<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]  Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange
     Act Of 1934

     For the Quarterly Period Ended September 30, 2006 or

[ ]  Transition Report Pursuant To Section 13 Or 15(d) Of The Securities
     Exchange Act Of 1934

     For the Transition Period From _________ to ________.

     Commission file number: 0-19557

                                  Salton, Inc.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                       <C>
                Delaware                                        36-3777824
     (State of other jurisdiction of                         (I.R.S. Employer
      Incorporation or organization)                      Identification Number)
</TABLE>

<TABLE>
<S>                                                             <C>
            1955 Field Court
             Lake Forest, IL                                       60045
(Address of principal executive offices)                        (Zip Code)
</TABLE>

                                 (847) 803-4600
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                Yes [X]   No [ ]

Indicate by the check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

 Large accelerated filer [ ]   Accelerated filer [ ]   Non-accelerated filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                                Yes [ ]   No [X]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of November 4, 2006,
14,383,890 shares of its $0.01 par value Common Stock.


                                        1

<PAGE>

<TABLE>
<CAPTION>
                                                                        PAGE NO.
                                                                        --------
<S>                                                                     <C>
PART I FINANCIAL INFORMATION

   Item 1: Financial Statements

           Condensed Consolidated Balance Sheets (unaudited) -
           September 30, 2006 and July 1, 2006                              3

           Condensed Consolidated Statements of Operations
           (unaudited) - Thirteen weeks ended - September 30, 2006
           and October 1, 2005                                              4

           Condensed Consolidated Statements of Cash Flows
           (unaudited) - Thirteen weeks ended September 30, 2006 and
           October 1, 2005                                                  5

           Notes to Condensed Consolidated Financial Statements             6

   Item 2: Management's Discussion and Analysis of Financial
           Condition and Results of Operations                             21

   Item 3: Quantitative and Qualitative Disclosures About Market Risk      27

   Item 4: Controls and Procedures                                         27

PART II OTHER INFORMATION

   Item 1: Legal Proceedings                                               28

   Item 6: Exhibits                                                        29

Signature                                                                  30

Index of Exhibits                                                          31
</TABLE>


                                        2

<PAGE>

                                  SALTON, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT SHARE DATA)                                    SEPTEMBER 30, 2006   JULY 1, 2006
                                                                    ------------------   ------------
<S>                                                                 <C>                  <C>
ASSETS

CURRENT ASSETS:
   Cash                                                                  $ 13,495          $ 18,103
   Compensating balances on deposit                                        39,696            39,516
   Accounts receivable, less allowances                                   132,236           117,094
   Inventories                                                            146,133           143,997
   Prepaid expenses and other current assets                               16,454            14,809
   Prepaid income taxes                                                     3,237             1,332
   Deferred income taxes                                                    5,438             5,433
                                                                         --------          --------
      Total Current Assets                                                356,689           340,284
Property, Plant and Equipment, net                                         38,572            40,460
Tradenames                                                                160,138           159,675
Non-Current Deferred Tax Asset                                              3,355             3,269
Other Assets                                                               10,540             9,844
                                                                         --------          --------
TOTAL ASSETS                                                             $569,294          $553,532
                                                                         ========          ========
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Revolving line of credit and other current debt, including
      accrued interest of $10,971 and $10,971, respectively              $ 58,882          $ 32,518
   Accounts payable                                                        90,664            91,308
   Accrued expenses                                                        29,423            28,081
   Accrued interest                                                         7,250             5,028
   Income taxes payable                                                     1,677               702
                                                                         --------          --------
      Total Current Liabilities                                           187,896           157,637
Non-Current Deferred Income Taxes                                          16,022            16,271
Senior Subordinated Notes due 2008, including an adjustment of
   $1,580 and $1,829 to the carrying value related
   to interest rate swap agreements, respectively                          61,306            61,531
Second Lien Notes, including accrued interest
   of $7,619 and $13,136, respectively                                    110,891           116,407
Series C Preferred Stock, $0.1 par value; authorized, 150,000
   shares, 135,217 shares issued                                            9,198             8,922
Term Loan and Other Notes Payable                                         117,729           117,908
Other Long Term Liabilities                                                15,635            15,668
                                                                         --------          --------

TOTAL LIABILITIES                                                         518,677           494,344
Redeemable Convertible Preferred Stock, $0.01 par value;
   authorized, 2,000,000 shares; 40,000 shares issued                      40,000            40,000
Commitments and contingencies

STOCKHOLDERS' EQUITY:
   Common Stock, $0.01 par value; authorized, 40,000,000
      shares; issued and outstanding: 2007-14,384,390 shares;
      2006 -14,386,390 shares                                                 178               178
   Treasury Stock, 7,885,845 shares, at cost                              (65,793)          (65,793)
   Additional Paid-In Capital                                              64,818            63,854
   Accumulated Other Comprehensive Income                                  10,786            10,297
   Retained Earnings                                                          628            10,652
                                                                         --------          --------
      Total Stockholders' Equity                                           10,617            19,188
                                                                         --------          --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                               $569,294          $553,532
                                                                         ========          ========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.


                                        3
<PAGE>

                                  SALTON, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                13 WEEKS ENDED
                                                                    -------------------------------------
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)                      SEPTEMBER 30, 2006    OCTOBER 1, 2005
                                                                    -------------------   ---------------
<S>                                                                 <C>                   <C>
NET SALES                                                               $   138,307         $   148,416
Cost of Goods Sold                                                           94,178             108,371
Distribution Expenses                                                         9,687              10,548
                                                                        -----------         -----------
GROSS PROFIT                                                                 34,442              29,497
Selling, General and Administrative Expenses                                 33,546              40,418
Restructuring Costs                                                             845                 117
                                                                        -----------         -----------
OPERATING INCOME (LOSS)                                                          51             (11,038)
Interest Expense, net                                                         9,277              11,049
Gain-Early Settlement of Debt                                                    --             (21,655)
                                                                        -----------         -----------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                          (9,226)               (432)
Income Tax Expense (Benefit)                                                    798                (545)
                                                                        -----------         -----------
NET (LOSS) INCOME FROM CONTINUING OPERATIONS                                (10,024)                113
Income from Discontinued Operations, Net of Tax                                  --               1,735
Gain on Sale of Discontinued Operations, Net of Tax                              --              27,816
                                                                        -----------         -----------
NET (LOSS) INCOME                                                       $   (10,024)        $    29,664
                                                                        ===========         ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (RESTATED, SEE NOTE 6)        14,384,961          15,745,323
WEIGHTED AVERAGE COMMON AND COMMON  EQUIVALENT SHARES OUTSTANDING        14,384,961          16,249,880

Net (Loss) Income per Common Share: Basic (Restated, see Note 6)
   (Loss) Income from continuing operations                             $     (0.70)        $      0.01
   Income from discontinued operations, net of tax                               --                0.11
   Gain on sale of discontinued operations, net of tax                           --                1.76
                                                                        -----------         -----------
Net (Loss) Income per Common Share: Basic                               $     (0.70)        $      1.88
                                                                        ===========         ===========
Net (Loss) Income per Common Share: Diluted
   (Loss) income from continuing operations                             $     (0.70)        $      0.01
   Income from discontinued operations, net of tax                               --                0.11
   Gain on sale of discontinued operations, net of tax                           --                1.71
                                                                        -----------         -----------
Net (Loss) Income per Common Share: Diluted                             $     (0.70)        $      1.83
                                                                        ===========         ===========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.


                                        4

<PAGE>

                                  SALTON, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          13 WEEKS ENDED
                                                                    --------------------------
                                                                    SEPTEMBER 30,   OCTOBER 1,
(IN THOUSANDS)                                                           2006          2005
                                                                    -------------   ----------
<S>                                                                 <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net (Loss) Income                                                   $(10,024)     $ 29,664
   Adjustments to Reconcile Net (Loss) Income to Net Cash
      from Operating Activities:
      Imputed interest on notes payable and other non-cash items             51          (337)
      Deferred income tax benefit                                          (311)         (475)
      Stock based compensation expense                                      324           271
      Depreciation and amortization                                       3,566         4,401
      Amortization of deferred financing costs                            1,795           939
      Bad debt (recovery) provision                                         (33)           14
      Gain on sale of discontinued operations                                --       (27,816)
      Loss (gain) on disposal of property and equipment                      14          (729)
      Inventory valuation adjustment                                         --         3,292
      Impairment loss on intangible assets                                   46             5
      Foreign currency losses (gains)                                       119          (315)
      Gain - early settlement of debt                                        --       (21,655)
      Minority interest                                                      --         1,381
      Changes in assets and liabilities:
         Accounts receivable                                            (15,013)      (22,872)
         Inventories                                                     (1,776)      (30,231)
         Prepaid expenses and other current assets                       (1,585)       (2,402)
         Other non-current assets                                            16         1,025
         Accounts payable                                                  (444)       36,212
         Income taxes payable                                              (933)        1,654
         Accrued expenses                                                 3,081        (4,933)
                                                                       --------      --------
            NET CASH FROM OPERATING ACTIVITIES                          (21,107)      (32,907)

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                                  (1,713)       (1,628)
   Proceeds from sale of property and equipment                             154         1,050
   Proceeds from sale of tabletop assets                                     --        14,195
   Proceeds from sale of discontinued operations, net of $10,998
      cash sold                                                              --        69,938
   Increase in restricted cash                                               --       (81,664)
   Acquisition of majority interest, net of cash acquired                    --        (4,525)
   Additional payment for acquisition of trade names                        (46)           --
   Increase in compensating balances on deposit                            (180)       (4,424)
                                                                       --------      --------
            NET CASH FROM INVESTING ACTIVITIES                           (1,785)       (7,058)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from revolving line of credit and other short
      term debt                                                          25,923         7,125
   Repayment of long term debt                                           (5,918)         (196)
   Costs associated with refinancing                                     (1,827)       (9,401)
   Common stock issued                                                       --           175
                                                                       --------      --------
            NET CASH FROM FINANCING ACTIVITIES                           18,178        (2,297)
                                                                       --------      --------
Effect of Exchange Rate Changes on Cash                                     106         1,781
                                                                       --------      --------
Decrease in Cash                                                         (4,608)      (40,481)
Cash, Beginning of Period, Including Cash of Discontinued
   Operations of $0 and $35,934, respectively                            18,103        50,791
                                                                       --------      --------
Cash, End of Period, Including Cash of Discontinued Operations of
   $0 and $0, respectively                                             $ 13,495      $ 10,310
                                                                       ========      ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid During the Period for:
   Interest                                                            $ 10,719      $ 10,653
   Income taxes, net of (refunds)                                      $  1,944      $    554
</TABLE>

NOTE: Cash flow activity includes discontinued operations for the thirteen weeks
ended October 1, 2005.

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

In the quarter ended September 30, 2006, the Company issued a warrant for the
purchase of 719,320 shares of common stock of the Company at an exercise price
of $2.12 per share to the Agent of the Senior Secured Credit Facility.

            See Notes to Condensed Consolidated Financial Statements.


                                        5
<PAGE>

                                  SALTON, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     In the opinion of management, the accompanying condensed consolidated
     balance sheets and related interim condensed consolidated statements of
     operations and cash flows include all adjustments, consisting only of
     normal recurring items, necessary for their fair presentation in conformity
     with principles, generally accepted in the United States of America.
     Preparing financial statements requires management to make estimates and
     assumptions that affect the reported amounts of assets, liabilities,
     revenue and expenses. Actual results may differ from these estimates. The
     Company's business is highly seasonal, with operating results varying from
     quarter to quarter. Interim results are not necessarily indicative of
     results for a full year. The information included in this Form 10-Q should
     be read in conjunction with Management's Discussion and Analysis and
     consolidated financial statements and notes thereto included in the Salton,
     Inc. 2006 Annual Report on Form 10-K.

2.   DISCONTINUED OPERATIONS

     On September 29, 2005, the Company completed the sale of its 52.6%
     ownership interest in Amalgamated Appliances Holdings Limited ("AMAP"), a
     leading distributor and marketer of small appliances and other products in
     South Africa, to a group of investors led by Interactive Capital
     (Proprietary) Limited. In the first quarter of fiscal 2006, the Company
     received proceeds, net of expenses, of approximately $81.0 million in
     connection with the transaction and recorded a preliminary gain of $27.8
     million, net of tax. Also, the Company licensed its George Foreman(R),
     Russell Hobbs(R) and Carmen(R) branded products to AMAP following the
     transaction.

     The following is a summary of financial results included within
     discontinued operations:

<TABLE>
<CAPTION>
                                                 THIRTEEN WEEKS ENDED
                                         ------------------------------------
                                         SEPTEMBER 30, 2006   OCTOBER 1, 2005
                                         ------------------   ---------------
<S>                                      <C>                  <C>
Net sales from discontinued operations           $--              $68,798
                                                 ---              -------
Income from discontinued operations
   before income taxes                            --              $ 5,477
Income taxes                                      --                2,338
Minority Interest                                 --                1,404
                                                 ---              -------
Income from discontinued operations,
   net of tax                                    $--              $ 1,735
                                                 ===              =======
</TABLE>

     At September 30, 2006 and July 1, 2006 there were no assets and liabilities
     classified as assets and liabilities of discontinued operations.

3.   SENIOR SECURED CREDIT FACILITY, LETTERS OF CREDIT AND LONG-TERM DEBT

     NINTH AMENDMENT TO SENIOR SECURED CREDIT FACILITY - On August 15, 2006, the
     Company entered into a ninth amendment to, and waiver under, the senior
     secured credit facility (the "Ninth Amendment").

     The Ninth Amendment, among other things: (1) provides for an additional
     overadvance amount of $26.25 million; (2) eliminates the fixed charge
     coverage ratio and minimum EBITDA covenants through and including March
     2007 and revises such covenants thereafter; (3) adds a monthly cash flow
     covenant through March 2007; (4) provides that the combined outstanding
     amount of the existing overadvance of up to $16.2 million plus the
     additional overadvance of up to $26.25 million must be reduced to a maximum
     of $23.0 million by the end of March 2007; (5) excludes from EBITDA up to


                                        6

<PAGE>

     $6 million of losses or sale of excess inventory between August 15, 2006
     and December 31, 2006; (6) increases the interest rate by 50 basis points;
     and (7) extends to September 15, 2006 the date by which the Company must
     deliver an executed landlord waiver for a warehouse located in Redlands,
     California. Subsequently, as of September 27, 2006, the date for delivery
     of an executed landlord waiver was extended to July 1, 2007.

     As partial consideration for the Ninth Amendment, the Company issued a
     warrant to purchase 719,320 shares of common stock of the Company at an
     exercise price of $2.12 per share. The warrant may be exercised any time
     before the later of December 31, 2007 and the Stated Termination Date (as
     defined in the senior secured credit facility). The Company granted
     registration rights with respect to the shares issuable upon exercise of
     the warrant.

     As of September 30, 2006, the Company had outstanding borrowings of $127.6
     million under the senior secured credit facility and had approximately $8.9
     million available under this facility for future borrowings.

     LETTERS OF CREDIT - As of September 30, 2006, the Company had outstanding
     letters of credit of $1.1 million under the letter of credit subfacility of
     $15.0 million.

     SALTON EUROPE FACILITY AGREEMENT - On October 10, 2006, the Company entered
     into an amendment and restatement to the Europe Facility Agreement, which
     waives compliance with the fixed charge coverage ratio for the months of
     April and May 2006 and amends the definition of such covenant thereafter.

     As of September 30, 2006, the Company had outstanding borrowings
     denominated in the Great Britain Pound of L16.1 million (approximately
     $30.1 million) and borrowings denominated in the U.S. Dollar of $7.4
     million, and had approximately $3.3 million available under this agreement
     for future borrowings.

     As of September 30, 2006, the Company was in compliance with covenants
     under the Senior Secured Credit Facility and the Salton Europe Facility
     Agreement.

4.   STOCK-BASED COMPENSATION

     STOCK OPTIONS - Effective July 3, 2005, the Company adopted FASB Statement
     No. 123(R), "Share-Based Payment," which revises FASB Statement 123 and
     supercedes ABP 25. Statement No. 123(R) requires all share-based payments
     to employees to be recognized in the financial statements based on their
     fair value using an option-pricing model at the date of grant. The Company
     uses the Black-Scholes option-pricing model to determine fair value of
     awards on the date of grant.

     There were no stock option awards granted during the thirteen weeks ended
     September 30, 2006 or October 1, 2005. Stock-based compensation expense
     related to stock options for the thirteen weeks ended September 30, 2006
     and October 1, 2005 was $0 and $0.2 million, respectively. There was no
     compensation expense related to nonvested options not yet recognized as of
     September 30, 2006.


                                        7

<PAGE>

     A summary of the Company's fixed stock options for the thirteen weeks ended
     September 30, 2006 is as follows:

<TABLE>
<CAPTION>
                                                     WEIGHTED
                                                      AVERAGE
                                            SHARES   EXERCISE
                                             (000)     PRICE
                                            ------   --------
<S>                                         <C>      <C>
Outstanding as of July 1, 2006              2,164     $14.87
   Granted                                     --
   Exercised                                   --
   Expired or Canceled                         (7)     12.42
                                            -----
Outstanding as of September 30, 2006        2,157     $14.88
                                            =====     ======
Options exercisable at September 30, 2006   2,157     $14.88
Weighted-average fair value of
   options granted during the period                     N/A
</TABLE>

     The following information summarizes the stock options outstanding at
     September 30, 2006:

<TABLE>
<CAPTION>
                      OPTIONS OUTSTANDING
                     ---------------------               OPTIONS EXERCISABLE
                                WEIGHTED-                -------------------
                                 AVERAGE     WEIGHTED-             WEIGHTED-
                                REMAINING     AVERAGE               AVERAGE
RANGE                SHARES    CONTRACTUAL    EXERCISE    SHARES    EXERCISE
OF EXERCISE PRICES    (000)   LIFE (YEARS)     PRICE       (000)     PRICE
------------------   ------   ------------   ---------    ------   ---------
<S>                  <C>      <C>            <C>         <C>       <C>
$5.333 - $5.833          15       0.61         $ 5.35         15     $ 5.35
$6.333 - $10.60       1,108       5.12           8.83      1,108       8.83
$13.917 - $17.50        651       3.47          14.80        651      14.80
$18.95 - $37.00         383       3.26          32.89        383      32.89
                      -----                                -----
$5.333 - $37.00       2,157       4.27         $14.88      2,157     $14.88
                      =====       ====         ======      =====     ======
</TABLE>

     STOCK GRANTS - On March 9, 2006, the Company granted certain employees
     common stock of the Company. A total of 192,250 shares were granted, of
     which 101,250 vested upon issuance. The remaining 91,000 shares have a two
     year vesting, with 50% vesting after one year and the remaining 50% vesting
     after two years.

     The Company has previously recognized compensation cost for these stock
     grants at the fair value of the stock at the date of grant. As of September
     30, 2006, compensation cost related to nonvested awards not yet recognized
     of $0.1 million is being recognized over the remainder of the requisite two
     year service period.

     On August 24, 2006, the Company agreed to issue to David Sabin, the former
     Chairman of the Board, common stock of the Company pursuant to his
     Separation Agreement. A total of 141,510 shares will be issued upon the
     earlier of six months from the date of the Agreement or consummation of a
     change in control of the Company. The Company has recognized severance cost
     at fair value of the stock as of the date of the Agreement of $0.3 million.
     Further, in the event a change of control is consummated within six months
     of the Separation Agreement, the Company has also agreed to issue an
     additional number shares of common stock of the Company equal to $0.6
     million divided by the fair market value (as determined by the Board of
     Directors of the Company in good faith) of the consideration per


                                        8

<PAGE>

     share of common stock received by holders of common stock in connection
     with such change of control. The Company will recognize additional expense
     if and when a change of control occurs.

     WARRANTS - As partial consideration for the Ninth Amendment to the Senior
     Secured Credit Facility entered into on August 15, 2006, the Company issued
     a warrant to purchase 719,320 shares of common stock of the Company at an
     exercise price of $2.12 per share. The warrant may be exercised any time
     before the later of December 31, 2007 and the Stated Termination Date (as
     defined in the senior secured credit facility). The Company granted
     registration rights with respect to the shares issuable upon exercise of
     the warrant.

     The Company has recognized deferred financing cost for the warrant at fair
     value as of the date of issue of $0.6 million, which is being amortized
     over the related remaining loan term.

     The fair value of the warrant was estimated on the date of issue using the
     Black-Scholes option-pricing model. The following assumptions were used to
     estimate the fair value of the warrant:

<TABLE>
<S>                           <C>
Dividend yield                      N/A
Expected volatility                97.2%
Risk-free interest rate             5.0%
Expected life of warrant      1.4 years
</TABLE>

5.   CAPITAL STOCK

     Activity in the Company's capital accounts for the thirteen weeks ended
     September 30, 2006 was as follows:

<TABLE>
<CAPTION>
                                        13 WEEKS ENDED
                                      SEPTEMBER 30, 2006
                              ---------------------------------
                                 COMMON              ADDITIONAL
                                 SHARES     COMMON     PAID IN
(IN THOUSANDS)                OUTSTANDING    STOCK     CAPITAL
                              -----------   ------   ----------
<S>                           <C>           <C>      <C>
Balance, July 1, 2006           14,386       $178     $63,854
Share-based compensation            (2)        --         324
Warrant issued - financing
   fees                             --         --         640
                                ------       ----     -------
Balance, September 30, 2006     14,384       $178     $64,818
                                ======       ====     =======
</TABLE>

6.   NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE

     Net income (loss) per share is computed in accordance with SFAS No. 128,
     "Earnings Per Share," and Emerging Issues Task Force (EITF) Statement No.
     03-6, "Participating Securities and the Two Class Method Under FASB
     Statement No. 128, Earnings per Share." Under EITF 03-06, the Series A
     Preferred Stock are included in both basic and diluted net income (loss)
     per share using the "two-class" method, if the effect is dilutive. Diluted
     net income per share also includes dilutive common stock equivalents
     applying the treasury stock method for options, settlements and warrants.


                                        9

<PAGE>

     The previously reported weighted average common shares outstanding used in
     the calculation of basic earnings per share did not include the dilutive
     effect of the Company's convertible Series A Preferred Stock, as required
     under the "two-class" method. These shares, as well as net income per basic
     common share, have been restated for the first quarter of fiscal 2006.

     The following summarizes the effect of dilutive securities on earnings per
     share:

<TABLE>
<CAPTION>
                                            THIRTEEN WEEKS ENDED
                                    ------------------------------------
(IN THOUSANDS)                      SEPTEMBER 30, 2006   OCTOBER 1, 2005
                                    ------------------   ---------------
<S>                                 <C>                  <C>
Weighted average shares
   outstanding - basic                    14,385              15,745
Effect of dilutive securities:
   Stock options                              --                  48
   Contract settlement                        --                 457
                                          ------              ------
Weighted average shares - diluted         14,385              16,250
                                          ======              ======
</TABLE>

     For the thirteen weeks ended September 30, 2006, the Company's Series A
     Preferred Stock was not dilutive and was excluded from the calculation of
     basic and diluted loss per share. Additionally, the Company's outstanding
     common stock equivalents, options and warrants were excluded from the
     computation of diluted earnings per share because they had an anti-dilutive
     effect due to the Company's loss from continuing operations in the period.
     Had the Company recognized net income from continuing operations in the
     period, basic shares outstanding would have increased by 3.5 million shares
     related to the Series A Preferred Stock under the two-class method; and
     diluted shares outstanding would have increased by 3.6 million shares for
     the effect of the Series A Preferred Stock and outstanding warrants. Common
     stock equivalents totaling 2.2 million shares at a price range of $5.33 to
     $37.00 per share were not included in the calculation because of the
     Company's loss from continuing operations.

     For the thirteen weeks ended October 1, 2005, the Company's Series A
     Preferred Stock was dilutive and was included in the calculation of basic
     and diluted income per share. Additionally, the Company's outstanding
     common stock equivalents, options and settlements were included in the
     computation of diluted earnings per share because they had a dilutive
     effect due to the Company's income from continuing operations in the
     period. Basic shares outstanding increased by 3.5 million shares related to
     the Series A Preferred Stock under the two-class method and diluted shares
     outstanding increased by 4.0 million shares for the effect of the Series A
     Preferred Stock, outstanding options and contract settlements. Common stock
     equivalents totaling 2.3 million shares at a price range of $5.33 to $37.00
     per share were not included in the calculation because the stock options'
     exercise prices were greater than the average market price of the common
     shares.

7.   DERIVATIVE FINANCIAL INSTRUMENTS

     The Company uses derivative financial instruments to manage foreign
     currency risk. The Company does not enter into derivative financial
     instruments for trading purposes. The Company uses forward exchange
     contracts to hedge foreign currency payables for periods consistent with
     the expected cash flow of the underlying transactions. The contracts
     generally mature within one year and are designed to limit exposure to
     exchange rate fluctuations, primarily related to the Great Britain pound
     and the Australian dollar to the U.S. dollar.

     All foreign exchange contracts have been recorded in the consolidated
     balance sheets within accrued expenses at de minimis fair values at
     September 30, 2006 and July 1, 2006, respectively. The change in the fair
     value of contracts in the first quarter was insignificant.


                                       10

<PAGE>

     Contracts for the purchase of 4.0 million U.S. dollars were entered into
     during the first quarter of fiscal 2007. At September 30, 2006 the Company
     had foreign exchange forward contracts outstanding for the purchase of
     approximately 1.0 million U.S. dollars.

8.   COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME

     For the thirteen weeks ended September 30, 2006 and October 1, 2005,
     components of other comprehensive income include foreign currency
     translation adjustments of $0.5 million and $(5.0) million, respectively,
     and derivative liability adjustments of $0 million and $(1.5) million,
     respectively.

<TABLE>
<CAPTION>
                                               13 WEEKS ENDED
                                    ------------------------------------
(IN THOUSANDS)                      SEPTEMBER 30, 2006   OCTOBER 1, 2005
                                    ------------------   ---------------
<S>                                 <C>                  <C>
Net (Loss) Income                        $(10,024)            $29,664
Other Comprehensive Loss, net of
   tax of $-0- and $(595),
   respectively                               489              (6,445)
                                         --------             -------
Comprehensive (Loss) Income              $ (9,535)            $23,219
                                         ========             =======
</TABLE>

     Accumulated other comprehensive income is comprised of the following:

<TABLE>
<CAPTION>
                                                  AS OF
                                    ---------------------------------
(IN THOUSANDS)                      SEPTEMBER 30, 2006   JULY 1, 2006
                                    ------------------   ------------
<S>                                 <C>                  <C>
Minimum Pension Liability, net
   of tax of $(4,341) and
   $(4,308), respectively                $(8,251)          $(8,173)
Foreign Currency Translation              19,037            18,470
                                         -------           -------
                                         $10,786           $10,297
                                         =======           =======
</TABLE>

9.   PENSION BENEFIT PLANS

     The components of net periodic pension cost are as follows:

<TABLE>
<CAPTION>
                                      DOMESTIC         SALTON EUROPE           TOTAL
                                 -----------------   -----------------   -----------------
(IN THOUSANDS)                   9/30/06   10/1/05   9/30/06   10/1/05   9/30/06   10/1/05
                                 -------   -------   -------   -------   -------   -------
<S>                              <C>       <C>       <C>       <C>       <C>       <C>
THIRTEEN WEEKS ENDED:
   Service cost-benefits
      earned during the period    $  42     $  42     $ 120     $  70     $ 162     $ 112
   Interest cost on projected
      benefit obligation            175       176       606       540       781       716
   Actuarial return on plan
      assets                       (167)     (157)     (581)     (463)     (748)     (620)
   Net amortization and
      deferral                       48        61       147       200       195       261
                                  -----     -----     -----     -----     -----     -----
      Net pension cost            $  98     $ 122     $ 292     $ 347     $ 390     $ 469
                                  =====     =====     =====     =====     =====     =====
</TABLE>

     The Company previously disclosed in its financial statements for the year
     ended July 1, 2006 that it expected to contribute $0.5 million to its
     domestic pension plans and $1.5 million to the Salton Europe pension plan
     in fiscal 2007. As of September 30, 2006, $0.1 million and $0.4 million of
     contributions have been made to the domestic and Europe plans,
     respectively.


                                       11
<PAGE>

10.  OPERATING SEGMENTS AND MAJOR CUSTOMERS

     Salton consists of a single operating segment which designs, sources,
     markets and distributes a diversified product mix for use in the home. The
     product mix consists of small kitchen and home appliances, electronics for
     the home, time products, lighting products and personal care and wellness
     products. The Company believes this segmentation is appropriate based upon
     Management's operating decisions and performance assessment. Nearly all of
     the Company's products are consumer goods within the housewares market
     procured through independent manufacturers primarily in the Far East.
     Salton's products are distributed through similar distribution channels and
     customer base using the marketing efforts of its global marketing team.

     For the thirteen weeks ended September 30, 2006, no one customer accounted
     for more than 10.0% of net sales from continuing operations. For the
     thirteen weeks ended October 1, 2005, one customer accounted for 11.2% of
     net sales from continuing operations.

11.  LEGAL PROCEEDINGS

     PRODUCT LIABILITY

     On or about October 27, 2004, a lawsuit entitled DiNatale vs. Salton was
     filed in the New York State Supreme Court against the Company. The
     plaintiffs, who seek unspecified damages, allege that they were injured by
     water contaminated with lead taken from a tea kettle sold by the Company
     under its Russell Hobbs brand. The plaintiffs' attorney had been seeking to
     convert the lawsuit into a class action suit; no class action suit has been
     filed to date. The manufacturer of the product and its insurer are
     defending this lawsuit. The Company's attorneys and its insurers are
     cooperating in the defense of the lawsuit.

     JAY KORDICH V. SALTON, INC.

     On October 19, 2005, a lawsuit named Jay Kordich v. Salton, Inc. was filed
     in the United States District Court for the Southern District of
     California. The plaintiff in this action is seeking a judicial
     determination that a covenant not to compete in an agreement between him
     and Salton is invalid and unenforceable against him plus attorneys' fees
     and costs. Salton believes that the lawsuit is without merit.

     The outcome of the foregoing legal matters cannot be predicted with
     certainty, however Salton does not believe that these actions will have a
     material adverse affect on its business, financial condition or results of
     operations. Therefore, no amounts have been accrued for such claims.

     ENVIRONMENTAL

     The Company has accrued approximately $0.2 million for the anticipated
     costs of environmental remediation at four of our current and previously
     owned sites. Although such costs could exceed that amount, Salton believes
     any such excess will not have a material adverse effect on the financial
     condition or annual results of operations of the Company.


                                       12

<PAGE>

     OTHER

     The Company is a party to various other actions and proceedings incident to
     its normal business operations. The Company believes that the outcome of
     any such litigation will not have a material adverse effect on our
     business, financial condition or results of operations. The Company also
     has product liability and general liability insurance policies in amounts
     believed to be reasonable given its current level of business. Although
     historically the Company has not had to pay any material product liability
     claims, it is conceivable that the Company could incur claims for which we
     are not insured.

12.  RESTRUCTURING COSTS

     As a result of the U.S. restructuring plan, the Company incurred $0.8
     million of restructuring costs during the first quarter of fiscal 2007,
     consisting primarily of severance charges. During the same quarter of
     fiscal 2006, restructuring costs of $0.1 million related to warehouse
     rationalization. Payments of $0.7 million were made in the first quarter of
     fiscal 2007, including $0.3 million of stock-based compensation. Accrued
     restructuring costs were $0.2 million as of September 30, 2006.

13.  INCOME TAXES

     Deferred tax assets are recognized for deductible temporary differences,
     net operating loss carryforwards, and credit carryforwards if it is more
     likely than not that the tax benefit will be realized. To the extent that a
     deferred tax asset cannot be recognized under the preceding criteria, a
     valuation allowance has been established. This assessment is based on an
     analysis of historical and prospective earnings that will allow the Company
     to utilize the deferred tax asset. During fiscal 2006, the Company recorded
     a valuation allowance against its U.S. deferred income tax asset balance
     and increased its valuation allowance on certain foreign entity deferred
     tax balances. In the first quarter of fiscal 2007, the Company further
     increased its U.S. and foreign valuation allowances. This non-cash charge
     does not limit the Company's ability to realize future tax benefits
     associated with its net operating loss carryforwards to the extent that
     future profits result in taxable income during the carryforward period.
     Foreign valuation allowances have been provided for Salton Germany ($3.5
     million) and Salton Spain ($1.8 million). Salton Germany's net operating
     loss carryforward does not expire. Salton Spain's net operating loss
     carryforward expires beginning in fiscal year 2019 through 2022. The U.S.
     net operating loss carryforwards primarily expire beginning in fiscal year
     2009 through fiscal year 2025.

     In addition, the Company has unused foreign tax credits of $16.1 million
     which expire beginning in fiscal 2011. A valuation allowance has been
     provided related to these foreign tax credits as it is more likely than not
     that they may expire unused.

     In the second quarter of fiscal year 2007, the Internal Revenue Service
     completed its examination of Salton's consolidated federal income tax
     returns for fiscal years 2001 through 2004, resulting in a potential tax
     refund. As a result of the IRS examination, the Company's fiscal year 2005
     income tax return has been amended accordingly and will not be subject to
     any future IRS examination. On October 26, 2006, Salton's management
     consented to the results of the examination. Due to the refund claim, the
     staff of the Joint Committee on Taxation is required to review and approve
     the refund amount. This process is expected to be completed by the end of
     the second quarter. Salton management believes it is appropriate to record
     any income tax refund only when approval has been received from the Joint
     Committee. Additionally, as a result of the examination, the Company has
     agreed to a revision of its tax deductible trade name tax basis resulting
     in a $2.0 million benefit to the tax provision in the thirteen weeks ended
     September 30, 2006.


                                       13

<PAGE>

14.  SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION

     The payment obligations of the Company under the senior secured credit
     facility, the second lien notes and the senior subordinated notes are
     guaranteed by certain of the Company's 100% owned domestic subsidiaries
     (Subsidiary Guarantors). Such guarantees are full, unconditional and joint
     and several.

     In December 2005, the Company entered into a facility agreement which is
     guaranteed by certain of the Company's foreign subsidiaries (see Note 3,
     "Senior Secured Credit Facility, Letters of Credit and Long-Term Debt"). As
     a result of the foreign borrowing facility, primarily all of the assets in
     these foreign subsidiaries are restricted as to the transfer of funds to
     the parent in the form of cash dividends, loans, or advances. The column
     titled "Foreign Borrowers and Guarantor Subsidiaries" represents the
     financial position, results operations and cash flows of these foreign
     subsidiaries.

     The following condensed consolidating financial information sets forth, on
     a combined basis, balance sheets, statements of income and statements of
     cash flows for Salton, Inc. (Parent), the Guarantor Subsidiaries under the
     domestic facility, the Guarantor Subsidiaries under the foreign facility
     and the Company's Non-Guarantor subsidiaries (Other Subsidiaries).
     Investments in subsidiaries are accounted for using the equity method for
     purposes of the consolidating presentation. The principal elimination
     entries eliminate investments in subsidiaries and intercompany
     transactions.


                                       14

<PAGE>

CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 2006
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                          FOREIGN
                                                                                         BORROWERS
                                                                                            AND
                                                  GUARANTOR                              GUARANTOR
                                       PARENT   SUBSIDIARIES  ELIMINATIONS    TOTAL    SUBSIDIARIES
                                      --------  ------------  ------------  ---------  ------------
<S>                                   <C>       <C>           <C>           <C>        <C>
               ASSETS

Current Assets:
   Cash                               $     --   $     179     $      --    $     179    $  7,145
   Compensating balances on deposit         --          --            --           --          --
   Accounts receivable, net of
      allowances                            96      79,927                     80,023      34,040
   Inventories                          11,469      82,813       (12,807)      81,475      46,164
   Prepaid expenses and other
      current assets                     2,197       3,570            --        5,767       3,795
   Intercompany                        108,120    (135,734)         (131)     (27,745)    (12,392)
   Prepaid income taxes                  3,237          --            --        3,237          --
   Deferred income taxes                    --          --            --           --          --
                                      --------   ---------     ---------    ---------    --------
      Total current assets             125,119      30,755       (12,938)     142,936      78,752
Property, Plant and Equipment,           3,944       7,193            --       11,137      10,869
Investments in Subsidiaries            138,742     145,113      (283,855)          --          --
Trade names                            111,341      10,313            --      121,654      38,484
Non-current deferred tax asset              --          --            --           --       2,210
   Other Assets, net                     7,528          87            --        7,615       2,910
                                      --------   ---------     ---------    ---------    --------
Total Assets                          $386,674   $ 193,461     $(296,793)   $ 283,342    $133,225
                                      ========   =========     =========    =========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Revolving line of credit and
      other current debt              $ 10,971   $  27,641     $      --    $  38,612    $ 19,808
   Accounts payable                     11,744      10,624            41       22,409       2,701
   Accrued expenses                      2,299       6,578            --        8,877      16,397
   Accrued interest                      3,788       3,462            --        7,250          --
   Income taxes payable                    917          --            --          917         452
                                      --------   ---------     ---------    ---------    --------
      Total current liabilities         29,719      48,305            41       78,065      39,358
Non-current Deferred tax liability      11,142          --            --       11,142          --
Senior Subordinated Notes due 2008,
   including an adjustment of $1,580
   to the carrying value related to
   interest rate swap agreements        61,306          --            --       61,306          --
Second Lien Notes                      110,891          --            --      110,891          --
Series C Preferred Stock                 9,198          --            --        9,198          --
Term loan and other notes payable           --     100,001            --      100,001      17,728
Other long term liabilities                 --       2,921            --        2,921      12,714
                                      --------   ---------     ---------    ---------    --------
      Total liabilities                222,256     151,227            41      373,524      69,800
Convertible Preferred Stock             40,000          --            --       40,000          --
Stockholders' Equity                   124,418      42,234      (296,834)    (130,182)     63,425
                                      --------   ---------     ---------    ---------    --------
Total Liabilities and
   Stockholders' Equity               $386,674   $ 193,461     $(296,793)   $ 283,342    $133,225
                                      ========   =========     =========    =========    ========

<CAPTION>



                                          OTHER                    TOTAL OTHER   CONSOLIDATED  CONSOLIDATED
                                      SUBSIDIARIES  ELIMINATIONS  SUBSIDIARIES   ELIMINATIONS     TOTALS
                                      ------------  ------------  ------------   ------------  ------------
<S>                                   <C>           <C>           <C>            <C>           <C>
               ASSETS

Current Assets:
   Cash                                 $  6,171      $     --      $ 13,316       $    --       $ 13,495
   Compensating balances on deposit       39,696            --        39,696            --         39,696
   Accounts receivable, net of
      allowances                          18,173            --        52,213            --        132,236
   Inventories                            18,494            --        64,658            --        146,133
   Prepaid expenses and other
      current assets                       6,892            --        10,687            --         16,454
   Intercompany                           40,137            --        27,745            --             --
   Prepaid income taxes                       --            --            --            --          3,237
   Deferred income taxes                     200         5,238         5,438            --          5,438
                                        --------      --------      --------       -------       --------
      Total current assets               129,763         5,238       213,753            --        356,689
Property, Plant and Equipment,            16,566                      27,435            --         38,572
Investments in Subsidiaries               83,368       (83,368)           --            --             --
Trade names                                   --            --        38,484            --        160,138
Non-current deferred tax asset               549           596         3,355            --          3,355
   Other Assets, net                          15            --         2,925            --         10,540
                                        --------      --------      --------       -------       --------
Total Assets                            $230,261      $(77,534)     $285,952       $    --       $569,294
                                        ========      ========      ========       =======       ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Revolving line of credit and
      other current debt                $    462      $     --      $ 20,270       $    --       $ 58,882
   Accounts payable                       65,554            --        68,255            --         90,664
   Accrued expenses                        4,149            --        20,546            --         29,423
   Accrued interest                           --            --            --            --          7,250
   Income taxes payable                      236            72           760            --          1,677
                                        --------      --------      --------       -------       --------
      Total current liabilities           70,401            72       109,831            --        187,896
Non-current Deferred tax liability         1,857         3,023         4,880            --         16,022
Senior Subordinated Notes due 2008,
   including an adjustment of $1,580
   to the carrying value related to
   interest rate swap agreements              --            --            --            --         61,306
Second Lien Notes                             --            --            --            --        110,891
Series C Preferred Stock                      --            --            --            --          9,198
Term loan and other notes payable             --            --        17,728            --        117,729
Other long term liabilities                   --            --        12,714            --         15,635
                                        --------      --------      --------       -------       --------
      Total liabilities                   72,258         3,095       145,153            --        518,677

Convertible Preferred Stock                   --            --                          --         40,000
Stockholders' Equity                     158,003       (80,629)      140,799            --         10,617
                                        --------      --------      --------       -------       --------
Total Liabilities and
   Stockholders' Equity                 $230,261      $(77,534)     $285,952       $    --       $569,294
                                        ========      ========      ========       =======       ========
</TABLE>


                                       15

<PAGE>

CONSOLIDATING BALANCE SHEET AS OF JULY 1, 2006
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                          FOREIGN
                                                                                         BORROWERS
                                                                                            AND
                                                  GUARANTOR                              GUARANTOR
                                       PARENT   SUBSIDIARIES  ELIMINATIONS    TOTAL    SUBSIDIARIES
                                      --------  ------------  ------------  ---------  ------------
<S>                                   <C>       <C>           <C>           <C>        <C>
               ASSETS

Current Assets:
   Cash                               $      1   $   4,437     $      --    $   4,438   $   7,247
   Compensating balances on deposit         --          --            --           --          --
   Accounts receivable, net
      of allowances                        420      71,231            --       71,651      30,205
   Inventories                           5,184      85,911       (14,124)      76,971      50,599
   Prepaid expenses and other
      current assets                     1,620       1,876            --        3,496       3,031
   Intercompany                        120,860    (161,298)           --      (40,438)    (12,164)
   Prepaid income taxes                  1,332          --            --        1,332          --
   Deferred income taxes                    --          --            --           --          --
                                      --------   ---------     ---------    ---------   ---------
      Total current assets             129,417       2,157       (14,124)     117,450      78,918

Property, Plant and Equipment,           4,553       7,573            --       12,126      10,884
Investments in Subsidiaries            144,210     145,352      (289,562)          --          --
Trade names                            111,341      10,313            --      121,654      38,021
Non-current deferred tax asset              --          --            --           --       2,124
Other Assets, net                        6,877         102            --        6,979       2,852
                                      --------   ---------     ---------    ---------   ---------
Total Assets                          $396,398   $ 165,497     $(303,686)   $ 258,209   $ 132,799
                                      ========   =========     =========    =========   =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Revolving line of credit and
   other current debt                 $ 10,971   $      30     $      --    $  11,001   $  21,130
   Accounts payable                      7,075       4,397           172       11,644       3,501
   Accrued expenses                      2,395       7,150            --        9,545      14,875
   Accrued interest                      2,071       2,957            --        5,028          --
   Income taxes payable                    720          --            --          720          52
                                      --------   ---------     ---------    ---------   ---------
      Total current liabilities         23,232      14,534           172       37,938      39,558
Non-current Deferred tax liability      11,391          --            --       11,391          --
Senior Subordinated Notes due 2008,
   including an adjustment of $1,829
   to the carrying value related to
   interest rate swap agreements        61,531          --            --       61,531          --
Second Lien Notes                      116,407          --            --      116,407          --
Series C Preferred Stock                 8,922          --            --        8,922          --
Term loan and other notes payable           --     100,008            --      100,008      17,900
Other long term liabilities                443       2,968            --        3,411      12,257
                                      --------   ---------     ---------    ---------   ---------
      Total liabilities                221,926     117,510           172      339,608      69,715

Convertible Preferred Stock             40,000          --            --       40,000          --
Stockholders' Equity                   134,472      47,987      (303,858)    (121,399)     63,084
                                      --------   ---------     ---------    ---------   ---------
Total Liabilities and
   Stockholders' Equity               $396,398   $ 165,497     $(303,686)   $ 258,209   $ 132,799
                                      ========   =========     =========    =========   =========

<CAPTION>



                                          OTHER                    TOTAL OTHER   CONSOLIDATED  CONSOLIDATED
                                      SUBSIDIARIES  ELIMINATIONS  SUBSIDIARIES  EMLIMINATIONS     TOTALS
                                      ------------  ------------  ------------  -------------  ------------
<S>                                   <C>           <C>           <C>           <C>            <C>
               ASSETS

Current Assets:
   Cash                                $   6,418      $     --     $  13,665       $     --      $ 18,103
   Compensating balances on deposit       39,516            --        39,516             --        39,516
   Accounts receivable, net
      of allowances                       15,238            --        45,443             --       117,094
   Inventories                            16,427            --        67,026             --       143,997
   Prepaid expenses and other
      current assets                       8,282            --        11,313             --        14,809
   Intercompany                           52,602            --        40,438             --            --
   Prepaid income taxes                       --            --            --             --         1,332
   Deferred income taxes                     195         5,238         5,433             --         5,433
                                       ---------      --------     ---------       --------      --------
      Total current assets               138,678         5,238       222,834             --       340,284

Property, Plant and Equipment,            17,450                      28,334             --        40,460
Investments in Subsidiaries               83,368       (83,368)           --             --            --
Trade names                                   --                      38,021             --       159,675
Non-current deferred tax asset               550           595         3,269                        3,269
Other Assets, net                             13            --         2,865             --         9,844
                                       ---------      --------     ---------       --------      --------
Total Assets                           $ 240,059      $(77,535)    $ 295,323       $     --      $553,532
                                       =========      ========     =========       ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Revolving line of credit and
      other current debt               $     387      $     --     $  21,517             --      $ 32,518
   Accounts payable                       76,163            --        79,664             --        91,308
   Accrued expenses                        3,661            --        18,536             --        28,081
   Accrued interest                           --            --            --                        5,028
   Income taxes payable                      (70)           --           (18)            --           702
                                       ---------      --------     ---------       --------      --------
      Total current liabilities           80,141            --       119,699             --       157,637

Non-current Deferred tax liability         1,858         3,022         4,880                       16,271
Senior Subordinated Notes due 2008,
   including an adjustment of $1,829
   to the carrying value related to
   interest rate swap agreements              --            --            --             --        61,531
Second Lien Notes                             --            --            --             --       116,407
Series C Preferred Stock                      --            --            --             --         8,922
Term loan and other notes payable             --            --        17,900             --       117,908
Other long term liabilities                   --            --        12,257             --        15,668
                                       ---------      --------     ---------       --------      --------
      Total liabilities                   81,999         3,022       154,736             --       494,344

Convertible Preferred Stock                   --            --                           --        40,000
Stockholders' Equity                     158,060       (80,557)      140,587             --        19,188
                                       ---------      --------     ---------       --------      --------
Total Liabilities and
   Stockholders' Equity                $ 240,059      $(77,535)    $ 295,323       $     --      $553,532
                                       =========      ========     =========       ========      ========
</TABLE>


                                       16
<PAGE>

CONSOLIDATING STATEMENT OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED
SEPTEMBER 30, 2006

(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                          FOREIGN
                                                                                         BORROWERS
                                                                                            AND
                                                   GUARANTOR                             GUARANTOR
                                        PARENT   SUBSIDIARIES  ELIMINATIONS    TOTAL   SUBSIDIARIES
                                      ---------  ------------  ------------  --------  ------------
<S>                                   <C>        <C>           <C>           <C>       <C>
Net Sales                             $ 36,413     $89,935       $(49,126)   $77,222     $42,586
Cost of Goods Sold                      28,934      75,448        (50,443)    53,939      27,692
Distribution Expenses                                5,333                     5,333       3,050
                                      --------     -------       --------    -------     -------
   Gross Profit                          7,479       9,154          1,317     17,950      11,844
Selling, General and
   Administrative expenses               8,302      10,858             --     19,160      10,338
Restructuring costs                        674         171             --        845          --
                                      --------     -------       --------    -------     -------
   Operating Income (loss)              (1,497)     (1,875)         1,317     (2,055)      1,506
Interest Expense, Net                    3,844       3,641             --      7,485       1,461
(Income) Loss from
   Subsidiaries                          6,524         239         (6,763)        --          --
                                      --------     -------       --------    -------     -------
   (Loss) Income Before Income
      Taxes                            (11,865)     (5,755)         8,080     (9,540)         45
Income Tax Expense                         147          --             --        147         245
                                      --------     -------       --------    -------     -------
   Net (Loss) Income from
      Continuing Operations            (12,012)     (5,755)         8,080     (9,687)       (200)
Income from Discontinued
   Operations, Net of tax                               --             --         --          --
                                      --------     -------       --------    -------     -------
Net (Loss) Income                     $(12,012)    $(5,755)      $  8,080    $(9,687)    $  (200)
                                      ========     =======       ========    =======     =======

<CAPTION>


                                                                      TOTAL
                                          OTHER                       OTHER     CONSOLIDATED  CONSOLIDATED
                                      SUBSIDIARIES  ELIMINATIONS  SUBSIDIARIES  ELIMINATIONS     TOTALS
                                      ------------  ------------  ------------  ------------  ------------
<S>                                   <C>           <C>           <C>           <C>           <C>
Net Sales                                $36,326        $ --        $78,912       $(17,827)     $138,307
Cost of Goods Sold                        29,182          --         56,874        (16,635)       94,178
Distribution Expenses                      1,304          --          4,354                        9,687
                                         -------        ----        -------       --------      --------
   Gross Profit                            5,840          --         17,684         (1,192)       34,442
Selling, General and
   Administrative expenses                 5,240          --         15,578         (1,192)       33,546
Restructuring costs                           --          --             --             --           845
                                         -------        ----        -------       --------      --------
   Operating Income (loss)                   600          --          2,106             --            51
Interest Expense, Net                        331                      1,792             --         9,277
(Income) Loss from
   Subsidiaries                               --                         --             --            --
                                         -------        ----        -------       --------      --------
   (Loss) Income Before Income
      Taxes                                  269          --            314             --        (9,226)
Income Tax Expense                           334          72            651             --           798
                                         -------        ----        -------       --------      --------
   Net (Loss) Income from
      Continuing Operations                  (65)        (72)          (337)            --       (10,024)
Income from Discontinued
   Operations, Net of tax                                 --             --             --            --
                                         -------        ----        -------       --------      --------
Net (Loss) Income                        $   (65)       $(72)       $  (337)      $     --      $(10,024)
                                         =======        ====        =======       ========      ========
</TABLE>

CONSOLIDATING STATEMENT OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED
OCTOBER 1, 2005

(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                           FOREIGN
                                                                                          BORROWERS
                                                                                             AND
                                                   GUARANTOR                              GUARANTOR
                                        PARENT   SUBSIDIARIES  ELIMINATIONS    TOTAL    SUBSIDIARIES
                                      ---------  ------------  ------------  ---------  ------------
<S>                                   <C>        <C>           <C>           <C>        <C>
Net Sales                             $ 31,049     $121,564      $(66,045)   $ 86,568     $ 41,155
Cost of Goods Sold                      25,453      110,391       (69,441)     66,403       28,073
Distribution Expenses                       --        6,225            --       6,225        3,264
                                      --------     --------      --------    --------     --------
   Gross Profit                          5,596        4,948         3,396      13,940        9,818
Selling, General and Administrative
   expenses                             10,448       11,832            --      22,280      (41,627)
Restructuring costs                         27           90            --         117           --
                                      --------     --------      --------    --------     --------
   Operating (loss) Income              (4,879)      (6,974)        3,396      (8,457)      51,445
Interest Expense, Net                    5,146        3,936            --       9,082          166
Gain on early extinguishment of debt   (21,655)          --            --     (21,655)          --
(Income) Loss from Subsidiaries        (39,308)         (24)       39,332          --           --
                                      --------     --------      --------    --------     --------
   (Loss) Income Before Income Taxes    50,938      (10,886)      (35,936)      4,116       51,279
Income Tax Expense (Benefit)             3,323           --            --       3,323         (983)
                                      --------     --------      --------    --------     --------
   Net (Loss) Income from Continuing
      Operations                        47,615      (10,886)      (35,936)        793       52,262
Income from Discontinued Operations,
   Net of tax                               --           --            --          --           --
Gain on Sale of Discontinued
   Operatoins, Net of tax              (21,323)          --            --     (21,323)       5,398
                                      --------     --------      --------    --------     --------
Net Income (Loss)                     $ 26,292     $(10,886)     $(35,936)   $(20,530)    $ 57,660
                                      ========     ========      ========    ========     ========

<CAPTION>


                                                                      TOTAL
                                          OTHER                       OTHER     CONSOLIDATED  CONSOLIDATED
                                      SUBSIDIARIES  ELIMINATIONS  SUBSIDIARIES  ELIMINATIONS     TOTALS
                                      ------------  ------------  ------------  ------------  ------------
<S>                                   <C>           <C>           <C>           <C>           <C>
Net Sales                               $79,566       $     --      $120,721      $(58,873)     $148,416
Cost of Goods Sold                       71,468             --        99,541       (57,573)      108,371
Distribution Expenses                     1,059             --         4,323            --        10,548
                                        -------       --------      --------      --------      --------
   Gross Profit                           7,039             --        16,857        (1,300)       29,497
Selling, General and Administrative
   expenses                               6,821         54,244        19,438        (1,300)       40,418
Restructuring costs                          --             --            --            --           117
                                        -------       --------      --------      --------      --------
   Operating (loss) Income                  218        (54,244)       (2,581)           --       (11,038)
Interest Expense, Net                     1,801                        1,967                      11,049
Gain on early extinguishment of debt         --             --            --            --       (21,655)
(Income) Loss from Subsidiaries              --             --            --            --            --
                                        -------       --------      --------      --------      --------
   (Loss) Income Before Income Taxes     (1,583)       (54,244)       (4,548)           --          (432)
Income Tax Expense (Benefit)               (277)        (2,608)       (3,868)           --          (545)
                                        -------       --------      --------      --------      --------
   Net (Loss) Income from Continuing
      Operations                         (1,306)       (51,636)         (680)           --           113
Income from Discontinued Operations,
   Net of tax                             1,735             --         1,735            --         1,735
Gain on Sale of Discontinued
   Operatoins, Net of tax                43,741             --        49,139            --        27,816
                                        -------       --------      --------      --------      --------
Net Income (Loss)                       $44,170       $(51,636)     $ 50,194      $     --      $ 29,664
                                        =======       ========      ========      ========      ========
</TABLE>


                                        17

<PAGE>

CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE THIRTEEN WEEKS ENDED
SEPTEMBER 30, 2006

(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                                FOREIGN
                                                                                                               BORROWERS
                                                                        GUARANTOR                            AND GUARANTOR
                                                             PARENT   SUBSIDIARIES  ELIMINATIONS    TOTAL     SUBSIDIARIES
                                                           ---------  ------------  ------------  ---------  -------------
<S>                                                        <C>        <C>           <C>           <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                $(12,012)    $ (5,755)     $ 8,080     $ (9,687)     $  (200)
   Adjustments to reconcile net loss to net cash
      from operating activities:
      Imputed interest on note payable and other non-cash
         items                                                   51           --           --           51           --
      Deferred income tax (benefit) provision                  (250)          --           --         (250)         (60)
      Stock based compensation expense                          324           --           --          324           --
      Depreciation and amortization                             642          443           --        1,085          320
      Amortization of deferred financing costs                1,492           --           --        1,492          303
      Bad debt provision                                         --          (76)          --          (76)          36
      Gain on sale of discontinued operations                                 11           --           11           --
      (Gain)loss on disposal of property and equipment           --           --           --           --           --
      Inventory valuation adjustment                             --           --           --           --           --
      Impairment loss on intangible assets                                    46           --           46           --
      Foreign currency gains and losses                          --           40           --           40           79
      Gain-early settlement of debt                                           --           --           --
      Equity in income of unconsolidated affiliate/
         consolidated subsidiaries                            6,524          239       (6,763)          --           --
      Minority Interest, net of tax                                                        --           --           --
      Changes in assets and liabilities, net of
         acquisitions:
      Accounts receivable                                       323       (8,660)          --       (8,337)      (3,697)
      Inventories                                            (6,285)       3,100       (1,317)      (4,502)       4,804
      Prepaid expenses and other current assets                (577)      (1,694)          --       (2,271)        (723)
      Other non-current assets                                   --           16           --           16           --
      Accounts payable                                        4,538        6,227           --       10,765         (623)
      Income taxes payable                                   (1,708)          --           --       (1,708)         397
      Accrued expenses                                       13,990      (25,678)          --      (11,688)       1,832
                                                           --------     --------      -------     --------      -------
         NET CASH FROM OPERATING ACTIVITIES                   7,052      (31,741)          --      (24,689)       2,468
                                                           --------     --------      -------     --------      -------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Capital expenditures                                      (33)        (215)          --         (248)        (178)
      Proceeds from sale of property and equipment               --          140           --          140           --
      Additional payment for trade names                                     (46)          --          (46)          --
      Increase in compensating balances on deposit               --           --           --           --           --
                                                           --------     --------      -------     --------      -------
         NET CASH FROM INVESTING ACTIVITIES                     (33)        (121)          --         (154)        (178)
                                                           --------     --------      -------     --------      -------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Net proceeds (repayments) from revolving line of
         credit and other short term debt                        --       27,611           --       27,611       (1,761)
      Repayment of long-term debt                            (5,516)          (7)                   (5,523)        (395)
      Costs associated with refinancing                      (1,504)          --           --       (1,504)        (323)
                                                           --------     --------      -------     --------      -------
         NET CASH FROM FINANCING ACTIVITIES                  (7,020)      27,604           --       20,584       (2,479)
                                                           --------     --------      -------     --------      -------

The effect of exchange rate changes on cash                      --           --           --           --           87
                                                           --------     --------      -------     --------      -------
Net (decrease)/increase in cash and cash equivalents             (1)      (4,258)          --       (4,259)        (102)
Cash, beginning of year                                           1        4,437           --        4,438        7,247
                                                           --------     --------      -------     --------      -------
Cash, end of period                                        $     --     $    179      $    --     $    179      $ 7,145
                                                           ========     ========      =======     ========      =======

<CAPTION>


                                                              OTHER                     TOTAL OTHER  CONSOLIDATED  CONSOLIDATED
                                                           SUBSIDIARIES  ELIMINATIONS  SUBSIDIARIES  ELIMINATIONS     TOTALS
                                                           ------------  ------------  ------------  ------------  ------------
<S>                                                        <C>           <C>           <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                  $    (65)       $(72)      $    (337)                   $(10,024)
   Adjustments to reconcile net loss to net cash
      from operating activities:                                                               --                          --
      Imputed interest on note payable and other non-cash
         items                                                     --          --              --          --              51
      Deferred income tax (benefit) provision                      (1)                        (61)         --            (311)
      Stock based compensation expense                             --          --              --          --             324
      Depreciation and amortization                             2,161          --           2,481          --           3,566
      Amortization of deferred financing costs                     --          --             303          --           1,795
      Bad debt provision                                            7          --              43          --             (33)
      Gain on sale of discontinued operations                       3          --               3          --              14
      (Gain)loss on disposal of property and equipment                         --              --          --              --
      Inventory valuation adjustment                                           --              --          --              --
      Impairment loss on intangible assets                         --          --              --          --              46
      Foreign currency gains and losses                            --          --              79          --             119
      Gain-early settlement of debt                                --          --              --          --              --
      Equity in income of unconsolidated affiliate/
         consolidated subsidiaries                                 --          --              --          --              --
      Minority Interest, net of tax                                            --              --          --              --
      Changes in assets and liabilities, net of
         acquisitions:                                                         --              --                          --
      Accounts receivable                                      (2,979)         --          (6,676)         --         (15,013)
      Inventories                                              (2,078)         --           2,726          --          (1,776)
      Prepaid expenses and other current assets                 1,409          --             686          --          (1,585)
      Other non-current assets                                     --          --              --          --              16
      Accounts payable                                        (10,586)         --         (11,209)         --            (444)
      Income taxes payable                                        306          72             775          --            (933)
      Accrued expenses                                         12,937          --          14,769          --           3,081
                                                             --------        ----       ---------         ---        --------
         NET CASH FROM OPERATING ACTIVITIES                     1,114          --           3,582          --         (21,107)
                                                             --------        ----       ---------         ---        --------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Capital expenditures                                     (1,287)         --          (1,465)         --          (1,713)
      Proceeds from sale of property and equipment                 14          --              14          --             154
      Additional payment for trade names                           --          --              --          --             (46)
      Increase in compensating balances on deposit               (180)         --            (180)         --            (180)
                                                             --------        ----       ---------         ---        --------
         NET CASH FROM INVESTING ACTIVITIES                    (1,453)         --          (1,631)         --          (1,785)
                                                             --------        ----       ---------         ---        --------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Net proceeds (repayments) from revolving line of
           credit and other short term debt                        73          --          (1,688)         --          25,923
      Repayment of long-term debt                                              --            (395)                     (5,918)
      Costs associated with refinancing                            --          --            (323)                     (1,827)
                                                             --------        ----       ---------         ---        --------
         NET CASH FROM FINANCING ACTIVITIES                        73          --          (2,406)         --          18,178
                                                             --------        ----       ---------         ---        --------

The effect of exchange rate changes on cash                        19          --             106          --             106
                                                             --------        ----       ---------         ---        --------
Net (decrease)/increase in cash and cash equivalents             (247)         --            (349)         --          (4,608)
Cash, beginning of year                                         6,418          --          13,665          --          18,103
                                                             --------        ----       ---------         ---        --------
Cash, end of period                                          $  6,171        $ --       $  13,316         $--        $ 13,495
                                                             ========        ====       =========         ===        ========
</TABLE>


                                       18

<PAGE>

CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE THIRTEEN WEEKS ENDED
OCTOBER 1, 2005

(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                                FOREIGN
                                                                                                               BORROWERS
                                                                        GUARANTOR                            AND GUARANTOR
                                                             PARENT   SUBSIDIARIES  ELIMINATIONS    TOTAL     SUBSIDIARIES
                                                           ---------  ------------  ------------  ---------  -------------
<S>                                                        <C>        <C>           <C>           <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net (loss) income                                       $ 26,292     $(10,886)    $ (35,936)   $(20,530)    $  57,660
   Adjustments to reconcile net (loss) income to net cash
      from operating activities:
      Imputed interest on note payable and other non-cash
         items                                                 (359)          --            --        (359)          --
      Deferred income tax (benefit) provision                 3,322           --            --       3,322         (857)
      Stock based compensation expense                          271           --            --         271           --
         Depreciation and amortization                        1,966          683            --       2,649          294
         Bad debt provision (recovery) provision                 --           --            --          --           --
      Gain on sale of discontinued operations                21,323           --            --      21,323       (5,398)
         (Gain)loss on disposal of property and equipment        --         (745)           --        (745)          --
         Inventory valuation adjustment                          --        3,436            --       3,436         (144)
         Impairment loss on intangible assets                                  5            --           5           --
         Foreign currency gains and losses                       --         (315)           --        (315)          --
         Gain - early settlement of debt                    (21,655)          --            --     (21,655)          --
         Equity in income of unconsolidated affiliate/                        --
            consolidated subsidiaries                       (39,307)         (24)       39,331          --           --
         Minority Interest, net of tax                           --           --            --          --           --
         Changes in assets and liabilities, net of
            acquisitions:
            Accounts receivable                                 208      (10,190)                   (9,982)      (1,973)
            Inventories                                        (416)         (73)       (3,396)     (3,885)      (1,091)
            Prepaid expenses and other current assets           509       (2,535)           --      (2,026)       1,048
            Other non-current assets                             --          (17)           --         (17)      22,774
            Accounts payable                                    850        1,487            --       2,337        6,249
            Income taxes payable                                213           --            --         213         (290)
            Accrued expenses                                 16,201         (801)           --      15,400      (79,348)
                                                           --------     --------     ---------    --------     --------
               NET CASH FROM OPERATING ACTIVITIES             9,418      (19,975)           --     (10,558)      (1,076)
                                                           --------     --------     ---------    --------     --------

CASH FLOWS FROM INVESTING ACTIVITIES:
         Capital expenditures                                  (192)         (45)           --        (237)         (34)
      Increase in restricted cash                                --           --            --          --           --
      Proceeds from sale of discontinued operations              --           --            --          --           --
         Proceeds from sale of asssets and investments           --       15,222            --      15,222           --
      Acquisition of business, net of cash acquired              --           --            --          --           --
      Increase in compensating balances on deposit               --           --            --          --           --
                                                           --------     --------     ---------    --------     --------
               NET CASH FROM INVESTING ACTIVITIES              (192)      15,177            --      14,985          (34)
                                                           --------     --------     ---------    --------     --------

CASH FLOWS FROM FINANCING ACTIVITIES:
         Net proceeds (repayments) from revolving line of
            credit and other short term debt                     --        4,861            --       4,861        2,234
           Repayment of long-term debt                           --          (56)           --         (56)          --
      Costs associated with refinancing                      (9,401)          --            --      (9,401)          --
      Common stock issued                                       175           --            --         175           --
                                                           --------     --------     ---------    --------     --------
           NET CASH FROM FINANCING ACTIVITIES                (9,226)       4,805            --      (4,421)       2,234
                                                           --------     --------     ---------    --------     --------

The effect of exchange rate changes on cash                      --           --            --          --           (1)
                                                           --------     --------     ---------    --------     --------
Net increase in cash and cash equivalents                         0            7             0           7        1,123
Cash, beginning of the period, including cash of
   discontinued operations of $35,934                             0          127            --         127        2,019
                                                           --------     --------     ---------    --------     --------
Cash, end of period                                        $     --     $    134     $      --    $    134     $  3,142
                                                           ========     ========     =========    ========     ========

<CAPTION>


                                                              OTHER                     TOTAL OTHER  CONSOLIDATED  CONSOLIDATED
                                                           SUBSIDIARIES  ELIMINATIONS  SUBSIDIARIES  ELIMINATIONS     TOTALS
                                                           ------------  ------------  ------------  ------------  ------------
<S>                                                        <C>           <C>           <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net (loss) income                                         $  44,170     $(51,636)    $  50,194         $--        $ 29,664
   Adjustments to reconcile net (loss) income to net cash
      from operating activities:
      Imputed interest on note payable and other non-cash
         items                                                     22            --            22          --            (337)
      Deferred income tax (benefit) provision                    (332)       (2,608)       (3,797)         --            (475)
      Stock based compensation expense                             --            --            --          --             271
         Depreciation and amortization                          2,397            --         2,691          --           5,340
         Bad debt provision (recovery) provision                   14            --            14          --              14
      Gain on sale of discontinued operations                 (43,741)           --       (49,139)         --         (27,816)
         (Gain)loss on disposal of property and equipment          16            --            16          --            (729)
         Inventory valuation adjustment                                          --          (144)         --           3,292
         Impairment loss on intangible assets                      --            --            --          --               5
         Foreign currency gains and losses                         --            --            --          --            (315)
         Gain - early settlement of debt                                         --            --          --         (21,655)
         Equity in income of unconsolidated affiliate/                           --            --                          --
            consolidated subsidiaries                              --            --            --          --              --
         Minority Interest, net of tax                          1,381            --         1,381          --           1,381
         Changes in assets and liabilities, net of
            acquisitions:                                                        --            --                          --
            Accounts receivable                               (10,917)           --       (12,890)         --         (22,872)
            Inventories                                       (25,255)           --       (26,346)         --         (30,231)
            Prepaid expenses and other current assets         (1,424)            --         (376)          --          (2,402)
            Other non-current assets                          (75,976)        54,244        1,042                       1,025
            Accounts payable                                   27,626            --        33,875          --          36,212
            Income taxes payable                                1,731            --         1,441          --           1,654
            Accrued expenses                                   59,015            --       (20,333)         --          (4,933)
                                                             --------      --------     ---------         ---        --------
               NET CASH FROM OPERATING ACTIVITIES             (21,273)           --       (22,349)         --         (32,907)
                                                             --------      --------     ---------         ---        --------

CASH FLOWS FROM INVESTING ACTIVITIES:
         Capital expenditures                                  (1,357)           --        (1,391)         --          (1,628)
      Increase in restricted cash                             (81,664)           --       (81,664)                    (81,664)
      Proceeds from sale of discontinued operations            69,938            --        69,938                      69,938
         Proceeds from sale of asssets and investments             23            --            23          --          15,245
      Acquisition of business, net of cash acquired            (4,525)           --        (4,525)         --          (4,525)
      Increase in compensating balances on deposit             (4,424)           --        (4,424)         --          (4,424)
                                                             --------      --------     ---------         ---        --------
               NET CASH FROM INVESTING ACTIVITIES             (22,009)           --       (22,043)         --          (7,058)
                                                             --------      --------     ---------         ---        --------

CASH FLOWS FROM FINANCING ACTIVITIES:
         Net proceeds (repayments) from revolving line of
            credit and other short term debt                       30            --         2,264          --           7,125
           Repayment of long-term debt                           (140)           --          (140)         --            (196)
      Costs associated with refinancing                            --            --            --          --          (9,401)
      Common stock issued                                          --            --            --          --             175
                                                             --------      --------     ---------         ---        --------
           NET CASH FROM FINANCING ACTIVITIES                    (110)           --         2,124          --          (2,297)
                                                             --------      --------     ---------         ---        --------

The effect of exchange rate changes on cash                     1,782            --         1,781          --           1,781
                                                           --------     --------     ---------    --------     --------
Net increase in cash and cash equivalents                     (41,610)           --       (40,487)         --         (40,481)
Cash, beginning of the period, including cash of
   discontinued operations of $35,934                          48,645            --        50,664          --          50,791
                                                             --------      --------     ---------         ---        --------
Cash, end of period                                          $  7,035      $     --     $  10,177         $--        $ 10,310
                                                             ========      ========     =========         ===        ========
</TABLE>


                                       19
<PAGE>

15.  SUBSEQUENT EVENTS

     On October 18, 2006, the Company announced that William B. Rue decided to
     retire from his position as President and Chief Operating Officer and
     Director of the Company. The Company and Mr. Rue entered into a Separation
     Agreement (the "Separation Agreement"), which agreement supersedes the
     employment agreement dated January 1, 2003 between the Company and Mr. Rue.
     Pursuant to the Separation Agreement, the Company agreed to: (a) pay Mr.
     Rue $285,000, minus appropriate and customary payroll deductions, upon
     execution of this Agreement; and (b) issue to Mr. Rue 144,928 shares of
     common stock of the Company upon the earlier of six months or consummation
     of a change of control. In the event a change of control is consummated
     within six months, the Company also agreed to issue Mr. Rue an additional
     number of shares of common stock equal to $600,000 divided by the fair
     market value of the consideration per share of common stock received by
     holders of common stock in connection with such change of control. Mr. Rue
     also agreed to render consulting services to the Company for up to 6 months
     for consideration of $25,000 per month. Mr. Rue will also be entitled to
     certain health care and other benefits for six months.

     On October 23, 2006, Salton, Inc. announced that it has formed a special
     committee comprised of three independent Board members of the Company to
     review strategic alternatives to enhance stockholder value. Houlihan Lokey
     Howard & Zukin Capital, Inc. will serve as the Company's financial advisor
     to assist the Board and the Special Committee in the process, which could
     include a sale or merger of the Company.


                                       20

<PAGE>

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

As used in this quarterly report on Form 10-Q, "we," "us," "our," "Salton" and
"the Company" refer to Salton, Inc. and our subsidiaries, unless the context
otherwise requires.

This quarterly report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including without limitation the statements
under "Risk Factors," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The words "believes," "anticipates,"
"plans," "expects," "intends," "estimates" and similar expressions are intended
to identify forward-looking statements. These forward-looking statements involve
known and unknown risks, uncertainties and other factors, which may cause our
actual results, performance or achievements, or industry results, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following:

-    our ability to repay or refinance our indebtedness as it matures and
     satisfy the redemption obligations under our preferred stock;

-    our ability to continue to realize the benefits we expect from our U.S.
     restructuring plan;

-    our substantial indebtedness and our ability to comply with restrictive
     covenants in our debt instruments;

-    our ability to access the capital markets on attractive terms or at all;

-    our relationship and contractual arrangements with key customers,
     suppliers, strategic partners and licensors;

-    unfavorable outcomes from pending legal proceedings;

-    cancellation or reduction of orders;

-    the timely development, introduction and customer acceptance of our
     products;

-    dependence on foreign suppliers and supply and marketing constraints;

-    competitive products and pricing;

-    economic conditions and the retail environment;

-    international business activities;

-    the cost and availability of raw materials and purchased components for our
     products;

-    the risks related to intellectual property rights; and

-    the risks relating to regulatory matters and other risks and uncertainties
     detailed from time to time in our Securities and Exchange Commission
     Filings.


                                       21

<PAGE>

All forward looking statements included in this quarterly report on Form 10-Q
are based on information available to us on the date of this quarterly report.
We undertake no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
All subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements contained throughout this quarterly report on Form 10-Q.

INTRODUCTION

Salton consists of a single operating segment which designs, sources, markets
and distributes a diversified product mix for use in the home. Our product mix
consists of small kitchen and home appliances, electronics for the home, time
products, lighting products, picture frames and personal care and wellness
products. Salton sells its products under its portfolio of well recognized brand
names such as Salton(R), George Foreman(R), Westinghouse(TM), Toastmaster(R),
Melitta(R), Russell Hobbs(R), Farberware(R), Ingraham(R) and Stiffel(R). Salton
believes its strong market position results from its well-known brand names,
high quality and innovative products, strong relationships with its customer
base and the Company's focused outsourcing strategy.

CONSOLIDATED RESULTS OF OPERATIONS

The unaudited information included in this Form 10-Q should be read in
conjunction with the Consolidated Financial Statements contained in our 2006
Annual Report on Form 10-K. Interim results are not necessarily indicative of
results for a full year. We report discontinued operations in accordance with
the guidance from SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets." Accordingly, we have reported the sale of Amalgamated
Appliance Holdings ("AMAP") as discontinued operations for the periods
presented.

OTHER STRATEGIC OPTIONS

We continue to explore strategic options to satisfy our liquidity needs and
improve our overall balance sheet position and enhance our operating
performance. These strategic options include potential sales of assets or
businesses, the creation of new foreign debt, repurchases of outstanding
Subordinated Notes in the open market and/or through privately negotiated
transactions for cash or other securities (including Second Lien Notes, common
stock and/or Series C preferred stock) and further reductions in expenses.

QUARTER IN REVIEW

For the first quarter of fiscal 2007 (thirteen weeks ended September 30, 2006),
the Company continued to execute its U.S. Restructuring Plan, as defined in the
Company's Annual Report on Form 10-K for fiscal 2004, including actions taken to
further reduce operating expenses and improve working capital utilization.
Additional liquidity was secured through the Company's senior lenders to assist
with meeting the seasonal demands of our customers.

U.S. RESTRUCTURING PLAN

We continue to identify and implement opportunities to better align domestic
operating costs with current sales levels. Through our cost reduction programs
and consolidation of U.S. operations, we have already reduced cumulative
domestic operating expenses by approximately $100 million since inception of the
plan in fiscal 2005. Our reductions have exceeded our previously announced plans
and expectations. We continue to take actions through additional planned
reductions in fiscal 2007.

In addition to operational reductions, we have reduced domestic interest expense
through our debt restructuring activities and asset sales.


                                       22

<PAGE>

RESULTS OF OPERATIONS

The following table sets forth our results of operations as a percentage of net
sales for the thirteen weeks ended:

<TABLE>
<CAPTION>
                                                      THIRTEEN WEEKS ENDED
                                              ------------------------------------
                                              SEPTEMBER 30, 2006   OCTOBER 1, 2005
                                              ------------------   ---------------
<S>                                           <C>                  <C>
Net sales                                           100.0%              100.0%
Cost of goods sold                                   68.1%               73.0%
Distribution expenses                                 7.0%                7.1%
                                                    -----               -----
   Gross profit                                      24.9%               19.9%
Selling, general and administrative expense          24.3%               27.2%
Restructuring costs                                   0.6%                0.1%
                                                    -----               -----
   Operating (loss)                                   0.0%              -7.4%
                                                    =====               =====
</TABLE>

FIRST QUARTER 2007 COMPARED TO FIRST QUARTER 2006

NET SALES AND GROSS PROFIT

Salton's worldwide sales were $138.3 million in first quarter of fiscal 2007
versus $148.4 million in the first quarter of fiscal 2006. The decrease in sales
in the domestic market was partially due to the sale of the tabletop business in
September 2005, with revenues of $4.1 million in the first quarter of fiscal
2006, and planned discontinuation of most personal care product lines, with a
decline in revenues of $1.8 million in the first quarter of fiscal 2007 as
compared to the same period in fiscal 2006. Additionally, the Company
experienced inventory shortages, which were caused by the Company's liquidity
constraints at the beginning of fiscal 2007. These constraints were resolved in
the middle of the quarter with the Ninth Amendment to, and waiver, under the
senior secured credit facility (see Note 3, "Senior Secured Credit Facility,
Letters of Credit and Long-Term Debt"). Price increases also negatively impacted
domestic sales in the first quarter of fiscal 2007. Foreign sales increased by
$6.5 million, of which $2.5 million was a result of foreign exchange rate
fluctuations.

Gross profit for the first quarter of fiscal 2007 increased $4.9 million from
$29.5 million in 2006 to $34.4 million in 2007. As a percent of net sales, gross
profit was 19.9% in the first quarter of fiscal 2006 compared to 24.9% in the
first quarter of 2007, an increase of 5.0%. This increase is primarily a result
of a more favorable product mix including fewer closeouts and a higher
percentage of core products in 2007. Additional improvements of $0.9 million
resulted from a domestic decline in distribution expenses primarily as a result
of our U.S. cost reduction programs. In addition to improved mix, as a percent
of sales, gross margins on the core business lines showed an increase in spite
of material cost increases on plastics, copper, steel and corrugated materials.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses decreased to $33.5 million for
first quarter of fiscal 2007 compared to $40.4 million for first quarter of
fiscal 2006. U.S. operations reduced selling, general and administrative
expenses by $5.4 million, including a $2.2 million decline in promotional
expenditures and trade show expenses, as well as reduced selling, marketing,
general and administrative expenses of $3.2 million associated with other
elements of our U.S. cost reduction plan. Foreign operations reduced selling,
general and administrative expenses by $1.5 million primarily in the European
market as costs were realigned globally with current sales volumes.


                                       23

<PAGE>

RESTRUCTURING COSTS

As a result of our U.S. restructuring plan, we incurred $0.8 million in
restructuring costs during the first quarter of fiscal 2007 related to severance
costs. Restructuring costs of $0.1 million in the first quarter of 2006
consisted of warehouse rationalization.

Payments of $0.7 million were made in the first quarter of fiscal 2007,
including $0.3 million of stock-based compensation. Accrued restructuring costs
were $0.2 million as of September 30, 2006.

On August 24, 2006, the Company agreed to issue to David Sabin, the former
Chairman of the Board, common stock of the Company pursuant to his Separation
Agreement. A total of 141,510 shares will be issued upon the earlier of six
months from the date of the Agreement or consummation of a change in control of
the Company. The company has recognized severance cost at fair value of the
stock as of the date of the Agreement of $0.3 million.

NET INTEREST EXPENSE

Net interest expense was $9.3 million for the first quarter of fiscal 2007
compared to $11.0 million for the first quarter of fiscal 2006. Excluding
amortization of fees, interest expense as a percent of the average carrying
value of debt outstanding was a weighted average annual rate of 8.7% in fiscal
2007 compared to 8.9% in fiscal 2006. The average amount of all debt outstanding
was $341.6 million for the first quarter of 2007 compared to $434.9 million for
the first quarter of 2006.

INCOME TAXES

The effective tax rate for federal, state, and foreign income taxes was (8.7)%
for the first quarter of fiscal 2007 versus a 126.2% tax benefit for the first
quarter of fiscal 2006. The Company's provision for income taxes is based upon
estimated annual tax rates for the full fiscal year applied to federal, state,
and foreign income. The primary cause for the substantial change in the
effective tax rate is the valuation allowances provided against the domestic and
certain foreign deferred tax assets in the first quarter of fiscal 2007. Tax
benefits typically associated with losses were offset by valuation allowances.
There were no valuation allowances provided in the comparable quarter in fiscal
2006.

DISCONTINUED OPERATIONS

In the first quarter of fiscal 2007, no operations of the Company were reported
as discontinued operations. On September 29, 2005, the Company completed the
sale of its 52.6% ownership interest in Amalgamated Appliances Holdings Limited
("AMAP"), a leading distributor and marketer of small appliances and other
products in South Africa, to a group of investors led by Interactive Capital
(Proprietary) Limited. In the first quarter of fiscal 2006, the Company received
proceeds, net of expenses, of approximately $81.0 million in connection with the
transaction. The Company recorded a preliminary gain of $27.8 million, net of
tax. We licensed our George Foreman(R), Russell Hobbs(R) and Carmen(R) branded
products to AMAP following the transaction.

The following is a summary of financial results included within discontinued
operations:

<TABLE>
<CAPTION>
                                                           Thirteen Weeks
                                                               Ended
                                                          October 1, 2005
                                                          ---------------
<S>                                                       <C>
Net sales from discontinued operations                        $68,798
                                                              -------
Income from discontinued operations before income taxes       $ 5,477
Income taxes                                                    2,338
Minority Interest                                               1,404
                                                              -------
Income from discontinued operations, net of tax               $ 1,735
                                                              =======
</TABLE>


                                       24

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW FROM CONTINUING OPERATIONS

The following discussion excludes the impact on cash flows from discontinued
operations.

Our primary sources of liquidity are our cash flow from continuing operations
and borrowings under our senior secured credit facilities. In the first quarter
of fiscal 2007, Salton's continuing operations used $21.1 million in cash flow,
compared with $11.1 million, excluding $21.8 million from discontinued
operations, in the first quarter of fiscal 2006. The higher level of usage is
the result of the decrease in trade payable terms in the first quarter of fiscal
2007 as compared to fiscal 2006.

Our results of operations for the periods discussed have not been significantly
affected by inflation or foreign currency fluctuation. We generally negotiate
our purchase orders with our foreign manufacturers in United States dollars.
Thus, our cost under any purchase order is not subject to change after the time
the order is placed due to exchange rate fluctuations. However, the weakening of
the United States dollar against local currencies could result in certain
manufacturers increasing the United States dollar prices for future product
purchases. Given the seasonal nature of our business, borrowings and
availability tend to be highest in mid-Fall and early winter.

INVESTING ACTIVITIES

In the first quarter of fiscal 2006, we had $69.9 million in proceeds from the
sale of discontinued operations, net of cash acquired, as a result of the AMAP
transaction and $15.2 million in proceeds from the sale of assets, primarily
from the sale of our tabletop assets and a warehouse distribution facility in
the U.S.

FINANCING ACTIVITIES

During the first quarter of fiscal 2007, we had proceeds of $25.9 million on our
worldwide credit facilities. These funds were used to purchase inventory for the
upcoming holiday season. In addition, we incurred $1.8 million of financing
costs associated with our senior credit facilities.

CREDIT FACILITIES, OTHER DEBT AND PREFERRED STOCK

The Liquidity and Capital Resources section of Management's Discussion and
Analysis of Financial Condition and Results of Operations contained in our 2006
Annual Report on Form 10-K contains the detailed terms for our credit
facilities, other debt and preferred stock, which include the following:

     -    Senior Secured Credit Facility

     -    Second Lien Credit Agreement

     -    Intercreditor Agreement

     -    Senior Subordinated Notes

     -    Salton Europe Facility Agreement

     -    Other Credit Facilities

     -    Series C Preferred Stock

     -    Convertible Preferred Stock

An update of the above items is discussed below.

Senior Secured Credit Facility -As of November 3, 2006, we had borrowed $143.2
million under the senior secured credit facility and had approximately $2.0
million available under this facility for future borrowings.


                                       25
<PAGE>

Borrowings under our senior secured credit facility accrue interest, at our
option, at either: LIBOR, plus 6.5% (effective August 15, 2006) equaling 12.0%
at November 3, 2006; or the Base Rate (prime rate), plus 4.5% (effective August
15, 2006) equaling 12.8% at November 3, 2006. The Company has the option to
convert any base rate loan to LIBOR rate loan.

Second Lien Credit Agreement- The interest rate with respect to the Second Lien
Notes is the six month LIBOR plus 7%, currently 12.58%, payable in cash on
January 15th and July 15th of each year.

Salton Europe Facility Agreement - On December 23, 2005, Salton Holdings
Limited, Salton Europe Limited and certain affiliates entered into a Facility
Agreement with Burdale Financial Limited, as agent and security trustee, and a
financial institution group as lender. The provisions of the Facility Agreement
allow certain of the Company's European subsidiaries to borrow funds as needed
in an aggregate amount not to exceed L61.0 million (approximately $114.2
million). The Facility Agreement matures on December 22, 2008 and bears a
variable interest rate of LIBOR plus 7% on term loans and LIBOR plus 2.75% on
revolver loans, payable on the last business day of each month. At September 30,
2006, these rates for borrowings denominated in the Great Britain Pound were
approximately 14.0% and 9.7% for term and revolver loans, respectively. The rate
for revolver loan borrowings denominated in the U.S. Dollar was 10.1%.

The Facility Agreement consists of a Revolving Credit Facility with an aggregate
maximum availability of L50.0 million (approximately $93.6 million) and two Term
Loan Facilities of L5.0 million and L6.0 million (approximately $9.4 million and
$11.2 million, respectively). The Company uses borrowings under these facilities
for working capital purposes. As of September 30, 2006, under the Revolving
Credit Facility, the Company had outstanding borrowings denominated in the Great
Britain Pound of L5.8 million (approximately $10.8 million) and borrowings
denominated in the U.S. Dollar of $7.4 million.

DISCUSSION OF CRITICAL ACCOUNTING POLICIES

Our financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America, which require us
to make estimates and judgments that significantly affect the reported amounts
of assets, liabilities, revenues and expenses and related disclosure of
contingent assets and liabilities. We regularly evaluate these estimates,
including those related to our allowance for doubtful accounts, reserve for
inventory valuation, reserve for returns and allowances, valuation of intangible
assets having indefinite lives, cooperative advertising accruals, pension
benefits and depreciation and amortization. We base these estimates on
historical experience and on assumptions that are believed by management to be
reasonable under the circumstances. Actual results may differ from these
estimates, which may impact the carrying value of assets and liabilities. There
have been no material changes in policies or estimates since July 1, 2006.


                                       26

<PAGE>

     FORWARD LOOKING

     We anticipate capital expenditures on an ongoing basis to be at historical
     levels in relation to net sales.

     We believe that (a) future cash flow from operations based on our current
     level of operations, (b) available borrowings under our senior secured
     credit facility, second lien credit agreement and other sources of debt
     funding and (c) funds from the sale or monetization of certain assets will
     be adequate to meet our anticipated requirements for current capital
     expenditures, working capital requirements, interest and income tax
     payments and scheduled debt payments for the next twelve months. Our
     ability to satisfy our anticipated liquidity requirements, however, is
     subject to several assumptions, some of which are beyond our control,
     including: (a) general economic, financial, competitive and other factors;
     and (b) our continued compliance with covenants in our debt instruments. If
     we are unable to satisfy our liquidity needs, we could be required to adopt
     one or more alternatives, such as reducing or delaying capital
     expenditures, borrowing additional funds, restructuring indebtedness,
     selling other assets or operations and/or reducing expenditures for new
     product development, cutting other costs, and some or such actions would
     require the consent of our senior lenders, holders of Second Lien Notes
     and/or the holders of our Subordinated Notes. We cannot assure you that any
     of such actions could be effected, or if so, on terms favorable to us, that
     such actions would enable us to continue to satisfy our liquidity needs
     and/or that such actions would be permitted under the terms of our senior
     secured credit facility, the second lien credit agreement or the indentures
     governing our Subordinated Notes.

     In addition, we have required amendments and waivers to our senior debt
     during recent periods due to our failure to remain in compliance with
     financial covenants in our senior debt. We cannot assure you that we will
     be able to comply with the financial covenants and other covenants in our
     debt instruments or that, if we fail to comply, our debt holders would
     waive our compliance or forbear from exercising their remedies.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

     The market risk of the Company's financial instruments as of September 30,
     2006 has not significantly changed since July 1, 2006. The market risk
     profile of the Company on July 1, 2006 is disclosed in the Company's 2006
     Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

     (a) Evaluation of disclosure controls and procedures. Salton carried out an
     evaluation, under the supervision and with the participation of Salton's
     management, including Salton's principal executive officer and principal
     financial officer, of the effectiveness of the design and operation of
     Salton's disclosure controls and procedures pursuant to Rule 13a-15 under
     the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of
     September 30, 2006. Based upon that evaluation, the principal executive
     officer and principal financial officer concluded that Salton's disclosure
     controls and procedures were effective to ensure that information required
     to be disclosed by the Company (including its consolidated subsidiaries) in
     the reports the Company files or submits under the Exchange Act, is
     recorded, processed, summarized and reported within the periods specified
     in the SEC's rules and forms.


                                       27

<PAGE>

     (b) Changes in internal controls. As reported in the Company's Fiscal 2006
     Annual Report on Form 10-K, management determined that, as of July 1, 2006,
     actions taken to remediate a previously disclosed internal controls
     deficiency related to the Company's preparation and review of its income
     tax provision and related income tax accounting procedures had not been
     fully implemented and tested. This deficiency, which constituted a material
     weakness, required further action, which continued throughout the first
     fiscal quarter of 2007. The remediation process, included:

          1.   Implementing additional policies and improving interim reporting
               requirements for the Company's foreign subsidiaries to ensure the
               accuracy of accounting and tax calculations and supporting
               detailed schedules;

          2.   Streamlining the processes to ensure adequate time for review and
               controls testing;

          3.   Continuing the utilization of external resources to supplement
               the Company's tax personnel; and

          4.   Additional training of finance and tax personnel as required;

     These remediation plans will continue to be implemented and monitored
     during the second and third quarters of this fiscal year. The material
     weakness will not be considered remediated until the remedial procedures
     operate for a period of time, are subsequently tested and management has
     concluded that the procedures are operating effectively.

     There were no other changes in the Company's internal controls during the
     quarter ended September 30, 2006 that could materially affect or is
     reasonably likely to affect the Company's internal controls over financial
     reporting.

                           PART II: OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

     PRODUCT LIABILITY

     On or about October 27, 2004, a lawsuit entitled DiNatale vs. Salton was
     filed in the New York State Supreme Court against the Company. The
     plaintiffs, who seek unspecified damages, allege that they were injured by
     water contaminated with lead taken from a tea kettle sold by the Company
     under its Russell Hobbs brand. The plaintiffs' attorney had been seeking to
     convert the lawsuit into a class action suit; no class action suit has been
     filed to date. The manufacturer of the product and its insurer are
     defending this lawsuit. The Company's attorneys and its insurers are
     cooperating in the defense of the lawsuit.

     JAY KORDICH V. SALTON, INC.

     On October 19, 2005, a lawsuit named Jay Kordich v. Salton, Inc. was filed
     in the United States District Court for the Southern District of
     California. The plaintiff in this action is seeking a judicial
     determination that a covenant not to compete in an agreement between him
     and Salton is invalid and unenforceable against him plus attorneys' fees
     and costs. Salton believes that the lawsuit is without merit.

     The outcome of the foregoing legal matters cannot be predicted with
     certainty, however Salton does not believe that these actions will have a
     material adverse affect on its business, financial condition or results of
     operations. Therefore, no amounts have been accrued for such claims.


                                       28

<PAGE>

     ENVIRONMENTAL

     The Company has accrued approximately $0.2 million for the anticipated
     costs of environmental remediation at four of our current and previously
     owned sites. Although such costs could exceed that amount, Salton believes
     any such excess will not have a material adverse effect on the financial
     condition or annual results of operations of the Company.

     OTHER

     The Company is a party to various other actions and proceedings incident to
     its normal business operations. The Company believes that the outcome of
     any such litigation will not have a material adverse effect on our
     business, financial condition or results of operations. The Company also
     has product liability and general liability insurance policies in amounts
     believed to be reasonable given its current level of business. Although
     historically the Company has not had to pay any material product liability
     claims, it is conceivable that the Company could incur claims for which we
     are not insured.

ITEM. 6 EXHIBITS.

     The exhibits listed on the accompanying Index to Exhibits are filed as part
     of this Form 10-Q.


                                       29

<PAGE>

                                    SIGNATURE

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

Date: November 14, 2006                 SALTON, INC.


                                        /s/ William M. Lutz
                                        ----------------------------------------
                                        William M. Lutz
                                        Chief Financial Officer


                                       30

<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NUMBER                       DESCRIPTION OF DOCUMENT
--------------                       -----------------------
<S>              <C>
     12(A)       Computation of Ratio of Earnings to Fixed Charges

     31.1        Certification By The Chief Executive Officer Pursuant To
                 Section 302 Of The Sarbanes-Oxley Act Of 2002

     31.2        Certification By The Chief Financial Officer Pursuant To
                 Section 302 Of The Sarbanes-Oxley Act Of 2002

     32.1        Certification of The Chief Executive Officer Pursuant to 18
                 U.S.C. 1350, as Adopted Pursuant to Section 906 of the
                 Sarbanes-Oxley Act of 2002

     32.2        Certification of The Chief Financial Officer Pursuant to 18
                 U.S.C. 1350, as Adopted Pursuant to Section 906 of the
                 Sarbanes-Oxley Act of 2002
</TABLE>


                                       31