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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2001 OR

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

For the Transition period from  to

Commission File No. 333-76055

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

|DELAWARE(State or other jurisdiction of
incorporation or organization) |  | 43-1025604(I.R.S Employer
Identification No.)
|---------------------------------------------------------------------- |  | ---------------------------------------------

8825 Page Boulevard
St. Louis, Missouri 63114
(Address of principal executive office, including zip code)

(314) 427-0780
(Registrant's telephone number, including area code)

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

As
of June 30, 2001, the Registrant had 27,550,000 Class A voting and 27,550,000 Class B non-voting shares of common stock outstanding and 15,000 non-voting
shares of Class A preferred stock outstanding.

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PART 1

FINANCIAL INFORMATION  ITEM 1. Financial Statements

UNITED INDUSTRIES CORPORATION

BALANCE SHEETS

JUNE 30, 2001 AND 2000, AND DECEMBER 31, 2000

(Dollars in thousands)  (Unaudited)

|                                          |                                                                                                                                         | June 30,                                    |         | June 30, |          | December 31, |         
|----------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | ------- | -------- | -------- | ------------ | --------
|
|ASSETS                                    |                                                                                                                                         |                                             |         |          |          |              |         
|Current assets:                           |                                                                                                                                         |                                             |         |          |          |              |         
|                                          | Cash and cash equivalents                                                                                                               |                                             | $       |         |          | $            |        
|                                          | Accounts receivable (less allowance for doubtful accounts of $1,419 and $1,609 at June 30, 2001 and 2000 and $777 at December 31, 2000) |                                             |         | 77,040   |          |              | 76,041  
|                                          | Inventories                                                                                                                             |                                             |         | 38,149   |          |              | 38,899  
|                                          | Prepaid expenses                                                                                                                        |                                             |         | 4,835    |          |              | 2,924   
|                                          |                                                                                                                                         |                                             |         |          |          |              |         
|                                          |                                                                                                                                         | Total current assets                        |         |          | 120,024  |              |         
|Equipment and leasehold improvements, net |                                                                                                                                         |                                             | 24,276  |          |          | 26,336       |         
|Deferred income tax                       |                                                                                                                                         |                                             | 116,763 |          |          | 116,268      |         
|Other assets                              |                                                                                                                                         |                                             | 18,632  |          |          | 20,489       |         
|                                          |                                                                                                                                         |                                             |         |          |          |              |         
|                                          |                                                                                                                                         | Total assets                                |         | $        | 279,695  |              | $       
|                                          |                                                                                                                                         |                                             |         |          |          |              |         
|LIABILITIES AND STOCKHOLDERS' DEFICIT     |                                                                                                                                         |                                             |         |          |          |              |         
|Current liabilities:                      |                                                                                                                                         |                                             |         |          |          |              |         
|                                          | Current maturities of long-term debt and capital lease obligation                                                                       |                                             | $       | 5,693    |          | $            | 6,096   
|                                          | Accounts payable                                                                                                                        |                                             |         | 29,527   |          |              | 24,109  
|                                          | Accrued expenses                                                                                                                        |                                             |         | 33,887   |          |              | 27,840  
|                                          | Short-term borrowings                                                                                                                   |                                             |         | 18,550   |          |              | 21,050  
|                                          |                                                                                                                                         |                                             |         |          |          |              |         
|                                          |                                                                                                                                         | Total current liabilities                   |         |          | 87,657   |              |         
|Long-term debt                            |                                                                                                                                         |                                             | 323,693 |          |          | 349,125      |         
|Capital lease obligation                  |                                                                                                                                         |                                             | 4,428   |          |          | 5,345        |         
|Other liabilities                         |                                                                                                                                         |                                             | 16,167  |          |          | 11,922       |         
|                                          |                                                                                                                                         |                                             |         |          |          |              |         
|                                          |                                                                                                                                         | Total liabilities                           |         |          | 431,945  |              |         
|Stockholders' deficit                     |                                                                                                                                         |                                             |         |          |          |              |         
|                                          | Common Stock (27.6 million shares of $0.01 par value Class A and 27.6 million $0.01 par value Class B)                                  |                                             |         | 554      |          |              | 554     
|                                          | Preferred Stock (15,000 shares of $0.01 par value Class A)                                                                              |                                             |         |         |          |              |        
|                                          | Warrants                                                                                                                                |                                             |         | 2,784    |          |              |        
|                                          | Additional paid-in capital                                                                                                              |                                             |         | 139,081  |          |              | 126,865 
|                                          | Accumulated deficit                                                                                                                     |                                             |         | (291,640 | )        |              | (289,249
|                                          | Accumulated other comprehensive loss                                                                                                    |                                             |         | (329     | )        |              |        
|                                          | Common stock held in grantor trust                                                                                                      |                                             |         | (2,700   | )        |              | (2,700  
|                                          |                                                                                                                                         |                                             |         |          |          |              |         
|                                          |                                                                                                                                         | Total stockholders' deficit                 |         |          | (152,250 | )            |         
|                                          |                                                                                                                                         |                                             |         |          |          |              |         
|                                          |                                                                                                                                         | Total liabilities and stockholders' deficit |         | $        | 279,695  |              | $       
|                                          |                                                                                                                                         |                                             |         |          |          |              |         

See
accompanying notes to financial statements

2

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UNITED INDUSTRIES CORPORATION

STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000

(Dollars in thousands)  (Unaudited)

|                                         |                                              | Three months ended June 30,        |         | Six months ended June 30,
|---------------------------------------- | -------------------------------------------- | ---------------------------------- | ------- | -------------------------
|
|Sales before promotion expense           |                                              | $                                  | 124,428 |                          
|Promotion expense                        |                                              |                                    | 9,781   |                          
|                                         |                                              |                                    |         |                          
|Net sales                                |                                              |                                    | 114,647 |                          
|                                         |                                              |                                    |         |                          
|Operating costs and expenses:            |                                              |                                    |         |                          
|                                         | Cost of goods sold                           |                                    |         | 60,748                   
|                                         | Selling, general and administrative expenses |                                    |         | 22,121                   
|                                         |                                              |                                    |         |                          
|                                         |                                              | Total operating costs and expenses |         |                          
|                                         |                                              |                                    |         |                          
|Operating income                         |                                              |                                    | 31,778  |                          
|Interest expense                         |                                              |                                    | 9,388   |                          
|                                         |                                              |                                    |         |                          
|Income before provision for income taxes |                                              |                                    | 22,390  |                          
|Income tax expense                       |                                              |                                    | 6,637   |                          
|                                         |                                              |                                    |         |                          
|Net income                               |                                              | $                                  | 15,753  |                          
|                                         |                                              |                                    |         |                          

See
accompanying notes to financial statements.

3

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UNITED INDUSTRIES CORPORATION

STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000

(Dollars in thousands)  (Unaudited)

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

See
accompanying notes to financial statements.

4

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

Note 1Basis of presentation

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

Note 2Inventories

Inventories are as follows:

|                                                 |  | June 30, |        | June, 30 |   | December 31, |  
|------------------------------------------------ |  | -------- | ------ | -------- | - | ------------ | -
|
|Raw materials                                    |  | $        | 8,895  |          | $ | 7,494        |  
|Finished goods                                   |  |          | 30,658 |          |   | 32,391       |  
|Allowance for obsolete and slow-moving inventory |  |          | (1,404 | )        |   | (986         | )
|                                                 |  |          |        |          |   |              |  
|Total inventories                                |  | $        | 38,149 |          | $ | 38,899       |  
|                                                 |  |          |        |          |   |              |  

Note 3Equipment and leasehold improvements

Equipment and leasehold improvements are as follows:

|                                 |  | June 30, |        | June 30, |   | December 31,
|-------------------------------- |  | -------- | ------ | -------- | - | ------------
|
|Machinery and equipment          |  | $        | 28,773 |          | $ | 27,421      
|Office furniture and equipment   |  |          | 10,951 |          |   | 9,784       
|Automobiles, trucks and aircraft |  |          | 6,156  |          |   | 6,290       
|Leasehold improvements           |  |          | 7,108  |          |   | 6,956       
|                                 |  |          |        |          |   |             
|                                 |  |          | 52,988 |          |   | 50,451      
|Less: accumulated depreciation   |  |          | 28,712 |          |   | 24,115      
|                                 |  |          |        |          |   |             
|                                 |  | $        | 24,276 |          | $ | 26,336      
|                                 |  |          |        |          |   |             

5

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Note 4Other assets

Other assets are as follows:

|                         |  | June 30, |        | June 30, |   | December 31, |  
|------------------------ |  | -------- | ------ | -------- | - | ------------ | -
|
|Goodwill                 |  | $        | 7,175  |          | $ | 7,988        |  
|Accumulated amortization |  |          | (1,461 | )        |   | (2,075       | )
|                         |  |          |        |          |   |              |  
|                         |  |          | 5,714  |          |   | 5,913        |  
|                         |  |          |        |          |   |              |  
|Deferred financing fees  |  |          | 18,067 |          |   | 17,087       |  
|Accumulated amortization |  |          | (5,757 | )        |   | (3,131       | )
|                         |  |          |        |          |   |              |  
|                         |  |          | 12,310 |          |   | 13,956       |  
|                         |  |          |        |          |   |              |  
|Other                    |  |          | 608    |          |   | 620          |  
|                         |  |          |        |          |   |              |  
|Total other assets       |  | $        | 18,632 |          | $ | 20,489       |  
|                         |  |          |        |          |   |              |  

Note 5Accrued expenses

Accrued expensed are as follows:

|                            |  | June 30, |        | June 30, |   | December 31,
|--------------------------- |  | -------- | ------ | -------- | - | ------------
|
|Advertising and promotional |  | $        | 13,506 |          | $ | 11,615      
|Dursban charge              |  |          | 1,452  |          |   |            
|Interest                    |  |          | 3,834  |          |   | 4,019       
|Cash overdraft              |  |          | 7,414  |          |   | 6,586       
|Dividend payable            |  |          | 1,466  |          |   |            
|Severence charges           |  |          | 457    |          |   | 1,168       
|Other                       |  |          | 5,758  |          |   | 4,452       
|                            |  |          |        |          |   |             
|Total accrued expenses      |  | $        | 33,887 |          | $ | 27,840      
|                            |  |          |        |          |   |             

6

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Note 6Long-term debt and credit facilities

Long-term debt is comprised of the following:

|                                                    |                           | June 30, |         | June 30, |   | December 31, |        
|--------------------------------------------------- | ------------------------- | -------- | ------- | -------- | - | ------------ | -------
|
|Senior Credit Facility:                             |                           |          |         |          |   |              |        
|                                                    | Term Loan A               |          | $       | 43,817   |   | $            | 57,500 
|                                                    | Term Loan B               |          |         | 135,183  |   |              | 147,375
|                                                    | Revolving Credit Facility |          |         | 18,550   |   |              | 21,050 
|97/8% Series B Registered Senior Subordinated Notes |                           |          | 150,000 |          |   | 150,000      |        
|                                                    |                           |          |         |          |   |              |        
|                                                    |                           |          | 347,550 |          |   | 375,925      |        
|Less portion due within one year                    |                           |          | (23,857 | )        |   | (26,800      | )      
|                                                    |                           |          |         |          |   |              |        
|Total long-term debt net of current portion         |                           | $        | 323,693 |          | $ | 349,125      |        
|                                                    |                           |          |         |          |   |              |        

The
Senior Credit Facility was provided by NationsBank, N.A., Morgan Stanley Senior Funding, Inc. and CIBC Inc. and consists of (i) a $80,000 revolving credit
facility (the "Revolving Credit Facility"); (ii) a $75,000 term loan facility ("Term Loan A"); and (iii) a $150,000 term loan facility ("Term Loan B"). The Revolving Credit Facility and
Term Loan A matures on January 20, 2005, and Term Loan B matures on January 20, 2006. The Revolving Credit Facility is subject to a clean-down period during which the
aggregate amount outstanding under the Revolving Credit Facility shall not exceed $10.0 million for 30 consecutive days occurring during the period between August 1 and
November 30 in each calendar year. On June 30, 2001, $18,550 was outstanding under the Revolving Credit Facility. There were no compensating balance requirements for the Revolving Credit
Facility at June 30, 2001.

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

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

Under
the covenants, interest on the Revolving Credit Facility, Term Loan A and Term Loan B ranges from 250 to 400 basis points above LIBOR depending on certain financial ratios.
Unused commitments under the Revolving Credit Facility are subject to a 50 basis point annual commitment fee. LIBOR was 3.86% at June 30, 2001.

7

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Note 6Long-term debt and credit facilities (continued)

The Senior Credit Facility may be prepaid at any time in whole or in part without premium or penalty. During fiscal 2000, principal payments on Term Loans A
and B of $14.1 million and $12.2 million, respectively, were paid, which included optional principal prepayments of $4.1 million and $10.8 on Term Loan A and Term Loan B,
respectively. During the six month period ended June 30, 2001, optional principal prepayments of $4.6 million and $.7 million on Term Loan A and Term Loan B, respectively, were
paid. The optional payments were made in order for the Company to remain two quarterly payments ahead. According to the Senior Credit Facility agreement, each prepayment on Term Loan A and Term Loan B
can be applied to the next principal repayment installments. Management intends to pay a full year of principal repayment installments in 2001 in accordance with the Senior Credit Facility agreement.

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

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

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

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

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

2001 Remainder of year

$
2002


10,6142003


15,8042004


17,5342005


102,382Thereafter


182,666$
329,000


Note 7Commitments

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

8

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the related party leases described above are similar to those negotiated by unrelated parties at arm's length.

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

Note 9Contingencies

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

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

Note 10Dursban Charge

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

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

|                               |  | Accrual Balances
at the end of 2000 |       | Year to Date
2001 Utilization |   | Amount to be utilized
during remainder of 2001 | 
|------------------------------ |  | ----------------------------------- | ----- | ----------------------------- | - | ---------------------------------------------- | 
|Customer returns and markdowns |  | $                                   | 4,509 |                               | $ | 2,707                                          | 
|Inventory                      |  |                                     | 1,118 |                               |   | 1,064                                          | 
|Disposal and related costs     |  |                                     | 439   |                               |   | 843                                            | 
|                               |  |                                     |       |                               |   |                                                | 
|                               |  | $                                   | 6,066 |                               | $ | 4,614                                          | 
|                               |  |                                     |       |                               |   |                                                | 

Note 11Shipping and handling costs

Certain shipping and handling costs are included in the selling, general and administrative expenses line item on the Company's Statements of Operations. The
amount included is $4,230 and $4,139 for the three months ended June 30, 2001 and 2000, respectively. The amount included is $7,906 and $7,752 for the six months ended June 30, 2001 and
2000, respectively.

9

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Note 12Derivatives and Hedging Activities

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

Effective
April 1, 2001, the Company entered into two interest rate swaps that have fixed the interest rate as of April 30, 2001 for $75.0 million of variable rate debt under
the Credit Facility. The interest rate swaps are for $50.0 and $25.0 million of the Credit Facility and will terminate on April 30, 2002. The fixed LIBOR interest rates are 4.74% and 4.66%, for
the $50.0 and $25.0 million interest rate swaps, respectively. The Company's objective is to manage the cash flow risks associated with its variable rate debt and not to trade such instruments for
profit and loss. The Company's interest rate hedges are classified as cash flow hedges. For a cash flow hedge, the ineffective portion is deferred in accumulated other comprehensive income on the
balance sheet until the transaction is realized, at which time any deferred hedging gains or losses are recorded in earnings. The fair value of the interest rate swaps is reported as a liability and
as a component of comprehensive income in Stockholders' deficit at June 30, 2001. The June 30, 2001 fair value is $0.3 million.

Note 13Comprehensive Income

Comprehensive income differs from net income due to the cash flow hedge. Comprehensive income for the three and six months ended June 30, 2001 was
$15,424 and $19,660, respectively.

10

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

FORWARD-LOOKING STATEMENTS

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

Overview

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

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

Results of Operations

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



11

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

Three Months Ended June 30,2001

2000Net sales:Value brands

81.9
%
74.1
%Opening price point brands

18.1

25.9Total net sales

100.0

100.0Operating costs and expenses:Cost of goods sold

53.9

54.4Selling, general and administrative expenses

19.3

15.6Total operating costs and expenses

72.3

70.0Operating income

27.7

30.0Interest expense

8.2

9.2Income before provision for income taxes

19.5

20.8Income tax expense

5.8

4.6Net income

13.7
%
16.2
%


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

Net Sales.Net sales increased 0.4% to $114.6 million for the three months ended June 30, 2001 from
$114.2 million for the three months ended June 30, 2001. This increase was driven by a combination of offsetting factors including:



Net
sales of the Company's value brands increased 11.0% to $93.9 million for the three months ended June 30, 2001 from $86.4 million for the three months ended
June 30, 2000. Value brand sales to hardware channels increased $4.2 million primarily due to additional product listings that were secured. The gains achieved in the hardware channel,
were partially offset by the lost sales of products that contain chlorpyrifos. During 2000 the US Environmental Protection Agency and manufacturers of chlorpyrifos (the active ingredient in Dursban
pesticidal products) entered into a voluntary agreement that provided for the withdrawal of virtually all residential uses of Dursban. The Increase in promotion expense was due to growth of the home
centers business. The Increase in demand for insect repellants and termiticides was related primarily to weather conditions.

Net
sales of opening price point brands decreased 30.0% to $20.7 million for the three months ended June 30, 2001 from $29.6 million for the three months ended
June 30, 2000. The decrease was driven by the loss of the Kmart Kgro business that was discontinued in the third quarter of 2000.

Gross Profit.Gross profit increased 3.5% to $53.9 million for the three months ended June 30, 2001
compared to $52.1 million for the three months ended June 30, 2000. As a percentage of sales, gross profit increased to 47.0% for the three months ended June 30, 2001 as compared
to 45.6% for

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the three months ended June 30, 2000. The increase in gross profit as a percentage of sales was the result of the change in mix of sales to more value brand sales, which are higher margin
products.

Selling, General and Administrative Expenses.Selling, general and administrative expenses increased 24.5% to
$22.1 million for the three months ended June 30, 2001 from $17.8 million for the three months ended June 30, 2000. As a percentage of net sales, selling, general and
administrative expenses increased to 19.3% for the three months ended June 30, 2001 from 15.6% for the three months ended June 30, 2000. The increase is attributed to greater advertising
spending to support the value brands, along with additional spending for in-store sales and support in the home centers. Prior year expenses also reflect a cost reduction due to the impact
of the termination of a capital lease. The double-digit percentage increase should not be viewed as a trend for the future.

Operating Income.Operating income decreased 7.4% to $31.8 million for the three months ended June 30,
2001 from $34.3 million for the three months ended June 30, 2000. As a percentage of net sales, operating income decreased to 27.7% for the three months ended June 30, 2001 from
30.0% for the three months ended June 30, 2000.

Income tax expense.For the three months ended June 30, 2001, the Company's effective income tax rate is 28.0%,
which reflects the estimated utilization of the goodwill deduction in fiscal year 2001. The goodwill deduction and corresponding release of valuation allowance is related to the step up in tax basis
in conjunction with the Recapitalization. On January 20, 1999, pursuant to a Recapitalization agreement with UIC Holdings, L.L.C. (the "Equity Investor"), which is owned by Thomas H. Lee Equity
Fund IV, L.P. ("THL Fund IV" and, together with its affiliates, the "THL Parties"), the Company was recapitalized (the "Recapitalization").

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

Six Months Ended June 30,2001

2000Net sales:Value brands

82.6
%
75.7
%Opening price point brands

17.4

24.3Total net sales

100.0

100.0Operating costs and expenses:Cost of goods sold

53.8

54.3Selling, general and administrative expenses

21.7

20.2Dursban charge



Total operating costs and expenses

75.5

74.5Operating income

24.5

25.5Interest expense

10.0

10.8Income before provision for income taxes

14.5

14.7Income tax expense

4.3

3.3Net income

10.2
%
11.4
%


Six Months Ended June 30, 2001 compared to Six Months Ended June 30, 2000

Net Sales.Net sales decreased 0.3% to $194.6 million for the six months ended June 30, 2001 from
$195.1 million for the six months ended June 30, 2000. This decrease was driven by a combination of offsetting factors including:



Net
sales of the Company's value brands increased 8.7% to $160.6 million for the six months ended June 30, 2001 from $147.7 million for the six months ended
June 30, 2000. Value brand sales of Spectracide Terminate increased $6.0 million primarily due to focused marketing programs and replenishment of inventory levels at retail.
The gains achieved by Spectracide Terminate, were partially offset by loss sales of products that contained chlorpyrifos. During 2000 the US Environmental Protection Agency and
manufacturers of chlorpyrifos (the active ingredient in Dursban pesticidal products) entered into a voluntary agreement that provided for the withdrawal of virtually all residential uses of Dursban.
The increase in demand for insect repellants is related primarily to weather conditions.

Net
sales of opening price point brands decreased 28.3% to $33.9 million for the six months ended June 30, 2001 from $47.4 million for the six months ended
June 30, 2000. The decrease was driven by the loss of the Kmart Kgro business that was discontinued in the third quarter of 2000.

Gross Profit.Gross profit increased 0.8% to $89.9 million for the six months ended June 30, 2001
compared to $89.1 million for the six months ended June 30, 2000. As a percentage of sales, gross profit increased to 46.2% for the six months ended June 30, 2001 as compared to
45.7% for the six

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months ended June 30, 2000. The increase in gross profit as a percentage of sales was the result of change in mix of sales to value brands, which are higher margin products.

Selling, General and Administrative Expenses.Selling, general and administrative expenses increased 7.1% to
$42.2 million for the six months ended June 30, 2001 from $39.4 million for the six months ended June 30, 2000. As a percentage of net sales, selling, general and
administrative expenses increased to 21.7% for the six months ended June 30, 2001 from 20.2% for the six months ended June 30, 2000. The increase is attributed to greater advertising
spending to support the value brands, along with additional spending for in-store sales and support in the home centers. Prior year expenses also reflect a cost reduction due to the impact
of the termination of a capital lease.

Operating Income.Operating income decreased 4.1% to $47.7 million for the six months ended June 30, 2001
from $49.7 million for the six months ended June 30, 2000. As a percentage of net sales, operating income decreased to 24.5% for the six months ended June 30, 2001 from 25.5% for
the six months ended June 30, 2000.

Income tax expense.For the six months ended June 30, 2001, the Company's effective income tax rate is 28.0%,
which reflects the estimated utilization of the goodwill deduction in fiscal year 2001. The goodwill deduction and corresponding release of valuation allowance is related to the step up in tax basis
in conjunction with the Recapitalization. On January 20, 1999, pursuant to a Recapitalization agreement with UIC Holdings, L.L.C. (the "Equity Investor"), which is owned by Thomas H. Lee Equity
Fund IV, L.P. ("THL Fund IV" and, together with its affiliates, the "THL Parties"), the Company was recapitalized (the "Recapitalization").

Liquidity and Capital Resources

Historically, the Company has utilized internally generated funds and borrowings under credit facilities to meet ongoing working capital and capital
expenditure requirements. As a result of the Recapitalization, the Company has significantly increased cash requirements for debt service relating to the Company's Senior Subordinated Notes and Senior
Credit Facility. As of December 31, 2000, the Company had total debt outstanding of $354.3 million. As of June 30, 2001, the Company had total debt outstanding of
$352.4 million. The Company will rely on internally generated funds and, to the extent necessary, borrowings under the Company's Revolving Credit Facility to meet liquidity needs.

The
Company's Senior Credit Facility consists of:



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

The
Company's principal liquidity requirements are for working capital, capital expenditures and debt service under the Senior Credit Facility and the notes. Cash flow from continuing
operations provided net cash of approximately $3.8 million and $0.8 million for the six months ended June 30, 2001 and June 30, 2000, respectively. Net cash used by
operating activities fluctuates during the year as the seasonal nature of the Company's sales results in a significant increase in working capital (primarily

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accounts receivable and inventory) during the first half of the year, with the second and third quarters being significant cash collection periods.

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

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

Capital
expenditures are related to the enhancement of the Company's existing facilities and the construction of additional productions and distribution capacity. Cash used for
capital was $1.9 million and $2.6 million for the six months ended June 30, 2001 and June 30, 2000, respectively. In addition, the
Company entered into a capital lease agreement in March 2000 for $5.3 million. Cash used for capital expenditures for the remainder of fiscal 2001 is expected to be less than
$5.0 million.

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

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

Seasonality

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

Impact of 2000 Dursban Withdrawal

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

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

Recently Issued Accounting Pronouncements

The Emerging Issues Task Force (EITF) issued EITF 00-25. This issue addresses when consideration from a vendor to a retailer (a) in
connection with the retailer's purchase of the vendor's

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products or (b) to promote sales of the vendor's products by the retailer should be classified in the vendor's income statement as a reduction of revenue. The Company has adopted EITF
00-25 for fiscal year 2001. The Company has reclassified all trade and co-op promotional expense in the Statements of Operations to net sales.

In
July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141 (SFAS 141), "Business Combinations."
SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 and establishes specific criteria for recognition of
intangible assets separately from goodwill. For business combinations initiated after June 30, 2001, SFAS 141 also requires that unallocated negative goodwill be written off immediately
as an extraordinary gain. Any unamortized deferred credit arising from a business combination completed before July 1, 2001 will be recognized as the cumulative effect of a change in accounting
principle. The Company is currently evaluating the impact of SFAS 141 on its financial statements.

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

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Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Interest Rate

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

The
Company manages interest rate risk by balancing the amount of fixed and variable debt. For fixed rate debt, interest rate changes affect the fair market value of such debt but do
not impact earnings or cash flows. Conversely for variable rate debt, interest rate changes generally do not affect the fair market value of such debt but do impact future earnings and cash flows,
assuming other factors are held constant. As of June 30, 2001, variable rate debt was $197.6 million, which includes the interest rate swaps as discussed below.

The
Company entered into two interest rate swaps that have fixed the interest rate as of April 30, 2001 for $75.0 million of variable rate debt under the Credit
Facility. The interest rate swaps are for $50.0 and $25.0 million of the Credit Facility and will terminate on April 30, 2002. The fixed LIBOR interest rates are 4.74% and 4.66%, for the
$50.0 and $25.0 million interest rate swaps, respectively. The change in fair value of the interest rate swaps is reported as a liability and as a component of comprehensive income in
Stockholders' deficit at June 30, 2001. The June 30, 2001, reduction in fair value of $0.3 million is net of taxes.

Interest
ranges from 250 to 400 basis points above LIBOR depending on certain financial ratios. LIBOR was 3.86% on June 30, 2001.

Exchange Rate

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

Commodity Price

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

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Part II

OTHER INFORMATION

Item 1.  Legal Proceedings.The Company has no reportable legal proceedings in the current period.

Item 2.  Changes in Securities.None.

Item 3.  Defaults Upon Senior Securities.None.

Item 4.  Submission of Matters to a Vote of Security Holders.No matters were submitted.

Item 5.  Other Information.None.

Item 6.  Exhibits and Reports on Form 8-K



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SIGNATURES

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

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

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