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

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2003

OR

|o | 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: 333-76055

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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.)2150 Schuetz Road
St. Louis, Missouri 63146(Address of principal executive office, including zip code)(314) 427-0780(Registrant's telephone number, including area code)


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

As
of May 8, 2003, the registrant had 33,188,000 Class A voting and 33,188,000 Class B nonvoting shares of common stock outstanding and 37,600 Class A
nonvoting shares of preferred stock outstanding.

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

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UNITED INDUSTRIES CORPORATION
QUARTERLY REPORT ON FORM 10-Q
PERIOD ENDED MARCH 31, 2003

TABLE OF CONTENTS



|                                                                                              |                                                                                                                   | Page
|--------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ----
|PART I. FINANCIAL INFORMATION                                                                 |                                                                                                                   |     
|Item 1. Financial Statements (Unaudited)                                                      |                                                                                                                   |     
|                                                                                              | Consolidated Balance Sheets as of March 31, 2003 and 2002 and December 31, 2002                                   |     
|                                                                                              | Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended March 31, 2003 and 2002 |     
|                                                                                              | Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002                          |     
|                                                                                              | Notes to Consolidated Financial Statements                                                                        |     
|Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                   | 25  
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |                                                                                                                   | 35  
|Item 4. Controls and Procedures                                                               |                                                                                                                   | 37  
|PART II. OTHER INFORMATION                                                                    |                                                                                                                   |     
|Item 1. Legal Proceedings                                                                     |                                                                                                                   | 38  
|Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                                   | 38  
|Signatures                                                                                    |                                                                                                                   | 39  
|Certifications                                                                                |                                                                                                                   | 40  
|Exhibit Index                                                                                 |                                                                                                                   | 42  

2

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements. These statements are subject to a number of risks and uncertainties, many of which are beyond our
control. All statements other than statements of historical facts included in this Quarterly Report, including statements regarding our strategy, future operations, financial position, estimated
revenues, projected costs, projections, plans and objectives of management, are forward-looking statements. As may be used in this Quarterly Report, the words "will," "believe," "plan," "may,"
"strategies," "goals," "anticipate," "intend," "estimate," "expect," "project" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements
contain such identifying words. All forward-looking statements speak only as of the date they were made. We do not undertake any obligation to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. Although we believe that our plans, intentions and expectations reflected in or suggested by any forward-looking statements we make
in this Quarterly Report are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved.

Our
actual results could differ significantly from the results discussed in any forward-looking statements contained in this Quarterly Report. Factors that could cause or contribute to
such differences include the risks set forth in our Annual Report on Form 10-K including, but not limited to, the following:



Spectracide®,
Spectracide Triazicide, Spectracide Terminate®, Hot Shot®, Garden Safe, Schultz®, Expert
Gardener®,
Rid-a-Bug®, Bag-a-Bug®, Real-Kill®, No-Pest®, Repel®, Gro
Best®, Vigoro®, Sta-Green® and Bandini® are our trademarks and trade names. We also license certain Cutter® trademarks from
Bayer A.G. and certain Peters® and Peters Professional® trademarks from The Scotts Company. Other trademarks and trade names used in this Quarterly Report are the property of
their respective owners.

3

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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

UNITED INDUSTRIES CORPORATION AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS        (Dollars in thousands, except share data)        (Unaudited)

|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      | March 31,                                   |         |          |        
|----------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | ------- | -------- | -------
|
|
|ASSETS                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|                                                                  | Current assets:                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|                                                                  | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                            |                                             | $       |         |        
|                                                                  | Accounts receivable, less reserves of $4,950 and $2,845 at March 31, 2003 and 2002, respectively, and $3,171 at December 31, 2002                                                                                                                                                                                                                                                                    |                                             |         | 139,537  |        
|                                                                  | Inventories                                                                                                                                                                                                                                                                                                                                                                                          |                                             |         | 98,119   |        
|                                                                  | Prepaid expenses and other current assets                                                                                                                                                                                                                                                                                                                                                            |                                             |         | 10,524   |        
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      | Total current assets                        |         |          | 248,180
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|Equipment and leasehold improvements, net                         |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             | 33,649  |          |        
|Deferred tax asset                                                |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             | 96,739  |          |        
|Goodwill and intangible assets, net                               |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             | 98,938  |          |        
|Other assets, net                                                 |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             | 15,163  |          |        
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      | Total assets                                |         | $        | 492,669
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|LIABILITIES AND STOCKHOLDERS' DEFICIT                             |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|                                                                  | Current liabilities:                                                                                                                                                                                                                                                                                                                                                                                 |                                             |         |          |        
|Current maturities of long-term debt and capital lease obligation |                                                                                                                                                                                                                                                                                                                                                                                                      | $                                           | 1,590   |          | $      
|                                                                  | Accounts payable                                                                                                                                                                                                                                                                                                                                                                                     |                                             |         | 59,016   |        
|                                                                  | Accrued expenses                                                                                                                                                                                                                                                                                                                                                                                     |                                             |         | 66,313   |        
|                                                                  | Short-term borrowings                                                                                                                                                                                                                                                                                                                                                                                |                                             |         | 10,100   |        
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      | Total current liabilities                   |         |          | 137,019
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|Long-term debt, net of current maturities                         |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             | 431,328 |          |        
|Capital lease obligation, net of current maturities               |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             | 3,577   |          |        
|Other liabilities                                                 |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             | 4,048   |          |        
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      | Total liabilities                           |         |          | 575,972
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|Commitments and contingencies                                     |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|Stockholders' deficit:                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|                                                                  | Preferred stock (37,600 shares of $0.01 par value Class A issued and outstanding, 40,000 shares authorized)                                                                                                                                                                                                                                                                                          |                                             |         |         |        
|                                                                  | Common stock (33.2 million shares each of $0.01 par value Class A and Class B issued and outstanding, 43.6 million shares of each authorized at March 31, 2003; 27.7 million shares of each issued and outstanding and 37.6
million shares of each authorized at March 31, 2002; 33.1 million shares of each issued and outstanding and 43.6 million shares of each authorized at December 31, 2002) |                                             |         | 664      |        
|                                                                  | Warrants and options                                                                                                                                                                                                                                                                                                                                                                                 |                                             |         | 11,745   |        
|                                                                  | Additional paid-in capital                                                                                                                                                                                                                                                                                                                                                                           |                                             |         | 210,480  |        
|                                                                  | Accumulated deficit                                                                                                                                                                                                                                                                                                                                                                                  |                                             |         | (275,946 | )      
|                                                                  | Common stock subscription receivable                                                                                                                                                                                                                                                                                                                                                                 |                                             |         | (24,976  | )      
|                                                                  | Common stock repurchase option                                                                                                                                                                                                                                                                                                                                                                       |                                             |         | (2,636   | )      
|                                                                  | Common stock held in grantor trust                                                                                                                                                                                                                                                                                                                                                                   |                                             |         | (2,700   | )      
|                                                                  | Loans to executive officer                                                                                                                                                                                                                                                                                                                                                                           |                                             |         | (324     | )      
|                                                                  | Accumulated other comprehensive income (loss)                                                                                                                                                                                                                                                                                                                                                        |                                             |         | 390      |        
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      | Total stockholders' deficit                 |         |          | (83,303
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      | Total liabilities and stockholders' deficit |         | $        | 492,669
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |         |          |        

See accompanying notes to consolidated financial statements.

4

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UNITED INDUSTRIES CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME        (Dollars in thousands)        (Unaudited)

|                                                 |                                              | Three Months Ended March 31, |        
|------------------------------------------------ | -------------------------------------------- | ---------------------------- | -------
|
|CONSOLIDATED STATEMENTS OF OPERATIONS:           |                                              |                              |        
|Net sales before promotion expense               |                                              | $                            | 193,733
|Promotion expense                                |                                              |                              | 14,921 
|                                                 |                                              |                              |        
|Net sales                                        |                                              |                              | 178,812
|                                                 |                                              |                              |        
|Operating costs and expenses:                    |                                              |                              |        
|                                                 | Cost of goods sold                           |                              |        
|                                                 | Selling, general and administrative expenses |                              |        
|                                                 |                                              |                              |        
|                                                 | Total operating costs and expenses           |                              |        
|                                                 |                                              |                              |        
|Operating income                                 |                                              |                              | 31,058 
|Interest expense, net                            |                                              |                              | 9,203  
|                                                 |                                              |                              |        
|Income before income tax expense                 |                                              |                              | 21,855 
|Income tax expense                               |                                              |                              | 8,402  
|                                                 |                                              |                              |        
|Net income                                       |                                              | $                            | 13,453 
|                                                 |                                              |                              |        
|Preferred stock dividends                        |                                              | $                            | 1,807  
|                                                 |                                              |                              |        
|Net income available to common stockholders      |                                              | $                            | 11,646 
|                                                 |                                              |                              |        
|CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME: |                                              |                              |        
|Net income                                       |                                              | $                            | 13,453 
|Other comprehensive income, net of tax:          |                                              |                              |        
|                                                 | Loss on interest rate swap                   |                              |        
|                                                 | Gain on derivative hedging instruments       |                              |        
|                                                 |                                              |                              |        
|Comprehensive income                             |                                              | $                            | 13,875 
|                                                 |                                              |                              |        

See
accompanying notes to consolidated financial statements.

5

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UNITED INDUSTRIES CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS        (Dollars in thousands)        (Unaudited)

|                                               |                                                                                     | Three Months Ended
March 31,                          |                                                     
|---------------------------------------------- | ----------------------------------------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------------------
|
|Cash flows from operating activities:          |                                                                                     |                                                       |                                                     
|                                               | Net income                                                                          |                                                       | $                                                   
|                                               | Adjustments to reconcile net income to net cash flows
used in operating activities: |                                                       |                                                     
|                                               |                                                                                     | Depreciation and amortization                         |                                                     
|                                               |                                                                                     | Amortization and write-off of deferred financing fees |                                                     
|                                               |                                                                                     | Deferred income tax expense                           |                                                     
|                                               |                                                                                     | Changes in operating assets and liabilities:          |                                                     
|                                               |                                                                                     |                                                       | Accounts receivable                                 
|                                               |                                                                                     |                                                       | Inventories                                         
|                                               |                                                                                     |                                                       | Prepaid expenses and other current assets           
|                                               |                                                                                     |                                                       | Other assets                                        
|                                               |                                                                                     |                                                       | Accounts payable                                    
|                                               |                                                                                     |                                                       | Accrued expenses                                    
|                                               |                                                                                     |                                                       | Facilities and organizational rationalization charge
|                                               |                                                                                     |                                                       | Other operating activities, net                     
|                                               |                                                                                     |                                                       |                                                     
|                                               |                                                                                     |                                                       |                                                     
|                                               |                                                                                     |                                                       |                                                     
|Cash flows from investing activities:          |                                                                                     |                                                       |                                                     
|                                               | Purchases of equipment and leasehold improvements                                   |                                                       |                                                     
|                                               |                                                                                     |                                                       |                                                     
|                                               |                                                                                     |                                                       |                                                     
|                                               |                                                                                     |                                                       |                                                     
|Cash flows from financing activities:          |                                                                                     |                                                       |                                                     
|                                               | Proceeds from issuance of senior subordinated notes                                 |                                                       |                                                     
|                                               | Proceeds from additional term debt                                                  |                                                       |                                                     
|                                               | Proceeds from borrowings on revolver                                                |                                                       |                                                     
|                                               | Payments received for common stock subscription receivable                          |                                                       |                                                     
|                                               | Payments received on loans to executive officer                                     |                                                       |                                                     
|                                               | Repayment of borrowings on revolver and other debt                                  |                                                       |                                                     
|                                               | Payments for debt issuance costs                                                    |                                                       |                                                     
|                                               | Repayment on cash overdraft                                                         |                                                       |                                                     
|                                               |                                                                                     |                                                       |                                                     
|                                               |                                                                                     |                                                       |                                                     
|                                               |                                                                                     |                                                       |                                                     
|Net increase in cash and cash equivalents      |                                                                                     |                                                       | (10,318                                             
|Cash and cash equivalents, beginning of period |                                                                                     |                                                       | 10,318                                              
|                                               |                                                                                     |                                                       |                                                     
|Cash and cash equivalents, end of period       |                                                                                     | $                                                     |                                                    
|                                               |                                                                                     |                                                       |                                                     
|Noncash financing activities:                  |                                                                                     |                                                       |                                                     
|                                               | Preferred stock dividends accrued                                                   |                                                       | $                                                   
|                                               |                                                                                     |                                                       |                                                     

See
accompanying notes to consolidated financial statements.

6

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UNITED INDUSTRIES CORPORATION AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        (Dollars in thousands, except where indicated)        (Unaudited)

Note 1Description of Business and Basis of Presentation

Operating as Spectrum Brands, United Industries Corporation (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, fertilizers, growing media and soils under a variety of brand names. The Company's value brands are targeted
toward consumers who want products and packaging that are comparable or superior to, and at lower prices than, premium price brands, while its opening price point brands are designed for cost
conscious consumers who want quality products. The Company's products are marketed to mass merchandisers, home improvement centers, hardware chains, nurseries and garden centers.

As
described further in Note 12, the Company's operations are divided into three business segments: Lawn and Garden, Household and Contract. The Company's lawn and garden brands
include, among others, Spectracide®, Garden Safe®, Real-Kill® and No-Pest® in the controls category, as well as
Sta-Green®, Vigoro®, Schultz® and Bandini® brands in the lawn and garden fertilizer and growing media categories. The Company's household
brands include, among others, Hot Shot®, Cutter® and Repel®. The Contract segment represents non-core products and includes various compounds and
chemicals such as, among others, charcoal, water purification tablets, first-aid kits, barbeque sauce, fish attractant, cleaning solutions and automotive products.

The
accompanying consolidated financial statements include the accounts and balances of the Company and its wholly owned subsidiaries. All material intercompany transactions have been
eliminated in consolidation. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim
financial information and the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures typically included in the Company's Annual
Report on Form 10-K have been condensed or omitted for this report. As such, this report should be read in conjunction with the consolidated financial statements and accompanying
notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2002. Certain amounts in the 2002 consolidated financial statements included herein have
been reclassified to conform with the 2003 presentation. In addition, the Company has reclassified its borrowing on cash overdrafts from operating activities to financing activities in the
accompanying consolidated statements of cash flows.

The
accompanying consolidated financial statements are unaudited. In the opinion of management, such statements include all adjustments, which consist of only normal recurring
adjustments, necessary for a fair presentation of the results for the periods presented. Interim results are not necessarily indicative of results for a full year. The preparation of financial
statements in conformity with accounting principles generally accepted in the United States 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.

7

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Note 2Inventories

Inventories consist of the following:

March 31,December 31,
20022003

2002Raw materials

$
31,307

$
20,948

$
27,853Finished goods


72,252


44,580


65,750Allowance for obsolete and slow-moving inventory


(5,440
)

(4,056
)

(5,841
)Total inventories, net

$
98,119

$
61,472

$
87,762


Note 3Equipment and Leasehold Improvements

Equipment and leasehold improvements consist of the following:

March 31,December 31,
20022003

2002Machinery and equipment

$
38,670

$
30,746

$
39,609Office furniture, equipment and capitalized software


24,891


15,608


26,299Transportation equipment


6,283


6,156


6,313Leasehold improvements


3,907


7,405


9,512Land and buildings


72





1,09973,823


59,915


82,832Accumulated depreciation and amortization


(40,174
)

(33,273
)

(48,614
)Total equipment and leasehold improvements, net

$
33,649

$
26,642

$
34,218


During
the three months ended March 31, 2003, the Company disposed of equipment with a historical cost of $10.3 million related to a manufacturing facility previously
closed during 2002. No gain or loss was recognized in connection with the disposal as the equipment was fully depreciated.

For
the three months ended March 31, 2003 and 2002 and the year ended December 31, 2002, depreciation expense was $1.8 million, $2.2 million and
$7.3 million, respectively. As of March 31, 2003 and 2002 and December 31, 2002, the cost of the aircraft held under capital lease was $5.3 million and related accumulated
amortization was $3.5 million, $2.3 million, and $3.2 million respectively.

8

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Note 4Goodwill and Intangible Assets

Goodwill and intangible assets consist of the following:

|                   |                                           |                         |       | March 31, 2003 |   | March 31, 2002 |        | December 31, 2002
|------------------ | ----------------------------------------- | ----------------------- | ----- | -------------- | - | -------------- | ------ | -----------------
|
|Intangible assets: |                                           |                         |       |                |   |                |        |                  
|                   | Trade names                               |                         | 25-40 |                | $ | 65,968         |        | $                
|                   | Customer relationships                    |                         | 5     |                |   | 22,651         |        |                  
|                   | Supply agreement                          |                         | 4     |                |   | 5,694          |        |                  
|                   | Other intangible assets                   |                         | 25    |                |   | 551            |        |                  
|                   |                                           |                         |       |                |   |                |        |                  
|                   |                                           | Total intangible assets |       |                |   | $              | 94,864 |                  
|                   |                                           |                         |       |                |   |                |        |                  
|Goodwill           |                                           |                         |       |                |   |                |        |                  
|                   |                                           |                         |       |                |   |                |        |                  
|                   | Total goodwill and intangible assets, net |                         |       |                |   |                |        |                  
|                   |                                           |                         |       |                |   |                |        |                  

On January 1, 2002, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of
accounting and broadens the criteria for recording intangible assets separately from goodwill. SFAS No. 142, among other things, eliminates the amortization of goodwill and indefinite-lived
intangible assets and requires them to be tested for impairment at least annually. During 2002, both at adoption and at the end of the year, the Company performed an impairment analysis of its
goodwill. No impairment charges resulted from these analyses. Prospectively, the Company will test goodwill for impairment annually, or more frequently as warranted by events or changes in
circumstances. For the year ended December 31, 2002, goodwill recorded in connection with acquisitions was $3.3 million. No amounts were recorded for goodwill during the three months
ended March 31, 2003 or 2002.

Intangible
assets include patents, trade names and other intangible assets, which are valued at acquisition through independent appraisals, where material, or using other valuation
methods. Intangible assets are amortized using the straight-line method over periods ranging from 4 to 40 years. The useful lives of intangible assets were not revised as a result
of the adoption of SFAS No. 142.

During
the three months ended March 31, 2003, the Company obtained the final report of an independent third party valuation of the assets acquired and liabilities assumed in its
merger with Schultz Company in May 2002. The valuation report indicated the full value of the purchase price should be allocated to trade names and customer relationships obtained in the merger
with no value ascribed to goodwill. As a result, the Company reclassified $19.7 million from goodwill to intangible

9

---

assets
and is amortizing customer relationships using the straight-line method over the remaining useful life, four years. The following table presents the reclassification
described:

|                                                      |                             |   |        |        |   |        |        |   |       | Goodwill by Segment |   |       |       
|----------------------------------------------------- | --------------------------- | - | ------ | ------ | - | ------ | ------ | - | ----- | ------------------- | - | ----- | ------
|
|Goodwill and intangible assets at December 31, 2002   |                             | $ | 64,025 |        | $ |       |        | $ | 5,694 |                     | $ | 5,401 |       
|                                                      | Purchase price reallocation |   |        | 1,943  |   |        | 22,651 |   |       |                    |   |       | (4,850
|                                                      |                             |   |        |        |   |        |        |   |       |                     |   |       |       
|Goodwill and intangible assets at March 31, 2003      |                             |   | 65,968 |        |   | 22,651 |        |   | 5,694 |                     |   | 551   |       
|                                                      |                             |   |        |        |   |        |        |   |       |                     |   |       |       
|                                                      | Accumulated amortization    |   |        | (3,470 | ) |        | (478   | ) |       | (846                | ) |       |      
|                                                      |                             |   |        |        |   |        |        |   |       |                     |   |       |       
|Goodwill and intangible assets, net at March 31, 2003 |                             | $ | 62,498 |        | $ | 22,173 |        | $ | 4,848 |                     | $ | 551   |       
|                                                      |                             |   |        |        |   |        |        |   |       |                     |   |       |       

For the three months ended March 31, 2003 and 2002 and the year ended December 31, 2002, aggregate amortization expense related to
intangible assets was $0.4 million, $0.1 million and $2.9 million, respectively. The following table presents estimated amortization expense for intangible assets during each of
the next five years:

Year

AmountRemainder of 2003

$
5,8092004


8,8072005


8,7322006


7,9542007


3,510


Note 5Other Assets

Other assets consist of the following:

March 31,December 31,
20022003

2002Deferred financing fees

$
24,434

$
19,138

$
22,432Accumulated amortization


(11,438
)

(7,797
)

(10,382
)Deferred financing fees, net


12,996


11,341


12,050Other


2,167


612


975Total other assets, net

$
15,163

$
11,953

$
13,025


In
connection with its issuance of 97/8% Series C senior subordinated notes in March 2003 (see Note 8), the Company recorded $2.2 million of
deferred financing fees which are being amortized over the term of the notes through April 1, 2009. In connection with the repayment of a portion of its

10

---

outstanding
obligations under the Senior Credit Facility in March 2003 using proceeds from the issuance of such notes, the Company recorded a write-off of $1.3 million of
previously deferred financing fees which is reflected in interest expense in the accompanying consolidated statement of operations for the three months ended March 31, 2003.

Note 6Accrued Expenses

Accrued expenses consist of the following:

March 31,December 31,
20022003

2002Advertising and promotions

$
23,339

$
16,007

$
16,401Facilities rationalization


1,081


3,445


1,563Interest


8,522


7,771


3,777Cash overdraft


8,031


1,598


1,506Noncompete agreement


350





1,770Preferred stock dividends


11,299


4,445


9,492Salaries and benefits


3,878


1,359


4,357Severance costs


1,741


1,458


869Freight


5,103


1,609


441Other


2,969


3,115


5,045Total accrued expenses

$
66,313

$
40,807

$
45,221


Note 7Charge for Facilities and Organization Rationalization

During the fourth quarter of 2001, the Company recorded a charge of $8.5 million, which included $5.6 million related to facilities and
organizational rationalization which primarily affected the Company's Lawn and Garden segment results, $2.7 million of inventory obsolescence recorded in cost of goods sold and
$0.2 million of miscellaneous costs recorded in selling, general and administrative expenses. In connection therewith, 85 employees were terminated and provided severance benefits.
Approximately $3.5 million of costs associated with the facilities and organizational rationalization, which related primarily to facility exit costs and resultant duplicate rent payments in
2002, were incurred by December 31, 2002. Amounts remaining in the facilities and organizational rationalization accrual as of March 31, 2003 primarily represent costs associated with
the restoration of leased facilities to their original condition and duplicate rent payments which are expected to be incurred by the end of 2003.

11

---

The
following table presents amounts charged against the facilities and organizational rationalization accrual:

Facilities
Rationalization

Severance
Costs

Total
CostsBalance at December 31, 2002

$
1,563

$
379

$
1,942Charges against the accrual


(482
)

(114
)

(596
)Balance at March 31, 2003

$
1,081

$
265

$
1,346


Note 8Long-term Debt

Long-term debt, excluding capital lease obligation, consists of the following:

March 31,December 31,
20022003

2002Senior Credit Facility:Term Loan A

$


$
36,899

$
28,250Term Loan B


196,069


164,064


222,465Revolving Credit Facility


10,100


58,377


97/8% Series B Senior Subordinated Notes


150,000


150,000


150,00097/8% Series C Senior Subordinated Notes, including unamortized premium


86,275





442,444


409,340


400,715Less current maturities and short-term borrowings


(11,116
)

(63,833
)

(9,222
)Total long-term debt, net of current maturities

$
431,328

$
345,507

$
391,493


Senior Credit Facility

The Senior Credit Facility, as amended as of March 14, 2003, was provided by Bank of America, N.A. (formerly known as NationsBank, N.A.), Morgan Stanley
Senior Funding, Inc. and Canadian Imperial Bank of Commerce and consists of (1) a $90.0 million revolving credit facility (the Revolving Credit Facility); (2) a
$75.0 million term loan facility (Term Loan A); and (3) a $240.0 million term loan facility (Term Loan B). The Revolving Credit Facility and Term Loan A mature 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 during the period between August 1 and November 30 in each calendar year. As of
March 31, 2003 and 2002, $10.1 million and $58.4 million were outstanding under the Revolving Credit Facility, respectively. As of December 31, 2002, the
clean-down period had been completed and no amounts were outstanding under the Revolving Credit Facility. There were no compensating balance requirements during each of the periods
presented.

12

---



On
March 14, 2003, the Senior Credit Facility was amended to permit the issuance of 97/8% Series C senior subordinated notes due 2009 (the Series C
Notes) and 97/8% Series D senior subordinated notes due 2009 (the Series D Notes). The Company intends to offer the Series D Notes in 2003 in exchange for
outstanding Series B Notes and Series C Notes. This amendment did not change any existing covenants of the Senior Credit Facility.

The
principal amount of Term Loan A was to be repaid in 24 consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20, 2005.
However, in connection with the issuance of the Series C Notes, as described below, the Company used a portion of the proceeds to repay the outstanding balance under Term Loan A. The principal
amount of Term Loan B is to be repaid in 28 consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20, 2006. The Company used a portion of the
proceeds from the issuance of the Series C Notes to repay $25.9 million of the balance under Term Loan B.

The
Senior Credit Facility agreement contains restrictive affirmative, negative and financial covenants. Affirmative and negative covenants place restrictions on, among other things,
levels of investments, indebtedness, insurance, capital expenditures and dividend payments. The financial covenants require the maintenance of certain financial ratios at defined levels. As of and
during the three months ended March 31, 2003 and 2002 and the year ended December 31, 2002, the Company was in compliance with all covenants. While the Company does not anticipate an
event of non-compliance in the foreseeable future, the effect of non-compliance would require the Company to request a waiver or an amendment to the Senior Credit Facility.
Amending the Senior Credit Facility could result in changes to the Company's borrowing capacity or its effective interest rates. Under the agreements, interest rates on the Revolving Credit Facility,
Term Loan A and Term Loan B range from 1.50% to 4.00% above LIBOR, depending on certain financial ratios. LIBOR was 1.29% as of March 31, 2003, 2.03% as of March 31, 2002 and 1.38% as of
December 31, 2002. Unused commitments under the Revolving Credit Facility are subject to a 0.5% annual commitment fee. The interest rate of Term Loan A was 5.41% and 4.67% as of
March 31, 2002 and December 31, 2002, respectively. The interest rate of Term Loan B was 5.31% and 5.91% as of March 31, 2003 and 2002, respectively, and 5.42% as of
December 31, 2002.

The
Senior Credit Facility may be prepaid in whole or in part at any time without premium or penalty. During the three months ended March 31, 2003, the Company made principal
payments of $28.3 million to fully repay Term Loan A and $25.9 million on Term Loan B, both of which represent optional principal prepayments. In connection with these prepayments, the
Company recorded a write-off of $1.3 million of previously deferred financing fees which is reflected in interest expense in the accompanying consolidated statement of operations
for the three months ended March 31, 2003. For the year ended December 31, 2002, the Company made principal payments of $11.0 million on Term Loan A and $2.0 million on
Term Loan B, which included optional principal prepayments of $6.3 million on Term Loan A and $1.1 million on Term Loan B. The optional prepayments in the three months ended
March 31, 2002 were made to remain two quarterly payments ahead of the regular payment schedule. Under the Senior Credit Facility agreement, each prepayment may be applied to the next principal
repayment installments. The Company remains two principal payments ahead of schedule

13

---

on
Term Loan B and intends to pay a full year of principal installments in 2003 in accordance with the terms of the Senior Credit Facility.

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

Senior Subordinated Notes

In March 2003, the Company issued in a private placement $85.0 million in aggregate principal amount of 97/8% Series C senior
subordinated notes due April 1, 2009 (the Series C Notes). Gross proceeds from the issuance were $86.3 million and included a premium of $1.3 million which is being
amortized over the term of the Series C Notes using the effective interest method. Interest on the Series C Notes accrues at a rate of 97/8% per annum, payable
semi-annually on April 1 and October 1. Net proceeds of $84.1 million were used to repay $30.0 million of the Revolving Credit Facility, fully repay
$28.3 million outstanding under Term Loan A and repay $25.9 million outstanding under Term Loan B. The Series C Notes were issued with terms substantially similar to the
Series B Notes. In connection with its issuance of the Series C Notes, the Company recorded $2.2 million of deferred financing fees which are being amortized over the term of the
Series C Notes. As of March 31, 2003, $85.0 million of the Series C Notes were outstanding.

In
November 1999, the Company issued $150.0 million in aggregate principal amount of 97/8% Series B senior subordinated notes (the Series B
Notes and, collectively with the Series C Notes, the Senior Subordinated Notes) due April 1, 2009. Interest accrues at a rate of 97/8% per annum, payable
semi-annually on April 1 and October 1.

The
Company's indentures governing the Senior Subordinated Notes contain a number of significant covenants that could adversely impact the Company's business. In particular, the
indentures limit the Company's ability to:



14

---



Furthermore,
in accordance with the indentures governing the Senior Subordinated Notes, the Senior Subordinated Notes are unconditionally and jointly and severally guaranteed by the
Company's subsidiaries (see Note 15), which are 100% owned by the Company. The indentures also require the Company to maintain specified financial ratios and meet certain financial tests. The
ability to comply with these provisions may be affected by events beyond the Company's control. The breach of any of these covenants will result in a default under the applicable debt agreement or
instrument and could trigger acceleration of the debt under the applicable agreements. Any default under the Company's indentures governing the Senior Subordinated Notes might adversely affect the
Company's growth, financial condition and results of operations and the ability to make payments on the Senior Subordinated Notes or meet other obligations.

The
fair value of the Senior Subordinated Notes was $243.2 million and $147.8 million as of March 31, 2003 and 2002, respectively, and $151.5 million as of
December 31, 2002, based on their quoted market price on such dates. The Senior Subordinated Notes are unconditionally and jointly and severally guaranteed by all of the Company's existing
subsidiaries.

The
Company is in the process of registering the Series D Notes, with terms substantially similar to the Series B Notes and the Series C Notes, with the U.S.
Securities Exchange Commission. As soon as practicable after the registration statement becomes effective, the Company intends to offer to exchange its Series D Notes for up to 100% of its
Series B Notes and Series C Notes.

Aggregate
future principal payments of long-term debt, excluding capital lease obligation, as of March 31, 2003 are as follows:

Year

AmountRemainder of 2003

$
10,6082004


2,0332005


145,2732006


48,2552007


Thereafter


236,275$
442,444


Note 9Commitments

The Company leases several of its operating facilities from Rex Realty, Inc., a company owned by stockholders and operated by a former executive and past
member of the Board of Directors of the Company. The operating leases expire at various dates through December 31, 2010. The Company has options to terminate the leases on an annual basis by
giving advance notice of at least one year. The Company leases a portion of its operating facilities from the same company under a sublease agreement expiring on December 31, 2005 with minimum
annual rentals of $0.7 million. The Company has two five-year options to renew this lease, beginning January 1, 2006.

15

---

The
Company is obligated under additional operating leases for other operations and the use of warehouse space. The leases expire at various dates through December 31, 2015. Five
of the leases provide for as many as five options to renew for five years each.

In
March 2000, the Company entered into a capital lease agreement for $5.3 million for its aircraft. The Company is obligated to make monthly payments of
$0.1 million, with a balloon payment of $3.2 million
in February 2005. The Company has the option of purchasing the aircraft following the expiration of the lease agreement for a nominal amount.

The
following table presents future minimum payments due under operating and capital leases as of March 31, 2003:

Operating LeasesYear

Capital
LeaseAffiliate

Other

TotalRemainder of 2003

$
1,294

$
5,360

$
580

$
7,2342004


1,766


6,348


773


8,8872005


1,806


5,492


3,240


10,5382006


1,847


4,307





6,1542007


1,887


3,525





5,412Thereafter


10,673


18,686





29,359Total minimum lease payments

$
19,273

$
43,718


4,593

$
67,584Less amount representing interest








(442
)Present value of net minimum lease payments, including current portion of $574







$
4,151


Note 10Contingencies

In the normal course of business, the Company is a party to certain guarantees and financial instruments with off-balance sheet risk, such as standby
letters of credit and indemnifications, which are not reflected in the accompanying consolidated balance sheets. As of March 31, 2003 and 2002 and December 31, 2002, the Company had
$2.2 million, $1.3 million and $1.9 million, respectively, in standby letters of credit pledged as collateral to support the lease of its primary distribution facility in St.
Louis, a United States customs bond, certain product purchases, various workers' compensation obligations and the aircraft. These agreements mature at various dates through May 2004 and may be
renewed as circumstances warrant. Such financial instruments are valued based on the amount of exposure under the instruments and the likelihood of performance being required. In the Company's past
experience, no claims have been made against these financial instruments nor does management expect any losses to result from them.

The
Company is the lessee under a number of equipment and property leases, as described above. It is common in such commercial lease transactions for the Company to agree to indemnify
the lessor for the value of the property or equipment leased should it be damaged during the course of the

16

---

Company's
operations. The Company expects that any losses that may occur with respect to the leased property would be covered by insurance, subject to deductible amounts.

The
Company has entered into certain derivative hedging instruments and other commitments to purchase granular urea during its peak production season in 2003. See Note 11 for
information regarding these commitments.

The
Company is involved from time to time in routine legal matters and other claims incidental to its business. 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, liabilities are recorded in the consolidated financial statements and
charges are
recorded against earnings. Management believes that it is remote the resolution of such routine matters and other incidental claims, taking into account established reserves and insurance, will have a
material adverse impact on the Company's consolidated financial position, results of operations or liquidity.

Note 11Accounting for Derivative Instruments and Hedging Activities

In the normal course of business, the Company is exposed to fluctuations in interest rates and raw materials prices. The Company has established policies and
procedures that govern the management of these exposures through the use of derivative hedging instruments, including swap agreements. The Company's objective in managing its exposure to such
fluctuations is to decrease the volatility of earnings and cash flows associated with changes in interest rates and certain raw materials prices. To achieve this objective, the Company periodically
enters into swap agreements with values that change in the opposite direction of anticipated cash flows. Derivative instruments related to forecasted transactions are considered to hedge future cash
flows, and the effective portion of any gains or losses is included in accumulated other comprehensive income until earnings are affected by the variability of cash flows. Any remaining gain or loss
is recognized currently in earnings.

As
of March 31, 2003, with nearly 60% of its annual urea purchases completed, the Company had hedged 6%, and had purchase agreements to effectively fix an additional 4%, of its
remaining 2003 urea purchases. The contract price of the Company's derivative hedging instruments as of March 31, 2003, intended to fix the price of forecasted urea prices through
April 2003, was $137 per ton (not in thousands). The average purchase price of the Company's purchase agreements as of March 31, 2003 was approximately $200 per ton (not in thousands).
While management expects these instruments and agreements to manage the Company's exposure to such price fluctuations, no assurance can be provided that the instruments will be effective in fully
mitigating exposure to these risks, nor can assurance be provided that the Company will be successful in passing on pricing increases to its customers.

The
Company has formally documented, designated and assessed the effectiveness of transactions that receive hedge accounting treatment. The cash flows of the derivative instruments are
expected to be highly effective in achieving offsetting cash flows attributable to fluctuations in the cash flows of the hedged risk. Changes in the fair value of agreements designated as derivative
hedging instruments are reported as either an asset or liability in the accompanying consolidated balance sheets with the

17

---

associated
unrealized gains or losses reflected in accumulated other comprehensive income. As of March 31, 2003 and December 31, 2002, an unrealized gain of $0.4 million and an
unrealized loss of less than $0.1 million, respectively, related to derivative instruments designated as cash flow hedges were recorded in accumulated other comprehensive income. The amounts in
accumulated other comprehensive income are subsequently reclassified into cost of goods sold in the same period in which the underlying hedged transactions affect earnings.

If
it becomes probable that a forecasted transaction will no longer occur, any gains or losses in accumulated other comprehensive income will be recognized in earnings. The Company has
not incurred any gains or losses for hedge ineffectiveness or due to excluding a portion of the value from measuring effectiveness. The Company does not enter into derivatives or other hedging
arrangements for trading or speculative purposes.

As
of March 31, 2003, one derivative hedging agreement contract was outstanding, which matured on April 24, 2003, for 5,000 tons of urea with a contract price of $137 per
ton (not in thousands). The contract value upon the effective contract date was $0.7 million while the contract value at March 31, 2003 was $0.9 million resulting in a gain
recorded in accumulated other comprehensive income of $0.2 million as of March 31, 2003.

For
the three months ended March 31, 2003, the Company reclassified $0.2 million from accumulated other comprehensive income into cost of goods sold representing a gain on
raw materials derivative hedging instruments. No such amounts were recorded during the three months ended March 31, 2002 or year ended December 31, 2002.

Note 12Segment Information

During the third quarter of 2002, the Company began reporting its operating results using three reportable segments: Lawn and Garden, Household and Contract.
Segments were established primarily by product type which represents the basis upon which management, including the CEO who is the chief operating decision maker of the Company, reviews and assesses
the Company's financial performance. The Lawn and Garden segment primarily consists of dry, granular slow-release lawn fertilizers, lawn fertilizer combination and lawn control products,
herbicides, water-soluble and controlled-release garden and indoor plant foods, plant care products, potting soils and other growing media products and insecticide products. Products are marketed to
mass merchandisers, home improvement centers, hardware chains, nurseries and garden centers. This segment includes, among others, the Company's Spectracide, Garden Safe, Schultz, Vigoro,
Sta-Green, Bandini, Real-Kill, and No-Pest brands.

The
Household segment represents household insecticides and insect repellents that allow consumers to achieve and maintain a pest-free household and repel insects. The
Household segment includes the Company's Hot Shot, Cutter and Repel brands, as well as a number of private label and other products.

18

---

The
Contract segment represents mainly non-core products, some of which are private label, and includes various compounds and chemicals such as, among others, charcoal, water
purification tablets, first-aid kits, barbeque sauce, fish attractant, cleaning solutions and automotive products.

The
following table presents certain financial segment information in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," for the
three months ended March 31, 2003 and 2002. The accounting policies of the reportable segments are the same as those described in the summary of significant polices in Note 1 to the
consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002, as applicable. The segment financial information
presented includes comparative periods prepared on a basis consistent with the current year presentation.

Three Months Ended
March 31,2003

2002Net sales:Lawn and Garden

$
145,614

$
110,385Household


27,567


25,278Contract


5,631


728Total net sales

$
178,812

$
136,391Operating income (loss):Lawn and Garden

$
24,473

$
14,933Household


6,626


7,044Contract


(41
)

12Total operating income

$
31,058

$
21,989Operating margin:Lawn and Garden


16.8
%

13.5
%Household


24.0
%

27.9
%Contract


-0.7
%

1.6
%Total operating margin


17.4
%

16.1
%


Operating
income represents earnings before net interest expense and income tax expense. Operating income is the measure of profitability used by management to assess the Company's
financial performance. Operating margin represents operating income as a percentage of net sales.

The
majority of the Company's sales are conducted with customers in the United States. The Company's international sales comprise less than 1% of total net sales. In addition, no single
item comprises more than 10% of the Company's net sales. For the three months ended March 31, 2003 and 2002, the Company's three largest customers were responsible for 68% and 69% of net sales,
respectively.

19

---

As
the Company's assets support production across all segments, they are managed on an entity-wide basis at the corporate level and are not recorded or analyzed by segment.
Substantially all of the Company's assets are located in the United States.

Note 13Shipping and Handling Costs

Certain shipping and handling costs are included in selling, general and administrative expenses in the accompanying consolidated statements of operations. These
costs primarily consist of personnel and other general and administrative costs associated with the Company's distribution facilities, and to a lesser extent, some costs related to the shipment of
goods between the Company's facilities. For the three months ended March 31, 2003 and 2002 and the year ended December 31, 2002, these costs were $6.1 million, $3.8 million
and $15.7 million, respectively. The remaining shipping and handling costs comprise those costs associated with shipping goods to customers and receiving supplies from vendors and are included
in cost of goods sold in the accompanying consolidated statements of operations.

Note 14Stock-Based Compensation

The Company accounts for stock options issued to employees in accordance with Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock
Issued to Employees" and applies the disclosure provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," and SFAS No. 148, "Accounting for Stock-Based
CompensationTransition and Disclosure, an amendment of FASB Statement No. 123." Under APB No. 25 and related interpretations, compensation expense is recognized using the
intrinsic value method for the difference between the exercise price of the options and the estimated fair value of the Company's common stock on the date of grant.

SFAS
No. 123 requires pro forma disclosure of the impact on earnings as if the Company determined stock-based compensation expense using the fair value method. The following table
presents net income, as reported, using the intrinsic value method, stock-based compensation included therein, stock-based compensation expense that would have been recorded using the fair value
method and pro forma net income that would have been reported had the fair value method been applied:

Three Months Ended
March 31,2003

2002Net income, as reported

$
13,453

$
10,162Stock-based compensation expense included in net income, as reported, net of tax





Stock-based compensation expense using the fair method, net of tax


352


369Pro forma net income


13,101


9,793


Note 15Financial Information for Subsidiary Guarantors

The Company's Senior Subordinated Notes are unconditionally and jointly and severally guaranteed by all of the Company's existing subsidiaries. The Company's
subsidiaries are 100% owned

20

---

by
the Company. The condensed consolidating financial information below is presented as of and for the three months ended March 31, 2003 and has been prepared in accordance with the
requirements for presentation of such information. The Company did not have any subsidiaries as of or during the three months ended March 31, 2002. The Company believes that separate financial
statements concerning the guarantor subsidiaries would not be material to investors and that the information presented herein provides sufficient detail to determine the nature of the aggregate
financial position, results of operations and cash flows of the guarantor subsidiaries.

The
Company's investment in subsidiaries is accounted for using the equity method of accounting. Earnings of the subsidiaries are reflected in the respective investment accounts of the
parent company accordingly. The investments in subsidiaries and all intercompany balances and transactions have been eliminated. Beginning January 1, 2003, in connection with the integration of
its merged and acquired companies, the Company began accounting for the operating results of certain subsidiaries on a combined basis with the parent company. Various assumptions and estimates were
used to establish the financial statements of such subsidiaries for the information presented herein.

21

---



Balance Sheet

|                                                    |                                                                   | Parent                                               |         | Subsidiary
Guarantors |         | Eliminations |        | Consolidated |        
|--------------------------------------------------- | ----------------------------------------------------------------- | ---------------------------------------------------- | ------- | --------------------- | ------- | ------------ | ------ | ------------ | -------
|ASSETS                                              |                                                                   |                                                      |         |                       |         |              |        |              |        
|Current assets:                                     |                                                                   |                                                      |         |                       |         |              |        |              |        
|                                                    | Cash and cash equivalents                                         |                                                      | $       |                      |         | $            |       |              | $      
|                                                    | Accounts receivable, net                                          |                                                      |         | 136,978               |         |              | 2,559  |              |        
|                                                    | Inventories                                                       |                                                      |         | 60,177                |         |              | 37,942 |              |        
|                                                    | Prepaid expenses and other current assets                         |                                                      |         | 9,561                 |         |              | 963    |              |        
|                                                    |                                                                   |                                                      |         |                       |         |              |        |              |        
|                                                    |                                                                   | Total current assets                                 |         |                       | 206,716 |              |        | 41,464       |        
|                                                    |                                                                   |                                                      |         |                       |         |              |        |              |        
|Equipment and leasehold improvements, net           |                                                                   |                                                      | 26,521  |                       |         | 7,128        |        |              |       
|Investment in subsidiaries                          |                                                                   |                                                      | 25,034  |                       |         |             |        |              | (25,034
|Intercompany assets                                 |                                                                   |                                                      | 47,608  |                       |         |             |        |              | (47,608
|Deferred tax asset                                  |                                                                   |                                                      | 96,313  |                       |         | 426          |        |              |       
|Goodwill and intangible assets, net                 |                                                                   |                                                      | 47,455  |                       |         | 51,483       |        |              |       
|Other assets, net                                   |                                                                   |                                                      | 8,850   |                       |         | 6,313        |        |              |       
|                                                    |                                                                   |                                                      |         |                       |         |              |        |              |        
|                                                    |                                                                   | Total assets                                         |         | $                     | 458,497 |              | $      | 106,814      |        
|                                                    |                                                                   |                                                      |         |                       |         |              |        |              |        
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)      |                                                                   |                                                      |         |                       |         |              |        |              |        
|Current liabilities:                                |                                                                   |                                                      |         |                       |         |              |        |              |        
|                                                    | Current maturities of long-term debt and capital lease obligation |                                                      | $       | 1,590                 |         | $            |       |              | $      
|                                                    | Accounts payable                                                  |                                                      |         | 30,393                |         |              | 28,623 |              |        
|                                                    | Accrued expenses                                                  |                                                      |         | 61,691                |         |              | 4,622  |              |        
|                                                    | Short-term borrowings                                             |                                                      |         | 10,100                |         |              |       |              |        
|                                                    |                                                                   |                                                      |         |                       |         |              |        |              |        
|                                                    |                                                                   | Total current liabilities                            |         |                       | 103,774 |              |        | 33,245       |        
|                                                    |                                                                   |                                                      |         |                       |         |              |        |              |        
|Long-term debt, net of current maturities           |                                                                   |                                                      | 431,328 |                       |         |             |        |              |       
|Capital lease obligation, net of current maturities |                                                                   |                                                      | 3,577   |                       |         |             |        |              |       
|Other liabilities                                   |                                                                   |                                                      | 3,121   |                       |         | 927          |        |              |       
|Intercompany liabilities                            |                                                                   |                                                      |        |                       |         | 47,608       |        |              | (47,608
|                                                    |                                                                   |                                                      |         |                       |         |              |        |              |        
|                                                    |                                                                   | Total liabilities                                    |         |                       | 541,800 |              |        | 81,780       |        
|                                                    |                                                                   |                                                      |         |                       |         |              |        |              |        
|Commitments and contingencies                       |                                                                   |                                                      |         |                       |         |              |        |              |        
|Stockholders' equity (deficit):                     |                                                                   |                                                      |         |                       |         |              |        |              |        
|                                                    | Preferred stock                                                   |                                                      |         |                      |         |              |       |              |        
|                                                    | Common stock                                                      |                                                      |         | 664                   |         |              |       |              |        
|                                                    | Warrants and options                                              |                                                      |         | 11,745                |         |              |       |              |        
|                                                    | Investment from parent                                            |                                                      |         |                      |         |              | 26,891 |              |        
|                                                    | Additional paid-in capital                                        |                                                      |         | 210,480               |         |              |       |              |        
|                                                    | Accumulated deficit                                               |                                                      |         | (275,946              | )       |              | (1,857 | )            |        
|                                                    | Common stock subscription receivable                              |                                                      |         | (24,976               | )       |              |       |              |        
|                                                    | Common stock repurchase option                                    |                                                      |         | (2,636                | )       |              |       |              |        
|                                                    | Common stock held in grantor trust                                |                                                      |         | (2,700                | )       |              |       |              |        
|                                                    | Loans to executive officer                                        |                                                      |         | (324                  | )       |              |       |              |        
|                                                    | Accumulated other comprehensive income                            |                                                      |         | 390                   |         |              |       |              |        
|                                                    |                                                                   |                                                      |         |                       |         |              |        |              |        
|                                                    |                                                                   | Total stockholders' equity (deficit)                 |         |                       | (83,303 | )            |        | 25,034       |        
|                                                    |                                                                   |                                                      |         |                       |         |              |        |              |        
|                                                    |                                                                   | Total liabilities and stockholders' equity (deficit) |         | $                     | 458,497 |              | $      | 106,814      |        
|                                                    |                                                                   |                                                      |         |                       |         |              |        |              |        

22

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Statement of Operations

|                                        |                                              | Parent |         | Subsidiary
Guarantors |   | Eliminations |        | Consolidated
|--------------------------------------- | -------------------------------------------- | ------ | ------- | --------------------- | - | ------------ | ------ | ------------
|Net sales before promotion expense      |                                              | $      | 157,950 |                       | $ | 83,999       |        | $           
|Promotion expense                       |                                              |        | 14,921  |                       |   |             |        |             
|                                        |                                              |        |         |                       |   |              |        |             
|Net sales                               |                                              |        | 143,029 |                       |   | 83,999       |        |             
|                                        |                                              |        |         |                       |   |              |        |             
|Operating costs and expenses:           |                                              |        |         |                       |   |              |        |             
|                                        | Cost of goods sold                           |        |         | 78,352                |   |              | 74,979 |             
|                                        | Selling, general and administrative expenses |        |         | 33,260                |   |              | 9,379  |             
|                                        | Equity (income) loss in subsidiaries         |        |         | 317                   |   |              |       |             
|                                        |                                              |        |         |                       |   |              |        |             
|                                        | Total operating costs and expenses           |        |         | 111,929               |   |              | 84,358 |             
|                                        |                                              |        |         |                       |   |              |        |             
|Operating income (loss)                 |                                              |        | 31,100  |                       |   | (359         | )      |             
|Interest expense, net                   |                                              |        | 9,066   |                       |   | 137          |        |             
|                                        |                                              |        |         |                       |   |              |        |             
|Income (loss) before income tax expense |                                              |        | 22,034  |                       |   | (496         | )      |             
|Income tax expense (benefit)            |                                              |        | 8,581   |                       |   | (179         | )      |             
|                                        |                                              |        |         |                       |   |              |        |             
|Net income (loss)                       |                                              | $      | 13,453  |                       | $ | (317         | )      | $           
|                                        |                                              |        |         |                       |   |              |        |             

23

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Statement of Cash Flows

|                                             |                                                                                         | Parent                                                                         |                                                      | Subsidiary
Guarantors                               |       | Eliminations |         | Consolidated |       
|-------------------------------------------- | --------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ---------------------------------------------------- | --------------------------------------------------- | ----- | ------------ | ------- | ------------ | ------
|Cash flows from operating activities:        |                                                                                         |                                                                                |                                                      |                                                     |       |              |         |              |       
|                                             | Net income (loss)                                                                       |                                                                                | $                                                    | 13,453                                              |       | $            | (317    | )            | $     
|                                             | Adjustments to reconcile net income (loss) to net cash flows from operating activities: |                                                                                |                                                      |                                                     |       |              |         |              |       
|                                             |                                                                                         | Depreciation and amortization                                                  |                                                      |                                                     | 1,759 |              |         | 503          |       
|                                             |                                                                                         | Amortization of deferred financing fees                                        |                                                      |                                                     | 2,309 |              |         |             |       
|                                             |                                                                                         | Deferred income tax expense                                                    |                                                      |                                                     | 8,402 |              |         |             |       
|                                             |                                                                                         | Equity (income) loss in subsidiaries                                           |                                                      |                                                     | 317   |              |         |             |       
|                                             |                                                                                         | Changes in operating assets and liabilities, net of effects from acquisitions: |                                                      |                                                     |       |              |         |              |       
|                                             |                                                                                         |                                                                                | Accounts receivable                                  |                                                     |       | (70,735      | )       |              | 2,270 
|                                             |                                                                                         |                                                                                | Inventories                                          |                                                     |       | (57,075      | )       |              | 2,142 
|                                             |                                                                                         |                                                                                | Prepaid expenses and other current assets            |                                                     |       | 405          |         |              | 843   
|                                             |                                                                                         |                                                                                | Other assets                                         |                                                     |       | (1,524       | )       |              |      
|                                             |                                                                                         |                                                                                | Accounts payable and accrued expenses                |                                                     |       | 33,765       |         |              | 11,636
|                                             |                                                                                         |                                                                                | Facilities and organizational rationalization charge |                                                     |       | (596         | )       |              |      
|                                             |                                                                                         |                                                                                | Other operating activities, net                      |                                                     |       | (2,976       | )       |              |      
|                                             |                                                                                         |                                                                                |                                                      |                                                     |       |              |         |              |       
|                                             |                                                                                         |                                                                                |                                                      | Net cash flows from (used for) operating activities |       |              | (72,496 | )            |       
|                                             |                                                                                         |                                                                                |                                                      |                                                     |       |              |         |              |       
|Cash flows from investing activities:        |                                                                                         |                                                                                |                                                      |                                                     |       |              |         |              |       
|                                             | Purchases of equipment and leasehold improvements                                       |                                                                                |                                                      | (1,165                                              | )     |              | (102    | )            |       
|                                             |                                                                                         |                                                                                |                                                      |                                                     |       |              |         |              |       
|                                             |                                                                                         |                                                                                |                                                      | Net cash flows used for investing activities        |       |              | (1,165  | )            |       
|                                             |                                                                                         |                                                                                |                                                      |                                                     |       |              |         |              |       
|Cash flows from financing activities:        |                                                                                         |                                                                                |                                                      |                                                     |       |              |         |              |       
|                                             | Proceeds from additional debt                                                           |                                                                                |                                                      | 126,275                                             |       |              |        |              |       
|                                             | Repayment of debt                                                                       |                                                                                |                                                      | (84,747                                             | )     |              |        |              |       
|                                             | Other financing and intercompany activities                                             |                                                                                |                                                      | 2,266                                               |       |              | 2,574   |              |       
|                                             |                                                                                         |                                                                                |                                                      |                                                     |       |              |         |              |       
|                                             |                                                                                         |                                                                                |                                                      | Net cash flows from financing activities            |       |              | 43,794  |              |       
|                                             |                                                                                         |                                                                                |                                                      |                                                     |       |              |         |              |       
|Net increase in cash and cash equivalents    |                                                                                         |                                                                                | (29,867                                              | )                                                   |       | 19,549       |         |              |      
|Cash and cash equivalents, beginning of year |                                                                                         |                                                                                | 10,191                                               |                                                     |       | 127          |         |              |      
|                                             |                                                                                         |                                                                                |                                                      |                                                     |       |              |         |              |       
|Cash and cash equivalents, end of year       |                                                                                         | $                                                                              | (19,676                                              | )                                                   | $     | 19,676       |         | $            |      
|                                             |                                                                                         |                                                                                |                                                      |                                                     |       |              |         |              |       

24

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

The discussion and analysis of our consolidated financial condition and results of operations included herein should be read in conjunction with our historical
financial information included in the consolidated financial statements and the related notes thereto elsewhere in this Quarterly Report. Future results could differ materially from those discussed
below for many reasons, including the risks discussed elsewhere in this Quarterly Report and in our Annual Report filed on Form 10-K for the year ended December 31, 2002.

Overview

Operating as Spectrum Brands, we are majority owned by UIC Holdings, L.L.C. and are the leading manufacturer and marketer of value-oriented products for the
consumer lawn and garden care and insect control markets in the United States. Under a variety of brand names, we manufacture and market one of the broadest lines of pesticides in the industry,
including herbicides and indoor and outdoor insecticides, as well as insect repellents, fertilizers, growing media and soils. Our operations are divided into three business segments: Lawn and Garden,
Household and Contract. We believe that the key growth factors for the $2.8 billion consumer lawn and garden and pesticide retail markets include:



We
do not believe that our historical financial condition and results of operations are accurate indicators of future results because of certain significant past events. Those events
include merger and acquisition activities, strategic transactions and equity and debt financing transactions over the last several years. Furthermore, our sales are seasonal in nature and are
susceptible to weather conditions that vary from year to year.

Critical Accounting Policies

While all of the significant accounting policies are important to our consolidated financial statements, some of these policies may be viewed as being critical.
Such policies are those that are both most important to the portrayal of our financial condition and require our most difficult, subjective or complex estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our consolidated financial statements and the reported amounts of revenues and expenses
during the reporting period. We base our estimates and assumptions on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could
differ from these estimates and assumptions. We believe our most critical accounting policies are as follows:

Revenue Recognition.Net sales represent gross sales less any applicable customer discounts from list
price, customer returns and promotion expense through cooperative programs with retailers. The provision for customer returns is based on historical sales returns and analysis of credit memo and other
relevant information. If the historical or other data used to develop these estimates do not properly reflect future returns, net sales may need to be adjusted. Sales reductions related to returns
were $2.0 million for the three months ended March 31, 2003 and $1.6 million for the three months ended March 31, 2002. Amounts included in the accounts receivable reserves
for sales returns were $3.4 million as of March 31, 2003, $2.0 million as of March 31, 2002 and $2.0 million as of December 31, 2002.

25

---

Inventories.Inventories are reported at the lower of cost or market. Cost is determined using a
standard costing system that approximates the first-in, first-out method and includes raw materials, direct labor and overhead. An allowance for potentially obsolete or
slow-moving inventory is recorded based on our analysis of inventory levels and future sales forecasts. In the event that our estimates of future usage and sales differ from actual
results, the allowance for obsolete or slow-moving inventory may be adjusted. Amounts recorded for potentially obsolete or slow-moving inventory were reduced by
$0.2 million for the three months ended March 31, 2003 and increased by $0.5 million for the three months ended March 31, 2002. The allowance for potentially obsolete or
slow-moving inventory was $5.4 million as of March 31, 2003, $4.1 million as of March 31, 2002 and $5.8 million as of December 31, 2002.

Promotion Expense.We advertise and promote our products through national and regional media.
Products are also advertised and promoted through cooperative programs with retailers. Advertising and promotion costs are expensed as incurred, although costs incurred during interim periods are
generally expensed ratably in relation to revenues. Management develops an estimate of the amount of costs that have been incurred by the retailers under our cooperative programs based on an analysis
of specific programs offered to retailers and historical information. Actual costs incurred may differ significantly from our estimates if factors such as the level of participation and success of the
retailers' programs or other conditions differ from our expectations. Promotion expense, including cooperative programs with customers, is recorded as a reduction of sales and was $14.9 million
for the three months ended March 31, 2003 and $12.8 million for the three months ended March 31, 2002. Accrued advertising and promotion expense was $23.3 million as of
March 31, 2003, $16.0 million as of March 31, 2002 and $16.4 million as of December 31, 2002. In addition, advertising costs are incurred irrespective of promotions.
Such costs are included in selling, general and administrative expenses in our consolidated statements of operations and were $3.7 million for the three months ended March 31, 2003 and
$0.5 million for the three months ended March 31, 2002.

Income Taxes.Income taxes are accounted for under the asset and liability method. Under this method,
deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial reporting basis and the tax basis of assets and liabilities at
enacted tax rates expected to be in effect when such amounts are recovered or settled. The judgment of management is required to determine income tax expense, deferred tax assets and any related
valuation allowance and deferred tax liabilities. We have recorded a valuation allowance of $104.1 million as of March 31, 2003 due to uncertainties related to the ability to utilize
some of the deferred tax assets, primarily consisting of certain net operating loss carryforwards that were generated in 1999 through 2002 and deductible goodwill recorded in connection with our
recapitalization in 1999. The valuation allowance is based on our estimates of future taxable income by jurisdiction in which the deferred tax assets will be recoverable.

As
previously noted, we generated net operating losses for tax purposes for each of the years 1999 through 2002. Our current estimates indicate that we will generate taxable income for
2003. If we achieve such results, 2003 would be the first year that taxable income would be generated since our recapitalization in 1999. In addition, as our budgets for future years indicate that we
will continue to generate taxable income, it is possible the valuation allowance will need to be reduced. Any adjustment to the valuation allowance could materially impact our consolidated financial
position and results of operations. In addition, beginning in 2003 our effective tax rate is 38%, absent any reduction of the valuation allowance that may occur, as previously described.

Goodwill and Other Intangible Assets.We have acquired intangible assets or made acquisitions in the
past that resulted in the recording of goodwill or intangible assets, including our merger with Schultz Company in May 2002 and our acquisition of WPC Brands, Inc. in
December 2002. Under generally accepted accounting principles previously in effect, goodwill and intangibles were amortized

26

---

over
their estimated useful lives, and were tested periodically to determine if they were recoverable from their cash flows on an undiscounted basis over their useful lives.

Effective
in 2002, goodwill is no longer amortized and is subject to impairment testing at least annually. We evaluate the recoverability of long-lived assets, including
goodwill and intangible assets, for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events or changes in circumstances
could include such factors as changes in technological advances, fluctuations in the fair value of such assets or adverse changes in relationships or vendors. If a review indicates that the carrying
value of goodwill and other intangible assets are not recoverable, the carrying value of such asset is reduced to its estimated fair value. While we believe that our estimates of future cash flows are
reasonable, different assumptions regarding such cash flows could materially affect our evaluations. Therefore, impairment losses could be recorded in the future.

Results of Operations

During the third quarter of 2002, we began reporting operating results using three reportable segments:



27

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The
following table presents amounts and the percentages of net sales that items in the accompanying consolidated statements of operations constitute for the periods presented:

Three Months Ended March 31,2003

2002Net sales by segment:Lawn and Garden

$
145,614

81.4
%
$
110,385

80.9
%Household


27,567

15.4
%

25,278

18.5
%Contract


5,631

3.2
%

728

0.6
%Total net sales


178,812

100.0
%

136,391

100.0
%Operating costs and expenses:Cost of goods sold


108,755

60.8
%

87,163

63.9
%Selling, general and administrative expenses


38,999

21.8
%

27,239

20.0
%Total operating costs and expenses


147,754

82.6
%

114,402

83.9
%Operating income (loss) by segment:Lawn and Garden


24,473

13.7
%

14,933

10.9
%Household


6,626

3.7
%

7,044

5.2
%Contract


(41
)
(0.0
)%

13

0.0
%Total operating income


31,058

17.4
%

21,990

16.1
%Interest expense, net


9,203

5.1
%

8,512

6.2
%Income before income tax expense


21,855

12.3
%

13,478

9.9
%Income tax expense, net


8,402

4.8
%

3,315

2.4
%Net income

$
13,453

7.5
%
$
10,163

7.5
%


Three Months Ended March 31, 2003 Compared to Three Months Ended March 31, 2002

Net Sales.Net sales represent gross sales less any applicable customer discounts from list price,
customer returns and promotion expense through cooperative programs with retailers. Net sales increased $42.4 million, or 31.1%, to $178.8 million for the three months ended
March 31, 2003 from $136.4 million for the three months ended March 31, 2002. The increase, primarily in our Lawn and Garden segment, as well as the change in our sales mix by
segment, were primarily due to our expanded product lines resulting from our merger with Schultz in May 2002, which contributed $32.8 million to the increase in net sales, our
acquisition of WPC Brands in December 2002, which contributed $3.0 million to the increase in net sales and an increase in net sales of specific product lines described further below.
This increase was partially offset by a decline in charcoal sales of $3.0 million due to our cessation of charcoal distribution and an increase in promotion expense during the three months
ended March 31, 2003.

Net
sales in the Lawn and Garden segment increased $35.2 million, or 31.9%, to $145.6 million for the three months ended March 31, 2003 from $110.4 million
for the three months ended March 31, 2002. Net sales of this segment increased primarily due to our merger with Schultz and increased sales of our Spectracide products, partially offset by
lower sales of various other products in the Lawn and Garden segment. Net sales in the Household segment increased $2.3 million, or 9.1%, to $27.6 million for the three months ended
March 31, 2003 from $25.3 million for the three months ended March 31, 2002. Net sales of this segment increased primarily due to our acquisition of WPC Brands and increased sales
of our Cutter products, offset slightly by lower sales of certain Hot Shot products. Net sales in the Contract segment increased $4.9 million to $5.6 million for the three months ended
March 31, 2003 from $0.7 million for the three months ended March 31, 2002. Net sales of this

28

---

segment
increased primarily due to our merger with Schultz and acquisition of WPC Brands, which were partially offset by a decline in charcoal sales.

Gross Profit.Gross profit increased $20.9 million, or 42.5%, to $70.1 million for the
three months ended March 31, 2003 from $49.2 million for the three months ended March 31, 2002. The increase in gross profit was primarily due to our merger with Schultz, coupled
with favorable fertilizer manufacturing costs resulting from our purchase of certain fertilizer production assets from U.S. Fertilizer (formerly known as Pursell Industries, Inc.) in
October 2002. The increase in gross profit was partially offset by $0.7 million in amortization of the purchase accounting inventory write-up related to the WPC Brands
acquisition. As a percentage of net sales, gross profit increased to 39.2% for the three months ended March 31, 2003 from 36.1% for the three months ended March 31, 2002. The increase in
gross profit as a percentage of net sales was primarily due to improved margins on fertilizer products,
as described above, and our ability to achieve operational efficiencies from other strategic transactions in 2002.

Selling, General and Administrative Expenses.Selling, general and administrative expenses include
all costs associated with the selling and distribution of product, product registrations and administrative functions such as finance, information systems and human resources. Selling, general and
administrative expenses increased $11.9 million, or 43.8%, to $39.0 million for the three months ended March 31, 2003 from $27.2 million for the three months ended
March 31, 2002. The increase was primarily due to increased operating expenses resulting from our merger with Schultz and acquisition of WPC Brands, non-manufacturing costs associated with
fertilizer being produced internally rather than being purchased and an increase in advertising activities. As a percentage of net sales, selling, general and administrative expenses increased to
21.8% for the three months ended March 31, 2003 from 20.0% for the three months ended March 31, 2002. The increase was primarily due to additional selling, general and administrative
expenses related to our acquisition of WPC Brands in December 2002 with a lesser corresponding increase in net sales.

Operating Income.Operating income increased $9.1 million, or 41.4%, to $31.1 million
for the three months ended March 31, 2003 from $22.0 million for the three months ended March 31, 2002. The increase was due to the factors described above. As a percentage of net
sales, operating income increased to 17.4% for the three months ended March 31, 2003 from 16.1% for the three months ended March 31, 2002. The increase was primarily in our Lawn and
Garden segment due to additional sales of our fertilizer brands and our merger with Schultz, with a lesser corresponding increase in operating costs and expenses.

Operating
income in the Lawn and Garden segment increased $10.7 million, or 71.8%, to $25.6 million for the three months ended March 31, 2003 from
$14.9 million for the three months ended March 31, 2002. Operating income of this segment increased primarily due to the addition of sales resulting from the Schultz merger and strong
sales growth of our Spectracide products. These increases were partially offset by lower sales volume and margins of certain other products in the Lawn and Garden segment. Operating income in the
Household segment decreased $0.4 million, or 5.9%, to $6.6 million for the three months ended March 31, 2003 from $7.0 million for the three months ended March 31,
2002. Operating income of this segment decreased primarily due to the amortization of the purchase accounting inventory write-up related to the WPC Brands acquisition which totaled
$0.7 million. Operating loss in the Contract segment increased $1.2 million for the three months ended March 31, 2003 from operating income of less than $0.1 million for
the three months ended March 31, 2002. Operating loss of this segment increased primarily due to increased operating costs, coupled with increased sales of certain lower margin products.

Interest Expense, Net.Interest expense, net, increased $0.7 million to $9.2 million
for the three months ended March 31, 2003 from $8.5 million for the three months ended March 31, 2002. The increase in net interest expense was due to a $1.3 million
write-off of deferred financing fees recorded

29

---

in
connection with our repayment of a portion of the obligations outstanding under our senior credit facility during the three months ended March 31, 2003 and an increase in our average debt
outstanding during 2002, which resulted from additional borrowings under our senior credit facility to increase liquidity in February 2002, finance our merger with Schultz and finance the
acquisition of WPC Brands. The increase was partially offset by a decline in our average variable borrowing rate of 2.16 percentage points to 6.68% for the three months ended March 31,
2003 from 8.84% for the three months ended March 31, 2002, resulting primarily from the effects of two unfavorable interest rate swaps terminated in 2002, a decrease of interest rates under the
terms of our senior credit facility, a general decline in variable borrowing rates and $0.5 million of interest income recognized for payments received on the common stock subscription
receivable from Bayer.

Income Tax Expense.Our effective income tax rate was 38% for the three months ended March 31,
2003 and 19% for the three months ended March 31, 2002. This increase is primarily the result of no adjustment being recorded to the valuation allowance during the three months ended
March 31, 2003 compared to the three months ended March 31, 2002.

Liquidity and Capital Resources

Our principal liquidity requirements are for working capital, capital expenditures and debt service under the senior credit facility and the senior subordinated
notes.

Operating Activities.Operating activities used cash of $55.4 million for the three months
ended March 31, 2003 compared to $53.1 million for the three months ended March 31, 2002. The increase in cash used in operations was primarily due to an increase in the change in
accounts receivable of $32.2 million for the three months ended March 31, 2003 compared to the three months ended March 31, 2002. This increase was partially offset by an increase
in the change in accounts payable and accrued expenses of $17.6 million, an increase in income tax expense of $5.1 million and an increase in net income of $3.3 million for the
three months ended March 31, 2003 compared to the three months ended March 31, 2002. The seasonal nature of our operations generally requires cash to fund significant increases in
working capital, primarily accounts receivable and inventories, during the first half of the year. Accounts receivable and accounts payable also build substantially in the first half of the year in
line with increasing sales as the season begins. These balances liquidate over the latter part of the second half of the year as the lawn and garden season comes to a close.

Investing Activities.Investing activities used cash of $1.3 million for the three months
ended March 31, 2003 compared to $0.9 million for the three months ended March 31, 2002. The increase in cash used in investing activities was the result of an increase in
purchases of equipment and leasehold improvements for the three months ended March 31, 2003 compared to the three months ended March 31, 2002.

Financing Activities.Financing activities provided cash of $46.4 million for the three months
ended March 31, 2003 compared to $54.0 million for the three months ended March 31, 2002. The decrease in cash from financing activities was primarily due to a decline in
borrowings under our senior credit facility of $24.9 million and increased repayments on borrowings of $81.9 million, exclusive of cash overdrafts, partially offset by proceeds from the
issuance of senior subordinated notes of $86.3 million.

Historically,
we have utilized internally generated funds, borrowings, and the issuance of equity to meet ongoing working capital and capital expenditure requirements. As a result of our
recapitalization in 1999 and increased borrowings, we have significantly increased cash requirements for debt service relating to our senior subordinated notes and senior credit facility. We will rely
on internally generated funds and, to the extent necessary, borrowings under our revolving credit facility to meet liquidity needs. Long-term debt, excluding current maturities and
short-term borrowings, totaled $431.3 million

30

---

as
of March 31, 2003, $345.5 million as of March 31, 2002 and $391.5 million as of December 31, 2002. This debt was comprised of senior subordinated notes of
$236.3 million as of March 31, 2003 and $150.0 million as of March 31, 2002 and December 31, 2002, and borrowings under our senior credit facility of
$195.0 million as of March 31, 2003, $195.5 million as of March 31, 2002 and $241.5 million as of December 31, 2002. The weighted average rate on borrowings
under our senior credit facility was 5.27% as of March 31, 2003, 6.04% as of March 31, 2002 and 5.34% as of December 31, 2002. The weighted average rate on the senior subordinated
notes was 9.875% as of the end of each of these periods, resulting in a blended weighted average rate of 7.72% as of March 31, 2003, 7.44% as of March 31, 2002 and 7.03% as of
December 31, 2002. The fair value of our total fixed-rate debt was $243.2 million as of March 31, 2003, $147.8 million as of March 31, 2002 and
$151.5 million as of December 31, 2002. The fair value of variable-rate debt approximated the carrying value of $206.2 million as of March 31, 2003,
$259.3 million as of March 31, 2002 and $250.7 million as of December 31, 2002. The fair values of fixed-rate debt and variable-rate debt are based
on quoted market prices. As of March 31, 2003, we had unused availability of $77.7 million under our revolving credit facility.

We
believe that cash flows from operations, together with available borrowings under our revolving credit facility, will be adequate to meet the anticipated requirements for working
capital, capital expenditures and scheduled principal and interest payments for at least the next two years. We are regularly engaged in acquisition discussions with a number of companies, although we
have no definitive agreements at this time and we cannot guarantee that any acquisitions will be consummated. If we do consummate any acquisitions, it could be material to our business and require us
to incur additional debt under our revolving credit facility or otherwise.

We
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. Our ability to meet debt service and clean-down obligations and reduce debt will be dependent on our future performance, which in turn, will be
subject to general economic and weather conditions and to financial, business and other factors, including factors beyond our control. Because a portion of our debt bears interest at floating rates,
our financial condition is and will continue to be affected by changes in prevailing interest rates.

Investing Activities

Sale of Non-Core Product Lines.We are currently considering selling certain or all of
the non-core product lines acquired in the acquisition of WPC Brands in December 2002. The product lines that may be sold include, among others, water purification tablets,
first-aid kits and fish attractant products. Total assets and operating results associated with the product lines that may be sold are not significant to our consolidated financial
position or results of operations.

Capital Expenditures.Capital expenditures relate primarily to the enhancement of our existing
facilities, the construction of additional capacity for production and distribution and the development and implementation of our enterprise resource planning, or ERP, system. Cash used for capital
expenditures was $1.3 million for the three months ended March 31, 2003 and $0.9 million for the three months ended March 31, 2002. The increase in capital expenditures in
2003 from 2002 is primarily related to additional costs recorded for the development of our ERP system.

Financing Activities

Senior Credit Facility.Our senior credit facility, as amended as of March 14, 2003, was
provided by Bank of America, N.A. (formerly known as NationsBank, N.A.), Morgan Stanley Senior Funding, Inc. and Canadian Imperial Bank of Commerce and consists of (1) a
$90.0 million revolving credit facility; (2) a $75.0 million term loan facility (Term Loan A); and (3) a $240.0 million term loan

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facility
(Term Loan B). The revolving credit facility and Term Loan A mature 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 during the period
between August 1 and November 30 in each calendar year. Amounts outstanding under the revolving credit facility were $10.1 million as of March 31, 2003 and $58.4 as of
March 31, 2002. As of December 31, 2002, the clean-down period had been completed and no amounts were outstanding under the revolving credit facility. There were no
compensating balance requirements during each of the periods presented.

On
March 14, 2003, the senior credit facility was amended to permit the offering of 97/8% Series C senior subordinated notes due 2009 (the Series C
Notes) and 97/8% Series D senior subordinated notes due 2009 (the Series D Notes). We intend to offer the Series D Notes in 2003 in exchange for outstanding
Series B Notes and Series C Notes. This amendment did not change any existing covenants of the senior credit facility.

The
principal amount of Term Loan A was to be repaid in 24 consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20, 2005.
However, in connection with the issuance of the Series C Notes, as described below, we used a portion of the proceeds to repay the outstanding balance under Term Loan A. The principal amount of
Term Loan B is to be repaid in 28 consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20, 2006. We used a portion of the proceeds from the
issuance of the Series C Notes to repay $25.9 million of the outstanding balance under Term Loan B.

The
senior credit facility agreement contains restrictive affirmative, negative and financial covenants. Affirmative and negative covenants place restrictions on, among other things,
levels of investments, indebtedness, insurance, capital expenditures and dividend payments. The financial covenants require the maintenance of certain financial ratios at defined levels. As of and
during the three months ended March 31, 2003 and 2002 and the year ended December 31, 2002, we were in compliance with all covenants. While we do not anticipate an event of
non-compliance in the foreseeable future, the effect of non-compliance would require us to request a waiver or an amendment to the senior credit facility. Amending the senior
credit facility could result in changes to our borrowing capacity or its effective interest rates. Under the agreements, interest rates on the revolving credit facility, Term Loan A and Term Loan B
range from 1.50% to 4.00% above LIBOR, depending on certain financial ratios. LIBOR was 1.29% as of March 31, 2003, 2.03% as of March 31, 2002 and 1.38% as of December 31, 2002.
Unused commitments under the revolving credit facility are subject to a 0.5% annual commitment fee. The interest rate of Term Loan A was 5.41% as of March 31, 2002 and 4.67% as of
December 31, 2002. The interest rate of Term Loan B was 5.31% as of March 31, 2003, 5.91% as of March 31, 2002 and 5.42% as of December 31, 2002.

The
senior credit facility may be prepaid in whole or in part at any time without premium or penalty. During the three months ended March 31, 2003, we made principal payments of
$28.3 million to fully repay Term Loan A and $25.9 million on Term Loan B, both of which represent optional principal prepayments. In connection with these prepayments, we recorded a
write-off of $1.3 million of previously deferred financing fees which is reflected in interest expense in the accompanying consolidated statements of operations for the three months
ended March 31, 2003. For the year ended December 31, 2002, we made principal payments of $11.0 million on Term Loan A and $2.0 million on Term Loan B, which included
optional principal prepayments of $6.3 million on Term Loan A and $1.1 million on Term Loan B. The optional prepayments in the three months ended March 31, 2002 were made to
remain two quarterly payments ahead of the regular payment schedule. Under the senior credit facility agreement, each prepayment may be applied to the next principal repayment installments. We remain
two principal payments ahead of schedule on Term Loan B and intend to pay a full year of principal installments in 2003 in accordance with the terms of the senior credit facility.

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The
carrying amount of our obligations under the senior credit facility approximates fair value because the interest rates are based on floating interest rates identified by reference to
market rates.

97/8% Series C Senior Subordinated Notes.In March 2003, we issued in a
private placement $85.0 million in aggregate principal amount of 97/8% Series C senior subordinated notes due April 1, 2009 (the Series C Notes). Gross
proceeds from the issuance were $86.3 million and included a premium of $1.3 million which is being amortized over the term of the Series C Notes using the effective interest
method. Interest on the Series C Notes accrues at a rate of 97/8% per annum, payable semi-annually on April 1 and October 1. Net proceeds of
$84.1 million were used to repay $30.0 million of the revolving credit facility, fully repay $28.3 million outstanding under Term Loan A and repay $25.9 million outstanding
under Term Loan B. The Series C Notes were issued with terms substantially similar to the Series B Notes. In connection with the issuance of the Series C Notes, we recorded
$2.2 million of deferred financing fees which are being amortized over the term of the Series C Notes. As of March 31, 2003, $85.0 million of the Series C Notes were
outstanding.

97/8% Series B Senior Subordinated Notes.In November 1999, we issued
$150.0 million in aggregate principal amount of 97/8% Series B senior subordinated notes due April 1, 2009 (the Series B Notes and, collectively with the
Series C Notes, the senior subordinated notes). Interest accrues on the Series B Notes at a rate of 97/8% per annum, payable semi-annually on April 1
and October 1.

Our
indentures governing the senior subordinated notes contain a number of significant covenants that could adversely impact our business. In particular, the indentures limit our ability
to:



Furthermore,
in accordance with the indentures governing the senior subordinated notes, the senior subordinated notes are unconditionally and jointly and severally guaranteed by our
subsidiaries, which are 100% owned by us. The indentures also require us to maintain specified financial ratios and meet certain financial tests. The ability to comply with these provisions may be
affected by events beyond our control. The breach of any of these covenants will result in a default under the applicable debt agreement or instrument and could trigger acceleration of the debt under
the applicable agreements. Any default under our indentures governing the senior subordinated notes might adversely affect our growth, financial condition and results of operations and the ability to
make payments on the senior subordinated notes or meet other obligations.

The
fair value of the Series C Notes was $88.0 million March 31, 2003, based on their quoted market price on such date. The fair value of the Series B Notes
was $155.3 million and $147.8 million as of March 31, 2003 and 2002 and $151.5 million as of December 31, 2002, based on their quoted

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market
price on such dates. Our senior subordinated notes are unconditionally and jointly and severally guaranteed by all of our existing subsidiaries.

We
are in the process of registering the Series D Notes, with terms substantially similar to the Series B Notes and the Series C Notes, with the U.S. Securities
Exchange Commission. As soon as practicable after the registration statement becomes effective, we intend to offer to exchange our Series D Notes for up to 100% of our Series B Notes and
Series C Notes.

Contractual Cash Obligations.The following table presents the aggregate amount of future cash
outflows of our contractual cash obligations as of March 31, 2003, excluding amounts due for interest on outstanding indebtedness (dollars in thousands):

|                                  |                                    | Obligations due in:
|--------------------------------- | ---------------------------------- | -------------------
|
|Senior credit facility            |                                    | $                  
|Senior subordinated notes         |                                    |                    
|Capital lease                     |                                    |                    
|Operating leases                  |                                    |                    
|Tolling agreement with Pursell(2) |                                    |                    
|Urea hedging agreements(3)        |                                    |                    
|Services agreements(4)            |                                    |                    
|                                  |                                    |                    
|                                  | Total contractual cash obligations |                    
|                                  |                                    |                    

---

We
lease several of our operating facilities from Rex Realty, Inc., a company owned by stockholders and operated by a former executive and past member of our Board of Directors.
The operating leases expire at various dates through December 31, 2010. We have options to terminate the leases on an annual basis by giving advance notice of at least one year. We lease a
portion of our operating facilities from the same company under a sublease agreement expiring on December 31, 2005 with minimum annual rentals of $0.7 million. We have two
five-year options to renew this lease, beginning January 1, 2006.

We
are obligated under additional operating leases for other operations and the use of warehouse space. The leases expire at various dates through December 31, 2015. Five of the
leases provide for as many as five options to renew for five years each.

In
March 2000, we entered into a capital lease agreement for $5.3 million for our aircraft. We are obligated to make monthly payments of $0.1 million, with a balloon
payment of $3.2 million in

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February 2005.
We have the option of purchasing the aircraft following the expiration of the lease agreement for a nominal amount.

Guarantees and Off-Balance Sheet Risk.In the normal course of business, we are a party
to certain guarantees and financial instruments with off-balance sheet risk, such as standby letters of credit and indemnifications, which are not reflected in the accompanying
consolidated balance sheets. We had $2.2 million at March 31, 2003, $1.3 million at March 31, 2002 and $1.9 million at December 31, 2002, in standby letters
of credit pledged as collateral to support the lease of our primary distribution facility in St. Louis, a United States customs bond, certain product purchases, various workers' compensation
obligations and the aircraft. These agreements mature at various dates through May 2004 and may be renewed as circumstances warrant. Such financial instruments are valued based on the amount of
exposure under the instruments and the likelihood of performance being required. In our past experience, no claims have been made against these financial instruments nor do we expect any losses to
result from them. As a result, we determined the fair value of such instruments to be zero and have not recorded any related amounts in our consolidated financial statements.

We
are the lessee under a number of equipment and property leases. It is common in such commercial lease transactions for us to agree to indemnify the lessor for the value of the
property or equipment leased should it be damaged during the course of our operations. We expect that any losses that may occur with respect to the leased property would be covered by insurance,
subject to deductible amounts. As a result, we determined the fair value of such instruments to be zero and have not recorded any related amounts in our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risks

Raw Material Prices

In the normal course of business, we are exposed to fluctuations in raw materials prices. We have established policies and procedures that govern the management
of this exposure through the use of derivative hedging instruments, including swap agreements. Our objective in managing our exposure to such fluctuations is to decrease the volatility of earnings and
cash flows associated with changes in certain raw materials prices. To achieve this objective, we periodically enter into swap agreements with values that change in the opposite direction of
anticipated cash flows. Derivative instruments related to
forecasted transactions are considered to hedge future cash flows, and the effective portion of any gains or losses is included in accumulated other comprehensive income until earnings are affected by
the variability of cash flows. Any remaining gain or loss is recognized currently in earnings.

As
of March 31, 2003, with nearly 60% of our annual urea purchases completed, we had hedged 6%, and had purchase agreements to effectively fix an additional 4%, of our remaining
2003 urea purchases. The contract price of our derivative hedging instruments as of March 31, 2003, intended to fix the price of forecasted urea prices through April 2003, was $137 per
ton. The average purchase price of our purchase agreements as of March 31, 2003 was approximately $200 per ton. While we expect these instruments and agreements to manage our exposure to such
price fluctuations, no assurance can be provided that the instruments will be effective in fully mitigating exposure to these risks, nor can assurance be provided that we will be successful in passing
on pricing increases to our customers.

We
have formally documented, designated and assessed the effectiveness of transactions that receive hedge accounting treatment. The cash flows of the derivative instruments are expected
to be highly effective in achieving offsetting cash flows attributable to fluctuations in the cash flows of the hedged risk. Changes in the fair value of agreements designated as derivative hedging
instruments are reported as either an asset or liability in the accompanying consolidated balance sheets with the associated unrealized gains or losses reflected in accumulated other comprehensive
income. As of March 31, 2003 and December 31, 2002, an unrealized gain of $0.4 million and an unrealized loss of

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less
than $0.1 million, respectively, related to derivative instruments designated as cash flow hedges were recorded in accumulated other comprehensive income. The amounts in accumulated other
comprehensive income are subsequently reclassified into cost of goods sold in the same period in which the underlying hedged transactions affect earnings.

If
it becomes probable that a forecasted transaction will no longer occur, any gains or losses in accumulated other comprehensive income will be recognized in earnings. We have not
incurred any gains or losses for hedge ineffectiveness or due to excluding a portion of the value from measuring effectiveness. We do not enter into derivatives or other hedging arrangements for
trading or speculative purposes.

As
of March 31, 2003, one derivative hedging agreement contract was outstanding, which matured on April 24, 2003, for 5,000 tons of urea with a contract price of $137 per
ton. The contract value upon the effective contract date was $0.7 million while the contract value at March 31, 2003 was $0.9 million resulting in a gain recorded in accumulated
other comprehensive income of $0.2 million as of March 31, 2003.

For
the three months ended March 31, 2003, we reclassified $0.2 million from accumulated other comprehensive income into cost of goods sold representing a gain on raw
materials derivative hedging
instruments. No such amounts were recorded during the three months ended March 31, 2002 or year ended December 31, 2002.

Interest Rates

We are exposed to various market risks, including fluctuations in interest rates. As such, our policy is to manage interest costs using a mix of fixed and
variable rate debt. To achieve this objective, we periodically enter into swap agreements with values that change in the opposite direction of anticipated cash flows. As of March 31, 2003, we
did not hold any interest rate agreements.

Long-term
debt, excluding current maturities and short-term borrowings, totaled $431.3 million as of March 31, 2003, $345.5 million as of
March 31, 2002 and $391.5 million as of December 31, 2002. This debt was comprised of senior subordinated notes of $236.3 million as of March 31, 2003 and
$150.0 million as of March 31, 2002 and December 31, 2002, and borrowings under our senior credit facility of $195.0 million as of March 31, 2003,
$195.5 million as of March 31, 2002 and $241.5 million as of December 31, 2002. The weighted average rate on borrowings under our senior credit facility was 5.27% as of
March 31, 2003, 6.04% as of March 31, 2002 and 5.34% as of December 31, 2002. The weighted average rate on the senior subordinated notes was 9.875% as of the end of each of these
periods, resulting in a blended weighted average rate of 7.72% as of March 31, 2003, 7.44% as of March 31, 2002 and 7.03% as of December 31, 2002. The fair value of our total
fixed-rate debt was $243.2 million as of March 31, 2003, $147.8 million as of March 31, 2002 and $151.5 million as of December 31, 2002. The fair
value of variable-rate debt approximated the carrying value of $206.2 million as of March 31, 2003, $259.3 million as of March 31, 2002 and
$250.7 million as of December 31, 2002. The fair values of fixed-rate debt and variable-rate debt are based on quoted market prices.

The
following table summarizes information about our debt instruments that are sensitive to changes in interest rates as of March 31, 2003. The table presents future principal
cash flows and

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related
weighted-average interest rates by expected maturity dates. Weighted average variable rates are based on implied forward rates in the yield curve at March 31, 2003 (dollars in
thousands):

|Description     |                    | Remainder
of 2003     |   | 2004   |      | 2005 |       | 2006 |   | 2007    |      | There-
After |        | Total |   | Fair
Value
|--------------- | ------------------ | --------------------- | - | ------ | ---- | ---- | ----- | ---- | - | ------- | ---- | ------------ | ------ | ----- | - | ----------
|Long-term debt: |                    |                       |   |        |      |      |       |      |   |         |      |              |        |       |   |           
|                | Fixed rate debt    |                       | $ |       |      | $    |      |      | $ |        |      | $            |       |       | $ |          
|                |                    | Average interest rate |   |        |     |      |       |     |   |         |     |              |        |      |   |           
|                | Variable rate debt |                       | $ | 10,608 |      | $    | 2,033 |      | $ | 145,273 |      | $            | 48,255 |       | $ |          
|                |                    | Average interest rate |   |        | 5.39 | %    |       | 5.88 | % |         | 6.42 | %            |        | 6.86  | % |           

Exchange Rates

International sales during the three months ended March 31, 2003 and 2002 and the year ended December 31, 2002 comprised less than 1% of total net
sales. We do not use derivative instruments to hedge foreign currency exposures as substantially all of our foreign currency transactions are denominated in U.S. dollars.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our chief executive officer and our chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in the
Securities Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a date (the Evaluation Date) within 90 days before the filing date of this
report, have concluded that as of the Evaluation Date, our disclosure controls and procedures are effective in bringing to their attention on a timely basis material information relating to us and our
consolidated subsidiaries required to be included in our periodic filings under the Exchange Act.

Internal Controls

Since 2001, we have been in the process of developing an enterprise resource planning, or ERP, system on a company wide basis. As we believe is the case in most
system changes, the development and eventual implementation of these systems has necessitated changes in operating policies and procedures and the related internal controls and their method of
application. We believe that throughout this process, we have maintained internal control systems that are adequate to provide reasonable assurance that assets are safeguarded from loss or
unauthorized use, and which produce adequate records for preparation of financial information.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are involved from time to time in routine legal matters and other claims incidental to the business. When it appears probable in management's judgment that we
will incur monetary damages or other costs in connection with such claims and proceedings, and such costs can be reasonably estimated, liabilities are recorded in the consolidated financial statements
and charges are recorded against earnings. We believe that the resolution of such routine matters and other incidental claims, taking into account established reserves and insurance, will not have a
material adverse impact on our consolidated financial position or results of operations.

Item 6. Exhibits and Reports on Form 8-K

The
exhibit index is on page 42.

On
February 14, 2003, we filed a current report on Form 8-K under Item 9 to announce our earnings for the fourth quarter and year ended December 31,
2002.

On
March 20, 2003, we filed a current report on Form 8-K under Item 5 to announce that we were proposing to offer a private placement of $75,000,000 aggregate
principal amount of 97/8% Series C Senior Subordinated Notes due 2009.

On
March 27, 2003, we filed a current report on Form 8-K under Item 5 to announce our closing of the private placement of $85,000,000 aggregate principal amount
of 97/8% Series C Senior Subordinated Notes due 2009. We previously announced that we were offering $75,000,000 aggregate principal amount of such notes.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, United Industries Corporation has duly caused this
Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                    |  | UNITED INDUSTRIES CORPORATION, registrant
|------------------- |  | -----------------------------------------
|Dated: May 15, 2003 |  | By:                                      
|                    |  |                                          
|                    |  |                                          

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CERTIFICATIONS

I, Robert L. Caulk, certify that:



|Dated: May 15, 2003 |  | By: | /s/ROBERT L. CAULKRobert L. Caulk
President and
Chief Executive Officer
|------------------- |  | --- | -----------------------------------------------------------------------

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I,
Daniel J. Johnston, certify that:



|Dated: May 15, 2003 |  | By: | /s/DANIEL J. JOHNSTONDaniel J. Johnston
Executive Vice President and
Chief Financial Officer
|------------------- |  | --- | --------------------------------------------------------------------------------------------

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EXHIBIT INDEX

|Exhibit
Number |  | Exhibit Description                                                                                                                                                      
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|99.1           |  | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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