
                                  statements.

                                      F-73
<PAGE>   96

                      CONTINENTAL SPRAYERS AND AFFILIATES

                       COMBINED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED MAY 31, 1997, 1996 AND 1995
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               1997       1996       1995
                                                              -------    -------    -------
<S>                                                           <C>        <C>        <C>
Cash flows from operating activities:
  Net income................................................  $ 6,057    $ 4,772    $ 8,181
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Depreciation...........................................    6,526      6,173      5,562
     Net gain on disposal of assets.........................      (89)        (6)        15
     Decrease (increase) in receivable from Contico, net....     (355)       482        (19)
     Decrease (increase) in trade receivable, less
       reserves.............................................     (117)    (2,316)       922
     Decrease (increase) in inventories.....................    1,119      1,589        (81)
     Decrease (increase) in other current assets............      311       (387)      (141)
     Increase (decrease) in accounts payable................   (1,822)     2,685       (606)
     Increase (decrease) in accrued expenses................     (331)      (286)        14
                                                              -------    -------    -------
          Net cash provided by operating activities.........   11,299     12,706     13,847
                                                              -------    -------    -------
Cash flows from investing activities:
  Purchases of property, plant and equipment................   (4,477)    (3,337)    (5,301)
  Proceeds from disposal of assets..........................      106         10         18
  Purchases of other long-term assets.......................     (238)      (232)      (131)
                                                              -------    -------    -------
          Net cash used in investing activities.............   (4,609)    (3,559)    (5,414)
                                                              -------    -------    -------
Cash flows from financing activities:
  Payment of dividends to Contico...........................   (3,851)    (3,018)    (5,065)
  Net decrease in advances from Contico.....................   (3,151)    (6,490)    (3,199)
  Increase (decrease) in uncleared checks...................      303        363       (220)
                                                              -------    -------    -------
          Net cash used in financing activities.............   (6,699)    (9,145)    (8,484)
                                                              -------    -------    -------
          Effect of exchange rate changes on cash...........       (9)         4        (13)
                                                              -------    -------    -------
          Increase (decrease) in cash.......................      (18)         6        (64)
Cash, beginning of period...................................       39         33         97
                                                              -------    -------    -------
Cash, end of period.........................................  $    21    $    39    $    33
                                                              =======    =======    =======
Cash paid during the period for:
  Interest..................................................  $   616    $   983    $ 1,355
                                                              =======    =======    =======
  Taxes.....................................................  $   396    $   178    $   333
                                                              =======    =======    =======
</TABLE>

     The accompanying notes are an integral part of the combined financial
                                  statements.

                                      F-74
<PAGE>   97

                      CONTINENTAL SPRAYERS AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                             (AMOUNTS IN THOUSANDS)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     A.  COMBINED ENTITIES AND BASIS OF PRESENTATION:  The combined financial
statements of Continental Sprayers and affiliates (the "Company") include the
accounts of Continental Sprayers and Contour Cutting, divisions of Contico
International, Inc. ("Contico"), a Missouri corporation, of Continental Sprayers
de Mexico S.A. de C.V. (a majority owned Mexican subsidiary of Contico) and of
Continental Sprayers & Equipment (a United Kingdom division of Contico).

     The purpose of the combined financial statements is to present the
financial position, results of operations and cash flows of Contico's liquid
dispenser business activities. The combined financial statements have been
prepared as if the Company had operated as a stand-alone entity for all periods
presented, and include those assets, liabilities, revenues, expenses and cash
flows directly attributable to the operations of the Company. The combined
financial statements have been presented using consolidation principles.
Minority interest in affiliate represents the minority stockholder's
proportionate share of net equity. As a result of the matters discussed above,
no separate components of equity are presented in the combined financial
statements. All significant intercompany accounts and transactions have been
eliminated.

     Contico provides certain services to, and incurs certain costs on behalf
of, its subsidiaries and divisions. These costs, which include general overhead
and treasury services are billed to Contico's subsidiaries, including the
Company, based upon an analysis of the allocated resources required to perform
such services. Such costs are presented in the accompanying combined statements
of operations as administrative expenses (see Note 5).

     Contico's management believes the method used to allocate expenses to the
Company is reasonable and appropriate. However, allocated expenses are not
necessarily indicative of the expenses which would have resulted had the Company
operated as a separate entity. The Company has relied upon Contico to fund
working capital needs and provide equity. The financial information included
herein is based on the operation of the Company as a division of Contico and
should not necessarily be considered indicative of future operating results of
the Company on a stand-alone basis.

     B.  RECENTLY ISSUED ACCOUNTING STANDARDS:  Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income, is effective for
years beginning after December 15, 1997. This statement requires that an
enterprise classify items of other comprehensive income by their nature in the
financial statements and display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in capital in the
equity section of the statement of position.

     Statement of Financial Accounting Standards No. 131, Disclosure About
Segments of an Enterprise and Related Information, is effective for years
beginning after December 15, 1997. This statement requires that a public
business enterprise report financial and descriptive information about its
reportable business segments.

     Management of the Company believes that the future adoption of these
statements will not have a significant impact on the Company's combined
financial position, results of operations or cash flows, but will result in
additional disclosure.

     C.  INVENTORIES:  Inventories are stated at the lower of cost or market.
Cost is determined on the first-in, first-out (FIFO) basis.

     D.  PROPERTY, PLANT AND EQUIPMENT:  Property, plant and equipment is stated
at cost. Depreciation is provided primarily on a straight-line basis over the
estimated useful lives of the assets. The estimated lives utilized in
calculating depreciation are as follows: building -- 39 years; building
improvements -- 10 to 39 years; machinery and equipment -- 3 to 10 years; molds,
dies and tooling -- 5 years; and furniture and fixtures -- 5 to 10 years.
Leasehold improvements are amortized over the shorter of the life of the lease
or of the improvement. Maintenance and repairs are charged to income as incurred
and betterments that extend the

                                      F-75
<PAGE>   98
                      CONTINENTAL SPRAYERS AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

useful life are capitalized. Upon retirement or sale, the cost and accumulated
depreciation are eliminated from the respective accounts, and the gain or loss,
if any, is included in income.

     If events or changes in circumstances indicate that the carrying amount of
a long-lived asset may not be recoverable, the Company estimates the future cash
flows expected to result from the use of the asset and its eventual disposition.
If the sum of the expected future cash flows (undiscounted and without interest
charges) is less than the carrying amount of the long-lived asset, an impairment
loss is recognized. To date, no impairment losses have been recognized.

     E.  FOREIGN CURRENCY TRANSLATION:  The functional currency of Continental
Sprayers de Mexico S.A. de C.V. is the U.S. dollar. The functional currency of
Continental Sprayers & Equipment is British pounds sterling. Assets and
liabilities of Continental Sprayers & Equipment are translated into U.S. dollars
at current exchange rates, and profit and loss accounts are translated at
average annual exchange rates. Resulting translation gains and losses are
included as a separate component in divisional equity. As of May 31, 1997 and
1996, the cumulative translation adjustment included in divisional equity was
$33 and $1, respectively. Foreign exchange transaction gains and losses are
included in the results of operations. Such amounts for the years presented were
insignificant.

     F.  REVENUE RECOGNITION:  Sales and related costs of goods sold are
included in income when goods are shipped and title has passed to customers.

     G.  RESEARCH AND DEVELOPMENT:  The cost of research and development is
expensed as incurred. Research and development costs for the periods were not
significant.

     H.  INCOME TAXES:  Contico is a Subchapter S corporation for federal and
Missouri state tax purposes. Under this election, the United States taxable
income of the Company is included in the personal taxable income of the
stockholders of Contico. The provision for income taxes includes certain state
taxes and taxes provided for foreign affiliates and divisions.

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

2.  INVENTORIES:

     Inventories are comprised of the following:

<TABLE>
<CAPTION>
                                                              1997      1996
                                                             ------    ------
<S>                                                          <C>       <C>
Raw materials..............................................  $1,293    $1,562
Work in process............................................   2,303     3,355
Finished goods.............................................   2,172     1,930
                                                             ------    ------
                                                             $5,768    $6,847
                                                             ======    ======
</TABLE>

                                      F-76
<PAGE>   99
                      CONTINENTAL SPRAYERS AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

3.  PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                           1997        1996
                                                         --------    --------
<S>                                                      <C>         <C>
Land, buildings and improvements.......................  $  7,897    $  7,852
Machinery and equipment................................    40,160      39,320
Molds, dies and tooling................................    21,936      19,694
Furniture and fixtures.................................     1,216         989
Construction in progress...............................       669         608
                                                         --------    --------
                                                           71,878      68,463
     Less accumulated depreciation.....................   (41,290)    (35,999)
                                                         --------    --------
                                                         $ 30,588    $ 32,464
                                                         ========    ========
</TABLE>

4.  ACCRUED EXPENSES:

     Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                              1997      1996
                                                             ------    ------
<S>                                                          <C>       <C>
Accrued compensation.......................................  $1,156    $1,248
Accrued workers' compensation..............................     400       673
Other accrued expenses.....................................     402       365
                                                             ------    ------
                                                             $1,958    $2,286
                                                             ======    ======
</TABLE>

5.  INTERENTITY TRANSACTIONS:

     Net sales to Contico result from a wholesale distribution agreement whereby
the Company provides Contico's entire domestic requirements of liquid
dispensers. The agreement is renewable annually as mutually agreed by the
parties.

     The Company has an agreement to purchase certain operating, administrative
and corporate services from Contico. The agreement, which is subject to certain
conditions, is renewable annually as mutually agreed by the parties. The Company
paid $285, $285 and $270 for services rendered during the years ended May 31,
1997, 1996 and 1995, respectively (see Note 1).

     Contico advances funds to the Company as needed to meet the Company's
operating requirements. The Company is charged interest on these advances at
7.5% and 8.3% at May 31, 1997 and 1996, respectively. Interest expense on these
advances was $616, $983 and $1,355 for the years ended May 31, 1997, 1996 and
1995, respectively. The Company's domestic, as well as Contico's, assets are
pledged as collateral under Contico's bank financing agreements.

     The Company paid dividends to Contico of $3,851, $3,018 and $5,065
representing 60% of the Company's income before provision for income taxes for
the years ended May 31, 1997, 1996 and 1995, respectively.

6.  RETIREMENT BENEFITS:

     The Company offers a 401(k) plan to substantially all domestic nonunion
employees. The Company's contributions under this plan were $83, $91 and $110
for the years ended May 31, 1997, 1996 and 1995, respectively.

                                      F-77
<PAGE>   100
                      CONTINENTAL SPRAYERS AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7.  MAJOR CUSTOMERS:

     Two customers accounted for approximately 30%, 34% and 24% of total net
sales for the years ended May 31, 1997, 1996 and 1995, respectively.

     In January 1998, following the sale of certain of its product lines to S.C.
Johnson, Dow Brands, CSI's largest customer, notified CSI that it would be
terminating its contract with CSI effective April 23, 1998. Dow Brands purchases
from CSI for each of the three years in the period ended May 31, 1997 was 18.2%,
22.2% and 15.1%, respectively. The loss of the Dow Brands business could
adversely impact the Company's future results of operations. Following its
acquisition of the Dow Brands product lines, S.C. Johnson resold certain of the
acquired product lines to a third party. Management believes that the Company
will continue through the end of 1998 to supply trigger sprayers for those
product lines, which accounted for approximately one-half of CSI's unit sales to
Dow Brands, as well as for certain of the product lines retained by S.C.
Johnson. However, there can be no assurance of the extent to which the Company
will continue to supply trigger sprayers for any of these product lines or the
length of time it will continue to supply them.

8.  GEOGRAPHIC SEGMENT INFORMATION:

     The Company operates in one business segment -- the manufacture and sale of
liquid dispensers. The Company's operations can be grouped into two geographical
segments. Total revenue by segment includes both sales to customers and
intersegment sales, which are accounted for at prices charged to customers and
eliminated in consolidation. Pertinent financial data by major geographic
segment is as follows:

<TABLE>
<CAPTION>
                                                             YEAR ENDED MAY 31,
                                                   --------------------------------------
                                                      1997          1996          1995
                                                   ----------    ----------    ----------
<S>                                                <C>           <C>           <C>
North America:
  Net sales......................................   $60,582       $56,856       $59,844
  Operating income...............................     6,026         5,537         8,992
  Identifiable assets............................    41,672        47,259
Europe:
  Net sales......................................   $ 7,643       $ 4,110       $ 4,117
  Operating income...............................     1,284           546           656
  Identifiable assets............................     5,566         4,009
Eliminations:
  Net sales......................................   $(5,976)      $(3,862)      $(5,641)
  Operating (loss) income........................      (248)           72           (33)
  Identifiable assets............................    (1,310)       (2,637)
Total:
  Net sales......................................   $62,249       $57,104       $58,320
  Operating income...............................     7,062         6,155         9,615
  Identifiable assets............................    45,928        48,631
</TABLE>

9.  SUBSEQUENT EVENT -- SALE OF OPERATIONS:

     Effective February 1, 1998, Contico sold certain of the assets, liabilities
and operations of the Company to Continental Acquisition Corp., for a net cash
sale price of approximately $91 million plus approximately $2 million,
contingently payable in the future based on the Company achieving certain
agreed-upon sales levels through 2005. No adjustments have been recorded in the
accompanying historical combined financial statements of the Company as a result
of this transaction.

                                      F-78
<PAGE>   101
REPORT OF INDEPENDENT ACCOUNTANTS



To the Stockholders and Board of Directors of
      Contico International, Inc.:



In our opinion, the accompanying combined balance sheet and the related combined
statement of operations and of divisional equity and of cash flows present
fairly, in all material respects, the combined financial position of Continental
Sprayers and Affiliates (the "Company") at January 30, 1998, and the combined
results of their operations and their cash flows for the eight-month period
ended January 30, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.

PricewaterhouseCoopers, LLP

St. Louis, Missouri
March 12, 1998

                                      F-79
<PAGE>   102
CONTINENTAL SPRAYERS AND AFFILIATES

COMBINED BALANCE SHEET
January 30, 1998
(In thousands)

<TABLE>
<S>                                                                        <C>
                              ASSETS

Current assets:
     Cash                                                                  $    16
     Trade receivables from Contico                                            503
     Trade receivables, less allowance for doubtful accounts
          of $129                                                            7,379
     Inventories                                                             4,818
     Other current assets                                                      196
                                                                           -------

          Total current assets                                              12,912

Property, plant and equipment                                               28,149
Other assets                                                                   599
                                                                           -------

             Total assets                                                  $41,660
                                                                           =======

                                  LIABILITIES AND DIVISIONAL EQUITY

Current liabilities:
     Accounts payable                                                      $ 1,861
     Accrued expenses                                                        2,751
     Uncleared checks                                                          598
                                                                           -------

          Total current liabilities                                          5,210

Advances from Contico                                                        1,058
Minority interest in affiliate                                                 116
                                                                           -------

             Total liabilities                                               6,384
                                                                           -------

Divisional equity                                                           35,276
                                                                           -------

               Total liabilities and divisional equity                     $41,660
                                                                           =======
</TABLE>


The accompanying notes are an integral part of the combined financial
statements.



                                      F-80

<PAGE>   103
CONTINENTAL SPRAYERS AND AFFILIATES

COMBINED STATEMENT OF OPERATIONS
for the eight months ended January 30, 1998
(In thousands)


<TABLE>
<S>                                                            <C>
Net sales to third parties                                     $38,366
Net sales to Contico                                             2,606
                                                               -------

                                                                40,972
Cost of sales                                                   31,294
                                                               -------

          Gross profit                                           9,678

Operating expenses:
     Selling and distribution                                    2,116
     Administrative                                              1,801
                                                               -------

             Income from operations                              5,761
                                                               -------

Other expense (income):
     Interest expense from Contico                                 147
     Other, net                                                     57
                                                               -------

                                                                   204
                                                               -------

               Income before provision for income taxes          5,557

Provision for income taxes                                         253
                                                               -------

                  Net income                                   $ 5,304
                                                               =======
</TABLE>


The accompanying notes are an integral part of the combined financial
statements.



                                      F-81
<PAGE>   104
CONTINENTAL SPRAYERS AND AFFILIATES

COMBINED STATEMENT OF DIVISIONAL EQUITY
for the eight months ended January 30, 1998
(In thousands)


<TABLE>
<S>                                            <C>
Balance,  May 31, 1997                         $ 34,178

Net income                                        5,304
Dividends                                        (4,241)
Foreign currency translation adjustment              35
                                               --------

Balance, January 30, 1998                      $ 35,276
                                               ========
</TABLE>


The accompanying notes are an integral part of the combined financial
statements.




                                      F-82

<PAGE>   105
CONTINENTAL SPRAYERS AND AFFILIATES

COMBINED STATEMENT OF CASH FLOWS
for the eight months ended January 30, 1998
(In thousands)

<TABLE>
<S>                                                                               <C>
Cash flows from operating activities:
     Net income                                                                   $  5,304

     Adjustments to reconcile net income to net cash provided by operating
          activities:
       Depreciation                                                                  4,382
       Net gain on disposal of assets                                                   (8)
       Decrease in receivable from Contico, net                                        247
       Decrease in trade receivable, less reserves                                     842
       Decrease in inventories                                                         978
       Decrease in other current assets                                                 92
       Decrease in accounts payable                                                   (583)
       Decrease in accrued expenses                                                    790
                                                                                  --------

          Net cash provided by operating activities                                 12,044
                                                                                  --------

Cash flows from investing activities:
     Purchases of property, plant and equipment                                     (1,816)
     Proceeds from disposal of assets                                                   17
     Purchases of other long-term assets                                              (217)
                                                                                  --------

          Net cash used in investing activities                                     (2,016)
                                                                                  --------

Cash flows from financing activities:
     Payment of dividends to Contico                                                (4,241)
     Net decrease in advances from Contico                                          (4,856)
                                                                                      (921)
     Decrease in uncleared checks
                                                                                  --------

          Net cash used in financing activities                                    (10,018)
                                                                                  --------

Effect of exchange rate changes on cash                                                (15)
                                                                                  --------

             Increase (decrease) in cash                                                (5)

Cash, beginning of period                                                               21
                                                                                  --------

Cash, end of period                                                               $     16
                                                                                  ========

Cash paid during the period for:
     Interest                                                                     $    208
                                                                                  ========

     Taxes                                                                        $    266
                                                                                  ========
</TABLE>


                 The accompanying notes are an integral part of the combined
financial statements.




                                      F-83
<PAGE>   106
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

    A.  COMBINED ENTITIES AND BASIS OF PRESENTATION: The combined financial
        statements of Continental Sprayers and affiliates (the "Company")
        include the accounts of Continental Sprayers and Contour Cutting,
        divisions of Contico International, Inc. ("Contico"), a Missouri
        corporation, of Continental Sprayers de Mexico S.A. de C.V. (a majority
        owned Mexican subsidiary of Contico) and of Continental Sprayers &
        Equipment (a United Kingdom division of Contico).

        The purpose of the combined financial statements is to present the
        financial position, results of operations and cash flows of Contico's
        liquid dispenser business activities. The combined financial statements
        have been prepared as if the Company had operated as a stand-alone
        entity for all periods presented, and include those assets, liabilities,
        revenues, expenses and cash flows directly attributable to the
        operations of the Company. The combined financial statements have been
        presented using consolidation principles. Minority interest in affiliate
        represents the minority stockholder's proportionate share of net equity.
        As a result of the matters discussed above, no separate components of
        equity are presented in the combined financial statements. All
        significant intercompany accounts and transactions have been eliminated.

        Contico provides certain services to, and incurs certain costs on behalf
        of its subsidiaries and divisions. These costs, which include general
        overhead and treasury services are billed to Contico's subsidiaries and
        divisions, including the Company, based upon an analysis of the
        allocated resources required to perform such services. Such costs are
        presented in the accompanying combined statements of operations as
        administrative expenses (see Note 5).

        Contico's management believes the method used to allocate expenses to
        the Company is reasonable and appropriate. However, allocated expenses
        are not necessarily indicative of the expenses which would have resulted
        had the Company operated as a separate entity. The Company has relied
        upon Contico to fund working capital needs and provide equity. The
        financial information included herein is based on the operation of the
        Company as a Division of Contico and should not necessarily be
        considered indicative of future operating results of the Company on a
        stand-alone basis.


                                      F-84

<PAGE>   107
CONTINENTAL SPRAYERS AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
(Amounts in thousands)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

    B.  RECENTLY ISSUED ACCOUNTING STANDARDS: Statement of Financial Accounting
        Standards No. 130, Reporting Comprehensive Income, is effective for
        years beginning after December 15, 1997. This statement requires that an
        enterprise classify items of other comprehensive income by their nature
        in the financial statements and display the accumulated balance of other
        comprehensive income separately from retained earnings and additional
        paid-in capital in the equity section of the statement of position.

        Statement of Financial Accounting Standards No. 131, Disclosure About
        Segments of an Enterprise and Related Information, is effective for
        years beginning after December 15, 1997. This statement requires that a
        public business enterprise report financial and descriptive information
        about its reportable business segments.

        Management of the Company believes that the future adoption of these
        statements will not have a significant impact on the Company's combined
        financial position, results of operations or cash flows, but will result
        in additional disclosure.

    C.  INVENTORIES: Inventories are stated at the lower of cost or market. Cost
        is determined on the first-in, first-out (FIFO) basis.

    D.  PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment is stated
        at cost. Depreciation is provided primarily on a straight-line basis
        over the estimated useful lives of the assets. The estimated lives
        utilized in calculating depreciation are as follows: building - 39
        years; building improvements - 10 to 39 years; machinery and equipment -
        3 to 10 years; molds, dies and tooling - 5 years; and furniture and
        fixtures - 5 to 10 years. Leasehold improvements are amortized over the
        shorter of the life of the lease or of the improvement. Maintenance and
        repairs are charged to income as incurred and betterments that extend
        the useful life are capitalized. Upon retirement or sale, the cost and
        accumulated depreciation are eliminated from the respective accounts,
        and the gain or loss, if any, is included in income.

        If events or changes in circumstances indicate that the carrying amount
        of a long-lived asset may not be recoverable, the Company estimates the
        future cash flows expected to result from the use of the asset and its
        eventual disposition. If the sum of the expected future cash flows
        (undiscounted and without interest charges) is less than the carrying
        amount of the long-lived asset, an impairment loss is recognized. To
        date, no impairment losses have been recognized.


                                      F-85

<PAGE>   108
CONTINENTAL SPRAYERS AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
(Amounts in thousands)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

    E.  FOREIGN CURRENCY TRANSLATION: The functional currency of Continental
        Sprayers de Mexico S.A. de C.V. is the U.S. dollar. The functional
        currency of Continental Sprayers and Equipment is British pounds
        sterling. Assets and liabilities of Continental Sprayers & Equipment are
        translated into U.S. dollars at current exchange rates, and profit and
        loss accounts are translated at average annual exchange rates. Resulting
        translation gains and losses are included as a separate component in
        equity. As of January 30, 1998, the cumulative translation adjustment
        included in divisional equity was $35. Foreign exchange transaction
        gains and losses are included in the results of operations. Such amounts
        for the period presented were insignificant.

    F.  REVENUE RECOGNITION: Sales and related costs of goods sold are included
        in income when goods are shipped and title has passed to customers.

    G.  RESEARCH AND DEVELOPMENT: The cost of research and development is
        expensed as incurred. Research and development costs for the periods
        presented were not significant.

    H.  INCOME TAXES: Contico is a Subchapter S corporation for federal and
        Missouri state tax purposes. Under this election, the United States
        taxable income of the Company is included in the personal taxable income
        of the stockholders of Contico. The provision for income taxes includes
        certain state taxes and taxes provided for foreign affiliates and
        divisions.

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



2.  INVENTORIES:

    Inventories at January 30, 1998 are comprised of the following:


<TABLE>
<S>                                                                       <C>
Raw materials                                                             $1,450
Work in process                                                            1,912
Finished goods                                                             1,456
                                                                          ------

                                                                          $4,818
                                                                          ======
</TABLE>




                                      F-86

<PAGE>   109
CONTINENTAL SPRAYERS AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
(Amounts in thousands)


3.  PROPERTY, PLANT AND EQUIPMENT:

    Property, plant and equipment at January 30, 1998 consists of the following:


<TABLE>
<S>                                                                    <C>
Land, buildings and improvements                                       $  7,878
Machinery and equipment                                                  40,711
Molds, dies and tooling                                                  22,352
Furniture and fixtures                                                    1,264
Construction in progress                                                  1,482
                                                                       --------

                                                                         73,687
   Less accumulated depreciation                                        (45,538)
                                                                       --------

                                                                       $ 28,149
                                                                       ========
</TABLE>


4.  ACCRUED EXPENSES:

    Accrued expenses at January 30, 1998 consist of the following:


<TABLE>
<S>                                                                       <C>
Accrued compensation                                                      $  820
Accrued workers' compensation                                                342
Customer allowances                                                        1,210
Other accrued expenses                                                       379
                                                                          ------

                                                                          $2,751
                                                                          ======
</TABLE>



                                      F-87
<PAGE>   110
CONTINENTAL SPRAYERS AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
(Amounts in thousands)


5.  INTERENTITY TRANSACTIONS:

    Net sales to Contico result from a wholesale distribution agreement whereby
    the Company provides Contico's entire domestic requirements of liquid
    dispensers. The agreement is renewable annually as mutually agreed by the
    parties.

    The Company has an agreement to purchase certain operating, administrative
    and corporate services from Contico. The agreement, which is subject to
    certain conditions, is renewable annually as mutually agreed by the parties.
    The Company paid $196 for services rendered during the period ended January
    30, 1998 (see Note 1).

                                      F-88

<PAGE>   111
CONTINENTAL SPRAYERS AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
(Amounts in thousands)


5.  INTERENTITY TRANSACTIONS:

    Contico advances funds to the Company as needed to meet the Company's
    operating requirements. The Company is charged interest on these advances at
    7.7% at January 30, 1998. Interest expense on these advances was $208 for
    the period ended January 30, 1998. The Company's domestic as well as
    Contico's assets are pledged as collateral under Contico's bank financing
    agreements.

    The Company paid dividends to Contico of $4,241 representing 62% of the
    Company's income before provision for income taxes for the period ended
    January 30, 1998.



6.  RETIREMENT BENEFITS:

    The Company offers a 401(k) plan to substantially all domestic nonunion
    employees. The Company's contributions under this plan were $157 for the
    period ended January 30, 1998.



7.  MAJOR CUSTOMERS:

    Two customers accounted for approximately 26% of total net sales for the
    eight months ended January 30, 1998.



8.  GEOGRAPHIC SEGMENT INFORMATION:

    The Company operates in one business segment - the manufacture and sale of
    liquid dispensers. The Company's operations can be grouped into two
    geographical segments. Total revenue by segment includes both sales to
    customers and intersegment sales, which are accounted for at prices charged
    to customers and eliminated in consolidation. Pertinent financial data by
    major geographic segment is as follows:


                                      F-89
<PAGE>   112
CONTINENTAL SPRAYERS AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
(Amounts in thousands)


8.  GEOGRAPHIC SEGMENT INFORMATION, CONTINUED:


<TABLE>
<CAPTION>
                                                                     EIGHT MONTHS
                                                                        ENDED
                                                                     JANUARY 30,
                                                                         1998
                                                                     ------------
<S>                                                                    <C>
North America:
   Net sales                                                           $ 37,918
   Operating income                                                       4,929
   Identifiable assets                                                   37,541

Europe:
   Net sales                                                           $  6,301
   Operating income                                                         859
   Identifiable assets                                                    6,878

Eliminations:
   Net sales                                                           $ (3,247)
   Operating income                                                         (27)
   Identifiable assets                                                   (2,759)

Total:
   Net sales                                                           $ 40,972
   Operating income                                                       5,761
   Identifiable assets                                                   41,660
</TABLE>


9.  SUBSEQUENT EVENT - SALE OF OPERATIONS:

    Effective February 1, 1998, Contico sold certain of the assets, liabilities
    and operations of the Company to Continental Acquisition Corp., for cash of
    approximately $91 million plus approximately $2 million, contingently
    payable in the future based on the Company achieving certain agreed-upon
    sales levels through 2005. No adjustments have been recorded in the
    accompanying historical combined financial statements of the Company as a
    result of this transaction.


                                      F-90
<PAGE>   113
CONTINENTAL SPRAYERS AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
(Amounts in thousands)


9.  SUBSEQUENT EVENT - SALE OF OPERATIONS, CONTINUED:

    In September 1997, at the request of a customer, the Company implemented
    certain design changes to a trigger sprayer, which changes were approved by
    the customer. In October 1997, without informing the Company, the customer
    made changes to the formulation of is product that were incompatible with
    the revised design of the Company's trigger sprayer, resulting in
    malfunction of the trigger sprayer when used with that product. Management
    believes that the trigger sprayer functions in accordance with the
    customer's design specifications. However, the Company will provide certain
    allowance to the customer. The Company has estimated and recorded total
    allowances of $1,210, which are included in accrued liabilities at January
    30, 1998.


                                      F-91