##### Table of Contents



United States
Securities and Exchange Commission
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 For the fiscal year ended: December 31, 2007
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission file number 1-5558
 Katy Industries, Inc.
  Delaware
(State or other jurisdiction of
    
    75-1277589
(IRS Employer Identification No.)incorporation or organization)
 2461 South Clark Street, Suite 630, Arlington, Virginia
    
    22202(Address of Principal Executive Offices)
    
    (Zip Code)
   (Title of each class) 
Common Stock, $1.00 par value
    
    (Name of each exchange on which registered)
OTC Bulletin BoardCommon Stock Purchase Rights
   o þ
  o þ
  þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
  *
    
    Calculated by excluding all shares held by executive officers and directors of the registrant
without conceding that all such persons are affiliates of the registrant for purposes of federal
securities laws. DOCUMENTS INCORPORATED BY REFERENCE




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TABLE OF CONTENTS
 PART IItem 1. BUSINESS
    
    
    3Item 1A. RISK FACTORS
    
    
    7Item 1B. UNRESOLVED STAFF COMMENTS
    
    
    11Item 2. PROPERTIES
    
    
    12Item 3. LEGAL PROCEEDINGS
    
    
    12Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    12PART IIItem 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    13Item 6. SELECTED FINANCIAL DATA
    
    
    15Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
    
    
    16Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    29Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    31Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
    
    
    67Item 9A. CONTROLS AND PROCEDURES
    
    
    67Item 9B. OTHER INFORMATION
    
    
    69Part IIIItem 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    70Item 11. EXECUTIVE COMPENSATION
    
    
    70Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
    
    
    70Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    71Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    71Part IVItem 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES
    
    
    72SIGNATURES
    
    
    72EXHIBITS
    
    
    77Exhibit 21Exhibit 23Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I
 
 Item 1. BUSINESS
  Operations
   Continental Commercial Products, LLC (CCP
 Continental ® ® ® ® ®
 Contico ® ® ®
 Container ®
 CCP Canada
 Disco ® ® ® ® ®
 Gemtex ®
  3




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Glit ® ® ® ® ® ® ® ® ® ® ®
 Wilen ® ® ®
   Other Operations
    Discontinued Operations
   4




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Markets and Competition
    Backlog
   5




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Raw Materials
  Employees
  Regulatory and Environmental Matters
  Licenses, Patents and Trademarks
 ® ® ® ® ® ® ® ®
 Available Information
 http://www.sec.gov
 http://www.katyindustries.com
  6




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Item 1A. RISK FACTORS
  Our stock price has been, and likely will continue to be, volatile.
  
    
    announcements concerning us or our competitors;
 
    
    quarterly variations in operating results;
 
    
    introduction or abandonment of new technologies or products;
 
    
    divestiture or acquisition of business groups or units;
 
    
    limited trading in our stock;
 
    
    changes in product pricing policies;
 
    
    changes in governmental regulations affecting us; and
 
    
    changes in earnings estimates by analysts or changes in accounting policies.
  Our common stock is quoted on the OTC Bulletin Board, which may have an unfavorable impact on our
stock price and liquidity.
  We are dependent upon a continuous supply of raw materials from third party suppliers and would be
harmed by a significant, prolonged disruption in supply.
   7




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Price increases in raw materials could adversely affect our operating results and financial
condition.
  Fluctuations in the price, quality and availability of certain portions of our finished goods due
to greater reliance on third party suppliers could negatively impact our results of operations.
  Our inability to successfully execute our facility consolidation and acquisition integration plans
could adversely affect our business and results of operations.
  Our inability to implement our strategy of continuously improving our productivity and streamlining
our operations could have an adverse effect on our financial condition and results of operations.
  Historically, we have had a high amount of debt, and the cost of servicing our debt may adversely
affect our liquidity and financial condition, limit our ability to grow and compete, and prevent us
from fulfilling our obligations under our indebtedness.
  
    
    make it more difficult for us to satisfy our outstanding debt obligations;
 
    
    require us to dedicate a substantial portion or even all of our cash flow from
operations to payments on our debt, thereby reducing the amount of our cash flow
available for working capital, capital expenditures, acquisitions, and other general
corporate purposes;
  8




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
    
    increase the amount of interest expense that will have to pay because some of our
borrowings are at variable rates of interest, which, if increased, will result in higher
interest payments;
 
    
    limit our flexibility in planning for, or reacting to, changes in our business and the
industries in which we compete;
 
    
    place us at a competitive disadvantage compared to our competitors, some of which have
lower debt service obligations and greater financial resources than we do;
 
    
    limit our ability to borrow additional funds; and
 
    
    increase our vulnerability to existing and future adverse economic and industry
conditions.
  We are obligated to comply with financial and other covenants in our debt agreements that could
restrict our operating activities, and the failure to comply with such covenants could result in
defaults that accelerate the payment under our debt.
  
    
    incur additional debt;
 
    
    make certain distributions, investments and other restricted payments;
 
    
    limit the ability of restricted subsidiaries to make payments to us;
 
    
    enter into transactions with affiliates;
 
    
    create certain liens;
 
    
    sell assets and if sold, use of proceeds; and
 
    
    consolidate, merge or sell all or substantially all of our assets.
    9




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Work stoppages or other labor issues at our facilities or those of our suppliers could adversely
affect our operations.
  We may not be able to protect our intellectual property rights adequately.
   Disruption of our information technology and communications systems or our failure to adequately
maintain our information technology and communications systems could have a material adverse effect
on our business and operations.
   Our future performance is influenced by our ability to remain competitive.
   10




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Failure to maintain effective internal control over financial reporting could have material adverse
effect on our business, results of operations, financial condition and stock price.
  Changes in significant laws and government regulations affecting environmental compliance and
income taxes could adversely affect our business and results of operations.
   We are subject to litigation that could adversely affect our operating results.
  
 Item 1B. UNRESOLVED STAFF COMMENTS
   11




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Item 2. PROPERTIES
  Location
    
    Facility
    
    Business UnitUNITED STATESCaliforniaNorwalk
    
    Office, Manufacturing, Distribution
    
    Continental, Contico, ContainerChino
    
    Distribution
    
    Continental, Contico, Glit, Wilen, DiscoGeorgiaAtlanta
    
    Office, Manufacturing, Distribution
    
    WilenMcDonough
    
    Office, Manufacturing, Distribution
    
    Glit, Wilen, DiscoWrens*
    
    Office, Manufacturing, Distribution
    
    GlitWashington**
    
    Manufacturing
    
    GlitMissouriBridgeton
    
    Office, Manufacturing, Distribution
    
    Continental, ConticoHazelwood
    
    Manufacturing
    
    ConticoVirginiaArlington
    
    Corporate Headquarters
    
    CorporateCANADAOntarioToronto
    
    Office, Manufacturing, Distribution
    
    Gemtex, CCP Canada
 *
    
    Facility is owned.**
    
    In 2007, we consolidated all of our abrasives operations in Washington, Georgia into our
Wrens, Georgia (Wrens) facility. The facility is currently available for sublease.  
 Item 3. LEGAL PROCEEDINGS
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   12




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PART II
 
 Item 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
   Period
    
    High
    
    
    Low2007First Quarter
    
    $
    2.72
    
    
    $
    2.00Second Quarter
    
    
    2.20
    
    
    
    1.05Third Quarter
    
    
    1.65
    
    
    
    1.10Fourth Quarter
    
    
    2.00
    
    
    
    0.752006First Quarter
    
    $
    3.75
    
    
    $
    2.80Second Quarter
    
    
    3.61
    
    
    
    2.24Third Quarter
    
    
    3.23
    
    
    
    1.85Fourth Quarter
    
    
    3.40
    
    
    
    2.51
  Dividend Policy
  Equity Compensation Plan Information
   13




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Share Repurchase Plan
  Total Number
    
    
    Approximateof Shares
    
    
    Dollar ValuePurchased as
    
    
    of Shares ThatPart of
    
    
    May Yet BePublicly
    
    
    PurchasedTotal Number
    
    
    
    
    
    
    Announced
    
    
    Under theof Shares
    
    
    Average Price
    
    
    Plans or
    
    
    Plans orPeriod
    
    Purchased
    
    
    Paid per Share
    
    
    Programs
    
    
    Programs2005
    
    
    3,200
    
    
    $
    2.35
    
    
    
    3,200
    
    
    $0.9 million2006
    
    
    40,800
    
    
    $
    2.71
    
    
    
    40,8002007
    
    
    1,300
    
    
    $
    2.61
    
    
    
    1,300Total
    
    
    45,300
    
    
    $
    2.68
    
    
    
    45,300
   14




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Item 6. SELECTED FINANCIAL DATA
 Years Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(Amounts in Thousands, except per share data and percentages)Net sales
    
    $
    187,771
    
    
    $
    192,416
    
    
    $
    200,085
    
    
    $
    221,390
    
    
    $
    233,611Loss from continuing operations [a]
    
    $
    (13,881
    )
    
    $
    (8,661
    )
    
    $
    (22,466
    )
    
    $
    (48,595
    )
    
    $
    (26,306
    )Discontinued operations [b]
    
    
    12,380
    
    
    
    (2,962
    )
    
    
    8,669
    
    
    
    12,474
    
    
    
    16,942Cumulative effect of a change in accounting principle [b] [c]
    
    
    
    
    
    
    (756
    )
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    (1,501
    )
    
    
    (12,379
    )
    
    
    (13,797
    )
    
    
    (36,121
    )
    
    
    (9,364
    )Gain on early redemption of preferred interest of subsidiary [d]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,560Payment-in-kind of dividends on convertible preferred stock [e]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,749
    )
    
    
    (12,811
    )Net loss attributable to common stockholders
    
    $
    (1,501
    )
    
    $
    (12,379
    )
    
    $
    (13,797
    )
    
    $
    (50,870
    )
    
    $
    (15,615
    )Loss per share of common stock  Basic and diluted:Loss from continuing operations attributable to
common stockholders
    
    $
    (1.75
    )
    
    $
    (1.09
    )
    
    $
    (2.83
    )
    
    $
    (8.03
    )
    
    $
    (3.96
    )Discontinued operations
    
    
    1.56
    
    
    
    (0.37
    )
    
    
    1.09
    
    
    
    1.58
    
    
    
    2.06Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    (0.09
    )
    
    
    
    
    
    
    
    
    
    
    Net loss attributable to common stockholders
    
    $
    (0.19
    )
    
    $
    (1.55
    )
    
    $
    (1.74
    )
    
    $
    (6.45
    )
    
    $
    (1.90
    )Total assets
    
    $
    98,564
    
    
    $
    182,694
    
    
    $
    212,094
    
    
    $
    224,464
    
    
    $
    241,708Total liabilities
    
    
    62,108
    
    
    
    140,662
    
    
    
    157,390
    
    
    
    155,879
    
    
    
    139,416Stockholders equity
    
    
    36,456
    
    
    
    42,032
    
    
    
    54,704
    
    
    
    68,585
    
    
    
    102,292Long-term debt, including current maturities
    
    
    13,453
    
    
    
    56,871
    
    
    
    57,660
    
    
    
    58,737
    
    
    
    39,663Impairments of long-lived assets [f]
    
    
    
    
    
    
    
    
    
    
    2,112
    
    
    
    29,974
    
    
    
    11,161Severance, restructuring and related charges [f]
    
    
    2,581
    
    
    
    17
    
    
    
    956
    
    
    
    2,621
    
    
    
    5,949Depreciation and amortization [f]
    
    
    7,294
    
    
    
    7,628
    
    
    
    7,699
    
    
    
    10,779
    
    
    
    17,599Capital expenditures [f]
    
    
    4,403
    
    
    
    3,733
    
    
    
    8,210
    
    
    
    9,773
    
    
    
    10,181Working capital [g]
    
    
    15,622
    
    
    
    48,564
    
    
    
    48,132
    
    
    
    59,855
    
    
    
    43,439Ratio of debt to capitalization
    
    
    27.0
    %
    
    
    57.5
    %
    
    
    51.3
    %
    
    
    46.1
    %
    
    
    27.9
    %Weighted average common shares outstanding  Basic and diluted
    
    
    7,951,231
    
    
    
    7,966,742
    
    
    
    7,948,749
    
    
    
    7,883,265
    
    
    
    8,214,712Number of employees
    
    
    920
    
    
    
    1,172
    
    
    
    1,544
    
    
    
    1,793
    
    
    
    1,808Cash dividends declared per common share
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 [a]
    
    Includes distributions on preferred securities in 2003.[b]
    
    Presented net of tax.[c]
    
    This amount is stock compensation expense recorded with the adoption of Statement of Financial
Accounting Standards (SFAS) No. 123R, Share-Based Payment.[d]
    
    Represents the gain recognized on a redemption of a preferred interest of our CCP subsidiary.[e]
    
    Represents a 15% payment-in-kind dividend on our Convertible Preferred Stock. See Note 12 to
the Consolidated Financial Statements in Part II, Item 8.[f]
    
    From continuing operations only.[g]
    
    Defined as current assets minus current liabilities, exclusive of deferred tax assets and
liabilities and debt classified as current.  15




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Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Restatement of Prior Financial Information
  COMPANY OVERVIEW
       16




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Years Ended December 31,2007
    
    
    2006
    
    
    2005(Amounts in Millions, except per share data and percentages)$
    
    
    % to Sales
    
    
    $
    
    
    % to Sales
    
    
    $
    
    
    % to SalesNet sales
    
    $
    187.8
    
    
    
    100.0
    
    
    $
    192.4
    
    
    
    100.0
    
    
    $
    200.1
    
    
    
    100.0Cost of goods sold
    
    
    167.5
    
    
    
    89.2
    
    
    
    167.3
    
    
    
    87.0
    
    
    
    185.7
    
    
    
    92.8Gross profit
    
    
    20.3
    
    
    
    10.8
    
    
    
    25.1
    
    
    
    13.0
    
    
    
    14.4
    
    
    
    7.2Selling, general and administrative expenses
    
    
    26.0
    
    
    
    (13.8
    )
    
    
    30.5
    
    
    
    (15.8
    )
    
    
    35.4
    
    
    
    (17.7
    )Impairments of long-lived assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.1
    
    
    
    (1.1
    )Severance, restructuring and related charges
    
    
    2.6
    
    
    
    (1.4
    )
    
    
    
    
    
    
    (0.0
    )
    
    
    1.0
    
    
    
    (0.5
    )Loss (gain) on sale of assets
    
    
    2.4
    
    
    
    (1.3
    )
    
    
    0.4
    
    
    
    (0.2
    )
    
    
    (0.3
    )
    
    
    0.2Operating loss
    
    
    (10.7
    )
    
    
    (5.7
    )
    
    
    (5.8
    )
    
    
    (3.0
    )
    
    
    (23.8
    )
    
    
    (11.9
    )Equity in income of equity method investment
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.6Gain on SESCO joint venture transaction
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    Interest expense
    
    
    (4.6
    )
    
    
    
    
    
    
    (4.2
    )
    
    
    
    
    
    
    (3.8
    )Other, net
    
    
    (0.1
    )
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.1Loss from continuing operations before benefit from
income taxes
    
    
    (14.6
    )
    
    
    
    
    
    
    (9.2
    )
    
    
    
    
    
    
    (26.9
    )Benefit from income taxes from continuing operations
    
    
    0.7
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    4.4Loss from continuing operations
    
    
    (13.9
    )
    
    
    
    
    
    
    (8.7
    )
    
    
    
    
    
    
    (22.5
    )Income from operations of discontinued businesses (net of tax)
    
    
    2.3
    
    
    
    
    
    
    
    2.5
    
    
    
    
    
    
    
    8.7Gain (loss) on sale of discontinued businesses (net of tax)
    
    
    10.1
    
    
    
    
    
    
    
    (5.4
    )
    
    
    
    
    
    
    Loss before cumulative effect of a change in accounting principle
    
    
    (1.5
    )
    
    
    
    
    
    
    (11.6
    )
    
    
    
    
    
    
    (13.8
    )Cumulative effect of a change in accounting principle (net of tax)
    
    
    
    
    
    
    
    
    
    
    (0.8
    )
    
    
    
    
    
    
    Net loss
    
    $
    (1.5
    )
    
    
    
    
    
    $
    (12.4
    )
    
    
    
    
    
    $
    (13.8
    )Loss per share of common stock  Basic and dilutedLoss from continuing operations
    
    $
    (1.75
    )
    
    
    
    
    
    $
    (1.09
    )
    
    
    
    
    
    $
    (2.83
    )Discontinued operations (net of tax)
    
    
    1.56
    
    
    
    
    
    
    
    (0.37
    )
    
    
    
    
    
    
    1.09Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.09
    )
    
    
    
    
    
    
    Net loss
    
    $
    (0.19
    )
    
    
    
    
    
    $
    (1.55
    )
    
    
    
    
    
    $
    (1.74
    )
 RESULTS OF OPERATIONS
 2007 COMPARED TO 2006
     17




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Severance, Restructuring and Related Charges
  Other
     Share-Based Payments
 2006 COMPARED TO 2005
   18




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Impairments of Long-lived Assets
 Goodwill and Intangible Assets Accounting for the
Impairment or Disposal of Long-Lived Assets
 Severance, Restructuring and Related Charges
  Other
     19




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Share-Based Payments
 LIQUIDITY AND CAPITAL RESOURCES
   Bank of America Credit Agreement
      20




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Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements that
Include Both a Subjective Acceleration Clause and a Lock-Box Arrangement
  21




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Contractual Obligations
  Due in less
    
    
    Due in 1-3
    
    
    Due in 3-5
    
    
    Due after 5Contractual Cash Obligations
    
    Total
    
    

than 1 year
    
    
    years
    
    
    years
    
    
    yearsRevolving credit facility [a]
    
    $
    2,853
    
    
    $
    2,853
    
    
    $
    
    
    
    $
    
    
    
    $
    Term loans
    
    
    10,600
    
    
    
    1,500
    
    
    
    9,100
    
    
    
    
    
    
    
    Interest on debt [b]
    
    
    2,159
    
    
    
    842
    
    
    
    1,317
    
    
    
    
    
    
    
    Operating leases [c]
    
    
    12,495
    
    
    
    6,324
    
    
    
    4,651
    
    
    
    1,210
    
    
    
    310Severance and restructuring [c]
    
    
    552
    
    
    
    106
    
    
    
    233
    
    
    
    125
    
    
    
    88Postretirement benefits [d]
    
    
    4,839
    
    
    
    668
    
    
    
    1,223
    
    
    
    845
    
    
    
    2,103Total Contractual Obligations
    
    $
    33,498
    
    
    $
    12,293
    
    
    $
    16,524
    
    
    $
    2,180
    
    
    $
    2,501
 Due in less
    
    
    Due in 1-3
    
    
    Due in 3-5
    
    
    Due after 5Other Commercial Commitments
    
    Total
    
    

than 1 year
    
    
    years
    
    
    years
    
    
    yearsCommercial letters of credit
    
    $
    423
    
    
    $
    423
    
    
    $
    
    
    
    $
    
    
    
    $
    Stand-by letters of credit
    
    
    5,613
    
    
    
    5,613
    
    
    
    
    
    
    
    
    
    
    
    Total Commercial Commitments
    
    $
    6,036
    
    
    $
    6,036
    
    
    $
    
    
    
    $
    
    
    
    $
    
 [a]
    
    As discussed in the Liquidity and Capital Resources section above and in Note 9 to the
Consolidated Financial Statements in Part II, Item 8, the entire Revolving Credit Facility under
the Bank of America Revolving Credit Agreement is classified as a current liability on the
Consolidated Balance Sheets as a result of the combination in the Bank of America Credit Agreement
of (i) lockbox agreements on Katys depository bank accounts, and (ii) a subjective Material
Adverse Effect (MAE) clause. The Revolving Credit Facility expires in November of 2010.[b]
    
    Represents interest on the Revolving Credit Facility and Term Loan of the Bank of America
Credit Agreement. Amounts assume interest accrues at the current rate in effect. The amount also
assumes the principal balance of the Revolving Credit Facility remains constant through its
expiration date of November 30, 2010 and the principal balance of the Term Loan amortizes in
accordance with the terms of the Bank of America Credit Agreement. Due to the variable nature of
the Bank of America Credit Agreement, actual interest rates could differ from the assumptions
above. In addition, actual borrowing levels could differ from the assumptions above due to
liquidity needs.[c]
    
    Future non-cancelable lease rentals are included in the line entitled Operating leases, which
represent obligations associated with restructuring activities. The line entitled Severance and
restructuring represents the remaining obligations associated with restructuring activities, net
of the future non-cancelable lease rentals. The Consolidated Balance Sheets at December 31, 2007
and 2006, include $1.5 million and $1.0 million, respectively, in discounted liabilities associated
with non-cancelable operating lease rentals, net of estimated sub-lease revenues, related to
facilities that have been abandoned as a result of restructuring and consolidation activities.[d]
    
    Benefits consist of postretirement medical obligations to retirees of former subsidiaries of
Katy, as well as deferred compensation plan liabilities to former officers of the Company,
discussed in Note 11 to the Consolidated Financial Statements in Part II, Item 8.  Off-balance Sheet Arrangements
   22




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##### Table of Contents



Cash Flow
  Operating Activities
  Investing Activities
  Financing Activities
  TRANSACTIONS WITH RELATED AND CERTAIN OTHER PARTIES
  SEVERANCE, RESTRUCTURING AND RELATED CHARGES
   23




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##### Table of Contents



2007
    
    
    2006
    
    
    2005(Amounts in Thousands)Consolidation of Glit facilities
    
    $
    1,699
    
    
    $
    299
    
    
    $
    724Consolidation of St. Louis
manufacturing/distribution facilities
    
    
    882
    
    
    
    (499
    )
    
    
    39Corporate office relocation
    
    
    
    
    
    
    217
    
    
    
    172Consolidation of administrative functions for CCP
    
    
    
    
    
    
    
    
    
    
    21Total severance, restructuring and related costs
    
    $
    2,581
    
    
    $
    17
    
    
    $
    956
  One-time
    
    
    ContractTermination
    
    
    TerminationTotal
    
    
    Benefits [a]
    
    Costs [b]
    
    Other [c]Restructuring liabilities
at December 31, 2005
    
    $
    2,507
    
    
    $
    412
    
    
    $
    2,095
    
    
    $
    Additions
    
    
    516
    
    
    
    326
    
    
    
    
    
    
    
    190Reductions
    
    
    (499
    )
    
    
    
    
    
    
    (499
    )
    
    
    Payments
    
    
    (2,054
    )
    
    
    (738
    )
    
    
    (1,126
    )
    
    
    (190
    )Restructuring liabilities
at December 31, 2006
    
    $
    470
    
    
    $
    
    
    
    $
    470
    
    
    $
    Additions
    
    
    2,656
    
    
    
    151
    
    
    
    2,332
    
    
    
    173Reductions
    
    
    (75
    )
    
    
    
    
    
    
    (75
    )
    
    
    Payments
    
    
    (909
    )
    
    
    (151
    )
    
    
    (585
    )
    
    
    (173
    )Other
    
    
    (689
    )
    
    
    
    
    
    
    (689
    )
    
    
    Restructuring liabilities
at December 31, 2007
    
    $
    1,453
    
    
    $
    
    
    
    $
    1,453
    
    
    $
    
 [a]
    
    Includes severance, benefits, and other employee-related costs associated with the employee
terminations. No obligations remain at December 31, 2007.[b]
    
    Includes charges related to non-cancelable lease liabilities for abandoned facilities, net of
potential sub-lease revenue. Total maximum potential amount of lease loss, excluding any sublease
rentals, is $3.1 million as of December 31, 2007. The Company has included $1.6 million as an
offset for sublease rentals.[c]
    
    Includes charges associated with equipment removal and cleanup of abandoned facilities. No
obligations remain at December 31, 2007.      24




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##### Table of Contents



25




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##### Table of Contents



Cautionary Statement Pursuant to Safe Harbor Provisions of the Private Securities Litigation
Reform Act of 1995
  
    
    Increases in the cost of, or in some cases continuation of, the current price levels
of thermoplastic resins, paper board packaging, and other raw materials.
    
    Our inability to reduce product costs, including manufacturing, sourcing, freight, and other product costs.
    
    Our inability to reduce administrative costs through consolidation of functions and systems improvements.
    
    Our inability to protect our intellectual property rights adequately.
    
    Our inability to reduce our raw materials costs.
    
    Our inability to grow our revenue.
    
    Our inability to achieve product price increases, especially as they relate to
potentially higher raw material costs.
    
    Competition from foreign competitors.
    
    The potential impact of rising interest rates on our LIBOR-based Bank of America Credit Agreement.
    
    Our inability to meet covenants associated with the Bank of America Credit Agreement.
    
    Our failure to identify, and promptly and effectively remediate, any material
weaknesses or significant deficiencies in our internal controls over financial
reporting.
    
    The potential impact of rising costs for insurance for properties and various forms of liabilities.
    
    The potential impact of changes in foreign currency exchange rates related to our foreign operations.
    
    Labor issues, including union activities that require an increase in production costs
or lead to a strike, thus impairing production and decreasing sales. We are also
subject to labor relations issues at entities involved in our supply chain, including
both suppliers and those involved in transportation and shipping.
    
    Changes in significant laws and government regulations affecting environmental
compliance and income taxes.
   26




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
  Revenue Recognition Accounting
for Consideration Given by a Vendor to a Customer
 Stock-based Compensation Share-Based Payment
 Accounts Receivable
 Inventories
  Goodwill and Impairments of Long-Lived Assets Goodwill and Intangible Assets,
  27




---



##### Table of Contents



Accounting for
the Impairment or Disposal of Long-Lived Assets,
 Deferred Income Taxes Accounting for Income Taxes
 Accounting
for Uncertainty in Income Taxes
 Workers Compensation and Product Liabilities
  28




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##### Table of Contents



Environmental and Other Contingencies
 Severance, Restructuring and Related Charges Accounting for Costs Associated with Exit or Disposal Activities
 NEW ACCOUNTING PRONOUNCEMENTS
  
 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
   29




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##### Table of Contents



Expected Maturity Dates
 2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    Total
    
    
    Fair ValueASSETSTemporary cash investmentsFixed rate
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Average interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    INDEBTEDNESSFixed rate debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Average interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Variable rate debt
    
    $
    1,500
    
    
    $
    1,500
    
    
    $
    10,453
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    13,453
    
    
    $
    13,453Average interest rate
    
    
    7.50
    %
    
    
    7.50
    %
    
    
    7.57
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Foreign Exchange Risk
  Commodity Price Risk
   30




---



##### Table of Contents



Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Report of Independent Registered Public Accounting Firm
       
  31




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##### Table of Contents



ASSETS
 2007
    
    
    2006CURRENT ASSETS:Cash and cash equivalents
    
    $
    2,015
    
    
    $
    7,392Trade accounts receivable, net of allowances of
$261 and $2,213
    
    
    18,077
    
    
    
    55,014Inventories, net
    
    
    26,160
    
    
    
    54,980Receivable from disposition
    
    
    6,799
    
    
    
    Other current assets
    
    
    2,520
    
    
    
    2,991Asset held for sale
    
    
    
    
    
    
    4,483Total current assets
    
    
    55,571
    
    
    
    124,860OTHER ASSETS:Goodwill
    
    
    665
    
    
    
    665Intangibles, net
    
    
    4,853
    
    
    
    6,435Other
    
    
    3,470
    
    
    
    8,990Total other assets
    
    
    8,988
    
    
    
    16,090PROPERTY AND EQUIPMENTLand and improvements
    
    
    336
    
    
    
    336Buildings and improvements
    
    
    9,666
    
    
    
    9,669Machinery and equipment
    
    
    96,650
    
    
    
    119,703106,652
    
    
    
    129,708Less  Accumulated depreciation
    
    
    (72,647
    )
    
    
    (87,964
    )Property and equipment, net
    
    
    34,005
    
    
    
    41,744Total assets
    
    $
    98,564
    
    
    $
    182,694
   32




---



##### Table of Contents



LIABILITIES AND STOCKHOLDERS EQUITY
 2007
    
    
    2006CURRENT LIABILITIES:Accounts payable
    
    $
    14,995
    
    
    $
    33,684Accrued compensation
    
    
    2,629
    
    
    
    3,518Accrued expenses
    
    
    22,325
    
    
    
    38,187Current maturities, long-term debt
    
    
    1,500
    
    
    
    1,125Revolving credit agreement
    
    
    2,853
    
    
    
    43,879Total current liabilities
    
    
    44,302
    
    
    
    120,393LONG-TERM DEBT, less current maturities
    
    
    9,100
    
    
    
    11,867OTHER LIABILITIES
    
    
    8,706
    
    
    
    8,402Total liabilities
    
    
    62,108
    
    
    
    140,662COMMITMENTS AND CONTINGENCIES (Notes 18 and 22)
    
    
    
    
    
    
    STOCKHOLDERS EQUITY15% Convertible preferred stock, $100 par value, authorized
1,200,000 shares, issued

and outstanding 1,131,551
shares, liquidation value $113,155
    
    
    108,256
    
    
    
    108,256Common stock, $1 par value; authorized 35,000,000 shares;
issued 9,822,304 shares
    
    
    9,822
    
    
    
    9,822Additional paid-in capital
    
    
    27,338
    
    
    
    27,120Accumulated other comprehensive (loss) income
    
    
    (1,112
    )
    
    
    2,242Accumulated deficit
    
    
    (85,915
    )
    
    
    (83,434
    )Treasury stock, at cost, 1,871,128 shares
and 1,869,827 shares, respectively
    
    
    (21,933
    )
    
    
    (21,974
    )Total stockholders equity
    
    
    36,456
    
    
    
    42,032Total liabilities and stockholders equity
    
    $
    98,564
    
    
    $
    182,694
   33




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##### Table of Contents



2007
    
    
    2006
    
    
    2005Net sales
    
    $
    187,771
    
    
    $
    192,416
    
    
    $
    200,085Cost of goods sold
    
    
    167,517
    
    
    
    167,347
    
    
    
    185,646Gross profit
    
    
    20,254
    
    
    
    25,069
    
    
    
    14,439Selling, general and administrative expenses
    
    
    25,985
    
    
    
    30,450
    
    
    
    35,456Impairments of goodwill
    
    
    
    
    
    
    
    
    
    
    1,574Impairments of other long-lived assets
    
    
    
    
    
    
    
    
    
    
    538Severance, restructuring and related charges
    
    
    2,581
    
    
    
    17
    
    
    
    956Loss (gain) on sale of assets
    
    
    2,434
    
    
    
    412
    
    
    
    (329
    )Operating loss
    
    
    (10,746
    )
    
    
    (5,810
    )
    
    
    (23,756
    )Equity in income of equity method investment
    
    
    783
    
    
    
    
    
    
    
    600Gain on SESCO joint venture transaction
    
    
    
    
    
    
    563
    
    
    
    Interest expense
    
    
    (4,565
    )
    
    
    (4,221
    )
    
    
    (3,803
    )Other, net
    
    
    (72
    )
    
    
    278
    
    
    
    117Loss from continuing operations before benefit from
income taxes
    
    
    (14,600
    )
    
    
    (9,190
    )
    
    
    (26,842
    )Benefit from income taxes from continuing operations
    
    
    719
    
    
    
    529
    
    
    
    4,376Loss from continuing operations
    
    
    (13,881
    )
    
    
    (8,661
    )
    
    
    (22,466
    )Income from operations of discontinued businesses (net of tax)
    
    
    2,259
    
    
    
    2,443
    
    
    
    8,669Gain (loss) on sale of discontinued businesses (net of tax)
    
    
    10,121
    
    
    
    (5,405
    )
    
    
    Loss before cumulative effect of a change in accounting principle
    
    
    (1,501
    )
    
    
    (11,623
    )
    
    
    (13,797
    )Cumulative effect of a change in accounting principle (net of tax)
    
    
    
    
    
    
    (756
    )
    
    
    Net loss
    
    $
    (1,501
    )
    
    $
    (12,379
    )
    
    $
    (13,797
    )Loss per share of common stock  Basic and dilutedLoss from continuing operations
    
    $
    (1.75
    )
    
    $
    (1.09
    )
    
    $
    (2.83
    )Discontinued operations (net of tax)
    
    
    1.56
    
    
    
    (0.37
    )
    
    
    1.09Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    (0.09
    )
    
    
    Net loss
    
    $
    (0.19
    )
    
    $
    (1.55
    )
    
    $
    (1.74
    )
   34




---



##### Table of Contents



AccumulatedConvertible
    
    
    Common
    
    
    
    
    
    
    OtherPreferred Stock
    
    
    Stock
    
    
    Additional
    
    
    Compre-
    
    
    
    
    
    
    
    
    
    
    Compre-
    
    
    TotalNumber of
    
    
    Par
    
    
    Number of
    
    
    Par
    
    
    Paid-in
    
    
    hensive
    
    
    Accumulated
    
    
    Treasury
    
    
    hensive
    
    
    StockholdersShares
    
    
    Value
    
    
    Shares
    
    
    Value
    
    
    Capital
    
    
    Income (Loss)
    
    
    Deficit
    
    
    Stock
    
    
    Loss
    
    
    EquityBalance, January 1, 2005
    
    
    1,131,551
    
    
    $
    108,256
    
    
    
    9,822,204
    
    
    $
    9,822
    
    
    $
    25,111
    
    
    $
    4,564
    
    
    $
    (57,258
    )
    
    $
    (21,910
    )
    
    
    
    
    
    $
    68,585Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,797
    )
    
    
    
    
    
    $
    (13,797
    )
    
    
    (13,797
    )Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,352
    )
    
    
    
    
    
    
    
    
    
    
    (1,352
    )
    
    
    (1,352
    )Pension minimum liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (109
    )
    
    
    
    
    
    
    
    
    
    
    (109
    )
    
    
    (109
    )Interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    55Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (15,203
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    (7
    )Stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,004Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48
    )
    
    
    
    
    
    
    
    
    
    
    (627
    )
    
    
    
    
    
    
    (675
    )Balance, December 31, 2005
    
    
    1,131,551
    
    
    $
    108,256
    
    
    
    9,822,204
    
    
    $
    9,822
    
    
    $
    27,067
    
    
    $
    3,158
    
    
    $
    (71,055
    )
    
    $
    (22,544
    )
    
    
    
    
    
    $
    54,704Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,379
    )
    
    
    
    
    
    $
    (12,379
    )
    
    
    (12,379
    )Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    686
    
    
    
    
    
    
    
    
    
    
    
    686
    
    
    
    686Interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    22Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (11,671
    )Adoption of SFAS 158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,624
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,624
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (111
    )
    
    
    
    
    
    
    (111
    )Stock option exercise
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (378
    )
    
    
    
    
    
    
    
    
    
    
    525
    
    
    
    
    
    
    
    147Stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    587
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    587Other
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    (156
    )
    
    
    
    
    
    
    
    
    
    
    156
    
    
    
    
    
    
    
    Balance, December 31, 2006
    
    
    1,131,551
    
    
    $
    108,256
    
    
    
    9,822,304
    
    
    $
    9,822
    
    
    $
    27,120
    
    
    $
    2,242
    
    
    $
    (83,434
    )
    
    $
    (21,974
    )
    
    
    
    
    
    $
    42,032Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,501
    )
    
    
    
    
    
    $
    (1,501
    )
    
    
    (1,501
    )Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,551
    )
    
    
    
    
    
    
    
    
    
    
    (4,551
    )
    
    
    (4,551
    )Interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76
    )
    
    
    
    
    
    
    
    
    
    
    (76
    )
    
    
    (76
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (6,128
    )Penion and other postretirement
benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,273
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,273Adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (980
    )
    
    
    
    
    
    
    
    
    
    
    (980
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )Stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44
    )
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    Balance, December 31, 2007
    
    
    1,131,551
    
    
    $
    108,256
    
    
    
    9,822,304
    
    
    $
    9,822
    
    
    $
    27,338
    
    
    $
    (1,112
    )
    
    $
    (85,915
    )
    
    $
    (21,933
    )
    
    
    
    
    
    $
    36,456
   35




---



##### Table of Contents



2007
    
    
    2006
    
    
    2005Cash flows from operating activities:Net loss
    
    $
    (1,501
    )
    
    $
    (12,379
    )
    
    $
    (13,797
    )(Income) loss from discontinued operations
    
    
    (12,380
    )
    
    
    2,962
    
    
    
    (8,669
    )Loss from continuing operations
    
    
    (13,881
    )
    
    
    (9,417
    )
    
    
    (22,466
    )Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    756
    
    
    
    Depreciation and amortization
    
    
    7,294
    
    
    
    7,628
    
    
    
    7,699Impairments of goodwill
    
    
    
    
    
    
    
    
    
    
    1,574Impairments of other long-lived assets
    
    
    
    
    
    
    
    
    
    
    538Write-off and amortization of debt issuance costs
    
    
    2,007
    
    
    
    1,178
    
    
    
    1,122Write-off of assets due to lease termination
    
    
    751
    
    
    
    
    
    
    
    Stock option expense
    
    
    262
    
    
    
    587
    
    
    
    2,004Loss (gain) on sale of assets
    
    
    2,434
    
    
    
    412
    
    
    
    (329
    )Equity in income of equity method investment
    
    
    (783
    )
    
    
    
    
    
    
    (600
    )Deferred income taxes
    
    
    (48
    )
    
    
    14
    
    
    
    240(1,964
    )
    
    
    1,158
    
    
    
    (10,218
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    1,383
    
    
    
    3,272
    
    
    
    5,813Inventories
    
    
    (5,330
    )
    
    
    7,045
    
    
    
    9,428Other assets
    
    
    (220
    )
    
    
    (283
    )
    
    
    933Accounts payable
    
    
    60
    
    
    
    (3,076
    )
    
    
    (3,277
    )Accrued expenses
    
    
    (5,541
    )
    
    
    (1,062
    )
    
    
    (1,135
    )Other, net
    
    
    1,399
    
    
    
    (4,236
    )
    
    
    (2,139
    )(8,249
    )
    
    
    1,660
    
    
    
    9,623Net cash (used in) provided by continuing operations
    
    
    (10,213
    )
    
    
    2,818
    
    
    
    (595
    )Net cash provided by (used in) discontinued operations
    
    
    74
    
    
    
    (75
    )
    
    
    7,454Net cash (used in) provided by operating activities
    
    
    (10,139
    )
    
    
    2,743
    
    
    
    6,859Cash flows from investing activities:Capital expenditures of continuing operations
    
    
    (4,403
    )
    
    
    (3,733
    )
    
    
    (8,210
    )Acquisition of subsidiary, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (1,115
    )Proceeds from sale of assets, net
    
    
    246
    
    
    
    289
    
    
    
    901Net cash used in continuing operations
    
    
    (4,157
    )
    
    
    (3,444
    )
    
    
    (8,424
    )Net cash provided by (used in) discontinued operations
    
    
    55,195
    
    
    
    3,738
    
    
    
    (970
    )Net cash provided by (used in) investing activities
    
    
    51,038
    
    
    
    294
    
    
    
    (9,394
    )Cash flows from financing activities:Net (repayments) borrowings of revolving loans
    
    
    (41,026
    )
    
    
    1,934
    
    
    
    1,165(Decrease) increase in book overdraft
    
    
    (1,903
    )
    
    
    (1,534
    )
    
    
    3,621Proceeds of term loans
    
    
    573
    
    
    
    1,364
    
    
    
    Repayments of term loans
    
    
    (2,965
    )
    
    
    (4,086
    )
    
    
    (2,857
    )Direct costs associated with debt facilities
    
    
    (236
    )
    
    
    (312
    )
    
    
    (151
    )Repurchases of common stock
    
    
    (3
    )
    
    
    (111
    )
    
    
    (7
    )Proceeds from the exercise of stock options
    
    
    
    
    
    
    147
    
    
    
    Net cash (used in) provided by continuing operations
    
    
    (45,560
    )
    
    
    (2,598
    )
    
    
    1,771Net cash (used in) provided by discontinued operations
    
    
    (570
    )
    
    
    (1,071
    )
    
    
    692Net cash (used in) provided by financing activities
    
    
    (46,130
    )
    
    
    (3,669
    )
    
    
    2,463Effect of exchange rate changes on cash and cash equivalents
    
    
    (146
    )
    
    
    (397
    )
    
    
    (32
    )Net decrease in cash and cash equivalents
    
    
    (5,377
    )
    
    
    (1,029
    )
    
    
    (104
    )Cash and cash equivalents, beginning of period
    
    
    7,392
    
    
    
    8,421
    
    
    
    8,525Cash and cash equivalents, end of period
    
    $
    2,015
    
    
    $
    7,392
    
    
    $
    8,421Supplemental disclosure of non-cash investing activities:Receivable from sale of discontinued operations
    
    $
    6,799
    
    
    $
    1,200
    
    
    $
    
   36




---



##### Table of Contents



Consolidation Policy
   Use of Estimates and Reclassifications
  Revenue Recognition Accounting for Consideration Given by a Vendor to a Customer
  37




---



##### Table of Contents



Cash and Cash Equivalents
 Advertising Costs
 Accounts Receivable and Allowance for Doubtful Accounts
 Inventories
 December 31,2007
    
    
    2006(Amounts in Thousands)Raw materials
    
    $
    17,022
    
    
    $
    14,777Work in process
    
    
    763
    
    
    
    613Finished goods
    
    
    13,762
    
    
    
    46,973Inventory reserves
    
    
    (1,376
    )
    
    
    (3,905
    )LIFO reserve
    
    
    (4,011
    )
    
    
    (3,478
    )$
    26,160
    
    
    $
    54,980
 Goodwill Goodwill and Intangible Assets
 Property and Equipment
  38




---



##### Table of Contents



Accounting for Asset Retirement Obligations
 SFAS No. 143 Obligation at December 31, 2005
    
    $
    1,068Accretion expense
    
    
    49SFAS No. 143 Obligation at December 31, 2006
    
    $
    1,117Accretion expense
    
    
    42Changes in estimates
    
    
    (173
    )Write-off from sale of discontinued businesses
    
    
    (157
    )SFAS No. 143 Obligation at December 31, 2007
    
    $
    829
 Impairment of Long-lived Assets
 Income Taxes
 Foreign Currency Translation
 Fair Value of Financial Instruments
 Stock Options and Other Stock Awards Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation Accounting for Stock-Based Compensation  Transition and Disclosure
   39




---



##### Table of Contents



Share-Based Payment
  For the Years Ended December 31,2007
    
    
    2006Selling, general and administrative expense
    
    $
    270
    
    
    $
    398Cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    756$
    270
    
    
    $
    1,154
  Share-Based Payment
 Expected term (years)
    
    5.3 - 6.5Volatility
    
    53.8% - 57.6%Risk-free interest rate
    

3.98% - 4.48%
  40




---



##### Table of Contents



December 31,2007
    
    
    2006Expected term (years)
    
    
    3.0 - 4.7
    
    
    
    3.0 - 5.5Volatility
    
    
    85.4% - 97.1
    %
    
    
    52.6% - 56.5
    %Risk-free interest rate
    
    
    3.07% - 3.26
    %
    
    
    4.69% - 4.72
    %
  For the year endedDecember 31, 2005Net loss attributable to common stockholders, as reported
    
    $
    (13,797
    )Add: Stock-based employee compensation expense included
in reported net loss, with no related tax effects
    
    
    2,004Deduct: Total stock-based employee compensation expense
determined under fair value based method for all
awards, net of related tax effects
    
    
    (293
    )Pro forma net loss
    
    $
    (12,086
    )Earnings per shareBasic and diluted-as reported
    
    $
    (1.74
    )Basic and diluted-pro forma
    
    $
    (1.52
    )
  Derivative
Financial Instruments Accounting for Derivative Financial Instruments and Hedging Activities
   41




---



##### Table of Contents



New
Accounting Pronouncements Accounting for Uncertainty in Income
Taxes
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities Including an Amendment of FASB Statement No. 115
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements-an amendment of ARB No. 51
   Goodwill at December 31, 2004
    
    $
    2,239Impairment charge
    
    
    (1,574
    )Goodwill at December 31, 2005
    
    
    665Impairment charge
    
    
    Goodwill at December 31, 2006
    
    
    665Impairment charge
    
    
    Goodwill at December 31, 2007
    
    $
    665
  42




---



##### Table of Contents



December 31,
    
    
    December 31,2007
    
    
    2006Gross
    
    
    Accumulated
    
    
    Net Carrying
    
    
    Gross
    
    
    Accumulated
    
    
    Net CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountPatents
    
    $
    1,031
    
    
    $
    (734
    )
    
    $
    297
    
    
    $
    1,511
    
    
    $
    (1,065
    )
    
    $
    446Customer lists
    
    
    10,231
    
    
    
    (8,240
    )
    
    
    1,991
    
    
    
    10,454
    
    
    
    (8,111
    )
    
    
    2,343Tradenames
    
    
    5,054
    
    
    
    (2,489
    )
    
    
    2,565
    
    
    
    5,612
    
    
    
    (2,345
    )
    
    
    3,267Other
    
    
    441
    
    
    
    (441
    )
    
    
    
    
    
    
    441
    
    
    
    (62
    )
    
    
    379Total
    
    $
    16,757
    
    
    $
    (11,904
    )
    
    $
    4,853
    
    
    $
    18,018
    
    
    $
    (11,583
    )
    
    $
    6,435
  2008
    
    $
    4892009
    
    
    4682010
    
    
    4382011
    
    
    4112012
    
    
    386Thereafter
    
    
    2,661Total
    
    $
    4,853
     The Equity Method for of Accounting for
Investments in Common Stock,
  43




---



##### Table of Contents



44




---



##### Table of Contents



December 31,2007
    
    
    2006Current assets:Accounts receivable, net
    
    $
    
    
    
    $
    35,742Inventories, net
    
    
    
    
    
    
    34,529Other current assets
    
    
    8,034
    
    
    
    1,905$
    8,034
    
    
    $
    72,176Non-current assets:Intangibles, net
    
    $
    
    
    
    $
    807Other
    
    
    600
    
    
    
    2,001Property and equipment, net
    
    
    
    
    
    
    2,459$
    600
    
    
    $
    5,267Current liabilities:Accounts payable
    
    $
    30
    
    
    $
    17,007Accrued compensation
    
    
    
    
    
    
    352Accrued expenses
    
    
    148
    
    
    
    11,083$
    178
    
    
    $
    28,442Other liabilities:
    
    $
    
    
    
    $
    735Accumulated other comprehensive income:
    
    $
    
    
    
    $
    4,871
   2007
    
    
    2006
    
    
    2005Net sales
    
    $
    166,691
    
    
    $
    225,235
    
    
    $
    255,112Pre-tax operating income
    
    $
    4,939
    
    
    $
    5,291
    
    
    $
    14,474Pre-tax gain (loss) on sale of discontinued businesses
    
    $
    10,121
    
    
    $
    (5,405
    )
    
    $
    
     45




---



##### Table of Contents



December 31,2007
    
    
    2006(Amounts in Thousands)Term loan payable under the Bank of America Credit Agreement, interest based on
LIBOR and Prime Rates (7.5% - 8.0%), due through 2010
    
    $
    10,600
    
    
    $
    12,992Revolving loans payable under the Bank of America Credit Agreement, interest based on
LIBOR and Prime Rates (7.75%)
    
    
    2,853
    
    
    
    43,879Total debt
    
    
    13,453
    
    
    
    56,871Less revolving loans, classified as current (see below)
    
    
    (2,853
    )
    
    
    (43,879
    )Less current maturities
    
    
    (1,500
    )
    
    
    (1,125
    )Long-term debt
    
    $
    9,100
    
    
    $
    11,867
  2008
    
    $
    1,5002009
    
    
    1,5002010
    
    
    7,600Total
    
    $
    10,600
      46




---



##### Table of Contents



Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements that
Include Both a Subjective Acceleration Clause and a Lock-Box Arrangement
  47




---



##### Table of Contents



Earnings Per Share
 For the Year Ended December 31,
    
    2007
    
    
    2006
    
    
    2005Basic and Diluted EPS:Loss from continuing operations
    
    $
    (13,881
    )
    
    $
    (8,661
    )
    
    $
    (22,466
    )Discontinued operations (net of tax)
    
    
    12,380
    
    
    
    (2,962
    )
    
    
    8,669Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    (756
    )
    
    
    Net loss
    
    $
    (1,501
    )
    
    $
    (12,379
    )
    
    $
    (13,797
    )Weighted average shares  Basic and Diluted
    
    
    7,951
    
    
    
    7,967
    
    
    
    7,949Per share amount:Loss from continuing operations
    
    $
    (1.75
    )
    
    $
    (1.09
    )
    
    $
    (2.83
    )Discontinued operations (net of tax)
    
    
    1.56
    
    
    
    (0.37
    )
    
    
    1.09Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    (0.09
    )
    
    
    Net loss
    
    $
    (0.19
    )
    
    $
    (1.55
    )
    
    $
    (1.74
    )
   Pension and Other Postretirement Plans
   48




---



##### Table of Contents



Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R)
 
 Before Application
    
    
    
    
    
    
    After Applicationof SFAS No. 158
    
    
    Adjustments
    
    
    of SFAS No. 158Assets:Other non-current assets
    
    $
    136
    
    
    $
    (94
    )
    
    $
    42Deferred taxes
    
    
    
    
    
    
    
    
    
    
    Liabilities:Accrued expenses
    
    
    
    
    
    
    327
    
    
    
    327Other liabilities
    
    
    2,585
    
    
    
    1,203
    
    
    
    3,788Stockholders Equity:Accumulated OCI
    
    $
    (500
    )
    
    $
    (1,624
    )
    
    $
    (2,124
    )
  Pension Benefits
    
    
    Other Benefits2007

    
    
    2006
    
    
    2007
    
    
    2006(Amounts in Thousands)Change in benefit obligation:Benefit obligation at beginning of year
    
    $
    1,539
    
    
    $
    1,634
    
    
    $
    3,831
    
    
    $
    2,801Service cost
    
    
    13
    
    
    
    9
    
    
    
    
    
    
    
    Interest cost
    
    
    90
    
    
    
    90
    
    
    
    155
    
    
    
    209Actuarial (gain) loss
    
    
    (63
    )
    
    
    (43
    )
    
    
    (1,118
    )
    
    
    1,093Benefits paid
    
    
    (181
    )
    
    
    (151
    )
    
    
    (261
    )
    
    
    (272
    )Benefit obligation at end of year
    
    $
    1,398
    
    
    $
    1,539
    
    
    $
    2,607
    
    
    $
    3,831Change in plan assets:Fair value of plan assets at beginning of year
    
    $
    1,297
    
    
    $
    1,239
    
    
    $
    
    
    
    $
    Actuarial return on plan assets
    
    
    89
    
    
    
    106
    
    
    
    
    
    
    
    Employer contributions
    
    
    142
    
    
    
    102
    
    
    
    261
    
    
    
    272Benefits paid
    
    
    (181
    )
    
    
    (150
    )
    
    
    (261
    )
    
    
    (272
    )Fair value of plan assets at end of year
    
    $
    1,347
    
    
    $
    1,297
    
    
    $
    
    
    
    $
    Funded status  deficiency
    
    $
    51
    
    
    $
    242
    
    
    $
    2,607
    
    
    $
    3,831Unrecognized net actuarial loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrecognized prior service cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accrued benefit cost at end of year
    
    $
    51
    
    
    $
    242
    
    
    $
    2,607
    
    
    $
    3,831Amount recognized in financial statements:Other non-current assets
    
    $
    (49
    )
    
    $
    (42
    )
    
    $
    
    
    
    $
    Accrued expenses
    
    
    
    
    
    
    
    
    
    
    237
    
    
    
    327Other liabilities
    
    
    100
    
    
    
    284
    
    
    
    2,370
    
    
    
    3,504Total
    
    $
    51
    
    
    $
    242
    
    
    $
    2,607
    
    
    $
    3,831Amounts recognized in accumulated OCI consist of:Unrecognized net actuarial loss
    
    $
    540
    
    
    $
    604
    
    
    $
    487
    
    
    $
    461Unrecognized prior service cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,235Prepaid (accrued) benefit cost
    
    $
    540
    
    
    $
    604
    
    
    $
    487
    
    
    $
    1,696
  49




---



##### Table of Contents



Pension Benefits
    
    
    Other Benefits2007
    
    
    2006
    
    
    2007
    
    
    2006Assumptions as of December 31:Discount rates
    
    
    6.25
    %
    
    
    5.75
    %
    
    
    6.25
    %
    
    
    5.75
    %Expected long-term return rate on assets
    
    
    7.00
    %
    
    
    7.00
    %
    
    
    N/A
    
    
    
    N/AAssumed rates of compensation increases
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AMedical trend rate pre-65 (initial)
    
    
    N/A
    
    
    
    N/A
    
    
    
    7.00
    %
    
    
    8.50
    %Medical trend rate post-65 (initial)
    
    
    N/A
    
    
    
    N/A
    
    
    
    8.00
    %
    
    
    8.50
    %Medical trend rate (ultimate)
    
    
    N/A
    
    
    
    N/A
    
    
    
    5.00
    %
    
    
    5.00
    %Years to ultimate rate pre-65
    
    
    N/A
    
    
    
    N/A
    
    
    
    5
    
    
    
    7Years to ultimate rate post-65
    
    
    N/A
    
    
    
    N/A
    
    
    
    7
    
    
    
    7Impact of one-percent increase in health care trend rate:Increase in accumulated postretirement benefit obligation
    
    
    
    
    
    
    
    
    
    $
    212
    
    
    $
    322Increase in service cost and interest cost
    
    
    
    
    
    
    
    
    
    $
    14
    
    
    $
    18Impact of one-percent decrease in health care trend rate:Decrease in accumulated postretirement benefit obligation
    
    
    
    
    
    
    
    
    
    $
    185
    
    
    $
    280Decrease in service cost and interest cost
    
    
    
    
    
    
    
    
    
    $
    12
    
    
    $
    16
  Target
    
    
    Percentage ofAllocation
    
    
    Plan AssetsAsset Category
    
    2008
    
    
    2007
    
    
    2006Equity Securities
    
    
    30 - 35%
    
    
    
    48%
    
    
    
    45%Debt Securities
    
    
    60 - 65%
    
    
    
    52%
    
    
    
    55%Real estate
    
    
    0%
    
    
    
    0%
    
    
    
    0%Other
    
    
    0 - 3%
    
    
    
    0%
    
    
    
    0%
  Pension Benefits
    
    
    Other Benefits2007
    
    
    2006
    
    
    2007
    
    
    2006Components of net periodic benefit cost:Service cost
    
    $
    13
    
    
    $
    9
    
    
    $
    
    
    
    $
    Interest cost
    
    
    90
    
    
    
    90
    
    
    
    155
    
    
    
    209Expected return on plan assets
    
    
    (93
    )
    
    
    (90
    )
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    126Amortization of net loss
    
    
    50
    
    
    
    59
    
    
    
    34
    
    
    
    16Net periodic benefit cost
    
    $
    60
    
    
    $
    68
    
    
    $
    208
    
    
    $
    351
  50




---



##### Table of Contents



Pension Benefits
    
    
    Other Benefits2008
    
    $
    176
    
    
    $
    2452009
    
    
    61
    
    
    
    2442010
    
    
    72
    
    
    
    2422011
    
    
    75
    
    
    
    2382012
    
    
    75
    
    
    
    234Thereafter
    
    
    455
    
    
    
    1,065Total
    
    $
    914
    
    
    $
    2,268
  Pension Benefits
    
    
    Other BenefitsActuarial loss
    
    $
    37
    
    
    $
    30Total
    
    $
    37
    
    
    $
    30
  401(k) Plans
   Convertible Preferred Stock
   51




---



##### Table of Contents



Share Repurchase
   Director Stock Grant
  Stock Options
     52




---



##### Table of Contents



53




---



##### Table of Contents



WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicExercise
    
    
    Contractual
    
    
    ValueOptions
    
    
    Price
    
    
    Life
    
    
    (in thousands)Outstanding at December 31, 2004
    
    
    1,725,650
    
    
    $
    4.94Granted
    
    
    936,000
    
    
    
    2.71Exercised
    
    
    (55,000
    )
    
    
    8.98Cancelled
    
    
    (750,300
    )
    
    
    4.20Outstanding at December 31, 2005
    
    
    1,856,350
    
    
    $
    3.99Exercised
    
    
    (45,000
    )
    
    
    3.26Expired
    
    
    (60,750
    )
    
    
    13.23Cancelled
    
    
    (32,600
    )
    
    
    5.53Outstanding at December 31, 2006
    
    
    1,718,000
    
    
    $
    3.66Expired
    
    
    (7,600
    )
    
    
    16.85Cancelled
    
    
    (78,200
    )
    
    
    3.71Outstanding at December 31, 2007
    
    
    1,632,200
    
    
    $
    3.59
    
    
    5.81 years
    
    $
    Vested and Exercisable at December 31, 2007
    
    
    1,322,200
    
    
    $
    3.80
    
    
    5.41 years
    
    $
    
  Stock Appreciation Rights
     54




---



##### Table of Contents



Non-Vested at December 31, 2005
    
    
    85,115Granted
    
    
    26,000Vested
    
    
    (55,998
    )Cancelled
    
    
    (1,683
    )Non-Vested at December 31, 2006
    
    
    53,434Granted
    
    
    6,000Vested
    
    
    (42,768
    )Cancelled
    
    
    (3,333
    )Non-Vested at December 31, 2007
    
    
    13,333Total Outstanding at December 31, 2007
    
    
    669,215
    2007
    
    
    2006
    
    
    2005(Amounts in Thousands)Domestic
    
    $
    (15,114
    )
    
    $
    (10,345
    )
    
    $
    (27,894
    )Foreign
    
    
    514
    
    
    
    1,155
    
    
    
    1,052Total
    
    $
    (14,600
    )
    
    $
    (9,190
    )
    
    $
    (26,842
    )
  2007
    
    
    2006
    
    
    2005(Amounts in Thousands)Current tax (benefit) provision:Federal
    
    $
    (800
    )
    
    $
    (559
    )
    
    $
    (4,452
    )State
    
    
    35
    
    
    
    30
    
    
    
    76Foreign
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    (765
    )
    
    $
    (529
    )
    
    $
    (4,376
    )Deferred tax provision:Federal
    
    $
    
    
    
    $
    
    
    
    $
    State
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    46
    
    
    
    
    
    
    
    Total
    
    $
    46
    
    
    $
    
    
    
    $
    Total benefit from continuing operations
    
    $
    (719
    )
    
    $
    (529
    )
    
    $
    (4,376
    )
   55




---



##### Table of Contents



2007
    
    
    2006
    
    
    2005(Amounts in Thousands)Benefit from income taxes at statutory rate
    
    $
    (5,110
    )
    
    $
    (3,217
    )
    
    $
    (9,395
    )State income taxes, net of federal benefit
    
    
    23
    
    
    
    20
    
    
    
    49Foreign tax rate differential
    
    
    325
    
    
    
    404
    
    
    
    368Net operating losses adjustments
    
    
    (4
    )
    
    
    2,518
    
    
    
    (166
    )Stock option expense
    
    
    
    
    
    
    
    
    
    
    529Valuation allowance adjustments
    
    
    3,843
    
    
    
    (277
    )
    
    
    3,552Foreign NOL utilization
    
    
    65
    
    
    
    113
    
    
    
    718Permanent items
    
    
    18
    
    
    
    (124
    )
    
    
    (10
    )Other, net
    
    
    121
    
    
    
    34
    
    
    
    (21
    )Net benefit from income taxes
    
    $
    (719
    )
    
    $
    (529
    )
    
    $
    (4,376
    )
  2007
    
    
    2006(Amounts in Thousands)Deferred tax liabilitiesWaste-to-energy facility
    
    $
    
    
    
    $
    160Inventory costs
    
    
    (1,074
    )
    
    
    (1,072
    )Unremitted foreign earnings
    
    
    
    
    
    
    (4,153
    )$
    (1,074
    )
    
    $
    (5,065
    )Deferred tax assetsAllowance for doubtful receivables
    
    $
    104
    
    
    $
    1,862Accrued expenses and other items
    
    
    9,872
    
    
    
    12,069Difference between book and tax basis of property
    
    
    10,383
    
    
    
    12,859Operating loss carry-forwards  domestic
    
    
    34,521
    
    
    
    35,326Operating loss carry-forwards  foreign
    
    
    48
    
    
    
    94Tax credit carry forwards
    
    
    12,500
    
    
    
    6,647Estimated foreign tax credit related to unremitted earnings
    
    
    
    
    
    
    4,15367,428
    
    
    
    73,010Less valuation allowance
    
    
    (66,306
    )
    
    
    (66,971
    )1,122
    
    
    
    6,039Net deferred income tax asset
    
    $
    48
    
    
    $
    974
   56




---



##### Table of Contents



Balances at January 1, 2007
    
    $
    2,043Tax positions related to prior years
    
    
    61Tax positions related to the current year
    
    
    819Reductions for tax positions related to prior years
    
    
    (329
    )Settlements and payments
    
    
    (339
    )Lapse of applicable statute of limitations
    
    
    (201
    )Balances at December 31, 2007
    
    $
    2,054
     Repatriation of Foreign Earnings
     57




---



##### Table of Contents



2008
    
    $
    6,3242009
    
    
    2,6252010
    
    
    2,0262011
    
    
    8962012
    
    
    314Thereafter
    
    
    310Total minimum payments
    
    $
    12,495
        58




---



##### Table of Contents



Years Ended December 31,2007
    
    
    2006
    
    
    2005(Amounts in thousands)Maintenance Products GroupNet external sales
    
    
    
    $
    187,771
    
    
    $
    192,416
    
    
    $
    200,085Operating income (loss)
    
    
    
    
    571
    
    
    
    4,825
    
    
    
    (7,819
    )Operating margin (deficit)
    
    
    
    
    0.3
    %
    
    
    2.5
    %
    
    
    (3.9
    %)Depreciation and amortization
    
    
    
    
    7,175
    
    
    
    7,516
    
    
    
    7,600Capital expenditures
    
    
    
    
    4,373
    
    
    
    3,713
    
    
    
    8,210Total assets
    
    
    
    
    85,124
    
    
    
    86,147
    
    
    
    100,401Net sales
    
    -       Segment
    
    $
    187,771
    
    
    $
    192,416
    
    
    $
    200,085Total
    
    $
    187,771
    
    
    $
    192,416
    
    
    $
    200,085Operating loss
    
    -       Segment
    
    $
    571
    
    
    $
    4,825
    
    
    $
    (7,819
    )-       Unallocated corporate
    
    
    (6,302
    )
    
    
    (10,206
    )
    
    
    (13,198
    )-       Impairments of long-lived assets
    
    
    
    
    
    
    
    
    
    
    (2,112
    )-       Severance, restructuring and related charges
    
    
    (2,581
    )
    
    
    (17
    )
    
    
    (956
    )-       (Loss) gain on sale of assets
    
    
    (2,434
    )
    
    
    (412
    )
    
    
    329Total
    
    $
    (10,746
    )
    
    $
    (5,810
    )
    
    $
    (23,756
    )Depreciation and amortization
    
    -       Segment
    
    $
    7,175
    
    
    $
    7,516
    
    
    $
    7,600-       Unallocated corporate
    
    
    119
    
    
    
    112
    
    
    
    99Total
    
    $
    7,294
    
    
    $
    7,628
    
    
    $
    7,699Capital expenditures
    
    -       Segment
    
    $
    4,373
    
    
    $
    3,713
    
    
    $
    8,210-       Unallocated corporate
    
    
    30
    
    
    
    20
    
    
    
    -       Discontinued operations
    
    
    261
    
    
    
    1,009
    
    
    
    1,156Total
    
    $
    4,664
    
    
    $
    4,742
    
    
    $
    9,366Total assets
    
    -       Segment
    
    $
    85,124
    
    
    $
    86,147
    
    
    $
    100,401-       Other [a]
    
    
    8,634
    
    
    
    89,645
    
    
    
    101,497-       Unallocated corporate
    
    
    4,806
    
    
    
    6,902
    
    
    
    10,196Total
    
    $
    98,564
    
    
    $
    182,694
    
    
    $
    212,094
 [a]
    
    Amounts shown as Other represent items associated with Sahlman Holding Company, Inc.,
the Companys equity method investment, and the assets of the Woods US, Woods Canada, CML, United
Kingdom consumer plastics and the Metal Truck Box business units.  United(Thousands of Dollars)
    
    States
    
    
    Canada
    
    
    Europe
    
    
    Other
    
    
    Consolidated2007:Sales to unaffiliated customers
    
    $
    179,581
    
    
    $
    3,296
    
    
    $
    2,571
    
    
    $
    2,323
    
    
    $
    187,771Total assets
    
    $
    89,816
    
    
    $
    8,748
    
    
    $
    
    
    
    $
    
    
    
    $
    98,5642006:Sales to unaffiliated customers
    
    $
    177,776
    
    
    $
    9,128
    
    
    $
    2,320
    
    
    $
    3,192
    
    
    $
    192,416Total assets
    
    $
    145,512
    
    
    $
    24,678
    
    
    $
    12,264
    
    
    $
    240
    
    
    $
    182,6942005:Sales to unaffiliated customers
    
    $
    185,556
    
    
    $
    8,699
    
    
    $
    2,351
    
    
    $
    3,479
    
    
    $
    200,085Total assets
    
    $
    161,044
    
    
    $
    25,950
    
    
    $
    24,881
    
    
    $
    219
    
    
    $
    212,094
   59




---



##### Table of Contents



General Environmental Claims
  W.J. Smith Wood Preserving Company (W.J. Smith)
    Asbestos Claims
     60




---



##### Table of Contents



Non-Environmental Litigation  Banco del Atlantico, S.A.
 Banco del Atlantico, S.A. v. Woods Industries, Inc., et al. Civil Action No. L-96-139 (now 1:03-CV-1342-LJM-VSS, U.S. District Court, Southern District of Indiana, appeal docketed,
United States Court of Appeals for the Seventh Circuit, Appeal No. 07-2238)
   with prejudice with
prejudice
 with
prejudice
    61




---



##### Table of Contents



Other Claims
      2007
    
    
    2006
    
    
    2005(Amounts in Thousands)Consolidation of Glit facilities
    
    $
    1,699
    
    
    $
    299
    
    
    $
    724Consolidation of St. Louis manufacturing/distribution facilities
    
    
    882
    
    
    
    (499
    )
    
    
    39Corporate office relocation
    
    
    
    
    
    
    217
    
    
    
    172Consolidation of administrative functions for CCP
    
    
    
    
    
    
    
    
    
    
    21Total severance, restructuring and related costs
    
    $
    2,581
    
    
    $
    17
    
    
    $
    956
 Consolidation of Glit facilities
  62




---



##### Table of Contents



One-time
    
    
    ContractTermination
    
    
    TerminationTotal
    
    
    Benefits [a]
    
    
    Costs [b]
    
    
    Other [c]Restructuring liabilities
at December 31, 2005
    
    $
    505
    
    
    $
    255
    
    
    $
    250
    
    
    $
    Additions
    
    
    299
    
    
    
    109
    
    
    
    
    
    
    
    190Payments
    
    
    (799
    )
    
    
    (364
    )
    
    
    (245
    )
    
    
    (190
    )Restructuring liabilities
at December 31, 2006
    
    $
    5
    
    
    $
    
    
    
    $
    5
    
    
    $
    Additions
    
    
    1,774
    
    
    
    151
    
    
    
    1,450
    
    
    
    173Reductions
    
    
    (75
    )
    
    
    
    
    
    
    (75
    )
    
    
    Payments
    
    
    (389
    )
    
    
    (151
    )
    
    
    (65
    )
    
    
    (173
    )Other
    
    
    (689
    )
    
    
    
    
    
    
    (689
    )
    
    
    Restructuring liabilities
at December 31, 2007
    
    $
    626
    
    
    $
    
    
    
    $
    626
    
    
    $
    
 Consolidation
of St. Louis manufacturing/distribution facilities
 ContractTerminationCosts [b]Restructuring liabilities
at December 31, 2005
    
    $
    1,845Reductions
    
    
    (499
    )Payments
    
    
    (881
    )Restructuring liabilities
at December 31, 2006
    
    $
    465Additions
    
    
    882Payments
    
    
    (520
    )Restructuring liabilities
at December 31, 2007
    
    $
    827
 Corporate
office relocation
 One-timeTerminationBenefits [a]Restructuring liabilities
at December 31, 2005
    
    $
    157Additions
    
    
    217Payments
    
    
    (374
    )Restructuring liabilities
at December 31, 2006
    
    $
    Additions
    
    
    Payments
    
    
    Restructuring liabilities
at December 31, 2007
    
    $
    
 Consolidation of administrative functions for CCP
  63




---



##### Table of Contents



One-time
    
    
    ContractTermination
    
    
    TerminationTotal
    
    
    Benefits [a]
    
    
    Costs [b]
    
    
    Other [c]Restructuring liabilities at December 31, 2005
    
    $
    2,507
    
    
    $
    412
    
    
    $
    2,095
    
    
    $
    Additions
    
    
    516
    
    
    
    326
    
    
    
    
    
    
    
    190Reductions
    
    
    (499
    )
    
    
    
    
    
    
    (499
    )
    
    
    Payments
    
    
    (2,054
    )
    
    
    (738
    )
    
    
    (1,126
    )
    
    
    (190
    )Restructuring liabilities at December 31, 2006
    
    $
    470
    
    
    $
    
    
    
    $
    470
    
    
    $
    Additions
    
    
    2,656
    
    
    
    151
    
    
    
    2,332
    
    
    
    173Reductions
    
    
    (75
    )
    
    
    
    
    
    
    (75
    )
    
    
    Payments
    
    
    (909
    )
    
    
    (151
    )
    
    
    (585
    )
    
    
    (173
    )Other
    
    
    (689
    )
    
    
    
    
    
    
    (689
    )
    
    
    Restructuring liabilities at December 31, 2007
    
    $
    1,453
    
    
    $
    
    
    
    $
    1,453
    
    
    $
    
 [a]
    
    Includes severance, benefits, and other employee-related costs associated with the
employee terminations. No obligations remain at December 31, 2007.[b]
    
    Includes charges related to non-cancelable lease liabilities for abandoned facilities, net of
potential sub-lease revenue. Total maximum potential amount of lease loss, excluding any sublease
rentals, is $3.1 million as of December 31, 2007. The Company has included $1.6 million as an
offset for sublease rentals.[c]
    
    Includes charges associated with equipment removal and cleanup of abandoned facilities. No
obligations remain at December 31, 2007.   MaintenanceProductsTotal
    
    
    Group
    
    
    CorporateRestructuring liabilities at December 31, 2005
    
    $
    2,507
    
    
    $
    2,350
    
    
    $
    157Additions
    
    
    516
    
    
    
    299
    
    
    
    217Reductions
    
    
    (499
    )
    
    
    (499
    )
    
    
    Payments
    
    
    (2,054
    )
    
    
    (1,680
    )
    
    
    (374
    )Restructuring liabilities at December 31, 2006
    
    $
    470
    
    
    $
    470
    
    
    $
    Additions
    
    
    2,656
    
    
    
    2,656
    
    
    
    Reductions
    
    
    (75
    )
    
    
    (75
    )
    
    
    Payments
    
    
    (909
    )
    
    
    (909
    )
    
    
    Other
    
    
    (689
    )
    
    
    (689
    )
    
    
    Restructuring liabilities at December 31, 2007
    
    $
    1,453
    
    
    $
    1,453
    
    
    $
    
  64




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##### Table of Contents



MaintenanceProductsGroup2008
    
    $
    3222009
    
    
    2592010
    
    
    2832011
    
    
    2632012
    
    
    83Thereafter
    
    
    243Total Payments
    
    $
    1,453
     2007
    
    1st Qtr
    
    
    2nd Qtr
    
    
    3rd Qtr
    
    
    4th QtrNet sales
    
    $
    45,552
    
    
    $
    49,972
    
    
    $
    49,208
    
    
    $
    43,039Gross profit
    
    $
    5,596
    
    
    $
    6,640
    
    
    $
    5,539
    
    
    $
    2,479Net (loss) income
    
    $
    (3,779
    )
    
    $
    1,808
    
    
    $
    (810
    )
    
    $
    1,280(Loss) earnings per share of common stock  Basic and diluted
    
    $
    (0.48
    )
    
    $
    0.23
    
    
    $
    (0.10
    )
    
    $
    0.16
 2006
    
    1stQtr
    
    
    2ndQtr
    
    
    3rdQtr
    
    
    4thQtrNet sales
    
    $
    45,971
    
    
    $
    50,932
    
    
    $
    51,920
    
    
    $
    43,593Gross profit
    
    $
    5,778
    
    
    $
    5,885
    
    
    $
    7,566
    
    
    $
    5,840Loss before cumulative effect of a change in accounting principle
    
    $
    (4,989
    )
    
    $
    (1,934
    )
    
    $
    (2,020
    )
    
    $
    (2,680
    )Net loss
    
    $
    (5,745
    )
    
    $
    (1,934
    )
    
    $
    (2,020
    )
    
    $
    (2,680
    )Loss per share of common stock  Basic and diluted [a]:Loss before cumulative effect of a change in accounting principle
    
    $
    (0.62
    )
    
    $
    (0.24
    )
    
    $
    (0.25
    )
    
    $
    (0.34
    )Net loss
    
    $
    (0.72
    )
    
    $
    (0.24
    )
    
    $
    (0.25
    )
    
    $
    (0.34
    )
   65




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##### Table of Contents



December 31,2007
    
    
    2006Prepaids
    
    $
    1,018
    
    
    $
    1,615Miscellaneous receivables (sale of businesses)
    
    
    635
    
    
    
    Notes receivable - Metal Truck Box
    
    
    600
    
    
    
    Deferred tax asset
    
    
    
    
    
    
    907Other
    
    
    267
    
    
    
    469Total
    
    $
    2,520
    
    
    $
    2,991
  December 31,2007
    
    
    2006Rabbi trust assets
    
    $
    1,263
    
    
    $
    1,455Debt issuance costs, net
    
    
    1,114
    
    
    
    2,885Notes receivable - Metal Truck Box
    
    
    600
    
    
    
    1,200Equity method investment in unconsolidated affiliate
    
    
    
    
    
    
    2,217Other
    
    
    493
    
    
    
    1,233Total
    
    $
    3,470
    
    
    $
    8,990
  December 31,2007
    
    
    2006Contingent liabilities
    
    $
    14,174
    
    
    $
    15,705Advertising and rebates
    
    
    3,377
    
    
    
    11,594Professional services
    
    
    843
    
    
    
    847Accrued SARs
    
    
    575
    
    
    
    567Commissions
    
    
    449
    
    
    
    1,215Non-cancelable lease liabilities - restructuring
    
    
    421
    
    
    
    428Accrued income taxes
    
    
    
    
    
    
    1,649SESCO note payable to Montenay
    
    
    
    
    
    
    400Other
    
    
    2,486
    
    
    
    5,782Total
    
    $
    22,325
    
    
    $
    38,187
   December 31,2007
    
    
    2006Pension and postretirement benefits
    
    $
    2,462
    
    
    $
    3,763Deferred compensation
    
    
    2,211
    
    
    
    2,983Accrued income taxes - long-term
    
    
    2,052
    
    
    
    Non-cancelable lease liabilities - restructuring
    
    
    1,019
    
    
    
    703Other
    
    
    962
    
    
    
    953Total
    
    $
    8,706
    
    
    $
    8,402
  66




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##### Table of Contents



Years Ended December 31,2007
    
    
    2006
    
    
    2005Interest
    
    $
    4,916
    
    
    $
    5,486
    
    
    $
    3,953Income taxes
    
    $
    2,176
    
    
    $
    1,067
    
    
    $
    1,789
   
 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  
 Item 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
       67




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##### Table of Contents




    
    The Company did not maintain a proper level of segregation of duties, specifically the
verification process of physical raw material inventory on hand and the operational
handling of this inventory; and
    
    The Company did not maintain sufficient oversight of the raw material inventory counting
and reconciliation process.
  Remediation of Material Weaknesses
  
    
    Completed a full resin physical inventory by independent employees not involved in the
operational handling and reporting of resin inventory;
    
    Completed a full comparison of the physical resin inventory to the general ledger and
recorded the appropriate adjustment;
    
    Verified the automated measurement systems with third parties as well as the physical
observation of the resin inventory by independent employees;
    
    Initiated weekly physical counts of resin inventory and completed a comparison to the
perpetual inventory system for any differences with any significant differences
investigated by management. We will continue to perform these weekly physical counts until
management believes the process and related controls are operating as designed; and
    
    Reviewed and adjusted, as necessary, procedures and personnel involved in the physical
inventory counting of resin.
  Managements Report on Internal Control over Financial Reporting
    68




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##### Table of Contents



Changes in Internal Control over Financial Reporting
 Remediation of
Material Weaknesses
 
 Item 9B. OTHER INFORMATION
   69




---



##### Table of Contents



Part III
 
 Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
     
 Item 11. EXECUTIVE COMPENSATION
  
 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
  Equity Compensation Plan Information
  Number of SecuritiesRemaining Available forNumber of Securities to
    
    
    Weighted-average
    
    
    Future Issuances Under EquityBe Issued on Exercise of
    
    
    Exercise Price of
    
    
    Compensation PlansOutstanding Option,
    
    
    Outstanding Options,
    
    
    (Excluding SecuritiesPlan Category
    
    Warrants and Rights
    
    
    Warrants and Rights
    
    
    Reflected in Column (a))(a)
    
    
    (b)
    
    
    (c)Equity Compensation
Plans Approved by
Stockholders
    
    
    667,373
    
    
    $
    4.93
    
    
    
    799,948Equity Compensation
Plans Not Approved
by
Stockholders
    
    
    1,634,042
    
    
    $
    3.56
    
    
    
    Total
    
    
    2,301,415
    
    
    
    
    
    
    
    799,948
  70




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##### Table of Contents



Equity Compensation Plans Not Approved by Stockholders
     
 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
  
 Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
   71




---



##### Table of Contents



Part IV
 
 Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 1. Financial Statements
  
 2. Financial Statement Schedules
  3. Exhibits
  
   Dated:  March 14, 2008
    KATY INDUSTRIES, INC.
Registrant/s/ Anthony T. Castor IIIAnthony T. Castor IIIPresident and Chief Executive Officer/s/ Amir RosenthalAmir RosenthalVice President, Chief Financial Officer,
General Counsel and Secretary  72




---



##### Table of Contents



Signature
    
    Title/s/ William F. Andrews
William F. Andrews
    
    Chairman of the Board and Director/s/ Anthony T. Castor III
Anthony T. Castor III
    
    President, Chief Executive Officer and Director 
(Principal Executive Officer)/s/ Amir Rosenthal
Amir Rosenthal
    
    Vice President, Chief Financial Officer, General 
Counsel and Secretary
(Principal Financial and Accounting Officer)/s/ Christopher Anderson
Christopher Anderson
    
    Director/s/ Robert M. Baratta
Robert M. Baratta
    
    Director/s/ Daniel B. Carroll
Daniel B. Carroll
    
    Director/s/ Wallace E. Carroll, Jr.
Wallace E. Carroll, Jr.
    
    Director/s/ Samuel P. Frieder
Samuel P. Frieder
    
    Director/s/ Christopher Lacovara
Christopher Lacovara
    
    Director/s/ Shant Mardirossian
Shant Mardirossian
    
    Director
  73




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##### Table of Contents



Report of Independent Registered Accounting Firm
    
    
    75Schedule II  Valuation and Qualifying Accounts
    
    
    76Consent of Independent Registered Public Accounting Firm
    
    
    Exhibit 23
   74




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM ON
FINANCIAL STATEMENT SCHEDULE
    
  75




---



##### Table of Contents



Balance at
    
    
    Additions
    
    
    
    
    
    
    
    
    
    
    Balance atBeginning
    
    
    Charged to
    
    
    Write-offs
    
    
    Other
    
    
    EndAccounts Receivable Reserves
    
    of Year
    
    
    Expense
    
    
    to Reserves
    
    
    Adjustments *
    
    
    of YearYear ended December 31, 2007Trade receivables
    
    $
    2,213
    
    
    $
    (140
    )
    
    $
    (85
    )
    
    $
    (1,727
    )
    
    $
    261Sales allowances
    
    
    17,893
    
    
    
    13,967
    
    
    
    (15,585
    )
    
    
    (11,986
    )
    
    
    4,289$
    20,106
    
    
    $
    13,827
    
    
    $
    (15,670
    )
    
    $
    (13,713
    )
    
    $
    4,550Year ended December 31, 2006Trade receivables
    
    $
    2,445
    
    
    $
    (147
    )
    
    $
    (155
    )
    
    $
    70
    
    
    $
    2,213Sales allowances
    
    
    14,071
    
    
    
    14,201
    
    
    
    (14,409
    )
    
    
    4,030
    
    
    
    17,893$
    16,516
    
    
    $
    14,054
    
    
    $
    (14,564
    )
    
    $
    4,100
    
    
    $
    20,106Year ended December 31, 2005Trade receivables
    
    $
    2,827
    
    
    $
    42
    
    
    $
    (156
    )
    
    $
    (268
    )
    
    $
    2,445Sales allowances
    
    
    14,571
    
    
    
    14,281
    
    
    
    (12,709
    )
    
    
    (2,072
    )
    
    
    14,071$
    17,398
    
    
    $
    14,323
    
    
    $
    (12,865
    )
    
    $
    (2,340
    )
    
    $
    16,516
 Balance at
    
    
    Additions
    
    
    
    
    
    
    
    
    
    
    Balance atBeginning
    
    
    Charged to
    
    
    Write-offs
    
    
    Other
    
    
    EndInventory Reserves
    
    of Year
    
    
    Expense
    
    
    to Reserves
    
    
    Adjustments
    
    
    of YearYear ended December 31, 2007
    
    $
    3,905
    
    
    $
    (183
    )
    
    $
    (50
    )
    
    $
    (2,296
    )
    
    $
    1,376Year ended December 31, 2006
    
    $
    4,548
    
    
    $
    460
    
    
    $
    (486
    )
    
    $
    (617
    )
    
    $
    3,905Year ended December 31, 2005
    
    $
    4,671
    
    
    $
    279
    
    
    $
    (263
    )
    
    $
    (139
    )
    
    $
    4,548
 Balance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance atBeginning
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    EndIncome Tax Valuation Allowances
    
    of Year
    
    
    Provision
    
    
    Reversals
    
    
    Adjustments
    
    
    of YearYear ended December 31, 2007
    
    $
    66,971
    
    
    $
    
    
    
    $
    (665
    )
    
    $
    
    
    
    $
    66,306Year ended December 31, 2006
    
    $
    64,794
    
    
    $
    2,177
    
    
    $
    
    
    
    $
    
    
    
    $
    66,971Year ended December 31, 2005
    
    $
    60,028
    
    
    $
    4,766
    
    
    $
    
    
    
    $
    
    
    
    $
    64,794
 *
    
    Other adjustments for all periods presented includes net activity associated with our
businesses disposed in 2007 and 2006.  76




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##### Table of Contents



ExhibitNumber
    
    Exhibit Title
    
    Page2
    
    
    Preferred Stock Purchase and Recapitalization
Agreement, dated as of June 2, 2001 (incorporated by
reference to Annex B to the Companys Proxy Statement
on Schedule 14A filed June 8, 2001).
    
    
    *3.1
    
    
    The Amended and Restated Certificate of Incorporation
of the Company (incorporated by reference to Exhibit
3.1 of the Companys Current Report on Form 8-K on July
13, 2001).
    
    
    *3.2
    
    
    The By-laws of the Company, as amended (incorporated by
reference to Exhibit 3.1 of the Companys Quarterly
Report on Form 10-Q filed May 15, 2001).
    
    
    *4.1
    
    
    Rights Agreement dated as of January 13, 1995 between
Katy and Harris Trust and Savings Bank as Rights Agent
(incorporated by reference to Exhibit 2.1 of the
Companys Form 8-A filed January 17, 1995).
    
    
    *4.1a
    
    
    First Amendment to Rights Agreement, dated as of
October 30, 1996, between Katy and Harris Trust and
Savings Bank as Rights Agent (incorporated by reference
to Exhibit 4.1(a) of the Companys Quarterly Report on
Form 10-Q filed August 9, 2006).
    
    
    *4.1b
    
    
    Second Amendment to Rights Agreement, dated as of
January 8, 1999, between Katy and LaSalle National Bank
as Rights Agent (incorporated by reference to Exhibit
4.1(b) of the Companys Annual Report on Form 10-K
filed March 18, 1999).
    
    
    *4.1c
    
    
    Third Amendment to Rights Agreement, dated as of March
30, 2001, between Katy and LaSalle Bank, N.A. as Rights
Agent (incorporated by reference to Exhibit (e) (3) to
the Companys Solicitation/Recommendation Statement on
Schedule 14D-9 filed April 25, 2001).
    
    
    *4.1d
    
    
    Fourth Amendment to Rights Agreement, dated as of June
2, 2001, between Katy and LaSalle Bank N.A. as Rights
Agent (incorporated by reference to Exhibit 4.1(d) of
the Companys Quarterly Report on Form 10-Q filed
August 9, 2006).
    
    
    *10.1
    
    
    Amended and Restated Katy Industries, Inc. 1995
Long-Term Incentive Plan (incorporated by reference to
Exhibit 10.1 of the Companys Quarterly Report on Form
10-Q filed August 9, 2006).
    
    
    *10.2
    
    
    Katy Industries, Inc. Non-Employee Director Stock
Option Plan (incorporated by reference to Katys
Registration Statement on Form S-8 filed June 21,
1995).
    
    
    *10.3
    
    
    Katy Industries, Inc. Supplemental Retirement and
Deferral Plan effective as of June 1, 1995
(incorporated by reference to Exhibit 10.4 to Companys
Annual Report on Form 10-K filed April 1, 1996).
    
    
    *10.4
    
    
    Katy Industries, Inc. Directors Deferred Compensation
Plan effective as of June 1, 1995 (incorporated by
reference to Exhibit 10.5 to Companys Annual Report on
Form 10-K filed April 1, 1996).
    
    
    *10.5
    
    
    Employment Agreement dated as of June 1, 2005 between
Anthony T. Castor III and the Company (incorporated by
reference to Exhibit 10.1 to the Companys Quarterly
Report on Form 10-Q filed August 15, 2005).
    
    
    *10.6
    
    
    Katy Industries, Inc. 2005 Chief Executive Officers
Plan (incorporated by reference to Exhibit 10.4 to the
Companys Quarterly Report on Form 10-Q filed August
15, 2005).
    
    
    *10.7
    
    
    Employment Agreement dated as of September 1, 2001
between Amir Rosenthal and the Company (incorporated by
reference to Exhibit 10.2 to the Companys Quarterly
Report on Form 10-Q dated November 14, 2001).
    
    
    *10.8
    
    
    Amendment dated as of October 1, 2004 to the Employment
Agreement dated as of September 1, 2001 between Amir
Rosenthal and the Company (incorporated by reference to
Exhibit 10.2 to the Companys Quarterly Report on Form
10-Q dated November 10, 2004).
    
    
    *10.9
    
    
    Katy Industries, Inc. 2001 Chief Financial Officers
Plan (incorporated by reference to Exhibit 10.3 to the
Companys Quarterly Report on Form 10-Q dated November
14, 2001).
    
    
    *10.10
    
    
    Katy Industries, Inc. 2002 Stock Appreciation Rights
Plan, dated November 21, 2002, (incorporated by
reference to Exhibit 10.17 to the Companys Annual
Report on Form 10-K dated April 15, 2003).
    
    
    *
  77




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##### Table of Contents



ExhibitNumber
    
    Exhibit Title
    
    Page10.11
    
    
    Katy Industries, Inc. Executive Bonus Plan dated
December 2001 (incorporated by reference to Exhibit
10.18 to the Companys Annual Report on Form 10-K dated
April 15, 2005).
    
    
    *10.12
    
    
    Second Amended and Restated Loan Agreement dated as of
November 30, 2007 with Bank of America, (incorporated
by reference to Exhibit 10.1 to the Companys Current
Report on Form 8-K filed December 5, 2007).
    
    
    *10.13
    
    
    Amended and Restated Katy Industries, Inc. 1997
Long-Term Incentive Plan (incorporated by reference to
Exhibit 10.20 of the Companys Quarterly Report on Form
10-Q filed August 9, 2006).
    
    
    *10.14
    
    
    Stand-Alone Stock Appreciation Rights Agreement
(incorporated by reference to Exhibit 99.1 of the
Companys Current Report on Form 8-K filed September 6,
2006).
    
    
    *21
    
    
    Subsidiaries of registrant
    
    
    **23
    
    
    Consent of Independent Registered Public Accounting Firm
    
    
    **31.1
    
    
    CEO Certification pursuant to Securities Exchange Act
Rule 13a-14, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
    
    
    **31.2
    
    
    CFO Certification pursuant to Securities Exchange Act
Rule 13a-14, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    
    **32.1
    
    
    CEO Certification required by 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
    
    
    **#32.2
    
    
    CFO Certification required by 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
    
    
    **#
 *
    
    Indicates incorporated by reference.**
    
    Indicates filed herewith.#
    
    These certifications are being furnished solely to accompany this report pursuant to 18 U.S.C.
1350, and are not being filed for purposes of Section 18 of the Securities and Exchange Act of
1934, as amended, and are not to be incorporated by reference into any filing of Katy Industries,
Inc. whether made before or after the date hereof, regardless of any general incorporation language
in such filing.  78