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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(Mark One)

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2001

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 No. 333-76055

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UNITED INDUSTRIES CORPORATION(Exact name of registrant as specified in its charter)

DELAWARE(State or other jurisdiction of
incorporation or organization)

43-1025604(I.R.S Employer Identification No.)


8825 Page Boulevard
St. Louis, Missouri 63114(Address of principal executive office, including zip code)
(314) 427-0780
(Registrant's telephone number, including area code)

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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 / /

As
of September 30, 2001, the Registrant had 27,721,000 Class A voting and 27,721,000 Class B non-voting shares of common stock outstanding and 15,000 non-voting
shares of Class A preferred stock outstanding.

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PART 1  FINANCIAL INFORMATION

Item 1. Financial Statements

UNITED INDUSTRIES CORPORATION        BALANCE SHEETS        SEPTEMBER 30, 2001 AND 2000, AND DECEMBER 31, 2000        (Dollars in thousands)    
(Unaudited)

|                                                                                                                                         |                                             | September 30, |          | September 30, |   | December 31, |         
|---------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | ------------- | -------- | ------------- | - | ------------ | --------
|
|ASSETS                                                                                                                                   |                                             |               |          |               |   |              |         
|Current assets:                                                                                                                          |                                             |               |          |               |   |              |         
|Cash and cash equivalents                                                                                                                |                                             | $             |         |               | $ | 17,146       |         
|Accounts receivable (less allowance for doubtful accounts of $843 and $875 at September 30, 2001 and 2000 and $777 at December 31, 2000) |                                             |               | 36,855   |               |   | 31,376       |         
|Inventories                                                                                                                              |                                             |               | 33,779   |               |   | 31,799       |         
|Prepaid expenses                                                                                                                         |                                             |               | 4,777    |               |   | 2,666        |         
|                                                                                                                                         |                                             |               |          |               |   |              |         
|                                                                                                                                         | Total current assets                        |               |          | 75,411        |   |              | 82,987  
|Equipment and leasehold improvements, net                                                                                                |                                             |               | 24,223   |               |   | 25,871       |         
|Deferred income tax                                                                                                                      |                                             |               | 116,763  |               |   | 116,268      |         
|Other assets                                                                                                                             |                                             |               | 17,915   |               |   | 19,806       |         
|                                                                                                                                         |                                             |               |          |               |   |              |         
|                                                                                                                                         | Total assets                                |               | $        | 234,312       |   | $            | 244,932 
|                                                                                                                                         |                                             |               |          |               |   |              |         
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                    |                                             |               |          |               |   |              |         
|Current liabilities:                                                                                                                     |                                             |               |          |               |   |              |         
|Current maturities of long-term debt and capital lease obligation                                                                        |                                             | $             | 5,699    |               | $ | 6,096        |         
|Accounts payable                                                                                                                         |                                             |               | 13,146   |               |   | 11,789       |         
|Accrued expenses                                                                                                                         |                                             |               | 26,898   |               |   | 23,049       |         
|Short -term borrowings                                                                                                                   |                                             |               |         |               |   | 15,000       |         
|                                                                                                                                         |                                             |               |          |               |   |              |         
|                                                                                                                                         | Total current liabilities                   |               |          | 45,743        |   |              | 55,934  
|Long-term debt                                                                                                                           |                                             |               | 321,039  |               |   | 349,125      |         
|Capital lease obligation                                                                                                                 |                                             |               | 4,329    |               |   | 5,261        |         
|Other liabilities                                                                                                                        |                                             |               | 16,198   |               |   | 6,725        |         
|                                                                                                                                         |                                             |               |          |               |   |              |         
|                                                                                                                                         | Total liabilities                           |               |          | 387,309       |   |              | 417,045 
|Stockholders' deficit                                                                                                                    |                                             |               |          |               |   |              |         
|Common Stock (27.7 million shares of $0.01 par value Class A and 27.7 million $0.01 par value Class B)                                   |                                             |               | 554      |               |   | 554          |         
|Preferred Stock (15,000 shares of $0.01 par value Class A )                                                                              |                                             |               |         |               |   |             |         
|Warrants                                                                                                                                 |                                             |               | 2,784    |               |   |             |         
|Additional paid-in capital                                                                                                               |                                             |               | 139,051  |               |   | 126,865      |         
|Accumulated deficit                                                                                                                      |                                             |               | (291,993 | )             |   | (296,832     | )       
|Accumulated other comprehensive loss                                                                                                     |                                             |               | (693     | )             |   |             |         
|Common stock held in grantor trust                                                                                                       |                                             |               | (2,700   | )             |   | (2,700       | )       
|                                                                                                                                         |                                             |               |          |               |   |              |         
|                                                                                                                                         | Total stockholders' deficit                 |               |          | (152,997      | ) |              | (172,113
|                                                                                                                                         |                                             |               |          |               |   |              |         
|                                                                                                                                         | Total liabilities and stockholders' deficit |               | $        | 234,312       |   | $            | 244,932 
|                                                                                                                                         |                                             |               |          |               |   |              |         

See
accompanying notes to financial statements

2

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UNITED INDUSTRIES CORPORATION        STATEMENTS OF OPERATIONS        FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000        (Dollars in thousands)
       (Unaudited)

|                                                |                                              | Three months ended September 30, |        | Nine months ended
September 30,
|----------------------------------------------- | -------------------------------------------- | -------------------------------- | ------ | -------------------------------
|
|Sales before promotion expense                  |                                              | $                                | 60,541 |                                
|Promotion expense                               |                                              |                                  | 4,748  |                                
|                                                |                                              |                                  |        |                                
|Net sales                                       |                                              |                                  | 55,793 |                                
|                                                |                                              |                                  |        |                                
|Operating costs and expenses:                   |                                              |                                  |        |                                
|                                                | Cost of goods sold                           |                                  |        | 30,104                         
|                                                | Selling, general and administrative expenses |                                  |        | 16,970                         
|                                                | Dursban related expenses (see note 9)        |                                  |        |                               
|                                                |                                              |                                  |        |                                
|                                                | Total operating costs and expenses           |                                  |        | 47,074                         
|                                                |                                              |                                  |        |                                
|Operating income (loss)                         |                                              |                                  | 8,719  |                                
|Interest expense                                |                                              |                                  | 8,407  |                                
|                                                |                                              |                                  |        |                                
|Income (loss) before provision for income taxes |                                              |                                  | 312    |                                
|Income tax expense (benefit)                    |                                              |                                  | 91     |                                
|                                                |                                              |                                  |        |                                
|Net income (loss)                               |                                              | $                                | 221    |                                
|                                                |                                              |                                  |        |                                

See
accompanying notes to financial statements.

3

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UNITED INDUSTRIES CORPORATION        STATEMENTS OF CASH FLOWS        FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000        (Dollars in thousands)        (Unaudited)

|                                              |                                                                               | Nine months ended
September 30,                     |                                                             
|--------------------------------------------- | ----------------------------------------------------------------------------- | --------------------------------------------------- | ------------------------------------------------------------
|
|Cash flows from operating activities:         |                                                                               |                                                     |                                                             
|                                              | Net income                                                                    |                                                     | $                                                           
|                                              | Adjustments to reconcile net income to net cash used by operating activities: |                                                     |                                                             
|                                              |                                                                               | Non cash reduction of capital lease obligation      |                                                             
|                                              |                                                                               | Depreciation and amortization                       |                                                             
|                                              |                                                                               | Amortization of deferred financing fees             |                                                             
|                                              |                                                                               | Unrealized loss on interest rate swap, net of taxes |                                                             
|                                              |                                                                               | Provision for deferred income tax expense           |                                                             
|                                              |                                                                               | Changes in assets and liabilities:                  |                                                             
|                                              |                                                                               |                                                     | Increase in accounts receivable                             
|                                              |                                                                               |                                                     | Decrease in inventories                                     
|                                              |                                                                               |                                                     | Decrease in prepaid expenses                                
|                                              |                                                                               |                                                     | Increase (decrease) in accounts payable and accrued expenses
|                                              |                                                                               |                                                     | Increase (decrease) in Dursban charge                       
|                                              |                                                                               |                                                     | Decrease (increase) in other assets                         
|                                              |                                                                               |                                                     | Other, net                                                  
|                                              |                                                                               |                                                     |                                                             
|                                              |                                                                               |                                                     |                                                             
|Investing activities:                         |                                                                               |                                                     |                                                             
|                                              | Purchases of equipment and leasehold improvements                             |                                                     |                                                             
|                                              |                                                                               |                                                     |                                                             
|                                              |                                                                               |                                                     |                                                             
|Financing activities:                         |                                                                               |                                                     |                                                             
|                                              | Transaction costs related to the redemption of treasury stock                 |                                                     |                                                             
|                                              | Debt issuance costs                                                           |                                                     |                                                             
|                                              | Proceeds from the issuance of debt                                            |                                                     |                                                             
|                                              | Repayment of borrowings on revolver and other debt                            |                                                     |                                                             
|                                              |                                                                               |                                                     |                                                             
|                                              |                                                                               |                                                     |                                                             
|Net increase in cash and cash equivalents     |                                                                               |                                                     |                                                            
|Cash and cash equivalentsbeginning of period |                                                                               |                                                     |                                                            
|                                              |                                                                               |                                                     |                                                             
|Cash and cash equivalentsend of period       |                                                                               | $                                                   |                                                            
|                                              |                                                                               |                                                     |                                                             
|                                              | Noncash financing activity:                                                   |                                                     |                                                             
|                                              |                                                                               |                                                     |                                                             
|                                              |                                                                               |                                                     |                                                             

See
accompanying notes to financial statements.

4

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UNITED INDUSTRIES CORPORATION        NOTES TO FINANCIAL STATEMENTS        (Dollars in thousands)        (Unaudited)

Note 1Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all
of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a
fair presentation have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year. These statements should be read in
conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-K of United Industries Corporation (the "Company") for the year ended
December 31, 2000.

Note 2Inventories

Inventories are as follows:

|                                                 |  | September 30,
2001 |        | September 30,
2000 |   | December 31,
2000 |  
|------------------------------------------------ |  | ------------------ | ------ | ------------------ | - | ----------------- | -
|Raw materials                                    |  | $                  | 7,421  |                    | $ | 7,715             |  
|Finished goods                                   |  |                    | 27,593 |                    |   | 25,071            |  
|Allowance for obsolete and slow-moving inventory |  |                    | (1,235 | )                  |   | (987              | )
|                                                 |  |                    |        |                    |   |                   |  
|Total inventories                                |  | $                  | 33,779 |                    | $ | 31,799            |  
|                                                 |  |                    |        |                    |   |                   |  

Note 3Equipment and leasehold improvements, net

Equipment and leasehold improvements are as follows:

|                                 |  | September 30,
2001 |        | September 30,
2000 |   | December 31,
2000
|-------------------------------- |  | ------------------ | ------ | ------------------ | - | -----------------
|Machinery and equipment          |  | $                  | 29,460 |                    | $ | 27,514           
|Office furniture and equipment   |  |                    | 11,120 |                    |   | 10,227           
|Automobiles, trucks and aircraft |  |                    | 6,156  |                    |   | 6,412            
|Leasehold improvements           |  |                    | 7,372  |                    |   | 6,985            
|                                 |  |                    |        |                    |   |                  
|                                 |  |                    | 54,108 |                    |   | 51,138           
|Less: accumulated depreciation   |  |                    | 29,885 |                    |   | 25,267           
|                                 |  |                    |        |                    |   |                  
|                                 |  | $                  | 24,223 |                    | $ | 25,871           
|                                 |  |                    |        |                    |   |                  

5

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Note 4-Other assets

Other assets are as follows:

September 30,
2001

September 30,
2000

December 31,
2000Goodwill

$
7,175

$
7,988

$
7,988Accumulated amortization


(1,510
)

(2,130
)

(2,175
)5,665


5,858


5,813Deferred financing fees


18,067


17,108


18,067Accumulated amortization


(6,429
)

(3,770
)

(4,411
)11,638


13,338


13,656Other


612


610


618Total other assets

$
17,915

$
19,806

$
20,087


Note 5-Accrued expenses

Accrued expenses are as follows:

September 30,
2001

September 30,
2000

December 31,
2000Advertising and promotional

$
10,513

$
8,009

$
5,520Dursban charge


681


7,479


6,066Interest


7,723


3,782


3,886Cash overdraft


1,171





6,181Dividend payable


2,039





320Severence charges


205


952


1,010Other


4,566


2,827


1,808Total accrued expenses

$
26,898

$
23,049

$
24,791


6

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Note 6-Long-term debt and credit facilities

Long-term debt is comprised of the following:

September 30,
2001

September 30,
2000

December 31,
2000Senior Credit Facility:Term Loan A

$
41,511

$
57,500

$
48,430Term Loan B


134,835


147,375


135,878Revolving Credit Facility





15,000


15,00097/8% Series B Registered Senior Subordinated Notes


150,000


150,000


150,000326,346


369,875


349,308Less portion due within one year


(5,307
)

(20,750
)

(20,308
)Total long-term debt net of current portion

$
321,039

$
349,125

$
329,000


The
Senior Credit Facility was provided by NationsBank, N.A., Morgan Stanley Senior Funding, Inc. and CIBC Inc. and consists of (i) a $80,000 revolving credit
facility (the "Revolving Credit Facility"); (ii) a $75,000 term loan facility ("Term Loan A"); and (iii) a $150,000 term loan facility ("Term Loan B"). The Revolving Credit Facility and
Term Loan A matures on January 20, 2005, and Term Loan B matures on January 20, 2006. The Revolving Credit Facility is subject to a clean-down period during which the
aggregate amount outstanding under the Revolving Credit Facility shall not exceed $10.0 million for 30 consecutive days occurring during the period between August 1 and
November 30 in each calendar year. On September 30, 2001, $0 was outstanding under the Revolving Credit Facility. There were no compensating balance requirements for the Revolving Credit
Facility at September 30, 2001.

The
principal amount of Term Loan A is to be repaid in twenty-three consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20,
2005. The principal amount of Term Loan B is to be repaid in twenty-seven consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20, 2006.

The
Senior Credit Facility agreement contains restrictive affirmative, negative and financial covenants. Affirmative and negative covenants put restrictions on levels of investments,
indebtedness, insurance and capital expenditures. Financial covenants require the maintenance of certain financial ratios at defined levels. At September 30, 2001, the Company was in compliance
with all financial covenants.

Under
the covenants, interest on the Revolving Credit Facility, Term Loan A and Term Loan B ranges from 250 to 400 basis points above LIBOR depending on certain financial ratios.
Unused commitments under the Revolving Credit Facility are subject to a 50 basis point annual commitment fee. LIBOR was 2.63% at September 30, 2001.

The
Senior Credit Facility may be prepaid at any time in whole or in part without premium or penalty. During fiscal 2000, principal payments on Term Loans A and B of
$14.1 million and $12.2 million, respectively, were paid, which included optional principal prepayments of $4.1 million

7

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and $10.8 on Term Loan A and Term Loan B, respectively. During the nine month period ended September 30, 2001, optional principal prepayments of $4.6 million and $0.7 million on
Term Loan A and Term Loan B, respectively, were paid. The optional payments were made in order for the Company to remain two quarterly payments ahead of scheduled payments. According to the Senior
Credit Facility agreement, each prepayment on Term Loan A and Term Loan B can be applied to the next principal repayment installments. Management intends to pay a full year of principal repayment
installments in 2001 in accordance with the Senior Credit Facility agreement.

In
November 1999, the Company issued 97/8% Senior Subordinated Notes for $150 million that are due April 1, 2009.

Interest
accrues at the rate of 97/8% per annum, payable semi-annually on each April 1 and October 1.

Substantially
all of the properties and assets of the Company and substantially all of the properties and assets of the Company's future domestic subsidiaries secure obligations under
the Senior Credit Facility.

The
carrying amount of the Company's obligation under the Senior Credit Facility approximate fair value because the interest rates are based on floating interest rates identified by
reference to market rates.

Aggregate
maturities under the Senior Credit Facility (excluding the Revolving Credit Facility) and the Senior Subordinated Notes are as follows:

2001 Remainder of year

$
2002


7,9612003


15,8042004


17,5342005


102,382Thereafter


182,665$
326,346


Note 7-Commitments

The Company leases the majority of its operating facilities from a company owned by a significant shareholder of the Company under various operating leases
expiring December 31, 2010. The Company has options to terminate the leases on a year-to-year basis by giving advance notice of at least twelve months. The Company
leases a portion of its operating facilities from the same company under a sublease agreement expiring on December 31, 2005. The Company has two five-year options to renew
this lease, beginning January 1, 2006. Management believes that the terms and expenses associated with the related party leases described above are similar to those negotiated by unrelated
parties at arm's length.

8

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The Company is obligated under other operating leases for use of warehouse space. The leases expire at various dates through December 1, 2006. Five of the leases provide as
many as five five-year options to renew.

The
Company is involved in litigation and arbitration proceedings in the normal course of business that assert product liability and other claims. The Company is contesting all such
claims. When it appears probable in management's judgment that the Company will incur monetary damages or other costs in connection with such claims and proceedings, and such costs can be reasonably
estimated, appropriate liabilities are recorded in the financial statements and charges are made against earnings.

Management
believes the possibility of a material adverse effect on the Company's consolidated financial position, results of operations and cash flows from the claims and proceedings
described above is remote.

Note 8Contingencies

The Company is involved in litigation and arbitration proceedings in the normal course of business that assert product liability and other claims. The Company
is contesting all such claims. When it appears probable in management's judgment that the Company will incur monetary damages or other costs in connection with such claims and proceedings, and such
costs can be reasonably estimated, appropriate liabilities are recorded in the financial statements and charges are made against earnings.

Management
believes the possibility of a material adverse effect on the Company's consolidated financial position, results of operations and cash flows from the claims and proceedings
described above is remote.

Note 9Dursban Related Expenses

During 2000 the US Environmental Protection Agency and manufacturers of chlorpyrifos (the active ingredient in Dursban pesticidal products) entered into a
voluntary agreement that provides for withdrawal of virtually all residential uses of Dursban. Formulation of new Dursban products intended for residential use were required to cease by
December 1, 2000. Formulators can no longer sell such products to retailers as of February 1, 2001 and retailers will no longer be able to sell Dursban products after December 31,
2001. A charge of $8,000 was recorded in September 2000 for costs associated with this agreement. The Company believes that the accrual is adequate as of September 30, 2001.

9

---

Details of this charge and the accrual balances remaining are as follows:

Accrual Balances
at the end of 2000

Year to Date
2001 Utilization

Amount to be utilized
during remainder of 2001Customer returns and markdowns

$
4,509

$
3,461

$
1,048Inventory


1,118


1,064


54Disposal and related costs


439


860


(421
)$
6,066

$
5,385

$
681


Note 10Shipping and handling costs

Shipping and handling costs are included in the selling, general and administrative expenses line item on the Company's Statements of Operations. The amount
included is $2,902 and $2,593 for the three months ended September 30, 2001 and 2000, respectively. The amount included is $10,808 and $10,345 for the nine months ended September 30,
2001 and 2000, respectively.

Note 11Derivatives and Hedging Activities

The Company is exposed to market risks relating to changes in interest rates. The Company does not enter into derivatives or other financial instruments for
trading or speculative purposes. The Company enters into financial instruments to manage and reduce the impact of changes in interest rates.

Effective
April 1, 2001, the Company entered into two interest rate swaps that have fixed the interest rate as of April 30, 2001 for $75.0 million variable rate
debt under the Senior Credit Facility. The interest rate swaps are for $50.0 and $25.0 million of the Senior Credit Facility and will terminate on April 30, 2002. The fixed LIBOR
interest rates are 4.74% and 4.66% for the $50.0 and $25.0 million interest rate swaps respectively. The Company's objective is to manage the cash flow risks associated with its variable rate
debt and not to trade such instruments for profit or loss. The Company's interest rate hedges are classified as cash flow hedges. For a cash flow hedge, the unrealized portion is deferred in
accumulated other comprehensive income on the balance sheet until the transaction is realized, at which time any deferred hedging gains or losses are recorded in earnings. The fair value of the
interest rate swaps is reported as a liability and as a component of comprehensive income in Stockholders' deficit at September 30, 2001. The September 30, 2001 fair value is
$0.7 million.

Note 12Comprehensive Income

Comprehensive income differs from net income due to the cash flow hedge. Comprehensive income (loss) for the three and nine months ended September 30,
2001 was ($143) and $19,517 respectively.

10

---

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

Certain statements contained herein constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this report regarding the Company's financial position,
business strategy, budgets and plans and objectives of management for future operations are forward-looking statements. Although the management of the Company believes that the expectations reflected
in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from those contemplated or projected,
forecasted, estimated or budgeted in or expressed or implied by such forward-looking statements. Such factors include, among others, the risks and other factors set forth under Item 7A in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 as well as the following: general economic and business conditions; governmental regulations;
industry trends; the loss of major customers or suppliers; cost and availability of raw materials; changes in business strategy or development plans; availability and quality of management; and
availability, terms and deployment of capital. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events
or otherwise.

Overview

The Company is the leading manufacturer and marketer of value-oriented branded products for the consumer lawn and garden pesticide and household insecticide
markets in the United States. The Company manufactures and markets one of the broadest lines of pesticides in the industry, including herbicides and indoor and outdoor insecticides, as well as insect
repellents and water-soluble fertilizers, under a variety of brand names. The Company believes that the key drivers of growth for the $2.7 billion consumer lawn and garden pesticide and
household insecticide retail markets include: (a) the aging of the population of the United States; (b) growth in the home improvement center and mass merchandiser channels; and
(c) shifting consumers preferences' toward value-oriented branded products.

The
following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the historical financial information included
in the unaudited quarterly financial statements and the related notes to the unaudited quarterly financial statements contained elsewhere in this report.

Results of Operations

The following discussion regarding results of operations refers to net sales, cost of goods sold and selling and general and administrative expenses, which the
Company defines as follows:



11

---



The
following table sets forth the percentage relationship of certain items in the Company's Statements of Operations to net sales for the three months ended September 30, 2001
and September 30, 2000:

|                                                |                                              | Three Months Ended
September 30, |     
|----------------------------------------------- | -------------------------------------------- | -------------------------------- | ----
|
|Net sales:                                      |                                              |                                  |     
|                                                | Value brands                                 |                                  | 76.6
|                                                | Opening price point brands                   |                                  | 23.4
|                                                |                                              |                                  |     
|Total net sales                                 |                                              | 100.0                            |     
|Operating costs and expenses:                   |                                              |                                  |     
|                                                | Cost of goods sold                           |                                  | 54.0
|                                                | Selling, general and administrative expenses |                                  | 30.4
|                                                | Dursban related expenses (see note 10)       |                                  |    
|                                                |                                              |                                  |     
|Total operating costs and expenses              |                                              | 84.4                             |     
|                                                |                                              |                                  |     
|Operating income (loss)                         |                                              | 15.6                             |     
|Interest expense                                |                                              | 15.1                             |     
|                                                |                                              |                                  |     
|Income (loss) before provision for income taxes |                                              | 0.6                              |     
|Income tax expense (benefit)                    |                                              | 0.2                              |     
|                                                |                                              |                                  |     
|Net income (loss)                               |                                              | 0.4                              | %   
|                                                |                                              |                                  |     

Three Months Ended September 30, 2001 compared to Three Months Ended September 30, 2000

Net Sales.Net sales increased 18.7% to $55.8 million for the three months ended September 30, 2001 from
$47.0 million for the three months ended September 30, 2001. This increase was driven by a combination of offsetting factors including:



Net
sales of the Company's value brands increased 22.0% to $42.8 million for the three months ended September 30, 2001 from $35.1 million for the three months
ended September 30, 2000. The increase in value brands was lead by insect repellent sales to home centers and mass merchants. Demand for mass merchants were better aligned with consumer demand.
Increase in hardware channels primarily due to additional product listings that were secured aided in the increase. The Increase in promotion expense was due to growth of the home centers business.
The Increase in demand for insect repellants was related primarily to weather conditions.

Net
sales of opening price point brands increased 8.9% to $13.0 million for the three months ended September 30, 2001 from $12.0 million for the three months
ended September 30, 2000. The increase was lead by sales of insecticides at home centers and mass merchants, which was partially offset by the loss of the Kmart Kgro business that was
discontinued in the third quarter of 2000.

Gross Profit.Gross profit increased 25.6% to $25.7 million for the three months ended September 30, 2001
compared to $20.5 million for the three months ended September 30, 2000. As a percentage of sales, gross profit increased to 46.0% for the three months ended September 30, 2001 as
compared to 43.5% for the three months ended September 30, 2000. The increase in gross profit as a

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percentage of sales was the result of the change in mix of sales to more value brand sales, which are higher margin products.

Selling, General and Administrative Expenses.Selling, general and administrative expenses increased 12.8% to
$17.0 million for the three months ended September 30, 2001 from $15.0 million for the three months ended September 30, 2000. As a percentage of net sales, selling, general
and administrative expenses decreased to 30.4% for the three months ended September 30, 2001 from 32.0% for the three months ended September 30, 2000. The increase is attributed to
greater advertising spending to support the value brands and increase in variable cost related to the increase in sales volume. The double-digit percentage increase should not be viewed as a trend for
the future.

Dursban Related Expenses.During 2000, the Company recorded a non-recurring expense of $8.0 million
as a result of the EPA and the manufacturers of Dursban voluntary withdrawal of the active chemical in the Company's products. There were no related charges in 2001. See footnote 9 to Financial
Statements.

Operating Income.Operating income increased 437.7% to $8.7 million for the three months ended
September 30, 2001 from a loss of $2.6 million for the three months ended September 30, 2000. As a percentage of net sales, operating income increased to 15.6% for the three
months ended September 30, 2001 from (5.5%) for the three months ended September 30, 2000. Increase was driven by the $8.0 million charge for Dursban related expenses, during the
three months ended September 30, 2000.

Income tax expense.For the three months ended September 30, 2001, the Company's effective income tax rate is
29.3%, which reflects the estimated utilization of the goodwill deduction in fiscal year 2001. The goodwill deduction and corresponding release of valuation allowance is related to the step up in tax
basis in conjunction with the Recapitalization.

The
following table sets forth the percentage relationship of certain items in the Company's Statements of Operations to net sales for the nine months ended September 30, 2001
and September 30, 2000:

|                                         |                                              | Nine Months Ended
September 30, |     
|---------------------------------------- | -------------------------------------------- | ------------------------------- | ----
|
|Net sales:                               |                                              |                                 |     
|                                         | Value brands                                 |                                 | 81.2
|                                         | Opening price point brands                   |                                 | 18.8
|                                         |                                              |                                 |     
|Total net sales                          |                                              | 100.0                           |     
|Operating costs and expenses:            |                                              |                                 |     
|                                         | Cost of goods sold                           |                                 | 53.8
|                                         | Selling, general and administrative expenses |                                 | 23.6
|                                         | Dursban related expenses (see note 9)        |                                 |    
|                                         |                                              |                                 |     
|Total operating costs and expenses       |                                              | 77.5                            |     
|                                         |                                              |                                 |     
|Operating income                         |                                              | 22.5                            |     
|Interest expense                         |                                              | 11.1                            |     
|                                         |                                              |                                 |     
|Income before provision for income taxes |                                              | 11.4                            |     
|Income tax expense                       |                                              | 3.3                             |     
|                                         |                                              |                                 |     
|Net income                               |                                              | 8.1                             | %   
|                                         |                                              |                                 |     

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Nine Months Ended September 30, 2001 compared to Nine Months Ended September 30, 2000

Net Sales.Net sales increased 3.4% to $250.4 million for the nine months ended September 30, 2001 from
$242.1 million for the nine months ended September 30, 2000. This increase was driven by a combination of offsetting factors including:



Net
sales of the Company's value brands increased 11.3% to $203.4 million for the nine months ended September 30, 2001 from $182.8 million for the nine months
ended September 30, 2000. Value brand sales of Spectracide Terminate increased $5.9 million primarily due to focused marketing programs and replenishment of inventory levels
at retail. The gains achieved by Spectracide Terminate, were partially offset by loss sales of products that contained chlorpyrifos. During 2000 the US Environmental Protection Agency and
manufacturers of chlorpyrifos (the active ingredient in Dursban pesticidal products) entered into a voluntary agreement that provided for the withdrawal of virtually all residential uses of Dursban.
The Increase in demand for insect repellants is related primarily to weather conditions.

Net
sales of opening price point brands decreased 20.8% to $47.0 million for the nine months ended September 30, 2001 from $59.3 million for the nine months ended
September 30, 2000. The decrease was driven by the loss of the Kmart Kgro business that was discontinued in the third quarter of 2000. The decrease was partially offset by sales of insect
repellants.

Gross Profit.Gross profit increased 5.4% to $115.5 million for the nine months ended September 30, 2001
compared to $109.6 million for the nine months ended September 30, 2000. As a percentage of sales, gross profit increased to 46.2% for the nine months ended September 30, 2001 as
compared to 45.3% for the nine months ended September 30, 2000. The increase in gross profit as a percentage of sales was the result of change in mix of sales to value brands, which are higher
margin products.

Selling, General and Administrative Expenses.Selling, general and administrative expenses increased 8.6% to
$59.2 million for the nine months ended September 30, 2001 from $54.4 million for the nine months ended September 30, 2000. As a percentage of net sales, selling, general
and administrative expenses decreased to 23.6% for the nine months ended September 30, 2001 from 25.8% for the nine months ended September 30, 2000. The increase is attributed to greater
advertising spending to support the value brands, along with additional spending for in-store sales and support in the home centers. Prior year expenses also reflect a cost reduction due
to the impact of the termination of a capital lease.

Dursban Related Expenses.During 2000, the Company recorded a non-recurring expense of $8.0 million
as a result of the EPA and the manufacturers of Dursban voluntary withdrawal of the active chemical in the Company's products. There were no related charges in 2001. See footnote 9 to Financial
Statements.

Operating Income.Operating income increased 19.6% to $56.4 million for the nine months ended
September 30, 2001 from $47.1 million for the nine months ended September 30, 2000. As a percentage of net sales, operating income increased to 22.5% for the nine months ended
September 30, 2001 from 19.5% for the nine months ended September 30, 2000. Increase was primarily driven by the $8.0 million charge for Dursban related expenses, during the three
months ended September 30, 2000.

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Income tax expense.For the nine months ended September 30, 2001, the Company's effective income tax rate is
29.3%, which reflects the estimated utilization of the goodwill deduction in fiscal year 2001. The goodwill deduction and corresponding release of valuation allowance is related to the step up in tax
basis in conjunction with the Recapitalization.

Liquidity and Capital Resources

Historically, the Company has utilized internally generated funds and borrowings under credit facilities to meet ongoing working capital and capital
expenditure requirements. As a result of the Recapitalization, the Company has significantly increased cash requirements for debt service relating to the Company's Senior Subordinated Notes and Senior
Credit Facility. As of December 31, 2000, the Company had total debt outstanding of $354.3 million. As of September 30, 2001, the Company had total debt outstanding of
$331.1 million. The Company will rely on internally generated funds and, to the extent necessary, borrowings under the Company's Revolving Credit Facility to meet liquidity needs.

The
Company's Senior Credit Facility consists of:



The
Company's Revolving Credit Facility and the Term Loan A mature in January 2005, and the Term Loan B matures in January 2006. The Revolving Credit Facility is subject
to a clean-down period during which the aggregate amount outstanding under the Revolving Credit Facility shall not exceed $10.0 million for 30 consecutive days occurring during the
period August 1 and November 30 in each calendar year. The Company was in compliance with debt covenants at September 30, 2001.

The
Company's principal liquidity requirements are for working capital, capital expenditures and debt service under the Senior Credit Facility and the Senior Subordinated Notes. Cash
flow from continuing operations provided net cash of approximately $26.2 million and $24.7 million for the nine months ended September 30, 2001 and September 30, 2000,
respectively. Net cash related to operating activities fluctuates during the year as the seasonal nature of the Company's sales results in a significant increase in working capital (primarily accounts
receivable and inventory) during the first half of the year, with the second and third quarters being significant cash collection periods.

In
November 1999, the Company issued 97/8% Senior Subordinated Notes for $150 million that are due April 1, 2009.

Interest
accrues at the rate of 97/8% per annum, payable semi-annually on each April 1 and October 1.

Capital
expenditures are related to the enhancement of the Company's existing facilities and the construction of additional productions and distribution capacity. Cash used for
capital was $3.0 million and $3.2 million for the nine months ended September 30, 2001 and September 30, 2000, respectively. In addition, the Company entered into a capital
lease agreement in March 2000 for $5.3 million. Cash used for capital expenditures for the remainder of fiscal 2001 is expected to be less than $5.0 million.

The
principal amount on Term Loan A is to be repaid in twenty-three consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20,
2005. The principal amount of Term Loan B is to be repaid in twenty-seven consecutive quarterly installments commencing June 30, 1999 with a final balloon installment due January 20,
2006.

The
Company believes that cash flow from operations, together with available borrowings under the Revolving Credit Facility, will be adequate to meet the anticipated requirements for
working

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capital, capital expenditures and scheduled principal and interest payments for at least the next two years. However, the Company cannot ensure that sufficient cash flow will be generated from
operations to repay the Senior Subordinated Notes and amounts outstanding under the Senior Credit Facility at maturity without requiring additional financing. The Company's ability to meet debt
service and clean-down obligations and reduce debt will be dependent on the Company's future performance, which in turn, will be subject to general economic conditions and to financial,
business and other factors, including factors beyond the Company's control. Because a portion of the Company's debt bears interest at floating rates, the Company's financial condition is and will
continue to be affected by changes in prevailing interest rates.

Seasonality

The Company's business is highly seasonal because the Company's products are used primarily in the spring and summer. For the past two years, approximately 75%
of the Company's net sales have occurred in the first and second quarters. The Company's working capital needs, and correspondingly the Company's borrowings, peak near the end of the Company's first
quarter.

Impact of 2000 Dursban Withdrawal (See Note 9)

During 2000, the U.S. Environmental Protection Agency and manufacturers of chlorpyrifos (the active ingredient in Dursban pesticidal products) entered into a
voluntary agreement that provides for withdrawal of virtually all residential uses of Dursban. Formulation of new Dursban products intended for residential use were required to cease by
December 1, 2000. Formulators can no longer sell such products to retailers as of February 1, 2001. Retailers will no longer be able to sell Dursban products after December 31,
2001.

The
Company recorded a charge of $8.0 million in September 2000 for costs associated with this agreement. The Company currently has replacement chemicals for Dursban,
and the replacement chemicals are currently being used in production of new pesticidal products.

Facility Consolidation

The Company has been reviewing potential efficiencies and logistic opportunities related to warehousing and distribution. As a result the Company will be
moving into a new warehouse facility, which will allow the consolidation of three existing facilities. As a result of the move, the Company will take a one-time charge during the fourth quarter of
2001, after a review of related leasehold improvements, duplicate lease payments and slow-moving inventory that doesn't justify the move to the new facility has been completed.

Recently Issued Accounting Pronouncements

The Emerging Issues Task Force (EITF) issued EITF 00-25. This issue addresses when consideration from a vendor to a retailer (a) in
connection with the retailer's purchase of the vendor's products or (b) to promote sales of the vendor's products by the retailer should be classified in the vendor's income statement as a
reduction of revenue. The Company has adopted EITF 00-25 for fiscal year 2001. The Company has reclassified all trade and co-op promotional expense in the Statements of
Operations to net sales.

In
July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141 (SFAS 141), "Business Combinations."
SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 and establishes specific criteria for recognition of
intangible assets separately from goodwill. For business combinations initiated after June 30, 2001, SFAS 141 also requires that unallocated negative goodwill be written off immediately
as an extraordinary gain. Any unamortized deferred credit arising from a

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business combination completed before July 1, 2001 will be recognized as the cumulative effect of a change in accounting principle. The Company is currently evaluating the impact of
SFAS 141 on its financial statements.

Also
in July 2001, the FASB issued SFAS 142, "Goodwill and Other Intangible Assets". SFAS 142 eliminates the amortization of goodwill and instead requires
goodwill to be tested for impairment annually. Also, intangible assets are required to be amortized over their useful lives and reviewed for impairment in accordance with SFAS 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." Under SFAS 142, if the intangible asset has an indefinite useful life, it is not
amortized until its life is determined to be finite. The Company is required to adopt SFAS 142 no later than the first quarter of fiscal 2003, but is permitted to adopt as of the first quarter
of fiscal 2002. The Company is currently evaluating the impact of SFAS 142 on its financial statements.

The
FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143") in 2001. SFAS 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Company is required to adopt SFAS 143 no later than the first quarter of
fiscal 2003, but is permitted to adopt earlier. The Company is currently evaluating the impact of SFAS 143 on its financial statements.

The
FASB issued SFAS No. 143, "Accounting for the Impairment or Disposal of Long-Lived Assets," which provides guidance on the accounting for the impairment or disposal of
long-lived assets. The provisions of the Statement are effective for financial statements issued for fiscal years beginning after December 15, 2001, and interim periods within those fiscal
years, although early adoption is allowed. The Company is currently evaluating the impact of SFAS 144 on its financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate

The Company is exposed to market risks relating to changes in interest rates. The Company does not enter into derivatives or other financial instruments for
trading or speculative purposes. The Company enters into financial instruments to manage and reduce the impact of changes in interest rates.

The
Company manages interest rate risk by balancing the amount of fixed and variable debt. For fixed rate debt, interest rate changes affect the fair market value of such debt but do
not impact earnings or cash flows. Conversely for variable rate debt, interest rate changes generally do not affect the fair market value of such debt but do impact future earnings and cash flows,
assuming other factors are held constant. As of September 30, 2001, variable rate debt was $176.3 million, which includes the interest rate swaps as discussed below.

The
Company entered into two interest rate swaps that have fixed the interest rate as of April 30, 2001 for $75.0 million of variable rate debt under the Senior Credit
Facility. The interest rate swaps are for $50.0 and $25.0 million of the Senior Credit Facility and will terminate on April 30, 2002. The fixed interest rates are 4.74% and 4.66%, for
the $50.0 and $25.0 million interest rate swaps, respectively. The change in fair value of the interest rate swaps is reported as a liability and as a component of comprehensive income in
Stockholders' deficit at September 30, 2001. The September 30, 2001, reduction in fair value of $0.7 million is net of taxes.

Interest
ranges from 250 to 400 basis points above LIBOR depending on certain financial ratios. LIBOR was 2.63% on September 30, 2001.

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Exchange Rate

The Company does not use derivative instruments to hedge against foreign currency exposures related to transactions denominated in other than the Company's
functional currency. Substantially all foreign currency transactions are denominated in United States dollars.

Commodity Price

The Company does not use derivative instruments to hedge its exposures to changes in commodity prices. The Company utilizes various commodity and specialty
chemicals in its production process. Purchasing procedures and arrangements with major customers serve to mitigate its exposure to price changes in commodity and specialty chemicals.

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Part II

OTHER INFORMATION

Item 1. Legal Proceedings.

The Company has no reportable legal proceedings in the current period.

Item 2. Changes in Securities.

None.

Item 3. Defaults Upon Senior Securities.

None.

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

No matters were submitted.

Item 5. Other Information.

None.

Item 6. Exhibits and Reports on Form 8-K





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SIGNATURES

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

|                         |  | UNITED INDUSTRIES CORPORATION
|------------------------ |  | -----------------------------
|Dated: November 14, 2001 |  | By:                          

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