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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

COMMISSION FILE NUMBERS: 333-44473
333-77905


THE HOLMES GROUP, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


| |                                                                                |  |                                                 | 
| | ------------------------------------------------------------------------------ |  | ----------------------------------------------- | 
| | MASSACHUSETTS
(STATE OR OTHER JURISDICTION
OF INCORPORATION OR ORGANIZATION)   |  | 04-2768914
(I.R.S. EMPLOYER
IDENTIFICATION NO.) | 
| |                                                                                |  |                                                 | 
| | ONE HOLMES WAY, MILFORD MASSACHUSETTS
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) |  | 01757
(ZIP CODE)                                | 

(508) 634-8050
(REGISTRANTS TELEPHONE NUMBER)

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.  YESxNOo

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS
DEFINED IN RULE 12B-2 OF THE EXCHANGE
ACT).  YESoNOx





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TABLE OF CONTENTS



|                                                                        |                                                                                               |                                            |  |  |  |  |  | 
|----------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                                          
|                                                                        | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                                                        |                                                                                               | CONSOLIDATED BALANCE SHEETS               
|                                                                        |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                                                        |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                                                        |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                                        | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                                        | ITEM 3. QUANTIATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            
|                                                                        | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION                                             
|                                                                        | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                                                                        | ITEM 5. OTHER INFORMATION                                                                    
|SIGNATURES                                                             
|CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



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THE HOLMES GROUP, INC.
FORM 10-Q

QUARTER ENDED MARCH 31, 2003

TABLE OF CONTENTS

|        |  |                                                                                                             |  |      
|------- |  | ----------------------------------------------------------------------------------------------------------- |  | -----
|        |  |                                                                                                             |  | PAGE 
|PART I  |  | FINANCIAL INFORMATION:                                                                                      |  |      
|ITEM 1. |  | FINANCIAL STATEMENTS                                                                                        |  |      
|        |  | CONSOLIDATED BALANCE SHEETS AT MARCH 31, 2003 (UNAUDITED), DECEMBER 31,
2002 AND MARCH 31, 2002 (UNAUDITED) |  | 3    
|        |  | CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS
ENDED MARCH 31, 2003 AND 2002        |  | 4    
|        |  | CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS
ENDED MARCH 31, 2003 AND 2002        |  | 5    
|        |  | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                                  |  | 6-19 
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS                       |  | 20-26
|ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                  |  | 26   
|ITEM 4. |  | CONTROLS AND PROCEDURES                                                                                     |  | 26   
|PART II |  | OTHER INFORMATION:                                                                                          |  |      
|ITEM 1. |  | LEGAL PROCEEDINGS                                                                                           |  | 27   
|ITEM 5. |  | OTHER INFORMATION                                                                                           |  | 27   
|        |  | SIGNATURES AND OFFICER CERTIFICATES                                                                         |  | 28-30

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##### Table of Contents






PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS





THE HOLMES GROUP, INC.
CONSOLIDATED BALANCE SHEETS

|                                               |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |         |         |  
|---------------------------------------------- | -------------------------------------------------------------- | ------------------------------------------ | ------- | ------------------------------------------------- | ------- | ------------ | ------- | ----------- | ------- | --------- | ------- | ------- | ------- | -
|                                               |                                                                |                                            |         | MARCH 31,                                         |         |              |         |             |         | MARCH 31,
|                                               |                                                                |                                            |         | 2003                                              |         | DECEMBER 31, |         | 2002       
|                                               |                                                                |                                            |         | (UNAUDITED)                                       |         | 2002         |         | (UNAUDITED)
|                                               |                                                                |                                            |         |                                                   |         |              |         |            
|                                               |                                                                |                                            |         | (in thousands except share and per share amounts)
|ASSETS                                         |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |        
|Current assets:                                |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |        
|                                               | Cash and cash equivalents                                      |                                            | $       | 5,619                                             |         |              | $       | 8,426       |         |           | $       | 5,351   |        
|                                               | Accounts receivable, net                                       |                                            |         | 86,200                                            |         |              |         | 128,409     |         |           |         | 92,891  |        
|                                               | Inventories                                                    |                                            |         | 125,339                                           |         |              |         | 110,236     |         |           |         | 108,209 |        
|                                               | Prepaid expenses and other current assets                      |                                            |         | 4,871                                             |         |              |         | 4,817       |         |           |         | 6,656   |        
|                                               | Deferred income taxes                                          |                                            |         | 5,067                                             |         |              |         | 5,067       |         |           |         | 5,249   |        
|                                               |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |         |        
|                                               |                                                                | Total current assets                       | 227,096 |                                                   |         |              | 256,955 |             |         |           | 218,356 |        
|Assets held for sale                           |                                                                |                                            | 6,466   |                                                   |         |              | 6,466   |             |         |           | 6,288   |        
|Property and equipment, net                    |                                                                |                                            | 42,292  |                                                   |         |              | 42,446  |             |         |           | 59,641  |        
|Deposits and other assets                      |                                                                |                                            | 1,707   |                                                   |         |              | 837     |             |         |           | 5,146   |        
|Debt issuance costs, net                       |                                                                |                                            | 8,463   |                                                   |         |              | 10,184  |             |         |           | 15,701  |        
|Deferred income taxes                          |                                                                |                                            | 5,956   |                                                   |         |              | 5,956   |             |         |           | 5,774   |        
|                                               |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |         |        
|                                               |                                                                | $                                          | 291,980 |                                                   |         | $            | 322,844 |             |         | $         | 310,906 |        
|                                               |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |         |        
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |        
|Current liabilities:                           |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |        
|                                               | Accounts payable                                               |                                            |         | 40,484                                            |         |              |         | 44,267      |         |           |         | 42,578  |        
|                                               | Current portion of Credit Facility                             |                                            |         | 9,078                                             |         |              |         | 9,078       |         |           |         | 8,628   |        
|                                               | Accrued income taxes                                           |                                            |         | 7,739                                             |         |              |         | 7,405       |         |           |         | 6,829   |        
|                                               | Accrued expenses and other current liabilities                 |                                            |         | 40,091                                            |         |              |         | 53,101      |         |           |         | 43,916  |        
|                                               | Deferred income taxes                                          |                                            |         | 3,124                                             |         |              |         | 2,967       |         |           |         | 2,219   |        
|                                               |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |         |        
|                                               |                                                                | Total current liabilities                  |         |                                                   | 100,516 |              |         |             | 116,818 |           |         |         | 104,170 |  
|Long-term portion of Credit Facility           |                                                                |                                            | 153,386 |                                                   |         |              | 166,556 |             |         |           | 159,864 |        
|Senior Subordinated Notes                      |                                                                |                                            | 99,565  |                                                   |         |              | 99,544  |             |         |           | 99,482  |        
|Pension obligation                             |                                                                |                                            | 5,909   |                                                   |         |              | 5,840   |             |         |           |        |        
|Other liabilities                              |                                                                |                                            | 7,948   |                                                   |         |              | 7,613   |             |         |           | 7,266   |        
|Deferred income taxes                          |                                                                |                                            | 989     |                                                   |         |              | 989     |             |         |           | 1,125   |        
|Commitments and contingencies                  |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |        
|Stockholders equity (deficit):                |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |        
|                                               | Common stock, $.001 par value. Authorized - 28,500,000 shares; |                                            |         | 20                                                |         |              |         | 20          |         |           |         | 20      |        
|                                               |                                                                | Issued and outstanding - 20,302,995 shares |         |                                                   |         |              |         |             |         |           |         |         |         |  
|                                               | Additional paid in capital                                     |                                            |         | 68,874                                            |         |              |         | 68,874      |         |           |         | 68,874  |        
|                                               | Accumulated other comprehensive income (loss)                  |                                            |         | (6,932                                            | )       |              |         | (7,231      | )       |           |         | 140     |        
|                                               | Treasury stock, at cost (18,627,450 shares)                    |                                            |         | (62,076                                           | )       |              |         | (62,076     | )       |           |         | (62,076 | )      
|                                               | Retained earnings (deficit)                                    |                                            |         | (76,219                                           | )       |              |         | (74,103     | )       |           |         | (67,959 | )      
|                                               |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |         |        
|                                               |                                                                | Total stockholders equity (deficit)       |         |                                                   | (76,333 | )            |         |             | (74,516 | )         |         |         | (61,001 | )
|                                               |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |         |        
|                                               |                                                                | $                                          | 291,980 |                                                   |         | $            | 322,844 |             |         | $         | 310,906 |        
|                                               |                                                                |                                            |         |                                                   |         |              |         |             |         |           |         |         |        

The accompanying notes are an integral part of these consolidated financial statements

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THE HOLMES GROUP, INC.




CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


|                                                                                                                                 |                            |   |                    |       |                |   |         |         |  
|-------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | - | ------------------ | ----- | -------------- | - | ------- | ------- | -
|                                                                                                                                 |                            |   | THREE MONTHS ENDED
|                                                                                                                                 |                            |   |                   
|                                                                                                                                 |                            |   | March 31, 2003     |       | March 31, 2002
|                                                                                                                                 |                            |   |                    |       |               
|                                                                                                                                 |                            |   | (in thousands)    
|Net sales                                                                                                                        |                            | $ | 115,300            |       |                | $ | 117,342 |        
|Cost of sales                                                                                                                    |                            |   | 82,893             |       |                |   | 88,892  |        
|                                                                                                                                 |                            |   |                    |       |                |   |         |        
|Gross profit                                                                                                                     |                            |   | 32,407             |       |                |   | 28,450  |        
|Selling and administrative expenses                                                                                              |                            |   | 27,832             |       |                |   | 25,133  |        
|Restructuring charges (income)                                                                                                   |                            |   | (121               | )     |                |   | 1,787   |        
|                                                                                                                                 |                            |   |                    |       |                |   |         |        
|Operating income                                                                                                                 |                            |   | 4,696              |       |                |   | 1,530   |        
|Other expense (income):                                                                                                          |                            |   |                    |       |                |   |         |        
|                                                                                                                                 | Interest expense           |   |                    | 6,589 |                |   |         | 7,956   |  
|                                                                                                                                 | Gain on sale of business   |   |                    |      |                |   |         | (9,088  | )
|                                                                                                                                 | Gain on retirement of debt |   |                    |      |                |   |         | (22,388 | )
|                                                                                                                                 | Other income, net          |   |                    | (238  | )              |   |         | (1,003  | )
|                                                                                                                                 |                            |   |                    |       |                |   |         |        
|                                                                                                                                 |                            |   | 6,351              |       |                |   | (24,523 | )      
|                                                                                                                                 |                            |   |                    |       |                |   |         |        
|Income (loss) before income taxes, equity in earnings from joint venture
and cumulative effect of change in accounting principle |                            |   | (1,655             | )     |                |   | 26,053  |        
|Income tax expense (benefit)                                                                                                     |                            |   | 943                |       |                |   | (1,425  | )      
|Equity in earnings from joint venture                                                                                            |                            |   | (482               | )     |                |   | (600    | )      
|                                                                                                                                 |                            |   |                    |       |                |   |         |        
|Income (loss) before cumulative change in accounting principle                                                                   |                            |   | (2,116             | )     |                |   | 28,078  |        
|Cumulative effect of change in accounting principle                                                                              |                            |   |                   |       |                |   | (79,838 | )      
|                                                                                                                                 |                            |   |                    |       |                |   |         |        
|Net loss                                                                                                                         |                            | $ | (2,116             | )     |                | $ | (51,760 | )      
|                                                                                                                                 |                            |   |                    |       |                |   |         |        

The accompanying notes are an integral part of these consolidated financial statements

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THE HOLMES GROUP, INC.




CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


|                                                  |  |                                                                                 |                                                                |                                           |         |                    |         |                |         |         |        |  
|------------------------------------------------- |  | ------------------------------------------------------------------------------- | -------------------------------------------------------------- | ----------------------------------------- | ------- | ------------------ | ------- | -------------- | ------- | ------- | ------ | -
|                                                  |  |                                                                                 |                                                                |                                           |         | THREE MONTHS ENDED
|                                                  |  |                                                                                 |                                                                |                                           |         |                   
|                                                  |  |                                                                                 |                                                                |                                           |         | March 31, 2003     |         | March 31, 2002
|                                                  |  |                                                                                 |                                                                |                                           |         |                    |         |               
|                                                  |  |                                                                                 |                                                                |                                           |         | (in thousands)    
|Cash flows from operating activities:             |  |                                                                                 |                                                                |                                           |         |                    |         |               
|                                                  |  | Net loss                                                                        |                                                                | $                                         | (2,116  | )                  |         | $              | (51,760 | )      
|                                                  |  | Adjustments to reconcile net loss to net cash provided by
operating activities: |                                                                |                                           |         |                    |         |                |         |        
|                                                  |  |                                                                                 | Depreciation and amortization                                  |                                           |         | 2,692              |         |                |         | 3,302   |       
|                                                  |  |                                                                                 | Amortization of debt related costs and other non-cash interest |                                           |         | 1,742              |         |                |         | 1,432   |       
|                                                  |  |                                                                                 | Provision for doubtful accounts                                |                                           |         | 218                |         |                |         | 285     |       
|                                                  |  |                                                                                 | Loss on disposal of assets                                     |                                           |         | 21                 |         |                |         |        |       
|                                                  |  |                                                                                 | Gain on sale of business                                       |                                           |         |                   |         |                |         | (9,088  | )     
|                                                  |  |                                                                                 | Gain on retirement of debt                                     |                                           |         |                   |         |                |         | (22,388 | )     
|                                                  |  |                                                                                 | Cumulative effect of change in accounting principle            |                                           |         |                   |         |                |         | 79,838  |       
|                                                  |  |                                                                                 | Deferred income taxes                                          |                                           |         |                   |         |                |         | (2,594  | )     
|                                                  |  |                                                                                 | Restructuring and other asset impairment charges               |                                           |         |                   |         |                |         | 1,687   |       
|                                                  |  |                                                                                 | Changes in operating assets and liabilities:                   |                                           |         |                    |         |                |         |         |       
|                                                  |  |                                                                                 |                                                                | Accounts receivable                       |         |                    | 40,995  |                |         |         | 47,880 |  
|                                                  |  |                                                                                 |                                                                | Inventories                               |         |                    | (15,103 | )              |         |         | (9,512 | )
|                                                  |  |                                                                                 |                                                                | Prepaid expenses and other current assets |         |                    | (54     | )              |         |         | 1,265  |  
|                                                  |  |                                                                                 |                                                                | Deposits and other assets                 |         |                    | (870    | )              |         |         | (3,011 | )
|                                                  |  |                                                                                 |                                                                | Accounts payable                          |         |                    | (3,783  | )              |         |         | 5,592  |  
|                                                  |  |                                                                                 |                                                                | Accrued expenses and other liabilities    |         |                    | (13,031 | )              |         |         | 698    |  
|                                                  |  |                                                                                 |                                                                | Accrued income taxes                      |         |                    | 491     |                |         |         | 372    |  
|                                                  |  |                                                                                 |                                                                |                                           |         |                    |         |               
|                                                  |  |                                                                                 | Net cash provided by operating activities                      |                                           |         | 11,202             |         |                |         | 43,998  |       
|Cash flows from investing activities:             |  |                                                                                 |                                                                |                                           |         |                    |         |               
|                                                  |  | Proceeds from sale of business and assets held for sale                         |                                                                |                                           |        |                    |         |                | 15,100  |        
|                                                  |  | Distribution of earnings from joint venture                                     |                                                                |                                           | 996     |                    |         |                | 478     |        
|                                                  |  | Purchases of property and equipment                                             |                                                                |                                           | (2,427  | )                  |         |                | (1,736  | )      
|                                                  |  | Cash received from joint venture partner                                        |                                                                |                                           | 293     |                    |         |                |        |        
|                                                  |  |                                                                                 |                                                                |                                           |         |                    |         |               
|                                                  |  |                                                                                 | Net cash provided by (used for) investing activities           |                                           |         | (1,138             | )       |                |         | 13,842  |       
|Cash flows from financing activities:             |  |                                                                                 |                                                                |                                           |         |                    |         |               
|                                                  |  | Repayments
of Credit Facility                                                   |                                                                |                                           | (13,170 | )                  |         |                | (49,390 | )      
|                                                  |  | Redemption of Senior Subordinated Notes                                         |                                                                |                                           |        |                    |         |                | (11,549 | )      
|                                                  |  | Debt issuance costs                                                             |                                                                |                                           |        |                    |         |                | (1,579  | )      
|                                                  |  |                                                                                 |                                                                |                                           |         |                    |         |               
|                                                  |  |                                                                                 | Net cash used for financing activities                         |                                           |         | (13,170            | )       |                |         | (62,518 | )     
|Effect of exchange rate changes on cash           |  |                                                                                 | 299                                                            |                                           |         |                    | (86     | )             
|                                                  |  |                                                                                 |                                                                |                                           |         |                    |         |               
|Net decrease in cash and cash equivalents         |  |                                                                                 | (2,807                                                         | )                                         |         |                    | (4,764  | )             
|Cash and cash equivalents, beginning of period    |  |                                                                                 | 8,426                                                          |                                           |         |                    | 10,115  |               
|                                                  |  |                                                                                 |                                                                |                                           |         |                    |         |               
|Cash and cash equivalents, end of period          |  | $                                                                               | 5,619                                                          |                                           |         | $                  | 5,351   |               
|                                                  |  |                                                                                 |                                                                |                                           |         |                    |         |               
|Supplemental disclosure of cash flow information: |  |                                                                                 |                                                                |                                           |         |                    |         |               
|                                                  |  |                                                                                 | Cash paid for interest                                         |                                           | $       | 2,445              |         |                | $       | 4,753   |       
|                                                  |  |                                                                                 | Cash paid for income taxes                                     |                                           | $       | 596                |         |                | $       | 182     |       

The accompanying notes are an integral part of these consolidated financial statements

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THE HOLMES GROUP, INC.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003


1. UNAUDITED INTERIM FINANCIAL STATEMENTS

The financial information included in this Form 10-Q of The Holmes Group, Inc.
(THG or the Company) for the periods ended March 31, 2003 and 2002 is
unaudited. However, such information includes all adjustments (including all
normal recurring adjustments) which, in the opinion of management, are
considered necessary for a fair presentation of the consolidated results for
those periods. The results of operations for the periods ended March 31, 2003
and 2002 are not necessarily indicative of the results of operations that may
be expected for the complete fiscal year. The year-end condensed balance sheet
data was derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles. The Company
filed its audited consolidated financial statements for the year ended December
31, 2002 on Form 10-K which included all information and footnotes necessary
for such presentation.

Certain amounts in the financial statements for prior periods have been
reclassified to conform to the current period presentation.

2. RECENTLY ISSUED ACCOUNTING STANDARDS

The Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44 and 64,
Amendment of FASB Statement No. 13, and Technical Corrections in April 2002.
This statement updates, clarifies and simplifies existing accounting
pronouncements. Specifically, the statement rescinds FASB Statement No. 4,
Reporting Gains and Losses from Extinguishment of Debt, FASB Statement No.
64, Extinguishment of Debt Made to Satisfy Sinking Fund Requirements and FASB
Statement No. 44, Accounting for Intangible Assets of Motor Carriers. This
statement also amends FASB Statement No. 13, Accounting for Leases and
certain other existing authoritative pronouncements to make technical
corrections or clarifications. FAS 145 became effective for THG related to the
rescission of FAS 4 and FAS 64 on January 1, 2003. FAS 145 was effective
related to the amendment of FAS 13 for all transactions occurring after May 15,
2002. All other provisions of FAS 145 became effective for financial
statements issued after May 15, 2002. In accordance with the new standard, the
Company reclassified the gain related to the Senior Notes repurchase, which was
treated as an extraordinary item in 2002, as a component of other income in the
consolidated statement of operations.

In July 2002, the FASB issued Statement of Financial Accounting Standards No.
146, Accounting for Costs Associated with Exit or Disposal Activities, which
nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). FAS 146
requires a liability for a cost associated with an exit or disposal activity be
recognized and measured initially at its fair value in the period in which the
liability is incurred. If fair value cannot be reasonable estimated, the
liability shall be recognized initially in the period in which fair value can
be reasonably estimated. The provisions of FAS 146 will be effective for the
Company prospectively for exit or disposal activities initiated after December
31, 2002. Adoption of this Standard will impact the timing of recognition of
costs associated with future exit and disposal activities.

In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of
Variable Interest Entities. This interpretation explains how to identify
variable interest entities and how an enterprise assesses its interest in a
variable interest entity to decide whether to consolidate that entity. This
interpretation requires existing unconsolidated variable interest entities to
be consolidated by their primary beneficiaries if the entities do not
effectively disperse risks among parties involved. Variable interest entities
that effectively disperse risk will not be consolidated unless a single party
holds an interest or combination of interest that effectively recombines risks
that were previously dispersed. This interpretation applies immediately to
variable interest entities created after January 31, 2003, and to variable
interest entities in which an enterprise obtains an interest after that date.
As of July 1, 2003, the standard applies to variable interest entities in which
an enterprise holds a variable interest that it acquired before February 1,
2003. The adoption of FIN 46 should not have a material effect on the
Companys financial position or results of operations.

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THE HOLMES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

3. CHANGE IN ACCOUNTING PRINCIPLE

In June 2001, the FASB issued Statement of Financial Accounting Standards No.
142, Goodwill and Other Intangible Assets. Under FAS 142, goodwill and
intangible assets with indefinite lives are no longer amortized, but are
reviewed annually for potential impairment by comparing the carrying value to
the fair value of the reporting unit to which they are assigned. FAS 142
requires that goodwill be tested for impairment at the reporting unit level at
adoption utilizing a two-step methodology. The provisions of FAS 142 were
effective for the Companys 2002 fiscal year and, accordingly, the Company
adopted the new standard effective January 1, 2002. The Companys consolidated
balance sheet as of December 31, 2001 included goodwill with a net book value
of $79.8 million as a result of the Rival acquisition in 1999. In accordance
with the new standard, the Company ceased goodwill amortization as of the
beginning of fiscal 2002.

In connection with adopting this standard, the Company established a policy to
value goodwill and other intangible assets using a discounted cash flow method.
With the assistance of independent valuation consultants, the Company
completed the transitional testing of goodwill using a measurement date of
January 1, 2002. The results of the transitional impairment testing indicated
that the carrying values of the goodwill asset for both the home environment
and kitchen reporting units significantly exceeded the estimated fair value of
the units. Accordingly, step two of the testing, which measures the amount of
asset impairment, was completed in 2002. As a result, a non-cash impairment
charge of $79.8 million was recognized as a change in accounting principle as
of the beginning of 2002. The impairment charge, which relates to the
Companys Consumer Durables segment, was $79.8 million on a before and
after-tax basis.

4. INVENTORIES

All inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method on approximately 86% of the
inventories and the last-in, first-out method (LIFO) for the remaining 14% of
the inventory. Inventories are as follows (in thousands):

|                |  |                |         |                   |  |                |         |   |  |   |         |  
|--------------- |  | -------------- | ------- | ----------------- |  | -------------- | ------- | - |  | - | ------- | -
|                |  | March 31, 2003 |         | December 31, 2002 |  | March 31, 2002
|                |  |                |         |                   |  |               
|Finished goods  |  | $              | 114,321 |                   |  | $              | 95,789  |   |  | $ | 87,707  |  
|Raw materials   |  |                | 9,157   |                   |  |                | 12,501  |   |  |   | 18,594  |  
|Work in process |  |                | 2,227   |                   |  |                | 2,312   |   |  |   | 2,108   |  
|                |  |                |         |                   |  |                |         |   |  |   |         |  
|                |  |                | 125,705 |                   |  |                | 110,602 |   |  |   | 108,409 |  
|LIFO allowance  |  |                | (366    | )                 |  |                | (366    | ) |  |   | (200    | )
|                |  |                |         |                   |  |                |         |   |  |   |         |  
|                |  | $              | 125,339 |                   |  | $              | 110,236 |   |  | $ | 108,209 |  
|                |  |                |         |                   |  |                |         |   |  |   |         |  

5. RESTRUCTURING CHARGES AND OTHER BUSINESS DIVESTITURES

On February 5, 1999, the Company completed its acquisition of The Rival Company
for an aggregate purchase price of $279.6 million. The acquisition was
accounted for as a purchase, and the results of operations of Rival are
included in the consolidated financial statements since the date of
acquisition.

Since the acquisition, the Company has taken several restructuring actions to
integrate Rivals operations into THG, to enhance efficiencies and to reduce
costs. In January 2002, the Company announced the closing of its Sedalia,
Missouri distribution center. The activities of this facility were moved to
the other existing distribution centers. In connection with this facility
closure, the Company recorded restructuring charges totaling $1,787,000 in the
first quarter of 2002. For the 2002 fiscal year, restructuring charges related
to this facility closure totaled $4,898,000, which included $4,220,000 of asset
write-downs of redundant property and equipment to their estimated net
realizable value, facility exit costs of $612,000 and $66,000 in severance
payments for employees who elected not to transfer to other facilities.

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THE HOLMES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)


On December 2, 2002, the Company announced the closure of its remaining US
manufacturing operations effective January 31, 2003, in an effort to
enhance efficiencies and to reduce operating costs. The production activities
of the facilities in Flowood, Mississippi, Sweet Springs, Missouri and Clinton,
Missouri have been shifted to the Companys expanded manufacturing complex in
southern China and to other independent suppliers in the Far East. As part of
this restructuring action, the Company also announced the closure of an
administrative office in Kansas City, Missouri and the phase out of two
distribution and service centers in Clinton, Missouri and Worcester,
Massachusetts during the first half of 2003. As a result of these changes, the
Company recorded restructuring charges totaling $23,108,000 during the fourth
quarter of 2002. The charges included $3,935,000 for severance payments to 706
employees, $15,670,000 of non-cash asset write-downs of redundant property and
equipment to their estimated net realizable value, $1,531,000 of liabilities
related to outstanding lease obligations and facility exit costs of $1,972,000.

Approximately 615 employees were separated during the first quarter of 2003 as
a result of the facility closings. The Company expects to pay the remaining
severance and facility exit costs which are accrued as of March 31, 2003 during
the balance of fiscal 2003 and fiscal 2004. A reconciliation of the
restructuring reserve activity for the quarter ended March 31, 2003 is as
follows:

|                             |  |                  |        |               |  |               |       |   |  |   |        |  
|---------------------------- |  | ---------------- | ------ | ------------- |  | ------------- | ----- | - |  | - | ------ | -
|                             |  | Employee         |        | Facility Exit |  | Total        
|                             |  | Severance and    |        | and Other     |  | Accrued      
|                             |  | Relocation Costs |        | Costs         |  | Restructuring
|                             |  |                  |        |               |  |              
|                             |  | (in thousands)  
|Balance at December 31, 2002 |  | $                | 3,631  |               |  | $             | 3,452 |   |  | $ | 7,083  |  
|Cash Payments                |  |                  | (2,788 | )             |  |               | (366  | ) |  |   | (3,154 | )
|                             |  |                  |        |               |  |               |       |   |  |   |        |  
|Balance at March 31, 2003    |  | $                | 843    |               |  | $             | 3,086 |   |  | $ | 3,929  |  
|                             |  |                  |        |               |  |               |       |   |  |   |        |  

During the first quarter of 2003, the Company incurred $712,000 of unfavorable
manufacturing variances at the closed facilities, which were recorded
in cost of sales, and $121,000 of income
associated with the 2002 restructuring actions which were not accrued at
December 31, 2002 in accordance with Emerging Issues Task Force Issue No. 94-3.
The restructuring income in the first quarter of 2003 included a pension plan
curtailment gain of $330,000 related to the closure of the Companys
manufacturing facilities. In accordance with the provisions of
Statement of Financial
Accounting Standards No. 88, Employers Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination Benefits,
the Company expects to record a non-cash charge of approximately $2.1 million
in the second quarter of 2003 caused by a partial plan settlement due to lump
sum benefits paid to terminated employees at the closed facilities. The
remaining net realizable value of facilities and equipment related to these
restructuring actions is classified as assets held for sale in the consolidated
balance sheet as of March 31, 2003. The Company expects to sell the majority
of these assets during the second quarter of 2003.

On January 14, 2002, the Company sold substantially all of the assets of its
Pollenex® division, which marketed personal care products, for approximately
$15.1 million. The cash proceeds received in this transaction exceeded the net
assets of the business, which consisted primarily of inventory and property and
equipment, by approximately $9.5 million, resulting in a gain during 2002. In
the first quarter of 2002, other income in the consolidated statement of
operations included a gain of $9.1 million related to this transaction.

6. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

|                                                                                     |  |                |         |                   |  |                |         |   |  |   |         |  
|------------------------------------------------------------------------------------ |  | -------------- | ------- | ----------------- |  | -------------- | ------- | - |  | - | ------- | -
|                                                                                     |  | March 31, 2003 |         | December 31, 2002 |  | March 31, 2002
|                                                                                     |  |                |         |                   |  |               
|Revolving Credit Facility                                                            |  | $              | 73,309  |                   |  | $              | 84,209  |   |  | $ | 70,709  |  
|Term Loan A due February 2005                                                        |  |                | 13,295  |                   |  |                | 15,397  |   |  |   | 21,299  |  
|Term Loan B due February 2007                                                        |  |                | 75,860  |                   |  |                | 76,028  |   |  |   | 76,484  |  
|                                                                                     |  |                |         |                   |  |                |         |   |  |   |         |  
|Total Credit Facility                                                                |  |                | 162,464 |                   |  |                | 175,634 |   |  |   | 168,492 |  
|9 7/8% Senior Subordinated Notes, net of
unamortized discount, due November 15, 2007 |  |                | 99,565  |                   |  |                | 99,544  |   |  |   | 99,482  |  
|                                                                                     |  |                |         |                   |  |                |         |   |  |   |         |  
|Total Debt                                                                           |  |                | 262,029 |                   |  |                | 275,178 |   |  |   | 267,974 |  
|Less current maturities of Credit Facility                                           |  |                | (9,078  | )                 |  |                | (9,078  | ) |  |   | (8,628  | )
|                                                                                     |  |                |         |                   |  |                |         |   |  |   |         |  
|                                                                                     |  | $              | 252,951 |                   |  | $              | 266,100 |   |  | $ | 259,346 |  
|                                                                                     |  |                |         |                   |  |                |         |   |  |   |         |  

8



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THE HOLMES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

Credit Facility

Under the Fifth Amendment to the Companys Credit Facility, which was executed
in March 2002, the lenders have committed to a Revolving Credit Loan A of $131
million and a Revolving Credit Loan B of $40 million. Revolving Credit Loan B
is supported by the guarantee of investment funds managed by Berkshire
Partners, the Companys majority shareholder. Actual availability under these
Revolving Credit facilities is subject to a borrowing base formula based on
inventory and accounts receivable.

In connection with the Fifth Amendment, the Company entered into a guarantee
fee arrangement with Berkshire Partners which provides for a fee of 2.25% per
annum, compounded annually, on the $40.0 million Revolving Credit Loan B
commitment, less the portion of this facility designated as subordinated debt
funding loans (which portion is subordinated to the other obligations under the
Credit Facility). The guarantee fee related to the subordinated debt funding
loan is calculated at 20% per annum, compounded annually. At March 31, 2003,
the subordinated debt funding loan totaled $12.8 million. The guarantee fees
have not been paid, but have been accrued and are included as non-cash interest
in the statement of operations for 2002 and 2003. Payment of these fees is
subordinated to the Companys obligations under the Credit Facility.

As of March 31, 2003, December 31, 2002 and March 31, 2002, the Companys
availability under the revolving credit portions of the Credit Facility was
$61.1 million, $78.3 million and $54.5 million, respectively, net of
outstanding letters of credit. The Credit Facility bears interest at variable
rates based on either the prime rate or Eurodollar rate at the Companys
option, plus a margin which, in the case of the Term Loan A and a portion of
the Revolving Credit Facility, varies depending upon certain financial ratios.
The weighted average interest rate of borrowings under the Credit Facility was
5.4% at March 31, 2003, 5.6% at December 31, 2002 and 5.9% at March 31, 2002.
The Credit Facility, and the guarantees thereof by the Companys domestic
subsidiaries, are collateralized by substantially all of the Companys domestic
and certain foreign assets.

Senior Subordinated Notes

The Companys Senior Subordinated Notes were issued as part of a
recapitalization transaction in 1997 ($105 million) and to partially finance
the Rival acquisition in 1999 ($31.3 million). The Notes, which are due
November 15, 2007, are subordinated to the Companys other debt, including the
Credit Facility.

In conjunction with the Fifth Amendment of the Credit Facility, as described
above, the Company repurchased from two Berkshire Partners investment funds an
aggregate principal amount of approximately $36.2 million of the Senior
Subordinated Notes. The purchase price of the Notes, representing Berkshire
Partners cost, was $11.5 million plus accrued interest, which was funded with
proceeds of the Revolving Credit Loan B described above. The Notes repurchased
were retired and cancelled. This transaction resulted in a gain on the early
retirement of debt totaling $22.4 million, which has been reflected in the
consolidated statement of operations for the three months ended March 31, 2002.
This gain is net of approximately $1.9 million of debt issuance costs and $0.3
million of debt issuance discount associated with the Senior Subordinated Notes
and $0.1 million of transaction fees. A provision for income taxes was not
recorded in connection with this transaction as the Company has offset the gain
with available net operating loss carry forwards. In accordance with the
provisions of FAS 145, this gain, which was originally reported as an
extraordinary item in 2002, has been reclassified as a component of other
income in the statement of operations. The Company may consider repurchases of
additional Notes in the future, and may utilize the proceeds of the Credit
Facility for this purpose.

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THE HOLMES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

7. COMPREHENSIVE INCOME (LOSS)

Comprehensive income consists of net earnings and foreign currency translation
adjustments as presented in the following table (in thousands):

|                                         |  |                    |        |                |  |   |         |  
|---------------------------------------- |  | ------------------ | ------ | -------------- |  | - | ------- | -
|                                         |  | Three months ended
|                                         |  |                   
|                                         |  | March 31, 2003     |        | March 31, 2002
|                                         |  |                    |        |               
|Net income (loss)                        |  | $                  | (2,116 | )              |  | $ | (51,760 | )
|Foreign currency translation adjustments |  |                    | 299    |                |  |   | 142     |  
|                                         |  |                    |        |                |  |   |         |  
|Comprehensive income (loss)              |  | $                  | (1,817 | )              |  | $ | (51,618 | )
|                                         |  |                    |        |                |  |   |         |  

8. BUSINESS SEGMENTS

The Company currently manages its operations through three business segments:
Consumer Durables, International and Far East Manufacturing. The Consumer
Durables segment sells products including fans, heaters, humidifiers, air
purifiers, lighting products, Crock-Pot® slow cookers and other small kitchen
electric appliances to retailers throughout the United States. The Consumer
Durables segment is made up of home environment products and kitchen electric
products, which are considered one business segment due to the similar customer
base, distribution channels, and economic characteristics. The International
segment sells the Companys products outside the United States, predominantly
in Canada, Latin America and Europe. The Far East Manufacturing segment
represents the Companys manufacturing and sourcing operations located
primarily in Hong Kong and China at Holmes Products (Far East) Limited (HPFEL).

Summary financial information for each reportable segment for the three month
periods ended March 31, 2003 and 2002 is as follows (in thousands):

|                   |                       |          |          |          |   |               |   |              |  |       |   |        |  |  |   |         |              |  |   |         |  
|------------------ | --------------------- | -------- | -------- | -------- | - | ------------- | - | ------------ |  | ----- | - | ------ |  |  | - | ------- | ------------ |  | - | ------- | -
|                   |                       |          | Consumer |          |   |               |   |              |  |       |   |        |  |  |   |         | Consolidated
|THREE MONTHS ENDED |                       | Durables |          | Far East |   | International |   | Eliminations |  | Total
|                   |                       |          |          |          |   |               |   |              |  |      
|March 31, 2003:    |                       |          |          |          |   |               |   |              |  |       |   |        |  |  |   |         |              |  |   |        
|                   | Net sales             |          | $        | 96,316   |   |               | $ | 82,762       |  |       | $ | 13,731 |  |  | $ | (77,509 | )            |  | $ | 115,300 |  
|                   | Segment income (loss) |          |          | (6,466   | ) |               |   | 4,286        |  |       |   | 241    |  |  |   | (177    | )            |  |   | (2,116  | )
|March 31, 2002:    |                       |          |          |          |   |               |   |              |  |       |   |        |  |  |   |         |              |  |   |        
|                   | Net sales             |          | $        | 103,110  |   |               | $ | 71,383       |  |       | $ | 9,791  |  |  | $ | (66,942 | )            |  | $ | 117,342 |  
|                   | Segment income (loss) |          |          | 22,575   |   |               |   | 5,758        |  |       |   | 140    |  |  |   | (395    | )            |  |   | 28,078  |  

In 2002, income for the Consumer Durables segment includes the gain of
$22,388,000 related to the repurchase of the Companys Senior Subordinated
Notes, but excludes the goodwill impairment charge of $79,838,000 related to
the adoption of FAS 142.

The following information is summarized by geographic area (in thousands):

|                   |                                   |  |               |         |          |  |               |        |       |  |   |        |  |  |              |         | 
|------------------ | --------------------------------- |  | ------------- | ------- | -------- |  | ------------- | ------ | ----- |  | - | ------ |  |  | ------------ | ------- | 
|                   |                                   |  |               |         |          |  |               |        |       |  |   |        |  |  | Consolidated
|                   |                                   |  | United States |         | Far East |  | International |        | Total
|                   |                                   |  |               |         |          |  |               |        |      
|Net Sales:         |                                   |  |               |         |          |  |               |        |       |  |   |        |  |  |              |        
|                   | Three months ended March 31, 2003 |  | $             | 95,422  |          |  | $             | 6,493  |       |  | $ | 13,385 |  |  | $            | 115,300 | 
|                   | Three months ended March 31, 2002 |  |               | 103,110 |          |  |               | 4,441  |       |  |   | 9,791  |  |  |              | 117,342 | 
|Long-lived assets: |                                   |  |               |         |          |  |               |        |       |  |   |        |  |  |              |        
|                   | March 31, 2003                    |  |               | 16,311  |          |  |               | 33,678 |       |  |   | 476    |  |  |              | 50,465  | 
|                   | December 31, 2002                 |  |               | 16,226  |          |  |               | 33,028 |       |  |   | 495    |  |  |              | 49,749  | 
|                   | March 31, 2002                    |  |               | 37,272  |          |  |               | 32,561 |       |  |   | 1,242  |  |  |              | 71,075  | 

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THE HOLMES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

Net sales are grouped based on the geographic origin of the transaction. The
Companys manufacturing entities in the Far East sell completed
products to the Company and its subsidiaries at intercompany transfer prices which reflect
managements estimate of amounts which would be charged by an unrelated third
party. These sales are excluded from the above table and are eliminated in
consolidation. The remaining Far East sales are to the Companys motor
manufacturing joint venture with General Electric or to unrelated third
parties.

9. STOCK-BASED COMPENSATION

During the first quarter of fiscal 2003, the Company adopted the disclosure
provisions of Statement of Financial Accounting Standards No. 148, Accounting
for Stock Based Compensation  Transition and Disclosure. FAS No. 148 amends
FAS No. 123, Accounting for Stock-Based Compensation, to provide two
additional alternative transition methods if a company voluntarily decides to
change its method of accounting for stock-based employee compensation to the
fair-value method. FAS No. 148 also amends the disclosure requirements of
FAS No. 123 by requiring that companies make quarterly disclosures regarding
the pro forma effects of using the fair-value method of accounting for
stock-based compensation, effective for interim periods beginning after
December 15, 2002.

The Companys stock-based compensation plan is described fully in Note 9 to the
Companys consolidated financial statements for the year ended December 31,
2002, as contained in the Annual Report on Form 10-K. The Company accounts for
this plan under the recognition and measurement principles of APB Opinion No.
25, Accounting for Stock Issued to Employees, and related interpretations.
The following table provides the effect on net income (loss) if the Company had
applied the fair value recognition provisions of SFAS No. 123 to stock-based
compensation:

|                                                                                        |  |               |        |           |  |   |         |  
|--------------------------------------------------------------------------------------- |  | ------------- | ------ | --------- |  | - | ------- | -
|                                                                                        |  | Quarter Ended
|                                                                                        |  |              
|                                                                                        |  | March 31,     |        | March 31,
|                                                                                        |  | 2003          |        | 2002     
|                                                                                        |  |               |        |          
|Reported net loss                                                                       |  | $             | (2,116 | )         |  | $ | (51,760 | )
|Stock-based employee compensation included in net loss                                  |  |               |       |           |  |   |        |  
|Stock-based employee compensation determined under
the fair value method for all awards |  |               | (275   | )         |  |   | (291    | )
|                                                                                        |  |               |        |           |  |   |         |  
|Pro forma net loss                                                                      |  | $             | (2,391 | )         |  | $ | (52,051 | )
|                                                                                        |  |               |        |           |  |   |         |  

10. PRODUCT WARRANTIES

In November 2002, the FASB issued FASB Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees. The Company adopted
FIN 45 effective January 1, 2003 and will apply the provisions of the new
interpretation to any guarantees issued or modified after that date. The
Company issues warranties to consumers for certain of its home environment and
kitchen appliances. Warranty costs, representing the value of replacement
goods sent to consumers making warranty claims, are expensed as incurred. The
Company maintains a warranty reserve for consumer claims in process at the end
of the period. A reconciliation of the warranty reserve for the three months
ended March 31, 2003 is as follows (in thousands):

|                                             |  |   |     |  
|-------------------------------------------- |  | - | --- | -
|Balance at beginning of period               |  | $ | 375 |  
|Accruals for warranties issued during period |  |   | 183 |  
|Settlements made during the period           |  |   | (54 | )
|                                             |  |   |     |  
|Balance at end of period                     |  | $ | 504 |  
|                                             |  |   |     |  

11. CONTINGENCIES

The Company is involved in litigation and is the subject of claims arising in
the normal course of its business. In the opinion of management, based upon
discussions with legal counsel, no existing litigation or claims will have a
materially adverse effect on the Companys financial position or results of
operations or cash flows.

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THE HOLMES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

12. CONDENSED CONSOLIDATING INFORMATION

The Companys Senior Subordinated Notes are guaranteed by Rival and its
domestic subsidiary and Holmes Manufacturing Corp. (Manufacturing), Holmes
Motor Corp. (Motor) and Holmes Air (Taiwan) Corp. (Taiwan), but are not
guaranteed by THGs other subsidiary, HPFEL, or Rivals five foreign
subsidiaries. The guarantor subsidiaries are directly or indirectly
wholly-owned by THG, and the guarantees are full, unconditional and joint and
several. The following condensed consolidating financial information presents
the financial position, results of operations and cash flows of (i) THG, as
parent, as if it accounted for its subsidiaries on the equity method, (ii)
Rival (on a consolidated basis following its acquisition by THG, Manufacturing,
Motor and Taiwan, the guarantor subsidiaries, and (iii) HPFEL, Bionaire
International B.V., The Holmes Group Canada, Ltd., Waverly Products Company,
Ltd., and Rival de Mexico S.A. de C.V., the non-guarantor subsidiaries. There
were no transactions between Rival, Manufacturing, Motor and Taiwan during any
of the periods presented. Taiwan and Manufacturing had no revenues or
operations during the periods presented. As further described in Note 16 of the
Companys financial statements for the year ended December 31, 2002, which are
included in its Annual Report on Form 10-K, certain of HPFELs subsidiaries in
China have restrictions on distributions to their parent companies.

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THE HOLMES GROUP, INC.

CONDENSED CONSOLIDATING BALANCE SHEET AT MARCH 31, 2003 (IN THOUSANDS)
(UNAUDITED)

|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |         |  
|--------------------------------------- | ---------------------------------------------- | -------------------------- | ------- | ------- | ------- | ------------ | ------- | ------------ | ------- | ------------- | ------- | ------------ | ------- | - | -------- | -------- | -------- | - | ------- | ------- | ------- | -
|                                        |                                                |                            |         |         |         |              |         | Guarantor    |         | Non-Guarantor |         |              |         |   |          |          |          |  
|                                        |                                                |                            |         | Parent  |         | Subsidiaries |         | Subsidiaries |         | Eliminations  |         | Consolidated
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |             
|Assets                                  |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|Current Assets:                         |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                        | Cash and cash equivalents                      |                            | $       | 2,877   |         |              | $       | (488         | )       |               | $       | 3,230        |         |   |          |         |          |   | $       | 5,619   |        
|                                        | Accounts receivable, net                       |                            |         | 17,239  |         |              |         | 45,895       |         |               |         | 23,066       |         |   |          |         |          |   |         | 86,200  |        
|                                        | Inventories                                    |                            |         | 45,997  |         |              |         | 50,709       |         |               |         | 34,260       |         |   | $        | (5,627   | )        |   |         | 125,339 |        
|                                        | Prepaid expenses and other current assets      |                            |         | 3,185   |         |              |         | 121          |         |               |         | 1,565        |         |   |          |         |          |   |         | 4,871   |        
|                                        | Deferred income taxes                          |                            |         | 4,689   |         |              |         | 378          |         |               |         |             |         |   |          |         |          |   |         | 5,067   |        
|                                        | Due from affiliates                            |                            |         | 283,283 |         |              |         | 89           |         |               |         | 95,221       |         |   |          | (378,593 | )        |   |         |        |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | Total current assets       |         |         | 357,270 |              |         |              | 96,704  |               |         |              | 157,342 |   |          |          | (384,220 | ) |         |         | 227,096 |  
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Assets held for sale                    |                                                |                            |        |         |         |              | 6,466   |              |         |               |        |              |         |   |         |          |          |   | 6,466   |        
|Property and equipment, net             |                                                |                            | 9,317   |         |         |              | 205     |              |         |               | 32,770  |              |         |   |         |          |          |   | 42,292  |        
|Deposits and other assets               |                                                |                            | 5,505   |         |         |              | 1       |              |         |               | 1,385   |              |         |   | (5,184   | )        |          |   | 1,707   |        
|Debt issuance costs, net                |                                                |                            | 8,463   |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 8,463   |        
|Deferred income taxes                   |                                                |                            | 5,513   |         |         |              | 443     |              |         |               |        |              |         |   |         |          |          |   | 5,956   |        
|Investment in consolidated subsidiaries |                                                |                            | 19,055  |         |         |              |        |              |         |               | 3,701   |              |         |   | (22,756  | )        |          |   |        |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | $                          | 405,123 |         |         | $            | 103,819 |              |         | $             | 195,198 |              |         | $ | (412,160 | )        |          | $ | 291,980 |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Liabilities and Stockholders Equity    |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|Current Liabilities:                    |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                        | Accounts payable                               |                            |         | 6,278   |         |              |         | 1,825        |         |               |         | 37,565       |         |   |          | (5,184   | )        |   |         | 40,484  |        
|                                        | Current portion of Credit Facility             |                            |         | 9,078   |         |              |         |             |         |               |         |             |         |   |          |         |          |   |         | 9,078   |        
|                                        | Accrued income taxes                           |                            |         | 3,219   |         |              |         | (1,253       | )       |               |         | 5,773        |         |   |          |         |          |   |         | 7,739   |        
|                                        | Deferred income taxes                          |                            |         | (1,892  | )       |              |         | 2,582        |         |               |         | 2,434        |         |   |          |         |          |   |         | 3,124   |        
|                                        | Accrued expenses and other current liabilities |                            |         | 22,670  |         |              |         | 10,188       |         |               |         | 7,233        |         |   |          |         |          |   |         | 40,091  |        
|                                        | Due to affiliates                              |                            |         | 190,507 |         |              |         | 159,639      |         |               |         | 32,148       |         |   |          | (382,294 | )        |   |         |        |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | Total current liabilities  |         |         | 229,860 |              |         |              | 172,981 |               |         |              | 85,153  |   |          |          | (387,478 | ) |         |         | 100,516 |  
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Long-term portion of Credit facility    |                                                |                            | 153,386 |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 153,386 |        
|Senior Subordinated Notes               |                                                |                            | 99,565  |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 99,565  |        
|Pension obligation                      |                                                |                            | 265     |         |         |              | 5,644   |              |         |               |        |              |         |   |         |          |          |   | 5,909   |        
|Other liabilities                       |                                                |                            |        |         |         |              |        |              |         |               | 7,948   |              |         |   |         |          |          |   | 7,948   |        
|Deferred income taxes                   |                                                |                            | (1,620  | )       |         |              | 861     |              |         |               | 1,748   |              |         |   |         |          |          |   | 989     |        
|Stockholders equity:                   |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                        | Common stock, $.001 par value                  |                            |         | 20      |         |              |         | 2            |         |               |         |             |         |   |          | (2       | )        |   |         | 20      |        
|                                        | Common stock, $1 par value                     |                            |         |        |         |              |         |             |         |               |         | 3,810        |         |   |          | (3,810   | )        |   |         |        |        
|                                        | Additional paid in capital                     |                            |         | 68,874  |         |              |         |             |         |               |         |             |         |   |          |         |          |   |         | 68,874  |        
|                                        | Accumulated other comprehensive income         |                            |         | (6,932  | )       |              |         |             |         |               |         | 109          |         |   |          | (109     | )        |   |         | (6,932  | )      
|                                        | Treasury stock                                 |                            |         | (62,076 | )       |              |         |             |         |               |         |             |         |   |          |         |          |   |         | (62,076 | )      
|                                        | Retained earnings (deficit)                    |                            |         | (76,219 | )       |              |         | (75,669      | )       |               |         | 96,430       |         |   |          | (20,761  | )        |   |         | (76,219 | )      
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | Total stockholders equity |         |         | (76,333 | )            |         |              | (75,667 | )             |         |              | 100,349 |   |          |          | (24,682  | ) |         |         | (76,333 | )
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | $                          | 405,123 |         |         | $            | 103,819 |              |         | $             | 195,198 |              |         | $ | (412,160 | )        |          | $ | 291,980 |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        

13



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##### Table of Contents



THE HOLMES GROUP, INC.

CONDENSED CONSOLIDATING BALANCE SHEET AT DECEMBER 31, 2002 (IN THOUSANDS)

|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |         |  
|--------------------------------------- | ---------------------------------------------- | -------------------------- | ------- | ------- | ------- | ------------ | ------- | ------------ | ------- | ------------- | ------- | ------------ | ------- | - | -------- | -------- | -------- | - | ------- | ------- | ------- | -
|                                        |                                                |                            |         |         |         |              |         | Guarantor    |         | Non-Guarantor |         |              |         |   |          |          |          |  
|                                        |                                                |                            |         | Parent  |         | Subsidiaries |         | Subsidiaries |         | Eliminations  |         | Consolidated
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |             
|Assets                                  |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|Current Assets:                         |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                        | Cash and cash equivalents                      |                            | $       | 2,599   |         |              | $       | (488         | )       |               | $       | 6,315        |         |   |          |         |          |   | $       | 8,426   |        
|                                        | Accounts receivable, net                       |                            |         | 21,383  |         |              |         | 77,428       |         |               |         | 29,598       |         |   |          |         |          |   |         | 128,409 |        
|                                        | Inventories                                    |                            |         | 30,357  |         |              |         | 53,394       |         |               |         | 31,935       |         |   | $        | (5,450   | )        |   |         | 110,236 |        
|                                        | Prepaid expenses and other current assets      |                            |         | 2,360   |         |              |         | 237          |         |               |         | 2,220        |         |   |          |         |          |   |         | 4,817   |        
|                                        | Deferred income taxes                          |                            |         | 4,689   |         |              |         | 378          |         |               |         |             |         |   |          |         |          |   |         | 5,067   |        
|                                        | Due from affiliates                            |                            |         | 283,734 |         |              |         | 89           |         |               |         | 84,673       |         |   |          | (368,496 | )        |   |         |        |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | Total current assets       |         |         | 345,122 |              |         |              | 131,038 |               |         |              | 154,741 |   |          |          | (373,946 | ) |         |         | 256,955 |  
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Assets held for sale                    |                                                |                            |        |         |         |              | 6,466   |              |         |               |        |              |         |   |         |          |          |   | 6,466   |        
|Property and equipment, net             |                                                |                            | 9,073   |         |         |              | 238     |              |         |               | 33,135  |              |         |   |         |          |          |   | 42,446  |        
|Deposits and other assets               |                                                |                            | 5,212   |         |         |              | 1       |              |         |               | 515     |              |         |   | (4,891   | )        |          |   | 837     |        
|Debt issuance costs, net                |                                                |                            | 10,184  |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 10,184  |        
|Deferred income taxes                   |                                                |                            | 5,513   |         |         |              | 443     |              |         |               |        |              |         |   |         |          |          |   | 5,956   |        
|Investment in consolidated subsidiaries |                                                |                            | 16,247  |         |         |              |        |              |         |               | 3,701   |              |         |   | (19,948  | )        |          |   |        |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | $                          | 391,351 |         |         | $            | 138,186 |              |         | $             | 192,092 |              |         | $ | (398,785 | )        |          | $ | 322,844 |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Liabilities and Stockholders Equity    |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|Current Liabilities:                    |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                        | Accounts payable                               |                            |         | 4,604   |         |              |         | 7,709        |         |               |         | 36,845       |         |   |          | (4,891   | )        |   |         | 44,267  |        
|                                        | Current portion of Credit Facility             |                            |         | 9,078   |         |              |         |             |         |               |         |             |         |   |          |         |          |   |         | 9,078   |        
|                                        | Accrued income taxes                           |                            |         | 3,543   |         |              |         | (1,074       | )       |               |         | 4,936        |         |   |          |         |          |   |         | 7,405   |        
|                                        | Deferred income taxes                          |                            |         | (1,892  | )       |              |         | 2,582        |         |               |         | 2,277        |         |   |          |         |          |   |         | 2,967   |        
|                                        | Accrued expenses and other current liabilities |                            |         | 28,741  |         |              |         | 17,846       |         |               |         | 6,514        |         |   |          |         |          |   |         | 53,101  |        
|                                        | Due to affiliates                              |                            |         | 156,324 |         |              |         | 178,249      |         |               |         | 37,624       |         |   |          | (372,197 | )        |   |         |        |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | Total current liabilities  |         |         | 200,398 |              |         |              | 205,312 |               |         |              | 88,196  |   |          |          | (377,088 | ) |         |         | 116,818 |  
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Long-term portion of Credit Facility    |                                                |                            | 166,556 |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 166,556 |        
|Senior Subordinated Notes               |                                                |                            | 99,544  |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 99,544  |        
|Pension obligation                      |                                                |                            |        |         |         |              | 5,840   |              |         |               |        |              |         |   |         |          |          |   | 5,840   |        
|Other liabilities                       |                                                |                            |        |         |         |              |        |              |         |               | 7,613   |              |         |   |         |          |          |   | 7,613   |        
|Deferred income taxes                   |                                                |                            | (631    | )       |         |              | 861     |              |         |               | 759     |              |         |   |         |          |          |   | 989     |        
|Stockholders equity:                   |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                        | Common stock, $.001 par value                  |                            |         | 20      |         |              |         | 2            |         |               |         |             |         |   |          | (2       | )        |   |         | 20      |        
|                                        | Common stock, $1 par value                     |                            |         |        |         |              |         |             |         |               |         | 3,810        |         |   |          | (3,810   | )        |   |         |        |        
|                                        | Additional paid in capital                     |                            |         | 68,874  |         |              |         |             |         |               |         |             |         |   |          |         |          |   |         | 68,874  |        
|                                        | Accumulated other comprehensive income         |                            |         | (7,231  | )       |              |         |             |         |               |         | (189         | )       |   |          | 189      |          |   |         | (7,231  | )      
|                                        | Treasury stock                                 |                            |         | (62,076 | )       |              |         |             |         |               |         |             |         |   |          |         |          |   |         | (62,076 | )      
|                                        | Retained earnings (deficit)                    |                            |         | (74,103 | )       |              |         | (73,829      | )       |               |         | 91,903       |         |   |          | (18,074  | )        |   |         | (74,103 | )      
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | Total stockholders equity |         |         | (74,516 | )            |         |              | (73,827 | )             |         |              | 95,524  |   |          |          | (21,697  | ) |         |         | (74,516 | )
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | $                          | 391,351 |         |         | $            | 138,186 |              |         | $             | 192,092 |              |         | $ | (398,785 | )        |          | $ | 322,844 |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        

14



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##### Table of Contents



THE HOLMES GROUP, INC.
CONDENSED CONSOLIDATING BALANCE SHEET AT MARCH 31, 2002 (IN THOUSANDS)
(UNAUDITIED)

|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |         |  
|--------------------------------------- | ---------------------------------------------- | -------------------------- | ------- | ------- | ------- | ------------ | ------- | ------------ | ------- | ------------- | ------- | ------------ | ------- | - | -------- | -------- | -------- | - | ------- | ------- | ------- | -
|                                        |                                                |                            |         |         |         |              |         | Guarantor    |         | Non-Guarantor |         |              |         |   |          |          |          |  
|                                        |                                                |                            |         | Parent  |         | Subsidiaries |         | Subsidiaries |         | Eliminations  |         | Consolidated
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |             
|Assets                                  |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|Current Assets:                         |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                        | Cash and cash equivalents                      |                            | $       | (416    | )       |              | $       | 1,333        |         |               | $       | 4,434        |         |   |          |         |          |   | $       | 5,351   |        
|                                        | Accounts receivable, net                       |                            |         | 21,758  |         |              |         | 53,748       |         |               |         | 17,385       |         |   |          |         |          |   |         | 92,891  |        
|                                        | Inventories                                    |                            |         | 32,228  |         |              |         | 54,468       |         |               |         | 26,732       |         |   | $        | (5,219   | )        |   |         | 108,209 |        
|                                        | Prepaid expenses and other current assets      |                            |         | 1,718   |         |              |         | 2,750        |         |               |         | 2,188        |         |   |          |         |          |   |         | 6,656   |        
|                                        | Deferred income taxes                          |                            |         | 600     |         |              |         | 4,649        |         |               |         |             |         |   |          |         |          |   |         | 5,249   |        
|                                        | Due from affiliates                            |                            |         | 145,420 |         |              |         | 89           |         |               |         | 79,064       |         |   |          | (224,573 | )        |   |         |        |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | Total current assets       |         |         | 201,308 |              |         |              | 117,037 |               |         |              | 129,803 |   |          |          | (229,792 | ) |         |         | 218,356 |  
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Assets held for sale                    |                                                |                            |        |         |         |              | 6,288   |              |         |               |        |              |         |   |         |          |          |   | 6,288   |        
|Property and equipment, net             |                                                |                            | 7,342   |         |         |              | 20,167  |              |         |               | 32,132  |              |         |   |         |          |          |   | 59,641  |        
|Deposits and other assets               |                                                |                            | 2,153   |         |         |              | 6,934   |              |         |               | 950     |              |         |   | (4,891   | )        |          |   | 5,146   |        
|Debt issuance costs, net                |                                                |                            | 15,701  |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 15,701  |        
|Deferred income taxes                   |                                                |                            | 5,774   |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 5,774   |        
|Investment in consolidated subsidiaries |                                                |                            | 1,592   |         |         |              |        |              |         |               | 3,700   |              |         |   | (5,292   | )        |          |   |        |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | $                          | 233,870 |         |         | $            | 150,426 |              |         | $             | 166,585 |              |         | $ | (239,975 | )        |          | $ | 310,906 |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Liabilities and Stockholders Equity    |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|Current Liabilities:                    |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                        | Accounts payable                               |                            |         | 4,671   |         |              |         | 4,376        |         |               |         | 38,422       |         |   |          | (4,891   | )        |   |         | 42,578  |        
|                                        | Current portion of Credit Facility             |                            |         | 8,628   |         |              |         |             |         |               |         |             |         |   |          |          |          |   |         | 8,628   |        
|                                        | Accrued income taxes                           |                            |         |        |         |              |         | 2,068        |         |               |         | 4,761        |         |   |          |         |          |   |         | 6,829   |        
|                                        | Deferred income taxes                          |                            |         | 2,219   |         |              |         |             |         |               |         |             |         |   |          |          |          |   |         | 2,219   |        
|                                        | Accrued expenses and other current liabilities |                            |         | 22,734  |         |              |         | 13,845       |         |               |         | 7,337        |         |   |          |          |          |   |         | 43,916  |        
|                                        | Due to affiliates                              |                            |         | 2,112   |         |              |         | 201,367      |         |               |         | 24,794       |         |   |          | (228,273 | )        |   |         |        |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | Total current liabilities  |         |         | 40,364  |              |         |              | 221,656 |               |         |              | 75,314  |   |          |          | (233,164 | ) |         |         | 104,170 |  
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Long-term portion of Credit Facility    |                                                |                            | 159,864 |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 159,864 |        
|Senior Subordinated Notes               |                                                |                            | 99,482  |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 99,482  |        
|Other liabilities                       |                                                |                            |        |         |         |              |        |              |         |               | 7,266   |              |         |   |         |          |          |   | 7,266   |        
|Deferred income taxes                   |                                                |                            | (4,839  | )       |         |              | 3,857   |              |         |               | 2,107   |              |         |   |         |          |          |   | 1,125   |        
|Stockholders equity:                   |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                        | Common stock, $.001 par value                  |                            |         | 20      |         |              |         | 2            |         |               |         |             |         |   |          | (2       | )        |   |         | 20      |        
|                                        | Common stock, $1 par value                     |                            |         |        |         |              |         |             |         |               |         | 3,800        |         |   |          | (3,800   | )        |   |         |        |        
|                                        | Additional paid in capital                     |                            |         | 68,874  |         |              |         |             |         |               |         |             |         |   |          |         |          |   |         | 68,874  |        
|                                        | Accumulated other comprehensive income         |                            |         | 140     |         |              |         |             |         |               |         | (22          | )       |   |          | 22       |          |   |         | 140     |        
|                                        | Treasury stock                                 |                            |         | (62,076 | )       |              |         |             |         |               |         |             |         |   |          |         |          |   |         | (62,076 | )      
|                                        | Retained earnings (deficit)                    |                            |         | (67,959 | )       |              |         | (75,089      | )       |               |         | 78,120       |         |   |          | (3,031   | )        |   |         | (67,959 | )      
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | Total stockholders equity |         |         | (61,001 | )            |         |              | (75,087 | )             |         |              | 81,898  |   |          |          | (6,811   | ) |         |         | (61,001 | )
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                        |                                                | $                          | 233,870 |         |         | $            | 150,426 |              |         | $             | 166,585 |              |         | $ | (239,975 | )        |          | $ | 310,906 |        
|                                        |                                                |                            |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        

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THE HOLMES GROUP, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2003 (IN THOUSANDS)
(UNAUDITED)

|                                                                            |                             |                              |        |        |       |              |        |              |      |               |        |              |     |   |         |   |   |   |         |       |       | 
|--------------------------------------------------------------------------- | --------------------------- | ---------------------------- | ------ | ------ | ----- | ------------ | ------ | ------------ | ---- | ------------- | ------ | ------------ | --- | - | ------- | - | - | - | ------- | ----- | ----- | 
|                                                                            |                             |                              |        |        |       |              |        | Guarantor    |      | Non-Guarantor |        |              |     |   |         |   |   |  
|                                                                            |                             |                              |        | Parent |       | Subsidiaries |        | Subsidiaries |      | Eliminations  |        | Consolidated
|                                                                            |                             |                              |        |        |       |              |        |              |      |               |        |             
|Net sales                                                                   |                             | $                            | 39,733 |        |       | $            | 55,343 |              |      | $             | 96,493 |              |     | $ | (76,269 | ) |   | $ | 115,300 |      
|Cost of sales                                                               |                             |                              | 31,532 |        |       |              | 43,149 |              |      |               | 84,304 |              |     |   | (76,092 | ) |   |   | 82,893  |      
|                                                                            |                             |                              |        |        |       |              |        |              |      |               |        |              |     |   |         |   |   |   |         |      
|Gross profit (loss)                                                         |                             |                              | 8,201  |        |       |              | 12,194 |              |      |               | 12,189 |              |     |   | (177    | ) |   |   | 32,407  |      
|Selling and administrative expenses                                         |                             |                              | 8,307  |        |       |              | 14,345 |              |      |               | 5,180  |              |     |   |         |   |   |   | 27,832  |      
|Restructuring charges (income)                                              |                             |                              |       |        |       |              | (121   | )            |      |               |       |              |     |   |        |   |   |   | (121    | )    
|                                                                            |                             |                              |        |        |       |              |        |              |      |               |        |              |     |   |         |   |   |   |         |      
|Operating profit (loss)                                                     |                             |                              | (106   | )      |       |              | (2,030 | )            |      |               | 7,009  |              |     |   | (177    | ) |   |   | 4,696   |      
|Other (income) and expense:                                                 |                             |                              |        |        |       |              |        |              |      |               |        |              |     |   |         |   |   |   |         |      
|                                                                            | Interest expense            |                              |        | 6,597  |       |              |        |             |      |               |        | (8           | )   |   |         |  |   |   |         | 6,589 |      
|                                                                            | Other (income) expense, net |                              |        | (638   | )     |              |        | (190         | )    |               |        | 590          |     |   |         |  |   |   |         | (238  | )    
|                                                                            |                             |                              |        |        |       |              |        |              |      |               |        |              |     |   |         |   |   |   |         |      
|                                                                            |                             | Total other (income) expense |        |        | 5,959 |              |        |              | (190 | )             |        |              | 582 |   |         |   |  |   |         |       | 6,351 | 
|                                                                            |                             |                              |        |        |       |              |        |              |      |               |        |              |     |   |         |   |   |   |         |      
|Income (loss) before income taxes and
equity in earnings from joint venture |                             |                              | (6,065 | )      |       |              | (1,840 | )            |      |               | 6,427  |              |     |   | (177    | ) |   |   | (1,655  | )    
|Income tax expense (benefit)                                                |                             |                              | (957   | )      |       |              |       |              |      |               | 1,900  |              |     |   |        |   |   |   | 943     |      
|Equity in earnings from joint venture                                       |                             |                              | (482   | )      |       |              |       |              |      |               |       |              |     |   |        |   |   |   | (482    | )    
|                                                                            |                             |                              |        |        |       |              |        |              |      |               |        |              |     |   |         |   |   |   |         |      
|Income (loss) before equity in income of
consolidated subsidiaries          |                             |                              | (4,626 | )      |       |              | (1,840 | )            |      |               | 4,527  |              |     |   | (177    | ) |   |   | (2,116  | )    
|Equity in income of consolidated subsidiaries                               |                             |                              | 2,510  |        |       |              |       |              |      |               |       |              |     |   | (2,510  | ) |   |   |        |      
|                                                                            |                             |                              |        |        |       |              |        |              |      |               |        |              |     |   |         |   |   |   |         |      
|Net income (loss)                                                           |                             | $                            | (2,116 | )      |       | $            | (1,840 | )            |      | $             | 4,527  |              |     | $ | (2,687  | ) |   | $ | (2,116  | )    
|                                                                            |                             |                              |        |        |       |              |        |              |      |               |        |              |     |   |         |   |   |   |         |      

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THE HOLMES GROUP, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2002 (IN THOUSANDS)

|                                                                            |                             |                              |         |         |         |              |         |              |        |               |        |              |      |   |         |   |   |   |         |         |         |  
|--------------------------------------------------------------------------- | --------------------------- | ---------------------------- | ------- | ------- | ------- | ------------ | ------- | ------------ | ------ | ------------- | ------ | ------------ | ---- | - | ------- | - | - | - | ------- | ------- | ------- | -
|                                                                            |                             |                              |         |         |         |              |         | Guarantor    |        | Non-Guarantor |        |              |      |   |         |   |   |  
|                                                                            |                             |                              |         | Parent  |         | Subsidiaries |         | Subsidiaries |        | Eliminations  |        | Consolidated
|                                                                            |                             |                              |         |         |         |              |         |              |        |               |        |             
|Net sales                                                                   |                             | $                            | 41,137  |         |         | $            | 61,973  |              |        | $             | 81,174 |              |      | $ | (66,942 | ) |   | $ | 117,342 |        
|Cost of sales                                                               |                             |                              | 36,575  |         |         |              | 48,270  |              |        |               | 70,594 |              |      |   | (66,547 | ) |   |   | 88,892  |        
|                                                                            |                             |                              |         |         |         |              |         |              |        |               |        |              |      |   |         |   |   |   |         |        
|Gross profit (loss)                                                         |                             |                              | 4,562   |         |         |              | 13,703  |              |        |               | 10,580 |              |      |   | (395    | ) |   |   | 28,450  |        
|Selling and administrative expenses                                         |                             |                              | 13,514  |         |         |              | 6,903   |              |        |               | 4,716  |              |      |   |        |   |   |   | 25,133  |        
|Restructuring charges                                                       |                             |                              |        |         |         |              | 1,787   |              |        |               |       |              |      |   |        |   |   |   | 1,787   |        
|                                                                            |                             |                              |         |         |         |              |         |              |        |               |        |              |      |   |         |   |   |   |         |        
|Operating profit (loss)                                                     |                             |                              | (8,952  | )       |         |              | 5,013   |              |        |               | 5,864  |              |      |   | (395    | ) |   |   | 1,530   |        
|Other (income) and expense:                                                 |                             |                              |         |         |         |              |         |              |        |               |        |              |      |   |         |   |   |   |         |        
|                                                                            | Interest expense            |                              |         | 7,924   |         |              |         | 35           |        |               |        | (3           | )    |   |         |  |   |   |         | 7,956   |        
|                                                                            | Gain on sale of business    |                              |         |        |         |              |         | (9,088       | )      |               |        |             |      |   |         |  |   |   |         | (9,088  | )      
|                                                                            | Gain on retirement of debt  |                              |         | (22,388 | )       |              |         |             |        |               |        |             |      |   |         |  |   |   |         | (22,388 | )      
|                                                                            | Other (income) expense, net |                              |         | (197    | )       |              |         | 29           |        |               |        | (835         | )    |   |         |  |   |   |         | (1,003  | )      
|                                                                            |                             |                              |         |         |         |              |         |              |        |               |        |              |      |   |         |   |   |   |         |        
|                                                                            |                             | Total other (income) expense |         |         | (14,661 | )            |         |              | (9,024 | )             |        |              | (838 | ) |         |   |  |   |         |         | (24,523 | )
|                                                                            |                             |                              |         |         |         |              |         |              |        |               |        |              |      |   |         |   |   |   |         |        
|Income (loss) before income taxes and
equity in earnings from joint venture |                             |                              | 5,709   |         |         |              | 14,037  |              |        |               | 6,702  |              |      |   | (395    | ) |   |   | 26,053  |        
|Income tax expense (benefit)                                                |                             |                              |        |         |         |              | (2,383  | )            |        |               | 958    |              |      |   |        |   |   |   | (1,425  | )      
|Equity in earnings from joint venture                                       |                             |                              | (600    | )       |         |              |        |              |        |               |       |              |      |   |        |   |   |   | (600    | )      
|                                                                            |                             |                              |         |         |         |              |         |              |        |               |        |              |      |   |         |   |   |   |         |        
|Income (loss) before equity in income of
consolidated subsidiaries          |                             |                              | 6,309   |         |         |              | 16,420  |              |        |               | 5,744  |              |      |   | (395    | ) |   |   | 28,078  |        
|Equity in income of consolidated subsidiaries                               |                             |                              | (58,069 | )       |         |              |        |              |        |               |       |              |      |   | 58,069  |   |   |   |        |        
|                                                                            |                             |                              |         |         |         |              |         |              |        |               |        |              |      |   |         |   |   |   |         |        
|Income (loss) before accounting change                                      |                             |                              | (51,760 | )       |         |              | 16,420  |              |        |               | 5,744  |              |      |   | 57,674  |   |   |   | 28,078  |        
|Cumulative effect of change in accounting
principle                         |                             |                              |        |         |         |              | (79,838 | )            |        |               |       |              |      |   |        |   |   |   | (79,838 | )      
|                                                                            |                             |                              |         |         |         |              |         |              |        |               |        |              |      |   |         |   |   |   |         |        
|Net income (loss)                                                           |                             | $                            | (51,760 | )       |         | $            | (63,418 | )            |        | $             | 5,744  |              |      | $ | 57,674  |   |   | $ | (51,760 | )      
|                                                                            |                             |                              |         |         |         |              |         |              |        |               |        |              |      |   |         |   |   |   |         |        

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THE HOLMES GROUP, INC.
CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2003 (IN THOUSANDS)
(UNAUDITED)

|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |         |         |  
|---------------------------------------------------- | ------------------------------------------------------- | ---------------------------------------------------- | ------- | ------- | ------ | ------------ | ------ | ------------ | ------- | ------------- | ------ | ------- | ------- | - | ------ | ------- | ------- | -
|                                                     |                                                         |                                                      |         |         |        |              |        | Guarantor    |         | Non-Guarantor |        |         |         |  
|                                                     |                                                         |                                                      |         | Parent  |        | Subsidiaries |        | Subsidiaries |         | Consolidated 
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |              
|Net cash provided by (used for) operating activities |                                                         | $                                                    | (28,603 | )       |        | $            | 27,694 |              |         | $             | 12,111 |         |         | $ | 11,202 |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|Cash flows from investing activities:                |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     | Proceeds from sale of business and assets held for sale |                                                      |         |        |        |              |        |             |         |               |        |        |         |   |        |        |        
|                                                     | Distribution of earnings from joint venture             |                                                      |         | 996     |        |              |        |             |         |               |        |        |         |   |        | 996     |        
|                                                     | Purchases of property and equipment                     |                                                      |         | (658    | )      |              |        |             |         |               |        | (1,769  | )       |   |        | (2,427  | )      
|                                                     | Cash received from joint venture partner                |                                                      |         | 293     |        |              |        |             |         |               |        |        |         |   |        | 293     |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     |                                                         | Net cash provided by (used for) investing activities |         |         | 631    |              |        |              |        |               |        |         | (1,769  | ) |        |         | (1,138  | )
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|Cash flows from financing activities:                |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     | Repayments of Credit Facility                           |                                                      |         | (13,170 | )      |              |        |             |         |               |        |        |         |   |        | (13,170 | )      
|                                                     | Other activity with Parent, net                         |                                                      |         | 41,420  |        |              |        | (27,694      | )       |               |        | (13,726 | )       |   |        |        |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     |                                                         | Net cash provided by (used for) financing activities |         |         | 28,250 |              |        |              | (27,694 | )             |        |         | (13,726 | ) |        |         | (13,170 | )
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     | Effect of exchange rate changes on cash                 |                                                      |         |        |        |              |        |             |         |               |        | 299     |         |   |        | 299     |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|Net increase (decrease) in cash and cash equivalents |                                                         |                                                      | 278     |         |        |              |       |              |         |               | (3,085 | )       |         |   | (2,807 | )      
|Cash and cash equivalents, beginning of period       |                                                         |                                                      | 2,599   |         |        |              | (488   | )            |         |               | 6,315  |         |         |   | 8,426  |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|Cash and cash equivalents, end of period             |                                                         | $                                                    | 2,877   |         |        | $            | (488   | )            |         | $             | 3,230  |         |         | $ | 5,619  |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        

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THE HOLMES GROUP, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2002 (IN THOUSANDS)
(UNAUDITED)

|                                                     |                                                         |                                        |        |         |        |              |        |              |         |               |        |         |         |   |        |         |         |  
|---------------------------------------------------- | ------------------------------------------------------- | -------------------------------------- | ------ | ------- | ------ | ------------ | ------ | ------------ | ------- | ------------- | ------ | ------- | ------- | - | ------ | ------- | ------- | -
|                                                     |                                                         |                                        |        |         |        |              |        | Guarantor    |         | Non-Guarantor |        |         |         |  
|                                                     |                                                         |                                        |        | Parent  |        | Subsidiaries |        | Subsidiaries |         | Consolidated 
|                                                     |                                                         |                                        |        |         |        |              |        |              |         |              
|Net cash provided by (used for) operating activities |                                                         | $                                      | 2,983  |         |        | $            | 28,300 |              |         | $             | 12,715 |         |         | $ | 43,998 |        
|                                                     |                                                         |                                        |        |         |        |              |        |              |         |               |        |         |         |   |        |        
|Cash flows from investing activities:                |                                                         |                                        |        |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     | Proceeds from sale of business and assets held for sale |                                        |        |        |        |              |        | 15,100       |         |               |        |        |         |   |        | 15,100  |        
|                                                     | Distribution of earnings from joint venture             |                                        |        | 478     |        |              |        |             |         |               |        |        |         |   |        | 478     |        
|                                                     | Purchases of property and equipment                     |                                        |        | (327    | )      |              |        | (457         | )       |               |        | (952    | )       |   |        | (1,736  | )      
|                                                     |                                                         |                                        |        |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     | Net cash provided by (used for) investing activities    |                                        |        | 151     |        |              |        | 14,643       |         |               |        | (952    | )       |   |        | 13,842  |        
|                                                     |                                                         |                                        |        |         |        |              |        |              |         |               |        |         |         |   |        |        
|Cash flows from financing activities:                |                                                         |                                        |        |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     | Repayments of Credit Facility                           |                                        |        | (49,390 | )      |              |        |             |         |               |        |        |         |   |        | (49,390 | )      
|                                                     | Other activity with Parent, net                         |                                        |        | 54,885  |        |              |        | (42,922      | )       |               |        | (11,963 | )       |   |        |        |        
|                                                     | Redemption
of Senior Subordinated Notes                 |                                        |        | (11,549 | )      |              |        |             |         |               |        |        |         |   |        | (11,549 | )      
|                                                     | Debt issuance costs                                     |                                        |        | (1,579  | )      |              |        |             |         |               |        |        |         |   |        | (1,579  | )      
|                                                     |                                                         |                                        |        |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     |                                                         | Net cash used for financing activities |        |         | (7,633 | )            |        |              | (42,922 | )             |        |         | (11,963 | ) |        |         | (62,518 | )
|                                                     |                                                         |                                        |        |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     | Effect of exchange rate changes on cash                 |                                        |        |        |        |              |        |             |         |               |        | (86     | )       |   |        | (86     | )      
|                                                     |                                                         |                                        |        |         |        |              |        |              |         |               |        |         |         |   |        |        
|Net increase (decrease) in cash and cash equivalents |                                                         |                                        | (4,499 | )       |        |              | 21     |              |         |               | (286   | )       |         |   | (4,764 | )      
|Cash and cash equivalents, beginning of period       |                                                         |                                        | 4,083  |         |        |              | 1,312  |              |         |               | 4,720  |         |         |   | 10,115 |        
|                                                     |                                                         |                                        |        |         |        |              |        |              |         |               |        |         |         |   |        |        
|Cash and cash equivalents, end of period             |                                                         | $                                      | (416   | )       |        | $            | 1,333  |              |         | $             | 4,434  |         |         | $ | 5,351  |        
|                                                     |                                                         |                                        |        |         |        |              |        |              |         |               |        |         |         |   |        |        

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THE HOLMES GROUP, INC.




|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

BACKGROUND

The Holmes Group, Inc. is a leading developer, manufacturer and marketer of
quality, branded home appliances, including home environment and small kitchen
electric appliances. The Companys financial information includes the results
of The Rival Company since its acquisition on February 5, 1999. Our home
environment products include fans, heaters, humidifiers and air purifiers. Our
kitchen appliances include Crock-Pot® slow cookers, roaster ovens, skillets,
and deep fryers, and other similar small kitchen electric appliances. Our
products are sold under the Holmes®, Rival®, Crock-Pot®, White Mountain®,
Bionaire®, Patton®, Family Care® and Titan® brand names. We also sell products
to certain retailers under licensed brand names, including General Electric®,
Sunbeam® and Halls®. Our products are sold to consumers through major retail
chains, including mass merchants, do-it-yourself home centers, warehouse clubs,

hardware, department and specialty stores and national drug store chains.

Sales of
most of our products follow seasonal patterns that affect our
results of operations. In general, sales of fans occur predominantly from
January through June, and sales of heaters and humidifiers occur predominantly
from July to December. Although kitchen electrics, air purifiers, lighting
products and accessories generally are used year-round, these products tend to
draw increased sales during the winter months when people are indoors and, as a
result, sales of these products tend to be greatest in advance of the winter
months from July through December. Additionally, many of our kitchen products
are given as gifts and, as such, sell at larger volumes during the holiday
season. When holiday shipments are combined with seasonal products, our sales
during the months of August through November are generally at a higher level
than during the other months of the year. In addition to the seasonal
fluctuations in sales, we experience seasonality in gross profit, as margins
realized on fan products tend to be lower than those realized on kitchen
electrics and other home environment products.

A summary of the risks and uncertainties which may affect our future
performance is presented below. Our Form 10-K for the year ended December 31,
2002 includes a more detailed discussion of the risk factors affecting our
business. Risks and uncertainties are detailed from time to time in reports
filed by the Company with the SEC, including Forms 10-Q and 10-K and the
Companys most recent Registration Statement on Form S-4 (File No. 333-77905).

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and Section 21E of the
Securities Exchange Act of 1934. We caution investors that any forward-looking
statements presented in this report and presented elsewhere by management from
time to time are based on beliefs and assumptions made by, and information
currently available to, management. When used, the words anticipate,
believe, expect, intend, may, might, plan, estimate, project,
should, will be, will result and similar expressions, which do not relate
solely to historical matters, are intended to identify forward-looking
statements. Such statements are
subject to risks, uncertainties and assumptions and are not guarantees of
future performance, which may be affected by known or unknown risks, trends,
uncertainties and factors that are beyond our control. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
estimated or projected. We expressly disclaim any responsibility to update
forward-looking statements. Accordingly, past results and trends should not be
used by investors to anticipate future results or trends.

Risks and uncertainties that may affect future performance include, among
others, the following:



| |  | Our degree of leverage and continued compliance with debt covenants.                                           
|- |  | ---------------------------------------------------------------------------------------------------------------
| 
| |  | Our dependence on major customers and key employees.                                                           
| 
| |  | Any significant decline in purchases by our larger customers or pressure from these customers to reduce prices.
| 
| |  | The bankruptcy or loss of any major retail customer or supplier.                                               
| 
| |  | Weakness in the U.S. retail market.                                                                            
| 
| |  | The financial condition of the retail industry.                                                                
| 
| |  | The infringement or loss of our rights with respect to patents and trademarks related to our products.         
| 
| |  | Fluctuations in cost and availability of raw materials and components.                                         
| 
| |  | Product recalls and product liability claims against us or other regulatory actions.                           

20



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THE HOLMES GROUP, INC.

|        |  |                                                                                                    
|------- |  | ---------------------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS  (CONTINUED)



| |  | Changes in demand for the Companys products.                                                                                                                 
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Changing conditions in foreign countries.                                                                                                                     
| 
| |  | An extended interruption in the operation of our manufacturing facilities in China.                                                                           
| 
| |  | Changes in trade relations with China.                                                                                                                        
| 
| |  | Potential disruption in our supply chain due to health concerns relating to the disease known as severe acute respiratory
syndrome or other related illnesses.
| 
| |  | Currency fluctuations in our international operations.                                                                                                        
| 
| |  | Difficulties in implementing and maintaining new computer systems.                                                                                            
| 
| |  | Changes in retailer inventory management or failure of our order processing and logistical systems.                                                           
| 
| |  | Interruptions in data and communications systems.                                                                                                             
| 
| |  | Our ability to develop new and innovative products and customer acceptance of such products.                                                                  
| 
| |  | Seasonality of our operating results.                                                                                                                         
| 
| |  | Competition with other large companies that produce similar products.                                                                                         
| 
| |  | The success of our marketing and promotional programs.                                                                                                        

The risks included here are not exhaustive. Other sections of this report may
include additional factors which could adversely affect the Companys business
and financial performance. Moreover, the Company operates in a very
competitive and rapidly changing environment. New risk factors emerge from
time to time and it is not possible for management to predict all such risk
factors, nor can it assess the impact of all such risk factors on the Companys
business or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in any
forward-looking statements. Given these risks and uncertainties, investors
should not place undue reliance on forward-looking statements as a prediction
of actual results.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of
operations is based upon financial statements of The Holmes Group, Inc. which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires
management to make estimates and assumptions about future events that affect
the reported amounts in the financial statements and accompanying notes. Future
events cannot be determined with absolute certainty. Therefore, the
determination of estimates requires the exercise of judgment. Actual results
may differ from those estimates under different assumptions and conditions.

We believe the most significant accounting estimates inherent in the
preparation of the financial statements include estimates associated with
managements evaluation of the allowance for doubtful accounts and customer
deductions, reserves for inventory valuation, accruals for product returns and
the determination of liabilities related to taxation and restructuring actions.
These critical accounting policies are described in the Managements
Discussion and Analysis of Financial Condition and Results of Operations
section of our most recent Annual Report on Form 10-K.

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THE HOLMES GROUP, INC.

|        |  |                                                                                                    
|------- |  | ---------------------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS  (CONTINUED)

RESULTS OF OPERATIONS

The following table presents our operating results for the three-month
periods ended March 31, 2003 and 2002 as a percentage of net sales:

|                                                            |  |                         |       |      |  |  |       |   
|----------------------------------------------------------- |  | ----------------------- | ----- | ---- |  |  | ----- | --
|                                                            |  | Quarter Ended March 31,
|                                                            |  | 2003                    |       | 2002
|                                                            |  |                         |       |     
|Net sales                                                   |  |                         | 100.0 | %    |  |  | 100.0 | % 
|Cost of sales                                               |  |                         | 71.9  | %    |  |  | 75.8  | % 
|                                                            |  |                         |       |      |  |  |       |   
|Gross profit                                                |  |                         | 28.1  | %    |  |  | 24.2  | % 
|Selling and administrative expenses                         |  |                         | 24.1  | %    |  |  | 21.4  | % 
|                                                            |  |                         |       |      |  |  |       |   
|Operating profit before restructuring costs                 |  |                         | 4.0   | %    |  |  | 2.8   | % 
|Restructuring charges (income)                              |  |                         | (0.1  | )%   |  |  | 1.5   | % 
|                                                            |  |                         |       |      |  |  |       |   
|Operating profit                                            |  |                         | 4.1   | %    |  |  | 1.3   | % 
|Interest expense                                            |  |                         | 5.7   | %    |  |  | 6.8   | % 
|Other income, net                                           |  |                         | (0.2  | )%   |  |  | (0.9  | )%
|Gain on early retirement of debt                            |  |                         |      |      |  |  | (19.1 | )%
|Gain on sale of business                                    |  |                         |      |      |  |  | (7.7  | )%
|Income tax expense (benefit)                                |  |                         | 0.8   | %    |  |  | (1.2  | )%
|Equity in earnings from joint venture                       |  |                         | (0.4  | )%   |  |  | (0.5  | )%
|                                                            |  |                         |       |      |  |  |       |   
|Income (loss) before cumulative effect of
accounting change |  |                         | (1.8  | )%   |  |  | 23.9  | % 
|                                                            |  |                         |       |      |  |  |       |   

Comparison of Three Months Ended March 31, 2003 and March 31, 2002

Net Sales

During the first quarter of 2003, net sales decreased $2 million or 1.7% from
the sales level in the comparable period of fiscal 2002. The lower revenues
occurred primarily in the kitchen appliance business as 2003 sales were below
last year by 10% due to high retail inventory levels following the
Holiday 2002 selling season and the generally weak retail selling environment in the
first quarter of 2003. Sales of home environment products in the first quarter
of 2003 decreased slightly from the sales level in the first three months of
2002 as lower fan shipments in 2003 offset sales increases in the heater and
humidifier categories which benefited from the colder winter weather.
International sales in the first quarter of 2003 increased $5.6 million from
the 2002 level due to favorable trends in Canada and Europe and increased motor
sales to the Companys joint venture with General Electric. The first quarter
sales performance in 2003 was also adversely affected by increased returns from
retailers.

Gross Profit

Gross profit during the first quarter of 2003 totaled $32.4 million, an
increase of $4.0 million or 13.9% above the 2002 level. The Companys gross
profit percent improved 3.9 percentage points during the first quarter to 28.1%
in 2003 as compared to 24.2% in 2002. Both of the Companys major product
lines delivered profitability improvements during the first quarter of 2003
with the kitchen appliance business building on the trends established during
the second half of 2002 and the home environment profit margins benefiting from
the higher sales of winter season products. The Company completed the shutdown
of its domestic manufacturing operations in January 2003. Unfavorable
manufacturing variances related to the closed facilities totaled $0.7 million
or 0.6% of net sales in the first quarter of 2003 compared to $1.4 million or
1.2% of net sales in the 2002 first quarter.

Selling and Administrative Expenses

In the first quarter of 2003, operating expenses increased $2.7 million or
10.7% above the comparable period in 2002. These expenses represented 24.1% of
net sales in 2003 compared to 21.4% in 2002. Increased spending on new product
initiatives and higher legal expenses contributed to the cost increase during
the first quarter of 2003.

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THE HOLMES GROUP, INC.

|        |  |                                                                                                    
|------- |  | ---------------------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS  (CONTINUED)

Restructuring Charges (Income)

In 2003, restructuring costs were substantially lower than the first quarter of
2002 which included asset writedowns related to the closing of the Companys
distribution center in Sedalia, Missouri. The Company paid $3.2 million of
severance and other restructuring costs during the first quarter of 2003,
reducing the reserves which were established in the fourth quarter of 2002.
The Company expects to record a non-cash restructuring charge of approximately
$2.1 million in the second quarter of 2003 related to a partial plan settlement
of its defined benefit plan due to the closing of its domestic manufacturing
facilities.

Interest Expense and Other Income

During the first quarter of 2003, interest expense was $1.4 million lower than
in the comparable period of 2002 due to lower interest rates and the repurchase
of $36.2 million of the Companys Senior Subordinated Notes in March 2002.
Other income in 2003 was significantly lower than the first quarter of 2002 as
last years amount included a $9.1 million gain on the sale of the Companys
Pollenex® business in January 2002 and a gain of $22.4 million related to the
repurchase of Senior Subordinated Notes.

Income Taxes

During the first quarter of 2003, the Company recorded income tax expense of
$0.9 million compared to tax benefits of $1.4 million in 2002. The 2003 tax
expense was primarily related to the taxable profits of foreign operations.
The 2002 tax benefits included the effect of additional net operating loss
carrybacks which were made possible by recent tax law changes in the United
States.

Equity in Earnings from Joint Venture

The Companys share of the earnings of its joint venture with General Electric
totaled $0.5 million in the first quarter of 2003, down 19.7% from the 2002
earnings level.

Cumulative Effect of Accounting Change

The Company adopted Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets, effective January 1, 2002. The
Companys consolidated balance sheet as of December 31, 2001 included goodwill
with a net book value of $79.8 million as a result of the Rival acquisition in
1999. In connection with adopting this standard, the Company, assisted by
independent valuation consultants, completed the transitional testing of
goodwill using a measurement date of January 1, 2002. The results of this
testing indicated that the carrying values of the goodwill asset for both the
home environment and kitchen reporting units significantly exceeded the
estimated fair value of the units as determined utilizing various valuation
techniques, including discounted cash flow and comparative market analysis.
Accordingly, a non-cash impairment charge has been recognized as a change in
accounting principle as of the beginning of 2002. The impairment charge was
$79.8 million on a before and after-tax basis.

Net Loss and EBITDA

The Company incurred a net loss of $2.1 million in the first quarter of 2003
compared to a net loss of $51.8 million in the 2002 first quarter. The 2002
loss included the goodwill impairment charge of $79.8 million and one-time
gains of $31.5 million related to the Pollenex® and debt retirement
transactions described above.

The table below includes pro forma results and other non-GAAP financial
information to provide a better understanding of the Companys results and the
trends from which to measure performance. EBITDA, which includes our
share of our joint ventures earnings, represents income before
interest expense, income tax expense (benefit) and depreciation and
amortization. EBITDA is presented because it is a widely accepted
measure to provide information regarding a companys ability to
service and/or incur debt. EBITDA should not be considered in
isolation or as a substitute for net income, cash flows from
operations or other income or cash flow data prepared in accordance
with generally accepted accounting principles (GAAP), or as a measure
of a companys profitability or liquidity. Additionally, our
calculation of EBITDA may differ from that performed by other
companies, and thus the amounts disclosed may not be directly
comparable to those disclosed by other companies. A reconciliation
between operating income presented in accordance with GAAP in the
consolidated statements of operations, EBITDA as presented and
adjusted EBITDA after removing restructuring charges and other
unusual items for the three months ended March 31, 2003 and 2002
is as follows:

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THE HOLMES GROUP, INC.

|        |  |                                                                                                    
|------- |  | ---------------------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS  (CONTINUED)

|                                      |  |                         |       |      |  |   |         |  
|------------------------------------- |  | ----------------------- | ----- | ---- |  | - | ------- | -
|                                      |  | Quarter ended March 31,
|                                      |  |                        
|                                      |  | 2003                    |       | 2002
|                                      |  |                         |       |     
|Operating Income  GAAP               |  | $                       | 4,696 |      |  | $ | 1,530   |  
|Depreciation and amortization, net    |  |                         | 2,437 |      |  |   | 3,062   |  
|Other income                          |  |                         | 238   |      |  |   | 32,479  |  
|Equity in earnings from joint venture |  |                         | 482   |      |  |   | 600     |  
|                                      |  |                         |       |      |  |   |         |  
|EBITDA  as presented                 |  |                         | 7,853 |      |  |   | 37,671  |  
|Restructuring charges (income)        |  |                         | (121  | )    |  |   | 1,787   |  
|Gain on sale of business              |  |                         |      |      |  |   | (9,088  | )
|Gain on retirement of debt            |  |                         |      |      |  |   | (22,388 | )
|Credit Facility amendment costs       |  |                         | 18    |      |  |   | 244     |  
|                                      |  |                         |       |      |  |   |         |  
|EBITDA  Adjusted                     |  | $                       | 7,750 |      |  | $ | 8,226   |  
|                                      |  |                         |       |      |  |   |         |  

EBITDA totaled $7.9 million in the first quarter of 2003. This amount was
below the EBITDA of $37.7 million in the 2002 first quarter, which included
one-time gains of $31.5 million. On a pro forma basis, after removing the
effects of restructuring activities and other one-time items, adjusted EBITDA
totaled $7.8 million in the first quarter of 2003, which was 5.8% below the
adjusted EBITDA of $8.2 million earned in the comparable period of 2002.

LIQUIDITY AND CAPITAL RESOURCES

Analysis of Cash Flows

Following our recapitalization transaction in November 1997 and the acquisition
of the Rival business in February 1999, we have funded our liquidity
requirements with cash flows from operations and borrowings under our Credit
Facility. Our primary liquidity requirements are for working capital, to fund
capital expenditures and to service our indebtedness. While there can be no
assurance, we believe that existing cash resources, cash flows from operations
and borrowings under the amended Credit Facility will be sufficient to meet our
liquidity needs for the next twelve months, during which time we will continue
to carefully evaluate our financing requirements.

The Companys cash and cash equivalents decreased to $5.6 million at March 31,
2003, from $8.4 million at December 31, 2002. Cash provided by operations for
the three months ended March 31, 2003 and 2002 was $11.2 million and $44.0
million, respectively. For the three months ended March 31, 2003, operating
earnings, adjusted for non-cash items, improved to $2.6 million as compared to
adjusted operating earnings of $0.7 million in the comparable period of 2002.
Changes in other operating assets and liabilities provided $8.6 million of cash
in the three months of 2003 compared to $43.3 million in 2002. Inventory
levels at March 31, 2003 totaled $125.3 million, an increase of $17.1 million
or 15.8% over the same period of 2002. The increased inventory levels in
2003 included higher quantities of slow cookers and ice cream freezers to help
insure a smooth transition to Far East production. The inventory increase at
the end of the first quarter in 2003 was also impacted by lower demand due to
generally slow retail selling conditions during the 2002 holiday
season and the first quarter of 2003. Accounts receivable balances
decreased from the year ago levels, down $6.7 million or 7.2% from the accounts
receivable amount at March 31, 2002. Days sales outstanding (DSO) at March 31,
2003, stood at 66 days, 7% below the DSO statistic in 2002. During the first
quarter of 2003, the Company also expended $3.2 million of cash related to
severance and other facility exit costs which were accrued as restructuring
charges at December 31, 2002.

Cash used for investing activities for the three months ended March 31, 2003
was $1.1 million compared to $13.8 million of cash provided in 2002. The 2002
amount includes $15.1 million in proceeds received in connection with the sale
of the Pollenex business in January 2002. The Company invested $2.4 million in
capital expenditures for property and equipment during 2003 compared to capital
expenditures of $1.7 million in the first three months of 2002. The Company
expects to spend approximately $15 million on capital expenditures in 2003,
primarily related to the expansion of our China manufacturing facilities, the
implementation of computer systems and on-going tooling costs to support
product development needs.

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THE HOLMES GROUP, INC.

|        |  |                                                                                                    
|------- |  | ---------------------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS  (CONTINUED)

Cash used for financing activities for the three months ended March 31, 2003
and 2002 was $13.2 million and $62.5 million, respectively. Cash used for
financing in 2003 and 2002 reflected repayments on the Revolving Credit
Facility using cash flow from operations and also, in the 2002 first quarter,
the repurchase of a portion of the outstanding Senior Subordinated Notes and
debt issuance costs associated with the March 2002 Credit Facility amendment.

Financing Arrangements.

Under the Fifth Amendment to the Companys Credit Facility, which was executed
in March 2002, the lenders have committed to a Revolving Credit Loan A of $131
million and a Revolving Credit Loan B of $40 million. Revolving Credit Loan B
is supported by the Berkshire Partners guarantee. Actual availability under
these revolving credit loans is subject to a borrowing base formula based on inventory and
accounts receivable. Under the Fifth Amendment, the maturity date of the
Revolving Credit Loan B was extended from July 1, 2002 to July 1, 2004. The
maturity date of the Revolving Credit Loan A and the Term Loan A remain at
February 5, 2005, although the availability under the Revolving Credit Loan A
commitment will terminate on July 1, 2004 unless otherwise approved by a
majority of the lenders. The maturity date of the Term Loan B remains at
February 5, 2007.

During the first three months of 2003, the weighted average borrowings
outstanding under the Revolving Credit Facility were $71 million, slightly
above the average outstanding borrowings of $70.5 million in the comparable
period of 2002. As of March 31, 2003, our availability was $61.1 million, net
of outstanding letters of credit totaling $9 million. The Credit Facility bears
interest at variable rates based on either the prime rate or eurodollar rate,
at our option, plus a margin which, in the case of the Term Loan A and the
Revolving Credit Facility, varies depending upon certain financial ratios. The
Credit Facility, and the guarantees thereof by our domestic subsidiaries, are
secured by substantially all of our domestic and certain foreign assets. The
Credit Facility is cross-defaulted to the Notes Indentures.

In conjunction with the Fifth Amendment in March 2002, the Company repurchased
from two Berkshire Partners investment funds an aggregate principal amount of
approximately $36.2 million of the Senior Subordinated Notes. The purchase
price of the Notes, representing Berkshire Partners cost, was $11.5 million
plus accrued interest, which was funded with proceeds of the Revolving Credit
Loan B. The Notes repurchased were retired and cancelled. The Company may
consider repurchases of additional Notes in the future, and we may utilize the
proceeds of the Credit Facility for this purpose. As of March 31, 2003, $99.6
million of Senior Subordinated Notes were outstanding. Total debt at March 31,
2003 amounted to $262 million, down $5.9 million or 2.2% below the level of debt
outstanding at March 31, 2002. Over the past two years, the Company has repaid
or retired $91.5 million of debt, reducing total debt by 26% from the $353.5
million of debt outstanding at March 31, 2001.

The Credit Facility, as amended, and the Notes Indentures include certain
financial and operating covenants which, among other things, restrict our
ability to incur additional indebtedness, make investments and take certain
other actions. Our ability to meet our debt service obligations will be
dependent upon our future performance, which will be impacted by general
economic conditions and other factors.

RECENTLY ISSUED ACCOUNTING STANDARDS

The FASB issued Statement No. 145, Rescission of FASB Statements No. 4, 44 and
64, Amendment of FASB Statement No. 13, and Technical Corrections in April
2002. This statement updates, clarifies and simplifies existing accounting
pronouncements. Specifically, the statement rescinds FASB Statement No. 4,
Reporting Gains and Losses from Extinguishment of Debt, FASB Statement No.
64, Extinguishment of Debt Made to Satisfy, Sinking Fund Requirements and
FASB Statement No. 44 Accounting for Intangible Assets of Motor Carriers.
The Statement also amends FASB Statement No. 13, Accounting for Leases and
certain other existing authoritative pronouncements to make technical
corrections or clarifications. FAS No. 145 became effective for THG related to
the rescission of FAS 4, 44

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THE HOLMES GROUP, INC.

|        |  |                                                                                                    
|------- |  | ---------------------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS  (CONTINUED)

and 64 on January 1, 2003. FAS 145 will be effective related to the amendment of FAS 13
for all transactions occurring after May 15, 2002. All other provisions of FAS
145 became effective for financial statements issued after May 15, 2002. In
accordance with the new standard, the Company reclassified the gain related to
the Senior Notes repurchase, which was treated as an extraordinary item in
2002, as a component of other income in the consolidated statement of
operations.

In July 2002, the FASB issued Statement of Financial Accounting Standards No.
146, Accounting for Costs Associated with Exit or Disposal Activities, which
nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). FAS 146
requires a liability for a cost associated with an exit or disposal activity be
recognized and measured initially at it fair value in the period in which the
liability is incurred. If fair value cannot be reasonably estimated, the
liability shall be recognized initially in the period in which fair value can
be reasonably estimated. The provisions of FAS 146 will be effective for the
Company prospectively for exit or disposal activities initiated after December
31, 2002. Adoption of this Standard will to impact the timing of recognition
of costs associated with future exit and disposal activities.

In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of
Variable Interest Entities. This interpretation explains how to identify
variable interest entities and how an enterprise assesses its interest in a
variable interest entity to decide whether to consolidate that entity. This
interpretation requires existing unconsolidated variable interest entities to
be consolidated by their primary beneficiaries if the entities do not
effectively disperse risks among parties involved. Variable interest entities
that effectively disperse risk will not be consolidated unless a single party
holds an interest or combination of interest that effectively recombines risks
that were previously dispersed. This interpretation applies immediately to
variable interest entities created after January 31, 2003, and to variable
interest entities in which an enterprise obtains an interest after that date.
As of July 1, 2003, the standard applies to variable interest entities in which
an enterprise holds a variable interest that it acquired before February 1,
2003. The adoption of FIN 46 should not have a material effect on the
Companys financial position or results of operations.




ITEM 3.      QUANTIATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At March 31, 2003, the carrying value of our debt totaled $262 million. The
fair value approximated $252 million. This debt includes amounts at both fixed
and variable interest rates. For fixed rate debt, interest rate changes affect
the fair market value, but do not impact earnings or cash flows. Conversely,
for variable rate debt, interest rate changes generally do not affect the fair
market value, but do impact earnings and cash flows, assuming other factors are
held constant.

At March 31, 2003, the Company had fixed rate debt of $99.6 million and
variable rate debt of $162.4 million. Assuming a constant debt level, a one
percentage point decrease in interest rates would increase the unrealized fair
market value of fixed rate debt by approximately $4.7 million. Based on the
amounts of variable rate debt outstanding at March 31, 2003, the earnings and
cash flows impact for the next year resulting from a one percentage point
increase in interest rates would be approximately $1.6 million, holding other
variables constant.




ITEM 4.      CONTROLS AND PROCEDURES

(a)     Evaluation of disclosure controls and procedures.

Within the 90 days prior to the date of this report, the Company carried
out an evaluation under the supervision and with the participation of the
Companys management, including the Companys Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures pursuant to the Exchange Act Rule
12a-14. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Companys disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company (including its consolidated subsidiaries) required to
be included in the Companys periodic filings with the Securities and Exchange
Commission.

(b)     Changes in internal controls.

None.

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THE HOLMES GROUP, INC.




PART II. OTHER INFORMATION




ITEM 1.      LEGAL PROCEEDINGS

The Company is involved in various
legal proceedings incidental to its normal business operations,
including product liability and patent and trademark litigation. A
patent infringement action, Tilia International, Inc. v. The Rival
Company, is pending in the United States District Court in San
Francisco, California. In that proceeding, Tilia International claims
that the Rival Seal-A-Meal® vacuum seal food storage device and food
storage bags infringe certain patent claims allegedly owned by Tilia
International. The Company denies the allegations and is aggressively
litigating the matter. Management believes that the outcome of all
pending litigation will not have a material adverse effect on its
business, financial condition or results of operations. In the case
of product liability litigation, the Company has product liability
and general liability insurance policies in amounts management
believes to be reasonable. The Company also faces exposure to
voluntary or mandatory product recalls in the event that our products
are alleged to have manufacturing or safety defects. The Company does
not maintain product recall insurance.

ITEM 2.      CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.




ITEM 5.      OTHER INFORMATION

Investor Conference Call

We will hold a telephone conference call on Friday May 16, 2003 at 10 a.m.,
Eastern Time, in order for investors and other interested stakeholders to hear
managements views on our results of operations during the first three months
of 2003. If you are interested in accessing the call, please fax the following
information to Kay Ford, Executive Assistant, at 508-422-1676:



| |  | Name of Participant(s)
|- |  | ----------------------
| 
| |  | Company Affiliation   
| 
| |  | Nature of Business    
| 
| |  | Address               
| 
| |  | Phone, Fax and E-mail 

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits:

Not applicable

b. Reports on Form 8-K:

Not applicable

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THE HOLMES GROUP, INC.

SIGNATURES

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.

Registrant

|            |  |                                                  
|----------- |  | -------------------------------------------------
|May 9, 2003 |  | By: /s/ Peter J. Martin                          
|            |  |                                                  
|            |  | Peter J. Martin, President and                   
|            |  | Chief Executive Officer                          
|            |  | (Principal Executive Officer)                    
|            |  |                                                  
|May 9, 2003 |  | By: /s/ John M. Kelliher                         
|            |  |                                                  
|            |  | John M. Kelliher, Senior Vice President and Chief
|            |  | Financial Officer                                
|            |  | (Principal Financial and                         
|            |  | Accounting Officer)                              

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THE HOLMES GROUP, INC.

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter J. Martin, certify that:



|1. |  | I have reviewed this Quarterly Report on Form 10-Q for the period ended
March 31, 2003 of The Holmes Group, Inc.                                                                                                                                                                                                              
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The Registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we
have:                                                                                                     



| | a. |  | Designed such disclosure controls and procedures to
ensure that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report it being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Evaluated the effectiveness of the Registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|
| | c. |  | Presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The Registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrants auditors and the Audit
Committee of Registrants Board of Directors (or persons performing the
equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | All significant deficiencies in the design or operation
of internal controls which could adversely affect the Registrants
ability to record, process, summarize and report financial data
and have identified for the Registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Registrants internal controls; and                                                                                                                                        



|6. |  | The Registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                      
| | -------------------------------------
| | /s/ PETER J. MARTIN                  
| |                                      
| | Peter J. Martin                      
| | President and Chief Executive Officer

Date: May 9, 2003

29



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##### Table of Contents



THE HOLMES GROUP, INC.

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John M. Kelliher, certify that:



| | 1. |  | I have reviewed this Quarterly Report on Form 10-Q for the period
ended March 31, 2003 of The Holmes Group, Inc.                                                                                                                                                                                                              
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this quarterly report;                   
|
| | 4. |  | The Registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and
we have:                                                                                                     



| | a. |  | Designed such disclosure controls and procedures to
ensure that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report it being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Evaluated the effectiveness of the Registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|
| | c. |  | Presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



| | 5. |  | The Registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the Registrants auditors and
the Audit Committee of Registrants Board of Directors (or persons
performing the equivalent functions):
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | All significant deficiencies in the design or operation
of internal controls which could adversely affect the Registrants
ability to record, process, summarize and report financial data
and have identified for the Registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Registrants internal controls; and                                                                                                                                        



| | 6. |  | The Registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                          
| | -------------------------
| | /s/ JOHN M. KELLIHER     
| |                          
| | John M. Kelliher         
| | Senior Vice President and
| | Chief Financial Officer  

Date: May 9, 2003

30