<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 January 1, 2005 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)

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

            1955 Field Court                                       60045
             Lake Forest, IL                                    (Zip Code)
(Address of principal executive offices)

                                 (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).

                           Yes  X           No
                               ---             ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of February 4, 2005,
11,376,297 shares of its $0.01 par value Common Stock.


<PAGE>



<TABLE>
<CAPTION>

                                                                                            PAGE NO.
                                                                                            --------
<S>                                                                                         <C>

PART I                 FINANCIAL INFORMATION

           Item 1:     Consolidated Financial Statements (Unaudited)

                       Consolidated Balance Sheets - January 1, 2005 and December 27, 2003   3

                       Consolidated Statements of Income - Thirteen weeks ended
                       January 1, 2005 and December 27, 2003 and Twenty-six
                       weeks ended January 1, 2005 and December 27, 2003

                       Consolidated Statements of Cash Flows - Twenty-six weeks ended         5
                       January 1, 2005 and December 27, 2003

                       Notes to Consolidated Financial Statements                            6

           Item 2:     Management's Discussion and Analysis of Financial Condition and       20
                       Results of Operations

           Item 3:     Quantitative and Qualitative Disclosures About Market Risk            28

                       Controls and Procedures
           Item 4:                                                                           29


PART II                OTHER INFORMATION

           Item 1:     Legal Proceedings                                                     29

           Item 4:     Submission of Matters to a Vote of Security Holders                   32

                       Signature                                                             33

           Item 6:     Exhibits                                                              34
</TABLE>



                                       2
<PAGE>
                                  SALTON, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT SHARE DATA)                                JANUARY 1, 2005   JULY 3, 2004
                                                                ---------------   ------------
<S>                                                             <C>               <C>
ASSETS
CURRENT ASSETS:
  Cash                                                             $  37,370       $  46,847
  Compensating balances on deposit                                    34,465          34,000
  Accounts receivable, less allowances                               279,734         180,391
  Inventories                                                        277,861         253,627
  Prepaid expenses and other current assets                           19,001          21,267
  Deferred income taxes                                               24,104          25,742
                                                                   ---------       ---------
    Total Current Assets                                             672,535         561,874
Property, Plant and Equipment, net                                    78,985          81,152
Tradenames                                                           186,484         184,421
Non-Current Deferred Tax Asset                                        17,668          11,589
Other Assets                                                          14,439          15,516
                                                                   ---------       ---------
TOTAL ASSETS                                                       $ 970,111       $ 854,552
                                                                   =========       =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Revolving line of credit and other current debt                  $ 127,570       $  48,667
  Senior subordinated notes due 2005 - current                       125,000              --
  Accounts payable                                                   133,258         137,671
  Accrued expenses                                                    85,004          60,627
  Income taxes payable                                                14,134           8,805
                                                                   ---------       ---------
    Total Current Liabilities                                        484,966         255,770
Senior Subordinated Notes Due 2005                                        --         125,000
Senior Subordinated Notes due 2008, including an adjustment of
    $8,332 and $9,581 to the carrying value related
    to interest rate swap agreements, respectively                   157,515         158,642
Term Loan and Other Notes Payable                                    101,943         100,761
Other Long Term Liabilities                                           17,683          17,288
                                                                   ---------       ---------
                                                                     762,107         657,461
Minority Interest                                                     26,347          23,515
STOCKHOLDERS' EQUITY:
  Preferred Stock, $0.01 par value; authorized, 2,000,000
    shares; 40,000 shares issued                                          --              --
  Common Stock, $0.01 par value; authorized, 40,000,000
    shares; issued and outstanding: 2005-11,376,297 shares;
    2004-11,370,282 shares                                               148             148
   Treasury Stock - at cost                                          (65,793)        (65,793)
   Additional Paid-In Capital                                         96,107          96,147
   Accumulated Other Comprehensive Income                             21,219          12,668
   Retained Earnings                                                 129,976         130,406
                                                                   ---------       ---------
    Total Stockholders' Equity                                       181,657         173,576
                                                                   ---------       ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $ 970,111       $ 854,552
                                                                   =========       =========
</TABLE>


                See Notes to Consolidated Financial Statements.


                                       3
<PAGE>

                                  SALTON, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)


<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT SHARE DATA)                          13 WEEKS ENDED                          26 WEEKS ENDED
                                               ----------------------------------       ------------------------------------
                                               January 1, 2005  December 27, 2003       January 1, 2005    December 27, 2003
                                               --------------   -----------------       ---------------    -----------------
<S>                                            <C>              <C>                     <C>                <C>
NET SALES                                        $    376,976     $    397,103          $    651,111         $    635,642
Cost of Goods Sold                                    256,090          252,674               450,940              410,630
Distribution Expenses                                  21,330           21,051                37,098               37,451
                                                 ------------     ------------          ------------         ------------
GROSS PROFIT                                           99,556          123,378               163,073              187,561
Selling, General and Administrative Expenses           77,462           90,514               130,549              142,306
Restructuring Costs                                       118               --                   790                   --
                                                 ------------     ------------          ------------         ------------
OPERATING INCOME                                       21,976           32,864                31,734               45,255
Interest Expense, net                                  13,807           10,333                26,845               20,011
                                                 ------------     ------------          ------------         ------------
INCOME BEFORE INCOME TAXES                              8,169           22,531                 4,889               25,244
Income Tax Expense                                      2,835            7,411                 1,686                8,293
Minority Interest, net of tax                           2,577            2,774                 3,633                3,864
                                                 ------------     ------------          ------------         ------------
NET INCOME (LOSS)                                $      2,757     $     12,346          $       (430)        $     13,087
                                                 ============     ============          ============         ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING         11,372,138       11,189,836            11,371,542           11,188,496

WEIGHTED AVERAGE COMMON AND COMMON
   EQUIVALENT SHARES OUTSTANDING                   15,138,664       15,307,519            11,371,542           15,206,259

Net Income (Loss) per Common Share: Basic        $       0.24     $       1.10          $      (0.04)        $       1.17

Net Income (Loss) per Common Share: Diluted      $       0.18     $       0.81          $      (0.04)        $       0.86
</TABLE>



                See Notes to Consolidated Financial Statements.



                                       4
<PAGE>



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


<TABLE>
<CAPTION>
(IN THOUSANDS)                                                                                 26 WEEKS ENDED
                                                                                       ---------------------------
                                                                                        JANUARY 1,     DECEMBER 27,
                                                                                           2005           2003
                                                                                       -----------     -----------
<S>                                                                                    <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (Loss) Income                                                                     $    (430)     $  13,087
  Adjustments to Reconcile Net (Loss) Income to Net Cash from Operating Activities:
    Imputed interest on notes payable and other non-cash items                               (910)          (908)
    Deferred income tax provision                                                          (5,878)           134
    Depreciation and amortization                                                          12,125         10,877
    Bad debt (recovery) provision                                                          (1,468)         1,063
    Loss on disposal of equipment                                                              38             63
    Inventory valuation adjustment                                                           (899)         1,262
    Foreign currency gains and losses                                                        (925)           344
    Minority interest, net of tax                                                           3,633          3,864
    Changes in assets and liabilities:
       Accounts receivable                                                                (90,087)      (139,222)
       Inventories                                                                        (15,386)       (20,173)
       Prepaid expenses and other current assets                                            2,164         (4,333)
       Other non-current assets                                                              (715)          (372)
       Accounts payable                                                                    (9,769)        55,540
       Income taxes payable                                                                 4,579         16,440
       Accrued expenses                                                                    22,268         21,900
                                                                                        ---------      ---------
          NET CASH FROM OPERATING ACTIVITIES                                              (81,660)       (40,434)
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                                     (5,962)        (9,058)
  Proceeds from sale of property and equipment                                                136             --
  Additional payment for tradenames                                                          (251)       (21,666)
                                                                                        ---------      ---------
          NET CASH FROM INVESTING ACTIVITIES                                               (6,077)       (30,724)
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from revolving line of credit and other debt                                79,080         70,976
  Repayment of long term debt                                                                (486)          (429)
  Distributions to minority shareholders                                                   (2,296)            --
  Costs associated with refinancing                                                          (217)          (575)
  Common stock issued                                                                          27             42
  Increase in compensating balances on deposit                                               (465)        (5,600)
                                                                                        ---------      ---------
          NET CASH FROM FINANCING ACTIVITIES                                               75,643         64,414
                                                                                        ---------      ---------
Effect of Exchange Rate Changes on Cash                                                     2,617            338
                                                                                        ---------      ---------
Net Change in Cash                                                                         (9,477)        (6,406)
Cash, Beginning of Period                                                                  46,847         35,702
                                                                                        ---------      ---------
Cash, End of Period                                                                     $  37,370      $  29,296
                                                                                        =========      =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid (Received) During the Period for:
  Interest                                                                              $  23,190      $  19,018
  Income taxes, net of (refunds)                                                        $   3,964      $  (8,376)
</TABLE>



                See Notes to Consolidated Financial Statements.


                                       5
<PAGE>
                                  SALTON, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.   CONSOLIDATED FINANCIAL STATEMENTS

     In the opinion of management, the accompanying consolidated balance sheets
     and related interim consolidated statements of income 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. Our 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. 2004 Annual Report on Form
     10-K. Certain reclassifications have been made for consistent presentation.

2.   NEW ACCOUNTING PRONOUNCEMENTS

     In December 2004, the Financial Accounting Standards Board (FASB) issued
     Statement No. 123(R), "Share Based Payment", which replaces Statement No.
     123, "Accounting for Stock-Based Compensation," and APB No. 25, "Accounting
     for Stock Issued to Employees." This statement requires compensation
     expense to be measured based on fair value of the stock options, and to be
     recognized as an expense on the financial statements. This statement is
     effective for fiscal periods beginning after June 15, 2005. The Company
     will be adopting this statement for the first quarter of fiscal 2006,
     beginning July 3, 2005, and is currently evaluating the impact on its
     financial statements.

     On October 22, 2004, the American Jobs Creation Act ("the AJCA") was signed
     into law. The AJCA provides for a deduction of 85% of certain foreign
     earnings that are repatriated, as defined in the AJCA. The Company has
     completed its evaluation of the repatriation provision of the Act and does
     not intend to apply this provision to qualifying earnings repatriations.
     The Company currently has options to employ lower tax alternatives for
     potential future foreign earnings repatriations, including accumulated
     foreign earnings that were previously taxed in the U.S., as well as the use
     of the Company's U.S. net operating loss carryforward.

3.   FINANCING ARRANGEMENTS

     On September 28, 2004 Salton Europe, Limited ("Salton Europe"), the
     Company's wholly owned subsidiary, amended its facility (the "Facility
     Letter") agreement with Hong Kong Shanghai Bank. The amended Facility
     Letter includes an overdraft facility of up to (pound)8 million ($15.3
     million) and a money market borrowing facility of up to (pound)7 million
     ($13.4 million). In addition, Salton Europe has an invoice finance facility
     of between (pound)15 and (pound)40 million ($28.7 million and $76.6
     million) depending on seasonality and accounts receivable levels. As of
     January 1, 2005, there was $41.4 million outstanding under the facility,
     which is included in other current debt.

     The Company has $125.0 million of 10 3/4% senior subordinated notes
     outstanding with a maturity date of December 15, 2005. As of January 1,
     2005, the notes have been reclassified to current debt.



                                       6
<PAGE>



4.   STOCK-BASED COMPENSATION

     At January 1, 2005, the Company had various stock-based employee
     compensation plans, which are described more fully in Note 10 of the
     Company's 2004 Annual Report on Form 10-K. The Company accounts for those
     plans in accordance with Accounting Principles Board Opinion No. 25,
     "Accounting for Stock Issued to Employees" and related Interpretations. No
     stock-based employee compensation cost is reflected in net income, as no
     options granted under those plans had an exercise price less than the
     market value of the underlying common stock on the date of grant. The
     following table illustrates the effect on net income and earnings per share
     if the Company had applied the fair value recognition provisions of
     Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
     for Stock-Based Compensation."


<TABLE>
<CAPTION>
                                                                              13 WEEKS ENDED                26 WEEKS ENDED
                                                                        --------------------------   -------------------------
                                                                        January 1,    December 27,   January 1,    December 27,
(In thousands except earnings per share)                                  2005            2003          2005           2003
                                                                        ---------     -----------    ---------     -----------
<S>                                                                     <C>            <C>            <C>          <C>
Net income (loss) - as reported                                          $ 2,757        $ 12,346       $ (430)      $ 13,087
Less:  Total stock-based employee compensation expense determined
  under fair value based method for all awards, net of related taxes         287             427          572            854
                                                                         -------        --------      -------       --------
Net income (loss) - pro forma                                            $ 2,470        $ 11,919      $(1,002)      $ 12,233
                                                                         =======        ========      =======       ========

Earnings (Loss) per share - basic
   As reported                                                            $ 0.24          $ 1.10      $ (0.04)        $ 1.17
   Pro forma                                                                0.22            1.07        (0.09)          1.09
Earnings (Loss) per share - diluted
   As reported                                                            $ 0.18          $ 0.81      $ (0.04)        $ 0.86
   Pro forma                                                                0.16            0.78        (0.09)          0.80
</TABLE>

5.   NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE

     Basic net income per common share is computed based upon the weighted
     average number of common shares outstanding. Diluted net income per common
     share is computed based upon the weighted average number of common shares
     outstanding, adjusted for dilutive common stock equivalents applying the
     treasury stock method for options and warrants and the if-converted method
     for convertible securities.

     Options and warrants to purchase 2,524,372 shares of common stock at a
     price range of $5.83 to $37.00 per share and 1,155,070 shares of common
     stock at a price range of $13.92 to $37.00 per share were outstanding at
     January 1, 2005 and December 27, 2003, respectively, but were not included
     in the computation of diluted shares because the exercise prices were
     greater than the average market price of the common shares. Options to
     purchase 270,000 common shares at a price of $29.25 per share were not
     included in the computation of diluted shares for the twenty-six weeks
     ended December 27, 2003 because the options were contingent upon the
     Company's share price reaching specified targets for a specified period of
     time.

6.   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 South Africa Rand to the U.S. Dollar.




                                       7
<PAGE>

     All foreign exchange contracts have been recorded in the consolidated
     balance sheets within accrued expenses at a fair value of $5.7 million and
     $8.7 million at January 1, 2005 and July 3, 2004, respectively. The change
     in the fair value of contracts in the second quarter was $4.2 million.
     There was $(2.3) million and $(6.0) million at January 1, 2005 and July 3,
     2004, respectively, recorded in accumulated other comprehensive income, net
     of tax, related to these contracts. The Company anticipates that all gains
     and losses deferred in accumulated other comprehensive income related to
     foreign exchange contracts will be reclassified into earnings within the
     next twelve months as the related inventories are sold. At January 1, 2005,
     the Company had foreign exchange forward contracts for the purchase of 70.7
     million U.S. dollars. Contracts for the purchase of 25.9 million U.S.
     dollars were entered into during the second quarter of fiscal 2005.

7.   COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME

     For the thirteen weeks ended January 1, 2005 and December 27, 2003,
     components of other comprehensive income include foreign currency
     translation adjustments of $9.4 million and $8.3 million, respectively and
     derivative liability adjustments of $(1.9) million and $(5.2) million,
     respectively. For the twenty-six weeks ended January 1, 2005 and December
     27, 2003, components of other comprehensive income include foreign currency
     translation adjustments of $4.9 million and $10.9 million, respectively and
     derivative liability adjustments of $3.7 million and $(5.2) million,
     respectively.


<TABLE>
<CAPTION>
                                                                  13 Weeks Ended                      26 Weeks Ended
                                                            -----------------------------      ---------------------------
(In thousands)                                              January 1,       December 27,       January 1,     December 27,
                                                               2005              2003              2005            2003
                                                            ----------       ------------      ----------      -----------
<S>                                                         <C>              <C>               <C>             <C>
Net Income (Loss)                                              $ 2,757           $ 12,346        $ (430)        $ 13,087
Other Comprehensive Income, net of tax of
  $(594) and $1,564, $1,157 and $1,568, respectively             7,492              3,104         8,551            5,732
                                                              --------           --------       -------         --------
Comprehensive Income                                          $ 10,249           $ 15,450       $ 8,121         $ 18,819
                                                              ========           ========       =======         ========
</TABLE>



Accumulated other comprehensive income is comprised of the following:


<TABLE>
<CAPTION>
                                                                                                 As Of
                                                                                     ------------------------------
(In thousands)                                                                       January 1, 2005   July 3, 2004
                                                                                     ---------------   ------------
<S>                                                                                  <C>               <C>
Minimum Pension Liability, net of tax of $5,041 and $4,888, respectively                $ (10,530)     $ (10,172)
Unrealized Loss on Derivative, net of tax of $1,014 and $2,663, respectively               (2,297)        (6,030)
Foreign Currency Translation                                                               34,046         28,870
                                                                                         --------       --------
                                                                                         $ 21,219       $ 12,668
                                                                                         ========       ========
</TABLE>


8.   PENSION BENEFIT PLANS

     The components of net periodic pension cost are as follows:


<TABLE>
<CAPTION>
(In thousands)                                           Domestic            Salton Europe             Total
13 Weeks Ended:                                    1/1/2005  12/27/2003   1/1/2005  12/27/2003  1/1/2005  12/27/2003
                                                   --------  ----------   --------  ----------  --------  ----------
<S>                                                <C>        <C>        <C>        <C>        <C>        <C>
   Service cost-benefits earned during the year      $  42      $  42      $  79      $  73      $ 121      $ 115
   Interest cost on projected benefit obligation       176        179        559        466        735        645
   Actuarial return on plan assets                    (156)      (166)      (433)      (346)      (589)      (512)
   Net amortization and deferral                        65         99        188        177        253        276
                                                     -----      -----      -----      -----      -----      -----
             Net pension cost                        $ 127      $ 154      $ 393      $ 370      $ 520      $ 524
                                                     =====      =====      =====      =====      =====      =====
</TABLE>

                                       8
<PAGE>
<TABLE>
<CAPTION>
(In thousands)                                           Domestic               Salton Europe                Total
26 Weeks Ended:                                   1/1/2005   12/27/2003     1/1/2005   12/27/2003     1/1/2005   12/27/2003
                                                  --------   ----------     --------   ----------     ---------------------
<S>                                                <C>        <C>           <C>          <C>          <C>         <C>
   Service cost-benefits earned during the year      $  84      $  84        $  156         $ 147      $   240      $   231
   Interest cost on projected benefit obligation       353        357         1,100           932        1,453        1,289
   Actuarial return on plan assets                    (311)      (331)         (852)         (693)      (1,163)      (1,024)
   Net amortization and deferral                       129        197           370           353          499          550
                                                     -----      -----        ------         -----      -------      -------
             Net pension cost                        $ 255      $ 307        $  774         $ 739      $ 1,029      $ 1,046
                                                     =====      =====        ======         =====      =======      =======

</TABLE>

     The Company previously disclosed in its financial statements for the year
     ended July 3, 2004, that it expected to contribute $0.7 million to its
     domestic pension plans and $0.3 million to the Salton Europe pension plan
     in fiscal 2005. As of January 1, 2005, $0.5 million and $0.2 million of
     contributions have been made to the domestic and Europe plans,
     respectively.

9.   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, tabletop products, time products, lighting products, picture
     frames 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.

     Major Customers - For the thirteen weeks ended January 1, 2005, one
     customer accounted for 13.4% of total net sales. During the same period of
     fiscal 2004, one customer accounted for 11.5% of total net sales. For the
     first half of fiscal 2005, two customers accounted for 13.0% and 10.1% of
     total net sales, respectively. During the first half of fiscal 2004, no one
     customer accounted for more than 10.0% of net sales.

10.  LEGAL PROCEEDINGS

     SECURITIES CLASS ACTION LAWSUITS

     In May 2004, two stockholder lawsuits, named Mariss Partners, LLP v.
     Salton, Inc., Leonhard Dreimann and David M. Mulder, and Warren Beeler v.
     Salton, Inc., Leonhard Dreimann and David Mulder, were filed in the United
     States District Court for the Northern District of Illinois against the
     Company and certain Salton executives. The complaints allege that the
     defendants violated the federal securities laws, specifically Sections
     10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 of
     the Securities and Exchange Commission, by making certain alleged false and
     misleading statements. The plaintiffs seek unspecified damages on behalf of
     a purported class of purchasers of our securities during the period from
     November 11, 2002 through May 11, 2004. The Company believes that these
     lawsuits are without merit and that it has compelling defenses to the
     allegations contained in the complaints. Salton intends to vigorously
     defend the Company. The outcome of the class action lawsuits cannot be
     predicted with certainty, however, Salton does not believe that this matter
     will have a material adverse affect on its business, financial condition or
     results of operations. Therefore, no amounts have been accrued for such
     claims. The plaintiffs have voluntarily dismissed the Mariss Partners
     lawsuit.


                                       9
<PAGE>
     PHILIPS

     In June 2003, the Company received a letter from Philips Domestic
     Appliances and Personal Care B.V. (Philips) accusing Salton of interfering
     in a contractual relationship between Philips and a manufacturing source
     for Salton, Electrical and Electronics (E&E), misappropriating trade
     secrets and infringing other unspecified intellectual property rights in
     connection with its development and marketing of the One:One single serve
     coffee maker. On August 14, 2003, Salton filed a complaint in the United
     States District Court for the Northern District of Illinois seeking a
     declaratory judgment that the Company had not infringed the alleged trade
     secret rights of Philips and had not tortuously interfered with the
     contractual relationship between Philips and E&E.

     Philips response has been to file a series of lawsuits against Salton. On
     October 23, 2003, Philips filed a counterclaim against Salton in the
     Northern District of Illinois, Declaratory Judgment case, reiterating the
     allegations of Philips' June letter and adding a claim for copyright
     infringement. The counterclaim sought to enjoin the distribution of the
     One:One in the United States and money damages. On January 5, 2004, the
     Court dismissed the action for failure to join E&E and suggested that the
     matter should be litigated in the courts of Hong Kong. Philips has appealed
     the Court's decision to the United States Court of Appeals for the Seventh
     Circuit. A decision on this appeal is not expected for a number of months.
     In view of the District Court's ruling, the Company sought and obtained the
     consent of E&E to join in the action previously filed by Philips in Hong
     Kong in May 2003, against E&E, alone. That Hong Kong suit alleges that E&E
     misappropriated trade secrets, infringed intellectual property and breached
     its contract with Philips in the process of developing and manufacturing
     the One:One coffee maker for Salton.

     On January 6, 2004, Philips filed a new action in the United States
     District Court for the Northern District of Illinois, against Salton
     alleging violations of U.S. Copyright Law seeking to enjoin the Company
     from selling the One:One coffee maker and any monetary damages that the
     Court deems proper. Contemporaneously, Philips sought a preliminary
     injunction. On January 30, 2004, the Court dismissed Philips' new action on
     the grounds that it was barred by the Court's dismissal decision in the
     prior action. Philips appealed this dismissal and the appeal was
     consolidated with the appeal of the earlier case in the United States Court
     of Appeals for the Seventh Circuit.

     On November 24, 2003, Philips and Sara Lee NV also filed a patent
     infringement suit against Salton asserting that the One:One infringed a
     U.S. patent. Like the other actions, this case seeks damages and injunctive
     relief. The case is pending as in the United States District Court for the
     Northern District of Illinois.

     Philips has also filed an action for copyright infringement in the United
     Kingdom. This suit alleges that the software on the electronic controller
     of the One:One infringes Philips copyright and seeks unspecified money
     damages and injunctive relief. At issue were the 55,624 units initially
     introduced into the United Kingdom; Salton has discontinued the sales of
     these units. This case is currently pending in the United Kingdom. E&E has
     intervened in this action, and E&E's motion to dismiss or in the
     alternative stay this action in favor of the Hong Kong action described
     above was denied. On October 14, 2004, Salton offered to submit to judgment
     in this action, and in the event the parties cannot agree on a royalty for
     the use of this software in the 55,624 units, a judicial determination will
     have to be made of any monetary award.

     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 is seeking to
     convert the lawsuit into a class action suit.



                                       10
<PAGE>

     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.

     Shortly after receiving notice of the lawsuit, the Company voluntarily
     suspended selling the product. The Company believes that at substantially
     the same time, the two retailers who had purchased the kettle from the
     Company also suspended selling the product. Based on information received
     from the two retailers, the Company believes that only a limited number of
     the kettles were sold to consumers. The Company voluntarily contacted the
     U.S. Food and Drug Administration and has shared its information and test
     results concerning the product with the agency.

     The Company is reviewing the status of any other similar products, which
     the same manufacturer has sold to the Company in recent years.

     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.

     HOMEPLACE OF AMERICA

     Homeplace of America, a company in liquidation under the United States
     Bankruptcy Code, brought a lawsuit for recovery of preferential payments
     made to Salton and its subsidiary, Toastmaster, during the 90 day
     "preference" period prior to filing for bankruptcy. Homeplace's total
     claimed preferences are approximately $3.5 million. The trial started the
     first week of November 2004 in the U.S. Bankruptcy Court for the District
     of Delaware. Settlement discussions to date have not, in Salton's view,
     been meaningful. Salton does not believe that this matter will have a
     material adverse affect on its business, financial condition or results of
     operations. Therefore, no material 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 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
     our normal business operations. The Company believes that the outcome of
     any 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 we could incur claims for which we are not insured.



                                       11
<PAGE>

11.  SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION

     The payment obligations of the Company under the senior secured revolving
     credit facility and the senior subordinated notes are guaranteed by certain
     of the Company's wholly-owned domestic subsidiaries (Subsidiary
     Guarantors). Such guarantees are full, unconditional and joint and several.
     Separate financial statements of the Subsidiary Guarantors are not
     presented because the Company's management has determined that they would
     not be material to investors. The following supplemental 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, and the Company's Non-Guarantor subsidiaries (Other
     Subsidiaries).



                                       12
<PAGE>
CONSOLIDATING BALANCE SHEET AS OF JANUARY 1, 2005
(IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                      GUARANTOR
                                                          PARENT    SUBSIDIARIES  ELIMINATIONS    TOTAL
                                                        ---------------------------------------------------
<S>                                                     <C>          <C>          <C>          <C>
                    ASSETS
Current Assets:
  Cash                                                  $       1    $     700    $      --    $     701
  Compensating balances on deposits                            --           --           --           --
  Accounts receivable, net of allowances                       --      127,318           --      127,318
  Inventories                                              12,350      156,078      (23,702)     144,726
  Prepaid expenses and other current assets                 2,793        3,820           --        6,613
  Intercompany                                            114,711      (69,484)        (170)      45,057
  Deferred income taxes                                     1,314       16,577           --       17,891
                                                        ------------------------------------------------
    Total Current Assets                                  131,169      235,009      (23,872)     342,306
  Property, Plant and Equipment, net                        8,611       13,482           --       22,093
  Investments in Subsidiaries                             412,759       53,674     (466,433)          --
  Tradenames                                              134,974       10,313           --      145,287
  Non-current deferred tax asset                               --           --           --           --
  Other Assets                                             10,414          861           --       11,275
                                                        ------------------------------------------------
  Total Assets                                          $ 697,927    $ 313,339    $(490,305)   $ 520,961
                                                        ================================================
     LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Revolving line of credit and other current debt       $      --    $  81,507    $      --    $  81,507
  Senior subordinated notes due 2005                      125,000           --           --      125,000
  Accounts payable                                          2,068        4,039            2        6,109
  Accrued expenses                                          9,665       14,071           --       23,736
  Income taxes payable                                      4,438       (1,469)          --        2,969
                                                        ------------------------------------------------
    Total current liabilities                             141,171       98,148            2      239,321
  Non-current Deferred Income Taxes                       (12,237)      (9,167)          --      (21,404)
  Senior subordinated notes due 2008,
    including an adjustment of $8,332 to the carrying
    value related to interest rate swap agreements        157,515           --           --      157,515
  Term loan and other notes payable                            --      100,082           --      100,082
  Other Long Term Liability                                   486        3,651           --        4,137
                                                        ------------------------------------------------
    Total liabilities                                     286,935      192,714            2      479,651
  Minority interest                                            --           --           --           --
  Stockholders' Equity                                    410,992      120,625     (490,307)      41,310
                                                        ------------------------------------------------
  Total Liabilities and Stockholders' Equity            $ 697,927    $ 313,339    $(490,305)   $ 520,961
                                                        ================================================

<CAPTION>

                                                           OTHER        CONSOLIDATED    CONSOLIDATED
                                                        SUBSIDIARIES    ELIMINATIONS       TOTALS
                                                        --------------------------------------------
<S>                                                     <C>             <C>             <C>
Current Assets:
  Cash                                                    $  36,669      $      --        $  37,370
  Compensating balances on deposits                          34,465             --           34,465
  Accounts receivable, net of allowances                    152,416             --          279,734
  Inventories                                               133,135             --          277,861
  Prepaid expenses and other current assets                  12,388             --           19,001
  Intercompany                                              (45,057)            --               --
  Deferred income taxes                                       6,213             --           24,104
                                                          -----------------------------------------
    Total Current Assets                                    330,229             --          672,535
  Property, Plant and Equipment, net                         56,892             --           78,985
  Investments in Subsidiaries                                    --             --               --
  Tradenames                                                 41,197             --          186,484
  Non-current deferred tax asset                                 --         17,668           17,668
  Other Assets                                                3,164             --           14,439
                                                          -----------------------------------------
  Total Assets                                            $ 431,482      $  17,668        $ 970,111
                                                          =========================================

     LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Revolving line of credit and other current debt         $  46,063      $      --        $ 127,570
  Senior subordinated notes due 2005                             --             --          125,000
  Accounts payable                                          127,149             --          133,258
  Accrued expenses                                           61,268             --           85,004
  Income taxes payable                                       11,165             --           14,134
                                                          -----------------------------------------
    Total current liabilities                               245,645             --          484,966
  Non-current Deferred Income Taxes                           3,736         17,668               --
  Senior subordinated notes due 2008,
    including an adjustment of $8,332 to the carrying
    value related to interest rate swap agreements               --             --          157,515
  Term loan and other notes payable                           1,861             --          101,943
  Other Long Term Liability                                  13,546             --           17,683
                                                          -----------------------------------------
    Total liabilities                                       264,788         17,668          762,107
  Minority interest                                          26,347             --           26,347
  Stockholders' Equity                                      140,347             --          181,657
                                                          -----------------------------------------
  Total Liabilities and Stockholders' Equity              $ 431,482      $  17,668        $ 970,111
                                                          =========================================
</TABLE>


                                       13

<PAGE>

CONSOLIDATING BALANCE SHEET AS OF JULY 3, 2004
(IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                      GUARANTOR
                                                          PARENT    SUBSIDIARIES  ELIMINATIONS        TOTAL
                                                        -----------------------------------------------------
<S>                                                     <C>          <C>          <C>          <C>
                   ASSETS
Current Assets:
  Cash                                                 $       1      $     903      $      --      $     904
  Compensating balances on deposit                            --             --             --             --
  Accounts receivable, net of allowances                     311         96,905             --         97,216
  Inventories                                              5,133        165,189        (28,341)       141,981
  Prepaid expenses and other current assets                5,054          2,597             --          7,651
  Intercompany                                           131,818       (104,380)          (756)        26,682
  Deferred income taxes                                      913         16,577             --         17,490
                                                       ------------------------------------------------------
     Total current assets                                143,230        177,791        (29,097)       291,924
Property, Plant and Equipment,
   Net of Accumulated Depreciation                        11,016         14,910             --         25,926
Investments in Subsidiaries                              390,773         53,646       (444,419)            --
Tradenames                                               134,723         10,313             --        145,036
Non-current deferred tax asset                                --             --             --             --
 Other Assets                                             12,442            274             --         12,716
                                                       ------------------------------------------------------
Total Assets                                           $ 692,184      $ 256,934      $(473,516)     $ 475,602
                                                       ======================================================

    LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Revolving line of credit and other current debt      $      --      $  33,189      $      --      $  33,189
  Accounts payable                                         2,922          2,039           (584)         4,377
  Accrued expenses                                         9,491         13,478             --         22,969
  Income taxes payable                                    (2,336)        (1,496)            --         (3,832)
                                                       ------------------------------------------------------
     Total current liabilities                            10,077         47,210           (584)        56,703
Non-current Deferred Income Taxes                         (8,840)        (9,167)            --        (18,007)
Senior subordinated notes due 2005                       125,000             --             --        125,000
Senior subordinated notes due 2008, including
    an adjustment of $9,581 to the carrying
    value related to interest rate swap agreements       158,642             --             --        158,642
Long-term debt-revolving credit agreement                     --        100,000             --        100,000
Other notes payable                                           --            175             --            175
Other long term liabilities                                  418          3,932             --          4,350
                                                       ------------------------------------------------------
     Total liabilities                                   285,297        142,150           (584)       426,863
Minority Interest                                             --             --             --             --
Stockholders' Equity                                     406,887        114,784       (472,932)        48,739
                                                       ------------------------------------------------------
Total Liabilities and Stockholders' Equity             $ 692,184      $ 256,934      $(473,516)     $ 475,602
                                                       ======================================================

<CAPTION>

                                                          OTHER      CONSOLIDATED   CONSOLIDATED
                                                       SUBSIDIARIES  ELIMINATIONS      TOTALS
                                                       ------------------------------------------
<S>                                                     <C>          <C>            <C>
Current Assets:
  Cash                                                 $  45,943      $      --         $  46,847
  Compensating balances on deposit                        34,000             --            34,000
  Accounts receivable, net of allowances                  83,175             --           180,391
  Inventories                                            111,646             --           253,627
  Prepaid expenses and other current assets               13,616             --            21,267
  Intercompany                                           (26,682)            --                --
  Deferred income taxes                                    8,252             --            25,742
                                                       ------------------------------------------
     Total current assets                                269,950             --           561,874
Property, Plant and Equipment,
   Net of Accumulated Depreciation                        55,226             --            81,152
Investments in Subsidiaries                                   --             --                --
Tradenames                                                39,385             --           184,421
Non-current deferred tax asset                                --         11,589            11,589
 Other Assets                                              2,800             --            15,516
                                                       ------------------------------------------
Total Assets                                           $ 367,361      $  11,589         $ 854,552
                                                       ==========================================

    LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Revolving line of credit and other current debt      $  15,478      $      --            48,667
  Accounts payable                                       133,294             --           137,671
  Accrued expenses                                        37,658             --            60,627
  Income taxes payable                                    12,637             --             8,805
                                                       ------------------------------------------
     Total current liabilities                           199,067             --           255,770
Non-current Deferred Income Taxes                          6,418         11,589                --
Senior subordinated notes due 2005                            --             --           125,000
Senior subordinated notes due 2008, including
    an adjustment of $9,581 to the carrying
    value related to interest rate swap agreements            --             --           158,642
Long-term debt-revolving credit agreement                     --             --           100,000
Other notes payable                                          586             --               761
Other long term liabilities                               12,938             --            17,288
                                                       ------------------------------------------
     Total liabilities                                   219,009         11,589           657,461
Minority Interest                                         23,515             --            23,515
Stockholders' Equity                                     124,837             --           173,576
                                                       ------------------------------------------
Total Liabilities and Stockholders' Equity             $ 367,361      $  11,589         $ 854,552
                                                       ==========================================
</TABLE>


                                       14
<PAGE>


CONSOLIDATING STATEMENT OF INCOME FOR THE THIRTEEN WEEKS ENDED JANUARY 1, 2005
(IN THOUSANDS)


<TABLE>
<CAPTION>
                                                  GUARANTOR                                 OTHER        CONSOLIDATED   CONSOLIDATED
                                      PARENT     SUBSIDIARIES  ELIMINATIONS     TOTAL    SUBSIDIARIES    ELIMINATIONS       TOTALS
                                    ------------------------------------------------------------------------------------------------
<S>                                 <C>           <C>           <C>          <C>         <C>             <C>            <C>
Net Sales                           $  70,297     $ 191,908     $(109,824)   $ 152,381     $ 306,357     $ (81,762)     $ 376,976
Cost of Goods Sold                     57,147       161,976      (112,679)     106,444       226,025       (76,379)       256,090
Distribution Expenses                      --        10,110            --       10,110        11,220                       21,330
                                    ------------------------------------------------------------------------------------------------
    Gross Profit                       13,150        19,822         2,855       35,827        69,112        (5,383)        99,556
Selling, General and
  Administrative expenses              16,641        12,380            --       29,021        53,824        (5,383)        77,462
Restructuring Costs                      (102)          220            --          118            --                          118
                                    ------------------------------------------------------------------------------------------------
    Operating Income                   (3,389)        7,222         2,855        6,688        15,288            --         21,976
Interest Expense, net                   7,028         4,042            --       11,070         2,737            --         13,807
Income (Loss) from Subsidiary          (8,509)          (20)        8,529           --            --            --             --
                                    ------------------------------------------------------------------------------------------------
  (Loss) Income Before Income Taxes    (1,908)        3,200        (5,674)      (4,382)       12,551            --          8,169
Income Tax (Benefit) Expense           (1,830)           --            --       (1,830)        4,665            --          2,835
Minority Interest, net of tax              --            --            --           --         2,577            --          2,577
                                    ------------------------------------------------------------------------------------------------
    Net (Loss) Income               $     (78)    $   3,200     $  (5,674)   $  (2,552)    $   5,309     $      --      $   2,757
                                    ------------------------------------------------------------------------------------------------
</TABLE>





CONSOLIDATING STATEMENT OF INCOME FOR THE THIRTEEN WEEKS ENDED DECEMBER 27, 2003
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                   GUARANTOR                               OTHER       CONSOLIDATED   CONSOLIDATED
                                        PARENT   SUBSIDIARIES  ELIMINATIONS    TOTAL    SUBSIDIARIES   ELIMINATIONS      TOTALS
                                      -------------------------------------------------------------------------------------------
<S>                                   <C>        <C>           <C>           <C>        <C>            <C>            <C>
Net Sales                             $  94,317   $ 265,320     $(152,655)   $ 206,982    $ 289,853     $ (99,732)    $ 397,103
Cost of Goods Sold                       72,454     221,949      (155,770)     138,633      211,573       (97,532)      252,674
Distribution Expenses                        --      12,859            --       12,859        8,192            --        21,051
                                      -------------------------------------------------------------------------------------------
    Gross Profit                         21,863      30,512         3,115       55,490       70,088        (2,200)      123,378
Selling, General and
 Administrative expenses                 14,139      37,508            --       51,647       40,367        (1,500)       90,514
                                      -------------------------------------------------------------------------------------------
    Operating Income (Loss)               7,724      (6,996)        3,115        3,843       29,721          (700)       32,864
Interest Expense, net                     6,933       1,571            --        8,504        1,829            --        10,333
Income (Loss) from Subsidiary           (10,177)        216         9,961           --           --            --            --
                                      -------------------------------------------------------------------------------------------
  Income (Loss) Before Income Taxes      10,968      (8,783)       (6,846)      (4,661)      27,892          (700)       22,531
Income Tax (Benefit) Expense              1,252      (1,274)           --          (22)       7,433            --         7,411
Minority Interest, net of tax                --          --                                   2,774            --         2,774
                                      -------------------------------------------------------------------------------------------
    Net Income (Loss)                 $   9,716   $  (7,509)    $  (6,846)   $  (4,639)   $  17,685     $    (700)    $  12,346
                                      ===========================================================================================
</TABLE>



                                       15
<PAGE>
CONSOLIDATING STATEMENT OF INCOME FOR THE TWENTY SIX WEEKS ENDED JANUARY 1, 2005
(IN THOUSANDS)


<TABLE>
<CAPTION>
                                                GUARANTOR                                   OTHER       CONSOLIDATED   CONSOLIDATED
                                      PARENT   SUBSIDIARIES  ELIMINATIONS       TOTAL    SUBSIDIARIES   ELIMINATIONS      TOTALS
                                    ----------------------------------------------------------------------------------------------
<S>                                 <C>        <C>           <C>             <C>        <C>            <C>            <C>
Net Sales                           $ 118,377    $ 341,466    $(191,974)     $ 267,869    $ 543,170      $(159,928)     $ 651,111
Cost of Goods Sold                     96,488      286,266     (196,613)       186,141      415,060       (150,261)       450,940
Distribution Expenses                      --       18,763           --         18,763       18,335             --         37,098
                                    ----------------------------------------------------------------------------------------------
  Gross Profit                         21,889       36,437        4,639         62,965      109,775         (9,667)       163,073
Selling, General and
  Administrative expenses              30,984       22,665           --         53,649       86,567         (9,667)       130,549
Restructuring Costs                       354          436           --            790           --                           790
                                    ----------------------------------------------------------------------------------------------
  Operating Income                     (9,449)      13,336        4,639          8,526       23,208             --         31,734
Interest Expense, net                  14,335        7,521           --         21,856        4,989             --         26,845
Income (Loss) from Subsidiary         (14,943)         (27)      14,970             --           --             --             --
                                    ----------------------------------------------------------------------------------------------
(Loss) Income Before Income Taxes      (8,841)       5,842      (10,331)       (13,330)      18,219             --          4,889
Income Tax (Benefit) Expense           (3,799)          --           --         (3,799)       5,485             --          1,686
Minority Interest, net of tax              --           --           --             --        3,633             --          3,633
                                    ----------------------------------------------------------------------------------------------
  Net (Loss) Income                 $  (5,042)   $   5,842    $ (10,331)     $  (9,531)   $   9,101      $      --      $    (430)
                                    ==============================================================================================
</TABLE>

CONSOLIDATED STATEMENT OF INCOME FOR THE TWENTY-SIX WEEKS ENDED
DECEMBER 27, 2003
(IN THOUSANDS)
<TABLE>
<CAPTION>
                                                GUARANTOR                                  OTHER       CONSOLIDATED   CONSOLIDATED
                                      PARENT   SUBSIDIARIES  ELIMINATIONS      TOTAL    SUBSIDIARIES    ELIMINATIONS     TOTALS
                                    ----------------------------------------------------------------------------------------------
<S>                                 <C>        <C>           <C>             <C>        <C>            <C>            <C>
Net Sales                           $ 166,957    $ 441,197      $(273,429)   $ 334,725    $ 496,680     $(195,763)      $ 635,642
Cost of Goods Sold                    128,352      373,004       (272,346)     229,010      373,683      (192,063)        410,630
Distribution Expenses                      --       23,840                      23,840       13,611            --          37,451
                                    ----------------------------------------------------------------------------------------------
  Gross Profit                         38,605       44,353         (1,083)      81,875      109,386        (3,700)        187,561
Selling, General and
  Administrative expenses              25,385       60,827             --       86,212       59,094        (3,000)        142,306
                                    ----------------------------------------------------------------------------------------------
  Operating Income (Loss)              13,220      (16,474)        (1,083)      (4,337)      50,292          (700)         45,255
Interest Expense, net                  14,166        2,486             --       16,652        3,359            --          20,011
Income (Loss) from Subsidiary         (16,091)         608         15,483           --           --            --              --
                                    ----------------------------------------------------------------------------------------------
Income (Loss) Before Income Taxes      15,145      (19,568)       (16,566)     (20,989)      46,933          (700)         25,244
Income Tax (Benefit) Expense              883       (4,113)            --       (3,230)      11,523                         8,293
Minority Interest, net of tax              --           --             --           --        3,864                         3,864
                                    ----------------------------------------------------------------------------------------------
  Net Income (Loss)                 $  14,262    $ (15,455)     $ (16,566)   $ (17,759)   $  31,546     $    (700)      $  13,087
                                    ==============================================================================================
</TABLE>


                                       16
<PAGE>

CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE TWENTY-SIX WEEKS ENDED
JANUARY 1, 2005
(IN THOUSANDS)


<TABLE>
<CAPTION>
                                                          GUARANTOR                             OTHER      CONSOLIDATED CONSOLIDATED
                                               PARENT   SUBSIDIARIES  ELIMINATIONS   TOTAL   SUBSIDIARIES  ELIMINATIONS    TOTALS
                                             ---------------------------------------------------------------------------------------
<S>                                          <C>        <C>           <C>          <C>       <C>           <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                          $ (5,042)   $  5,842      $(10,331)   $ (9,531)   $  9,101    $     --        $   (430)
  Adjustments to reconcile net
    income (loss) to net cash
    used in operating activities:
      Imputed interest on notes payable
        and other non-cash items               (1,127)         --            --      (1,127)        217          --            (910)
      Deferred income tax provision            (3,798)         --            --      (3,798)     (2,080)         --          (5,878)
      Foreign currency gains and losses            --        (925)           --        (925)         --          --            (925)
      Depreciation and amortization             4,894       1,645            --       6,539       5,586                      12,125
      Bad debt (recovery) provision                        (1,476)           --      (1,476)          8                      (1,468)
      Loss on disposal of equipment                --          70            --          70         (32)         --              38
      Inventory valuation adjustment               --        (730)           --        (730)       (169)                       (899)
      Equity in net income of unconsolidated
        affiliate/consolidated subsidiaries   (14,943)        (28)       14,971          --          --          --              --
      Minority interest                            --          --                        --       3,632          --           3,632
      Changes in assets and liabilities:
        Accounts receivable                       311     (28,012)           --     (27,701)     62,386)         --         (90,087)
        Inventories                            (7,217)      9,842        (4,640)     (2,015)     13,371)                    (15,386)
        Prepaid expenses and other current
          assets                                2,261      (1,222)           --       1,039       1,125          --           2,164
        Other non-current assets                    0        (588)           --        (588)       (127)                       (715)
        Accounts payable                         (854)      2,587            --       1,733     (11,502)         --          (9,769)
        Taxes payable                           6,774          28            --       6,802      (2,223)         --           4,579
        Accrued expenses                       19,384     (35,178)           --     (15,794)     38,063          --          22,269
                                              --------------------------------------------------------------------------------------
          NET CASH FROM OPERATING ACTIVITIES      643     (48,145)           --     (47,502)    (34,158)         --         (81,660)
                                              --------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Capital expenditures                       (202)       (376)           --        (578)     (5,384)         --          (5,962)
      Proceeds from sale of property and
        equipment                                  --          93            --          93          43          --             136
      Additional payment for patents and
        trademarks                               (251)         --            --        (251)         --          --            (251)
                                             ---------------------------------------------------------------------------------------

        NET CASH FROM INVESTING ACTIVITIES       (453)       (283)           --        (736)     (5,341)         --          (6,077)
                                             ---------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

    Net proceeds from revolving line of
      credit and other debt                        --      48,562            --      48,562      30,518          --          79,080
    Repayment of long-term debt                    --        (337)           --        (337)       (149)         --            (486)
    Distributions to minority shareholders         --          --            --          --      (2,296)                     (2,296)
    Costs associated with refinancing            (217)         --            --        (217)         --          --            (217)
    Common stock issued                            27          --            --          27          --          --              27
    Increase in compensating balances on
      deposit                                      --                                    --        (465)                       (465)
                                             ---------------------------------------------------------------------------------------
    NET CASH FROM FINANCING ACTIVITIES           (190)     48,225            --      48,035      27,608          --          75,643
                                             ---------------------------------------------------------------------------------------

Effect of Exchange Rate Changes on Cash            --          --            --          --       2,617          --           2,617
                                             ---------------------------------------------------------------------------------------

Net Change in Cash                                 --        (203)           --        (203)     (9,274)         --          (9,477)

Cash, Beginning of Period                           1         903            --         904      45,943          --          46,847
                                             ---------------------------------------------------------------------------------------

Cash, End of Period                          $      1    $    700      $     --    $    701    $ 36,669    $     --        $ 37,370
                                             =======================================================================================
</TABLE>


                                       17
<PAGE>

CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE TWENTY-SIX WEEKS ENDED
DECEMBER 27, 2003
(IN THOUSANDS)


<TABLE>
<CAPTION>
                                                               GUARANTOR
                                                     PARENT   SUBSIDIARIES   ELIMINATIONS       TOTAL
                                                    ---------------------------------------------------
<S>                                                 <C>       <C>            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income (loss)                                 $ 14,262      $(15,455)     $(16,566)     $(17,759)
  Adjustments to reconcile net income
    (loss) to net cash used in operating
    activities:
      Imputed interest on notes payable and
        other non-cash items                          (1,127)           --            --        (1,127)
      Deferred income tax provision                       --            --            --            --
      Foreign currency gains and losses                   --           344            --           344
      Depreciation and amortization                    4,805         1,877            --         6,682
      Bad debt (recovery) provision                       --           (22)           --           (22)
      Loss on disposal of equipment                       --            --            --            --
      Equity in income of unconsolidated
        affiliate/consolidated subsidiaries          (16,090)          607        15,483            --
    Inventory valuation adjustment                         0         1,262            --         1,262
    Minority interest                                     --            --            --            --
    Changes in assets and liabilities:
        Accounts receivable                             (312)      (55,859)           --       (56,171)
        Inventories                                   (7,046)       (4,711)        1,083       (10,674)
        Prepaid expenses and other current assets       (496)         (596)           --        (1,092)
        Increase in other non-current assets              --             6            --             6
        Accounts payable                                 878           795            --         1,673
        Taxes payable                                 16,417        (5,127)           --        11,290
        Accrued expenses                              12,382        24,614            --        36,996
                                                    --------------------------------------------------
          NET CASH FROM OPERATING ACTIVITIES          23,673       (52,265)           --       (28,592)
                                                    --------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                (1,472)       (1,983)           --        (3,455)
  Additional payment for patents and trademarks      (21,666)           --            --       (21,666)
                                                    --------------------------------------------------
      NET CASH FROM INVESTING ACTIVITIES             (23,138)       (1,983)           --       (25,121)
                                                    --------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from revolving line of credit
    and other debt                                        --        59,000            --        59,000
  Repayment of long-term debt                             --          (429)           --          (429)
  Costs associated with refinancing                     (575)           --            --          (575)
  Common stock issued                                     42            --            --            42
  Increase in compensating balances on deposit            --            --            --            --
                                                    --------------------------------------------------
    NET CASH FROM FINANCING ACTIVITIES                  (533)       58,571            --        58,038
                                                    --------------------------------------------------

Effect of Exchange Rate Changes on Cash                   --            --            --            --
                                                    --------------------------------------------------
Net Change in Cash                                         2         4,323            --         4,325

Cash, Beginning of Period                                 --         8,971            --         8,971
                                                    --------------------------------------------------
Cash, End of Period                                 $      2      $ 13,294      $     --      $ 13,296
                                                    ==================================================

<CAPTION>

                                                       OTHER      CONSOLIDATED   CONSOLIDATED
                                                    SUBSIDIARIES  ELIMINATIONS      TOTALS
                                                    ------------------------------------------
                                                    <S>           <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income (loss)                                 $  31,546      $    (700)     $  13,087
  Adjustments to reconcile net income
    (loss) to net cash used in operating
    activities:
      Imputed interest on notes payable and
        other non-cash items                              219             --           (908)
      Deferred income tax provision                       134             --            134
      Foreign currency gains and losses                    --             --            344
      Depreciation and amortization                     4,195                        10,877
      Bad debt (recovery) provision                     1,085                         1,063
      Loss on disposal of equipment                        63             --             63
      Equity in income of unconsolidated
        affiliate/consolidated subsidiaries                --             --             --
    Inventory valuation adjustment                         --             --          1,262
    Minority interest                                   3,864             --          3,864
    Changes in assets and liabilities:
        Accounts receivable                           (83,051)            --       (139,222)
        Inventories                                   (10,199)           700        (20,173)
        Prepaid expenses and other current assets      (3,241)            --         (4,333)
        Increase in other non-current assets             (378)            --           (372)
        Accounts payable                               53,867             --         55,540
        Taxes payable                                   5,150             --         16,440
        Accrued expenses                              (15,096)            --         21,900
                                                    ----------------------------------------
          NET CASH FROM OPERATING ACTIVITIES          (11,842)            --        (40,434)
                                                    ----------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                 (5,603)            --         (9,058)
  Additional payment for patents and trademarks            --             --        (21,666)
                                                    ----------------------------------------
      NET CASH FROM INVESTING ACTIVITIES               (5,603)            --        (30,724)
                                                    ----------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from revolving line of credit
    and other debt                                     11,976             --         70,976
  Repayment of long-term debt                              --             --           (429)
  Costs associated with refinancing                        --             --           (575)
  Common stock issued                                      --             --             42
  Increase in compensating balances on deposit         (5,600)            --         (5,600)
                                                    ----------------------------------------
    NET CASH FROM FINANCING ACTIVITIES                  6,376             --         64,414
                                                    ----------------------------------------
Effect of Exchange Rate Changes on Cash                   338             --            338
                                                    ----------------------------------------
Net Change in Cash                                    (10,731)            --         (6,406)

Cash, Beginning of Period                              26,731             --         35,702
                                                    ----------------------------------------
Cash, End of Period                                 $  16,000      $      --      $  29,296
                                                    =======================================
</TABLE>


                                       18

<PAGE>

12.  SUBSEQUENT EVENTS

     On January 31, 2005, the Company entered into a sale agreement, whereby it
     sold a distribution warehouse in Europe for $15.2 million, which
     approximated book value at the date of sale. The Company subsequently
     entered into an operating lease agreement for this distribution warehouse.




                                       19
<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.

     INTRODUCTION

     Salton designs, sources, markets and distributes small appliances and
     electronics for the home, home decor and personal care products under
     recognized brand names in the International Housewares Industry. Our
     product mix consists of kitchen and home appliances, electronics, tabletop
     products, time products, lighting products, picture frames and personal
     care and wellness products. In recent years, we have expanded our
     international presence and strengthened our product offerings through
     strategic acquisitions, alliances and internal international growth.

     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, valuation reserves against deferred tax
     assets, 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.

     The following critical accounting policies required the most significant
     estimates used in the preparation of our consolidated financial statements

     ALLOWANCE FOR DOUBTFUL ACCOUNTS - We calculate allowances for estimated
     losses resulting from the inability of our customers to make required
     payments. We utilize a number of tools to evaluate and mitigate our
     customer credit risk. Management evaluates each new customer account using
     a combination of some or all of the following sources of information:
     credit bureau reports, industry credit group reports, customer financial
     statement analysis, customer supplied credit references and bank
     references. Appropriate credit limits are set in accordance with our credit
     risk policy and monitored on an on-going basis. Existing customers are
     monitored and credit limits are adjusted according to changes in their
     financial condition. We calculate additional accounts receivable allowances
     for anticipated future customer returns and claims. This additional accrual
     covers defective product (warranty), sales returns and other customer
     allowances. The amounts and trends are analyzed to develop appropriate
     percentages that are applied against future sales. Based on the procedures
     outlined herein, and the fact that only one customer accounted for 14.0% of
     the gross accounts receivable at January 1, 2005 and no customer accounted
     for 10.0% or more of the gross accounts receivable at July 3, 2004, we
     believe there is no concentration of credit risk.

     Our exposure to credit loss on our foreign currency forward contracts in
     the event of non-performance by the counterparties is believed to be remote
     due to the requirements that the counterparties consist only of major
     financial institutions that have a long-term credit rating of single-A or
     better from both Moody's and Standard & Poor's. Additionally, our foreign
     currency forward contracts generally have terms of one year or less.

                                       20
<PAGE>

     INVENTORY VALUATION - The Company's domestic inventories are generally
     determined using the last-in, first-out (LIFO) method. These inventories
     account for approximately 47.5% and 53.7% of the Company's inventories as
     of January 1, 2005 and July 3, 2004, respectively. All remaining inventory
     cost is determined on the first-in, first-out basis. The Company records
     inventory at the lower of its cost or net realizable value. Management
     regularly evaluates the composition of inventory to identify slow-moving
     and obsolete inventories and for items that we are unable to sell at prices
     above their original cost. When such items are identified, a charge to
     operations results to reduce the book value to the net amount expected to
     be realized upon the sale of such items. There is inherent subjectivity and
     uncertainty in this estimation process.

     COMMITMENTS AND CONTINGENCIES - We are subject to lawsuits and other claims
     related to product and other matters that are being defended and handled in
     the ordinary course of business. We maintain reserves and or accruals for
     such costs that may be incurred, which are determined on a case-by-case
     basis, taking into consideration the likelihood of adverse judgments or
     outcomes, as well as the potential range of probable loss. The reserves and
     accruals are monitored on an ongoing basis and are updated for new
     developments or new information as appropriate.

     INTANGIBLE ASSETS - We record intangible assets through transactions and
     acquisitions. The cost of acquisitions are allocated to the assets and
     liabilities acquired, including identifiable intangible assets, with the
     remaining amount being classified as goodwill. Goodwill and other
     intangible assets that have an indefinite life are assessed annually for
     impairment during the fourth quarter. The allocation of the acquisition
     cost to intangible assets and goodwill therefore has a significant impact
     on our future operating results. The allocation process requires the
     extensive use of estimates and assumptions, including estimates of future
     cash flows expected to be generated by the acquired assets. Further, when
     impairment indicators are identified with respect to previously recorded
     intangible assets, the values of the assets are determined using a variety
     of techniques including discounted future cash flows, which are based on
     estimated future operating results. Significant management judgment is
     required in the forecasting of future operating results, which are used in
     the preparation of projected discounted cash flows.

     INCOME TAXES - Significant management estimates and judgments are required
     in determining income tax expense for financial statement purposes. These
     estimates and judgments occur in the calculation of certain deferred tax
     assets and liabilities, which arise from differences in the timing of
     recognition of revenue and expense for tax and financial statement
     purposes. We must assess the likelihood that we will be able to recover our
     deferred tax assets. If recovery is not likely, we must increase our
     provision for taxes by recording a valuation allowance against the deferred
     tax assets that we estimate will not ultimately be recoverable. As changes
     occur in our assessments regarding our ability to recover our deferred tax
     assets, the valuation allowance and the tax provision are adjusted
     accordingly.

     REVENUE RECOGNITION - The Company recognizes revenue at FOB shipping point
     which corresponds to when title and risks and rewards of ownership transfer
     to its customers. Fees charged for shipping and handling are included in
     net sales and the associated costs are included in distribution expenses.
     Provision is made for estimated cost of returns, warranties and product
     liability claims.



                                       21
<PAGE>



     NEW ACCOUNTING PRONOUNCEMENTS

     In December 2004, the Financial Accounting Standards Board (FASB) issued
     Statement No. 123(R), "Share Based Payment", which replaces Statement No.
     123, "Accounting for Stock-Based Compensation," and APB No. 25, "Accounting
     for Stock Issued to Employees." This statement requires compensation
     expense to be measured based on fair value of the stock options, and to be
     recognized as an expense on the financial statements. This statement is
     effective for fiscal periods beginning after June 15, 2005. The Company
     will be adopting this statement for the first quarter of fiscal 2006,
     beginning July 3, 2005, and is currently evaluating the impact on its
     financial statements.

     On October 22, 2004, the American Jobs Creation Act ("the AJCA") was signed
     into law. The AJCA provides for a deduction of 85% of certain foreign
     earnings that are repatriated, as defined in the AJCA. The Company has
     completed its evaluation of the repatriation provision of the Act and does
     not intend to apply this provision to qualifying earnings repatriations.
     The Company currently has options to employ lower tax alternatives for
     potential future foreign earnings repatriations, including accumulated
     foreign earnings that were previously taxed in the U.S., as well as the use
     of the Company's U.S. net operating loss carryforward.

     QUARTER IN REVIEW

     For the second quarter of fiscal 2005 (thirteen weeks ended January 1,
     2005), Salton continued its focus on increasing international
     opportunities, increasing domestic pricing to offset rising product costs,
     and reducing domestic operating costs in an effort to align U.S. costs with
     current sales levels and return the domestic business to profitability.

     During the second quarter, Salton invested approximately $7.0 million of
     selling, advertising, general and administrative costs to expand sales into
     Spain, Italy and Germany, which resulted in beginning sales results of $5.8
     million for the quarter.

     Domestic price increases are underway within the industry to offset rising
     product costs to the domestic market. Although the Company believes the
     industry-wide cost drivers will ultimately result in the acceptance of the
     price increases, existing industry inventories built under lower cost
     structures could delay full acceptance of the price increases in the
     immediate future.

     We continued to implement the U.S. restructuring plan with additional
     headcount reductions and facility closures in the domestic operations. Our
     U.S. restructuring plan is on-target and, when fully implemented this
     fiscal year, is expected to generate in excess of $40.0 million in annual
     cost savings.

     RESULTS OF OPERATIONS
     The following table sets forth our results of operations as a percentage of
     net sales for the periods indicated:


<TABLE>
<CAPTION>
                                                    13 WEEKS ENDED
                                        --------------------------------------
                                        JANUARY 1, 2005      DECEMBER 27, 2003
                                        ---------------      -----------------
<S>                                     <C>                   <C>
Net sales                                   100.0%                 100.0%
Cost of goods sold                           67.9                   63.6
Distribution expenses                         5.7                    5.3
                                            -----                  -----
   Gross profit                              26.4%                  31.1%

Selling, general administrative expense      20.6                   22.8
Restructuring costs                            --                     --
                                            -----                  -----
Operating income                              5.8%                   8.3%
                                            =====                  =====
</TABLE>


                                       22
<PAGE>

     SECOND QUARTER FISCAL 2005 COMPARED TO SECOND QUARTER FISCAL 2004

     NET SALES AND GROSS PROFIT
     Sales for the second quarter of 2005 were $377.0 million compared to $397.1
     million in the second quarter of 2004. The $20.1 million or 5.1% decrease
     was primarily a result of a $49.0 million domestic sales decline, partially
     offset by $28.9 million of foreign sales increases, which includes $20.3
     million of foreign currency fluctuation gain.

     The Company experienced a decline in domestic volumes primarily driven by
     product shortages and lower retail purchases over the prior year. The prior
     year included higher then normal sales activity due to retailer concerns
     about supply chain interruptions at West Coast ports.

     International growth from AMAP, Brazil and Mexico and new growth from our
     start-up operations in Spain, Italy and Germany, was partially offset by
     softer sales in the United Kingdom as a result of a weak retail
     environment. Several retailers in the United Kingdom instituted temporary
     purchasing freezes during the period.

     Gross profit, as a percent of net sales, was 26.4% in second quarter of
     2005 as compared to 31.1% in second quarter of 2004, a decrease of 4.7%.
     This decrease was a result of a higher volume of AMAP sales at
     substantially lower margins due to the nature of their business in the
     electronics industry, the movement of excess and discontinued product in
     the domestic market as a result of inventory reduction plans and warehouse
     closures, promotional pricing to launch the Company's coffee pod
     initiatives and higher industry wide product costs.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
     Selling, general and administrative expenses decreased to 20.6% of net
     sales or $77.5 million in the second quarter of 2005 compared to 22.8% of
     net sales or $90.5 million for the second quarter of 2004. The decrease was
     a result of domestic cost reductions partially offset by approximately $7.0
     million of start-up expenses associated with our launch in Spain, Italy and
     Germany and $4.3 million of foreign currency fluctuations.

     For the second quarter of 2005, as a percent of sales, expenditures for
     television, royalty expense, certain other media and cooperative
     advertising and promotional activities decreased to 9.7% from 12.9% of net
     sales for second quarter of 2004. Advertising expenses associated with the
     launch of several new product categories in the prior year were not
     repeated in the same quarter this year, resulting in more normalized rates
     of expenditure.

     NET INTEREST EXPENSE
     Net interest expense was $13.8 million for the second quarter of 2005
     compared to $10.3 million in the second quarter of 2004. Our annualized
     weighted average rate of interest on average borrowings was 10.8% in the
     second quarter of 2005 compared to 9.7% in the same period in 2004. The
     average amount of all debt outstanding was $512.8 million for the second
     quarter of 2005 compared to $427.7 million for the same period in 2004.

     INCOME TAXES
     The Company's provision for income taxes is based upon estimated annual tax
     rates for the year applied to federal, state, and foreign income. The
     Company expects its effective tax rate of 34.7% for fiscal 2005 to differ
     from the prior year rate of 32.9% due to a shift in income mix from foreign
     jurisdictions to the U.S. in 2005 as well as non-deductible goodwill
     impairment charges and the establishment of deferred tax asset valuation
     allowances recorded in 2004.



                                       23
<PAGE>

     FIRST HALF IN REVIEW

     For the first half of fiscal 2005 (twenty-six weeks ended January 1, 2005),
     Salton continued its focus on increasing international opportunities and
     reducing domestic operating costs in an effort to align U.S. costs with
     current sales levels and return the domestic business to profitability.

     Salton continued its international expansion and opened operations in
     Spain, Italy and Germany, generating $5.8 million in new international
     business.

     We continued to implement the U.S. restructuring plan with additional
     headcount reductions and facility closures in the domestic operations. Our
     U.S. restructuring plan is on-target and, when fully implemented this
     fiscal year, is expected to generate at least $40.0 million in annual cost
     savings.

     In connection with the U.S. restructuring, we recorded pretax charges of
     $0.8 million in the first half of fiscal 2005 for consulting and legal fees
     and termination and severance costs associated with the headcount reduction
     in the U.S. Although the dollar amount is minimal, these costs do impact
     the overall comparability of reported operating income, net income and
     earnings per share for the first half of fiscal 2005.

     RESULTS OF OPERATIONS

     The following table sets forth our results of operations as a percentage of
     net sales for the periods indicated:

<TABLE>
<CAPTION>
                                                    26 WEEKS ENDED
                                        --------------------------------------
                                        JANUARY 1, 2005      DECEMBER 27, 2003
                                        ---------------      -----------------
<S>                                     <C>                   <C>
Net sales                                   100.0%                 100.0%
Cost of goods sold                           69.3                   64.6
Distribution expenses                         5.7                    5.9
                                            -----                  -----
   Gross profit                              25.0%                  29.5%

Selling, general administrative expense      20.0                   22.4
Restructuring costs                           0.1                     --
                                            -----                  -----
Operating income                              4.9%                   7.1%
                                            =====                  =====
</TABLE>


     FIRST HALF FISCAL 2005 COMPARED TO FIRST HALF FISCAL 2004

     NET SALES AND GROSS PROFIT
     Salton's net sales for the twenty-six weeks ended January 1, 2005 were
     $651.1 million. This represented an increase in revenues of 2.4% compared
     to $635.6 million for the same period in 2004. This increase was primarily
     the result of foreign sales increases of $64.8 million, which includes
     $30.7 million of foreign currency fluctuation gain, substantially offset by
     decreases in the domestic market.

     Gross profit in first half of 2005 decreased to $163.1 million compared to
     $187.6 million in the first half of 2004. As a percent of net sales, gross
     profit decreased from 29.5% in the first half of 2004 to 25.0% of net sales
     in the first half of 2005. The percentage decline was primarily a result of
     a higher volume of lower margin electronic sales from AMAP, higher
     industry-wide product costs, promotional pricing to launch the Company's
     coffee pod initiatives combined with a large volume of lower margin sales
     in the domestic market in an effort to move discontinued product under our
     inventory reduction plans and warehouse closures.




                                       24
<PAGE>
     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
     Selling, general and administrative expenses decreased to 20.0% of net
     sales or $130.5 million in first half of 2005 compared to 22.4% of net
     sales or $142.3 million for first half of 2004. Cost reductions achieved
     under the U.S. restructuring plan were partially offset by foreign
     increases of $7.0 million, which included international expansion, and $6.3
     million related to foreign currency fluctuations.

     For first half of 2005, as a percent of sales, expenditures for television,
     royalty expense, certain other media and cooperative advertising and
     promotional activities decreased to 8.9% from 11.1% of sales for first half
     of 2004. While first quarter product launches increased direct advertising
     expenditures, second quarter promotional and advertising expenditures were
     reduced, returning the Company to more normalized levels for the first half
     of 2005 compared to those of the same period for 2004.

     RESTRUCTURING COSTS
     In connection with the U.S. restructuring, we recorded pretax charges of
     $0.8 million in the first half of fiscal 2005 for consulting and legal fees
     and termination and severance costs associated with the headcount reduction
     in the U.S.

     NET INTEREST EXPENSE
     Net interest expense was $26.8 million for the first half of fiscal 2005
     compared to $20.0 million in the first half of fiscal 2004. Our annualized
     weighted average rate of interest on average borrowings was 11.0% in the
     first half of 2005 compared to 9.8% in the same period in 2004. The average
     amount of all debt outstanding was $489.1 million for the first half of
     2005 compared to $409.3 million for the same period in 2004.

     INCOME TAXES
     The Company's provision for income taxes is based upon estimated annual tax
     rates for the year applied to federal, state, and foreign income. The
     Company expects its effective tax rate of 34.5% for fiscal 2005 to differ
     from the prior year rate of 32.9% due to a shift in income mix from foreign
     jurisdictions to the U.S. in 2005 as well as non-deductible goodwill
     impairment charges and the establishment of deferred tax asset valuation
     allowances recorded in 2004.

     LIQUIDITY AND CAPITAL RESOURCES

     CASH FLOW FROM OPERATIONS
     Our primary sources of liquidity are our cash flow from operations and
     borrowings under our senior secured revolving credit facility. In the first
     half of fiscal 2005, Salton's operations used $81.7 million in cash flow,
     compared with $40.4 million in the first half of fiscal 2004. The increase
     in cash requirements were a result of $16.8 million in higher working
     capital needs and $13.5 million in lower net income. The remaining change
     was a result of $11.0 million in non-cash items. Given the seasonal nature
     of our business, borrowings and availability tend to be highest in mid-Fall
     and early Winter.

     Our cash flow from operations for the periods discussed have not been
     materially 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. In addition, the
     Company has recently experienced an upward trend in raw material prices and
     expects this trend could continue.



                                       25
<PAGE>

     The Company also currently uses foreign exchange contracts to hedge
     anticipated foreign currency transactions, primarily U.S. dollar inventory
     purchases. The contracts generally mature within one year and are designed
     to limit exposure to exchange rate fluctuations, primarily the Great
     Britain Pound and South Africa Rand against United States Dollars.

     INVESTING ACTIVITIES
     We incurred approximately $6.0 million for capital expenditures during the
     first half of fiscal 2005, including approximately $2.7 million in
     construction-in-progress for a warehouse renovation in Europe.

     FINANCING ACTIVITIES
     We had net proceeds from worldwide credit facilities of $79.1 million. The
     increase in facility usage represents a seasonal increase in working
     capital that was financed through our credit facilities in the U.S. and the
     UK.

     REVOLVING CREDIT FACILITY
     On June 15, 2004, we entered into an amended and restated $275.0 million
     senior secured revolving credit facility, which initially provides us with
     the ability to borrow up to $207.0 million (including $10.0 million for
     letters of credit). Advances under the senior secured revolving credit
     facility are primarily based upon percentages of eligible accounts
     receivable and inventories. The facility has a maturity date of June 15,
     2007 and is subject to a prepayment premium of 3.0% of $275.0 million if
     the facility is repaid by June 15, 2005, 2.0% if the facility is repaid
     between June 16, 2005 and June 15, 2006 and 1.0% if the facility is repaid
     between June 16, 2006 and June 15, 2007.

     As of January 1, 2005, we had borrowed $181.3 million under the senior
     secured revolving credit facility, $100.0 million of which is included in
     long-term liabilities. We had approximately $3.6 million available under
     this facility for future borrowings.

     Our senior indebtedness contains a number of significant covenants that,
     among other things, restrict our ability to dispose of assets, incur
     additional indebtedness, prepay other indebtedness, pay dividends,
     repurchase or redeem capital stock, enter into certain investments, enter
     into sale and lease-back transactions, make certain acquisitions, engage in
     mergers and consolidations, create liens, or engage in certain transactions
     with affiliates and otherwise restrict our corporate and business
     activities. In addition, under our senior secured revolving credit
     facility, we are required to comply with a minimum EBITDA, consolidated
     fixed charge coverage ratio and foreign leverage ratio. We are also
     required to deposit all proceeds from collection of accounts receivable and
     sale of collateral with an account under the exclusive dominion and control
     of the senior lenders.

     Borrowings under our senior secured credit facility accrue interest, at our
     option, at either: LIBOR, plus 5.0%, equaling 7.3% at January 1, 2005; or
     the Base Rate (prime rate), plus 3.0%, equaling 8.25% at January 1, 2005.
     The Company has the option to convert any base rate loan to LIBOR rate
     loan, which includes an applicable margin of 5.0%. LIBOR rate loans are to
     be no lower than a rate of 7.0%.

     Events of default under our senior secured revolving credit facility
     include, but are not limited to: (a) our failure to pay principal or
     interest when due; (b) our material breach of any representation or
     warranty; (c) covenant defaults; (d) our default with respect to any other
     debt with an outstanding principal amount in excess of $1.0 million if the
     effect thereof is to accelerate or permit the acceleration of such debt;
     and (e) events of bankruptcy.



                                       26
<PAGE>

     The senior secured revolving credit facility is secured by all of our
     tangible and intangible assets and all of the tangible and intangible
     assets of our domestic subsidiaries and a pledge of the capital stock of
     our domestic subsidiaries and 65.0% of the capital stock of certain of our
     foreign subsidiaries. The senior secured revolving credit facility is
     unconditionally guaranteed by each of our direct and indirect domestic
     subsidiaries.

     SENIOR SUBORDINATED NOTES
     In addition to borrowings under our senior secured revolving credit
     facility, we have $125.0 million of 10 3/4% senior subordinated notes due
     December 15, 2005 outstanding and $150.0 million of 12 1/4% senior
     subordinated notes due April 15, 2008 outstanding (excluding $8.3 million
     related to the fair value of interest rate swap agreements that have been
     monetized).

     Under the terms of our senior secured revolving credit facility, our senior
     lenders in their discretion may establish a reserve against our
     availability under such facility at any time during the 90-day period
     before the maturity date of the 10-3/4% senior subordinated notes in an
     amount equal to the lesser of $50.0 million or the amount due and payable
     under such notes upon maturity. We may incur additional debt, or may issue
     debt or equity securities, to repay and/or refinance the 10-3/4% senior
     subordinated notes. The availability and attractiveness of any outside
     sources of funds will depend on a number of factors, some of which relate
     to our financial condition and performance, and some of which are beyond
     our control, such as prevailing interest rates and general economic
     conditions. We cannot assure you that such additional funds will be
     available, or if available, that such funds will be on terms we find
     acceptable. In the event that we are unable to repay and/or refinance the
     10-3/4% senior subordinated notes, we may be required to pursue strategic
     options including a restructuring of our debt and capital structure through
     sale of assets or businesses, exchange offers and/or consent solicitations
     of our outstanding securities. We cannot assure you that any of these
     strategic options will be consummated.

     The indenture governing our 12 1/4% senior subordinated notes due 2008 and
     10 3/4% senior subordinated notes due 2005 contains, covenants that, among
     other things, limit our ability and the ability of our restricted
     subsidiaries to incur additional indebtedness and issue preferred stock,
     pay dividends or make certain other restricted payments, create certain
     liens, enter into certain transactions with affiliates, enter into sale and
     lease-back transactions, sell assets or enter into certain mergers and
     consolidations.

     Interest is payable on the 10 3/4 % senior subordinated notes on June 15th
     and December 15th of each year in an amount equal to approximately $6.7
     million on each payment date. Interest is payable on the 12 1/4 % senior
     subordinated notes on April 15th and October 15th of each year in an amount
     equal to approximately $9.2 million on each payment date.

     Our senior subordinated notes are general unsecured obligations and are
     subordinated to all our current and future senior debt, including all
     borrowings under our senior secured revolving credit facility. The
     subordinated notes rank equally with all our other existing and future
     senior subordinated indebtedness.

     Events of default under our senior subordinated notes include, but are not
     limited to: (a) our default for 30 days in the payment when due of
     interest; (b) our default in payment when due of principal or premium; (c)
     covenant defaults; (d) default under any indebtedness that (1) is caused by
     a failure to pay principal or interest or (2) results in the acceleration
     of such indebtedness and, in each of clause (1) and (2), the principal
     amount of such indebtedness exceeds $2.5 million; and (e) events of
     bankruptcy.

                                       27
<PAGE>

     Our current and future domestic restricted subsidiaries jointly and
     severally guarantee our payment obligations under the senior subordinated
     notes on a senior subordinated basis. The guarantees rank junior to all
     senior debt of the guarantors (including guarantees under our senior
     secured revolving credit facility) and equally with all other senior
     subordinated indebtedness of the guarantors.

     OTHER CREDIT FACILITIES
     We maintain credit facilities outside of the United States that locally
     support our foreign subsidiaries operations and working capital
     requirements. These facilities are at current market rates in those
     localities and at certain peak periods of the year, are secured by various
     assets.

     On September 28, 2004 Salton Europe, Limited ("Salton Europe"), the
     Company's wholly owned subsidiary, amended their facility agreement with
     Hong Kong Shanghai Bank. As of January 1, 2005, there was $41.4 million
     utilized under the facility included in other current debt.

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

     One or more of our overseas manufacturers, including some of our major
     suppliers, have recently been experiencing financial difficulties due to
     challenging business and economic conditions. If we are required to, or
     decide to, transition some of our production to different suppliers, the
     cost and availability of certain of our products during such a transition
     could be adversely affected.

     We believe that future cash flow from operations based on our current level
     of operations and anticipated growth, available borrowings under our senior
     secured revolving credit facility and other sources of debt funding and
     sale or monetization of certain assets, will be adequate to meet our
     anticipated requirements for current capital expenditures, potential
     acquisitions and alliances, working capital requirements, interest and
     income tax payments and scheduled debt payments for the next twelve months.
     Our anticipated earnings and growth are subject to general economic,
     financial, competitive and other factors that are beyond our control. If we
     are unable to satisfy such 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 and/or cutting other costs, and some or such actions
     would require the consent of our senior lenders and/or the holders of our
     senior 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 revolving
     credit facility or the indentures governing our senior subordinated notes.

     ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

     We use derivative financial instruments to manage interest rate and foreign
     currency risk. Our objectives in managing our exposure to interest rate
     changes are to limit the impact of interest rate changes on earnings and
     cash flows and to lower our overall borrowing costs through the use of
     interest rate swaps. Our objectives in managing our exposure to foreign
     currency fluctuations is to reduce the impact of changes in foreign
     exchange rates on consolidated results of operations and future foreign
     currency denominated cash flows. We do not enter into derivative financial
     instruments for trading purposes. Our policy is to manage interest rate
     risk through the use of a combination of fixed and variable rate debt and
     hedge foreign currency commitments of future payments and receipts by
     purchasing foreign currency forward contracts.



                                       28
<PAGE>


     All foreign exchange contracts have been recorded in the consolidated
     balance sheets within accrued expenses at a fair value of $5.7 million and
     $8.7 million at January 1, 2005 and July 3, 2004, respectively. The change
     in the fair value of contracts in the second quarter was $4.2 million.
     There was $(2.3) million and $(6.0) million at January 1, 2005 and July 3,
     2004, respectively, recorded in accumulated other comprehensive income, net
     of tax, related to these contracts. The Company anticipates that all gains
     and losses deferred in accumulated other comprehensive income related to
     foreign exchange contracts will be reclassified into earnings within the
     next twelve months as the related inventories are sold. At January 1, 2005,
     the Company had foreign exchange forward contracts for the purchase of 70.7
     million U.S. dollars. Contracts for the purchase of 25.9 million U.S.
     dollars were entered into during the second quarter of fiscal 2005.

     ITEM 4. CONTROLS AND PROCEDURES

(a)  Evaluation of disclosure controls and procedures. Based on their evaluation
     as of a date within 90 days of the filing date of this Quarterly Report on
     Form 10-Q, the Company's principal executive officer and principal
     financial officer have concluded that the Company's disclosure controls and
     procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the
     Securities Exchange Act of 1934 (the "Exchange Act")) are effective to
     ensure that information required to be disclosed by the Company in reports
     that it files or submits under the Exchange Act is recorded, processed,
     summarized and reported within the time periods specified in Securities and
     Exchange Commission rules and forms.

(b)  Changes in internal controls. There were no significant changes in the
     Company's internal controls or in other factors that could significantly
     affect these controls subsequent to the date of their evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


                           PART II: OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

     SECURITIES CLASS ACTION LAWSUITS

       In May 2004, two stockholder lawsuits, named Mariss Partners, LLP v.
       Salton, Inc., Leonhard Dreimann and David M. Mulder and Warren Beeler v.
       Salton, Inc., Leonhard Dreimann and David Mulder, were filed in the
       United States District Court for the Northern District of Illinois
       against the Company and certain Salton executives. The complaints allege
       that the defendants violated the federal securities laws, specifically
       Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule
       10b-5 of the Securities and Exchange Commission, by making certain
       alleged false and misleading statements. The plaintiffs seek unspecified
       damages on behalf of a purported class of purchasers of our securities
       during the period from November 11, 2002 through May 11, 2004. The
       Company believes that these lawsuits are without merit and that it has
       compelling defenses to the allegations contained in the complaints.
       Salton intends to vigorously defend the Company. The outcome of the class
       action lawsuits cannot be predicted with certainty, however, Salton does
       not believe that this matter will have a material adverse affect on its
       business, financial condition or results of operations. Therefore, no
       amounts have been accrued for such claims. The plaintiffs have
       voluntarily dismissed the Mariss Partners lawsuit.



                                       29
<PAGE>
     PHILIPS

     In June 2003, the Company received a letter from Philips Domestic
     Appliances and Personal Care B.V. (Philips) accusing Salton of interfering
     in a contractual relationship between Philips and a manufacturing source
     for Salton, Electrical and Electronics (E&E), misappropriating trade
     secrets and infringing other unspecified intellectual property rights in
     connection with its development and marketing of the One:One single serve
     coffee maker. On August 14, 2003, Salton filed a complaint in the United
     States District Court for the Northern District of Illinois seeking a
     declaratory judgment that the Company had not infringed the alleged trade
     secret rights of Philips and had not tortuously interfered with the
     contractual relationship between Philips and E&E.

     Philips response has been to file a series of lawsuits against Salton. On
     October 23, 2003, Philips filed a counterclaim against Salton in the
     Northern District of Illinois, Declaratory Judgment case, reiterating the
     allegations of Philips' June letter and adding a claim for copyright
     infringement. The counterclaim sought to enjoin the distribution of the
     One:One in the United States and money damages. On January 5, 2004, the
     Court dismissed the action for failure to join E&E and suggested that the
     matter should be litigated in the courts of Hong Kong. Philips has appealed
     the Court's decision to the United States Court of Appeals for the Seventh
     Circuit. A decision on this appeal is not expected for a number of months.
     In view of the District Court's ruling, the Company sought and obtained the
     consent of E&E to join in the action previously filed by Philips in Hong
     Kong in May 2003, against E&E, alone. That Hong Kong suit alleges that E&E
     misappropriated trade secrets, infringed intellectual property and breached
     its contract with Philips in the process of developing and manufacturing
     the One:One coffee maker for Salton.

     On January 6, 2004, Philips filed a new action in the United States
     District Court for the Northern District of Illinois, against Salton
     alleging violations of U.S. Copyright Law seeking to enjoin the Company
     from selling the One:One coffee maker and any monetary damages that the
     Court deems proper. Contemporaneously, Philips sought a preliminary
     injunction. On January 30, 2004, the Court dismissed Philips' new action on
     the grounds that it was barred by the Court's dismissal decision in the
     prior action. Philips appealed this dismissal and the appeal was
     consolidated with the appeal of the earlier case in the United States Court
     of Appeals for the Seventh Circuit.

     On November 24, 2003, Philips and Sara Lee NV also filed a patent
     infringement suit against Salton asserting that the One:One infringed a
     U.S. patent. Like the other actions, this case seeks damages and injunctive
     relief. The case is pending as in the United States District Court for the
     Northern District of Illinois.

     Philips has also filed an action for copyright infringement in the United
     Kingdom. This suit alleges that the software on the electronic controller
     of the One:One infringes Philips copyright and seeks unspecified money
     damages and injunctive relief. At issue were the 55,624 units initially
     introduced into the United Kingdom; Salton has discontinued the sales of
     these units. This case is currently pending in the United Kingdom. E&E has
     intervened in this action, and E&E's motion to dismiss or in the
     alternative stay this action in favor of the Hong Kong action described
     above was denied. On October 14, 2004, Salton offered to submit to judgment
     in this action, and in the event the parties cannot agree on a royalty for
     the use of this software in the 55,624 units, a judicial determination will
     have to be made of any monetary award.



                                       30
<PAGE>


     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 is seeking to
     convert the lawsuit into a class action suit. 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.

     Shortly after receiving notice of the lawsuit, the Company voluntarily
     suspended selling the product. The Company believes that at substantially
     the same time, the two retailers who had purchased the kettle from the
     Company also suspended selling the product. Based on information received
     from the two retailers, the Company believes that only a limited number of
     the kettles were sold to consumers. The Company voluntarily contacted the
     U.S. Food and Drug Administration and has shared its information and test
     results concerning the product with the agency.

     The Company is reviewing the status of any other similar products, which
     the same manufacturer has sold to the Company in recent years.

     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.

     HOMEPLACE OF AMERICA

     Homeplace of America, a company in liquidation under the United States
     Bankruptcy Code, brought a lawsuit for recovery of preferential payments
     made to Salton and its subsidiary, Toastmaster, during the 90 day
     "preference" period prior to filing for bankruptcy. Homeplace's total
     claimed preferences are approximately $3.5 million. The trial started the
     first week of November 2004 in the U.S. Bankruptcy Court for the District
     of Delaware. Settlement discussions to date have not, in Salton's view,
     been meaningful. Salton does not believe that this matter will have a
     material adverse affect on its business, financial condition or results of
     operations. Therefore, no material 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 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
     our normal business operations. The Company believes that the outcome of
     any 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 we could incur claims for which we are not insured.



                                       31
<PAGE>





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

     The Annual Meeting of Shareholders was held on December 9, 2004.

     The following proposal was adopted by the margins indicated:

         1. To elect three Class I Directors for a term expiring in 2007.


<TABLE>
<CAPTION>
                                           Number of Shares
                                      -------------------------
                                          For         Withheld
                                      ----------      ---------
<S>                                   <C>             <C>
            David C. Sabin            13,981,078      159,274
            William B. Rue            13,980,258      160,094
            Robert A. Bergmann        13,986,933      153,419
</TABLE>


     The following proposal was adopted by the margins indicated:

         2. To ratify the appointment of Deloitte & Touche LLP as the auditors
            for the 2005 fiscal year.

<TABLE>
<S>                                      <C>
                   For                   13,999,998
                   Against                  134,321
                   Abstain                    6,033
</TABLE>


                                       32
<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:  February 10, 2005             SALTON, INC.

                                     /s/  DAVID M. MULDER
                                     David M. Mulder
                                     Executive Vice President,
                                     Chief Administrative Officer and
                                     Senior Financial Officer
                                     (Duly Authorized Officer of the Registrant)



                                       33
<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 Senior 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 Senior Financial Officer Pursuant to 18.
                  U.S.C. 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002
</TABLE>


                                       34