##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003COMMISSION FILE NUMBERS: 333-44473
333-77905

THE HOLMES GROUP, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


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

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

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.

YESxNOo

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

YESoNOx





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TABLE OF CONTENTS



|                                                |                                                                                               |                                            |  |  |  |  |  | 
|----------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                  
|                                                | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                                |                                                                                               | CONSOLIDATED BALANCE SHEETS               
|                                                |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                                |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                                |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                                | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION                     
|                                                | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                                                | ITEM 5. OTHER INFORMATION                                                                    
|SIGNATURES                                     
|EX-31.1 SECTION 302 CERTIFICATION OF THE C.E.O.
|EX-31.2 SECTION 302 CERTIFICATION OF THE C.F.O.



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##### Table of Contents



THE HOLMES GROUP, INC.
FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2003

TABLE OF CONTENTS

|         |  |                                                                                                                               |  |      
|-------- |  | ----------------------------------------------------------------------------------------------------------------------------- |  | -----
|         |  |                                                                                                                               |  | PAGE 
|PART I.  |  | FINANCIAL INFORMATION:                                                                                                        |  |      
|ITEM 1.  |  | FINANCIAL STATEMENTS                                                                                                          |  |      
|         |  | CONSOLIDATED BALANCE SHEETS AT SEPTEMBER 30, 2003 (UNAUDITED),
DECEMBER 31, 2002
     AND SEPTEMBER 30, 2002 (UNAUDITED)      |  | 3    
|         |  | CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS
AND
     NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 |  | 4    
|         |  | CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS
ENDED
     SEPTEMBER 30, 2003 AND 2002                  |  | 5    
|         |  | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                                                    |  | 6-21 
|ITEM 2.  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF     OPERATIONS                                     |  | 22-30
|ITEM 3.  |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                    |  | 30   
|ITEM 4.  |  | CONTROLS AND PROCEDURES                                                                                                       |  | 30   
|PART II. |  | OTHER INFORMATION:                                                                                                            |  |      
|ITEM 1.  |  | LEGAL PROCEEDINGS                                                                                                             |  | 31   
|ITEM 5.  |  | OTHER INFORMATION                                                                                                             |  | 31   
|ITEM 6.  |  | EXHIBITS AND REPORTS ON FORM 8-K EXHIBITS 31.1 AND 31.2 - OFFICER
CERTIFICATES                                                |  | 31   
|         |  | SIGNATURES                                                                                                                    |  | 32   

2



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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS




THE HOLMES GROUP, INC.
CONSOLIDATED BALANCE SHEETS

|                                                               |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |         |  |         |  
|-------------------------------------------------------------- | ---------------------------------------------- | - | ------------------------------------ | ------- | ------------------------------------------------- | ------- | ------------ | ------- | ----------- | ------- | ------------- | ------- |  | ------- | -
|                                                               |                                                |   |                                      |         | SEPTEMBER 30,                                     |         |              |         |             |         | SEPTEMBER 30,
|                                                               |                                                |   |                                      |         | 2003                                              |         | DECEMBER 31, |         | 2002       
|                                                               |                                                |   |                                      |         | (UNAUDITED)                                       |         | 2002         |         | (UNAUDITED)
|                                                               |                                                |   |                                      |         |                                                   |         |              |         |            
|                                                               |                                                |   |                                      |         | (in thousands except share and per share amounts)
|ASSETS                                                         |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |        
|Current assets:                                                |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |        
|                                                               | Cash and cash equivalents                      |   | $                                    | 4,478   |                                                   |         | $            | 8,426   |             |         | $             | 4,686   | 
|                                                               | Accounts receivable, net                       |   |                                      | 121,802 |                                                   |         |              | 128,409 |             |         |               | 107,406 | 
|                                                               | Inventories                                    |   |                                      | 135,293 |                                                   |         |              | 110,236 |             |         |               | 138,766 | 
|                                                               | Prepaid expenses and other current assets      |   |                                      | 4,306   |                                                   |         |              | 4,817   |             |         |               | 9,935   | 
|                                                               | Deferred income taxes                          |   |                                      | 5,067   |                                                   |         |              | 5,067   |             |         |               | 5,249   | 
|                                                               |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |         | 
|                                                               |                                                |   | Total current assets                 |         |                                                   | 270,946 |              |         |             | 256,955 |               |         |  | 266,042 |  
|Assets held for sale                                           |                                                |   | 444                                  |         |                                                   |         | 6,466        |         |             |         | 5,659         |        
|Property and equipment, net                                    |                                                |   | 42,665                               |         |                                                   |         | 42,446       |         |             |         | 61,038        |        
|Deposits and other assets                                      |                                                |   | 1,441                                |         |                                                   |         | 837          |         |             |         | 4,395         |        
|Debt issuance costs, net                                       |                                                |   | 6,904                                |         |                                                   |         | 10,184       |         |             |         | 12,023        |        
|Deferred income taxes                                          |                                                |   | 5,956                                |         |                                                   |         | 5,956        |         |             |         | 5,774         |        
|                                                               |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |         | 
|                                                               |                                                | $ | 328,356                              |         |                                                   | $       | 322,844      |         |             | $       | 354,931       |        
|                                                               |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |         | 
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                 |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |        
|Current liabilities:                                           |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |        
|                                                               | Accounts payable                               |   | $                                    | 73,144  |                                                   |         | $            | 44,267  |             |         | $             | 58,107  | 
|                                                               | Current portion of Credit Facility             |   |                                      | 62,343  |                                                   |         |              | 9,078   |             |         |               | 8,928   | 
|                                                               | Accrued income taxes                           |   |                                      | 8,636   |                                                   |         |              | 7,405   |             |         |               | 9,705   | 
|                                                               | Accrued expenses and other current liabilities |   |                                      | 48,584  |                                                   |         |              | 53,101  |             |         |               | 43,140  | 
|                                                               | Deferred income taxes                          |   |                                      | 3,124   |                                                   |         |              | 2,967   |             |         |               | 2,194   | 
|                                                               |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |         | 
|                                                               |                                                |   | Total current liabilities            |         |                                                   | 195,831 |              |         |             | 116,818 |               |         |  | 122,074 |  
|Long-term portion of Credit Facility                           |                                                |   | 70,855                               |         |                                                   |         | 166,556      |         |             |         | 181,825       |        
|Senior Subordinated Notes                                      |                                                |   | 99,609                               |         |                                                   |         | 99,544       |         |             |         | 99,523        |        
|Pension obligation                                             |                                                |   | 8,448                                |         |                                                   |         | 5,840        |         |             |         |              |        
|Other liabilities                                              |                                                |   | 7,729                                |         |                                                   |         | 7,613        |         |             |         | 7,645         |        
|Deferred income taxes                                          |                                                |   | 1,194                                |         |                                                   |         | 989          |         |             |         | 843           |        
|Commitments and contingencies                                  |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |        
|Stockholders equity (deficit):                                |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |        
|Common
stock, $.001 par value. Authorized  28,500,000 shares; |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |        
|                                                               | Issued
and outstanding  20,302,995 shares     |   |                                      | 20      |                                                   |         |              | 20      |             |         |               | 20      | 
|Additional paid in capital                                     |                                                |   | 68,874                               |         |                                                   |         | 68,874       |         |             |         | 68,874        |        
|Accumulated other comprehensive income (loss)                  |                                                |   | (6,558                               | )       |                                                   |         | (7,231       | )       |             |         | (159          | )      
|Treasury stock, at cost (18,627,450 shares)                    |                                                |   | (62,076                              | )       |                                                   |         | (62,076      | )       |             |         | (62,076       | )      
|Retained earnings (deficit)                                    |                                                |   | (55,570                              | )       |                                                   |         | (74,103      | )       |             |         | (63,638       | )      
|                                                               |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |         | 
|                                                               |                                                |   | Total stockholders equity (deficit) |         |                                                   | (55,310 | )            |         |             | (74,516 | )             |         |  | (56,979 | )
|                                                               |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |         | 
|                                                               |                                                | $ | 328,356                              |         |                                                   | $       | 322,844      |         |             | $       | 354,931       |        
|                                                               |                                                |   |                                      |         |                                                   |         |              |         |             |         |               |         | 

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

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THE HOLMES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

|                                                                                                                           |                            |   |                    |        |                    |   |                    |       |                    |   |         |        |   |   |         |         |  
|-------------------------------------------------------------------------------------------------------------------------- | -------------------------- | - | ------------------ | ------ | ------------------ | - | ------------------ | ----- | ------------------ | - | ------- | ------ | - | - | ------- | ------- | -
|                                                                                                                           |                            |   | THREE MONTHS ENDED |        | NINE MONTHS ENDED 
|                                                                                                                           |                            |   |                    |        |                   
|                                                                                                                           |                            |   | September 30, 2003 |        | September 30, 2002 |   | September 30, 2003 |       | September 30, 2002
|                                                                                                                           |                            |   |                    |        |                    |   |                    |       |                   
|                                                                                                                           |                            |   | (in thousands)    
|Net sales                                                                                                                  |                            | $ | 183,358            |        |                    | $ | 153,549            |       |                    | $ | 414,410 |        |   | $ | 402,803 |        
|Cost
of sales                                                                                                              |                            |   | 125,046            |        |                    |   | 111,320            |       |                    |   | 290,797 |        |   |   | 299,811 |        
|                                                                                                                           |                            |   |                    |        |                    |   |                    |       |                    |   |         |        |   |   |         |        
|Gross profit                                                                                                               |                            |   | 58,312             |        |                    |   | 42,229             |       |                    |   | 123,613 |        |   |   | 102,992 |        
|Selling and administrative expenses                                                                                        |                            |   | 28,568             |        |                    |   | 27,626             |       |                    |   | 83,894  |        |   |   | 79,667  |        
|Restructuring costs (income)                                                                                               |                            |   | (185               | )      |                    |   | 1,350              |       |                    |   | 1,424   |        |   |   | 3,137   |        
|                                                                                                                           |                            |   |                    |        |                    |   |                    |       |                    |   |         |        |   |   |         |        
|Operating income                                                                                                           |                            |   | 29,929             |        |                    |   | 13,253             |       |                    |   | 38,295  |        |   |   | 20,188  |        
|Other expense (income):                                                                                                    |                            |   |                    |        |                    |   |                    |       |                    |   |         |        |   |   |         |        
|                                                                                                                           | Interest expense           |   |                    | 6,212  |                    |   |                    | 7,286 |                    |   |         | 19,082 |   |   |         | 22,384  |  
|                                                                                                                           | Gain on sale of business   |   |                    |       |                    |   |                    |      |                    |   |         |       |   |   |         | (9,088  | )
|                                                                                                                           | Gain on retirement of debt |   |                    |       |                    |   |                    |      |                    |   |         |       |   |   |         | (22,388 | )
|                                                                                                                           | Other, net                 |   |                    | 791    |                    |   |                    | (591  | )                  |   |         | (405   | ) |   |         | (871    | )
|                                                                                                                           |                            |   |                    |        |                    |   |                    |       |                    |   |         |        |   |   |         |        
|                                                                                                                           |                            |   | 7,003              |        |                    |   | 6,695              |       |                    |   | 18,677  |        |   |   | (9,963  | )      
|                                                                                                                           |                            |   |                    |        |                    |   |                    |       |                    |   |         |        |   |   |         |        
|Income before income taxes, equity in earnings from joint venture,
and cumulative effect of change in accounting principle |                            |   | 22,926             |        |                    |   | 6,558              |       |                    |   | 19,618  |        |   |   | 30,151  |        
|Income tax expense (benefit)                                                                                               |                            |   | 1,313              |        |                    |   | 3,180              |       |                    |   | 2,782   |        |   |   | (254    | )      
|Equity in earnings from joint venture                                                                                      |                            |   | (698               | )      |                    |   | (653               | )     |                    |   | (1,697  | )      |   |   | (1,994  | )      
|                                                                                                                           |                            |   |                    |        |                    |   |                    |       |                    |   |         |        |   |   |         |        
|Income before cumulative effect of change in accounting principle                                                          |                            |   | 22,311             |        |                    |   | 4,031              |       |                    |   | 18,533  |        |   |   | 32,399  |        
|Cumulative effect of change in accounting principle                                                                        |                            |   |                   |        |                    |   |                   |       |                    |   |        |        |   |   | (79,838 | )      
|                                                                                                                           |                            |   |                    |        |                    |   |                    |       |                    |   |         |        |   |   |         |        
|                                                                                                                           | Net
income (loss)          |   | $                  | 22,311 |                    |   | $                  | 4,031 |                    |   | $       | 18,533 |   |   | $       | (47,439 | )
|                                                                                                                           |                            |   |                    |        |                    |   |                    |       |                    |   |         |        |   |   |         |        

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

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THE HOLMES GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

|                                                  |                                                                                                     |                                           |                                                                |         |                    |         |                    |         |         |         |  
|------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ----------------------------------------- | -------------------------------------------------------------- | ------- | ------------------ | ------- | ------------------ | ------- | ------- | ------- | -
|                                                  |                                                                                                     |                                           |                                                                |         | NINE MONTHS ENDED 
|                                                  |                                                                                                     |                                           |                                                                |         |                   
|                                                  |                                                                                                     |                                           |                                                                |         | September 30, 2003 |         | September 30, 2002
|                                                  |                                                                                                     |                                           |                                                                |         |                    |         |                   
|                                                  |                                                                                                     |                                           |                                                                |         | (in thousands)    
|Cash flows from operating activities:             |                                                                                                     |                                           |                                                                |         |                    |         |                    |        
|                                                  | Net income (loss)                                                                                   |                                           | $                                                              | 18,533  |                    |         | $                  | (47,439 | )      
|                                                  | Adjustments
to reconcile net income (loss) to net cash provided by
(used for) operating activities: |                                           |                                                                |         |                    |         |                    |         |        
|                                                  |                                                                                                     |                                           | Depreciation and amortization                                  |         |                    | 8,056   |                    |         |         | 10,236  |  
|                                                  |                                                                                                     |                                           | Amortization of debt related costs and other non-cash interest |         |                    | 4,932   |                    |         |         | 5,151   |  
|                                                  |                                                                                                     |                                           | Provision for doubtful accounts                                |         |                    | (542    | )                  |         |         | 1,532   |  
|                                                  |                                                                                                     |                                           | (Gain)/Loss on disposal of assets                              |         |                    | 44      |                    |         |         | (386    | )
|                                                  |                                                                                                     |                                           | Gain on sale of business                                       |         |                    |        |                    |         |         | (9,088  | )
|                                                  |                                                                                                     |                                           | Extraordinary gain                                             |         |                    |        |                    |         |         | (22,388 | )
|                                                  |                                                                                                     |                                           | Cumulative effect of change in accounting principle            |         |                    |        |                    |         |         | 79,838  |  
|                                                  |                                                                                                     |                                           | Restructuring and other asset impairment charges               |         |                    | 1,122   |                    |         |         | 2,971   |  
|                                                  |                                                                                                     |                                           | Pension plan settlement charge, net                            |         |                    | 1,335   |                    |         |         |        |  
|Changes in operating assets and liabilities:      |                                                                                                     |                                           |                                                                |         |                    |         |                    |        
|                                                  |                                                                                                     |                                           | Accounts receivable                                            |         |                    | 5,154   |                    |         |         | 30,328  |  
|                                                  |                                                                                                     |                                           | Inventories                                                    |         |                    | (25,057 | )                  |         |         | (40,069 | )
|                                                  |                                                                                                     |                                           | Prepaid expenses and other current assets                      |         |                    | (611    | )                  |         |         | (4,618  | )
|                                                  |                                                                                                     |                                           | Deposits and other assets                                      |         |                    | (2,382  | )                  |         |         | (590    | )
|                                                  |                                                                                                     |                                           | Accounts payable                                               |         |                    | 28,877  |                    |         |         | 21,364  |  
|                                                  |                                                                                                     |                                           | Accrued expenses and other current liabilities                 |         |                    | (3,188  | )                  |         |         | (2,180  | )
|                                                  |                                                                                                     |                                           | Accrued income taxes                                           |         |                    | 1,232   |                    |         |         | 3,248   |  
|                                                  |                                                                                                     |                                           |                                                                |         |                    |         |                    |         |        
|                                                  |                                                                                                     | Net cash provided by operating activities |                                                                |         | 37,505             |         |                    |         | 27,910  |        
|Cash flows from investing activities:             |                                                                                                     |                                           |                                                                |         |                    |         |                    |        
|                                                  | Proceeds from sale of business and assets held for sale                                             |                                           |                                                                | 6,213   |                    |         |                    | 15,100  |        
|                                                  | Distribution of earnings from joint venture                                                         |                                           |                                                                | 1,995   |                    |         |                    | 1,819   |        
|                                                  | Purchases of property, plant and equipment                                                          |                                           |                                                                | (8,191  | )                  |         |                    | (9,843  | )      
|                                                  | Cash received from joint venture partner                                                            |                                           |                                                                | 293     |                    |         |                    |        |        
|                                                  |                                                                                                     |                                           |                                                                |         |                    |         |                    |         |        
|                                                  |                                                                                                     | Net cash provided by investing activities |                                                                |         | 310                |         |                    |         | 7,076   |        
|Cash flows from financing activities:             |                                                                                                     |                                           |                                                                |         |                    |         |                    |        
|                                                  | Repayments of Credit Facility                                                                       |                                           |                                                                | (42,436 | )                  |         |                    | (27,129 | )      
|                                                  | Redemption of Senior Subordinated Notes                                                             |                                           |                                                                |        |                    |         |                    | (11,550 | )      
|                                                  | Debt issuance costs                                                                                 |                                           |                                                                |        |                    |         |                    | (1,579  | )      
|                                                  |                                                                                                     |                                           |                                                                |         |                    |         |                    |         |        
|                                                  |                                                                                                     | Net cash used for financing activities    |                                                                |         | (42,436            | )       |                    |         | (40,258 | )      
|Effect of exchange rate changes on cash           |                                                                                                     |                                           | 673                                                            |         |                    |         | (157               | )      
|                                                  |                                                                                                     |                                           |                                                                |         |                    |         |                    |         |        
|Net
decrease in cash and cash equivalents         |                                                                                                     |                                           | (3,948                                                         | )       |                    |         | (5,429             | )      
|Cash and cash equivalents, beginning of period    |                                                                                                     |                                           | 8,426                                                          |         |                    |         | 10,115             |        
|                                                  |                                                                                                     |                                           |                                                                |         |                    |         |                    |         |        
|Cash and cash equivalents, end of period          |                                                                                                     | $                                         | 4,478                                                          |         |                    | $       | 4,686              |        
|                                                  |                                                                                                     |                                           |                                                                |         |                    |         |                    |         |        
|Supplemental disclosure of cash flow information: |                                                                                                     |                                           |                                                                |         |                    |         |                    |        
|                                                  |                                                                                                     | Cash paid for interest                    |                                                                | $       | 11,912             |         |                    | $       | 15,224  |        
|                                                  |                                                                                                     | Cash paid for income taxes                |                                                                | $       | 1,469              |         |                    | $       | 920     |        

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

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THE HOLMES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003

1. UNAUDITED INTERIM FINANCIAL STATEMENTS

The financial information included in this Form 10-Q of The Holmes Group, Inc.
(THG or the Company) for the periods ended September 30, 2003 and 2002 is
unaudited. However, such information includes all adjustments (including all
normal recurring adjustments) which, in the opinion of management, are
considered necessary for a fair presentation of the consolidated results for
those periods. The results of operations for the periods ended September 30,
2003 and 2002 are not necessarily indicative of the results of operations that
may be expected for the complete fiscal year. The year-end condensed balance
sheet data was derived from audited financial statements, but does not include
all disclosures required by generally accepted accounting principles. The
Company filed its audited consolidated financial statements for the year ended
December 31, 2002 on Form 10-K which included all information and footnotes
necessary for such presentation.

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

2. RECENTLY ISSUED ACCOUNTING STANDARDS

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

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

In April 2003, the FASB issued FAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging. FAS 149 amends and clarifies financial
accounting and reporting for derivative instruments and hedging activities to
ensure consistent reporting for contracts with comparable characteristics. The
Company adopted FAS 149 on July 1, 2003 with no material impact on the
Companys financial position or results of operations.

In May 2003, the FASB issued FAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. FAS 150
established standards for how to classify and measure certain financial
instruments with characteristics of both liabilities and equity. The
provisions as of FAS 150 are effective immediately for all financial
instruments entered into or modified after May 31, 2003. The Company adopted
these provisions as of June 1, 2003 with no material impact on the Companys
financial position or results of operations. For all other instruments, the
Standard goes into effect as of July 1, 2003, except for mandatorily redeemable
financial instruments of a non-public entity, which is effective for existing
or new contracts as of January 1, 2004. The Company is currently in process of
assessing the impact of these provisions.

6



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THE HOLMES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

In May 2003, the Emerging Issues Task Force (EITF) reached consensus on EITF
Issue No. 01-08, Determining Whether an Arrangement is a Lease, which is
intended to provided guidance in determining whether an arrangement should be
considered a lease subject to the requirements of FAS 13, Accounting for
Leases. The Task Force reached a consensus that the evaluation of whether an
arrangement contains a lease within the scope of FAS 13 should be based on the
substance of the arrangement using certain guidance specified in the consensus.
EITF 01-08 is required to be applied to Company arrangements agreed or
committed to, modified, or acquired in business combinations initiated after
July 1, 2003. The Company is currently in process of assessing the impact of
EITF 01-08.

3. CHANGE IN ACCOUNTING PRINCIPLE

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

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

4. INVENTORIES

All inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method on approximately 95% of the
inventories and the last-in, first-out method (LIFO) for the remaining 5% of
the inventory. Inventories are as follows (in thousands):

|                |  |                    |         |                   |  |                    |         |   |  |   |         |  
|--------------- |  | ------------------ | ------- | ----------------- |  | ------------------ | ------- | - |  | - | ------- | -
|                |  | September 30, 2003 |         | December 31, 2002 |  | September 30, 2002
|                |  |                    |         |                   |  |                   
|Finished goods  |  | $                  | 123,829 |                   |  | $                  | 95,789  |   |  | $ | 116,373 |  
|Raw materials   |  |                    | 9,284   |                   |  |                    | 12,501  |   |  |   | 21,040  |  
|Work in process |  |                    | 2,367   |                   |  |                    | 2,312   |   |  |   | 2,003   |  
|                |  |                    |         |                   |  |                    |         |   |  |   |         |  
|                |  |                    | 135,480 |                   |  |                    | 110,602 |   |  |   | 139,416 |  
|LIFO allowance  |  |                    | (187    | )                 |  |                    | (366    | ) |  |   | (650    | )
|                |  |                    |         |                   |  |                    |         |   |  |   |         |  
|                |  | $                  | 135,293 |                   |  | $                  | 110,236 |   |  | $ | 138,766 |  
|                |  |                    |         |                   |  |                    |         |   |  |   |         |  

5. RESTRUCTURING CHARGES AND OTHER BUSINESS DIVESTITURES

On February 5, 1999, the Company completed its acquisition of The Rival Company
for an aggregate purchase price of $279.6 million. The acquisition was
accounted for as a purchase, and the results of operations of Rival are
included in the consolidated financial statements since the date of
acquisition. Since the acquisition, the Company has taken several
restructuring actions to integrate Rivals operations into THG, to enhance
efficiencies and to reduce costs. In January 2002, the Company announced the
closing of its Sedalia, Missouri distribution center. The activities of this
facility were moved to the other existing distribution centers. In connection
with this facility closure, the Company recorded restructuring charges totaling
$3,137,000 in the first nine months of 2002. For the 2002 fiscal year,
restructuring charges related to this facility closure totaled $4,898,000,
which included $4,220,000 of asset write-downs of redundant property and
equipment to their estimated net realizable value, facility exit costs of
$612,000 and $66,000 in severance payments for employees who elected not to
transfer to other facilities.

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THE HOLMES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

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

Approximately 682 employees were separated during the first nine months of 2003
as a result of the facility closings. The Company expects to pay the remaining
severance and facility exit costs, which are accrued as of September 30, 2003,
during the balance of fiscal 2003 and fiscal 2004. A reconciliation of the
restructuring reserve activity for the nine months ended September 30, 2003 is
as follows:

|                              |  |                  |        |                   |  |               |        |   |  |   |        |  
|----------------------------- |  | ---------------- | ------ | ----------------- |  | ------------- | ------ | - |  | - | ------ | -
|                              |  | Employee         |        |                   |  |               |        |   |  |  
|                              |  | Severance and    |        | Facility Exit and |  | Total Accrued
|                              |  | Relocation Costs |        | Other Costs       |  | Restructuring
|                              |  |                  |        |                   |  |              
|                              |  | (in thousands)  
|Balance at December 31, 2002  |  | $                | 3,631  |                   |  | $             | 3,452  |   |  | $ | 7,083  |  
|Cash Payments                 |  |                  | (3,169 | )                 |  |               | (1,350 | ) |  |   | (4,519 | )
|Adjustments                   |  |                  | (60    | )                 |  |               | (438   | ) |  |   | (498   | )
|                              |  |                  |        |                   |  |               |        |   |  |   |        |  
|Balance at September 30, 2003 |  | $                | 402    |                   |  | $             | 1,664  |   |  | $ | 2,066  |  
|                              |  |                  |        |                   |  |               |        |   |  |   |        |  

During the first nine months of 2003, the Company incurred $1,424,000 of
expenses associated with the 2002 restructuring actions which were not accrued
at December 31, 2002 in accordance with Emerging Issues Task Force Issue No.
94-3. These restructuring charges were reduced by
$498,000 as actual severance and facility exit costs in the first
nine months of 2003 were lower than the
amounts accrued at December 31, 2002. The restructuring expenses in 2003 included a non-cash charge of $1,335,000 related to the
Companys pension plan for employees at the closed manufacturing facilities.
This charge, which was accrued in accordance with the provisions of Financial
Accounting Standards Board No. 88, Employers Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination Benefits,
included a partial plan settlement of $1,665,000 due to lump sum benefits paid
to terminated employees at the closed facilities, partially offset by a pension
plan curtailment gain of $330,000 that was recorded in the first quarter of
2003. In addition, cost of sales in the first nine months of 2003 includes
$1,109,000 of unfavorable manufacturing variances incurred during the shutdown
of the domestic facilities and $223,000 of freight costs associated with the
transfer of distribution activities from Missouri to a new facility in
California.

Assets held for sale in the consolidated balance sheet at September 30, 2003
includes $444,000 related to the facilities which were closed in January 2003.
During the second quarter of 2003, the Company sold two facilities in Missouri
and certain manufacturing equipment for cash proceeds of $6.2 million. There
was no significant gain or loss related to these asset sales. The Company
expects to sell the remaining assets which were affected by the restructuring
actions during the fourth quarter of 2003.

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

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THE HOLMES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

6. LONG-TERM DEBT

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

|                                                                                     |  |                    |         |                   |  |                    |         |   |  |   |         |  
|------------------------------------------------------------------------------------ |  | ------------------ | ------- | ----------------- |  | ------------------ | ------- | - |  | - | ------- | -
|                                                                                     |  | September 30, 2003 |         | December 31, 2002 |  | September 30, 2002
|                                                                                     |  |                    |         |                   |  |                   
|Revolving Credit Facility (Loans A and B)                                            |  | $                  | 53,409  |                   |  | $                  | 84,209  |   |  | $ | 97,208  |  
|Term Loan A due February 2005                                                        |  |                    | 8,326   |                   |  |                    | 15,397  |   |  |   | 17,365  |  
|Term Loan B due February 2007                                                        |  |                    | 71,463  |                   |  |                    | 76,028  |   |  |   | 76,180  |  
|                                                                                     |  |                    |         |                   |  |                    |         |   |  |   |         |  
|Total Credit Facility                                                                |  |                    | 133,198 |                   |  |                    | 175,634 |   |  |   | 190,753 |  
|9 7/8% Senior Subordinated Notes, net of
unamortized discount, due November 15, 2007 |  |                    | 99,609  |                   |  |                    | 99,544  |   |  |   | 99,523  |  
|                                                                                     |  |                    |         |                   |  |                    |         |   |  |   |         |  
|Total Debt                                                                           |  |                    | 232,807 |                   |  |                    | 275,178 |   |  |   | 290,276 |  
|Less current portion of Credit Facility                                              |  |                    | (62,343 | )                 |  |                    | (9,078  | ) |  |   | (8,928  | )
|                                                                                     |  |                    |         |                   |  |                    |         |   |  |   |         |  
|                                                                                     |  | $                  | 170,464 |                   |  | $                  | 266,100 |   |  | $ | 281,348 |  
|                                                                                     |  |                    |         |                   |  |                    |         |   |  |   |         |  

Credit Facility

Under the Fifth Amendment to the Companys Credit Facility, the lenders have
committed to a Revolving Credit Loan A of $131 million and a Revolving Credit
Loan B of $40 million, which is supported by the guarantee of investment funds
managed by Berkshire Partners, the Companys majority shareholder. Actual
availability under these Revolving Credit facilities is subject to a borrowing
base formula based on inventory and accounts receivable. The maturity date of
Revolving Credit Loan A is February 5, 2005, although the availability under the Revolving Credit Loan A commitment will terminate on
July 1, 2004 unless otherwise approved by a majority of the lenders. The
maturity date of Revolving Credit Loan B is July 1, 2004. As a result of the
maturity dates and the termination provisions of the Credit Facility, the
Company is obligated to repay all amounts outstanding under the Revolving Credit Facility on July 1, 2004. Accordingly, the current portion of the Credit
Facility at September 30, 2003 includes $53.4 million representing the
outstanding amounts of Revolving Credit Loan A ($40.6 million) and Revolving
Credit Loan B ($12.8 million). The Company is in the process of refinancing its
borrowing arrangements and anticipates concluding these negotiations prior to July 1, 2004.

In connection with the Fifth Amendment, the Company entered into a guarantee
fee arrangement with Berkshire Partners which provides for a fee of 2.25% per
annum, compounded annually, on the $40 million Revolving Credit Loan B
commitment, less the portion of this facility designated as subordinated debt
funding loans (which portion is subordinated to the other obligations under the
Credit Facility). The guarantee fee related to the subordinated debt funding
loan, which was $12.8 million at September 30, 2003, is calculated at 20% per
annum, compounded annually. The guarantee fees have not been paid, but have
been accrued and are included as non-cash interest in the statement of
operations for 2002 and 2003. Payment of these fees is subordinated to the
Companys obligations under the Credit Facility.

As of September 30, 2003, December 31, 2002 and September 30, 2002, the
Companys availability under the revolving credit portions of the Credit
Facility was $100.1 million, $62.7 million and $47.4 million, respectively, net
of outstanding letters of credit. The Credit Facility bears interest at
variable rates based on either the prime rate or Eurodollar rate at the
Companys option, plus a margin which, in the case of the Term Loan A and a
portion of the Revolving Credit Facility, varies depending upon certain
financial ratios. The weighted average interest rate of borrowings under the
Credit Facility was 5.2% at September 30, 2003, 5.6% at December 31, 2002 and
5.8% at September 30, 2002. The Credit Facility, and the guarantees thereof by
the Companys domestic subsidiaries, are collateralized by substantially all of
the Companys domestic and certain foreign assets.

Senior Subordinated Notes

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

In conjunction with the Fifth Amendment of the Credit Facility, as described
above, the Company repurchased from two Berkshire Partners investment funds an
aggregate principal amount of approximately $36.2 million of the Senior
Subordinated Notes. The purchase price of the Notes, representing Berkshire
Partners cost, was $11.5 million plus accrued interest, which
was funded with proceeds of the Revolving Credit Loan B described above. The
Notes repurchased were retired and cancelled.

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THE HOLMES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

This transaction resulted in a gain on the early retirement of debt totaling
$22.4 million, which has been reflected in the consolidated statement of
operations for the nine months ended September 30, 2002. This gain is net of
approximately $1.9 million of debt issuance costs and $0.3 million of debt
issuance discount associated with the Senior Subordinated Notes and $0.1
million of transaction fees. A provision for income taxes was not recorded in
connection with this transaction as the Company has offset the gain with
available net operating loss carry forwards. In accordance with the provisions
of FAS 145, this gain, which was originally reported as an extraordinary item
in 2002, has been reclassified as a component of other income in the statement
of operations. The Company may consider repurchases of additional Notes in the
future, and may utilize the proceeds of the Credit Facility for this purpose.

7. COMPREHENSIVE INCOME (LOSS)

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

|                                         |  |                    |        |                   |  |               |       |               |  |   |        |  |  |   |         |  
|---------------------------------------- |  | ------------------ | ------ | ----------------- |  | ------------- | ----- | ------------- |  | - | ------ |  |  | - | ------- | -
|                                         |  | Three months ended |        | Nine months ended
|                                         |  |                    |        |                  
|                                         |  | September 30,      |        | September 30,     |  | September 30, |       | September 30,
|                                         |  | 2003               |        | 2002              |  | 2003          |       | 2002         
|                                         |  |                    |        |                   |  |               |       |              
|Net income (loss)                        |  | $                  | 22,311 |                   |  | $             | 4,031 |               |  | $ | 18,533 |  |  | $ | (47,439 | )
|Foreign currency translation adjustments |  |                    | (34    | )                 |  |               | (702  | )             |  |   | 673    |  |  |   | (157    | )
|                                         |  |                    |        |                   |  |               |       |               |  |   |        |  |  |   |         |  
|Comprehensive income (loss)              |  | $                  | 22,277 |                   |  | $             | 3,329 |               |  | $ | 19,206 |  |  | $ | (47,596 | )
|                                         |  |                    |        |                   |  |               |       |               |  |   |        |  |  |   |         |  

8. BUSINESS SEGMENTS

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

Summary financial information for each reportable segment for the three month
and nine month periods ended September 30, 2003 and 2002 is as follows (in
thousands):

|                    |                       |  |   |          |   |          |   |               |  |              |   |        |  |  |   |          |   |              |   |         |  | 
|------------------- | --------------------- |  | - | -------- | - | -------- | - | ------------- |  | ------------ | - | ------ |  |  | - | -------- | - | ------------ | - | ------- |  | 
|                    |                       |  |   | Consumer |   |          |   |               |  |              |   |        |  |  |   |          |   | Consolidated
|                    |                       |  |   | Durables |   | Far East |   | International |  | Eliminations |   | Total 
|                    |                       |  |   |          |   |          |   |               |  |             
|THREE
MONTHS ENDED  |                       |  |   |          |   |          |   |               |  |              |   |        |  |  |   |          |   |              |   |        
|September 30, 2003: |                       |  |   |          |   |          |   |               |  |              |   |        |  |  |   |          |   |              |   |        
|                    | Net sales             |  | $ | 160,332  |   |          | $ | 137,668       |  |              | $ | 17,488 |  |  | $ | (132,130 | ) |              | $ | 183,358 | 
|                    | Segment income (loss) |  |   | 13,058   |   |          |   | 10,863        |  |              |   | 80     |  |  |   | (1,690   | ) |              |   | 22,311  | 
|September 30, 2002: |                       |  |   |          |   |          |   |               |  |              |   |        |  |  |   |          |   |              |   |        
|                    | Net sales             |  | $ | 132,054  |   |          | $ | 100,252       |  |              | $ | 16,270 |  |  | $ | (95,027  | ) |              | $ | 153,549 | 
|                    | Segment income (loss) |  |   | (2,510   | ) |          |   | 5,563         |  |              |   | 1,548  |  |  |   | (570     | ) |              |   | 4,031   | 
|NINE
MONTHS ENDED   |                       |  |   |          |   |          |   |               |  |              |   |        |  |  |   |          |   |              |   |        
|September 30, 2003: |                       |  |   |          |   |          |   |               |  |              |   |        |  |  |   |          |   |              |   |        
|                    | Net sales             |  | $ | 351,893  |   |          | $ | 285,904       |  |              | $ | 46,118 |  |  | $ | (269,505 | ) |              | $ | 414,410 | 
|                    | Segment income (loss) |  |   | 373      |   |          |   | 19,356        |  |              |   | 355    |  |  |   | (1,551   | ) |              |   | 18,533  | 
|September 30, 2002: |                       |  |   |          |   |          |   |               |  |              |   |        |  |  |   |          |   |              |   |        
|                    | Net sales             |  | $ | 349,278  |   |          | $ | 252,193       |  |              | $ | 39,619 |  |  | $ | (238,287 | ) |              | $ | 402,803 | 
|                    | Segment income (loss) |  |   | 15,186   |   |          |   | 17,013        |  |              |   | 1,960  |  |  |   | (1,760   | ) |              |   | 32,399  | 

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

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THE HOLMES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

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

|                   |                                       |  |               |         |          |  |               |        |       |  |   |        |  |  |              |         | 
|------------------ | ------------------------------------- |  | ------------- | ------- | -------- |  | ------------- | ------ | ----- |  | - | ------ |  |  | ------------ | ------- | 
|                   |                                       |  |               |         |          |  |               |        |       |  |   |        |  |  | Consolidated
|                   |                                       |  | United States |         | Far East |  | International |        | Total
|                   |                                       |  |               |         |          |  |               |        |      
|Net Sales:         |                                       |  |               |         |          |  |               |        |       |  |   |        |  |  |              |        
|                   | Three months ended September 30, 2003 |  | $             | 159,592 |          |  | $             | 6,278  |       |  | $ | 17,488 |  |  | $            | 183,358 | 
|                   | Three months ended September 30, 2002 |  |               | 132,054 |          |  |               | 5,225  |       |  |   | 16,270 |  |  |              | 153,549 | 
|                   | Nine months ended September 30, 2003  |  |               | 349,564 |          |  |               | 19,284 |       |  |   | 45,562 |  |  |              | 414,410 | 
|                   | Nine months ended September 30, 2002  |  |               | 349,278 |          |  |               | 13,906 |       |  |   | 39,619 |  |  |              | 402,803 | 
|Long-lived assets: |                                       |  |               |         |          |  |               |        |       |  |   |        |  |  |              |        
|                   | September 30, 2003                    |  |               | 9,825   |          |  |               | 34,048 |       |  |   | 677    |  |  |              | 44,550  | 
|                   | December 31, 2002                     |  |               | 16,226  |          |  |               | 33,028 |       |  |   | 495    |  |  |              | 49,749  | 
|                   | September 30, 2002                    |  |               | 37,727  |          |  |               | 32,854 |       |  |   | 511    |  |  |              | 71,092  | 

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

9. STOCK-BASED COMPENSATION

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

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

|                                                                                        |  |                    |        |                   |  |               |       |               |  |   |        |   |  |   |         |  
|--------------------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- |  | ------------- | ----- | ------------- |  | - | ------ | - |  | - | ------- | -
|                                                                                        |  | Three
Months Ended |        | Nine
Months Ended
|                                                                                        |  |                    |        |                  
|                                                                                        |  | September 30,      |        | September 30,     |  | September 30, |       | September 30,
|                                                                                        |  | 2003               |        | 2002              |  | 2003          |       | 2002         
|                                                                                        |  |                    |        |                   |  |               |       |              
|Reported net income (loss)                                                              |  | $                  | 22,311 |                   |  | $             | 4,031 |               |  | $ | 18,533 |   |  | $ | (47,439 | )
|Stock-based employee
compensation included in
net income (loss)                         |  |                    |       |                   |  |               |      |               |  |   |       |   |  |   |        |  
|Stock-based employee
compensation determined
under the fair value
method for all awards |  |                    | (200   | )                 |  |               | (291  | )             |  |   | (746   | ) |  |   | (873    | )
|                                                                                        |  |                    |        |                   |  |               |       |               |  |   |        |   |  |   |         |  
|Pro forma net income (loss)                                                             |  | $                  | 22,111 |                   |  | $             | 3,740 |               |  | $ | 17,787 |   |  | $ | (48,312 | )
|                                                                                        |  |                    |        |                   |  |               |       |               |  |   |        |   |  |   |         |  

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##### Table of Contents



THE HOLMES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

10. PRODUCT WARRANTIES

In November 2002, the FASB issued FASB Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees. The Company adopted
FIN 45 effective January 1, 2003 and will apply the provisions of the new
interpretation to any guarantees issued or modified after that date. The Company issues
warranties to consumers for certain of its home environment and kitchen
appliances. Warranty costs, representing the value of replacement goods sent
to consumers making warranty claims, are expensed as incurred. The Company
maintains a warranty reserve for consumer claims in process at the end of the
period. A reconciliation of the warranty reserve for the nine months ended
September 30, 2003 is as follows (in thousands):

|                                             |  |   |      |  
|-------------------------------------------- |  | - | ---- | -
|Balance at beginning of period               |  | $ | 375  |  
|Accruals for warranties issued during period |  |   | 349  |  
|Settlements made during the period           |  |   | (180 | )
|                                             |  |   |      |  
|Balance at end of period                     |  | $ | 544  |  
|                                             |  |   |      |  

11. CONTINGENCIES

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

12. CONDENSED CONSOLIDATING INFORMATION

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

12



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THE HOLMES GROUP, INC.
CONDENSED CONSOLIDATING BALANCE SHEET AT SEPTEMBER 30, 2003 (IN THOUSANDS)
(UNAUDITED)

|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |         |  
|---------------------------------------------- | ---------------------------------------------- | ------------------------------------ | ------- | ------- | ------- | ------------ | ------- | ------------ | ------- | ------------- | ------- | ------------ | ------- | - | -------- | -------- | -------- | - | ------- | ------- | ------- | -
|                                               |                                                |                                      |         |         |         |              |         | Guarantor    |         | Non-Guarantor |         |              |         |   |          |          |          |  
|                                               |                                                |                                      |         | Parent  |         | Subsidiaries |         | Subsidiaries |         | Eliminations  |         | Consolidated
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |             
|Assets                                         |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|Current Assets:                                |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                               | Cash and cash equivalents                      |                                      | $       | 1,571   |         |              | $       |             |         |               | $       | 2,907        |         |   |          |         |          |   | $       | 4,478   |        
|                                               | Accounts receivable, net                       |                                      |         | 34,809  |         |              |         | 58,600       |         |               |         | 28,393       |         |   |          |         |          |   |         | 121,802 |        
|                                               | Inventories                                    |                                      |         | 53,478  |         |              |         | 49,497       |         |               |         | 39,318       |         |   | $        | (7,000   | )        |   |         | 135,293 |        
|                                               | Prepaid expenses and other current assets      |                                      |         | 2,139   |         |              |         | 58           |         |               |         | 2,109        |         |   |          |         |          |   |         | 4,306   |        
|                                               | Deferred income taxes                          |                                      |         | 4,689   |         |              |         | 378          |         |               |         |             |         |   |          |         |          |   |         | 5,067   |        
|                                               | Due from affiliates                            |                                      |         | 279,582 |         |              |         | 89           |         |               |         | 142,631      |         |   |          | (422,302 | )        |   |         |        |        
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                               |                                                | Total current assets                 |         |         | 376,268 |              |         |              | 108,622 |               |         |              | 215,358 |   |          |          | (429,302 | ) |         |         | 270,946 |  
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Assets held for sale                           |                                                |                                      |        |         |         |              | 444     |              |         |               |        |              |         |   |         |          |          |   | 444     |        
|Property and equipment, net                    |                                                |                                      | 8,520   |         |         |              | 205     |              |         |               | 33,940  |              |         |   |         |          |          |   | 42,665  |        
|Deposits and other assets                      |                                                |                                      | 5,582   |         |         |              | 1       |              |         |               | 1,071   |              |         |   | (5,213   | )        |          |   | 1,441   |        
|Debt issuance costs, net                       |                                                |                                      | 6,904   |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 6,904   |        
|Deferred income taxes                          |                                                |                                      | 5,513   |         |         |              | 443     |              |         |               |        |              |         |   |         |          |          |   | 5,956   |        
|Investment in consolidated subsidiaries        |                                                |                                      | 35,968  |         |         |              |        |              |         |               | 3,701   |              |         |   | (39,669  | )        |          |   |        |        
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                               |                                                | $                                    | 438,755 |         |         | $            | 109,715 |              |         | $             | 254,070 |              |         | $ | (474,184 | )        |          | $ | 328,356 |        
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Liabilities
and Stockholders Equity (Deficit) |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|Current Liabilities:                           |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                               | Accounts payable                               |                                      |         | 7,018   |         |              |         | 861          |         |               |         | 70,478       |         |   |          | (5,213   | )        |   |         | 73,144  |        
|                                               | Current portion of Credit Facility             |                                      |         | 62,343  |         |              |         |             |         |               |         |             |         |   |          |         |          |   |         | 62,343  |        
|                                               | Accrued income taxes                           |                                      |         | 3,064   |         |              |         | (1,291       | )       |               |         | 6,863        |         |   |          |         |          |   |         | 8,636   |        
|                                               | Accrued expenses and other current liabilities |                                      |         | 26,355  |         |              |         | 10,168       |         |               |         | 12,061       |         |   |          |         |          |   |         | 48,584  |        
|                                               | Deferred income taxes                          |                                      |         | (2,097  | )       |              |         | 2,582        |         |               |         | 2,639        |         |   |          |         |          |   |         | 3,124   |        
|                                               | Due to affiliates                              |                                      |         | 228,333 |         |              |         | 157,164      |         |               |         | 36,805       |         |   |          | (422,302 | )        |   |         |        |        
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                               |                                                | Total current liabilities            |         |         | 325,016 |              |         |              | 169,484 |               |         |              | 128,846 |   |          |          | (427,515 | ) |         |         | 195,831 |  
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Long-term portion of Credit Facility           |                                                |                                      | 70,855  |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 70,855  |        
|Senior
Subordinated Notes                      |                                                |                                      | 99,609  |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 99,609  |        
|Pension obligation                             |                                                |                                      |        |         |         |              | 8,448   |              |         |               |        |              |         |   |         |          |          |   | 8,448   |        
|Other long-term liabilities                    |                                                |                                      |        |         |         |              |        |              |         |               | 7,729   |              |         |   |         |          |          |   | 7,729   |        
|Deferred income taxes                          |                                                |                                      | (1,415  | )       |         |              | 861     |              |         |               | 1,748   |              |         |   |         |          |          |   | 1,194   |        
|Stockholders
equity (deficit):                |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                               | Common stock, $.001 par value                  |                                      |         | 20      |         |              |         | 2            |         |               |         |             |         |   |          | (2       | )        |   |         | 20      |        
|                                               | Common stock, $1 par value                     |                                      |         |        |         |              |         |             |         |               |         | 3,810        |         |   |          | (3,810   | )        |   |         |        |        
|                                               | Additional paid in capital                     |                                      |         | 68,874  |         |              |         |             |         |               |         |              |         |   |          |         |          |   |         | 68,874  |        
|                                               | Accumulated other comprehensive income         |                                      |         | (6,558  | )       |              |         |             |         |               |         | 323          |         |   |          | (323     | )        |   |         | (6,558  | )      
|                                               | Treasury stock                                 |                                      |         | (62,076 | )       |              |         |             |         |               |         |              |         |   |          |         |          |   |         | (62,076 | )      
|                                               | Retained earnings (deficit)                    |                                      |         | (55,570 | )       |              |         | (69,080      | )       |               |         | 111,614      |         |   |          | (42,534  | )        |   |         | (55,570 | )      
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                               |                                                | Total
stockholders equity (deficit) |         |         | (55,310 | )            |         |              | (69,078 | )             |         |              | 115,747 |   |          |          | (46,669  | ) |         |         | (55,310 | )
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                               |                                                | $                                    | 438,755 |         |         | $            | 109,715 |              |         | $             | 254,070 |              |         | $ | (474,184 | )        |          | $ | 328,356 |        
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        

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##### Table of Contents



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

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

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##### Table of Contents



THE HOLMES GROUP, INC.
CONDENSED CONSOLIDATING BALANCE SHEET AT SEPTEMBER 30, 2002 (IN THOUSANDS)
(UNAUDITED)

|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |         |  
|---------------------------------------------- | ---------------------------------------------- | ------------------------------------ | ------- | ------- | ------- | ------------ | ------- | ------------ | ------- | ------------- | ------- | ------------ | ------- | - | -------- | -------- | -------- | - | ------- | ------- | ------- | -
|                                               |                                                |                                      |         |         |         |              |         | Guarantor    |         | Non-Guarantor |         |              |         |   |          |          |          |  
|                                               |                                                |                                      |         | Parent  |         | Subsidiaries |         | Subsidiaries |         | Eliminations  |         | Consolidated
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |             
|Assets                                         |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|Current Assets:                                |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                               | Cash and cash equivalents                      |                                      | $       | 2,811   |         |              | $       | (489         | )       |               | $       | 2,364        |         |   |          |          |          |   | $       | 4,686   |        
|                                               | Accounts receivable, net                       |                                      |         | 31,643  |         |              |         | 49,742       |         |               |         | 26,021       |         |   |          |          |          |   |         | 107,406 |        
|                                               | Inventories                                    |                                      |         | 48,260  |         |              |         | 64,690       |         |               |         | 32,641       |         |   | $        | (6,825   | )        |   |         | 138,766 |        
|                                               | Prepaid expenses and other current assets      |                                      |         | 1,671   |         |              |         | 5,433        |         |               |         | 2,831        |         |   |          |          |          |   |         | 9,935   |        
|                                               | Deferred income taxes                          |                                      |         | 600     |         |              |         | 4,649        |         |               |         |             |         |   |          |          |          |   |         | 5,249   |        
|                                               | Due from affiliates                            |                                      |         | 279,582 |         |              |         | 89           |         |               |         | 97,779       |         |   |          | (377,450 | )        |   |         |        |        
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                               |                                                | Total current assets                 |         |         | 364,567 |              |         |              | 124,114 |               |         |              | 161,636 |   |          |          | (384,275 | ) |         |         | 266,042 |  
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Assets held for sale                           |                                                |                                      | (629    | )       |         |              | 6,288   |              |         |               |         |              |         |   |          |          |          |   | 5,659   |        
|Property and equipment, net                    |                                                |                                      | 8,483   |         |         |              | 20,064  |              |         |               | 32,491  |              |         |   |         |          |          |   | 61,038  |        
|Deposits and other assets                      |                                                |                                      | 5,697   |         |         |              | 2,543   |              |         |               | 1,046   |              |         |   | (4,891   | )        |          |   | 4,395   |        
|Debt issuance costs, net                       |                                                |                                      | 12,023  |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 12,023  |        
|Deferred income taxes                          |                                                |                                      | 5,774   |         |         |              |        |              |         |               |        |              |         |   |          |          |          |   | 5,774   |        
|Investment in consolidated subsidiaries        |                                                |                                      | 12,358  |         |         |              |        |              |         |               | 3,701   |              |         |   | (16,059  | )        |          |   |        |        
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                               |                                                | $                                    | 408,273 |         |         | $            | 153,009 |              |         | $             | 198,874 |              |         | $ | (405,225 | )        |          | $ | 354,931 |        
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Liabilities and Stockholders Equity (Deficit) |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|Current Liabilities:                           |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                               | Accounts payable                               |                                      |         | 11,200  |         |              |         | 3,752        |         |               |         | 48,046       |         |   |          | (4,891   | )        |   |         | 58,107  |        
|                                               | Current portion of Credit Facility             |                                      |         | 8,928   |         |              |         |             |         |               |         |             |         |   |          |          |          |   |         | 8,928   |        
|                                               | Accrued income taxes                           |                                      |         | (1,310  | )       |              |         | 3,216        |         |               |         | 7,799        |         |   |          |         |          |   |         | 9,705   |        
|                                               | Accrued expenses and other current liabilities |                                      |         | 21,035  |         |              |         | 16,127       |         |               |         | 5,978        |         |   |          |          |          |   |         | 43,140  |        
|                                               | Deferred income taxes                          |                                      |         | 396     |         |              |         |             |         |               |         | 1,798        |         |   |          |          |          |   |         | 2,194   |        
|                                               | Due to affiliates                              |                                      |         | 146,671 |         |              |         | 198,000      |         |               |         | 32,779       |         |   |          | (377,450 | )        |   |         |        |        
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                               |                                                | Total current liabilities            |         |         | 186,920 |              |         |              | 221,095 |               |         |              | 96,400  |   |          |          | (382,341 | ) |         |         | 122,074 |  
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|Long-term portion of Credit Facility           |                                                |                                      | 181,825 |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 181,825 |        
|Senior
Subordinated Notes                      |                                                |                                      | 99,523  |         |         |              |        |              |         |               |        |              |         |   |         |          |          |   | 99,523  |        
|Other long-term liabilities                    |                                                |                                      |        |         |         |              |        |              |         |               | 7,645   |              |         |   |         |          |          |   | 7,645   |        
|Deferred income taxes                          |                                                |                                      | (3,016  | )       |         |              | 3,859   |              |         |               |        |              |         |   |         |          |          |   | 843     |        
|Stockholders
equity (deficit):                |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |        
|                                               | Common stock, $.001 par value                  |                                      |         | 20      |         |              |         | 2            |         |               |         |             |         |   |          | (2       | )        |   |         | 20      |        
|                                               | Common stock, $1 par value                     |                                      |         |        |         |              |         |             |         |               |         | 3,800        |         |   |          | (3,800   | )        |   |         |        |        
|                                               | Additional paid in capital                     |                                      |         | 68,874  |         |              |         |             |         |               |         |              |         |   |          |         |          |   |         | 68,874  |        
|                                               | Accumulated other comprehensive income         |                                      |         | (159    | )       |              |         |             |         |               |         | (320         | )       |   |          | 320      |          |   |         | (159    | )      
|                                               | Treasury stock                                 |                                      |         | (62,076 | )       |              |         |             |         |               |         |              |         |   |          |         |          |   |         | (62,076 | )      
|                                               | Retained earnings (deficit)                    |                                      |         | (63,638 | )       |              |         | (71,947      | )       |               |         | 91,349       |         |   |          | (19,402  | )        |   |         | (63,638 | )      
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                               |                                                | Total
stockholders equity (deficit) |         |         | (56,979 | )            |         |              | (71,945 | )             |         |              | 94,829  |   |          |          | (22,884  | ) |         |         | (56,979 | )
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        
|                                               |                                                | $                                    | 408,273 |         |         | $            | 153,009 |              |         | $             | 198,874 |              |         | $ | (405,225 | )        |          | $ | 354,931 |        
|                                               |                                                |                                      |         |         |         |              |         |              |         |               |         |              |         |   |          |          |          |   |         |         |        

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THE HOLMES GROUP, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2003 (IN THOUSANDS)
(UNAUDITED)

|                                                                            |                                     |   |        |       |              |   |              |        |               |   |              |       |  |   |          |   |  |   |         |        |  
|--------------------------------------------------------------------------- | ----------------------------------- | - | ------ | ----- | ------------ | - | ------------ | ------ | ------------- | - | ------------ | ----- |  | - | -------- | - |  | - | ------- | ------ | -
|                                                                            |                                     |   |        |       |              |   | Guarantor    |        | Non-Guarantor |   |              |       |  |   |          |   | 
|                                                                            |                                     |   | Parent |       | Subsidiaries |   | Subsidiaries |        | Eliminations  |   | Consolidated
|                                                                            |                                     |   |        |       |              |   |              |        |               |   |             
|Net sales                                                                   |                                     | $ | 60,153 |       |              | $ | 99,439       |        |               | $ | 155,156      |       |  |   | (131,390 | ) |  | $ | 183,358 |       
|Cost of sales                                                               |                                     |   | 40,055 |       |              |   | 79,063       |        |               |   | 135,628      |       |  |   | (129,700 | ) |  |   | 125,046 |       
|                                                                            |                                     |   |        |       |              |   |              |        |               |   |              |       |  |   |          |   |  |   |         |       
|Gross profit (loss)                                                         |                                     |   | 20,098 |       |              |   | 20,376       |        |               |   | 19,528       |       |  |   | (1,690   | ) |  |   | 58,312  |       
|                                                                            |                                     |   |        |       |              |   |              |        |               |   |              |       |  |   |          |   |  |   |         |       
|                                                                            | Selling and administrative expenses |   |        | 9,814 |              |   |              | 12,691 |               |   |              | 6,063 |  |   |          |  |  |   |         | 28,568 |  
|                                                                            | Restructuring costs (income)        |   |        |      |              |   |              | (185   | )             |   |              |      |  |   |          |  |  |   |         | (185   | )
|                                                                            |                                     |   |        |       |              |   |              |        |               |   |              |       |  |   |          |   |  |   |         |       
|Operating profit (loss)                                                     |                                     |   | 10,284 |       |              |   | 7,870        |        |               |   | 13,465       |       |  |   | (1,690   | ) |  |   | 29,929  |       
|                                                                            |                                     |   |        |       |              |   |              |        |               |   |              |       |  |   |          |   |  |   |         |       
|Other expense (income) :                                                    |                                     |   |        |       |              |   |              |        |               |   |              |       |  |   |          |   |  |   |         |       
|                                                                            | Interest expense                    |   |        | 6,210 |              |   |              |       |               |   |              | 2     |  |   |          |  |  |   |         | 6,212  |  
|                                                                            | Other, net                          |   |        | (881  | )            |   |              | 419    |               |   |              | 1,253 |  |   |          |  |  |   |         | 791    |  
|                                                                            |                                     |   |        |       |              |   |              |        |               |   |              |       |  |   |          |   |  |   |         |       
|                                                                            |                                     |   | 5,329  |       |              |   | 419          |        |               |   | 1,255        |       |  |   |         |   |  |   | 7,003   |       
|                                                                            |                                     |   |        |       |              |   |              |        |               |   |              |       |  |   |          |   |  |   |         |       
|Income (loss) before income taxes and
equity in earnings from joint venture |                                     |   | 4,955  |       |              |   | 7,451        |        |               |   | 12,210       |       |  |   | (1,690   | ) |  |   | 22,926  |       
|Income tax expense                                                          |                                     |   | 45     |       |              |   |             |        |               |   | 1,268        |       |  |   |         |   |  |   | 1,313   |       
|Equity in earnings from joint venture                                       |                                     |   | (698   | )     |              |   |             |        |               |   |             |       |  |   |         |   |  |   | (698    | )     
|                                                                            |                                     |   |        |       |              |   |              |        |               |   |              |       |  |   |          |   |  |   |         |       
|Income (loss) before equity in income of
consolidated subsidiaries          |                                     |   | 5,608  |       |              |   | 7,451        |        |               |   | 10,942       |       |  |   | (1,690   | ) |  |   | 22,311  |       
|Equity in income of consolidated subsidiaries                               |                                     |   | 16,703 |       |              |   |             |        |               |   |             |       |  |   | (16,703  | ) |  |   |        |       
|                                                                            |                                     |   |        |       |              |   |              |        |               |   |              |       |  |   |          |   |  |   |         |       
|Net income (loss)                                                           |                                     | $ | 22,311 |       |              | $ | 7,451        |        |               | $ | 10,942       |       |  | $ | (18,393  | ) |  | $ | 22,311  |       
|                                                                            |                                     |   |        |       |              |   |              |        |               |   |              |       |  |   |          |   |  |   |         |       

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THE HOLMES GROUP, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2002 (IN THOUSANDS)
(UNAUDITED)

|                                                                            |                     |   |        |       |              |   |              |       |               |   |              |      |   |   |         |   |  |   |         |       |  
|--------------------------------------------------------------------------- | ------------------- | - | ------ | ----- | ------------ | - | ------------ | ----- | ------------- | - | ------------ | ---- | - | - | ------- | - |  | - | ------- | ----- | -
|                                                                            |                     |   |        |       |              |   | Guarantor    |       | Non-Guarantor |   |              |      |   |   |         |   | 
|                                                                            |                     |   | Parent |       | Subsidiaries |   | Subsidiaries |       | Eliminations  |   | Consolidated
|                                                                            |                     |   |        |       |              |   |              |       |               |   |             
|Net sales                                                                   |                     | $ | 50,304 |       |              | $ | 81,751       |       |               | $ | 116,521      |      |   |   | (95,027 | ) |  | $ | 153,549 |      
|Cost of sales                                                               |                     |   | 38,341 |       |              |   | 67,022       |       |               |   | 100,414      |      |   |   | (94,457 | ) |  |   | 111,320 |      
|                                                                            |                     |   |        |       |              |   |              |       |               |   |              |      |   |   |         |   |  |   |         |      
|Gross profit (loss)                                                         |                     |   | 11,963 |       |              |   | 14,729       |       |               |   | 16,107       |      |   |   | (570    | ) |  |   | 42,229  |      
|                                                                            |                     |   |        |       |              |   |              |       |               |   |              |      |   |   |         |   |  |   |         |      
|Selling and administrative expenses                                         |                     |   | (3,477 | )     |              |   | 25,947       |       |               |   | 5,156        |      |   |   |        |   |  |   | 27,626  |      
|                                                                            | Restructuring costs |   |        |      |              |   |              | 1,350 |               |   |              |     |   |   |         |  |  |   |         | 1,350 |  
|                                                                            |                     |   |        |       |              |   |              |       |               |   |              |      |   |   |         |   |  |   |         |      
|Operating profit (loss)                                                     |                     |   | 15,440 |       |              |   | (12,568      | )     |               |   | 10,951       |      |   |   | (570    | ) |  |   | 13,253  |      
|                                                                            |                     |   |        |       |              |   |              |       |               |   |              |      |   |   |         |   |  |   |         |      
|Other expense (income):                                                     |                     |   |        |       |              |   |              |       |               |   |              |      |   |   |         |   |  |   |         |      
|                                                                            | Interest expense    |   |        | 7,275 |              |   |              | (1    | )             |   |              | 12   |   |   |         |  |  |   |         | 7,286 |  
|                                                                            | Other, net          |   |        | (921  | )            |   |              | 983   |               |   |              | (653 | ) |   |         |  |  |   |         | (591  | )
|                                                                            |                     |   |        |       |              |   |              |       |               |   |              |      |   |   |         |   |  |   |         |      
|                                                                            |                     |   | 6,354  |       |              |   | 982          |       |               |   | (641         | )    |   |   |        |   |  |   | 6,695   |      
|                                                                            |                     |   |        |       |              |   |              |       |               |   |              |      |   |   |         |   |  |   |         |      
|Income (loss) before income taxes and
equity in earnings from joint venture |                     |   | 9,086  |       |              |   | (13,550      | )     |               |   | 11,592       |      |   |   | (570    | ) |  |   | 6,558   |      
|Income tax expense (benefit)                                                |                     |   |       |       |              |   | (127         | )     |               |   | 3,307        |      |   |   |        |   |  |   | 3,180   |      
|Equity in earnings from joint venture                                       |                     |   | (653   | )     |              |   |             |       |               |   |             |      |   |   |        |   |  |   | (653    | )    
|                                                                            |                     |   |        |       |              |   |              |       |               |   |              |      |   |   |         |   |  |   |         |      
|Income (loss) before equity in income of
consolidated subsidiaries          |                     |   | 9,739  |       |              |   | (13,423      | )     |               |   | 8,285        |      |   |   | (570    | ) |  |   | 4,031   |      
|Equity in income of consolidated subsidiaries                               |                     |   | (5,708 | )     |              |   |             |       |               |   |             |      |   |   | 5,708   |   |  |   |        |      
|                                                                            |                     |   |        |       |              |   |              |       |               |   |              |      |   |   |         |   |  |   |         |      
|Income (loss) before accounting charge                                      |                     |   | 4,031  |       |              |   | (13,423      | )     |               |   | 8,285        |      |   |   | 5,138   |   |  |   | 4,031   |      
|Cumulative effect of change in accounting principle                         |                     |   |       |       |              |   |             |       |               |   |             |      |   |   |        |   |  |   |        |      
|                                                                            |                     |   |        |       |              |   |              |       |               |   |              |      |   |   |         |   |  |   |         |      
|Net income (loss)                                                           |                     | $ | 4,031  |       |              | $ | (13,423      | )     |               | $ | 8,285        |      |   | $ | 5,138   |   |  | $ | 4,031   |      
|                                                                            |                     |   |        |       |              |   |              |       |               |   |              |      |   |   |         |   |  |   |         |      

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THE HOLMES GROUP, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2003 (IN THOUSANDS)
(UNAUDITED)

|                                                                            |                  |   |         |        |              |   |              |      |               |   |              |       |   |   |          |   |  |   |         |        |  
|--------------------------------------------------------------------------- | ---------------- | - | ------- | ------ | ------------ | - | ------------ | ---- | ------------- | - | ------------ | ----- | - | - | -------- | - |  | - | ------- | ------ | -
|                                                                            |                  |   |         |        |              |   | Guarantor    |      | Non-Guarantor |   |              |       |   |   |          |   | 
|                                                                            |                  |   | Parent  |        | Subsidiaries |   | Subsidiaries |      | Eliminations  |   | Consolidated
|                                                                            |                  |   |         |        |              |   |              |      |               |   |             
|Net sales                                                                   |                  | $ | 129,825 |        |              | $ | 219,183      |      |               | $ | 332,022      |       |   | $ | (266,620 | ) |  | $ | 414,410 |       
|Cost of sales                                                               |                  |   | 94,858  |        |              |   | 171,252      |      |               |   | 289,756      |       |   |   | (265,069 | ) |  |   | 290,797 |       
|                                                                            |                  |   |         |        |              |   |              |      |               |   |              |       |   |   |          |   |  |   |         |       
|Gross profit (loss)                                                         |                  |   | 34,967  |        |              |   | 47,931       |      |               |   | 42,266       |       |   |   | (1,551   | ) |  |   | 123,613 |       
|                                                                            |                  |   |         |        |              |   |              |      |               |   |              |       |   |   |          |   |  |   |         |       
|Selling and administrative expenses                                         |                  |   | 24,842  |        |              |   | 42,041       |      |               |   | 17,011       |       |   |   |         |   |  |   | 83,894  |       
|Restructuring costs                                                         |                  |   |        |        |              |   | 1,424        |      |               |   |             |       |   |   |         |   |  |   | 1,424   |       
|                                                                            |                  |   |         |        |              |   |              |      |               |   |              |       |   |   |          |   |  |   |         |       
|Operating profit (loss)                                                     |                  |   | 10,125  |        |              |   | 4,466        |      |               |   | 25,255       |       |   |   | (1,551   | ) |  |   | 38,295  |       
|                                                                            |                  |   |         |        |              |   |              |      |               |   |              |       |   |   |          |   |  |   |         |       
|Other expense (income):                                                     |                  |   |         |        |              |   |              |      |               |   |              |       |   |   |          |   |  |   |         |       
|                                                                            | Interest expense |   |         | 19,085 |              |   |              | 4    |               |   |              | (7    | ) |   |          |  |  |   |         | 19,082 |  
|                                                                            | Other, net       |   |         | (2,001 | )            |   |              | (287 | )             |   |              | 1,883 |   |   |          |  |  |   |         | (405   | )
|                                                                            |                  |   |         |        |              |   |              |      |               |   |              |       |   |   |          |   |  |   |         |       
|                                                                            |                  |   | 17,084  |        |              |   | (283         | )    |               |   | 1,876        |       |   |   |         |   |  |   | 18,677  |       
|                                                                            |                  |   |         |        |              |   |              |      |               |   |              |       |   |   |          |   |  |   |         |       
|Income (loss) before income taxes and
equity in earnings from joint venture |                  |   | (6,959  | )      |              |   | 4,749        |      |               |   | 23,379       |       |   |   | (1,551   | ) |  |   | 19,618  |       
|Income tax expense (benefit)                                                |                  |   | (886    | )      |              |   |             |      |               |   | 3,668        |       |   |   |         |   |  |   | 2,782   |       
|Equity in earnings from joint venture                                       |                  |   | (1,697  | )      |              |   |             |      |               |   |             |       |   |   |         |   |  |   | (1,697  | )     
|                                                                            |                  |   |         |        |              |   |              |      |               |   |              |       |   |   |          |   |  |   |         |       
|Income (loss) before equity in income of
consolidated subsidiaries          |                  |   | (4,376  | )      |              |   | 4,749        |      |               |   | 19,711       |       |   |   | (1,551   | ) |  |   | 18,533  |       
|Equity in income of consolidated
subsidiaries                               |                  |   | 22,909  |        |              |   |             |      |               |   |             |       |   |   | (22,909  | ) |  |   |        |       
|                                                                            |                  |   |         |        |              |   |              |      |               |   |              |       |   |   |          |   |  |   |         |       
|Net income (loss)                                                           |                  | $ | 18,533  |        |              | $ | 4,749        |      |               | $ | 19,711       |       |   | $ | (24,460  | ) |  | $ | 18,533  |       
|                                                                            |                  |   |         |        |              |   |              |      |               |   |              |       |   |   |          |   |  |   |         |       

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THE HOLMES GROUP, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2002 (IN THOUSANDS)
(UNAUDITED)

|                                                                            |                            |   |         |         |              |   |              |        |               |   |              |      |   |   |          |   |  |   |         |         |  
|--------------------------------------------------------------------------- | -------------------------- | - | ------- | ------- | ------------ | - | ------------ | ------ | ------------- | - | ------------ | ---- | - | - | -------- | - |  | - | ------- | ------- | -
|                                                                            |                            |   |         |         |              |   | Guarantor    |        | Non-Guarantor |   |              |      |   |   |          |   | 
|                                                                            |                            |   | Parent  |         | Subsidiaries |   | Subsidiaries |        | Eliminations  |   | Consolidated
|                                                                            |                            |   |         |         |              |   |              |        |               |   |             
|Net sales                                                                   |                            | $ | 126,050 |         |              | $ | 223,229      |        |               | $ | 291,811      |      |   | $ | (238,287 | ) |  | $ | 402,803 |        
|Cost of sales                                                               |                            |   | 108,501 |         |              |   | 173,606      |        |               |   | 254,231      |      |   |   | (236,527 | ) |  |   | 299,811 |        
|                                                                            |                            |   |         |         |              |   |              |        |               |   |              |      |   |   |          |   |  |   |         |        
|Gross profit (loss)                                                         |                            |   | 17,549  |         |              |   | 49,623       |        |               |   | 37,580       |      |   |   | (1,760   | ) |  |   | 102,992 |        
|                                                                            |                            |   |         |         |              |   |              |        |               |   |              |      |   |   |          |   |  |   |         |        
|Selling and administrative expenses                                         |                            |   | 26,899  |         |              |   | 38,001       |        |               |   | 14,767       |      |   |   |          |   |  |   | 79,667  |        
|Restructuring costs                                                         |                            |   |        |         |              |   | 3,137        |        |               |   |             |      |   |   |          |   |  |   | 3,137   |        
|                                                                            |                            |   |         |         |              |   |              |        |               |   |              |      |   |   |          |   |  |   |         |        
|Operating profit (loss)                                                     |                            |   | (9,350  | )       |              |   | 8,485        |        |               |   | 22,813       |      |   |   | (1,760   | ) |  |   | 20,188  |        
|                                                                            |                            |   |         |         |              |   |              |        |               |   |              |      |   |   |          |   |  |   |         |        
|Other expense (income):                                                     |                            |   |         |         |              |   |              |        |               |   |              |      |   |   |          |   |  |   |         |        
|                                                                            | Interest expense           |   |         | 22,352  |              |   |              | 26     |               |   |              | 6    |   |   |          |  |  |   |         | 22,384  |  
|                                                                            | Gain on sale of business   |   |         |        |              |   |              | (9,088 | )             |   |              |     |   |   |          |  |  |   |         | (9,088  | )
|                                                                            | Gain on retirement of debt |   |         | (22,388 | )            |   |              |       |               |   |              |     |   |   |          |  |  |   |         | (22,388 | )
|                                                                            | Other, net                 |   |         | (361    | )            |   |              | 370    |               |   |              | (880 | ) |   |          |  |  |   |         | (871    | )
|                                                                            |                            |   |         |         |              |   |              |        |               |   |              |      |   |   |          |   |  |   |         |        
|                                                                            |                            |   | (397    | )       |              |   | (8,692       | )      |               |   | (874         | )    |   |   |         |   |  |   | (9,963  | )      
|                                                                            |                            |   |         |         |              |   |              |        |               |   |              |      |   |   |          |   |  |   |         |        
|Income (loss) before income taxes and
equity in earnings from joint venture |                            |   | (8,953  | )       |              |   | 17,177       |        |               |   | 23,687       |      |   |   | (1,760   | ) |  |   | 30,151  |        
|Income tax expense (benefit)                                                |                            |   | (2,583  | )       |              |   | (2,385       | )      |               |   | 4,714        |      |   |   |         |   |  |   | (254    | )      
|Equity in earnings from joint venture                                       |                            |   | (1,994  | )       |              |   |             |        |               |   |             |      |   |   |         |   |  |   | (1,994  | )      
|                                                                            |                            |   |         |         |              |   |              |        |               |   |              |      |   |   |          |   |  |   |         |        
|Income (loss) before equity in income of
consolidated subsidiaries          |                            |   | (4,376  | )       |              |   | 19,562       |        |               |   | 18,973       |      |   |   | (1,760   | ) |  |   | 32,399  |        
|Equity in income of consolidated subsidiaries                               |                            |   | (43,063 | )       |              |   |             |        |               |   |             |      |   |   | 43,063   |   |  |   |        |        
|                                                                            |                            |   |         |         |              |   |              |        |               |   |              |      |   |   |          |   |  |   |         |        
|Income (loss) before accounting charge                                      |                            |   | (47,439 | )       |              |   | 19,562       |        |               |   | 18,973       |      |   |   | 41,303   |   |  |   | 32,399  |        
|Cumulative effect of change in accounting principle                         |                            |   |        |         |              |   | (79,838      | )      |               |   |             |      |   |   |         |   |  |   | (79,838 | )      
|                                                                            |                            |   |         |         |              |   |              |        |               |   |              |      |   |   |          |   |  |   |         |        
|Net income (loss)                                                           |                            | $ | (47,439 | )       |              | $ | (60,276      | )      |               | $ | 18,973       |      |   | $ | 41,303   |   |  | $ | (47,439 | )      
|                                                                            |                            |   |         |         |              |   |              |        |               |   |              |      |   |   |          |   |  |   |         |        

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THE HOLMES GROUP, INC.
CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2003 (IN THOUSANDS)
(UNAUDITED)

|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |         |         |  
|---------------------------------------------------- | ------------------------------------------------------- | ---------------------------------------------------- | ------- | ------- | ------ | ------------ | ------ | ------------ | ------- | ------------- | ------ | ------- | ------- | - | ------ | ------- | ------- | -
|                                                     |                                                         |                                                      |         |         |        |              |        | Guarantor    |         | Non-Guarantor |        |         |         |  
|                                                     |                                                         |                                                      |         | Parent  |        | Subsidiaries |        | Subsidiaries |         | Consolidated 
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |              
|Net
cash provided by (used for) operating activities |                                                         | $                                                    | (49,691 | )       |        | $            | 26,749 |              |         | $             | 60,447 |         |         | $ | 37,505 |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|Cash flows from investing activities:                |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     | Proceeds from sale of business and assets held for sale |                                                      |         |        |        |              |        | 6,213        |         |               |        |        |         |   |        | 6,213   |        
|                                                     | Distribution of earnings from joint venture             |                                                      |         | 1,995   |        |              |        |             |         |               |        |        |         |   |        | 1,995   |        
|                                                     | Purchases of property and equipment                     |                                                      |         | (1,421  | )      |              |        |             |         |               |        | (6,770  | )       |   |        | (8,191  | )      
|                                                     | Cash received from joint venture partner                |                                                      |         | 293     |        |              |        |             |         |               |        |        |         |   |        | 293     |        
|                                                     |                                                         |                                                      |        |         |        |              |       |              |         |               |       |         |         |   |       |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     |                                                         | Net
cash provided by (used for) investing activities |         |         | 867    |              |        |              | 6,213   |               |        |         | (6,770  | ) |        |         | 310     |  
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|Cash flows from financing activities:                |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     | Repayments of credit facility, net of issuance costs    |                                                      |         | (42,436 | )      |              |        |             |         |               |        |        |         |   |        | (42,436 | )      
|                                                     | Other activity with Parent, net                         |                                                      |         | 90,232  |        |              |        | (32,474      | )       |               |        | (57,758 | )       |   |        |        |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     |                                                         | Net cash provided by (used for) financing activities |         |         | 47,796 |              |        |              | (32,474 | )             |        |         | (57,758 | ) |        |         | (42,436 | )
|                                                     | Effect of exchange rate changes on cash                 |                                                      |         |        |        |              |        |             |         |               |        | 673     |         |   |        | 673     |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|Net
increase (decrease) in cash and cash equivalents |                                                         |                                                      | (1,028  | )       |        |              | 488    |              |         |               | (3,408 | )       |         |   | (3,948 | )      
|Cash and cash equivalents, beginning of period       |                                                         |                                                      | 2,599   |         |        |              | (488   | )            |         |               | 6,315  |         |         |   | 8,426  |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|Cash and cash equivalents, end of period             |                                                         | $                                                    | 1,571   |         |        | $            |       |              |         | $             | 2,907  |         |         | $ | 4,478  |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        

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THE HOLMES GROUP, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2002 (IN THOUSANDS)
(UNAUDITED)

|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |         |         |  
|---------------------------------------------------- | ------------------------------------------------------- | ---------------------------------------------------- | ------- | ------- | ------ | ------------ | ------ | ------------ | ------- | ------------- | ------ | ------- | ------- | - | ------ | ------- | ------- | -
|                                                     |                                                         |                                                      |         |         |        |              |        | Guarantor    |         | Non-Guarantor |        |         |         |  
|                                                     |                                                         |                                                      |         | Parent  |        | Subsidiaries |        | Subsidiaries |         | Consolidated 
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |              
|Net
cash provided by (used for) operating activities |                                                         | $                                                    | (17,190 | )       |        | $            | 3,090  |              |         | $             | 42,010 |         |         | $ | 27,910 |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|Cash flows from investing activities:                |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     | Proceeds
from sale of business and assets held for sale |                                                      |         |        |        |              |        | 15,100       |         |               |        |        |         |   |        | 15,100  |        
|                                                     | Distribution of earnings from joint venture             |                                                      |         | 1,819   |        |              |        |             |         |               |        |        |         |   |        | 1,819   |        
|                                                     | Purchases of property and equipment                     |                                                      |         | (3,635  | )      |              |        | (744         | )       |               |        | (5,464  | )       |   |        | (9,843  | )      
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     |                                                         | Net
cash provided by (used for) investing activities |         |         | (1,816 | )            |        |              | 14,356  |               |        |         | (5,464  | ) |        |         | 7,076   |  
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|Cash flows from financing activities:                |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     | Repayments of credit facility, net of issuance costs    |                                                      |         | (27,129 | )      |              |        |             |         |               |        |        |         |   |        | (27,129 | )      
|                                                     | Other activity with Parent, net                         |                                                      |         | 57,990  |        |              |        | (19,247      | )       |               |        | (38,743 | )       |   |        |        |        
|                                                     | Redemption of long-term debt                            |                                                      |         | (11,550 | )      |              |        |             |         |               |        |        |         |   |        | (11,550 | )      
|                                                     | Debt issuance costs                                     |                                                      |         | (1,579  | )      |              |        |             |         |               |        |        |         |   |        | (1,579  | )      
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|                                                     |                                                         | Net cash provided by (used for) financing activities |         |         | 17,732 |              |        |              | (19,247 | )             |        |         | (38,743 | ) |        |         | (40,258 | )
|                                                     | Effect of exchange rate changes on cash                 |                                                      |         |        |        |              |        |             |         |               |        | (157    | )       |   |        | (157    | )      
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|Net
increase (decrease) in cash and cash equivalents |                                                         |                                                      | (1,274  | )       |        |              | (1,801 | )            |         |               | (2,354 | )       |         |   | (5,429 | )      
|Cash and cash equivalents, beginning of period       |                                                         |                                                      | 4,083   |         |        |              | 1,312  |              |         |               | 4,720  |         |         |   | 10,115 |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        
|Cash and cash equivalents, end of period             |                                                         | $                                                    | 2,809   |         |        | $            | (489   | )            |         | $             | 2,366  |         |         | $ | 4,686  |        
|                                                     |                                                         |                                                      |         |         |        |              |        |              |         |               |        |         |         |   |        |        

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##### Table of Contents



THE HOLMES GROUP, INC.




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

BACKGROUND

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

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

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

FORWARD-LOOKING STATEMENTS

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

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



| |  | Our degree of leverage and continued compliance with debt covenants.                                           
|- |  | ---------------------------------------------------------------------------------------------------------------
| 
| |  | Our ability to obtain adequate financing to replace the Revolving Credit Facility expiring in 2004.            
| 
| |  | Our dependence on major customers and key employees.                                                           
| 
| |  | Any significant decline in purchases by our larger customers or pressure from these customers to reduce prices.
| 
| |  | The bankruptcy or loss of any major retail customer or supplier.                                               
| 
| |  | Weakness in the U.S. retail market.                                                                            
| 
| |  | The financial condition of the retail industry.                                                                
| 
| |  | The infringement or loss of our rights with respect to patents and trademarks related to our products.         
| 
| |  | Fluctuations in cost and availability of raw materials and components.                                         
| 
| |  | Product recalls and product liability claims against us or other regulatory actions.                           

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THE HOLMES GROUP, INC.

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




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

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

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

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##### Table of Contents



THE HOLMES GROUP, INC.

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


RESULTS OF OPERATIONS

The following table presents our operating results for the three and nine
month periods ended September 30, 2003 and 2002 as a percentage of net sales:

|                                                     |  |                                  |       |                                 |  |      |       |      |  |  |       |    |  |  |       |   
|---------------------------------------------------- |  | -------------------------------- | ----- | ------------------------------- |  | ---- | ----- | ---- |  |  | ----- | -- |  |  | ----- | --
|                                                     |  | Three Months Ended September 30, |       | Nine Months Ended September 30,
|                                                     |  |                                  |       |                                
|                                                     |  | 2003                             |       | 2002                            |  | 2003 |       | 2002
|                                                     |  |                                  |       |                                 |  |      |       |     
|Net sales                                            |  |                                  | 100.0 | %                               |  |      | 100.0 | %    |  |  | 100.0 | %  |  |  | 100.0 | % 
|Cost of sales                                        |  |                                  | 68.2  | %                               |  |      | 72.5  | %    |  |  | 70.2  | %  |  |  | 74.4  | % 
|                                                     |  |                                  |       |                                 |  |      |       |      |  |  |       |    |  |  |       |   
|Gross profit                                         |  |                                  | 31.8  | %                               |  |      | 27.5  | %    |  |  | 29.8  | %  |  |  | 25.6  | % 
|Selling and administrative expenses                  |  |                                  | 15.6  | %                               |  |      | 18.0  | %    |  |  | 20.2  | %  |  |  | 19.8  | % 
|                                                     |  |                                  |       |                                 |  |      |       |      |  |  |       |    |  |  |       |   
|Operating
income before restructuring costs          |  |                                  | 16.2  | %                               |  |      | 9.5   | %    |  |  | 9.6   | %  |  |  | 5.8   | % 
|Restructuring costs (income)                         |  |                                  | (0.1  | )%                              |  |      | 0.9   | %    |  |  | 0.4   | %  |  |  | 0.8   | % 
|                                                     |  |                                  |       |                                 |  |      |       |      |  |  |       |    |  |  |       |   
|Operating
income                                     |  |                                  | 16.3  | %                               |  |      | 8.6   | %    |  |  | 9.2   | %  |  |  | 5.0   | % 
|Interest expense                                     |  |                                  | 3.4   | %                               |  |      | 4.8   | %    |  |  | 4.6   | %  |  |  | 5.6   | % 
|Other expense (income), net                          |  |                                  | 0.4   | %                               |  |      | (0.4  | )%   |  |  | (0.1  | )% |  |  | (0.2  | )%
|Gain on early retirement of debt                     |  |                                  |      |                                 |  |      |      |      |  |  |      |    |  |  | (5.6  | )%
|Gain on sale of business                             |  |                                  |      |                                 |  |      |      |      |  |  |      |    |  |  | (2.2  | )%
|Income tax expense (benefit)                         |  |                                  | 0.7   | %                               |  |      | 2.0   | %    |  |  | 0.6   | %  |  |  | (0.1  | )%
|Equity in earnings from joint venture                |  |                                  | (0.4  | )%                              |  |      | (0.4  | )%   |  |  | (0.4  | )% |  |  | (0.5  | )%
|                                                     |  |                                  |       |                                 |  |      |       |      |  |  |       |    |  |  |       |   
|Income before cumulative effect of accounting change |  |                                  | 12.2  | %                               |  |      | 2.6   | %    |  |  | 4.5   | %  |  |  | 8.0   | % 
|                                                     |  |                                  |       |                                 |  |      |       |      |  |  |       |    |  |  |       |   

Comparison of Three Months Ended September 30, 2003 and September 30, 2002

Net Sales

During the third quarter of 2003, net sales increased $29.8 million or 19.4%
from the sales level in the comparable period of fiscal 2002. Both the kitchen
appliance and home environment businesses contributed to the higher revenues as
2003 sales in these categories were above last year by 35% and 9%,
respectively, due to an improving retail selling environment in the third
quarter of 2003 and favorable trends related to the sell-in of seasonal products for the
Fall/Winter period. International sales of home environment and kitchen
appliances in the third quarter of 2003 increased $1.3 million or 8% from the
2002 level due to favorable trends in Canada and Europe. Sales of motors to
the Companys joint venture with General Electric also improved,
increasing $1.1 million or 24% above the third quarter of 2002.

Gross Profit

Gross profit during the third quarter of 2003 increased $16.1 million or 38.1%
above the 2002 level. The Companys gross profit percent improved 4.3
percentage points during the third quarter to 31.8% in 2003 as compared to
27.5% in 2002. The improved profitability in the third quarter of 2003 was
driven by higher margins in the kitchen appliance business and also benefited from the transfer of
production to lower cost resources in the Far East. The Company completed the
shutdown of its domestic manufacturing operations in January 2003. Unfavorable
manufacturing variances related to the closed facilities totaled $0.8 million
or 0.5% of net sales in the 2002 third quarter. Gross profit in the third
quarter of 2003 also benefited from the recovery of $0.9 million
from a settlement with a
supplier of faulty heater components which impacted product quality during
fiscal 1999 and 2000.

Selling and Administrative Expenses

In the third quarter of 2003, selling and administrative expenses increased
$0.9 million or 3.4% above the comparable period in 2002. This rate of expense
increase was well below the revenue growth rate of 19.4% in the third quarter
of 2003. As a percent of net sales, operating expenses represented 15.6% of
sales in the third quarter of 2003 compared to 18% of sales in 2002. Operating
expenses in 2003 included higher freight costs and increased spending related
to new product development initiatives. During the third quarter of 2003,
legal fees were also higher, increasing $1.1 million from the 2002 spending
level. Despite the higher sales level in the third quarter of 2003,
warehousing costs decreased

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##### Table of Contents



THE HOLMES GROUP, INC.

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


$0.6 million as the Company closed a facility in Massachusetts and transitioned its Midwest distribution operations
to a new facility in California. Bad debt expense was also lower in the 2003
quarterly period as expenses in the third quarter of 2002 included a $700,000
provision related to the pre-bankruptcy receivables of Kmart.

Restructuring Costs

During the third quarter of 2003, operating income was increased due to a
favorable restructuring accrual adjustment of $0.2 million as facility exit
costs were lower than anticipated due to the prompt sale of two closed
facilities. In the third quarter of 2002, the Company recorded $1.4 million of
restructuring costs related to the closure of its distribution center in
Sedalia, Missouri.

Interest Expense and Other Expense
(Income)

During the third quarter of 2003, interest expense decreased $1.1 million from
the comparable period of 2002 due to reduced borrowing levels and lower
interest rates. Other expense decreased earnings by $0.8 million in
the third quarter of 2003 due primarily to factoring expenses related to Kmart
receivables and foreign exchange losses related to international operations.

Income Taxes

During the third quarter of 2003, the Company recorded income tax expense of
$1.3 million compared to $3.2 million in 2002. The tax expense was primarily
related to the taxable profits of foreign operations.

Equity in Earnings from Joint Venture

The Companys share of the earnings of its joint venture with General Electric
totaled $0.7 million in the third quarter of 2003, slightly above the 2002
earnings level.

Net Income and EBITDA

The Companys net income of $22.3 million in the third quarter of 2003 was
significantly above the net income of $4 million in the 2002 third quarter due
to the increased level of net sales, improved gross profit performance and reduced
interest expense.

The table below includes non-GAAP financial information to provide a better
understanding of the Companys results and the trends from which to measure
performance. EBITDA, which includes our share of our joint ventures earnings,
represents income before interest expense, income tax expense (benefit) and
depreciation and amortization. EBITDA is presented because it is a widely
accepted measure to provide information regarding a companys ability to
service and/or incur debt. EBITDA should not be considered in isolation or as
a substitute for net income, cash flows from operations or other income or cash
flow data prepared in accordance with generally accepted accounting principles
(GAAP), or as a measure of a companys profitability or liquidity.
Additionally, our calculation of EBITDA may differ from that performed by other
companies, and thus the amounts disclosed may not be directly comparable to
those disclosed by other companies. A reconciliation between operating income
presented in accordance with GAAP in the consolidated statements of operations
and EBITDA, along with the restructuring charges and certain significant items
which impacted results for the three months ended September 30, 2003 and 2002
is as follows:

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##### Table of Contents



THE HOLMES GROUP, INC.

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


|                                                                                 |                                                                |   |                    |     |                   |   |        |        |  
|-------------------------------------------------------------------------------- | -------------------------------------------------------------- | - | ------------------ | --- | ----------------- | - | ------ | ------ | -
|                                                                                 |                                                                |   | Three months ended
|                                                                                 |                                                                |   |                   
|                                                                                 |                                                                |   | September 30,2003  |     | September 30,2002
|                                                                                 |                                                                |   |                    |     |                  
|Operating Income  GAAP                                                          |                                                                | $ | 29,929             |     |                   | $ | 13,253 |       
|Depreciation and amortization, net                                               |                                                                |   | 2,364              |     |                   |   | 3,532  |       
|Other income (expense)                                                           |                                                                |   | (791               | )   |                   |   | 591    |       
|Equity in earnings from joint venture                                            |                                                                |   | 698                |     |                   |   | 653    |       
|                                                                                 |                                                                |   |                    |     |                   |   |        |       
|EBITDA                                                                           |                                                                | $ | 32,200             |     |                   | $ | 18,029 |       
|                                                                                 |                                                                |   |                    |     |                   |   |        |       
|Restructuring and certain significant income (expense) items
included in EBITDA: |                                                                |   |                    |     |                   |   |        |       
|                                                                                 | Restructuring income (costs), net                              |   |                    | 185 |                   |   |        | (1,350 | )
|                                                                                 | Cost recovery from former supplier
of faulty heater components |   |                    | 950 |                   |   |        |       |  
|                                                                                 | Kmart bad debt provision                                       |   |                    |    |                   |   |        | (700   | )
|                                                                                 | Credit Facility amendment costs                                |   |                    | (18 | )                 |   |        | 17     |  
|                                                                                 |                                                                |   |                    |     |                   |   |        |       
|Total                                                                            |                                                                | $ | 1,117              |     |                   | $ | (2,033 | )     
|                                                                                 |                                                                |   |                    |     |                   |   |        |       

Comparison of Nine Month Periods Ended September 30, 2003 and September 30,
2002

Net Sales

During the first nine months of 2003, net sales increased $11.6 million or 2.9%
above the sales level in the comparable period of fiscal 2002. The kitchen
appliance product line posted a 6% sales increase as the higher sales level in
the third quarter of 2003 offset the generally weak retail selling environment
in the first half of 2003. Sales of home environment products in the first
nine months of 2003 were below the sales level in the comparable period of
2002. A decline in the fan category due to unseasonably cool weather, the de-emphasis of lower margin product lines and
other competitive conditions offset the favorable sell-in of the Companys heater and
humidifier product lines. International sales in the first nine months of 2003
increased $9 million or 22% from the 2002 level due to favorable trends in
Canada and Europe. Currency exchange rates had a favorable impact on
international sales accounting for approximately 3% of the revenue increase in
the nine-month period. Sales of motors to the Companys joint venture with
General Electric were also higher in 2003, increasing $2.9 million or 24% above
the sales level in the first nine months of 2002.

Gross Profit

Gross profit in the first nine months of 2003 increased $20.6 million or 20%
from the gross profit earned in the first nine months of 2002. The Companys
gross profit percent improved 4.2 percentage points during the first nine
months to 29.8% in 2003 as compared to 25.6% in 2002. The profitability of the
kitchen appliance business improved in the first nine months of 2003 as the
transfer of production to the Far East favorably impacted manufacturing costs.
The profitability of the home environment business in the first nine months of
2003 was slightly below 2002 levels. The closure of the Companys domestic
manufacturing facilities in January 2003 contributed to the improvement in
gross profit percent during 2003 as unfavorable manufacturing variances totaled
$1.1 million or 0.3% of net sales in the first nine months of 2003 compared to
variances of $3.5 million or 0.9% of net sales in 2002. Gross profit in 2003
was also favorably impacted by the cost recovery of $0.9 million from the
settlement of a claim against a former supplier.

Selling and Administrative Expenses

Selling and administrative expenses in the first nine months of 2003 increased
$4.2 million or 5.3% from the operating expenses in the comparable period of
2002. As a percentage of net sales, operating expenses represented 20.2% of sales
in the first nine months of 2003 compared to 19.8% in 2002. Expenses in 2003
included $1.2 million related to increased spending on new product development
initiatives and $1.6 million of additional freight costs. In addition, legal
expenses in the 2003 nine-month period were $2.3 million higher
than in 2002.
Expenses in 2003 also included a non-cash impairment charge of $1.1 million as
the Company re-evaluated its plan to use available trade credits to partially
fund consumer advertising media costs. Operating expense levels in the first
nine months of 2003 were favorably impacted by a bad debt recovery of $0.9
million related to the Kmart bankruptcy, while 2002 expenses included an
additional Kmart bad debt provision of $0.7 million.

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##### Table of Contents



THE HOLMES GROUP, INC.

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


Restructuring Costs

In the first nine months of 2003, restructuring costs totaled $1.4 million, 55%
below the restructuring charges of $3.1 million in the 2002 period. The
restructuring costs in 2003 included $1.3 million of non-cash settlement
charges related to the Companys pension plan as a result of the facility
closings in 2002.

Interest Expense and Other Expense
(Income)

During the first nine months of 2003, interest expense was $3.3 million lower
than in the comparable period of 2002 due to reduced borrowings, lower interest
rates and the repurchase of $36.2 million of the Companys Senior Subordinated
Notes in March 2002. Other income in 2003 was significantly lower than the
first nine months of 2002 as last years amount included a $9.1 million gain
on the sale of the Companys Pollenex©
business in January 2002 and a gain of
$22.4 million related to the repurchase of Senior Subordinated Notes. In 2003,
other expense included $0.4 million of factoring expenses related to
Kmart receivables.

Income Taxes

During the first nine months of 2003, the Company recorded income tax expense
of $2.8 million compared to tax benefits of $0.3 million in 2002. The 2003 tax
expense was primarily related to the taxable profits of foreign operations.
The 2002 tax benefit included a $5.1 million benefit associated with additional
net operating loss carrybacks, which were made possible by 2002 tax law changes
in the United States, offset by tax provisions related to foreign operations.

Equity in Earnings from Joint Venture

The Companys share of the earnings of its joint venture with General Electric
totaled $1.7 million in the first nine months of 2003, down $0.3 million or
14.9% from the 2002 earnings level.

Cumulative Effect of Accounting Change

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

Net Income (Loss) and EBITDA

Net income in the first nine months of 2003 totaled $18.5 million compared to a
net loss of $47.4 million in the comparable period of 2002. The 2002 loss
included the goodwill impairment charge of $79.8 million and gains of $31.5
million related to the Pollenex© and subordinated debt transactions described
above. The improved results in 2003 reflected the Companys higher sales
level, improved gross profit performance and reduced interest expense.

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THE HOLMES GROUP, INC.

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


The table below includes non-GAAP financial information to provide a better
understanding of the Companys results and the trends from which to measure
performance. A
reconciliation between
operating income presented in accordance with GAAP in the consolidated
statements of operations and EBITDA, along with the restructuring charges and
certain significant items for the nine months ended September 30, 2003 and 2002
is as follows:

|                                                                                 |                                                                |   |                   |        |                   |   |        |        |  
|-------------------------------------------------------------------------------- | -------------------------------------------------------------- | - | ----------------- | ------ | ----------------- | - | ------ | ------ | -
|                                                                                 |                                                                |   | Nine months ended
|                                                                                 |                                                                |   |                  
|                                                                                 |                                                                |   | September 30,2003 |        | September 30,2002
|                                                                                 |                                                                |   |                   |        |                  
|Operating Income  GAAP                                                          |                                                                | $ | 38,295            |        |                   | $ | 20,188 |       
|Depreciation and amortization, net                                               |                                                                |   | 7,291             |        |                   |   | 9,516  |       
|Other income                                                                     |                                                                |   | 405               |        |                   |   | 32,347 |       
|Equity in earnings from joint venture                                            |                                                                |   | 1,697             |        |                   |   | 1,994  |       
|                                                                                 |                                                                |   |                   |        |                   |   |        |       
|EBITDA                                                                           |                                                                | $ | 47,688            |        |                   | $ | 64,045 |       
|                                                                                 |                                                                |   |                   |        |                   |   |        |       
|Restructuring and certain significant income (expense) items
included in EBITDA: |                                                                |   |                   |        |                   |   |        |       
|                                                                                 | Pension plan settlement charge                                 |   |                   | (1,335 | )                 |   |        |       |  
|                                                                                 | Other restructuring costs, net                                 |   |                   | (89    | )                 |   |        | (3,137 | )
|                                                                                 | Gain of sale of business                                       |   |                   |       |                   |   |        | 9,088  |  
|                                                                                 | Gain on retirement of debt                                     |   |                   |       |                   |   |        | 22,388 |  
|                                                                                 | Trade credit asset impairment                                  |   |                   | (1,122 | )                 |   |        |       |  
|                                                                                 | Kmart bad debt recovery (provision)                            |   |                   | 904    |                   |   |        | (700   | )
|                                                                                 | Cost recovery from former supplier
of faulty heater components |   |                   | 950    |                   |   |        |       |  
|                                                                                 | Credit Facility amendment costs                                |   |                   | (36    | )                 |   |        | (362   | )
|                                                                                 |                                                                |   |                   |        |                   |   |        |       
|                                                                                 |                                                                | $ | (728              | )      |                   | $ | 27,277 |       
|                                                                                 |                                                                |   |                   |        |                   |   |        |       

LIQUIDITY AND CAPITAL RESOURCES

Analysis of Cash Flows

Following our recapitalization transaction in November 1997 and the acquisition
of the Rival business in February 1999, we have funded our liquidity
requirements with cash flows from operations and borrowings under our Credit
Facility. Our primary liquidity requirements are for working capital, to fund
capital expenditures and to service our indebtedness. The Companys $40 million Revolving Credit Loan B, which is supported by the
guarantee of Berkshire Partners, the Companys majority shareholder, matures on
July 1, 2004. While the maturity date of the Companys $131 million Revolving
Credit Loan A is February 5, 2005, the availability of the
Revolving Credit Loan A commitment will terminate on
July 1, 2004 unless otherwise approved by a majority of the
lenders. As a result of the maturity dates and the termination
provisions, the Company is obligated to repay all amounts
outstanding under the Revolving Credit Facility on July 1, 2004.
Accordingly, the current portion of the Credit Facility in the Companys
consolidated balance sheet as of September 30, 2003 includes $53.4 million representing the outstanding
amounts with respect to Revolving Credit Loan A ($40.6 million) and Revolving
Credit Loan B ($12.8 million). The Companys existing cash
resources, cash flow from operations and borrowings under the Credit
Facility will be sufficient to meet our liquidity needs through
June 30, 2004. We are in the process of refinancing our Credit
Facility and anticipate concluding these negotiations prior to
July 1, 2004.

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THE HOLMES GROUP, INC.

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


The Companys cash and cash equivalents decreased to $4.5 million at September
30, 2003, from $8.4 million at December 31, 2002. Cash provided by operations
for the nine months ended September 30, 2003 was
$37.5 million, an increase of $9.6 million on 34.4% from the
operating cash flow of $27.9 million in the comparable period
of 2002. For the nine months ended September 30, 2003,
operating earnings, adjusted for non-cash items, improved to $33.5 million, a 64.2% increase from the adjusted operating earnings of $20.4 million in the comparable
period of 2002. Changes in other operating assets and liabilities provided $4
million of cash in the nine months of 2003 compared to $7.5 million in 2002.
Accounts receivable balances increased from the year ago levels, up $14.4
million or 13.4% from the accounts receivable amount at September 30, 2002 due
to the 19.4% sales increase in the third quarter of 2003. Days sales
outstanding (DSO) at September 30, 2003, stood at 61 days, a 5% improvement
from the DSO statistic in September 2002. Inventory levels at September 30,
2003 totaled $135.3 million, a decrease of $3.5 million or 2.5% over the same
period of 2002. Accounts payable at September 30, 2003 increased $15 million
from the year ago levels due to the timing of purchases and more favorable
payment terms from foreign suppliers. During the first nine months of
2003, the Company also expended $4.5 million of cash related to severance and other
facility exit costs which were accrued as restructuring charges at December 31,
2002.

Cash provided by investing activities for the nine months ended September 30,
2003 was $0.3 million compared to $7.1 million in 2002. During the second
quarter of 2003, the Company received cash proceeds of $6.2 million from the
sale of real estate and equipment that was formerly used in the Companys
domestic manufacturing operations which were closed in January 2003. The
Company used $4.8 million of these cash proceeds to reduce outstanding
borrowings under the Credit Facilitys term loans. The 2002 cash
flow amount includes
$15.1 million in proceeds received in connection with the sale
of the Pollenex®
business in January 2002. The Company invested $8.2 million in capital
expenditures for property and equipment during 2003 compared to capital
expenditures of $9.8 million in the first nine months of 2002. The Company
expects to spend approximately $15 million on capital expenditures in 2003,
primarily related to the expansion of our China manufacturing facilities, the
implementation of computer systems and on-going tooling costs to support
product development needs.

Cash used for financing activities for the nine months ended September 30, 2003
and 2002 was $42.4 million and $40.3 million, respectively,
reflecting repayments on the Revolving Credit
Facility. In the 2002 first nine month
period, cash used for financing activities included the repurchase of a portion of the outstanding Senior Subordinated
Notes and debt issuance costs associated with the March 2002 Credit Facility
amendment.

Financing Arrangements

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

During the first nine months of 2003, the weighted average borrowings
outstanding under the Revolving Credit Facility totaled $69.6 million, 13%
below the average outstanding borrowings of $80.1 million in the comparable
period of 2002. As of September 30, 2003, our availability under the Credit
Facility was $100.1 million, net of outstanding letters of credit totaling $9.4
million. The Credit Facility bears interest at variable rates based on either
the prime rate or eurodollar rate, at our option, plus a margin which, in the
case of the Term Loan A and the Revolving Credit Facility, varies depending
upon certain financial ratios. The Credit Facility, and the guarantees thereof
by our domestic subsidiaries, are secured by substantially all of our domestic
and certain foreign assets. The Credit Facility is cross-defaulted to the Notes
Indentures.

In conjunction with the Fifth Amendment in March 2002, the Company repurchased
from two Berkshire Partners investment funds an aggregate principal amount of
approximately $36.2 million of the Senior Subordinated Notes. The purchase
price of the Notes, representing Berkshire Partners cost, was $11.5 million
plus accrued interest, which was funded with proceeds of the Revolving Credit
Loan B. The Notes repurchased were retired and cancelled. The Company may
consider repurchases of additional Notes in the future, and we may utilize the
proceeds of the Credit Facility for this purpose. As of September 30, 2003,
$99.6 million of Senior Subordinated Notes were outstanding. Total debt at
September 30, 2003 amounted to $232.8 million, down $57.5 million or 19.8%
below the level of debt outstanding at September 30, 2002. Over the past two
years, the Company has repaid or retired $105.8 million of debt, reducing total
debt by 31% from the $338.6 million of debt outstanding at September 30, 2001.

29



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##### Table of Contents



THE HOLMES GROUP, INC.

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


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

In April 2003, the Company entered into an agreement with a financial
institution covering the sale of accounts receivable from certain customers,
including Kmart Corporation. These arrangements are strictly for the purpose
of insuring selected receivables. The Company pays fees based upon a
percentage of the gross amount of each receivable purchased by the financial
institution. In certain circumstances, the Company is obligated to repurchase
the accounts receivable from the
financial institution if the balance remains unpaid for a period of 60 days
beyond the due date of the receivable. However, if within 90 days of the
repurchase transaction the customer files a voluntary or involuntary bankruptcy
petition or publicly declares a general moratorium on payment of trade vendor
obligations, the financial institution is required to repurchase the unpaid
receivable from the Company. At September 30, 2003, the financial institution
held $1.6 million of accounts receivable which had been purchased for cash from
the Company.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At September 30, 2003, the carrying value of our debt totaled $232.8 million.
The fair value approximated $225 million. This debt includes amounts at both
fixed and variable interest rates. For fixed rate debt, interest rate changes
affect the fair market value, but do not impact earnings or cash flows.
Conversely, for variable rate debt, interest rate changes generally do not
affect the fair market value, but do impact earnings and cash flows, assuming
other factors are held constant.

At September 30, 2003, the Company had fixed rate debt of $99.6 million and
variable rate debt of $133.2 million. Assuming a constant debt level, a one
percentage point decrease in interest rates would increase the unrealized fair
market value of fixed rate debt by approximately $4.7 million. Based on the
amounts of variable rate debt outstanding at September 30, 2003, the earnings
and cash flows impact for the next year resulting from a one percentage point
increase in interest rates would be approximately $1.3 million, holding other
variables constant.




ITEM 4. CONTROLS AND PROCEDURES



| | (a) |  | Evaluation of Disclosure
Controls and Procedures.
| | --- |  | -------------------------------------------------

Our
management, with the participation of our Chief Executive Officer, or
CEO, and Chief Financial Officer, or CFO, evaluated the effectiveness
of our disclosure controls and procedures (as defined in Rules
13a-15(c) and 15d-15(e) under the Securities Exchange Act) as of
September 30, 2003. In designing and evaluating our disclosure
controls and procedures, our management recognized that any controls
and procedures, no matter how well designed and operated, can provide
only reasonable, and not absolute, assurance of achieving their
objectives, and our management necessarily applied its judgment in
evaluating the cost-benefit relationship of possible controls and
procedures. Based on this evaluation, our CEO and CFO concluded that,
as of September 30, 2003, our disclosure controls and procedures
were (1) designed to ensure that material information relating
to us, including our consolidated subsidiaries, is made known to our
CEO and CFO by others within those entities, particularly during the
period in which this report was being prepared and
(2) effective, in that they provide reasonable assurance that
information required to be disclosed by us in the reports that we
file or submit under the Securities Exchange Act is recorded,
processed, summarized and reported within the time periods specified
in the Securities and Exchange Commissions rules and forms.



| | (b) |  | Changes in Internal Controls.
| | --- |  | -----------------------------

No
change in our internal control over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act)
occurred during the fiscal quarter ended September 30, 2003 that
has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

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##### Table of Contents



THE HOLMES GROUP, INC.




PART II. OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

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

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.




ITEM 5. OTHER INFORMATION

Investor Conference Call

We will hold a telephone conference call on Monday, November 17, 2003 at 10
a.m., Eastern Time, in order for investors and other interested stakeholders to
hear managements views on our results of operations during the first nine
months of 2003. If you are interested in accessing the call, please fax the
following information to Kay Ford, Executive Assistant, at
508-422-1676:



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

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a.        Exhibits:

|     |  |                                                                                                   
|---- |  | --------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|     |  |                                                                                                   
|31.2 |  | Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002

b.        Reports on Form 8-K:

Not applicable

31



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##### Table of Contents



THE HOLMES GROUP, INC.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1034, the
Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Registrant

|                  |  |                                            
|----------------- |  | -------------------------------------------
|November 10, 2003 |  | By: /s/ Peter J. Martin                    
|                  |  |                                            
|                  |  |                                            
|                  |  | Peter J. Martin, President and             
|                  |  | Chief Executive Officer                    
|                  |  | (Principal Executive Officer)              
|                  |  |                                            
|November 10, 2003 |  | By: /s/ John M. Kelliher                   
|                  |  |                                            
|                  |  |                                            
|                  |  | John M. Kelliher, Senior Vice President and
|                  |  | Chief Financial Officer                    
|                  |  | (Principal Financial and                   
|                  |  | Accounting Officer)                        

32