<Page>
                                                                    EXHIBIT 25.0

                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
U.S. Industries, Inc.

    We have audited the consolidated balance sheets of USI Atlantic Corp. (the
"Company") as of September 30, 2001 and 2000, and the related consolidated
statements of operations, cash flows and changes in stockholder's equity for
each of the three years in the period ended September 30, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company at
September 30, 2001 and 2000, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended September 30,
2001, in conformity with accounting principles generally accepted in the United
States.

    The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As more fully described in Note 2, the
Company is a wholly owned subsidiary of U.S. Industries, Inc. and subsidiaries
("USI"), as well as a co-borrower and co-obligor and a guarantor under certain
debt instruments of USI. USI is required under its restructured credit
facilities to make cumulative reductions of its senior debt of $450 million by
June 30, 2002. USI needs to generate sufficient funds to make such reductions
or, absent such reductions, restructure or refinance its debt. The Company's
capital stock and substantially all of its assets have been pledged as
collateral under USI's restructured credit facilities and senior notes. These
conditions raise substantial doubt about both USI's and the Company's ability to
continue as a going concern. USI's management's plans in regard to these matters
are also described in Note 2. The financial statements do not include any
adjustments that may result from the outcome of this uncertainty.

                                          /s/ Ernst & Young LLP

New York, New York
January 14, 2002
<Page>
                               USI ATLANTIC CORP.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                 (IN MILLIONS)

<Table>
<Caption>
                                                                FOR THE FISCAL YEARS ENDED
                                                                      SEPTEMBER 30,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net sales...................................................  $ 683.6    $1,215.2   $1,521.3
Operating costs and expenses:
  Cost of products sold.....................................    485.5       871.3    1,108.3
  Selling, general and administrative expenses..............    155.0       214.5      246.2
Management fee expense, net.................................     13.1        10.8       11.4
Impairment and restructuring charges........................     60.8          --        0.7
                                                              -------    --------   --------
Operating (loss) income.....................................    (30.8)      118.6      154.7

Affiliated interest income..................................     44.5         4.2        0.5
Affiliated interest expense.................................     (2.7)       (0.9)     (33.3)
Interest income.............................................      1.5         3.1        3.1
Interest expense............................................    (44.0)      (43.0)     (23.2)
Gain on the sale of businesses..............................       --        42.1         --
Equity earnings in investees................................     (1.4)        3.1         --
Minority interest income (expense)..........................     61.6       (11.3)     (36.7)
Other (expense) income, net.................................    (22.9)       (4.2)      11.1
                                                              -------    --------   --------
Income before income taxes, discontinued operations and
  cumulative effect of accounting change....................      5.8       111.7       76.2

Provision for income taxes..................................      8.6        48.5       37.5
                                                              -------    --------   --------
(Loss) income from continuing operations....................     (2.8)       63.2       38.7
Discontinued operations:
  (Loss) income from operations (net of income tax
    provisions of $37.9, $2.8 and $33.8, respectively)......    (45.7)       (1.6)      51.9
  Loss on disposals (net of tax benefits of $10.2 and $10.0
    in 2001 and 1999, respectively).........................   (194.1)         --      (12.1)
                                                              -------    --------   --------
(Loss) income from discontinued operations..................   (239.8)       (1.6)      39.8
Cumulative effect of accounting change, net of taxes of $0.8
  in 2001...................................................     (0.7)         --         --
                                                              -------    --------   --------
Net (loss) income...........................................  $(243.3)   $   61.6   $   78.5
                                                              =======    ========   ========
</Table>

                            See accompanying notes.

                                      F-2
<Page>
                               USI ATLANTIC CORP.

                          CONSOLIDATED BALANCE SHEETS

                        (IN MILLIONS EXCEPT SHARE DATA)

<Table>
<Caption>
                                                               AT SEPTEMBER 30,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
ASSETS
  Cash and cash equivalents.................................  $   51.8   $   18.1
  Trade receivables, net of allowances of $5.7 in 2001 and
    $2.8 in 2000............................................     158.7      178.6
  Inventories, net..........................................     117.0       95.1
  Deferred income taxes.....................................      24.7       18.6
  Net assets held for sale..................................     455.5      383.5
  Other current assets......................................      10.7       12.4
                                                              --------   --------
    Total current assets....................................     818.4      706.3
Property, plant and equipment, net..........................      99.5       74.7
Net assets held for sale....................................        --      417.8
Other assets................................................      26.1       26.2
Goodwill and other intangibles, net.........................     267.5      269.2
Notes receivable from affiliates, net.......................     681.7      709.3
                                                              --------   --------
Total assets................................................  $1,893.2   $2,203.5
                                                              ========   ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
  Notes payable.............................................  $   11.9   $   14.0
  Current maturities of long-term debt......................     428.0         --
  Trade accounts payable....................................      68.2       65.7
  Accrued expenses and other current liabilities............      68.4       63.4
  Notes payable to affiliates...............................      29.6       26.6
                                                              --------   --------
    Total current liabilities...............................     606.1      169.7
Long-term debt..............................................     280.1      542.5
Minority interest...........................................     133.4      195.0
Deferred income taxes.......................................      27.3       25.2
Other liabilities...........................................      38.6      115.5
Due to affiliates...........................................     160.0      283.0
                                                              --------   --------
    Total liabilities.......................................   1,245.5    1,330.9

Commitments and contingencies

Stockholder's equity:
  Preferred stock ($.01 par value), 1,000 shares authorized;
    no shares issued and outstanding........................        --         --
  Common stock ($.01 par value), 1,000 shares authorized;
    100 shares issued and outstanding.......................        --         --
  Paid-in capital...........................................     469.1      469.1
  Retained earnings.........................................     203.8      447.1
  Accumulated other comprehensive loss......................     (25.2)     (43.6)
                                                              --------   --------
Total stockholder's equity..................................     647.7      872.6
                                                              --------   --------
Total liabilities and stockholder's equity..................  $1,893.2   $2,203.5
                                                              ========   ========
</Table>

                             See accompanying notes

                                      F-3
<Page>
                               USI ATLANTIC CORP.

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

          FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

                                 (IN MILLIONS)

<Table>
<Caption>
                                                                               ACCUMULATED
                                                                                  OTHER
                                                                              COMPREHENSIVE
                                             COMMON     PAID-IN    RETAINED      INCOME       COMPREHENSIVE
                                              STOCK     CAPITAL    EARNINGS      (LOSS)       INCOME (LOSS)    TOTAL
                                            ---------   --------   --------   -------------   -------------   --------
<S>                                         <C>         <C>        <C>        <C>             <C>             <C>
Balance at September 30, 1998.............  $     --     $469.1    $ 307.0       $(11.2)         $    --      $ 764.9
Net income................................                            78.5                          78.5         78.5

Translation adjustment....................                                        (16.4)           (16.4)       (16.4)
Minimum pension liability adjustment......                                          1.1              1.1          1.1
                                                                                                 -------
Other comprehensive income................                                                         (15.3)
                                                                                                 -------
Total comprehensive income................                                                       $  63.2
                                            ---------    ------    -------       ------          =======      -------
Balance at September 30, 1999.............        --      469.1      385.5        (26.5)                        828.1
                                            ---------    ------    -------       ------                       -------
Net income................................                         $  61.6                          61.6         61.6
Sale of Diversified businesses:
  Translation adjustment..................                                          5.2              5.2          5.2
  Minimum pension liability adjustment....                                          1.7              1.7          1.7
Translation adjustment....................                                        (24.5)           (24.5)       (24.5)
Minimum pension liability adjustment......                                          0.5              0.5          0.5
                                                                                                 -------
Other comprehensive income................                                                         (17.1)
                                                                                                 -------
Total comprehensive loss..................                                                       $  44.5
                                            ---------    ------    -------       ------          =======      -------
Balance at September 30, 2000.............        --      469.1      447.1        (43.6)                        872.6
                                            ---------    ------    -------       ------                       -------
Net loss..................................                          (243.3)                      $(243.3)      (243.3)
Discontinued Operations:
  Translation adjustment..................                                         37.4             37.4         37.4
  Minimum pension liability adjustment....                                          7.2              7.2          7.2
Translation adjustment....................                                        (18.9)           (18.9)       (18.9)
Minimum pension liability adjustment......                                         (5.9)            (5.9)        (5.9)
Fair value of derivatives adjustment......                                         (1.4)            (1.4)        (1.4)
                                                                                                 -------
Other comprehensive income................                                                          18.4
                                                                                                 -------
Total comprehensive loss..................                                                       $(224.9)
                                            ---------    ------    -------       ------          =======      -------
Balance at September 30, 2001.............  $     --     $469.1    $ 203.8       $(25.2)                      $ 647.7
                                            =========    ======    =======       ======                       =======
</Table>

                            See accompanying notes.

                                      F-4
<Page>
                               USI ATLANTIC CORP.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN MILLIONS)

<Table>
<Caption>
                                                                FOR THE FISCAL YEARS ENDED
                                                                      SEPTEMBER 30,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
OPERATING ACTIVITIES
(Loss) income from continuing operations....................  $  (2.8)   $  63.2    $  38.7
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Depreciation and amortization.............................     18.1       30.5       37.7
  Amortization of deferred financing costs..................      0.7        0.7        0.6
  (Benefit) provision for deferred income taxes.............    (10.6)      21.9        2.6
  Provision for doubtful accounts...........................      2.5        2.5        3.1
  Gain on the sale of excess real estate....................       --       (3.2)     (12.6)
  Impairment, restructuring and other non-recurring
    charges.................................................     60.8         --         --
  Minority interest in net income...........................    (61.6)      11.3       36.7
  Equity loss (earnings) of investee........................      1.4       (3.1)        --
  Gain on sale of businesses................................       --      (42.1)        --
  Changes in operating assets and liabilities, excluding the
    effects of acquisitions and dispositions:
    (Increase) decrease in trade receivables................     27.5      (24.1)     (13.3)
    (Increase) decrease in inventories......................     (5.0)      (2.2)     (16.9)
    (Increase) decrease in other current assets.............      2.8       (0.3)      (2.5)
    (Increase) decrease in other assets.....................     (2.5)     (11.2)      26.5
    Increase (decrease) in trade accounts payable...........       --      (15.7)       0.6
    Increase (decrease) in accrued expenses and other
     liabilities............................................     (9.2)     (37.5)      (7.3)
    Increase (decrease) in other liabilities................     (8.5)     (12.8)     (11.2)
    Other, net..............................................       --         --         --
                                                              -------    -------    -------
Net cash provided by operating activities of continuing
  operations................................................     13.6      (22.1)      82.7
                                                              -------    -------    -------
Income from discontinued operations.........................   (239.8)      (1.6)      39.8
Adjustments to reconcile net income from discontinued
  operations to net cash provided by discontinued
  operations:
    Loss on disposal of discontinued operations.............    194.1         --       12.1
    Impairments and other nonrecurring charges..............     61.6       84.0
    Decrease (increase) in net assets held for sale.........     47.3      (56.6)      32.0
                                                              -------    -------    -------
Net cash provided by operating activities of discontinued
  operations................................................     63.2       25.8       83.9
                                                              -------    -------    -------
Net cash provided by operating activities...................     76.8        3.7      166.6

INVESTING ACTIVITIES
Proceeds from the sale of businesses........................       --      391.3       95.0
Acquisitions of businesses, net of cash acquired............       --      (78.4)    (169.3)
Purchases of property, plant and equipment..................    (17.8)     (23.6)     (36.1)
Proceeds from sales of property, plant and equipment........      0.9        1.7        3.3
Proceeds from sales of excess real estate...................       --        5.5       25.3
Repayments of (loans to) affiliates.........................     27.6     (487.5)        --
Other investing activities, net.............................       --         --        0.7
                                                              -------    -------    -------
Net cash used in investing activities.......................     10.7     (191.0)     (81.1)

FINANCING ACTIVITIES
Proceeds from long-term debt................................    247.9        5.8      410.5
Repayment of long-term debt.................................   (246.5)    (152.5)    (340.2)
(Repayment) proceeds of notes payable, net..................     (2.1)       1.8        4.9
Repayments of (loans to) affiliates.........................      3.0       (3.3)       4.3
Payment to settle interest rate protection agreements.......       --         --      (22.0)
Net transfers with affiliates...............................    (50.1)     311.1     (113.2)
                                                              -------    -------    -------
Net cash provided by (used in) financing activities.........    (47.8)     162.9      (55.7)

Effect of exchange rate changes on cash and cash
  equivalents...............................................     (6.0)      (5.9)     (18.0)

Increase (decrease) in cash and cash equivalents............     33.7      (30.3)      11.8
                                                              -------    -------    -------
Cash and cash equivalents at beginning of period............     18.1       48.4       36.6
                                                              -------    -------    -------
Cash and cash equivalents at end of period..................  $  51.8    $  18.1    $  48.4
                                                              =======    =======    =======
</Table>

                            See accompanying notes.

                                      F-5
<Page>
                               USI ATLANTIC CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--BASIS OF PRESENTATION

    USI Atlantic Corp. ("USI Atlantic") is a wholly owned subsidiary of U.S.
Industries, Inc. ("USI" or the "Parent"). USI Atlantic's only asset is its
investment in 100% of the outstanding common stock of USI American Holdings
("USIAH"). USIAH's sole asset is its ownership of 100% of the preferred stock of
USI Global Corporation ("Global"). The preferred stock of USI Global entitles
USIAH to ninety-one percent of the total voting rights of all of Global's
outstanding stock, thus giving USIAH and the Company control of Global. The
assets, liabilities and results of operations of USIAH and Global are,
therefore, consolidated in the accompanying financial statements for all periods
presented. Global's principal operating subsidiaries include Jacuzzi, Inc.,
Rexair, Inc., Jacuzzi Europe, spa., Spring Ram Plc., and Jacuzzi Leisure
Products Ltd. These entities manufacture and distribute a full line of whirlpool
baths, spas, swimming pools, swimming pool equipment, kitchen and bath sinks,
shower enclosures and premium vacuum cleaners. These entities operate in the
U.S., throughout Europe, Canada, and South America.

    In addition, Global's other principal subsidiaries are classified as
discontinued operations and include several of USI's domestic and European
commercial and institutional lighting businesses, USI's North American lawn and
garden businesses and the U.K. hand and industrial tools business (see NOTE 5).
The outstanding minority interest represents USI's 100% ownership of the
outstanding common stock of Global.

    The preferred stock has a stated value of $1.1 billion and a yield of 5.6%.
The preferred stock has a maturity date of June 30, 2024, at which time it can
be redeemed at the option of Global. All preferred dividends will be paid only
to the extent declared and will accumulate on a cumulative basis (without
interest), to the extent not declared or paid. The preferred stock will have a
liquidation value of the stated value plus accrued and unpaid dividends. The
preferred stock has no conversion rights, but will rank prior to the common
stock and all other classes and series of equity securities of Global as to
dividend rights and rights on liquidation, winding down or dissolution of
Global.

    USI and certain subsidiaries of USI (referred to herein as "Affiliates")
have provided certain corporate general and administrative services to the
Company including legal, finance, tax, risk management and employee benefits. A
portion of the related costs has been allocated to USI Atlantic based on the
percentage of USI Atlantic's sales to the consolidated sales of USI as
management fees. Atlantic's management believes such amounts are reasonable;
however, they may not be indicative of Atlantic's ongoing costs as a separate
entity.

    The Company operates on a 52- or 53-week fiscal year ending on the Saturday
nearest to September 30. The fiscal year periods presented in our consolidated
financial statements consisted of the 52 weeks ending on September 29, 2001,
September 30, 2000 or October 2, 1999, but are presented as of September 30 in
each of those years for convenience. Businesses over which the Company has the
ability to exercise significant influence are accounted for using the equity
method. In March 2000, the Company completed the disposition of a majority
equity interest in its Diversified segment. Since then, the Company has
accounted for its retained interest in the Diversified segment under the equity
method of accounting (see NOTE 4). The Company eliminates intercompany balances
and transactions when combining the account balances of its subsidiaries.

NOTE 2--GOING CONCERN

    The accompanying consolidated financial statements have been prepared on a
going concern basis of accounting and do not reflect any adjustments that might
result if USI Atlantic was unable to

                                      F-6
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--GOING CONCERN (CONTINUED)
continue as a going concern. On August 15, 2001, USI finalized a comprehensive
restructuring of its bank debt and the bank debt of Rexair, Inc. ("Rexair"), a
former subsidiary that was reacquired from Strategic Industries, LLC
("Strategic") on the same date. The amended facilities (together the
"Restructured Facilities") extend the final maturity date of USI's debt under
its credit agreement to November 30, 2002, which coincides with the final
maturity of the amended Rexair Credit Facility. The Restructured Facilities
provide for scheduled permanent reductions of USI's senior debt (a combination
of the Restructured Facilities, senior notes of USI and other defined
obligations) during the term of the Restructured Facilities. The required
cumulative permanent reductions of USI's senior debt are scheduled at
$75 million, $200 million, $450 million and $600 million for the periods ending
December 31, 2001, March 31, 2002, June 30, 2002, and October 15, 2002,
respectively. The remaining balance of the Restructured Facilities is due in
full on November 30, 2002. USI expects to satisfy operating liquidity needs
through operating cash flow. However, it will have to sell a substantial amount
of its assets and restructure or refinance its debt to satisfy the required
cumulative permanent reductions. USI Atlantic's capital stock and substantially
all of its assets have been pledged as collateral under USI's senior debt.

    On December 28, 2001, the Board of Directors of USI approved a formal
Disposal Plan for five businesses in order to meet the scheduled reductions.
Four of the businesses to be disposed of are included in the accompanying
financial statements, Ames True Temper, Lighting Corporation of America,
Spear & Jackson and SiTeco Lighting, and have an estimated net realizable value
of $455.5 million. The Disposal Plan calls for the sale of these businesses over
the next 12 months. The net assets of the discontinued businesses are included
in net assets held for sale in all periods presented.

    USI and the Company entered into an agreement to sell Ames True Temper on
December 24, 2001 for approximately $165 million in cash. The sale, which is
subject to the completion of financing and other customary closing conditions,
is currently expected to close in January 2002. Upon closing, the entire net
cash proceeds will be applied to reduce USI's funded and unfunded senior debt.
USI is pursuing the sale of the Strategic Notes together with the equity
interest in Strategic at an amount expected to approximate the September 30,
2001 carrying value. Upon closing, the entire net cash proceeds will be applied
to reduce USI's funded and unfunded senior debt.

    The net proceeds from the sale of Ames True Temper and the Strategic Notes
are expected to be sufficient to fund the required reductions of USI's senior
debt through March 31, 2002.

    USI continues to actively pursue its Disposal Plan. However, there can be no
assurance when or whether USI will consummate any of these transactions. If USI
is unable to consummate asset disposals as outlined in its Disposal Plan in time
to meet scheduled amortizations, USI expects to seek a further restructuring of
its credit facilities. Furthermore, the proceeds of the Disposal Plan, if
consummated in its entirety, and the sale of the Strategic Notes will be
insufficient to repay the Restructured Facilities upon their maturity in
November 2002. Accordingly, USI will have to restructure or refinance its
existing Restructured Facilities. USI believes it will be able to restructure or
refinance its existing Restructured Facilities before their scheduled maturity
in November 2002. However, there can be no assurance that it will be able to do
so.

    USI's and the Company's independent auditors have included a going concern
explanatory paragraph in their audit reports accompanying the September 30, 2001
consolidated financial statements of both USI and the Company. The paragraph
states that USI's need to generate sufficient

                                      F-7
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--GOING CONCERN (CONTINUED)
funds to make the required cumulative reductions of senior debt of $450 million
by June 30, 2002 through asset sales or a restructuring or refinancing raises
substantial doubt about USI's and the Company's ability to continue as a going
concern.

NOTE 3--ACCOUNTING POLICIES

    USE OF ESTIMATES: Accounting guidelines require that the Company makes
estimates and assumptions that affect amounts reported in its financial
statements and accompanying notes. Actual results could differ from those
estimates.

    FOREIGN CURRENCY TRANSLATION: The Company's subsidiaries outside of the
United States record transactions using their local currency as their functional
currency. In accordance with Statement of Financial Accounting Standards
("SFAS") No. 52, FOREIGN CURRENCY TRANSLATION, the assets and liabilities of the
Company's foreign subsidiaries are translated into U.S. dollars using the
exchange rates in effect at the balance sheet dates. Revenues, expenses and cash
flow items are translated at average daily exchange rates for the period. The
translation adjustments that result from translating the balance sheets at
different rates than the statements of operations are included in accumulated
other comprehensive income, which is a separate component of the Company's
stockholder's equity.

    CASH AND CASH EQUIVALENTS: The Company considers all highly liquid
investments with original maturities of three months or less to be cash
equivalents. Except for certain cash balances owned by the Company, cash
accounts have been controlled on a centralized basis by an Affiliate which
sweeps cash receipts and funds cash disbursements of the Company. The net
results of cash transactions between or on behalf of the Company, including
intercompany advances, are included in the consolidated balance sheets as due to
affiliates.

    TRADE RECEIVABLES AND CONCENTRATION OF CREDIT RISK: The Company records an
allowance for doubtful accounts, reducing its receivables balance to an amount
the Company estimates is collectible from its customers.

    The Company principally operates in the United States, and to a lesser
extent in the UK. The Company performs periodic credit evaluations of its
customers' financial condition and generally does not require collateral. The
Company encounters a certain amount of credit risk as a result of a
concentration of receivables among a few significant customers. One of its
customers represents 5.3% and 12.7% of the Company's trade receivables balance
at September 30, 2001 and 2000, respectively, and 10.3%, 8.0%, and 5.4% of its
sales for the years ending September 30, 2001, 2000, and 1999, respectively.
Credit losses have not been significant and are within management's
expectations.

    INCOME TAXES: Deferred tax assets and liabilities represent the tax effects,
based on current law, of any temporary differences in the timing of when
revenues and expenses are recognized for tax purposes and when they are
recognized for financial statement purposes. The deferred tax assets are
reviewed periodically for recoverability and valuation allowances are provided
as necessary.

    The Company's United States earnings have been included in the consolidated
federal income tax return filed by USI. The Company provided for income taxes in
the accompanying consolidated financial statements as if it were a stand-alone
entity and filed separate income tax returns from USI. Federal taxes currently
payable have been included in due to affiliate. Income taxes paid to state,
local and foreign jurisdictions during fiscal 2001, 2000 and 1999 were
$13.8 million, $18.8 million and $31.0 million, respectively.

                                      F-8
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
    INVENTORIES: The Company's inventories are stated at the lower of cost,
determined by the first-in, first-out method, or market. The Company's
inventories can be categorized as follows:

<Table>
<Caption>
                                                               AT SEPTEMBER 30,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Finished products...........................................   $ 57.9     $45.0
In-process products.........................................      5.8       4.4
Raw materials...............................................     53.3      45.7
                                                               ------     -----
                                                               $117.0     $95.1
                                                               ======     =====
</Table>

    PROPERTY, PLANT AND EQUIPMENT: The Company records its property, plant and
equipment at cost. The Company records depreciation and amortization in a manner
that recognizes the cost of its depreciable assets in operations over their
estimated useful lives using the straight-line method. The Company estimates the
useful lives of its depreciable assets to be 20-50 years for buildings and 3-10
years for machinery, equipment and furniture. Leasehold improvements are
amortized over the shorter of the terms of the underlying leases, including
probable renewal periods, or the estimated useful lives of the improvements.

    Property, plant and equipment consisted of:

<Table>
<Caption>
                                                                AT SEPTEMBER 30,
                                                              --------------------
                                                                2001        2000
                                                              --------    --------
                                                                 (IN MILLIONS)
<S>                                                           <C>         <C>
Land and buildings..........................................   $61.4       $48.7
Machinery, equipment and furniture..........................    98.2        74.7
Accumulated depreciation....................................   (60.1)      (48.7)
                                                               -----       -----
                                                               $99.5       $74.7
                                                               =====       =====
</Table>

    Depreciation and amortization consisted of:

<Table>
<Caption>
                                                              FOR THE FISCAL YEARS
                                                              ENDED SEPTEMBER 30,
                                                         ------------------------------
                                                           2001       2000       1999
                                                         --------   --------   --------
                                                                 (IN MILLIONS)
<S>                                                      <C>        <C>        <C>
Depreciation...........................................   $10.3      $20.2      $28.3
Amortization of goodwill...............................     7.8       10.3        9.4
                                                          -----      -----      -----
                                                          $18.1      $30.5      $37.7
                                                          =====      =====      =====
</Table>

    OTHER ASSETS: Included in other assets are excess properties held for sale
consisting of land and buildings no longer used in operations. These assets are
carried at the lower of cost or fair value less costs to sell. The carrying
value of such properties was $10.1 million and $14.6 million as of September 30,
2001 and 2000, respectively. In fiscal 2001, the Company recorded a loss from
excess properties of $0.2 million, compared to income from excess properties of
$2.7 million and $12.2 million in fiscal 2000 and 1999, respectively. This
amount is included in other income (expense), net and

                                      F-9
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
consists of net gains on the sale of these properties, adjustments to net
realizable value and the carrying costs incurred in the period.

    GOODWILL: Goodwill represents the excess of the purchase price over the fair
value of net assets acquired. The Company reviews operating results and other
relevant facts every fiscal quarter for each of its businesses to determine if
there are indications that the carrying value of its long-lived assets,
including goodwill may be impaired. When there are indicators of impairment, the
Company first assesses the recoverability of goodwill associated with long-lived
assets in accordance with the requirements of SFAS No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF, which
requires impairment losses to be recorded when the undiscounted cash flows
estimated to be generated by those assets are less than the carrying amount of
those assets. In addition, an enterprise level assessment of the recoverability
of any remaining goodwill is performed using the fair value methodology, as
permitted under APB No. 17. In the event that such fair value is below the
carrying value of an enterprise, for those companies with goodwill, the Company
reduces goodwill to the extent it is impaired based upon fair value.

    The fair value methodology is applied to determine the recoverable value for
each business on a stand-alone basis using ranges of fair values obtained from
independent appraisers. In developing these ranges, the independent appraisers
consider (a) publicly available information, (b) financial projections of each
business based on management's best estimates, (c) the future prospects of each
business as discussed with senior operating and financial management, (d)
publicly available information regarding comparable publicly traded companies in
each industry, (e) market prices, capitalization and trading multiples of
comparable public companies and (f) other information deemed relevant. In
reviewing these valuations and considering the need to record a charge for
impairment of enterprise value and goodwill to the extent it is part of the
enterprise value, the Company also evaluates solicited and unsolicited bids for
the businesses of the Company.

    Goodwill is amortized on a straight-line basis over the estimated future
period to be benefited (ranging from 20 to 40 years, primarily 40 years).
Accumulated amortization aggregated $73.1 million and $64.9 million at September
30, 2001 and 2000, respectively.

    ACCRUED EXPENSES AND OTHER LIABILITIES: Accrued expenses and other current
liabilities consisted of the following:

<Table>
<Caption>
                                                                AT SEPTEMBER 30,
                                                              --------------------
                                                                2001        2000
                                                              --------    --------
                                                                 (IN MILLIONS)
<S>                                                           <C>         <C>
Compensation related........................................   $12.8       $ 8.0
Other.......................................................    55.6        55.4
                                                               -----       -----
                                                               $68.4       $63.4
                                                               =====       =====
</Table>

    FAIR VALUE OF FINANCIAL INSTRUMENTS: SFAS No. 107, DISCLOSURE ABOUT FAIR
VALUE OF FINANCIAL INSTRUMENTS, requires that the Company disclose the fair
value of its financial instruments when it is practical to estimate. The Company
has determined the estimated fair values of its financial instruments, which are
either recognized in the Company's consolidated balance sheets or disclosed
within these notes, using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting market
data to develop estimates of fair

                                      F-10
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
value. Accordingly, the estimates presented are not necessarily indicative of
the amounts the Company could realize in a current market exchange.

    Short-term Assets and Liabilities: The fair values of the Company's cash and
cash equivalents, trade receivables and accounts payable approximate their
carrying values because of their short-term nature.

    Long-term Debt: The fair values of the Company's Senior Notes are determined
by discounting the cash flows using current interest rates for financial
instruments with similar characteristics and maturities. The fair value of the
Company's remaining debt approximates 80% of its carrying value as of September
30, 2001.

    There were no other significant differences as of September 30, 2001 and
September 30, 2000 between the carrying value and fair value of the Company's
financial instruments except as disclosed below:

<Table>
<Caption>
                                                    2001                  2000
                                             -------------------   -------------------
                                             CARRYING     FAIR     CARRYING     FAIR
                                              AMOUNT     VALUE      AMOUNT     VALUE
                                             --------   --------   --------   --------
                                                           (IN MILLIONS)
<S>                                          <C>        <C>        <C>        <C>
7.25% Senior Notes.........................   $123.9     $ 82.5     $123.6     $113.0
                                              ======     ======     ======     ======
</Table>

    Interest Rate Swaps and Foreign Currency Contracts: The fair value of the
Company's interest rate swap and foreign currency contracts is the amount the
Company would receive or have to pay to terminate the agreement at the reporting
date, taking into account current interest rates and exchange rates. The fair
value of the interest rate swap is provided to the Company by its financial
institution, the counter-party to the interest rate swap agreement. For more
information on these financial instruments, see the DERIVATIVE FINANCIAL
INSTRUMENTS section of this note.

    REVENUE RECOGNITION: The Company currently records revenue when delivery has
occurred and title has passed to the customer. Provisions are made for warranty
and return costs at the time of sale. Such provisions have not been material to
the Company.

    ACCOUNTING CHANGE: In December 1999, the Securities and Exchange Commission
("SEC") issued Staff Accounting Bulletin ("SAB") No. 101, REVENUE RECOGNITION IN
FINANCIAL STATEMENTS, which, along with other guidance, clarified the SEC's
views on various revenue recognition and reporting matters. As a result, the
Company changed its method of accounting for certain sales transactions.
Historically, the Company recognized revenue upon shipment of products to the
customer because, even though some products were shipped FOB destination, the
Company used a common carrier and thus gave up substantially all the risks of
ownership. Under the new accounting method adopted retroactive to October 1,
2000, the Company now recognizes revenue when title passes. The net effect of
the accounting change was not material to the results for the year ended
September 30, 2001. Net sales for the year ended September 30, 2001 includes
$4.4 million of net sales that, prior to the accounting change, had been
recognized through September 30, 2000. The pro forma amounts, had the new
revenue recognition method been applied retroactively to prior periods, were not
materially different from the amounts shown in the Company's consolidated
statements of operations for the years ended September 30, 2000 and 1999.
Therefore, these amounts have not been presented.

                                      F-11
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
    SHIPPING AND HANDLING FEES AND COSTS: After adopting Emerging Issues Task
Force ("EITF") Issue No. 00-10, ACCOUNTING FOR SHIPPING AND HANDLING FEES AND
COSTS, the Company classifies amounts charged to its customers for shipping and
handling as revenues, while shipping and handling costs are recorded as cost of
goods sold.

    ADVERTISING COSTS: Advertising costs are charged to expense when incurred.
The Company participates in cooperative advertising programs with certain
customers for which the Company reimburses a portion of advertising costs.
Advertising expense totaled $26.1 million, $27.7 million and $21.6 million in
fiscal 2001, 2000 and 1999, respectively.

    RESEARCH AND DEVELOPMENT COSTS: Research and development costs are expensed
as incurred. Such amounts totaled $4.1 million, $4.5 million and $2.9 million in
fiscal 2001, 2000 and 1999, respectively.

    DERIVATIVE FINANCIAL INSTRUMENTS: Effective October 1, 2000, the Company
adopted SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES, as amended, which requires that all derivative instruments be
reported on the balance sheet at fair value and establishes criteria for
designation and effectiveness of hedging relationships. The Company uses several
types of derivative financial instruments including interest rate swaps, forward
contracts and debt denominated in a foreign currency to hedge its exposure to
volatility in interest rates and currency exchange rates.

INTEREST RATE HEDGING

    The Company hedged a portion of its variable-rate debt by entering into an
interest rate swap in which the Company agreed to exchange, at specified
intervals, the calculated difference between fixed and variable interest amounts
on $90 million of its debt. The swap, which matures on June 30, 2002, is
designated as a cash flow hedge of the underlying variable-rate interest
payments and is recorded as a current liability in the Company's consolidated
balance sheet. Since an assessment of the hedging relationship revealed that it
was 100% effective, the entire unrealized loss, net of tax, is recorded in
accumulated other comprehensive income ("OCI") within stockholder's equity. As
of September 30, 2001 there was an unrealized loss of $1.4 million in OCI
related to this contract. The amounts in OCI will be recognized as additional
interest expense over the term of the swap agreement.

FORWARD EXCHANGE

    The Company manufactures and sells its products in a number of countries
throughout the world and, as a result, is exposed to movements in foreign
currency exchange rates. The primary purpose of the Company's foreign currency
hedging activities is to manage the volatility associated with foreign currency
payments to related entities or to vendors for purchases of materials and with
foreign currency collections from customers in the normal course of business.
The Company utilizes forward exchange contracts with maturities of less than
twelve months, which qualify as foreign currency hedges. These hedges are
intended to offset the effect of transaction gains and losses, which arise when
payments or collections in a foreign currency are made or received one to three
months after the asset or liability is generated. The fair value of these
instruments at September 30, 2001 was negligible. Since the Company's assessment
of these hedges revealed no ineffectiveness, gains and losses on these
instruments are deferred in OCI, net of tax, until the underlying transaction
gain or loss is recognized in earnings. Amounts in OCI will be reclassified into
earnings within the next twelve months.

                                      F-12
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCY DENOMINATED DEBT (NET INVESTMENT HEDGING)

    The Company is exposed to foreign currency risk when the financial
statements of its non-U.S. dollar subsidiaries are translated into its
functional currency. In order to hedge its net investment position in select
subsidiaries, the Company entered into foreign currency denominated debt. Since
the Company's assessment of these hedges revealed no ineffectiveness, all of the
transaction gains and losses associated with this debt have been reflected in
the foreign currency translation adjustment in OCI. As a result of the Company's
amended credit agreement, all foreign currency denominated debt was repaid and
the Company will no longer have a hedge of its net investment position in these
subsidiaries.

    COMPREHENSIVE INCOME (LOSS): Comprehensive income (loss) represents the
change in stockholder's equity from transactions and other events and
circumstances arising from non-stockholder sources. The Company's comprehensive
income (loss) for 2001, 2000 and 1999 consisted of net income (loss), foreign
currency translation adjustments, minimum pension liability adjustments and
unrealized gains and losses on derivatives established as cash flow hedges, net
of applicable income taxes.

    Components of accumulated other comprehensive income (loss) consist of the
following in millions:

<Table>
<Caption>
                                             MINIMUM                     ACCUMULATED OTHER
                               FOREIGN       PENSION     FAIR VALUE OF     COMPREHENSIVE
                              CURRENCY      LIABILITY     DERIVATIVES         INCOME
                             TRANSLATION   ADJUSTMENTS    ADJUSTMENT          (LOSS)
                             -----------   -----------   -------------   -----------------
<S>                          <C>           <C>           <C>             <C>
September 30, 1998.........    $ (6.7)        $(4.5)         $  --            $(11.2)
Fiscal 1999 change.........     (16.4)          1.1             --             (15.3)
                               ------         -----          -----            ------
September 30, 1999.........     (23.1)         (3.4)            --             (26.5)
Fiscal 2000 change.........     (19.3)          2.2             --             (17.1)
                               ------         -----          -----            ------
September 30, 2000.........     (42.4)         (1.2)            --             (43.6)
Fiscal 2001 change.........      18.5           1.3           (1.4)             18.4
                               ------         -----          -----            ------
September 30, 2001.........    $(23.9)        $ 0.1          $(1.4)           $(25.2)
                               ======         =====          =====            ======
</Table>

    STOCK-BASED COMPENSATION: The Company does not have stock-based compensation
plans separate from USI; however, the Company does participate in USI's
stock-based compensation plans. Consistent with USI, the Company accounts for
participation in these plans in accordance with Accounting Principles Board
Opinion No. 25 ("APB 25"), ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES and related
interpretations in accounting for stock-based compensation. The pro forma
effects on net income had compensation cost for awards of stock based
compensation been determined using the fair value method proscribed by SFAS No.
123, ACCOUNTING FOR STOCK-BASED COMPENSATION, were not materially different from
the amounts presented in the Company's consolidated statements of operations for
the periods ended September 30, 2001, 2000 and 1999. Therefore, these amounts
have not been provided.

    Certain key employees of the Company participate in stock incentive plans of
USI that provide for awards of restricted stock and options to purchase USI
common stock at prices equal to the fair value of the underlying shares at the
date of the grant. The Company recognized compensation expense of less than $0.1
million in fiscal 2001 for vesting restricted stock awards. As of September 30,
2001, an aggregate of approximately 0.5 million options to purchase shares of
USI common stock were held by Company employees.

                                      F-13
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
    INCOME (LOSS) PER SHARE: Historical income (loss) per share information is
not presented because the Company is a direct subsidiary of USI.

    NEW ACCOUNTING PRONOUNCEMENTS: In June 2001, the Financial Accounting
Standards Board ("FASB") issued Statements of Financial Accounting Standards No.
141, BUSINESS COMBINATIONS, and No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS,
effective for fiscal years beginning after December 15, 2001. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized but will be subject to annual impairment tests in accordance
with the Statements. Other intangible assets will continue to be amortized over
their useful lives. The Company has elected to adopt these pronouncements as of
October 1, 2001. Accordingly, as of such date, the Company will no longer
amortize goodwill.

    In August 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT
OR DISPOSAL OF LONG-LIVED ASSETS. The FASB's new rules on asset impairment
supersede SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
FOR LONG-LIVED ASSETS TO BE DISPOSED OF, and provide a single accounting model
for long-lived assets to be disposed of. Although retaining many of the
fundamental recognition and measurement provisions of SFAS No. 121, the new
rules significantly change the criteria that would have to be met to classify an
asset as held-for-sale. The new rules also supersede the provisions of APB
Opinion No. 30, REPORTING THE RESULTS OF OPERATIONS--REPORTING THE EFFECTS OF
DISPOSAL OF A SEGMENT OF A BUSINESS, AND EXTRAORDINARY, UNUSED AND INFREQUENTLY
OCCURRING EVENTS AND TRANSACTIONS, with regard to reporting the effects of a
disposal of a segment of a business and require expected future operating losses
from discontinued operations to be displayed in discontinued operations in the
period(s) in which the losses are incurred (rather than as of the measurement
date as presently required by APB No. 30). The Statement is effective for the
Company in the beginning of fiscal year 2003. The Company does not believe this
statement will have a material effect on the earnings or financial position of
the Company.

NOTE 4--ACQUISITIONS AND DISPOSITIONS OF BUSINESSES

ACQUISITIONS OF BUSINESSES

    The pro forma effects of the acquisitions detailed below are not material to
the Company's results of operations and are not provided herein. These
acquisitions have been accounted for as purchases and their results of
operations are included in the financial statements from the dates of
acquisition.

    Contemporaneously with the closing of its debt restructuring on August 15,
2001 (see NOTE 8), the Company re-acquired the 75% equity interest in Rexair,
Inc. ("Rexair"), the manufacturer of "Rainbow" vacuum cleaners, previously sold
to Strategic Industries, LLC ("Strategic") as part of the Diversified
transactions in March 2000. The purchase consideration included $27.4 million in
face value of Strategic's senior notes and the assumption of borrowings
outstanding under Rexair's $200 million credit facility (see DISPOSITIONS OF
BUSINESSES below). In connection with the re-acquisition, the Company reduced
the re-acquired basis in Rexair by the amount of its previously deferred gain
and reclassified its retained 25% share of Rexair's net liabilities from other
long-term liabilities. The allocation of the purchase consideration, including
the deferred gain and the carrying value of the retained liabilities, to the
assets acquired and liabilities assumed resulted in the goodwill and other
intangible assets of approximately $68.9 million, the majority of which have
indefinite lives and will not be amortized. In addition, the Company expensed
$17.4 million of deferred transaction costs associated with the March 2000 sale
of Rexair. The results of Rexair have been included in the Bath & Plumbing
segment since it was re-acquired. The Company accounted for Rexair under the
equity method of accounting during the time period when the Company held only a
25% interest, from March 24, 2000 until August 15, 2001.

                                      F-14
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--ACQUISITIONS AND DISPOSITIONS OF BUSINESSES (CONTINUED)
    In July 1999, the Company acquired Spring Ram Corporation PLC ("Spring Ram")
for approximately $133.6 million in cash, plus the assumption of $21.3 million
in debt, resulting in goodwill of approximately $110.0 million. Spring Ram,
located in Leeds, England, is a manufacturer of bathroom products. The operating
results of Spring Ram are included in the Bath & Plumbing segment.

    In June 1999, the Company purchased the assets of Gatsby Spas, Inc.
("Gatsby") for approximately $17.0 million in cash, resulting in goodwill of
$9.6 million. Gatsby manufactures and distributes spas. The results of Gatsby
are included in the Bath & Plumbing segment.

    In April 1999, USI contributed to Global the stock of the Dual-Lite and True
Temper businesses. The contribution was recorded at the historical carrying
value of the net assets at the time of contribution, which was approximately
$147.0 million. The results of True Temper and Dual-Lite are included in
Discontinued Operations (see NOTE 5).

DISPOSITIONS OF BUSINESSES

    On March 24, 2000, the Company disposed of a majority equity interest in its
Diversified segment in two separate transactions. In the first transaction, the
Company disposed of the following subsidiaries: Bearing Inspection, Inc.;
BiltBest Products, Inc.; EJ Footwear Corp. (including Georgia Boot Inc. and
Lehigh Safety Shoe Co.); Garden State Tanning Inc.; Huron Inc.; Jade Holdings
Pte Ltd (including Jade Technologies Singapore Ltd and FSM Europe B.V.); Leon
Plastics Inc.; Native Textiles Inc. and SCF Industries, Inc. The Company
received gross cash proceeds of approximately $197.0 million, retained a
preferred equity interest in the buyer, Strategic, having a stated value of
approximately $19.5 million, retained a common equity interest in Strategic of
17.7% and received approximately $209.0 million aggregate principal amount of
12% (12.5% effective August 18, 2000) senior notes (the "Strategic Notes") due
2007. In addition, Strategic assumed approximately $7.9 million of existing bank
debt. As a result of its disposal of the Diversified businesses, the Company
recorded a pre-tax gain of $42.1 million.

    In the second transaction, Rexair sold newly issued shares to Strategic
representing, after issuance, 75% of the equity interest in Rexair. The Company
received approximately $195.0 million in cash and retained a 25% direct equity
interest in Rexair. In addition, the Company guaranteed Rexair's $200 million
credit facility. In connection with the Rexair transaction, the Company recorded
an other liability of $82.2 million, related to its retained 25% share of
Rexair's net liabilities and a deferred gain, which, together with the deferral
of the related transaction costs, was to be deferred until the release of the
Company's guarantee of Rexair's credit facility. Rexair was re-acquired on
August 15, 2001. Accordingly, the deferred transaction costs were expensed in
full at such date, and the deferred gain as well as the Company's retained 25%
share of Rexair's net liabilities reduced the re-acquired basis in Rexair (See
ACQUISITIONS OF BUSINESSES above).

    In July 2000, the Company transferred the Strategic notes and cash proceeds
received to USI in exchange for notes receivable from USI in the amount of
$674.4 million bearing interest of 6.5% per annum with $358.5 million due on
demand and $315.9 million maturing in fiscal year 2005.

    During the first quarter of fiscal 2000, the Company disposed of assets
relating to its ladder operations and the infant and children footwear
operation. The total proceeds of these separate transactions were $17.0 million,
which approximated their carrying value. The Company has retained certain
product liabilities of the ladder operations.

                                      F-15
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5--DISCONTINUED OPERATIONS

    On December 28, 2001, the Board of Directors of USI approved a formal
Disposal Plan for four of the Company's businesses in connection with USI's
obligation to pay debt amortization as set forth in the restructured debt
agreements. In connection with the Disposal Plan, the Company recorded a charge
of $204.3 million, which represented the difference between the historical net
carrying value and the estimated net realizable value of those businesses, (Ames
True Temper, Lighting Corporation of America, Spear & Jackson, and SiTeco
Lighting) which are included within the Company's consolidated operations. The
Disposal Plan calls for the sale of these businesses over the next 12 months.

    The operating results of these businesses have been included in discontinued
operations for all periods presented. Summarized results of discontinued
operations are as follows:

<Table>
<Caption>
                                                   FOR THE FISCAL YEARS ENDED
                                                         SEPTEMBER 30,
                                                 ------------------------------
                                                   2001       2000       1999
                                                 --------   --------   --------
                                                         (IN MILLIONS)
<S>                                              <C>        <C>        <C>
Net sales......................................  $1,244.0   $1,311.1   $1,236.0
Operating income...............................       0.8        1.7       86.3
Income (loss) from operations before income
  taxes........................................      (7.8)       1.2       85.7
</Table>

    Included in the losses are goodwill impairment charges totaling
$61.6 million and $84.0 million in fiscal 2001 and 2000, respectively. These
goodwill impairment charges resulted from an evaluation of the recoverability of
goodwill performed by the Company in accordance with its accounting policy (see
NOTE 3). The impairment charges were recorded as part of continuing operations
before the approval of the Disposal Plan. The charges were reclassified into
discontinued operations after the approval of the Disposal Plan.

    Amounts classified as net assets held for sale consist of the following:

<Table>
<Caption>
                                                               AT SEPTEMBER 30,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Net current assets..........................................   $ 91.2     $383.5
Property, plant and equipment, net..........................    252.9      250.2
Other non-current assets and liabilities, net...............    111.4      167.6
                                                               ------     ------
Net assets held for sale....................................   $455.5     $801.3
                                                               ======     ======
</Table>

NOTE 6--IMPAIRMENT, RESTRUCTURING AND OTHER NON-RECURRING CHARGES

GOODWILL IMPAIRMENT CHARGES

    Operating results at certain of the Company's subsidiaries declined during
2001. In the third quarter of 2001, the Company evaluated the recoverability of
the goodwill of these subsidiaries in accordance with its accounting policy
described in Note 3. This evaluation indicated that the carrying value of the
goodwill of certain of its subsidiaries was impaired. As a result, the Company
recorded pretax goodwill impairment charges totaling $60.8 million and $61.6
million which have been included in continuing operations and loss from
operations of the discontinued operations, respectively.

                                      F-16
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--IMPAIRMENT, RESTRUCTURING AND OTHER NON-RECURRING CHARGES (CONTINUED)
RESTRUCTURING AND OTHER NON-RECURRING CHARGES

    During fiscal 1999, the Company expanded its 1998 restructuring plan related
to its footwear operations by closing a second domestic manufacturing facility.
The closure of the second facility was completed by June 1999, with its
production being outsourced to offshore vendors. As a result, the Company
recorded restructuring charges of $1.7 million primarily for the costs of
terminating 110 employees and the write-off of impaired fixed assets.
Furthermore, the Company recorded other non-recurring charges for inventory
obsolescence totaling $0.9 million, which were recorded in cost of goods sold.
The restructuring charges resulting from the closing of the Company's footwear
facility were offset by a $1.0 million reduction in severance costs that were
originally set up in 1998 for the Company's vacuum cleaner and textile
operations. Voluntary departures prior to final termination resulted in
severance payments that were lower than previously estimated. The Company
subsequently sold its footwear, vacuum cleaner and textile operations (see NOTE
4). Also, during fiscal 1999, the Company's Diversified segment recorded $6.1
million in charges and losses related to the closure of an unprofitable window
operation.

OTHER NON-RECURRING CHARGES

    During 2001, the Company recorded $17.4 million in deferred transaction
costs related to the original sale of Rexair in March 2000 once the business was
re-acquired in August 2001. These costs have been classified as "other expenses"
in the company's consolidated statement of operations.

    The principal components of impairment and restructuring charges recorded
for continuing operations are:

<Table>
<Caption>
                                                                FOR THE FISCAL YEARS
                                                                 ENDED SEPTEMBER 30,
                                                           -------------------------------
                                                             2001       2000        1999
                                                           --------   ---------   --------
                                                                    (IN MILLIONS)
<S>                                                        <C>        <C>         <C>
Impairment of goodwill...................................   $60.8     $     --      $ --
Lease obligations and impairment of equipment............      --           --       0.7
                                                            -----     ---------     ----
  Total..................................................   $60.8     $     --      $0.7
                                                            =====     =========     ====

Cash charges.............................................   $  --     $     --      $0.7
Non-cash charges.........................................    60.8           --        --
                                                            -----     ---------     ----
  Total..................................................   $60.8     $     --      $0.7
                                                            =====     =========     ====
</Table>

                                      F-17
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7--NOTES RECEIVABLE FROM AFFILIATES

    Notes Receivable from Affiliates consists of the following:

<Table>
<Caption>
                                                               AT SEPTEMBER 30,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
6.00% Notes Receivable......................................   $  7.3     $ 25.9
6.50% Notes Receivable......................................    674.4      683.4
                                                               ------     ------
                                                               $681.7     $709.3
                                                               ======     ======
</Table>

    At September 30, 2001 the notes receivable from Affiliates are unsecured
with $365.8 million payable upon demand, with $315.9 million maturing in fiscal
2005.

NOTE 8--LONG-TERM DEBT

    Long-term debt consists of the following:

<Table>
<Caption>
                                                              AT SEPTEMBER 30,
                                                             -------------------
                                                               2001       2000
                                                             --------   --------
                                                                (IN MILLIONS)
<S>                                                          <C>        <C>
7.25% Senior Notes, net....................................  $ 123.9     $123.6
Restructured facilities, Rexair............................    166.2         --
Restructured facilities, U.S. Industries...................    418.0         --
Five-year revolving credit facility, US dollar.............       --      200.0
Five-year revolving credit facility, foreign currencies....       --      218.9
Other long-term debt.......................................       --         --
                                                             -------     ------
                                                               708.1      542.5

Less current maturities                                       (428.0)        --
                                                             -------     ------
Long-term debt.............................................  $ 280.1     $542.5
                                                             =======     ======
</Table>

    Principal payments on long-term debt for the next five years ended
September 30 are as follows:

<Table>
<Caption>
                                                              (IN MILLIONS)
                                                              -------------
<S>                                                           <C>
2002........................................................     $428.0
2003........................................................      156.2
2004........................................................         --
2005........................................................         --
2006........................................................         --
</Table>

    The fiscal 2002 principal reduction amount of $428.0 million presented above
reflects the cumulative required senior debt reduction required by the terms of
the Restructured Facilities. To the extent the principal reduction amount for
fiscal 2002 is satisfied through asset sales, the reduction will be affected in
part by depositing cash in cash collateral accounts for the benefit of the
holders of the Company's Senior Notes (if required) and certain other creditors
of the Company. The fiscal 2003 principal reduction amount of $156.2 million
presented above (which is primarily comprised of the remaining balance due to
the Company's Lenders under its Restructured Facilities in October 2002 and

                                      F-18
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--LONG-TERM DEBT (CONTINUED)
November 2002), assumes that no portion of the reduction in fiscal 2002 will be
satisfied by deposits to cash collateral accounts. To the extent it is satisfied
by deposits to cash collateral accounts, the principal reduction amount for
fiscal 2003 will be increased by an amount equal to any deposits into collateral
accounts during fiscal 2002. The majority of the deposits in collateral accounts
will serve to reduce the required principal payments on the Senior Notes.

    In fiscal 1997, the Company's wholly owned subsidiary, USIAH, issued $125
million aggregate principal amount of Senior Notes due December 1, 2006, which
bear interest at 7.25%, payable semiannually (the "7.25% Notes"). A supplemental
indenture was later executed adding USI as a co-obligor with USIAH under the
7.25% Notes.

    In October 1998, USI and USIAH jointly issued $250 million aggregate
principal amount of Senior Notes due October 15, 2003, which bear interest at
7.125%, payable semiannually (the "7.125% Notes"). The 7.125% notes are recorded
as a liability of USI. A supplemental indenture was later executed adding Global
as a co-obligor to the 7.25% Notes.

    In addition, the 7.25% Notes and the 7.125% Notes (collectively, the "Senior
Notes") are joint and several obligations of USI, USI Global and USIAH, and are
guaranteed by USI Atlantic. The Senior Notes are redeemable at the option of the
issuers, in whole or in part, at a redemption price equal to the greater of (i)
100% of the principal amount to be redeemed or (ii) the sum of the present
values of the remaining scheduled payments of principal and interest on the
Senior Notes to be redeemed, discounted at a rate based on the yield to maturity
of the comparable U.S. Government securities plus a spread (10 basis points for
the 7.25% Notes and 50 basis points for the 7.125% Notes) plus, in each case,
accrued interest to the date of redemption. The Notes contain restrictions on
dividends as well as the purchase of common stock for treasury. See below
regarding the security interests granted to the holders of the Senior Notes as a
result of the Restructured Facilities.

    The Company also was a borrower along with USI under a five-year revolving
line of credit providing for borrowings in both U.S. dollars and foreign
currencies, which had original availability of $750 million (the "Credit
Agreement"). The Credit Agreement, which was permanently reduced over time to an
availability of $500 million, was scheduled to terminate on December 12, 2001.
The Credit Facility and Credit Agreement (together, the "Revolving Facilities")
were restructured on August 15, 2001 into an amended credit facility providing
for, among other things, an increase in availability to $830 million and an
extension of the final maturity of the debt through November 30, 2002.

    Although the Revolving Facilities were previously unsecured, the lenders of
the Revolving Facilities were granted on April 30, 2001 security interests in
substantially all of the assets of USI and its domestic subsidiaries, including
shares of the USI's domestic subsidiaries and 65% of the shares of certain of
the USI's foreign subsidiaries. As a result of having the Revolving Facilities
secured, the Rexair guarantee referred to below became secured with certain
assets. In addition, the Company's Senior Notes also became equally and ratably
secured with the Revolving Facilities and the Rexair Guaranty with respect to
the assets of USI and its subsidiaries that are subject to the covenant
restrictions under the Senior Notes. The covenants contained in the indentures
under which the Senior Notes were issued apply to USI, the Company and any
domestic subsidiary that is a "significant subsidiary" (within the meaning of
rule 1-02(w) of Regulation S-X promulgated under the Securities and Exchange Act
of 1934 or any successor provision).

    On August 15, 2001, USI finalized a comprehensive restructuring of its bank
debt and the bank debt of Rexair, which was re-acquired from Strategic on the
same date (See NOTE 4). The amended

                                      F-19
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--LONG-TERM DEBT (CONTINUED)
facilities (together the "Restructured Facilities") extend the final maturity
date of the USI's debt under the Revolving Facilities to November 30, 2002,
which coincides with the final maturity of the amended Rexair Credit Facility.
The Restructured Facilities provide for an increase in availability under the
Credit Agreement from $500 million to $830 million, the termination of the
multi-currency borrowing feature under the Credit Agreement, the elimination of
the 364-day Credit Facility and scheduled permanent reductions of the USI's
senior debt (a combination of the Restructured Facilities and the Senior Notes
and other defined obligations) during the term of the Restructured Facilities.

    The required cumulative permanent reductions of USI's senior debt are
scheduled at $75 million, $200 million, $450 million and $600 million for the
periods ending December 31, 2001, March 31, 2002, June 30, 2002 and October 15,
2002, respectively, with the remaining balance of the Restructured Facilities
due in full on November 30, 2002. USI expects to satisfy operating liquidity
needs through operating cash flow. However, it will have to sell a substantial
amount of its assets and restructure or refinance its debt to satisfy the
required cumulative permanent reductions.

    On December 21, 2001, USI obtained a waiver (the "December 2001 Waiver")
from its lenders under the Restructured Facilities that permitted the Company to
satisfy the December 31, 2001 $75 million reduction through a permanent
reduction of the unfunded commitments under the Restructured Facilities, to the
extent not satisfied through cash flow or asset sale proceeds.

    The Restructured Facilities require the Company, USI and Rexair to maintain
minimum monthly EBITDA, as defined, comply with maximum monthly capital
expenditure limits; USI and Rexair to maintain minimum availability (as defined)
under the Restructured Facility of no less than $25 million and comply with
other customary affirmative and negative covenants. In addition, the amended
Rexair Credit Facility, which provides a term loan of $175 million and
availability under a revolver of $20 million, requires that excess cash
generated by Rexair be segregated from excess cash generated by the remainder of
the USI's operations and used only to reduce the debt outstanding on the Rexair
Credit Facility. Rexair's availability under the revolver will be permanently
reduced by $5 million on May 31, 2002. In connection with the term loan, Rexair
will be required to make payments of $2.2 million each in December 2001 and
March 2002 and $4.4 million each in June 2002 and September 2002. Such payments
are credited towards the scheduled permanent reductions of the Company's senior
debt. The Senior Notes and the Restructured Facilities contain cross-default and
cross-acceleration provisions.

    The Restructured Facilities provide for increasing interest rates over the
remaining term. The spreads over London Interbank Offered Rate ("LIBOR") was 275
basis points until December 31, 2001, after which the spread increases by 50
basis points each quarter thereafter. The Restructured Facilities also provides
for several new fees including an unused commitment fee of 0.50% and a facing
fee on all outstanding letters of credit of 0.25% per annum. At USI's option, up
to 0.50% of the interest rate applicable to borrowings may be paid through the
issuance of notes.

    The security interests that were granted to the lenders of the Revolving
Facilities on April 30, 2001 remain in place under the debt restructuring, as do
the arrangements to equally and ratably secure the Rexair Guaranty and to
equally and ratably secure the Senior Notes. In addition, certain subsidiaries
of USI that are not subject to the Senior Notes' covenant restrictions have
guaranteed the Restructured Facilities. Under the Restructured Facilities, USI
also agreed to provide the lenders with security interests in the shares and
assets of certain foreign subsidiaries.

    Under the Restructured Facilities, substantially all sales proceeds are
required to be applied to reduce USI's funded and unfunded senior debt, on a pro
rata basis. The senior debt includes the

                                      F-20
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--LONG-TERM DEBT (CONTINUED)
Senior Notes in those cases when USI or any subsidiary subject to the Senior
Notes' covenants completes an asset sale. Proceeds allocable to the Senior Notes
and other defined obligations are required to be deposited in cash collateral
account for the benefit of the relevant holders; any claims of the lenders of
the Restructured Facilities to amounts on deposit in the cash collateral
accounts are subordinated to the claims of the relevant holders, including the
payment in full of their Senior Notes. Any reductions of senior debt with asset
sale proceeds are credited dollar-for-dollar towards the scheduled permanent
reductions.

    At December 31, 2001, excluding all amounts related to the amended Rexair
Credit Facility and after giving effect to the approximate $58 million reduction
pursuant to the December 2001 waiver, USI had approximately $766 million
committed under the Restructured Facilities, of which approximately
$669 million had been utilized and the balance of $97 million was available. At
December 31, 2001, $5.7 million was available for borrowing solely by Rexair
under the amended Rexair Credit Facility. These amounts are net of letters of
credit outstanding of $15.0 and $13.6 million at December 31, 2001 and
September 30, 2001, respectively. In addition, USI had letters of credit
outstanding with other financial institutions totalling $41.4 million as of both
December 31, 2001 and September 30, 2001.

    Interest paid to non-affiliates was $44.8 million, $46.1 million and
$39.8 million in fiscal 2001, 2000 and 1999 respectively.

    Notes Payable to Affiliates consists of the following:

<Table>
<Caption>
                                                                 AT SEPTEMBER 30,
                                                              ----------------------
                                                                2001          2000
                                                              --------      --------
                                                                  (IN MILLIONS)
<S>                                                           <C>           <C>
6.50% Notes Payable.........................................   $ 0.2         $  --
7.50% Notes Payable.........................................    22.9          22.9
8.25% Notes Payable.........................................     6.5           3.7
                                                               -----         -----
                                                               $29.6         $26.6
                                                               =====         =====
</Table>

    The notes payable to Affiliates are unsecured and payable upon demand.
Interest paid to Affiliates during fiscal 2001, 2000, and 1999 was $1.2 million,
$0.1 million, and $31.1 million, respectively.

NOTE 9--PENSION AND OTHER RETIREMENT PLANS

DOMESTIC BENEFIT ARRANGEMENTS

    The Company and its subsidiaries sponsor a number of non-contributory
defined benefit pension plans covering the majority of its United States
employees. The benefits under these plans are based primarily on years of
credited service and compensation as defined under the respective plan
provisions. The Company's funding policy is to contribute amounts to the plans
sufficient to meet the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974, plus additional amounts as the Company
may determine to be appropriate from time to time.

    The Company and certain of its subsidiaries also sponsor defined
contribution plans. Contributions relating to defined contribution plans are
made based upon the respective plans' provisions.

                                      F-21
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)
    The Company also provides health care and life insurance benefits to certain
groups of retirees with most retirees contributing a portion of the costs.

    The assumptions and the net periodic pension income for the Company's
defined benefit plans, as well as the total contributions charged to pension
expense for the defined contribution plans covering employees in the United
States are presented below:

<Table>
<Caption>
                                                                                     OTHER
                                                    PENSION BENEFITS               BENEFITS
                                             ------------------------------   -------------------
                                               2001       2000       1999       2000       1999
                                             --------   --------   --------   --------   --------
<S>                                          <C>        <C>        <C>        <C>        <C>
ASSUMPTIONS
Discount rate..............................     7.5%        8.0%      7.5%       8.0%       7.5%
Rate of compensation increases.............     4.5%        4.5%      4.5%        --         --
Expected rate of return on assets..........     9.5%        9.5%      9.5%        --         --
</Table>

<Table>
<Caption>
                                                                                     OTHER
                                                    PENSION BENEFITS               BENEFITS
                                             ------------------------------   -------------------
                                               2001       2000       1999       2000       1999
                                             --------   --------   --------   --------   --------
                                                                (IN MILLIONS)
<S>                                          <C>        <C>        <C>        <C>        <C>
COMPONENTS OF NET PERIODIC (INCOME) COST
Defined benefit plans:
  Service cost.............................   $ 0.1      $  1.1     $ 2.3       $0.2       $0.4
  Interest cost............................     0.2         1.5       2.7        0.3        0.7
  Expected return on plan assets...........    (0.1)       (1.4)     (2.8)        --         --
  Prior service costs......................      --         0.2       0.3         --        0.1
  Amortization of unrecognized transition
    asset..................................      --          --      (0.1)        --         --
  Net actuarial gain.......................      --         0.1       0.4         --         --
  Curtailments.............................      --        (1.1)      0.5         --        0.2
                                              -----      ------     -----       ----       ----
Periodic (income) cost of defined benefit
  plans....................................     0.2         0.4       3.3        0.5        1.4

Income from participation in USI Group
  Plan.....................................    (2.0)       (5.3)     (6.9)        --         --
  Curtailment in USI Group Plan............      --       (18.5)       --         --         --
                                              -----      ------     -----       ----       ----
Net period (income) cost:
  Defined benefit plans....................    (1.8)      (23.4)     (3.6)       0.5        1.4
  Defined contribution plans...............     0.2         0.7       0.9         --         --
                                              -----      ------     -----       ----       ----
Net periodic (income) cost.................   $(1.6)     $(22.7)    $(2.7)      $0.5       $1.4
                                              =====      ======     =====       ====       ====
</Table>

    The fiscal year 2000 curtailment gains totaling $19.6 million are related to
the sale of the Diversified businesses and are included in the statement of
operations caption "Gain on sale of businesses."

                                      F-22
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)
    The following table provides a reconciliation of changes in the projected
benefit obligation, fair value of plan assets and the funded status of the
Company's defined benefit pension and postretirement benefit plans to the
amounts recorded in the Company's balance sheet at September 30:

<Table>
<Caption>
                                                   PENSION BENEFITS       OTHER BENEFITS
                                                  -------------------   -------------------
                                                    2001       2000       2001       2000
                                                  --------   --------   --------   --------
                                                                (IN MILLIONS)
<S>                                               <C>        <C>        <C>        <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION:
Benefit obligation at beginning of year.........   $ 0.9      $ 35.6     $ 0.3      $ 9.1
Service cost....................................     0.1         1.1        --        0.2
Interest cost...................................     0.2         1.5        --        0.3
Actuarial (gains) losses........................    (0.1)        3.6       0.1         --
Benefits paid...................................    (0.1)       (0.6)       --       (0.1)
Acquisition (divestitures)......................    15.6       (40.3)      1.5       (9.2)
                                                   -----      ------     -----      -----
Benefit obligation at end of year...............   $16.6      $  0.9     $ 1.9      $ 0.3
                                                   =====      ======     =====      =====
CHANGE IN FAIR VALUE OF PLAN ASSETS:
Fair value of plan assets at beginning of
  year..........................................   $  --      $ 29.5     $  --      $  --
Actual return on plan assets....................    (0.4)        1.4        --         --
Contributions...................................      --         0.9        --        0.1
Benefits paid...................................    (0.1)       (0.6)       --       (0.1)
Acquisitions (divestitures).....................    12.2       (31.2)       --         --
                                                   -----      ------     -----      -----
Fair value of plan assets at end of year........   $11.7      $   --     $  --      $  --
                                                   =====      ======     =====      =====
FUNDED STATUS OF PLANS:
Plan assets less than projected benefit
  obligation....................................   $(4.9)     $ (0.9)    $(1.9)     $(0.3)
Unrecognized net actuarial losses...............     0.8         0.1       0.1         --
Unrecognized prior service cost.................      --         0.3        --         --
                                                   -----      ------     -----      -----
Total recognized................................   $(4.1)     $ (0.5)    $(1.8)     $(0.3)
                                                   =====      ======     =====      =====
AMOUNTS RECORDED IN THE BALANCE SHEET CONSIST
  OF:
Prepaid benefits................................   $  --      $   --     $  --      $  --
Accrued benefits................................    (4.4)       (1.0)     (1.8)      (0.3)
Intangible assets...............................      --         0.1        --         --
Accumulated other comprehensive income..........     0.3         0.4        --         --
                                                   -----      ------     -----      -----
Total recognized................................    (4.1)       (0.5)     (1.8)      (0.3)
Participation in USI Group Plan.................     6.7         4.6        --         --
                                                   -----      ------     -----      -----
Total amount recorded in the consolidated
  balance sheet.................................   $ 2.6      $  4.1     $(1.8)     $(0.3)
                                                   =====      ======     =====      =====
</Table>

    The fiscal 2001 Other Benefits balance of $1.8 million primarily relates to
Rexair, which was re-acquired on August 15, 2001.

    At September 30, 2001 and 2000, the Company has a net pension asset of
$6.7 million and $4.6 million, respectively, which reflects the Company's
recorded balance which is included in a USI group pension plan. As of
September 30, 2001, the USI group pension plan's fair value of the plan assets
of $270.1 million exceeds the present value of its accumulated benefit
obligation by approximately $97.6 million.

                                      F-23
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)

    The aggregate projected benefit obligation and the aggregate fair value of
plan assets, for the plans that have a projected benefit obligation in excess of
plan assets, are $16.6 million and $11.7 million, respectively, in 2001 and
$0.9 million and zero, respectively, in 2000.

    The aggregate accumulated benefit obligation and the aggregate fair value of
plan assets, for the plans that have an accumulated benefit obligation in excess
of plan assets, are $15.1 million and $11.7 million, respectively, in 2001 and
$0.9 million and zero, respectively, in 2000.

    The assets for the Company's U.S. plans are included in a master trust which
principally invests in listed stocks and bonds, including common stock of the
Company. Included in plan assets were 1,333,100 and 1,253,100 shares of the
Company's common stock at September 30, 2001 and 2000, respectively,
representing $3.1 million and $12.5 million of the master trust's assets for the
same respective periods. During fiscal 2001 and 2000, $0.1 million and $0.2
million, respectively, in dividends were paid to the master trust.

    The weighted average annual assumed rate of increase in the per capita cost
of covered benefits (i.e., the health care cost trend rate) for the other
postretirement benefit plans was 8.5% for 2001 and is assumed to decrease 0.5% a
year to 5.5%. A one-percentage-point change in the assumed health care cost
trend rate would have the following effects at and for the year ended
September 30, 2001 (in millions):

    Effect of a 1% increase in the health care cost trend rate on:

<Table>
<S>                                                           <C>
Service cost plus interest cost.............................    $ --
Accumulated postretirement benefit obligation...............     0.1
</Table>

    Effect of a 1% decrease in the health care cost trend rate on:

<Table>
<S>                                                           <C>
Service cost plus interest cost.............................   $  --
Accumulated postretirement benefit obligation...............    (0.1)
</Table>

    Certain of the Company's discontinued operations participate in
multi-employer plans, which provide defined benefits to union employees.
Contributions relating to multi-employer plans are based on negotiated
collective bargaining agreements.

FOREIGN BENEFIT ARRANGEMENTS

    The Company's foreign defined benefit pension plan covers salaried employees
of Spring Ram, which was acquired in July 1999 (see NOTE 4).

    The assumptions used and the net periodic pension cost for the Company's
foreign defined benefit plans are presented below:

<Table>
<Caption>
                                                                   PENSION BENEFITS
                                                            ------------------------------
                                                              2001       2000       1999
                                                            --------   --------   --------
<S>                                                         <C>        <C>        <C>
ASSUMPTIONS
Discount rate.............................................    6.25%       6.5%      6.0%
Rate of compensation increase.............................    3.25%      3.75%      4.0%
Expected return on assets.................................     7.5%       8.5%      7.0%
</Table>

                                      F-24
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)

<Table>
<Caption>
                                                                 PENSION BENEFITS
                                                          ------------------------------
                                                            2001       2000       1999
                                                          --------   --------   --------
                                                                  (IN MILLIONS)
<S>                                                       <C>        <C>        <C>
COMPONENTS OF NET PERIODIC BENEFIT (INCOME) COST
Defined benefit plans:
  Service cost..........................................   $ 0.5      $ 0.7       $0.1
  Interest cost.........................................     2.1        2.1        0.3
  Expected return on plan assets........................    (3.5)      (2.6)      (0.4)
  Curtailments..........................................      --       (0.9)        --
                                                           -----      -----       ----
  Net periodic benefit income...........................   $(0.9)     $(0.7)      $ --
                                                           =====      =====       ====
</Table>

    The following table provides a reconciliation of changes in the projected
benefit obligation, the fair value of plan assets and the funded status of the
Company's foreign defined benefit pension plans with the amounts recognized in
the Company's balance sheet as of September 30:

<Table>
<Caption>
                                                                    PENSION
                                                                   BENEFITS
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION
Benefit obligation at beginning of year.....................   $33.4      $38.0
Service cost................................................     0.5        0.7
Interest cost...............................................     2.1        2.1
Employee contributions......................................     0.4        0.6
Foreign currency exchange rate changes......................      --       (4.1)
Actuarial (gain) loss.......................................     3.7       (2.0)
Settlements/curtailments....................................      --       (0.9)
Benefits paid...............................................    (1.5)      (1.0)
                                                               -----      -----
Benefit obligation at end of year...........................   $38.6      $33.4
                                                               =====      =====
CHANGE IN FAIR VALUE OF PLAN ASSETS
Fair value of plan assets at beginning of year..............   $39.8      $38.5
Actual return on plan assets................................    (0.8)       5.1
Foreign currency exchange rate changes......................      --       (4.2)
Employer contributions......................................     0.5        0.8
Employee contributions......................................     0.4        0.6
Benefits paid...............................................    (1.5)      (1.0)
                                                               -----      -----
Fair value of plan assets at end of year....................   $38.4      $39.8
                                                               =====      =====
FUNDED STATUS OF PLANS
Plan assets in excess of (less than) projected benefit
  obligation................................................   $(0.2)     $ 6.4
Unrecognized net actuarial (gains) losses...................     5.8       (2.2)
                                                               -----      -----
Total recognized in the consolidated balance sheet..........   $ 5.6      $ 4.2
                                                               =====      =====
AMOUNTS RECOGNIZED IN THE BALANCE SHEET CONSIST OF
Prepaid benefits............................................   $ 5.6      $ 4.2
                                                               =====      =====
</Table>

                                      F-25
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10--INCOME TAXES

    Income (loss) before income taxes consists of:

<Table>
<Caption>
                                                          FOR THE FISCAL YEARS ENDED
                                                                SEPTEMBER 30,
                                                        ------------------------------
                                                          2001       2000       1999
                                                        --------   --------   --------
                                                                (IN MILLIONS)
<S>                                                     <C>        <C>        <C>
United States.........................................   $48.0      $ 74.8     $31.4
Foreign...............................................   (42.2)       36.9      44.8
                                                         -----      ------     -----
                                                         $ 5.8      $111.7     $76.2
                                                         =====      ======     =====
</Table>

    The provisions for federal, foreign, and state income taxes consist of:

<Table>
<Caption>
                                                          FOR THE FISCAL YEARS ENDED
                                                                SEPTEMBER 30,
                                                        ------------------------------
                                                          2001       2000       1999
                                                        --------   --------   --------
                                                                (IN MILLIONS)
<S>                                                     <C>        <C>        <C>
Current:
  Federal.............................................   $  7.5     $ 9.4      $17.1
  Foreign.............................................      7.6      12.3       14.5
  State...............................................      4.1       4.9        3.3
                                                         ------     -----      -----
                                                           19.2      26.6       34.9
Deferred..............................................    (10.6)     21.9        2.6
                                                         ------     -----      -----
                                                         $  8.6     $48.5      $37.5
                                                         ======     =====      =====
</Table>

<Table>
<Caption>
                                                          FOR THE FISCAL YEARS ENDED
                                                                SEPTEMBER 30,
                                                        ------------------------------
                                                          2001       2000       1999
                                                        --------   --------   --------
                                                                (IN MILLIONS)
<S>                                                     <C>        <C>        <C>
Statutory federal income tax provision................   $  2.0     $39.1      $26.7
Foreign income tax differential.......................       --      (0.4)      (2.0)
State income taxes (net of federal benefit)...........      2.7       3.2        2.1
Goodwill amortization.................................      1.4       2.4        1.5
Non-deductible goodwill impairments...................     21.3        --         --
Non-deductible restructuring charges..................      2.8        --         --
Resolution of tax contingencies.......................       --        --       (3.9)
Minority interest.....................................    (21.6)      4.0       12.8
Miscellaneous.........................................       --       0.2        0.3
                                                         ------     -----      -----
                                                         $  8.6     $48.5      $37.5
                                                         ======     =====      =====
</Table>

                                      F-26
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10--INCOME TAXES (CONTINUED)

<Table>
<Caption>
                                                                AT SEPTEMBER 30,
                                                              --------------------
                                                                2001        2000
                                                              --------    --------
                                                                 (IN MILLIONS)
<S>                                                           <C>         <C>
Deferred tax liabilities:
  Property, plant and equipment.............................   $  3.4      $  1.4
  Post retirement net pension assets........................      1.9        23.9
  Other.....................................................     22.1          --
                                                               ------      ------
Total deferred tax liabilities..............................     27.4        25.3
                                                               ------      ------
Deferred tax assets:
  Accruals and allowances...................................     24.2        17.1
  Postretirement benefits...................................      0.6         0.6
  Deductible goodwill.......................................       --         0.8
  Expected benefit from disposal............................     57.7          --
  Other.....................................................       --         0.2
                                                               ------      ------
  Gross deferred tax assets.................................     82.5        18.7
  Valuation allowance.......................................    (57.7)         --
                                                               ------      ------
Total deferred tax asset....................................     24.8        18.7
                                                               ------      ------
Net deferred tax liabilities................................   $ (2.6)     $ (6.6)
                                                               ======      ======
</Table>

    The Company has established a valuation allowance related to deferred tax
assets resulting from the losses recognized in connection with the Disposal
Plan, reflecting the uncertainty of the future realization of these assets.

    The classification of the deferred tax balances is:

<Table>
<Caption>
                                                                 SEPTEMBER 30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Current asset...............................................   $24.7      $18.6
Current liabilities.........................................      --         --
                                                               -----      -----
                                                                24.7       18.6
                                                               -----      -----
Noncurrent asset............................................     0.1        0.1
Noncurrent liability........................................   (27.4)     (25.3)
                                                               -----      -----
Net noncurrent liabilities..................................   (27.3)     (25.2)
                                                               -----      -----
Net deferred tax liability..................................   $(2.6)     $(6.6)
                                                               =====      =====
</Table>

NOTE 11--COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

    The table below shows the Company's future minimum lease payments due under
non-cancelable leases as of September 30, 2001. These minimum lease payments
(presented in millions) do not include facility leases that were accrued as
restructuring costs (See NOTE 6).

<Table>
<S>                                                           <C>
2002........................................................   $10.0
2003........................................................     7.0
2004........................................................     4.7
2005........................................................     3.7
2006........................................................     3.2
Thereafter..................................................     0.8
                                                               -----
Total minimum lease payments................................   $29.4
                                                               =====
</Table>

                                      F-27
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--COMMITMENTS AND CONTINGENCIES (CONTINUED)
    Rent expense, including equipment rental, was approximately $9.0 million,
$9.4 million and $12.7 million in 2001, 2000 and 1999, respectively.

LITIGATION

    The Company is subject to a wide range of environmental protection laws. The
Company has remedial and investigatory activities underway at approximately 38
sites, of which the Company has been named as a Potentially Responsible Party
("PRP") at 14 "superfund" sites pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or comparable statutes.

    It is often difficult to estimate the future impact of environmental
matters, including potential liabilities. The Company accrues for losses
associated with environmental remediation obligations when such losses are
probable and reasonably estimable. This practice is followed whether the claims
are asserted or unasserted. Reserves for estimated losses from environmental
remediation are, depending on the site, based primarily upon internal or third
party environmental studies, and estimates as to the number, participation level
and financial viability of any other PRP's, the extent of contamination and the
nature of required remedial actions. Such accruals are adjusted as further
information develops or circumstances change. Costs of future expenditures for
environmental remediation obligations are not discounted to their present fair
value. Recoveries of environmental remediation costs from other parties are
recognized as assets when their receipt is deemed probable. Management expects
that the amount reserved will be paid out over the periods of remediation for
the applicable sites which range up to 30 years and that such reserves are
adequate based on all current data. Each of the sites in question is at various
stages of investigation or remediation; however, no information currently
available reasonably suggests that projected expenditures associated with
remedial action or compliance with environmental laws for any single site or for
all sites in the aggregate, will have a material adverse affect on the Company's
financial condition, results of operations or cash flows.

    At September 30, 2001, the Company had accrued approximately $10.4 million
($0.9 million accrued as current liabilities; $9.5 million as non-current
liabilities) for various environmental related liabilities of which the Company
is aware. The Company believes that the range of liability for such matters is
between approximately $5.7 million and $14.6 million.

    Also, certain of the Company's subsidiaries are defendants or plaintiffs in
lawsuits that have arisen in the normal course of business. While certain of
these matters involve substantial amounts, it is management's opinion, based on
the advice of counsel, that the ultimate resolution of such litigation and
environmental matters will not have a material adverse effect on the Company's
financial condition, results of operations or cash flows.

    The Company's domestic subsidiaries participate in casualty insurance
programs of the Company and USI, which are principally self-insured programs. At
September 30, 2001, the Company's portion of these programs amounting to $6.1
million is included in other liabilities. The subsidiaries of the Company have
issued standby letters of credit guaranteeing financial responsibility for its
self-insured casualty programs amounting to $1.5 million. In addition, USI has
issued standby letters of credit guaranteeing financial responsibility for its
self-insured casualty programs.

                                      F-28
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12--SEGMENT DATA

    At September 30, 2001, the subsidiaries of the Company have issued
documentary letters of credit and banker's acceptances totaling $7.6 million
related to shipments from the Far East.

    The Company currently operates in one reportable segment--Bath & Plumbing.
Bath & Plumbing manufacturers whirlpools, spas, faucets, chinaware, bathtubs,
showertub enclosures, bath accessories, plumbing fittings, others behind the
wall plumbing products and vacuum cleaners. Prior to March 2000 (see NOTE 4),
the Company also operated a myriad of businesses through its Diversified
segment. These businesses manufactured automotive interiors,
precision-engineered products for the automotive, jet aviation and electronics
industries and various other consumer products. The Company's products are
primarily sold to the home improvement and home construction markets through
mass merchandisers, hardware stores, home centers, distributors, wholesalers and
other outlets.

    The financial information of the segments is regularly evaluated by the
corporate operating executives in determining resource allocation and assessing
performance and is periodically reviewed by the Company's Board of Directors.
The Company's senior management evaluates the performance of each business
segment based on its operating results and, other than general corporate
expenses, allocates specific corporate overhead to each segment. Accounting
policies for the segments are the same as those for the Company (see NOTE 3).

    The following is a summary of our significant accounts and balances by
segment, reconciled to our consolidated totals.

<Table>
<Caption>
                                                       BATH &                              CONSOLIDATED
                                                      PLUMBING   DIVERSIFIED   CORPORATE      TOTAL
                                                      --------   -----------   ---------   ------------
                                                                        (IN MILLIONS)
<S>                                                   <C>        <C>           <C>         <C>
NET SALES
2001................................................  $ 683.6      $   --      $     --      $  683.6
2000................................................    802.8       412.4            --       1,215.2
1999................................................    664.2       857.1            --       1,521.3

TOTAL OPERATING INCOME (LOSS)(1)
2001................................................  $ (16.7)     $   --      $  (14.1)     $  (30.8)
2000................................................     91.1        37.4          (9.9)        118.6
1999................................................     75.2        90.8          11.3         154.7

CAPITAL EXPENDITURES
2001................................................  $  17.6      $  0.2      $     --      $   17.8
2000................................................     10.9        12.6           0.1          23.6
1999................................................     10.2        25.1           0.8          36.1

DEPRECIATION AND AMORTIZATION
2001................................................  $  17.7      $  0.4      $     --      $   18.1
2000................................................     17.8        12.3           0.4          30.5
1999................................................     12.2        24.7           0.8          37.7

ASSETS(2)
2001................................................  $ 697.4      $   --      $1,195.8      $1,893.2
2000................................................    650.1          --       1,553.4       2,203.5
1999................................................    680.1       613.1         897.5       2,191.7
</Table>

------------------------

(1) Operating income (loss) for the Bath & Plumbing segment includes
    restructuring, impairment and other non-recurring charges of $60.8 million
    in fiscal 2001 (See Note 6). Operating losses for

                                      F-29
<Page>
                               USI ATLANTIC CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12--SEGMENT DATA (CONTINUED)
    corporate included management fees charged to the Company by USI of $13.1
    million, $10.8 million, and $11.4 million in fiscal 2001, 2000 and 1999,
    respectively.

(2) Corporate assets include net assets held for sale of $455.5 million, $801.3
    million, and $740.8 million and amounts due from affiliates of $681.7
    million, $709.3 million and $101.2 for fiscal 2001, 2000 and 1999,
    respectively.

    Aside from the operating income (loss) amounts noted above, the Company's
income from continuing operations includes interest income and expense, equity
earnings or losses in investees, other income and expense items and income
taxes, none of which are included in the Company's measurement of segment
operating profit. Corporate assets consist primarily of real property, cash and
cash equivalents and other investments. The following table presents certain
data by geographic areas.

    The Company's operations are principally located in North America and Europe
and to a lesser extent, in other regions of the world. The Company's country of
domicile is the United States. Export sales represented 5%, 12% and 32% of the
Company's total net sales for fiscal years 2001, 2000 and 1999, respectively.
Principal international markets served include Europe, South America, Canada and
Asia.

<Table>
<Caption>
                                                     FOR THE FISCAL YEARS ENDED
                                                           SEPTEMBER 30,
                                                   ------------------------------
                                                     2001       2000       1999
                                                   --------   --------   --------
                                                           (IN MILLIONS)
<S>                                                <C>        <C>        <C>
NET SALES
United States....................................   $405.1    $  831.8   $1,189.1
Foreign..........................................    278.5       383.4      332.2
                                                    ------    --------   --------
Total net sales..................................   $683.6    $1,215.2   $1,521.3
                                                    ======    ========   ========
OPERATING INCOME
United States....................................   $ (3.1)   $   61.8   $  104.7
Foreign..........................................    (27.7)       56.8       50.0
                                                    ------    --------   --------
Total operating income...........................   $(30.8)   $  118.6   $  154.7
                                                    ======    ========   ========
LONG-LIVED ASSETS
United States....................................   $264.4    $  175.5   $  383.4
Foreign..........................................    102.6       168.4      218.3
                                                    ------    --------   --------
Total long-lived assets..........................   $367.0    $  343.9   $  601.7
                                                    ======    ========   ========
</Table>

                                      F-30
<Page>
                         REPORT OF INDEPENDENT AUDITORS

    To the Board of Directors
U.S. Industries, Inc.

    We have audited the consolidated balance sheets of USI American Holdings
Corp. (the "Company") as of September 30, 2001 and 2000, and the related
consolidated statements of operations, cash flows and changes in stockholder's
equity for each of the three years in the period ended September 30, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company at
September 30, 2001 and 2000, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended September 30,
2001, in conformity with accounting principles generally accepted in the United
States.

    The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As more fully described in Note 2, the
Company is an indirect wholly owned subsidiary of U.S. Industries, Inc. and
subsidiaries ("USI"), as well as a co-borrower and co-obligor under certain debt
instruments of USI. USI is required under its restructured credit facilities to
make cumulative reductions its senior debt of $450 million by June 30, 2002. USI
needs to generate sufficient funds to make such reductions, or, absent such
reductions, restructure or refinance its debt. The Company's capital stock and
substantially all of its assets have been pledged as collateral under USI's
restructured credit facilities and senior notes. These conditions raise
substantial doubt about both USI's and the Company's ability to continue as a
going concern. USI's management's plans in regard to these matters are also
described in Note 2. The financial statements do not include any adjustments
that may result from the outcome of this uncertainty.

                                          /s/ Ernst & Young LLP

New York, New York
January 14, 2002

                                      F-31
<Page>
                          USI AMERICAN HOLDINGS CORP.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                 (IN MILLIONS)

<Table>
<Caption>
                                                                FOR THE FISCAL YEARS ENDED
                                                                      SEPTEMBER 30,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net sales...................................................  $ 683.6    $1,215.2   $1,521.3
Operating costs and expenses:
  Cost of products sold.....................................    485.5       871.3    1,108.3
  Selling, general and administrative expenses..............    155.0       214.5      246.2
Management fee expense, net.................................     13.1        10.8       11.4
Impairment and restructuring charges........................     60.8          --        0.7
                                                              -------    --------   --------
Operating (loss) income.....................................    (30.8)      118.6      154.7
Affiliated interest income..................................     44.5         4.2        0.5
Affiliated interest expense.................................     (2.7)       (0.9)     (33.3)
Interest income.............................................      1.5         3.1        3.1
Interest expense............................................    (44.0)      (43.0)     (23.2)
Gain on the sale of businesses..............................       --        42.1         --
Equity earnings in investees................................     (1.4)        3.1         --
Minority interest income (expense)..........................     61.6       (11.3)     (36.7)
Other (expense) income, net.................................    (22.9)       (4.2)      11.1
                                                              -------    --------   --------
Income before income taxes, discontinued operations and
  cumulative effect of accounting change....................      5.8       111.7       76.2
Provision for income taxes..................................      8.6        48.5       37.5
                                                              -------    --------   --------
(Loss) income from continuing operations....................     (2.8)       63.2       38.7
Discontinued operations:
  (Loss) income from operations (net of income tax
    provisions of $37.9, $2.8 and $33.8, respectively)......    (45.7)       (1.6)      51.9
  Loss on disposals (net of tax benefits of $10.2 and $10.0
    in 2001 and 1999, respectively).........................   (194.1)         --      (12.1)
                                                              -------    --------   --------
(Loss) income from discontinued operations..................   (239.8)       (1.6)      39.8
Cumulative effect of accounting change, net of taxes of $0.8
  in 2001...................................................     (0.7)         --         --
                                                              -------    --------   --------
Net (loss) income...........................................  $(243.3)   $   61.6   $   78.5
                                                              =======    ========   ========
</Table>

                            See accompanying notes.

                                      F-32
<Page>
                          USI AMERICAN HOLDINGS CORP.

                          CONSOLIDATED BALANCE SHEETS

                        (IN MILLIONS EXCEPT SHARE DATA)

<Table>
<Caption>
                                                               AT SEPTEMBER 30,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
ASSETS
  Cash and cash equivalents.................................  $   51.8   $   18.1
  Trade receivables, net of allowances of $5.7 in 2001 and
    $2.8 in 2000............................................     158.7      178.6
  Inventories, net..........................................     117.0       95.1
  Deferred income taxes.....................................      24.7       18.6
  Net assets held for sale..................................     455.5      383.5
  Other current assets......................................      10.7       12.4
                                                              --------   --------
    Total current assets....................................     818.4      706.3
Property, plant and equipment, net..........................      99.5       74.7
Net assets held for sale....................................        --      417.8
Other assets................................................      26.1       26.2
Goodwill and other intangibles, net.........................     267.5      269.2
Notes receivable from affiliates, net.......................     681.7      709.3
                                                              --------   --------
Total assets................................................  $1,893.2   $2,203.5
                                                              ========   ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
  Notes payable.............................................  $   11.9   $   14.0
  Current maturities of long-term debt......................     428.0         --
  Trade accounts payable....................................      68.2       65.7
  Accrued expenses and other current liabilities............      68.4       63.4
Notes payable to affiliates.................................      29.6       26.6
                                                              --------   --------
    Total current liabilities...............................     606.1      169.7
Long-term debt..............................................     280.1      542.5
Minority interest...........................................     133.4      195.0
Deferred income taxes.......................................      27.3       25.2
Other liabilities...........................................      38.6      115.5
Due to affiliates...........................................     160.0      283.0
                                                              --------   --------
    Total liabilities.......................................   1,245.5    1,330.9
Commitments and contingencies

Stockholder's equity:
  Common stock (no par value), 1,000 shares authorized; 200
    shares issued and outstanding...........................        --         --
  Paid-in capital...........................................     469.1      469.1
  Accumulated earnings......................................     203.8      447.1
  Accumulated other comprehensive loss......................     (25.2)     (43.6)
                                                              --------   --------
Total stockholder's equity..................................     647.7      872.6
                                                              --------   --------
Total liabilities and stockholder's equity..................  $1,893.2   $2,203.5
                                                              ========   ========
</Table>

                             See accompanying notes

                                      F-33
<Page>
                          USI AMERICAN HOLDINGS CORP.

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

          FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

                                 (IN MILLIONS)

<Table>
<Caption>
                                                                               ACCUMULATED
                                                                                  OTHER
                                                                              COMPREHENSIVE   COMPREHENSIVE
                                                                   RETAINED      INCOME          INCOME
                                  COMMON STOCK   PAID-IN CAPITAL   EARNINGS      (LOSS)          (LOSS)        TOTAL
                                  ------------   ---------------   --------   -------------   -------------   --------
<S>                               <C>            <C>               <C>        <C>             <C>             <C>
Balance at September 30, 1998...   $      --          $469.1        $307.0       $(11.2)         $   --        $764.9
Net income......................                                      78.5                         78.5          78.5
  Translation adjustment........                                                  (16.4)          (16.4)        (16.4)
  Minimum pension liability
    adjustment..................                                                    1.1             1.1           1.1
                                                                                                 ------
Other comprehensive income......                                                                  (15.3)
                                                                                                 ------
Total comprehensive income......                                                                   63.2
                                   =========          ======        ======       ======          ======        ======
Balance at September 30, 1999...          --           469.1         385.5        (26.5)                        828.1
Net income......................                                      61.6                         61.6          61.6
Sale of Diversified businesses:
  Translation adjustment........                                                    5.2             5.2           5.2
  Minimum pension liability
    adjustment..................                                                    1.7             1.7           1.7
Translation adjustment..........                                                  (24.5)          (24.5)        (24.5)
Minimum pension liability
  adjustment....................                                                    0.5             0.5           0.5
                                                                                                 ------
Other comprehensive income......                                                                  (17.1)
                                                                                                 ------
Total comprehensive loss........                                                                   44.5
                                   =========          ======        ======       ======          ======        ======
Balance at September 30, 2000...          --           469.1         447.1        (43.6)                        872.6
Net loss........................                                    (243.3)                      (243.3)       (243.3)
Discontinued Operations:
Translation adjustment..........                                                   37.4            37.4          37.4
Minimum pension liability
  adjustment....................                                                    7.2             7.2           7.2
Translation adjustment..........                                                  (18.9)          (18.9)        (18.9)
Minimum pension liability
  adjustment....................                                                   (5.9)           (5.9)         (5.9)
Fair value of derivatives
  adjustment....................                                                   (1.4)           (1.4)         (1.4)
                                                                                                 ------
Other comprehensive income......                                                                   18.4
                                                                                                 ------
Total comprehensive loss........                                                                 (224.9)
                                   ---------          ------        ------       ------          ======        ------
Balance at September 30, 2001...   $      --          $469.1        $203.8       $(25.2)                       $647.7
                                   =========          ======        ======       ======                        ======
</Table>

                            See accompanying notes.

                                      F-34
<Page>
                          USI AMERICAN HOLDINGS CORP.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN MILLIONS)

<Table>
<Caption>
                                                                   FOR THE FISCAL YEARS
                                                                   ENDED SEPTEMBER 30,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Operating activities
(Loss) income from continuing operations....................   $ (2.8)    $ 63.2    $  38.7
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Depreciation and amortization.............................     18.1       30.5       37.7
  Amortization of deferred financing costs..................      0.7        0.7        0.6
  (Benefit) provision for deferred income taxes.............    (10.6)      21.9        2.6
  Provision for doubtful accounts...........................      2.5        2.5        3.1
  Gain on the sale of excess real estate....................       --       (3.2)     (12.6)
  Impairment, restructuring and other non-recurring
    charges.................................................     60.8         --         --
  Minority interest in net income...........................    (61.6)      11.3       36.7
  Equity loss (earnings) of investee........................      1.4       (3.1)        --
  Gain on sale of businesses................................       --      (42.1)        --
  Changes in operating assets and liabilities, excluding the
    effects of acquisitions and dispositions:
    (Increase) decrease in trade receivables................     27.5      (24.1)     (13.3)
    (Increase) decrease in inventories......................     (5.0)      (2.2)     (16.9)
    (Increase) decrease in other current assets.............      2.8       (0.3)      (2.5)
    (Increase) decrease in other assets.....................     (2.5)     (11.2)      26.5
    Increase (decrease) in trade accounts payable...........       --      (15.7)       0.6
    Increase (decrease) in accrued expenses and other
     liabilities............................................     (9.2)     (37.5)      (7.3)
    Increase (decrease) in other liabilities................     (8.5)     (12.8)     (11.2)
    Other, net..............................................       --         --         --
                                                               ------     ------    -------
Net cash provided by operating activities of continuing
  operations................................................     13.6      (22.1)      82.7
                                                               ------     ------    -------
Income from discontinued operations.........................   (239.8)      (1.6)      39.8
Adjustments to reconcile net income from discontinued
  operations to net cash provided by discontinued
  operations:
    Loss on disposal of discontinued operations.............    194.1         --       12.1
    Impairments and other nonrecurring charges..............     61.6       84.0
    Decrease (increase) in net assets held for sale.........     47.3      (56.6)      32.0
                                                               ------     ------    -------
Net cash provided by operating activities of discontinued
  operations................................................     63.2       25.8       83.9
                                                               ------     ------    -------
Net cash provided by operating activities...................     76.8        3.7      166.6
Investing activities
Proceeds from the sale of businesses........................       --      391.3       95.0
Acquisitions of businesses, net of cash acquired............       --      (78.4)    (169.3)
Purchases of property, plant and equipment..................    (17.8)     (23.6)     (36.1)
Proceeds from sales of property, plant and equipment........      0.9        1.7        3.3
Proceeds from sales of excess real estate...................       --        5.5       25.3
Repayments of (loans to) affiliates.........................     27.6     (487.5)        --
Other investing activities, net.............................       --         --        0.7
                                                               ------     ------    -------
Net cash used in investing activities.......................     10.7     (191.0)     (81.1)
Financing activities
Proceeds from long-term debt................................    247.9        5.8      410.5
Repayment of long-term debt.................................   (246.5)    (152.5)    (340.2)
(Repayment) proceeds of notes payable, net..................     (2.1)       1.8        4.9
Repayments of (loans to) affiliates.........................      3.0       (3.3)       4.3
Payment to settle interest rate protection agreements.......       --         --      (22.0)
Net transfers with affiliates...............................    (50.1)     311.1     (113.2)
                                                               ------     ------    -------
Net cash provided by (used in) financing activities.........    (47.8)     162.9      (55.7)
Effect of exchange rate changes on cash and cash
  equivalents...............................................     (6.0)      (5.9)     (18.0)
Increase (decrease) in cash and cash equivalents............     33.7      (30.3)      11.8
                                                               ------     ------    -------
Cash and cash equivalents at beginning of period............     18.1       48.4       36.6
                                                               ------     ------    -------
Cash and cash equivalents at end of period..................   $ 51.8     $ 18.1    $  48.4
                                                               ======     ======    =======
</Table>

                            See accompanying notes.

                                      F-35
<Page>
                          USI AMERICAN HOLDINGS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--BASIS OF PRESENTATION

    The accompanying consolidated financial statements include the consolidated
operations of USI American Holdings Corp. ("USIAH" or the "Company"). USIAH is
an indirect wholly-owned subsidiary of U.S. Industries, Inc. ("USI" or the
"Parent") and a direct subsidiary of USI Atlantic Corp. ("USI Atlantic").

    The Company's sole asset is its ownership of 100% of the preferred stock of
USI Global. The preferred stock of USI Global entitles the Company to ninety-one
percent of the total voting rights of all of Global's outstanding stock, thus
giving the Company control of Global. The assets, liabilities and results of
operations of Global are, therefore, consolidated in the accompanying financial
statements for all periods presented. Global's principal operating subsidiaries
include Jacuzzi Inc., Rexair, Inc., Jacuzzi Europe, spa., Spring Ram Plc., and
Jacuzzi Leisure Products Ltd. These entities manufacture and distribute a full
line of whirlpool baths, spas, swimming pools, swimming pool equipment, kitchen
and bath sinks, shower enclosures and premium vacuum cleaners. These entities
operate in the U.S. and throughout Europe, Canada, and South America.

    In addition, Global's other principal subsidiaries are classified as
discontinued operations and include several of USI's domestic and European
commercial and institutional lighting businesses, USI's North American lawn and
garden businesses and the U.K. hand and industrial tools business (see NOTE 5).
The outstanding minority interest represents USI's 100% ownership of the
outstanding common stock of Global.

    The preferred stock has a stated value of $1.1 billion and a yield of 5.6%.
The preferred stock has a maturity date of June 30, 2024, at which time it can
be redeemed at the option of Global. All preferred dividends will be paid only
to the extent declared and will accumulate on a cumulative basis (without
interest), to the extent not declared or paid. The preferred stock will have a
liquidation value of the stated value plus accrued and unpaid dividends. The
preferred stock has no conversion rights, but will rank prior to the common
stock and all other classes and series of equity securities of Global as to
dividends rights and rights on liquidation, winding down or dissolution of
Global.

    USI and certain subsidiaries of USI (referred to herein as "Affiliates")
have provided certain corporate general and administrative services to the
Company including legal, finance, tax, risk management and employee benefits. A
portion of the related costs has been allocated to USIAH based on the percentage
of USIAH's sales to the consolidated sales of USI as management fees. USIAH's
management believes such amounts are reasonable; however, they may not be
indicative of USIAH's ongoing costs as a separate entity.

    The Company operates on a 52- or 53-week fiscal year ending on the Saturday
nearest to September 30. The fiscal year periods presented in our consolidated
financial statements consisted of the 52 weeks ending on September 29, 2001,
September 30, 2000 or October 2, 1999, but are presented as of September 30 in
each of those years for convenience. Businesses over which the Company has the
ability to exercise significant influence are accounted for using the equity
method. In March 2000, the Company completed the disposition of a majority
equity interest in its Diversified segment. Since then, the Company has
accounted for its retained interest in the Diversified segment under the equity
method of accounting (see NOTE 4). The Company eliminates intercompany balances
and transactions when combining the account balances of its subsidiaries.

                                      F-36
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--GOING CONCERN

    The accompanying consolidated financial statements have been prepared on a
going concern basis of accounting and do not reflect any adjustments that might
result if USIAH was unable to continue as a going concern. On August 15, 2001,
USI finalized a comprehensive restructuring of its bank debt and bank debt of
Rexair, Inc. ("Rexair"), a former subsidiary that was reacquired from Strategic
Industries, LLC ("Strategic") on the same date. The amended facilities (together
the "Restructured Facilities") extend the final maturity date of USI's debt
under its credit agreement to November 30, 2002, which coincides with the final
maturity of the amended Rexair Credit Facility. The Restructured Facilities
provide for scheduled permanent reductions of USI's senior debt (a combination
of the Restructured Facilities, senior notes of USI and other defined
obligations) during the term of the Restructured Facilities. The required
cumulative permanent reductions of USI's senior debt are scheduled at
$75 million, $200 million, $450 million and $600 million for the periods ending
December 31, 2001, March 31, 2002, June 30, 2002, and October 15, 2002,
respectively. The remaining balance of the Restructured Facilities is due in
full on November 30, 2002. USI expects to satisfy operating liquidity needs
through operating cash flow. However, it will have to sell a substantial amount
of its assets and restructure or refinance its debt to satisfy the required
cumulative permanent reductions. USIAH's capital stock and substantially all of
its assets have been pledged as collateral under USI's senior debt.

    On December 28, 2001, the Board of Directors of USI approved a formal
Disposal Plan for five businesses in order to meet the scheduled reductions.
Four of the businesses to be disposed of are included in the accompanying
financial statements, Ames True Temper, Lightning Corporation of America, Spear
& Jackson and SiTeco Lighting, and have an estimated net realizable value of
$455.5 million. The Disposal Plan calls for the sale of these businesses over
the next 12 months. The net assets of the discontinued businesses are included
in net assets held for sale in all periods presented.

    USI and the Company entered into an agreement to sell Ames True Temper on
December 24, 2001 for approximately $165 million in cash. The sale, which is
subject to the completion of financing and other customary closing conditions,
is currently expected to close in January 2002. Upon closing, the entire net
cash proceeds will be applied to reduce USI's funded and unfunded senior debt.
USI is pursuing the sale of the Strategic Notes together with the equity
interest in Strategic at an amount expected to approximate the September 30,
2001 carrying value. Upon closing, the entire net cash proceeds will be applied
to reduce USI's funded and unfunded senior debt.

    The net proceeds from the sale of Ames True Temper and the Strategic Notes
are expected to be sufficient to fund the required reductions of USI's senior
debt through March 31, 2002.

    USI continues to actively pursue its Disposal Plan. However, there can be no
assurance when or whether USI will consummate any of these transactions. If USI
is unable to consummate asset disposals as outlined in its Disposal Plan in time
to meet scheduled amortizations, USI expects to seek a further restructuring of
its credit facilities. Furthermore, the proceeds of the Disposal Plan, if
consummated in its entirety, and the sale of the Strategic Notes will be
insufficient to repay the Restructured Facilities upon their maturity in
November 2002. Accordingly, USI will have to restructure or refinance its
existing Restructured Facilities. USI believes it will be able to restructure or
refinance its existing Restructured Facilities before their scheduled maturity
in November 2002. However, there can be no assurance that it will be able to do
so.

    USI's and the Company's independent auditors have included a going concern
explanatory paragraph in their audit reports accompanying the September 30, 2001
consolidated financial

                                      F-37
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--GOING CONCERN (CONTINUED)
statements of both USI and the Company. The paragraph states that USI's need to
generate sufficient funds to make the required cumulative reductions of senior
debt of $450 million by June 30, 2002 through asset sales or a restructuring or
refinancing raises substantial doubt about USI's and the Company's ability to
continue as a going concern.

NOTE 3--ACCOUNTING POLICIES

    USE OF ESTIMATES: Accounting guidelines require that the Company makes
estimates and assumptions that affect amounts reported in its financial
statements and accompanying notes. Actual results could differ from those
estimates.

    FOREIGN CURRENCY TRANSLATION: The Company's subsidiaries outside of the
United States record transactions using their local currency as their functional
currency. In accordance with Statement of Financial Accounting Standards
("SFAS") No. 52, FOREIGN CURRENCY TRANSLATION, the assets and liabilities of the
Company's foreign subsidiaries are translated into U.S. dollars using the
exchange rates in effect at the balance sheet dates. Revenues, expenses and cash
flow items are translated at average daily exchange rates for the period. The
translation adjustments that result from translating the balance sheets at
different rates than the statements of operations are included in accumulated
other comprehensive income, which is a separate component of the Company's
stockholder's equity.

    CASH AND CASH EQUIVALENTS: The Company considers all highly liquid
investments with original maturities of three months or less to be cash
equivalents. Except for certain cash balances owned by the Company, cash
accounts have been controlled on a centralized basis by an Affiliate which
sweeps cash receipts and funds cash disbursements of the Company. The net
results of cash transactions between or on behalf of the Company, including
intercompany advances, are included in the consolidated balance sheets as due to
affiliates.

    TRADE RECEIVABLES AND CONCENTRATION OF CREDIT RISK: The Company records an
allowance for doubtful accounts, reducing its receivables balance to an amount
the Company estimates is collectible from its customers.

    The Company principally operates in the United States, and to a lesser
extent in the UK. The Company performs periodic credit evaluations of its
customers' financial condition and generally does not require collateral. The
Company encounters a certain amount of credit risk as a result of a
concentration of receivables among a few significant customers. One of its
customers represents 5.3% and 12.7% of the Company's trade receivables balance
at September 30, 2001 and 2000, respectively, and 10.3%, 8.0%, and 5.4% of its
sales for the years ending September 30, 2001, 2000, and 1999, respectively.
Credit losses have not been significant and are within management's
expectations.

    INCOME TAXES: Deferred tax assets and liabilities represent the tax effects,
based on current law, of any temporary differences in the timing of when
revenues and expenses are recognized for tax purposes and when they are
recognized for financial statement purposes. The deferred tax assets are
reviewed periodically for recoverability and valuation allowances are provided
as necessary.

    The Company's United States earnings have been included in the consolidated
federal income tax return filed by USI. The Company provided for income taxes in
the accompanying consolidated financial statements as if it were a stand-alone
entity and filed separate income tax returns from USI. Federal taxes currently
payable have been included in due to affiliate. Income taxes paid to state,
local and foreign jurisdictions during fiscal 2001, 2000 and 1999 were
$13.8 million, $18.8 million and $31.0 million, respectively.

                                      F-38
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
    INVENTORIES: The Company's inventories are stated at the lower of cost,
determined by the first-in, first-out method, or market. The Company's
inventories can be categorized as follows:

<Table>
<Caption>
                                                               AT SEPTEMBER 30,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Finished products...........................................   $ 57.9     $45.0
In-process products.........................................      5.8       4.4
Raw materials...............................................     53.3      45.7
                                                               ------     -----
                                                               $117.0     $95.1
                                                               ======     =====
</Table>

    PROPERTY, PLANT AND EQUIPMENT: The Company records its property, plant and
equipment at cost. The Company records depreciation and amortization in a manner
that recognizes the cost of its depreciable assets in operations over their
estimated useful lives using the straight-line method. The Company estimates the
useful lives of its depreciable assets to be 20-50 years for buildings and
3-10 years for machinery, equipment and furniture. Leasehold improvements are
amortized over the shorter of the terms of the underlying leases, including
probable renewal periods, or the estimated useful lives of the improvements.

    Property, plant and equipment consisted of:

<Table>
<Caption>
                                                               AT SEPTEMBER 30,
                                                             --------------------
                                                               2001        2000
                                                             --------    --------
                                                                (IN MILLIONS)
<S>                                                          <C>         <C>
Land and buildings.........................................   $ 61.4      $ 48.7
Machinery, equipment and furniture.........................     98.2        74.7
Accumulated depreciation...................................    (60.1)      (48.7)
                                                              ------      ------
                                                              $ 99.5      $ 74.7
                                                              ======      ======
</Table>

    Depreciation and amortization consisted of:

<Table>
<Caption>
                                                              FOR THE FISCAL YEARS
                                                              ENDED SEPTEMBER 30,
                                                         ------------------------------
                                                           2001       2000       1999
                                                         --------   --------   --------
                                                                 (IN MILLIONS)
<S>                                                      <C>        <C>        <C>
Depreciation...........................................   $10.3      $20.2      $28.3
Amortization of goodwill...............................     7.8       10.3        9.4
                                                          -----      -----      -----
                                                          $18.1      $30.5      $37.7
                                                          =====      =====      =====
</Table>

    OTHER ASSETS: Included in other assets are excess properties held for sale
consisting of land and buildings no longer used in operations. These assets are
carried at the lower of cost or fair value less costs to sell. The carrying
value of such properties was $10.1 million and $14.6 million as of
September 30, 2001 and 2000, respectively. In fiscal 2001, the Company recorded
a loss from excess properties of $0.2 million, compared to income from excess
properties of $2.7 million and $12.2 million in fiscal 2000 and 1999,
respectively. This amount is included in other income (expense), net and
consists of net gains on the sale of these properties, adjustments to net
realizable value and the carrying costs incurred in the period.

    GOODWILL: Goodwill represents the excess of the purchase price over the fair
value of net assets acquired. The Company reviews operating results and other
relevant facts every fiscal quarter for

                                      F-39
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
each of its businesses to determine if there are indications that the carrying
value of its long-lived assets, including goodwill may be impaired. When there
are indicators of impairment, the Company first assesses the recoverability of
goodwill associated with long-lived assets in accordance with the requirements
of SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
LONG-LIVED ASSETS TO BE DISPOSED OF, which requires impairment losses to be
recorded when the undiscounted cash flows estimated to be generated by those
assets are less than the carrying amount of those assets. In addition, an
enterprise level assessment of the recoverability of any remaining goodwill is
performed using the fair value methodology, as permitted under APB No. 17. In
the event that such fair value is below the carrying value of an enterprise, for
those companies with goodwill, the Company reduces goodwill to the extent it is
impaired based upon fair value.

    The fair value methodology is applied to determine the recoverable value for
each business on a stand-alone basis using ranges of fair values obtained from
independent appraisers. In developing these ranges, the independent appraisers
consider (a) publicly available information, (b) financial projections of each
business based on management's best estimates, (c) the future prospects of each
business as discussed with senior operating and financial management,
(d) publicly available information regarding comparable publicly traded
companies in each industry, (e) market prices, capitalization and trading
multiples of comparable public companies and (f) other information deemed
relevant. In reviewing these valuations and considering the need to record a
charge for impairment of enterprise value and goodwill to the extent it is part
of the enterprise value, the Company also evaluates solicited and unsolicited
bids for the businesses of the Company.

    Goodwill is amortized on a straight-line basis over the estimated future
period to be benefited (ranging from 20 to 40 years, primarily 40 years).
Accumulated amortization aggregated $73.1 million and $64.9 million at
September 30, 2001 and 2000, respectively.

    ACCRUED EXPENSES AND OTHER LIABILITIES: Accrued expenses and other current
liabilities consisted of the following:

<Table>
<Caption>
                                                                AT SEPTEMBER 30,
                                                              --------------------
                                                                2001        2000
                                                              --------    --------
                                                                 (IN MILLIONS)
<S>                                                           <C>         <C>
Compensation related........................................   $12.8       $ 8.0
Other.......................................................    55.6        55.4
                                                               -----       -----
                                                               $68.4       $63.4
                                                               =====       =====
</Table>

    FAIR VALUE OF FINANCIAL INSTRUMENTS: SFAS No. 107, DISCLOSURE ABOUT FAIR
VALUE OF FINANCIAL INSTRUMENTS, requires that the Company disclose the fair
value of its financial instruments when it is practical to estimate. The Company
has determined the estimated fair values of its financial instruments, which are
either recognized in the Company's consolidated balance sheets or disclosed
within these notes, using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting market
data to develop estimates of fair value. Accordingly, the estimates presented
are not necessarily indicative of the amounts the Company could realize in a
current market exchange.

    Short-term Assets and Liabilities: The fair values of the Company's cash and
cash equivalents, trade receivables and accounts payable approximate their
carrying values because of their short-term nature.

                                      F-40
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
    Long-term Debt: The fair values of the Company's Senior Notes are determined
by discounting the cash flows using current interest rates for financial
instruments with similar characteristics and maturities. The fair value of the
Company's remaining debt approximates 80% of its carrying value as of
September 30, 2001.

    There were no other significant differences as of September 30, 2001 and
September 30, 2000 between the carrying value and fair value of the Company's
financial instruments except as disclosed below:

<Table>
<Caption>
                                                     2001                  2000
                                              -------------------   -------------------
                                              CARRYING     FAIR     CARRYING     FAIR
                                               AMOUNT     VALUE      AMOUNT     VALUE
                                              --------   --------   --------   --------
                                                            (IN MILLIONS)
<S>                                           <C>        <C>        <C>        <C>
7.25% Senior Notes..........................   $123.9     $82.5      $123.6     $113.0
                                               ======     =====      ======     ======
</Table>

    Interest Rate Swaps and Foreign Currency Contracts: The fair value of the
Company's interest rate swap and foreign currency contracts is the amount the
Company would receive or have to pay to terminate the agreement at the reporting
date, taking into account current interest rates and exchange rates. The fair
value of the interest rate swap is provided to the Company by its financial
institution, the counter-party to the interest rate swap agreement. For more
information on these financial instruments, see the DERIVATIVE FINANCIAL
INSTRUMENTS section of this note

    REVENUE RECOGNITION: The Company currently records revenue when delivery has
occurred and title has passed to the customer. Provisions are made for warranty
and return costs at the time of sale. Such provisions have not been material to
the Company.

    ACCOUNTING CHANGE: In December 1999, the Securities and Exchange Commission
("SEC") issued Staff Accounting Bulletin ("SAB") No. 101, REVENUE RECOGNITION IN
FINANCIAL STATEMENTS, which, along with other guidance, clarified the SEC's
views on various revenue recognition and reporting matters. As a result, the
Company changed its method of accounting for certain sales transactions.
Historically, the Company recognized revenue upon shipment of products to the
customer because, even though some products were shipped FOB destination, the
Company used a common carrier and thus gave up substantially all the risks of
ownership. Under the new accounting method adopted retroactive to October 1,
2000, the Company now recognizes revenue when title passes. The net effect of
the accounting change was not material to the results for the year ended
September 30, 2001. Net sales for the year ended September 30, 2001 includes
$4.4 million of net sales that, prior to the accounting change, had been
recognized through September 30, 2000. The pro forma amounts, had the new
revenue recognition method been applied retroactively to prior periods, were not
materially different from the amounts shown in the Company's consolidated
statements of operations for the years ended September 30, 2000 and 1999.
Therefore, these amounts have not been presented.

    SHIPPING AND HANDLING FEES AND COSTS: After adopting Emerging Issues Task
Force ("EITF") Issue No. 00-10, ACCOUNTING FOR SHIPPING AND HANDLING FEES AND
COSTS, the Company classifies amounts charged to its customers for shipping and
handling as revenues, while shipping and handling costs are recorded as cost of
goods sold.

    ADVERTISING COSTS: Advertising costs are charged to expense when incurred.
The Company participates in cooperative advertising programs with certain
customers for which the Company reimburses a portion of advertising costs.
Advertising expense totaled $26.1 million, $27.7 million and $21.6 million in
fiscal 2001, 2000 and 1999, respectively.

                                      F-41
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
    RESEARCH AND DEVELOPMENT COSTS: Research and development costs are expensed
as incurred. Such amounts totaled $4.1 million, $4.5 million and $2.9 million in
fiscal 2001, 2000 and 1999, respectively.

    DERIVATIVE FINANCIAL INSTRUMENTS: Effective October 1, 2000, the Company
adopted SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES, as amended, which requires that all derivative instruments be
reported on the balance sheet at fair value and establishes criteria for
designation and effectiveness of hedging relationships. The Company uses several
types of derivative financial instruments including interest rate swaps, forward
contracts and debt denominated in a foreign currency to hedge its exposure to
volatility in interest rates and currency exchange rates.

INTEREST RATE HEDGING

    The Company hedged a portion of its variable-rate debt by entering into an
interest rate swap in which the Company agreed to exchange, at specified
intervals, the calculated difference between fixed and variable interest amounts
on $90 million of its debt. The swap, which matures on June 30, 2002, is
designated as a cash flow hedge of the underlying variable-rate interest
payments and is recorded as a current liability in the Company's consolidated
balance sheet. Since an assessment of the hedging relationship revealed that it
was 100% effective, the entire unrealized loss, net of tax, is recorded in
accumulated other comprehensive income ("OCI") within stockholder's equity. As
of September 30, 2001 there was an unrealized loss of $1.4 million in OCI
related to this contract. The amounts in OCI will be recognized as additional
interest expense over the term of the swap agreement.

FORWARD EXCHANGE

    The Company manufactures and sells its products in a number of countries
throughout the world and, as a result, is exposed to movements in foreign
currency exchange rates. The primary purpose of the Company's foreign currency
hedging activities is to manage the volatility associated with foreign currency
payments to related entities or to vendors for purchases of materials and with
foreign currency collections from customers in the normal course of business.
The Company utilizes forward exchange contracts with maturities of less than
twelve months, which qualify as foreign currency hedges. These hedges are
intended to offset the effect of transaction gains and losses, which arise when
payments or collections in a foreign currency are made or received one to three
months after the asset or liability is generated. The fair value of these
instruments at September 30, 2001 was negligible. Since the Company's assessment
of these hedges revealed no ineffectiveness, gains and losses on these
instruments are deferred in OCI, net of tax, until the underlying transaction
gain or loss is recognized in earnings. Amounts in OCI will be reclassified into
earnings within the next twelve months.

FOREIGN CURRENCY DENOMINATED DEBT (NET INVESTMENT HEDGING)

    The Company is exposed to foreign currency risk when the financial
statements of its non-U.S. dollar subsidiaries are translated into its
functional currency. In order to hedge its net investment position in select
subsidiaries, the Company entered into foreign currency denominated debt. Since
the Company's assessment of these hedges revealed no ineffectiveness, all of the
transaction gains and losses associated with this debt have been reflected in
the foreign currency translation adjustment in OCI. As a result of the Company's
amended credit agreement, all foreign currency denominated debt was repaid and
the Company will no longer have a hedge of its net investment position in these
subsidiaries.

                                      F-42
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
    COMPREHENSIVE INCOME (LOSS): Comprehensive income (loss) represents the
change in stockholder's equity from transactions and other events and
circumstances arising from non-stockholder sources. The Company's comprehensive
income (loss) for 2001, 2000 and 1999 consisted of net income (loss), foreign
currency translation adjustments, minimum pension liability adjustments and
unrealized gains and losses on derivatives established as cash flow hedges, net
of applicable income taxes.

    Components of accumulated other comprehensive income (loss) consist of the
following (in millions):

<Table>
<Caption>
                                                MINIMUM                      ACCUMULATED
                                  FOREIGN       PENSION     FAIR VALUE OF       OTHER
                                 CURRENCY      LIABILITY     DERIVATIVES    COMPREHENSIVE
                                TRANSLATION   ADJUSTMENTS    ADJUSTMENT     INCOME (LOSS)
                                -----------   -----------   -------------   -------------
<S>                             <C>           <C>           <C>             <C>
September 30, 1998............    $ (6.7)        $(4.5)         $  --           $(11.2)
Fiscal 1999 change............     (16.4)          1.1             --            (15.3)
                                  ------         -----          -----           ------
September 30, 1999............     (23.1)         (3.4)            --            (26.5)
Fiscal 2000 change............     (19.3)          2.2             --            (17.1)
                                  ------         -----          -----           ------
September 30, 2000............     (42.4)         (1.2)            --            (43.6)
Fiscal 2001 change............      18.5           1.3           (1.4)            18.4
                                  ------         -----          -----           ------
September 30, 2001............    $(23.9)        $ 0.1          $(1.4)          $(25.2)
                                  ======         =====          =====           ======
</Table>

    STOCK-BASED COMPENSATION: The Company does not have stock-based compensation
plans separate from USI; however, the Company does participate in USI's
stock-based compensation plans. Consistent with USI, the Company accounts for
participation in these plans in accordance with Accounting Principles Board
Opinion No. 25 ("APB 25"), ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES and related
interpretations in accounting for stock-based compensation. The pro forma
effects on net income had compensation cost for awards of stock based
compensation been determined using the fair value method proscribed by SFAS
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, were not materially different
from the amounts presented in the Company's consolidated statements of
operations for the periods ended September 30, 2001, 2000 and 1999. Therefore,
these amounts have not been provided.

    Certain key employees of the Company participate in stock incentive plans of
USI that provide for awards of restricted stock and options to purchase USI
common stock at prices equal to the fair value of the underlying shares at the
date of the grant. The Company recognized compensation expense of less than
$0.1 million in fiscal 2001 for vesting restricted stock awards. As of
September 30, 2001, an aggregate of approximately 0.5 million options to
purchase shares of USI common stock were held by Company employees.

    INCOME (LOSS) PER SHARE: Historical income (loss) per share information is
not presented because the Company is an indirect subsidiary of USI.

    NEW ACCOUNTING PRONOUNCEMENTS: In June 2001, the Financial Accounting
Standards Board ("FASB") issued Statements of Financial Accounting Standards
No. 141, BUSINESS COMBINATIONS, and No. 142, GOODWILL AND OTHER INTANGIBLE
ASSETS, effective for fiscal years beginning after December 15, 2001. Under the
new rules, goodwill and intangible assets deemed to have indefinite lives will
no longer be amortized but will be subject to annual impairment tests in
accordance with the Statements. Other intangible assets will continue to be
amortized over their useful lives. The Company

                                      F-43
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
has elected to adopt these pronouncements as of October 1, 2001. Accordingly, as
of such date, the Company will no longer amortize goodwill.

    In August 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT
OR DISPOSAL OF LONG-LIVED ASSETS. The FASB's new rules on asset impairment
supersede SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
FOR LONG-LIVED ASSETS TO BE DISPOSED OF, and provide a single accounting model
for long-lived assets to be disposed of. Although retaining many of the
fundamental recognition and measurement provisions of SFAS No. 121, the new
rules significantly change the criteria that would have to be met to classify an
asset as held-for-sale. The new rules also supersede the provisions of APB
Opinion No. 30, REPORTING THE RESULTS OF OPERATIONS--REPORTING THE EFFECTS OF
DISPOSAL OF A SEGMENT OF A BUSINESS, AND EXTRAORDINARY, UNUSED AND INFREQUENTLY
OCCURRING EVENTS AND TRANSACTIONS, with regard to reporting the effects of a
disposal of a segment of a business and require expected future operating losses
from discontinued operations to be displayed in discontinued operations in the
period(s) in which the losses are incurred (rather than as of the measurement
date as presently required by APB No. 30). The Statement is effective for the
Company in the beginning of fiscal year 2003. The Company does not believe this
statement will have a material effect on the earnings or financial position of
the Company.

NOTE 4--ACQUISITIONS AND DISPOSITIONS OF BUSINESSES

ACQUISITIONS OF BUSINESSES

    The pro forma effects of the acquisitions detailed below are not material to
the Company's results of operations and are not provided herein. These
acquisitions have been accounted for as purchases and their results of
operations are included in the financial statements from the dates of
acquisition.

    Contemporaneously with the closing of its debt restructuring on August 15,
2001 (see NOTE 8), the Company re-acquired the 75% equity interest in
Rexair, Inc. ("Rexair"), the manufacturer of "Rainbow" vacuum cleaners,
previously sold to Strategic Industries, LLC ("Strategic") as part of the
Diversified transactions in March 2000. The purchase consideration included
$27.4 million in face value of Strategic's senior notes and the assumption of
borrowings outstanding under Rexair's $200 million credit facility (see
DISPOSITIONS OF BUSINESSES below). In connection with the re-acquisition, the
Company reduced the re-acquired basis in Rexair by the amount of its previously
deferred gain and reclassified its retained 25% share of Rexair's net
liabilities from other long-term liabilities. The allocation of the purchase
consideration, including the deferred gain and the carrying value of the
retained liabilities, to the assets acquired and liabilities assumed resulted in
the goodwill and other intangible assets of approximately $68.9 million, the
majority of which have indefinite lives and will not be amortized. In addition,
the Company expensed $17.4 million of deferred transaction costs associated with
the March 2000 sale of Rexair. The results of Rexair have been included in the
Bath & Plumbing segment since it was re-acquired. The Company accounted for
Rexair under the equity method of accounting during the time period when the
Company held only a 25% interest, from March 24, 2000 until August 15, 2001.

                                      F-44
<Page>
                          USI AMERICAN HOLDINGS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4--ACQUISITIONS AND DISPOSITIONS OF BUSINESSES (CONTINUED)

    In July 1999, the Company acquired Spring Ram Corporation PLC ("Spring Ram")
for approximately $133.6 million in cash, plus the assumption of $21.3 million
in debt, resulting in goodwill of approximately $110.0 million. Spring Ram,
located in Leeds, England, is a manufacturer of bathroom products. The operating
results of Spring Ram are included in the Bath & Plumbing segment.

    In June 1999, the Company purchased the assets of Gatsby Spas, Inc.
("Gatsby") for approximately $17.0 million in cash, resulting in goodwill of
$9.6 million. Gatsby manufactures and distributes spas. The results of Gatsby
are included in the Bath & Plumbing segment.

    In April 1999, the Company's Parent contributed to the Company the stock of
the Dual-Lite and True Temper businesses. The contribution was recorded at the
historical carrying value of the net assets at the time of contribution, which
was approximately $147.0 million. The results of True Temper and Dual-Lite are
included in Discontinued Operations (see NOTE 5).

DISPOSITIONS OF BUSINESSES

    On March 24, 2000, the Company disposed of a majority equity interest in its
Diversified segment in two separate transactions. In the first transaction, the
Company disposed of the following subsidiaries: Bearing Inspection, Inc.;
BiltBest Products, Inc.; EJ Footwear Corp. (including Georgia Boot Inc. and
Lehigh Safety Shoe Co.); Garden State Tanning Inc.; Huron Inc.; Jade Holdings
Pte Ltd (including Jade Technologies Singapore Ltd and FSM Europe B.V.); Leon
Plastics Inc.; Native Textiles Inc. and SCF Industries, Inc. The Company
received gross cash proceeds of approximately $197.0 million, retained a
preferred equity interest in the buyer, Strategic, having a stated value of
approximately $19.5 million, retained a common equity interest in Strategic of
17.7% and received approximately $209.0 million aggregate principal amount of
12% (12.5% effective August 18, 2000) senior notes (the "Strategic Notes") due
2007. In addition, Strategic assumed approximately $7.9 million of existing bank
debt. As a result of its disposal of the Diversified businesses, the Company
recorded a pre-tax gain of $42.1 million.

    In the second transaction, Rexair sold newly issued shares to Strategic
representing, after issuance, 75% of the equity interest in Rexair. The Company
received approximately $195.0 million in cash and retained a 25% direct equity
interest in Rexair. In addition, the Company guaranteed Rexair's $200 million
credit facility. In connection with the Rexair transaction, the Company recorded
an other liability of $82.2 million, related to its retained 25% share of
Rexair's net liabilities and a deferred gain, which, together with the deferral
of the related transaction costs, was to be deferred until the release of the
Company's guarantee of Rexair's credit facility. Rexair was re-acquired on
August 15, 2001. Accordingly, the deferred transaction costs were expensed in
full at such date, and the deferred gain as well as the Company's retained 25%
share of Rexair's net liabilities reduced the re-acquired basis in Rexair (See
ACQUISITIONS OF BUSINESSES above).

    In July 2000, the Company transferred the Strategic notes and cash proceeds
received to USI in exchange for notes receivable from USI in the amount of
$674.4 million bearing interest of 6.5% per annum with $358.5 million due on
demand and $315.9 million maturing in fiscal year 2005.

    During the first quarter of fiscal 2000, the Company disposed of assets
relating to its ladder operations and the infant and children footwear
operation. The total proceeds of these separate transactions were
$17.0 million, which approximated their carrying value. The Company has retained
certain product liabilities of the ladder operations.

                                      F-45
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5--DISCONTINUED OPERATIONS

    On December 28, 2001, the Board of Directors of USI approved a formal
Disposal Plan for four of the Company's businesses in connection with USI's
obligation to pay debt amortization as set forth in the restructured debt
agreements. In connection with the Disposal Plan, the Company recorded a charge
of $204.3 million, which represented the difference between the historical net
carrying value and the estimated net realizable value of those businesses, (Ames
True Temper, Lighting Corporation of America, Spear & Jackson and SiTeco
Lighting) which are included within the Company's consolidated operations. The
Disposal Plan calls for the sale of these businesses over the next 12 months.

    The operating results of these businesses have been included in discontinued
operations for all periods presented. Summarized results of discontinued
operations are as follows:

<Table>
<Caption>
                                                   FOR THE FISCAL YEARS ENDED
                                                         SEPTEMBER 30,
                                                 ------------------------------
                                                   2001       2000       1999
                                                 --------   --------   --------
                                                         (IN MILLIONS)
<S>                                              <C>        <C>        <C>
Net sales......................................  $1,244.0   $1,311.1   $1,236.0
Operating income...............................       0.8        1.7       86.3
Income (loss) from operations before income
  taxes........................................      (7.8)       1.2       85.7
</Table>

    Included in the losses are goodwill impairment charges totaling
$61.6 million and $84.0 million in fiscal 2001 and 2000, respectively. These
goodwill impairment charges resulted from an evaluation of the recoverability of
goodwill performed by the Company in accordance with its accounting policy (see
NOTE 3). The impairment charges were recorded as part of continuing operations
before the approval of the Disposal Plan. The charges were reclassified into
discontinued operations after the approval of the Disposal Plan.

    Amounts classified as net assets held for sale consist of the following:

<Table>
<Caption>
                                                               AT SEPTEMBER 30,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Net current assets..........................................   $ 91.2     $383.5
Property, plant and equipment, net..........................    252.9      250.2
Other non-current assets and liabilities, net...............    111.4      167.6
                                                               ------     ------
Net assets held for sale....................................   $455.5     $801.3
                                                               ======     ======
</Table>

NOTE 6--IMPAIRMENT, RESTRUCTURING AND OTHER NON-RECURRING CHARGES

GOODWILL IMPAIRMENT CHARGES

    Operating results at certain of the Company's subsidiaries declined during
2001. In the third quarter of 2001, the Company evaluated the recoverability of
the goodwill of these subsidiaries in accordance with its accounting policy
described in Note 3. This evaluation indicated that the carrying value of the
goodwill of certain of its subsidiaries was impaired. As a result, the Company
recorded pretax goodwill impairment charges totaling $60.8 million and
$61.6 million which have been included in continuing operations and loss from
operations of the discontinued operations, respectively.

                                      F-46
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--IMPAIRMENT, RESTRUCTURING AND OTHER NON-RECURRING CHARGES (CONTINUED)
RESTRUCTURING AND OTHER NON-RECURRING CHARGES

    During fiscal 1999, the Company expanded its 1998 restructuring plan related
to its footwear operations by closing a second domestic manufacturing facility.
The closure of the second facility was completed by June 1999, with its
production being outsourced to offshore vendors. As a result, the Company
recorded restructuring charges of $1.7 million primarily for the costs of
terminating 110 employees and the write-off of impaired fixed assets.
Furthermore, the Company recorded other non-recurring charges for inventory
obsolescence totaling $0.9 million, which were recorded in cost of goods sold.
The restructuring charges resulting from the closing of the Company's footwear
facility were offset by a $1.0 million reduction in severance costs that were
originally set up in 1998 for the Company's vacuum cleaner and textile
operations. Voluntary departures prior to final termination resulted in
severance payments that were lower than previously estimated. The Company
subsequently sold its footwear, vacuum cleaner and textile operations (see
NOTE 4). Also, during fiscal 1999, the Company's Diversified segment recorded
$6.1 million in charges and losses related to the closure of an unprofitable
window operation.

OTHER NON-RECURRING CHARGES

    During 2001, the Company recorded $17.4 million in deferred transaction
costs related to the original sale of Rexair in March 2000 once the business was
re-acquired in August 2001. These costs have been classified as "other expenses"
in the company's consolidated statement of operations.

    The principal components of impairment and restructuring charges recorded
for continuing operations are:

<Table>
<Caption>
                                                                FOR THE FISCAL YEARS
                                                                ENDED SEPTEMBER 30,
                                                           ------------------------------
                                                             2001       2000       1999
                                                           --------   --------   --------
                                                                   (IN MILLIONS)
<S>                                                        <C>        <C>        <C>
Impairment of goodwill...................................   $60.8       $ --       $ --
Lease obligations and impairment of equipment............      --         --        0.7
                                                            -----       ----       ----
  Total..................................................   $60.8       $ --       $0.7
                                                            =====       ====       ====
Cash charges.............................................   $  --       $ --       $0.7
Non-cash charges.........................................    60.8         --         --
                                                            -----       ----       ----
  Total..................................................   $60.8       $ --       $0.7
                                                            =====       ====       ====
</Table>

NOTE 7--NOTES RECEIVABLE FROM AFFILIATES

    Notes Receivable from Affiliates consists of the following:

<Table>
<Caption>
                                                              AT SEPTEMBER 30,
                                                            --------------------
                                                              2001        2000
                                                            --------    --------
                                                               (IN MILLIONS)
<S>                                                         <C>         <C>
6.00% Notes Receivable....................................   $  7.3      $ 25.9
6.50% Notes Receivable....................................    674.4       683.4
                                                             ------      ------
                                                             $681.7      $709.3
                                                             ======      ======
</Table>

                                      F-47
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7--NOTES RECEIVABLE FROM AFFILIATES (CONTINUED)
    At September 30, 2001 the notes receivable from Affiliates are unsecured
with $365.8 million payable upon demand, with $315.9 million maturing in fiscal
2005.

NOTE 8--LONG-TERM DEBT

    Long-term debt consists of the following:

<Table>
<Caption>
                                                              AT SEPTEMBER 30,
                                                             -------------------
                                                               2001       2000
                                                             --------   --------
                                                                (IN MILLIONS)
<S>                                                          <C>        <C>
7.25% Senior Notes, net....................................  $ 123.9     $123.6
Restructured facilities, Rexair............................    166.2         --
Restructured facilities, U.S. Industries...................    418.0         --
Five-year revolving credit facility, US dollar.............       --      200.0
Five-year revolving credit facility, foreign currencies....       --      218.9
Other long-term debt.......................................       --         --
                                                             -------     ------
                                                               708.1      542.5

Less current maturities....................................   (428.0)        --
                                                             -------     ------
Long-term debt.............................................  $ 280.1     $542.5
                                                             =======     ======
</Table>

    Principal payments on long-term debt for the next five years ended
September 30 are as follows:

<Table>
<Caption>
                                                              (IN MILLIONS)
                                                              -------------
<S>                                                           <C>
2002........................................................     $428.0
2003........................................................      156.2
2004........................................................         --
2005........................................................         --
2006........................................................         --
</Table>

    The fiscal 2002 principal reduction amount of $428.0 million presented above
reflects the cumulative required senior debt reduction required by the terms of
the Restructured Facilities. To the extent the principal reduction amount for
fiscal 2002 is satisfied through asset sales, the reduction will be affected in
part by depositing cash in cash collateral accounts for the benefit of the
holders of the Company's Senior Notes (if required) and certain other creditors
of the Company. The fiscal 2003 principal reduction amount of $156.2 million
presented above (which is primarily comprised of the remaining balance due to
the Company's Lenders under its Restructured Facilities in October 2002 and
November 2002), assumes that no portion of the reduction in fiscal 2002 will be
satisfied by deposits to cash collateral accounts. To the extent it is satisfied
by deposits to cash collateral accounts, the principal reduction amount for
fiscal 2003 will be increased by an amount equal to any deposits into collateral
accounts during fiscal 2002. The majority of the deposits in collateral accounts
will serve to reduce the required principal payments on the Senior Notes.

    In fiscal 1997, the Company issued $125 million aggregate principal amount
of Senior Notes due December 1, 2006, which bear interest at 7.25%, payable
semiannually (the "7.25% Notes"). A

                                      F-48
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--LONG-TERM DEBT (CONTINUED)
supplemental indenture was later executed adding USI as a co-obligor with USIAH
under the 7.25% Notes.

    In October 1998, USI and the Company jointly issued $250 million aggregate
principal amount of Senior Notes due October 15, 2003, which bear interest at
7.125%, payable semiannually (the "7.125% Notes"). The 7.125% notes are recorded
as a liability of USI. A supplemental indenture was later executed adding Global
as a co-obligor to the 7.125% notes.

    In addition, the 7.25% Notes and the 7.125% Notes (collectively, the "Senior
Notes") are joint and several obligations of USI, Global and the Company, and
are guaranteed by USI Atlantic. The Senior Notes are redeemable at the option of
the issuers, in whole or in part, at a redemption price equal to the greater of
(i) 100% of the principal amount to be redeemed or (ii) the sum of the present
values of the remaining scheduled payments of principal and interest on the
Senior Notes to be redeemed, discounted at a rate based on the yield to maturity
of the comparable U.S. Government securities plus a spread (10 basis points for
the 7.25% Notes and 50 basis points for the 7.125% Notes) plus, in each case,
accrued interest to the date of redemption. The Notes contain restrictions on
dividends as well as the purchase of common stock for treasury. See below
regarding the security interests granted to the holders of the Senior Notes as a
result of the Restructured Facilities.

    The Company also was a borrower along with USI under a five-year revolving
line of credit providing for borrowings in both U.S. dollars and foreign
currencies, which had original availability of $750 million (the "Credit
Agreement"). The Credit Agreement, which was permanently reduced over time to an
availability of $500 million, was scheduled to terminate on December 12, 2001.
The Credit Facility and Credit Agreement (together, the "Revolving Facilities")
were restructured on August 15, 2001 into an amended credit facility providing
for, among other things, an increase in availability to $830 million and an
extension of the final maturity of the debt through November 30, 2002.

    Although the Revolving Facilities were previously unsecured, the lenders of
the Revolving Facilities were granted on April 30, 2001 security interests in
substantially all of the assets of USI and its domestic subsidiaries, including
shares of the USI's domestic subsidiaries and 65% of the shares of certain of
the USI's foreign subsidiaries. As a result of having the Revolving Facilities
secured, the Rexair guarantee referred to below became secured with certain
assets. In addition, the Company's Senior Notes also became equally and ratably
secured with the Revolving Facilities and the Rexair Guaranty with respect to
the assets of USI and its subsidiaries that are subject to the covenant
restrictions under the Senior Notes. The covenants contained in the indentures
under which the Senior Notes were issued apply to USI, the Company and any
domestic subsidiary that is a "significant subsidiary" (within the meaning of
rule 1-02(w) of Regulation S-X promulgated under the Securities and Exchange Act
of 1934 or any successor provision).

    On August 15, 2001, USI finalized a comprehensive restructuring of its bank
debt and the bank debt of Rexair, which was re-acquired from Strategic on the
same date (See NOTE 4). The amended facilities (together the "Restructured
Facilities") extend the final maturity date of the USI's debt under the
Revolving Facilities to November 30, 2002, which coincides with the final
maturity of the amended Rexair Credit Facility. The Restructured Facilities
provide for an increase in availability under the Credit Agreement from
$500 million to $830 million, the termination of the multi-currency borrowing
feature under the Credit Agreement, the elimination of the 364-day Credit
Facility and scheduled permanent reductions of the USI's senior debt (a
combination of the Restructured Facilities and the Senior Notes and other
defined obligations) during the term of the Restructured Facilities.

                                      F-49
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--LONG-TERM DEBT (CONTINUED)
    The required cumulative permanent reductions of USI's senior debt are
scheduled at $75 million, $200 million, $450 million and $600 million for the
periods ending December 31, 2001, March 31, 2002, June 30, 2002 and October 15,
2002, respectively, with the remaining balance of the Restructured Facilities
due in full on November 30, 2002. USI expects to satisfy operating liquidity
needs through operating cash flow. However, it will have to sell a substantial
amount of its assets and restructure or refinance its debt to satisfy the
required cumulative permanent reductions.

    On December 21, 2001, USI obtained a waiver (the "December 2001 Waiver")
from its lenders under the Restructured Facilities that permitted the Company to
satisfy the December 31, 2001 $75 million reduction through a permanent
reduction of the unfunded commitments under the Restructured Facilities, to the
extent not satisfied through cash flow or asset sale proceeds.

    The Restructured Facilities require the Company, USI and Rexair to maintain
minimum monthly EBITDA, as defined, comply with maximum monthly capital
expenditure limits; USI and Rexair to maintain minimum availability (as defined)
under the Restructured Facility of no less than $25 million and comply with
other customary affirmative and negative covenants. In addition, the amended
Rexair Credit Facility, which provides a term loan of $175 million and
availability under a revolver of $20 million, requires that excess cash
generated by Rexair be segregated from excess cash generated by the remainder of
the USI's operations and used only to reduce the debt outstanding on the Rexair
Credit Facility. Rexair's availability under the revolver will be permanently
reduced by $5 million on May 31, 2002. In connection with the term loan, Rexair
will be required to make payments of $2.2 million each in December 2001 and
March 2002 and $4.4 million each in June 2002 and September 2002. Such payments
are credited towards the scheduled permanent reductions of the Company's senior
debt. The Senior Notes and the Restructured Facilities contain cross-default and
cross-acceleration provisions.

    The Restructured Facilities provide for increasing interest rates over the
remaining term. The spreads over London Interbank Offered Rate ("LIBOR") was 275
basis points until December 31, 2001, after which the spread increases by 50
basis points each quarter thereafter. The Restructured Facilities also provides
for several new fees including an unused commitment fee of 0.50% and a facing
fee on all outstanding letters of credit of 0.25% per annum. At USI's option, up
to 0.50% of the interest rate applicable to borrowings may be paid through the
issuance of notes.

    The security interests that were granted to the lenders of the Revolving
Facilities on April 30, 2001 remain in place under the debt restructuring, as do
the arrangements to equally and ratably secure the Rexair Guaranty and to
equally and ratably secure the Senior Notes. In addition, certain subsidiaries
of USI that are not subject to the Senior Notes' covenant restrictions have
guaranteed the Restructured Facilities. Under the Restructured Facilities, USI
also agreed to provide the lenders with security interests in the shares and
assets of certain foreign subsidiaries.

    Under the Restructured Facilities, substantially all sales proceeds are
required to be applied to reduce USI's funded and unfunded senior debt, on a pro
rata basis. The senior debt includes the Senior Notes in those cases when USI or
any subsidiary subject to the Senior Notes' covenants completes an asset sale.
Proceeds allocable to the Senior Notes and other defined obligations are
required to be deposited in cash collateral account for the benefit of the
relevant holders; any claims of the lenders of the Restructured Facilities to
amounts on deposit in the cash collateral accounts are subordinated to the
claims of the relevant holders, including the payment in full of their Senior
Notes.

                                      F-50
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--LONG-TERM DEBT (CONTINUED)
Any reductions of senior debt with asset sale proceeds are credited
dollar-for-dollar towards the scheduled permanent reductions.

    At December 31, 2001, excluding all amounts related to the amended Rexair
Credit Facility and after giving effect to the approximately $58 million
reduction pursuant to the December 2001 waiver, USI had approximately
$766 million committed under the Restructured Facilities, of which approximately
$669 million had been utilized and the balance of $97 million was available. At
December 31, 2001, $5.7 million was available for borrowing solely by Rexair
under the amended Rexair Credit Facility. These amounts are net of letters of
credit outstanding of $15.0 and $13.6 million at December 31, 2001 and
September 30, 2001, respectively. In addition, USI had letters of credit
outstanding with other financial institutions totalling $41.4 million as of both
December 31, 2001 and September 30, 2001.

    Interest paid to non-affiliates was $44.8 million, $46.1 million and
$39.8 million in fiscal 2001, 2000 and 1999, respectively.

    Notes Payable to Affiliates consists of the following:

<Table>
<Caption>
                                                                 AT SEPTEMBER 30,
                                                              ----------------------
                                                                2001          2000
                                                              --------      --------
                                                                  (IN MILLIONS)
<S>                                                           <C>           <C>
6.50% Notes Payable.........................................   $ 0.2         $  --
7.50% Notes Payable.........................................    22.9          22.9
8.25% Notes Payable.........................................     6.5           3.7
                                                               -----         -----
                                                              2$9.6..        $26.6
                                                               =====         =====
</Table>

    The notes payable to Affiliates are unsecured and payable upon demand.
Interest paid to Affiliates during fiscal 2001, 2000, and 1999 was
$1.2 million, $0.1 million, and $31.1 million, respectively.

NOTE 9--PENSION AND OTHER RETIREMENT PLANS

DOMESTIC BENEFIT ARRANGEMENTS

    The Company and its subsidiaries sponsor a number of non-contributory
defined benefit pension plans covering the majority of its United States
employees. The benefits under these plans are based primarily on years of
credited service and compensation as defined under the respective plan
provisions. The Company's funding policy is to contribute amounts to the plans
sufficient to meet the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974, plus additional amounts as the Company
may determine to be appropriate from time to time.

    The Company and certain of its subsidiaries also sponsor defined
contribution plans. Contributions relating to defined contribution plans are
made based upon the respective plans' provisions.

    The Company also provides health care and life insurance benefits to certain
groups of retirees with most retirees contributing a portion of the costs.

                                      F-51
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)

    The assumptions and the net periodic pension income for the Company's
defined benefit plans, as well as the total contributions charged to pension
expense for the defined contribution plans covering employees in the United
States are presented below:

<Table>
<Caption>
                                                                                          OTHER
                                                         PENSION BENEFITS               BENEFITS
                                                  ------------------------------   -------------------
                                                    2001       2000       1999       2000       1999
                                                  --------   --------   --------   --------   --------
<S>                                               <C>        <C>        <C>        <C>        <C>
ASSUMPTIONS
Discount rate...................................    7.5%       8.0%       7.5%       8.0%       7.5%
Rate of compensation increases..................    4.5%       4.5%       4.5%        --         --
Expected rate of return on assets...............    9.5%       9.5%       9.5%        --         --
</Table>

<Table>
<Caption>
                                                                                      OTHER
                                                     PENSION BENEFITS               BENEFITS
                                              ------------------------------   -------------------
                                                2001       2000       1999       2000       1999
                                              --------   --------   --------   --------   --------
                                                                 (IN MILLIONS)
<S>                                           <C>        <C>        <C>        <C>        <C>
COMPONENTS OF NET PERIODIC (INCOME) COST
Defined benefit plans:
  Service cost..............................   $ 0.1      $  1.1     $ 2.3       $0.2       $0.4
  Interest cost.............................     0.2         1.5       2.7        0.3        0.7
  Expected return on plan assets............    (0.1)       (1.4)     (2.8)        --         --
  Prior service costs.......................      --         0.2       0.3         --        0.1
  Amortization of unrecognized transition
    asset...................................      --          --      (0.1)        --         --
  Net actuarial gain........................      --         0.1       0.4         --         --
  Curtailments..............................      --        (1.1)      0.5         --        0.2
                                               -----      ------     -----       ----       ----
Periodic (income) cost of defined benefit
  plans.....................................     0.2         0.4       3.3        0.5        1.4

Income from participation in
  USI Group Plan............................    (2.0)       (5.3)     (6.9)        --         --
  Curtailment in USI Group Plan.............      --       (18.5)       --         --         --
                                               -----      ------     -----       ----       ----
Net period (income) cost:
  Defined benefit plans.....................    (1.8)      (23.4)     (3.6)       0.5        1.4
  Defined contribution plans................     0.2         0.7       0.9         --         --
                                               -----      ------     -----       ----       ----
Net periodic (income) cost..................   $(1.6)     $(22.7)    $(2.7)      $0.5       $1.4
                                               =====      ======     =====       ====       ====
</Table>

    The fiscal year 2000 curtailment gains totaling $19.6 million are related to
the sale of the Diversified businesses and are included in the statement of
operations caption "Gain on sale of businesses."

                                      F-52
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)
    The following table provides a reconciliation of changes in the projected
benefit obligation, fair value of plan assets and the funded status of the
Company's defined benefit pension and postretirement benefit plans to the
amounts recorded in the Company's balance sheet at September 30:

<Table>
<Caption>
                                                   PENSION BENEFITS       OTHER BENEFITS
                                                  -------------------   -------------------
                                                    2001       2000       2001       2000
                                                  --------   --------   --------   --------
                                                                (IN MILLIONS)
<S>                                               <C>        <C>        <C>        <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION:
Benefit obligation at beginning of year.........   $ 0.9      $ 35.6     $ 0.3      $ 9.1
Service cost....................................     0.1         1.1        --        0.2
Interest cost...................................     0.2         1.5        --        0.3
Actuarial (gains) losses........................    (0.1)        3.6       0.1         --
Benefits paid...................................    (0.1)       (0.6)       --       (0.1)
Acquisition (divestitures)......................    15.6       (40.3)      1.5       (9.2)
                                                   -----      ------     -----      -----
Benefit obligation at end of year...............   $16.6      $  0.9     $ 1.9      $ 0.3
                                                   =====      ======     =====      =====
CHANGE IN FAIR VALUE OF PLAN ASSETS:
Fair value of plan assets at beginning of
  year..........................................   $  --      $ 29.5     $  --      $  --
Actual return on plan assets....................    (0.4)        1.4        --         --
Contributions...................................      --         0.9        --        0.1
Benefits paid...................................    (0.1)       (0.6)       --       (0.1)
Acquisitions (divestitures).....................    12.2       (31.2)       --         --
                                                   -----      ------     -----      -----
Fair value of plan assets at end of year........   $11.7      $   --     $  --      $  --
                                                   =====      ======     =====      =====
FUNDED STATUS OF PLANS:
Plan assets less than projected benefit
  obligation....................................   $(4.9)     $ (0.9)    $(1.9)     $(0.3)
Unrecognized net actuarial losses...............     0.8         0.1       0.1         --
Unrecognized prior service cost.................      --         0.3        --         --
                                                   -----      ------     -----      -----
Total recognized................................   $(4.1)     $ (0.5)    $(1.8)     $(0.3)
                                                   =====      ======     =====      =====
AMOUNTS RECORDED IN THE BALANCE SHEET CONSIST OF
Prepaid benefits................................   $  --      $   --     $  --      $  --
Accrued benefits................................    (4.4)       (1.0)     (1.8)      (0.3)
Intangible assets...............................      --         0.1        --         --
Accumulated other comprehensive income..........     0.3         0.4        --         --
                                                   -----      ------     -----      -----
Total recognized................................    (4.1)       (0.5)     (1.8)      (0.3)
Participation in USI Group Plan.................     6.7         4.6        --         --
                                                   -----      ------     -----      -----
Total amount recorded in the consolidated
  balance sheet.................................   $ 2.6      $  4.1     $(1.8)     $(0.3)
                                                   =====      ======     =====      =====
</Table>

    The fiscal 2001 Other Benefits balance of $1.8 million primarily relates to
Rexair, which was re-acquired on August 15, 2001.

    At September 30, 2001 and 2000, the Company has a net pension asset of
$6.7 million and $4.6 million, respectively, which reflects the Company's
recorded balance which is included in a USI group pension plan. As of
September 30, 2001, the USI group pension plan's fair value of the plan

                                      F-53
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)
assets of $270.1 million exceeds the present value of its accumulated benefit
obligation by approximately $97.6 million.

    The aggregate projected benefit obligation and the aggregate fair value of
plan assets, for the plans that have a projected benefit obligation in excess of
plan assets, are $16.6 million and $11.7 million, respectively, in 2001 and
$0.9 million and zero, respectively, in 2000.

    The aggregate accumulated benefit obligation and the aggregate fair value of
plan assets, for the plans that have an accumulated benefit obligation in excess
of plan assets, are $15.1 million and $11.7 million, respectively, in 2001 and
$0.9 million and zero, respectively, in 2000.

    The assets for the Company's U.S. plans are included in a master trust which
principally invests in listed stocks and bonds, including common stock of the
Company. Included in plan assets were 1,333,100 and 1,253,100 shares of the
Company's common stock at September 30, 2001 and 2000, respectively,
representing $3.1 million and $12.5 million of the master trust's assets for the
same respective periods. During fiscal 2001 and 2000, $0.1 million and
$0.2 million, respectively, in dividends were paid to the master trust.

    The weighted average annual assumed rate of increase in the per capita cost
of covered benefits (i.e., the health care cost trend rate) for the other
postretirement benefit plans was 8.5% for 2001 and is assumed to decrease 0.5% a
year to 5.5%. A one-percentage-point change in the assumed health care cost
trend rate would have the following effects at and for the year ended
September 30, 2001 (in millions):

    Effect of a 1% increase in the health care cost trend rate on:

<Table>
<S>                                                           <C>
Service cost plus interest cost.............................    $ --
Accumulated postretirement benefit obligation...............     0.1
</Table>

    Effect of a 1% decrease in the health care cost trend rate on:

<Table>
<S>                                                           <C>
Service cost plus interest cost.............................   $  --
Accumulated postretirement benefit obligation...............    (0.1)
</Table>

    Certain of the Company's discontinued operations participate in
multi-employer plans, which provide defined benefits to union employees.
Contributions relating to multi-employer plans are based on negotiated
collective bargaining agreements.

FOREIGN BENEFIT ARRANGEMENTS

    The Company's foreign defined benefit pension plan covers salaried employees
of Spring Ram, which was acquired in July 1999 (see NOTE 4).

                                      F-54
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)
    The assumptions used and the net periodic pension cost for the Company's
foreign defined benefit plans are presented below:

<Table>
<Caption>
                                                                   PENSION BENEFITS
                                                            ------------------------------
                                                              2001       2000       1999
                                                            --------   --------   --------
<S>                                                         <C>        <C>        <C>
ASSUMPTIONS
Discount rate.............................................    6.25%       6.5%      6.0%
Rate of compensation increase.............................    3.25%      3.75%      4.0%
Expected return on assets.................................     7.5%       8.5%      7.0%
</Table>

<Table>
<Caption>
                                                                 PENSION BENEFITS
                                                          ------------------------------
                                                            2001       2000       1999
                                                          --------   --------   --------
                                                                  (IN MILLIONS)
<S>                                                       <C>        <C>        <C>
COMPONENTS OF NET PERIODIC BENEFIT (INCOME) COST
Defined benefit plans:
  Service cost..........................................   $ 0.5      $ 0.7      $ 0.1
  Interest cost.........................................     2.1        2.1        0.3
  Expected return on plan assets........................    (3.5)      (2.6)      (0.4)
  Curtailments..........................................      --       (0.9)        --
                                                           -----      -----      -----
  Net periodic benefit income...........................   $(0.9)     $(0.7)     $  --
                                                           =====      =====      =====
</Table>

                                      F-55
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)
    The following table provides a reconciliation of changes in the projected
benefit obligation, the fair value of plan assets and the funded status of the
Company's foreign defined benefit pension plans with the amounts recognized in
the Company's balance sheet as of September 30:

<Table>
<Caption>
                                                                    PENSION
                                                                   BENEFITS
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION
Benefit obligation at beginning of year.....................   $33.4      $38.0
Service cost................................................     0.5        0.7
Interest cost...............................................     2.1        2.1
Employee contributions......................................     0.4        0.6
Foreign currency exchange rate changes......................      --       (4.1)
Actuarial (gain) loss.......................................     3.7       (2.0)
Settlements/curtailments....................................      --       (0.9)
Benefits paid...............................................    (1.5)      (1.0)
                                                               -----      -----
Benefit obligation at end of year...........................   $38.6      $33.4
                                                               =====      =====
CHANGE IN FAIR VALUE OF PLAN ASSETS
Fair value of plan assets at beginning of year..............   $39.8      $38.5
Actual return on plan assets................................    (0.8)       5.1
Foreign currency exchange rate changes......................      --       (4.2)
Employer contributions......................................     0.5        0.8
Employee contributions......................................     0.4        0.6
Benefits paid...............................................    (1.5)      (1.0)
                                                               -----      -----
Fair value of plan assets at end of year....................   $38.4      $39.8
                                                               =====      =====
FUNDED STATUS OF PLANS
Plan assets in excess of (less than) projected benefit
  obligation................................................   $(0.2)     $ 6.4
Unrecognized net actuarial (gains) losses...................     5.8       (2.2)
                                                               -----      -----
Total recognized in the consolidated balance sheet..........   $ 5.6      $ 4.2
                                                               =====      =====
AMOUNTS RECOGNIZED IN THE BALANCE SHEET CONSIST OF
Prepaid benefits............................................   $ 5.6      $ 4.2
                                                               =====      =====
</Table>

                                      F-56
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10--INCOME TAXES

    Income (loss) before income taxes consists of:

<Table>
<Caption>
                                                         FOR THE FISCAL YEARS ENDED
                                                               SEPTEMBER 30,
                                                       ------------------------------
                                                         2001       2000       1999
                                                       --------   --------   --------
                                                               (IN MILLIONS)
<S>                                                    <C>        <C>        <C>
United States........................................   $ 48.0     $ 74.8     $31.4
Foreign..............................................    (42.2)      36.9      44.8
                                                        ------     ------     -----
                                                        $  5.8     $111.7     $76.2
                                                        ======     ======     =====
</Table>

    The provisions for federal, foreign, and state income taxes consist of:

<Table>
<Caption>
                                                          FOR THE FISCAL YEARS ENDED
                                                                SEPTEMBER 30,
                                                        ------------------------------
                                                          2001       2000       1999
                                                        --------   --------   --------
                                                                (IN MILLIONS)
<S>                                                     <C>        <C>        <C>
Current:
  Federal.............................................   $  7.5     $ 9.4      $17.1
  Foreign.............................................      7.6      12.3       14.5
  State...............................................      4.1       4.9        3.3
                                                         ------     -----      -----
                                                           19.2      26.6       34.9
Deferred..............................................    (10.6)     21.9        2.6
                                                         ------     -----      -----
                                                         $  8.6     $48.5      $37.5
                                                         ======     =====      =====
</Table>

<Table>
<Caption>
                                                          FOR THE FISCAL YEARS ENDED
                                                                SEPTEMBER 30,
                                                        ------------------------------
                                                          2001       2000       1999
                                                        --------   --------   --------
                                                                (IN MILLIONS)
<S>                                                     <C>        <C>        <C>
Statutory federal income tax provision................   $  2.0     $39.1      $26.7
Foreign income tax differential.......................       --      (0.4)      (2.0)
State income taxes (net of federal benefit)...........      2.7       3.2        2.1
Goodwill amortization.................................      1.4       2.4        1.5
Non-deductible goodwill impairments...................     21.3        --         --
Non-deductible restructuring charges..................      2.8        --         --
Resolution of tax contingencies.......................       --        --       (3.9)
Minority interest.....................................    (21.6)      4.0       12.8
Miscellaneous.........................................       --       0.2        0.3
                                                         ------     -----      -----
                                                         $  8.6     $48.5      $37.5
                                                         ======     =====      =====
</Table>

                                      F-57
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10--INCOME TAXES (CONTINUED)

<Table>
<Caption>
                                                                 AT SEPTEMBER 30,
                                                              ----------------------
                                                                2001          2000
                                                              --------      --------
                                                                  (IN MILLIONS)
<S>                                                           <C>           <C>
Deferred tax liabilities:
  Property, plant and equipment.............................   $  3.4        $ 1.4
  Post retirement net pension assets........................      1.9         23.9
  Other.....................................................     22.1           --
                                                               ------        -----
Total deferred tax liabilities..............................     27.4         25.3
                                                               ------        -----
Deferred tax assets:
  Accruals and allowances...................................     24.2         17.1
  Postretirement benefits...................................      0.6          0.6
  Deductible goodwill.......................................       --          0.8
  Expected benefit from disposal............................     57.7           --
  Other.....................................................       --          0.2
                                                               ------        -----
  Gross deferred tax assets.................................     82.5         18.7
  Valuation allowance.......................................    (57.7)          --
                                                               ------        -----
Total deferred tax asset....................................     24.8         18.7
                                                               ------        -----
Net deferred tax liabilities................................   $ (2.6)       $(6.6)
                                                               ======        =====
</Table>

    The Company has established a valuation allowance related to deferred tax
assets resulting from the losses recognized in connection with the Disposal
Plan, reflecting the uncertainty of the future realization of these assets.

    The classification of the deferred tax balances is:

<Table>
<Caption>
                                                                 SEPTEMBER 30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Current asset...............................................   $ 24.7     $ 18.6
Current liabilities.........................................       --         --
                                                               ------     ------
                                                                 24.7       18.6
                                                               ------     ------
Noncurrent asset............................................      0.1        0.1
Noncurrent liability........................................    (27.4)     (25.3)
                                                               ------     ------
Net noncurrent liabilities..................................    (27.3)     (25.2)
                                                               ------     ------
Net deferred tax liability..................................   $ (2.6)    $ (6.6)
                                                               ======     ======
</Table>

                                      F-58
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

    The table below shows the Company's future minimum lease payments due under
non-cancelable leases as of September 30, 2001. These minimum lease payments
(presented in millions) do not include facility leases that were accrued as
restructuring costs (See NOTE 6).

<Table>
<S>                                                           <C>
2002........................................................   $10.0
2003........................................................     7.0
2004........................................................     4.7
2005........................................................     3.7
2006........................................................     3.2
Thereafter..................................................     0.8
                                                               -----
Total minimum lease payments................................   $29.4
                                                               =====
</Table>

    Rent expense, including equipment rental, was approximately $9.0 million,
$9.4 million and $12.7 million in 2001, 2000 and 1999, respectively.

LITIGATION

    The Company is subject to a wide range of environmental protection laws. The
Company has remedial and investigatory activities underway at approximately 38
sites, of which the Company has been named as a Potentially Responsible Party
("PRP") at 14 "superfund" sites pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or comparable statutes.

    It is often difficult to estimate the future impact of environmental
matters, including potential liabilities. The Company accrues for losses
associated with environmental remediation obligations when such losses are
probable and reasonably estimable. This practice is followed whether the claims
are asserted or unasserted. Reserves for estimated losses from environmental
remediation are, depending on the site, based primarily upon internal or third
party environmental studies, and estimates as to the number, participation level
and financial viability of any other PRP's, the extent of contamination and the
nature of required remedial actions. Such accruals are adjusted as further
information develops or circumstances change. Costs of future expenditures for
environmental remediation obligations are not discounted to their present fair
value. Recoveries of environmental remediation costs from other parties are
recognized as assets when their receipt is deemed probable. Management expects
that the amount reserved will be paid out over the periods of remediation for
the applicable sites which range up to 30 years and that such reserves are
adequate based on all current data. Each of the sites in question is at various
stages of investigation or remediation; however, no information currently
available reasonably suggests that projected expenditures associated with
remedial action or compliance with environmental laws for any single site or for
all sites in the aggregate, will have a material adverse affect on the Company's
financial condition, results of operations or cash flows.

    At September 30, 2001, the Company had accrued approximately $10.4 million
($0.9 million accrued as current liabilities; $9.5 million as non-current
liabilities) for various environmental related liabilities of which the Company
is aware. The Company believes that the range of liability for such matters is
between approximately $5.7 million and $14.6 million.

                                      F-59
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--COMMITMENTS AND CONTINGENCIES

    Also, certain of the Company's subsidiaries are defendants or plaintiffs in
lawsuits that have arisen in the normal course of business. While certain of
these matters involve substantial amounts, it is management's opinion, based on
the advice of counsel, that the ultimate resolution of such litigation and
environmental matters will not have a material adverse effect on the Company's
financial condition, results of operations or cash flows.

    The Company's domestic subsidiaries participate in casualty insurance
programs of the Company and USI, which are principally self-insured programs. At
September 30, 2001, the Company's portion of these programs amounting to
$6.1 million is included in other liabilities. The subsidiaries of the Company
have issued standby letters of credit guaranteeing financial responsibility for
its self-insured casualty programs amounting to $1.5 million. In addition, USI
has issued standby letters of credit guaranteeing financial responsibility for
its self-insured casualty programs.

NOTE 12--SEGMENT DATA

    At September 30, 2001, the subsidiaries of the Company have issued
documentary letters of credit and banker's acceptances totaling $7.6 million
related to shipments from the Far East.

    The Company currently operates in one reportable segment--Bath & Plumbing.
Bath & Plumbing manufacturers whirlpools, spas, faucets, chinaware, bathtubs,
showertub enclosures, bath accessories, plumbing fittings, others behind the
wall plumbing products and vacuum cleaners. Prior to March 2000 (see NOTE 4),
the Company also operated a myriad of businesses through its Diversified
segment. These businesses manufactured automotive interiors,
precision-engineered products for the automotive, jet aviation and electronics
industries and various other consumer products. The Company's products are
primarily sold to the home improvement and home construction markets through
mass merchandisers, hardware stores, home centers, distributors, wholesalers and
other outlets.

    The financial information of the segments is regularly evaluated by the
corporate operating executives in determining resource allocation and assessing
performance and is periodically reviewed by the Company's Board of Directors.
The Company's senior management evaluates the performance of each business
segment based on its operating results and, other than general corporate
expenses, allocates specific corporate overhead to each segment. Accounting
policies for the segments are the same as those for the Company (see NOTE 3).

                                      F-60
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12--SEGMENT DATA (CONTINUED)
    The following is a summary of our significant accounts and balances by
segment, reconciled to our consolidated totals.

<Table>
<Caption>
                                                       BATH &                              CONSOLIDATED
                                                      PLUMBING   DIVERSIFIED   CORPORATE      TOTAL
                                                      --------   -----------   ---------   ------------
                                                                        (IN MILLIONS)
<S>                                                   <C>        <C>           <C>         <C>
NET SALES
2001................................................  $ 683.6      $   --      $     --      $  683.6
2000................................................    802.8       412.4            --       1,215.2
1999................................................    664.2       857.1            --       1,521.3

TOTAL OPERATING INCOME (LOSS)(1)
2001................................................  $ (16.7)     $   --      $  (14.1)     $  (30.8)
2000................................................     91.1        37.4          (9.9)        118.6
1999................................................     75.2        90.8          11.3         154.7

CAPITAL EXPENDITURES
2001................................................  $  17.6      $  0.2      $     --      $   17.8
2000................................................     10.9        12.6           0.1          23.6
1999................................................     10.2        25.1           0.8          36.1

DEPRECIATION AND AMORTIZATION
2001................................................  $  17.7      $  0.4      $     --      $   18.1
2000................................................     17.8        12.3           0.4          30.5
1999................................................     12.2        24.7           0.8          37.7

ASSETS(2)
2001................................................  $ 697.4      $   --      $1,195.8      $1,893.2
2000................................................    650.1          --       1,553.4       2,203.5
1999................................................    681.1       613.1         897.5       2,191.7
</Table>

------------------------

(1) Operating income (loss) for the Bath & Plumbing segment includes
    restructuring, impairment and other non-recurring charges of $60.8 million
    in fiscal 2001 (See Note 6). Operating losses for corporate included
    management fees charged to the Company by USI of $13.1 million,
    $10.8 million, and $11.4 million in fiscal 2001, 2000 and 1999,
    respectively.

(2) Corporate assets include net assets held for sale of $455.5 million,
    $801.3 million, and $740.8 million and amounts due from affiliates of
    $681.7 million, $709.3 million and $101.2 for fiscal 2001, 2000 and 1999,
    respectively.

    Aside from the operating income (loss) amounts noted above, the Company's
income from continuing operations includes interest income and expense, equity
earnings or losses in investees, other income and expense items and income
taxes, none of which are included in the Company's measurement of segment
operating profit. Corporate assets consist primarily of real property, cash and
cash equivalents and other investments. The following table presents certain
data by geographic areas.

    The Company's operations are principally located in North America and Europe
and to a lesser extent, in other regions of the world. The Company's country of
domicile is the United States. Export sales represented 5%, 12% and 32% of the
Company's total net sales for fiscal years 2001, 2000 and

                                      F-61
<Page>
                          USI AMERICAN HOLDINGS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12--SEGMENT DATA (CONTINUED)
1999, respectively. Principal international markets served include Europe, South
America, Canada and Asia.

<Table>
<Caption>
                                                     FOR THE FISCAL YEARS ENDED
                                                           SEPTEMBER 30,
                                                   ------------------------------
                                                     2001       2000       1999
                                                   --------   --------   --------
                                                           (IN MILLIONS)
<S>                                                <C>        <C>        <C>
NET SALES
United States....................................   $405.1    $  831.8   $1,189.1
Foreign..........................................    278.5       383.4      332.2
                                                    ------    --------   --------
Total net sales..................................   $683.6    $1,215.2   $1,521.3
                                                    ======    ========   ========
OPERATING INCOME
United States....................................   $ (3.1)   $   61.8   $  104.7
Foreign..........................................    (27.7)       56.8       50.0
                                                    ------    --------   --------
Total operating income...........................   $(30.8)   $  118.6   $  154.7
                                                    ======    ========   ========
LONG-LIVED ASSETS
United States....................................   $264.4    $  175.5   $  383.4
Foreign..........................................    102.6       168.4      218.3
                                                    ------    --------   --------
Total long-lived assets..........................   $367.0    $  343.9   $  601.7
                                                    ======    ========   ========
</Table>

                                      F-62
<Page>
                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
U. S. Industries, Inc.

    We have audited the accompanying consolidated balance sheets of USI Global
Corporation (the "Company") as of September 30, 2001 and 2000, and the related
consolidated statements of operations, cash flows and changes in stockholders'
equity for each of the two years in the period ended September 30, 2001 and the
period from inception to September 30, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company at
September 30, 2001 and 2000, and the consolidated results of its operations and
its cash flows for each of the two years in the period ended September 30, 2001,
and the period from inception to September 30, 1999, in conformity with
accounting principles generally accepted in the United States.

    The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As more fully described in Note 2, the
Company is a wholly owned subsidiary of U.S. Industries, Inc. and subsidiaries
("USI"), as well as a co-borrower and co-obligor under certain debt instruments
of USI. USI is required under its restructured credit facilities to make
cumulative reductions of its senior debt of $450 million by June 30, 2002. USI
needs to generate sufficient funds to make such reductions or, absent such
reductions, restructure or refinance its debt. The Company's capital stock and
substantially all of its assets have been pledged as collateral under USI's
restructured credit facilities and senior notes. These conditions raise
substantial doubt about both USI and the Company's ability to continue as a
going concern. USI's management's plans in regard to these matters are also
described in Note 2. The financial statements do not include any adjustments
that may result from the outcome of this uncertainty.

                                          /s/ Ernst & Young LLP

New York, New York
January 14, 2002

                                      F-63
<Page>
                             USI GLOBAL CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN MILLIONS)

<Table>
<Caption>
                                                               FISCAL YEARS ENDED SEPTEMBER 30
                                                              ---------------------------------
                                                                2001        2000        1999
                                                              ---------   ---------   ---------
<S>                                                           <C>         <C>         <C>
Net sales...................................................   $ 683.6    $1,215.2     $822.3
Operating costs and expenses:
  Cost of products sold.....................................     485.5       871.3      606.8
  Selling, general and administrative expenses..............     155.0       214.5      115.9
  Management fees...........................................      13.1        10.8        6.2
  Goodwill impairment and restructuring charges.............      60.8          --        0.7
                                                               -------    --------     ------
Operating (loss) income.....................................     (30.8)      118.6       92.7

Affiliated interest income..................................      44.5         4.2        0.5
Affiliated interest expense.................................      (2.7)       (0.9)      (9.4)
Interest income.............................................       1.5         3.1        3.1
Interest expense............................................     (44.0)      (43.0)     (21.1)
Gain on sale of businesses..................................        --        42.1         --
Equity (loss) earnings in investees.........................      (1.4)        3.1         --
Other (expense) income, net.................................     (22.9)       (4.2)      12.5
                                                               -------    --------     ------
(Loss) income before income taxes, discontinued operations
  and cumulative effect of accounting change................     (55.8)      123.0       78.3

Provision for income taxes..................................       8.6        48.5       25.1
                                                               -------    --------     ------
(Loss) income from continuing operations....................     (64.4)       74.5       53.2

Discontinued operations:
  (Loss) income from operations (net of income tax
    provisions of $37.9, $2.8 and $19.2), respectively......     (45.7)       (1.6)      29.4
  Loss from disposals (net of income tax benefit of
    $10.2)..................................................    (194.1)         --         --
                                                               -------    --------     ------
(Loss) income from discontinued operations..................    (239.8)       (1.6)      29.4
                                                               -------    --------     ------
(Loss) income before cumulative effect of accounting
  change....................................................    (304.2)       72.9       82.6
Cumulative effect of accounting change, net of taxes of $0.8
  in 2001...................................................      (0.7)         --         --
                                                               -------    --------     ------
Net (loss) income...........................................    (304.9)       72.9       82.6
Dividend on preferred stock.................................     (61.6)      (61.6)     (25.7)
                                                               -------    --------     ------
(Loss) income applicable to common shares...................   $(366.5)   $   11.3     $ 56.9
                                                               =======    ========     ======
</Table>

                            See accompanying notes.

                                      F-64
<Page>
                             USI GLOBAL CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                        (IN MILLIONS, EXCEPT SHARE DATA)

<Table>
<Caption>
                                                                 SEPTEMBER 30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
                                     ASSETS
Current assets:
  Cash and cash equivalents.................................  $   51.8   $   18.1
  Trade receivables, net of allowances of $5.7 in 2001 and
    $2.8 in 2000............................................     158.7      178.6
  Inventories...............................................     117.0       95.1
  Deferred income taxes.....................................      24.7       18.6
  Net assets held for sale..................................     455.5      383.5
  Other current assets......................................      10.7       12.4
                                                              --------   --------
Total current assets........................................     818.4      706.3
Property, plant and equipment, net..........................      99.5       74.7
Net assets held for sale....................................        --      417.8
Other assets................................................      26.1       26.2
Goodwill, net...............................................     267.5      269.2
Notes receivable from Parent and affiliates.................     681.7      709.3
                                                              --------   --------
                                                              $1,893.2   $2,203.5
                                                              ========   ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Notes payable.............................................  $   11.9   $   14.0
  Current maturities of long-term debt......................     428.0         --
  Trade accounts payable....................................      68.2       65.7
  Accrued expenses and other liabilities....................      68.4       63.4
  Notes payable to Parent...................................      29.6       26.6
                                                              --------   --------
Total current liabilities...................................     606.1      169.7
Long-term debt..............................................     280.1      542.5
Deferred income taxes.......................................      27.3       25.2
Other liabilities...........................................      38.6      115.5
Due to Parent and affiliates................................     288.7      350.1
                                                              --------   --------
Total liabilities...........................................   1,240.8    1,203.0
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock (par value $.01) per share; authorized 1,000
  shares, issued and outstanding 1,000......................        --         --
Common stock (par value $.01) per share; authorized 200
  shares, issued and outstanding 100........................        --         --
Paid-in capital.............................................     975.9      975.9
Accumulated (deficit) earnings..............................    (298.3)      68.2
Accumulated other comprehensive loss........................     (25.2)     (43.6)
                                                              --------   --------
Total stockholders' equity..................................     652.4    1,000.5
                                                              --------   --------
                                                              $1,893.2   $2,203.5
                                                              ========   ========
</Table>

                            See accompanying notes.

                                      F-65
<Page>
                             USI GLOBAL CORPORATION

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

              FISCAL YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<Table>
<Caption>
                                                                                       ACCUMULATED
                                                                       ACCUMULATED        OTHER        COMPREHENSIVE
                                      COMMON    PREFERRED   PAID-IN      EARNINGS     COMPREHENSIVE        INCOME
                                      STOCK       STOCK     CAPITAL     (DEFICIT)     INCOME (LOSS)        (LOSS)         TOTAL
                                     --------   ---------   --------   ------------   --------------   --------------   ---------
<S>                                  <C>        <C>         <C>        <C>            <C>              <C>              <C>
Balance at September 30, 1998......   $   --     $   --      $   --      $    --          $   --          $    --       $      --
Issuance of Preferred Stock........                  --       828.9                        (20.9)                           808.0
Issuance of Common Stock...........       --                  147.0                                                         147.0
Net income applicable to common
  shares...........................                                         56.9                             56.9            56.9
Translation adjustment.............                                                         (6.7)            (6.7)           (6.7)
Minimum pension liability
  adjustment.......................                                                          1.1              1.1             1.1
                                                                                                          -------
Other comprehensive income.........                                                                          (5.6)
                                                                                                          -------
Total comprehensive income.........                                                                       $  51.3
                                      ------     ------      ------      -------          ------          -------       ---------
Balance at September 30, 1999......       --         --       975.9         56.9           (26.5)                         1,006.3
                                      ------     ------      ------      -------          ------                        ---------
Net income applicable to common
  shares...........................                                         11.3                          $  11.3            11.3
Sale of Diversified businesses:
  Translation adjustment...........                                                          5.2              5.2             5.2
  Minimum pension liability
    adjustment.....................                                                          1.7              1.7             1.7
Translation adjustment.............                                                        (24.5)           (24.5)          (24.5)
Minimum pension liability
  adjustment.......................                                                          0.5              0.5             0.5
                                                                                                          -------
Other comprehensive loss...........                                                                         (17.1)
                                                                                                          -------
Total comprehensive income.........                                                                       $  (5.8)
                                      ------     ------      ------      -------          ------          -------       ---------
Balance at September 30, 2000......       --         --       975.9         68.2           (43.6)                         1,000.5
                                      ------     ------      ------      -------          ------                        ---------

Net loss applicable to common
  shares...........................                                       (366.5)                         $(366.5)         (366.5)
Discontinued operations:
  Translation adjustment...........                                                         37.4             37.4            37.4
  Minimum pension liability
    adjustment.....................                                                          7.2              7.2             7.2
Translation adjustment.............                                                        (18.9)           (18.9)          (18.9)
Minimum pension liability
  adjustment.......................                                                         (5.9)            (5.9)           (5.9)
Fair value of derivatives
  adjustment.......................                                                         (1.4)            (1.4)           (1.4)
                                                                                                          -------
Other comprehensive income.........                                                                          18.4
                                                                                                          -------
Total comprehensive income.........                                                                       $(348.1)
                                      ------     ------      ------      -------          ------          -------       ---------
Balance at September 30, 2001......   $   --     $   --      $975.9      $(298.3)         $(25.2)         $             $   652.4
                                      ======     ======      ======      =======          ======                        =========
</Table>

                            See accompanying notes.

                                      F-66
<Page>
                             USI GLOBAL CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN MILLIONS)

<Table>
<Caption>
                                                                FOR THE FISCAL YEARS ENDED
                                                                      SEPTEMBER 30,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
OPERATING ACTIVITIES:
  (Loss) income from continuing operations..................  $ (64.4)   $  74.5    $  53.2
  Adjustments to reconcile income from continuing operations
    to net cash provided by
    operating activities:
    Depreciation and amortization...........................     18.1       30.5       18.6
    Amortization of deferred financing costs................      0.7        0.7        0.6
    (Benefit) provision for deferred income taxes...........    (10.6)      21.9        1.7
    Provision for doubtful accounts.........................      2.5        2.5        2.5
    Gain on sale of excess real estate......................       --       (3.2)     (12.6)
    Equity loss (earnings) of investee......................      1.4       (3.1)        --
    Gain on sale of businesses..............................       --      (42.1)        --
    Impairment, restructuring and other non-recurring
     charges................................................     60.8         --         --
  Changes in operating assets and liabilities, excluding the
    effects of acquisitions and dispositions:
    Decrease (increase) in trade receivables................     27.5      (24.1)     (16.4)
    Decrease in inventories.................................     (5.0)      (2.2)      (6.2)
    Decrease (increase) in other current assets.............      2.8       (0.3)       1.3
    (Decrease) increase in other assets.....................     (2.5)     (11.2)      25.9
    (Decrease) increase in trade accounts payable...........       --      (15.7)      13.8
    Decrease in accrued expenses and other current
     liabilities............................................     (9.2)     (37.5)      (7.3)
    Increase (decrease) in other liabilities................     (8.5)     (12.8)       2.4
    Other, net..............................................       --         --        2.4
                                                              -------    -------    -------
Net cash provided by (used in) operating activities of
  continuing operations.....................................     13.6      (22.1)      79.9
(Loss) income from discontinued operations..................   (239.8)      (1.6)      29.4
Adjustments to reconcile (loss) income from discontinued
  operations to net cash provided by (used in) discontinued
  operations:
    (Loss) on disposal of discontinued operations...........    194.1         --         --
    Impairment and other non-recurring charges..............     61.6       84.0         --
    Other decreases (increases) in net assets held for
     sale...................................................     47.3      (56.6)      16.0
                                                              -------    -------    -------
Net cash provided by discontinued operations................     63.2       25.8       45.4
                                                              -------    -------    -------
Net cash provided by (used in) operating activities.........     76.8       (3.7)     125.3
                                                              -------    -------    -------
INVESTING ACTIVITIES:
  Proceeds from the sale of businesses......................       --      391.3         --
  Acquisition of companies, net of cash acquired............       --      (78.4)    (152.6)
  Purchases of property, plant and equipment................    (17.8)     (23.6)     (16.4)
  Proceeds from sales of property, plant and equipment......      0.9        1.7        3.3
  Proceeds from sale of excess real estate..................       --        5.5       25.3
  Repayment of (loans to) affiliates........................     27.6     (487.5)        --
                                                              -------    -------    -------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES.........     10.7     (191.0)    (140.4)
                                                              -------    -------    -------
FINANCING ACTIVITIES:
  Proceeds from long-term debt..............................    247.9        5.8      146.9
  Repayment of long-term debt...............................   (246.5)    (152.5)     (76.6)
  (Repayment) proceeds of notes payable, net................     (2.1)       1.8        5.6
  Proceeds (repayment) of notes payable to affiliates,
    net.....................................................      3.0       (3.3)       4.3
  Payment of dividend.......................................       --         --      (25.7)
  Net transfers with affiliates.............................    (50.1)     311.1       17.3
                                                              -------    -------    -------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES.........    (47.8)     162.9       71.8
Effect of exchange rate changes on cash and cash
  equivalents...............................................     (6.0)      (5.9)      (8.3)
                                                              -------    -------    -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............     33.7      (30.3)      48.4
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............     18.1       48.4         --
                                                              -------    -------    -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD..................  $  51.8    $  18.1    $  48.4
                                                              =======    =======    =======
</Table>

                            See accompanying notes.

                                      F-67
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--BASIS OF PRESENTATION

    The accompanying consolidated financial statements include the consolidated
operations of USI Global Corporation ("Global" or the "Company"). Global was
incorporated in the state of Delaware on February 9, 1999. U.S. Industries, Inc.
("USI" or the "Parent") acquired all of the issued and outstanding common stock
of Global on February 9, 1999, when USI contributed a nominal amount of cash to
Global. Subsequent thereto, on April 30, 1999, USI contributed to Global all of
the stock of Dual-Lite Inc. ("Dual-Lite") and True Temper Hardware Company
("True Temper"), each a wholly-owned subsidiary of USI. Contemporaneously, USI
American Holdings ("USIAH"), an indirect wholly owned subsidiary of USI,
contributed to Global all of its assets and liabilities, including the
outstanding capital stock of JUSI Holdings Inc. ("JUSI") in exchange for all of
the outstanding preferred stock of Global representing approximately ninety-one
percent of the voting stock of Global. Promptly following its receipt, Global
contributed the stock of Dual-Lite and True Temper to JUSI.

    Each share of the Global common stock and the Global preferred stock, which
are both owned by USI or its wholly owned subsidiaries, entitles the holder to
one vote. The preferred stock has a stated value of $1.1 billion and a yield of
5.6%. The preferred stock has a maturity date of June 30, 2024 at which time it
can be redeemed at the option of Global. All preferred dividends will be paid
only to the extent declared and will accumulate on a cumulative basis (without
interest), to the extent not declared or paid. The preferred stock will have a
liquidation value of the stated value plus accrued and unpaid dividends. The
preferred stock has no conversion rights, but will rank prior to the common
stock and all other classes and series of equity securities of Global as to
dividends rights and rights on liquidation, winding down or dissolution of
Global.

    Global's principal operating subsidiaries are Jacuzzi Inc., Rexair, Inc.,
Jacuzzi Europe, Spa., Spring Ram Plc., and Jacuzzi Leisure Products Ltd. These
entities manufacture and distribute a full line of whirlpool baths, spas,
swimming pools, swimming pool equipment, kitchen and bath sinks, shower
enclosures and premium vacuum cleaners. These entities operate in the United
States, throughout Europe, Canada, and South America.

    Global's other principal subsidiaries are classified as discontinued
operations and include several of USI's domestic and European commercial and
institutional lighting businesses, USI's North American lawn and garden
businesses and the U.K. hand and industrial tools business (see Note 5).

    USI and certain subsidiaries of USI (referred to herein as "Affiliates")
have provided certain corporate general and administrative services to the
Company including legal, finance, tax, risk management and employee benefits. A
portion of the related costs has been allocated to Global based on the
percentage of Global's sales to the consolidated sales of USI as management
fees. Global's management believes such amounts are reasonable; however, they
may not be indicative of Global's ongoing costs as a separate entity.

    The Company operates on a 52- or 53-week fiscal year ending on the Saturday
nearest to September 30. The fiscal periods presented in our consolidated
financial statements consisted of the 52 weeks ending on September 29, 2001 and
September 30, 2000 and the period from inception to October 2, 1999, but are
presented as of, and for the fiscal years ended, September 30 in each of those
periods for convenience. Businesses over which the Company has the ability to
exercise significant influence are accounted for using the equity method. In
March 2000, the Company completed the disposition of a majority equity interest
in its Diversified segment. Since then, the Company has accounted for its
retained interest in the Diversified segment under the equity method of
accounting

                                      F-68
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--BASIS OF PRESENTATION (CONTINUED)
(see Note 4). The Company eliminates intercompany balances and transactions when
combining the account balances of its subsidiaries.

NOTE 2--GOING CONCERN

    The accompanying consolidated financial statements have been prepared on a
going concern basis of accounting and do not reflect any adjustments that might
result if Global was unable to continue as a going concern. On August 15, 2001,
USI finalized a comprehensive restructuring of its bank debt and the bank debt
of Rexair, Inc. ("Rexair"), a former subsidiary that was reacquired from
Strategic Industries, LLC ("Strategic") on the same date. The amended facilities
(together the "Restructured Facilities") extend the final maturity date of USI's
debt under its credit agreement to November 30, 2002, which coincides with the
final maturity of the amended Rexair Credit Facility. The Restructured
Facilities provide for scheduled permanent reductions of USI's senior debt (a
combination of the Restructured Facilities, senior notes of USI and other
defined obligations) during the term of the Restructured Facilities. The
required cumulative permanent reductions of USI's senior debt are scheduled at
$75 million, $200 million, $450 million and $600 million for the periods ending
December 31, 2001, March 31, 2002, June 30, 2002, and October 15, 2002,
respectively. The remaining balance of the Restructured Facilities is due in
full on November 30, 2002. USI expects to satisfy operating liquidity needs
through operating cash flow. However, it will have to sell a substantial amount
of its assets and restructure or refinance its debt to satisfy the required
cumulative permanent reductions. Global's capital stock and substantially all of
its assets have been pledged as collateral under USI's Restructured Facilities
and senior notes.

    On December 28, 2001, the Board of Directors of USI approved a formal
Disposal Plan for five businesses in order to meet the scheduled reductions.
Four of the businesses to be disposed of are included in the accompanying
financial statements Global, Ames True Temper, Lighting Corporation of America,
Spear & Jackson and SiTeco Lighting, and have an estimated net realizable value
of $455.5 million. The Disposal Plan calls for the sale of these businesses over
the next 12 months. The net assets of the discontinued businesses are included
in net assets held for sale in all periods presented.

    USI and Global entered into an agreement to sell Ames True Temper on
December 24, 2001 for approximately $165 million in cash. The sale, which is
subject to the completion of financing and other customary closing conditions,
is currently expected to close in January 2002. Upon closing, the entire net
cash proceeds will be applied to reduce USI's funded and unfunded senior debt.

    USI is pursuing the sale of the Strategic Notes together with the equity
interest in Strategic at an amount expected to approximate the September 30,
2001 carrying value. Upon closing, the entire net cash proceeds will be applied
to reduce USI's funded and unfunded senior debt.

    The net proceeds from the sale of Ames True Temper and the Strategic Notes
are expected to be sufficient to fund the required reductions of USI's senior
debt through March 31, 2002.

    USI continues to actively pursue its Disposal Plan. However, there can be no
assurance when or whether USI will consummate any of these transactions. If USI
is unable to consummate asset disposals as outlined in its Disposal Plan in time
to meet scheduled amortizations, USI expects to seek a further restructuring of
its credit facilities. Furthermore, the proceeds of the Disposal Plan, if
consummated in its entirety, and the sale of the Strategic Notes will be
insufficient to repay the Restructured Facilities

                                      F-69
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--GOING CONCERN (CONTINUED)
upon their maturity in November 2002. Accordingly, USI will have to restructure
or refinance its existing Restructured Facilities. USI believes it will be able
to restructure or refinance its existing Restructured Facilities before their
scheduled maturity in November 2002. However, there can be no assurance that it
will be able to do so.

    USI's and the Company's independent auditors have included a going concern
explanatory paragraph in their audit reports accompanying the September 30, 2001
consolidated financial statements of both USI and the Company. The paragraph
states that USI's need to generate sufficient funds to make the required
cumulative reductions of senior debt of $450 million by June 30, 2002 through
asset sales or a restructuring or refinancing raises substantial doubt about
USI's and the Company's ability to continue as a going concern.

NOTE 3--ACCOUNTING POLICIES

    USE OF ESTIMATES: Accounting guidelines require that the Company make
estimates and assumptions that affect amounts reported in its financial
statements and accompanying notes. Actual results could differ from those
estimates.

    FOREIGN CURRENCY TRANSLATION: The Company's subsidiaries outside of the
United States record transactions using their local currency as their functional
currency. In accordance with Statement of Financial Accounting Standards
("SFAS") No. 52, FOREIGN CURRENCY TRANSLATION, the assets and liabilities of the
Company's foreign subsidiaries are translated into U.S. dollars using the
exchange rates in effect at the balance sheet dates. Revenues, expenses and cash
flow items are translated at average daily exchange rates for the period. The
translation adjustments that result from translating the balance sheets at
different rates than the statements of operations are included in accumulated
other comprehensive income, which is a separate component of the Company's
stockholders' equity.

    CASH AND CASH EQUIVALENTS: The Company considers all highly liquid
investments with original maturities of three months or less to be cash
equivalents. Except for certain cash balances owned by the Company, cash
accounts have been controlled on a centralized basis by an Affiliate which
sweeps cash receipts and funds cash disbursements of the Company. The net
results of cash transactions between or on behalf of the Company, including
intercompany advances, are included in the consolidated balance sheets as due to
affiliates.

    TRADE RECEIVABLES AND CONCENTRATION OF CREDIT RISK: The Company records an
allowance for doubtful accounts, reducing its receivables balance to an amount
the Company estimates is collectible from its customers.

    The Company principally operates in the United States, and to a lesser
extent in the UK. The Company performs periodic credit evaluations of its
customers' financial condition and generally does not require collateral. The
Company encounters a certain amount of credit risk as a result of a
concentration of receivables among a few significant customers. One of its
customers represents 5.3% and 12.7% of the Company's trade receivables balance
at September 30, 2001 and 2000, respectively, and 10.3%, 8.0%, and 4.9% of its
sales for the years ending September 30, 2001, 2000, and 1999, respectively.
Credit losses have not been significant and are within management's
expectations.

    INCOME TAXES: Deferred tax assets and liabilities represent the tax effects,
based on current law, of any temporary differences in the timing of when
revenues and expenses are recognized for tax

                                      F-70
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
purposes and when they are recognized for financial statement purposes. The
deferred tax assets are reviewed periodically for recoverability and valuation
allowances are provided as necessary.

    The Company's United States earnings have been included in the consolidated
federal income tax return filed by USI. The Company provided for income taxes in
the accompanying consolidated financial statements as if it were a stand-alone
entity and filed separate income tax returns from USI. Federal taxes currently
payable have been included in Due to Parent and affiliates. Income taxes paid to
state, local and foreign jurisdictions during fiscal 2001, 2000 and 1999 were
$13.8 million, $18.8 million and $23.0 million, respectively.

    INVENTORIES: The Company's inventories are stated at the lower of cost,
determined by the first-in, first-out method, or market. The Company's
inventories can be categorized as follows:

<Table>
<Caption>
                                                                 SEPTEMBER 30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Finished products...........................................   $ 57.9     $45.0
In-process products.........................................      5.8       4.4
Raw materials...............................................     53.3      45.7
                                                               ------     -----
                                                               $117.0     $95.1
                                                               ======     =====
</Table>

    PROPERTY, PLANT AND EQUIPMENT: The Company records its property, plant and
equipment at cost. The Company records depreciation and amortization in a manner
that recognizes the cost of its depreciable assets in operations over their
estimated useful lives using the straight-line method. The Company estimates the
useful lives of its depreciable assets to be 20-50 years for buildings and
3-10 years for machinery, equipment and furniture. Leasehold improvements are
amortized over the shorter of the terms of the underlying leases, including
probable renewal periods, or the estimated useful lives of the improvements.

    Property, plant and equipment consisted of:

<Table>
<Caption>
                                                                 SEPTEMBER 30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Land and buildings..........................................   $61.4      $48.7
Machinery, equipment and furniture..........................    98.2       74.7
Accumulated depreciation....................................   (60.1)     (48.7)
                                                               -----      -----
                                                               $99.5      $74.7
                                                               =====      =====
</Table>

                                      F-71
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
    Depreciation and amortization consisted of:

<Table>
<Caption>
                                                           FISCAL YEARS ENDED
                                                              SEPTEMBER 30
                                                     -------------------------------
                                                       2001        2000       1999
                                                     ---------   --------   --------
                                                              (IN MILLIONS)
<S>                                                  <C>         <C>        <C>
Depreciation.......................................    $10.3      $20.2      $13.8
Amortization of goodwill...........................      7.8       10.3        4.8
                                                       -----      -----      -----
                                                       $18.1      $30.5      $18.6
                                                       =====      =====      =====
</Table>

    OTHER ASSETS: Included in other assets are excess properties held for sale
consisting of land and buildings no longer used in operations. These assets are
carried at the lower of cost or fair value less costs to sell. The carrying
value of such properties was $10.1 million and $14.6 million as of
September 30, 2001 and 2000, respectively. In fiscal 2001, the Company recorded
a loss from excess properties of $0.2 million, compared to income from excess
properties of $2.7 million and $12.5 million in fiscal 2000 and 1999,
respectively. This amount is included in other (expense) income, net and
consists of net gains on the sale of these properties, adjustments to net
realizable value and the carrying costs incurred in the period.

    GOODWILL: Goodwill represents the excess of the purchase price over the fair
value of net assets acquired. The Company reviews operating results and other
relevant facts every fiscal quarter for each of its businesses to determine if
there are indications that the carrying value of its long-lived assets,
including goodwill may be impaired. When there are indicators of impairment, the
Company first assesses the recoverability of goodwill associated with long-lived
assets in accordance with the requirements of SFAS No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF, which
requires impairment losses to be recorded when the undiscounted cash flows
estimated to be generated by those assets are less than the carrying amount of
those assets. In addition, an enterprise level assessment of the recoverability
of any remaining goodwill is performed using the fair value methodology, as
permitted under APB No. 17. In the event that such fair value is below the
carrying value of an enterprise, for those companies with goodwill, the Company
reduces goodwill to the extent it is impaired based upon fair value.

    The fair value methodology is applied to determine the recoverable value for
each business on a stand alone basis using ranges of fair values obtained from
independent appraisers. In developing these ranges, the independent appraisers
consider (a) publicly available information, (b) financial projections of each
business based on management's best estimates, (c) the future prospects of each
business as discussed with senior operating and financial management,
(d) publicly available information regarding comparable publicly traded
companies in each industry, (e) market prices, capitalization and trading
multiples of comparable public companies and (f) other information deemed
relevant. In reviewing these valuations and considering the need to record a
charge for impairment of enterprise value and goodwill to the extent it is part
of the enterprise value, the Company also evaluates solicited and unsolicited
bids for the businesses of the Company.

    Goodwill is amortized on a straight-line basis over the estimated future
period to be benefited (ranging from 20 to 40 years, primarily 40 years).
Accumulated amortization aggregated $73.1 million and $64.9 million at
September 30, 2001 and 2000, respectively.

                                      F-72
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
    ACCRUED EXPENSES AND OTHER LIABILITIES: Accrued expenses and other current
liabilities consisted of the following:

<Table>
<Caption>
                                                                 AT SEPTEMBER
                                                                      30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Compensation related........................................   $12.8      $ 8.0
Other.......................................................    55.6       55.4
                                                               -----      -----
                                                               $68.4      $63.4
                                                               =====      =====
</Table>

    FAIR VALUE OF FINANCIAL INSTRUMENTS: SFAS No. 107, DISCLOSURE ABOUT FAIR
VALUE OF FINANCIAL INSTRUMENTS, requires that the Company disclose the fair
value of its financial instruments when it is practical to estimate. The Company
has determined the estimated fair values of its financial instruments, which are
either recognized in the Company's consolidated balance sheets or disclosed
within these notes, using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting market
data to develop estimates of fair value. Accordingly, the estimates presented
are not necessarily indicative of the amounts the Company could realize in a
current market exchange.

    Short-term Assets and Liabilities: The fair values of the Company's cash and
cash equivalents, trade receivables and accounts payable approximate their
carrying values because of their short-term nature.

    Long-term Debt: The fair values of the Company's Senior Notes are determined
by discounting the cash flows using current interest rates for financial
instruments with similar characteristics and maturities. The fair value of the
Company's remaining debt approximates 80% of its carrying value as of
September 30, 2001.

    There were no other significant differences as of September 30, 2001 and
September 30, 2000 between the carrying value and fair value of the Company's
financial instruments except as disclosed below:

<Table>
<Caption>
                                                    2001                  2000
                                             -------------------   -------------------
                                             CARRYING     FAIR     CARRYING     FAIR
                                              AMOUNT     VALUE      AMOUNT     VALUE
                                             --------   --------   --------   --------
                                                           (IN MILLIONS)
<S>                                          <C>        <C>        <C>        <C>
7.25% Senior Notes.........................   $123.9     $ 82.5     $123.6     $113.0
                                              ======     ======     ======     ======
</Table>

    Interest Rate Swaps and Foreign Currency Contracts: The fair value of the
Company's interest rate swap and foreign currency contracts is the amount the
Company would receive or have to pay to terminate the agreement at the reporting
date, taking into account current interest rates and exchange rates. The fair
value of the interest rate swap is provided to the Company by its financial
institution, the counter-party to the interest rate swap agreement. For more
information on these financial instruments, see the DERIVATIVE FINANCIAL
INSTRUMENTS section of this note

                                      F-73
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
    REVENUE RECOGNITION: The Company currently records revenue when delivery has
occurred and title has passed to the customer. Provisions are made for warranty
and return costs at the time of sale. Such provisions have not been material to
the Company.

    ACCOUNTING CHANGE: In December 1999, the Securities and Exchange Commission
("SEC") issued Staff Accounting Bulletin ("SAB") No. 101, REVENUE RECOGNITION IN
FINANCIAL STATEMENTS, which, along with other guidance, clarified the SEC's
views on various revenue recognition and reporting matters. As a result, the
Company changed its method of accounting for certain sales transactions.
Historically, the Company recognized revenue upon shipment of products to the
customer because, even though some products were shipped FOB destination, the
Company used a common carrier and thus gave up substantially all the risks of
ownership. Under the new accounting method adopted retroactive to October 1,
2000, the Company now recognizes revenue when title passes. The net effect of
the accounting change was not material to the results for the year ended
September 30, 2001. Net sales for the year ended September 30, 2001 includes
$4.4 million of net sales that, prior to the accounting change, had been
recognized through September 30, 2000. The pro forma amounts, had the new
revenue recognition method been applied retroactively to prior periods, were not
materially different from the amounts shown in the Company's consolidated
statements of operations for the years ended September 30, 2000 and 1999.
Therefore, these amounts have not been presented.

    SHIPPING AND HANDLING FEES AND COSTS: After adopting Emerging Issues Task
Force ("EITF") Issue No. 00-10, ACCOUNTING FOR SHIPPING AND HANDLING FEES AND
COSTS, the Company classifies amounts charged to its customers for shipping and
handling as revenues, while shipping and handling costs are recorded as cost of
goods sold.

    ADVERTISING COSTS: Advertising costs are charged to expense when incurred.
The Company participates in cooperative advertising programs with certain
customers for which the Company reimburses a portion of advertising costs.
Advertising expense totaled $26.1 million, $27.7 million and $10.8 million in
2001, 2000 and 1999, respectively.

    RESEARCH AND DEVELOPMENT COSTS: Research and development costs are expensed
as incurred. Such amounts totaled $4.1 million, $4.5 million and $1.4 million in
2001, 2000 and 1999, respectively.

    DERIVATIVE FINANCIAL INSTRUMENTS: Effective October 1, 2000, the Company
adopted SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES, as amended, which requires that all derivative instruments be
reported on the balance sheet at fair value and establishes criteria for
designation and effectiveness of hedging relationships. The Company uses several
types of derivative financial instruments including interest rate swaps, forward
contracts and debt denominated in a foreign currency to hedge its exposure to
volatility in interest rates and currency exchange rates.

INTEREST RATE HEDGING

    The Company hedged a portion of its variable-rate debt by entering into an
interest rate swap in which the Company agreed to exchange, at specified
intervals, the calculated difference between fixed and variable interest amounts
on $90 million of its debt. The swap, which matures on June 30, 2002, is
designated as a cash flow hedge of the underlying variable-rate interest
payments and is recorded as a current liability in the Company's consolidated
balance sheet. Since an assessment of the hedging relationship revealed that it
was 100% effective, the entire unrealized loss, net of tax, is recorded in

                                      F-74
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
accumulated other comprehensive income ("OCI") within stockholders' equity. As
of September 30, 2001, there was an unrealized loss of $1.4 million in OCI
related to this contract. The amounts in OCI will be recognized as additional
interest expense over the term of the swap agreement.

FORWARD EXCHANGE

    The Company manufactures and sells its products in a number of countries
throughout the world and, as a result, is exposed to movements in foreign
currency exchange rates. The primary purpose of the Company's foreign currency
hedging activities is to manage the volatility associated with foreign currency
payments to related entities or to vendors for purchases of materials and with
foreign currency collections from customers in the normal course of business.
The Company utilizes forward exchange contracts with maturities of less than
twelve months, which qualify as foreign currency hedges. These hedges are
intended to offset the effect of transaction gains and losses, which arise when
payments or collections in a foreign currency are made or received one to three
months after the asset or liability is generated. The fair value of these
instruments at September 30, 2001 was negligible. Since the Company's assessment
of these hedges revealed no ineffectiveness, gains and losses on these
instruments are deferred in OCI, net of tax, until the underlying transaction
gain or loss is recognized in earnings. Amounts in OCI will be reclassified into
earnings within the next twelve months.

FOREIGN CURRENCY DENOMINATED DEBT (NET INVESTMENT HEDGING)

    The Company is exposed to foreign currency risk when the financial
statements of its non-U.S. dollar subsidiaries are translated into its
functional currency. In order to hedge its net investment position in select
subsidiaries, the Company entered into foreign currency denominated debt. Since
the Company's assessment of these hedges revealed no ineffectiveness, all of the
transaction gains and losses associated with this debt have been reflected in
the foreign currency translation adjustment in OCI. As a result of the Company's
amended credit agreement, all foreign currency denominated debt was repaid and
the Company will no longer have a hedge of its net investment position in these
subsidiaries.

    COMPREHENSIVE INCOME (LOSS): Comprehensive income (loss) represents the
change in stockholders' equity from transactions and other events and
circumstances arising from non-stockholder sources. The Company's comprehensive
income (loss) for 2001, 2000 and 1999 consisted of net income (loss), foreign
currency translation adjustments, minimum pension liability adjustments and
unrealized gains and losses on derivatives established as cash flow hedges, net
of applicable income taxes.

                                      F-75
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
    Components of accumulated other comprehensive income (loss) consist of the
following (in millions):

<Table>
<Caption>
                                                                MINIMUM                      ACCUMULATED
                                                  FOREIGN       PENSION     FAIR VALUE OF       OTHER
                                                 CURRENCY      LIABILITY     DERIVATIVES    COMPREHENSIVE
                                                TRANSLATION   ADJUSTMENTS    ADJUSTMENT     INCOME (LOSS)
                                                -----------   -----------   -------------   -------------
<S>                                             <C>           <C>           <C>             <C>
September 30, 1998............................    $   --         $  --          $  --           $   --
Fiscal 1999 change............................     (23.1)         (3.4)            --            (26.5)
                                                  ------         -----          -----           ------
September 30, 1999............................     (23.1)         (3.4)            --            (26.5)
Fiscal 2000 change............................     (19.3)          2.2             --            (17.1)
                                                  ------         -----          -----           ------
September 30, 2000............................     (42.4)         (1.2)            --            (43.6)
Fiscal 2001 change............................      18.5           1.3           (1.4)            18.4
                                                  ------         -----          -----           ------
September 30, 2001............................    $(23.9)        $ 0.1          $(1.4)          $(25.2)
                                                  ======         =====          =====           ======
</Table>

    STOCK-BASED COMPENSATION: The Company does not have stock-based compensation
plans separate from USI; however, the Company does participate in USI's
stock-based compensation plans. Consistent with USI, the Company accounts for
participation in these plans in accordance with Accounting Principles Board
Opinion No. 25 ("APB 25"), ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES and related
interpretations in accounting for stock based compensation. The pro forma
effects on net income had compensation cost for awards of stock-based
compensation been determined using the fair value method prescribed by Statement
of Financial Accounting Standards No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, were not materially different from the amounts presented in the
Company's consolidated statements of operations for the periods ended
September 30, 2001, 2000 and 1999. Therefore, these amounts have not been
presented.

    Certain key employees of the Company participate in stock incentive plans of
USI that provide for awards of restricted stock and options to purchase USI
common stock at prices equal to the fair value of the underlying shares at the
date of the grant. The Company recognized compensation expense of less than
$0.1 million in fiscal 2001 for vesting restricted stock awards. As of
September 30, 2001, an aggregate of approximately 0.5 million options to
purchase shares of USI common stock were held by Company employees.

    INCOME (LOSS) PER SHARE: Historical income (loss) per share information is
not presented because the Company is a direct subsidiary of USI.

    NEW ACCOUNTING PRONOUNCEMENTS: In June 2001, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
No. 141, BUSINESS COMBINATIONS, and No. 142, GOODWILL AND OTHER INTANGIBLE
ASSETS, effective for fiscal years beginning after December 15, 2001. Under the
new rules, goodwill and intangible assets deemed to have indefinite lives will
no longer be amortized but will be subject to annual impairment tests in
accordance with the Statements. Other intangible assets will continue to be
amortized over their useful lives. SFAS 141 is effective commencing July 1,
2001, and the Company has elected to adopt SFAS 142 as of October 1, 2001.
Accordingly, as of such date, the Company will no longer amortize goodwill.

    In August 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT
OR DISPOSAL OF LONG-LIVED ASSETS. The FASB's new rules on asset impairment
supersede SFAS No. 121, ACCOUNTING FOR

                                      F-76
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF,
and provide a single accounting model for long-lived assets to be disposed of.
Although retaining many of the fundamental recognition and measurement
provisions of SFAS No. 121, the new rules significantly change the criteria that
would have to be met to classify an asset as held-for-sale. The new rules also
supersede the provisions of APB Opinion No. 30, REPORTING THE RESULTS OF
OPERATIONS--REPORTING THE EFFECTS OF DISPOSAL OF A SEGMENT OF A BUSINESS, AND
EXTRAORDINARY, UNUSED AND INFREQUENTLY OCCURRING EVENTS AND TRANSACTIONS, with
regard to reporting the effects of a disposal of a segment of a business and
require expected future operating losses from discontinued operations to be
displayed in discontinued operations in the period(s) in which the losses are
incurred (rather than as of the measurement date as presently required by APB
No. 30). The Statement is effective for the Company in the beginning of fiscal
year 2003. The Company does not believe this statement will have a material
effect on the earnings or financial position of the Company.

NOTE 4--ACQUISITIONS AND DISPOSITIONS OF BUSINESSES

ACQUISITIONS OF BUSINESSES

    The pro forma effects of the acquisitions detailed below are not material to
the Company's results of operations and are not provided herein. These
acquisitions have been accounted for as purchases and their results of
operations are included in the financial statements from the dates of
acquisition.

    Contemporaneously with the closing of its debt restructuring on August 15,
2001 (see Note 8), the Company re-acquired the 75% equity interest in
Rexair, Inc. ("Rexair"), the manufacturer of "Rainbow" vacuum cleaners,
previously sold to Strategic Industries, LLC ("Strategic") as part of the
Diversified transactions in March 2000. The purchase consideration included
$27.4 million in face value of Strategic's senior notes and the assumption of
borrowings outstanding under Rexair's $200 million credit facility (see
DISPOSITIONS OF BUSINESSES below). In connection with the reacquisition, the
Company reduced the reacquired basis in Rexair by the amount of its previously
deferred gain and reclassified its retained 25% share of Rexair's net
liabilities from other long-term liabilities. The allocation of the purchase
consideration, including the deferred gain and the carrying value of the
retained liabilities, to the assets acquired and liabilities assumed resulted in
the goodwill and other intangible assets of approximately $68.9 million, the
majority of which have indefinite lives and will not be amortized. In addition,
the Company expensed $17.4 million of deferred transaction costs associated with
the March 2000 sale of Rexair. The results of Rexair have been included in the
Bath & Plumbing segment since it was reacquired. The Company accounted for
Rexair under the equity method of accounting during the time period when the
Company held only a 25% interest, from March 24, 2000 until August 15, 2001.

    In July 1999, the Company acquired Spring Ram Corporation PLC ("Spring Ram")
for approximately $133.6 million in cash, plus the assumption of $21.3 million
in debt, resulting in goodwill of approximately $110.0 million. Spring Ram,
located in Leeds, England, is a manufacturer of bathroom products. The operating
results of Spring Ram are included in the Bath & Plumbing segment.

    In June 1999, the Company purchased the assets of Gatsby Spas, Inc.
("Gatsby") for approximately $17.0 million in cash, resulting in goodwill of
$9.6 million. Gatsby manufactures and distributes spas. The results of Gatsby
are included in the Bath & Plumbing segment.

                                      F-77
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--ACQUISITIONS AND DISPOSITIONS OF BUSINESSES (CONTINUED)
    In April 1999, the Company's Parent contributed to the Company the stock of
the businesses Dual-Lite and True Temper. The contribution was recorded at the
historical carrying value of the net assets at the time of contribution, which
was approximately $147.0 million. The results of True Temper and Dual-Lite are
included in Discontinued Operations (see Note 5).

DISPOSITIONS OF BUSINESSES

    On March 24, 2000, the Company disposed of a majority equity interest in its
Diversified segment in two separate transactions. In the first transaction, the
Company disposed of the following subsidiaries: Bearing Inspection, Inc.;
BiltBest Products, Inc.; EJ Footwear Corp. (including Georgia Boot Inc. and
Lehigh Safety Shoe Co.); Garden State Tanning Inc.; Huron Inc.; Jade Holdings
Pte Ltd (including Jade Technologies Singapore Ltd and FSM Europe B.V.); Leon
Plastics Inc.; Native Textiles Inc. and SCF Industries, Inc. The Company
received gross cash proceeds of approximately $197.0 million, retained a
preferred equity interest in the buyer, Strategic, having a stated value of
approximately $19.5 million, retained a common equity interest in Strategic of
17.7% and received approximately $209.0 million aggregate principal amount of
12% (12.5% effective August 18, 2000) senior notes (the "Strategic Notes") due
2007. In addition, Strategic assumed approximately $7.9 million of existing bank
debt. As a result of its disposal of the Diversified businesses, the Company
recorded a pre-tax gain of $42.1 million.

    In the second transaction, Rexair sold newly issued shares to Strategic
representing, after issuance, 75% of the equity interest in Rexair. The Company
received approximately $195.0 million in cash and retained a 25% direct equity
interest in Rexair. In addition, the Company guaranteed Rexair's $200 million
credit facility. In connection with the Rexair transaction, the Company recorded
an other liability of $82.2 million, related to its retained 25% share of
Rexair's net liabilities and a deferred gain, which, together with the deferral
of the related transaction costs, was to be deferred until the release of the
Company's guarantee of Rexair's credit facility. Rexair was re-acquired on
August 15, 2001. Accordingly, the deferred transaction costs were expensed in
full at such date, and the deferred gain as well as the Company's retained 25%
share of Rexair's net liabilities reduced the reacquired basis in Rexair (See
ACQUISITIONS OF BUSINESSES above).

    In July 2000, the Company transferred the Strategic notes and cash proceeds
received to USI in exchange for notes receivable from USI in the amount of
$674.4 million bearing interest of 6.5% per annum with $358.5 million due on
demand and $315.9 million maturing in fiscal year 2005.

    During the first quarter of fiscal 2000, the Company disposed of assets
relating to its ladder operations and the infant and children footwear
operation. The total proceeds of these separate transactions were
$17.0 million, which approximated their carrying value. The Company has retained
certain product liabilities of the ladder operations.

NOTE 5--DISCONTINUED OPERATIONS

    On December 28, 2001, the Board of Directors of USI approved a formal
Disposal Plan for five business in connection with USI's obligation to pay debt
amortization as set forth in the restructured debt agreements. In connection
with the Disposal Plan, the Company recorded a charge of $204.3 million, which
represented the difference between the historical net carrying value and the
estimated net realizable value of those businesses, (Ames True Temper, Lighting
Corporation of America, Spear & Jackson and SiTeco Lighting) which are included
within the consolidated operations

                                      F-78
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5--DISCONTINUED OPERATIONS (CONTINUED)
of Global. The Disposal Plan calls for the sale of these businesses over the
next 12 months. The net assets of the discontinued businesses are included in
net assets held for sale for all periods presented.

    The operating results of these businesses have been included in discontinued
operations for all periods presented. Summarized results of discontinued
operations are as follows:

<Table>
<Caption>
                                                                FOR THE FISCAL YEARS ENDED
                                                                      SEPTEMBER 30,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN MILLIONS)
<S>                                                           <C>        <C>        <C>
Net sales...................................................  $1,244.0   $1,311.1   $  669.6
Operating income............................................       0.8        1.7       49.8
Income (loss) from operations before income taxes...........      (7.8)       1.2       48.6
</Table>

    Included in the losses are goodwill impairment charges totaling
$61.6 million and $84.0 million in fiscal 2001 and 2000, respectively. These
goodwill impairment charges resulted from an evaluation of the recoverability of
goodwill performed by the Company in accordance with its accounting policy (see
NOTE 3). The impairment charges were recorded as part of continuing operations
before the approval of the Disposal Plan. The charges were reclassified into
discontinued operations after the approval of the Disposal Plan.

    Amounts classified as net assets held for sale consist of the following:

<Table>
<Caption>
                                                               AT SEPTEMBER 30,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Net current assets..........................................   $ 91.2     $383.5
Property, plant and equipment, net..........................    252.9      250.2
Other non-current assets and liabilities, net...............    111.4      167.6
                                                               ------     ------
Net assets held for sale....................................   $455.5     $801.3
                                                               ======     ======
</Table>

NOTE 6--IMPAIRMENT, RESTRUCTURING AND OTHER NON-RECURRING CHARGES

GOODWILL IMPAIRMENT CHARGES

    Operating results at certain of the Company's subsidiaries declined during
2001. In the third quarter of 2001, the Company evaluated the recoverability of
the goodwill of these subsidiaries in accordance with its accounting policy
described in Note 3. This evaluation indicated that the carrying value of the
goodwill of certain of its subsidiaries was impaired. As a result, the Company
recorded a goodwill impairment charge totaling $60.8 million in the Bath &
Plumbing segment.

RESTRUCTURING AND OTHER NON-RECURRING CHARGES

    During fiscal 1999, the Company expanded its 1998 restructuring plan related
to its footwear operations by closing a second domestic manufacturing facility.
The closure of the second facility was completed by June 1999, with its
production being outsourced to offshore vendors. As a result, the Company
recorded restructuring charges of $1.7 million primarily for the costs of
terminating 110 employees and the write-off of impaired fixed assets.
Furthermore, the Company recorded other

                                      F-79
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--IMPAIRMENT, RESTRUCTURING AND OTHER NON-RECURRING CHARGES (CONTINUED)
non-recurring charges for inventory obsolescence totaling $0.9 million, which
were recorded in cost of goods sold. The restructuring charges resulting from
the closing of the Company's footwear facility were offset by a $1.0 million
reduction in severance costs that were originally set up in 1998 for the
Company's vacuum cleaner and textile operations. Voluntary departures prior to
final termination resulted in severance payments that were lower than previously
estimated. The Company subsequently sold its footwear, vacuum cleaner and
textile operations (see Note 4). Also, during fiscal 1999, the Company's
Diversified segment recorded $6.1 million in charges and losses related to the
closure of an unprofitable window operation.

    The principal components of impairment and restructuring charges recorded
for continuing operations are:

<Table>
<Caption>
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN MILLIONS)
<S>                                                           <C>        <C>        <C>
Impairment of goodwill......................................   $60.8      $  --       $ --
Lease obligations and impairment of equipment...............      --         --        0.7
                                                               -----      -----       ----
  Total.....................................................   $60.8      $  --       $0.7
                                                               =====      =====       ====
Cash charges................................................   $  --      $  --       $0.7
Non-cash charges............................................    60.8         --         --
                                                               -----      -----       ----
  Total.....................................................   $60.8      $  --       $0.7
                                                               =====      =====       ====
</Table>

OTHER NON-RECURRING CHARGES

    During 2001, the Company recorded $17.4 million in deferred transaction
costs related to the original sale of Rexair in March 2000 once the business was
re-acquired in August 2001. These costs have been classified "other expenses" in
the Company's consolidated statement of operations.

NOTE 7--NOTES RECEIVABLE FROM AFFILIATES

    Notes Receivable from Affiliates consists of the following:

<Table>
<Caption>
                                                                 SEPTEMBER 30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
6.00% Notes Receivable from Affiliates......................   $  7.3     $ 25.9
6.50% Notes Receivable from Affiliates......................    674.4      683.4
                                                               ------     ------
                                                               $681.7     $709.3
                                                               ======     ======
</Table>

    At September 30, 2001, the notes receivable from Affiliates are unsecured
with $365.8 million payable upon demand, with $315.9 million maturing in fiscal
year 2005.

                                      F-80
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--LONG-TERM DEBT

    Long-term debt consists of the following:

<Table>
<Caption>
                                                                 SEPTEMBER 30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
7.25% Senior Notes, net.....................................   $123.9     $123.6
Restructured Facilities, Rexair.............................    166.2         --
Restructured Facilities, U.S. Industries....................    418.0         --
Five-year revolving credit facility, US dollar..............       --      200.0
Five-year revolving credit facility, foreign currencies.....       --      218.9
                                                               ------     ------
                                                                708.1      542.5
Less current maturities.....................................   (428.0)        --
                                                               ------     ------
Long-term debt..............................................   $280.1     $542.5
                                                               ======     ======
</Table>

    Principal payments on long-term debt for the next five years ended
September 30 are as follows:

<Table>
<Caption>
                                                              (IN MILLIONS)
                                                              -------------
<S>                                                           <C>
2002........................................................     $428.0
2003........................................................      156.2
</Table>

    The fiscal 2002 principal reduction amount of $428.0 million presented above
reflects the cumulative required senior debt reduction required by the terms of
the Restructured Facilities. To the extent the principal reduction amount for
fiscal 2002 is satisfied through asset sales, the reduction will be affected in
part by depositing cash in cash collateral accounts for the benefit of the
holders of the Senior Notes (if required) and certain other creditors of the
Company. The fiscal 2003 principal reduction amount of $156.2 million presented
above (which is primarily comprised of the remaining balance due to the
Company's lenders under its Restructured Facilities in October 2002 and November
2002), assumes that no portion of the reduction in fiscal 2002 will be satisfied
by deposits to cash collateral accounts. To the extent it is satisfied by
deposits to cash collateral accounts, the principal reduction amount for fiscal
2003 will be increased by an amount equal to any deposits into collateral
accounts during fiscal 2002. The majority of the deposits in collateral accounts
will serve to reduce the required principal payments on the Senior Notes.

    In fiscal 1997, USIAH issued $125 million aggregate principal amount of
Senior Notes due December 1, 2006, which bear interest at 7.25%, payable
semiannually (the "7.25% Notes"). A supplemental indenture was later executed
adding USI as a co-obligor with USIAH under the 7.25% Notes. In April 1999, as
part of the issuance of Global preferred shares to USIAH, the 7.25% notes were
transferred to Global.

    In October 1998, USI and USIAH jointly issued $250 million aggregate
principal amount of Senior Notes due October 15, 2003, which bear interest at
7.125%, payable semiannually (the "7.125% Notes"). The 7.125% notes are recorded
as a liability of USI. A supplemental indenture was later executed adding Global
as a co-obligor on the 7.125% notes.

    In addition, the 7.25% Notes and the 7.125% Notes (collectively, the "Senior
Notes") are joint and several obligations of the Company, USI and USIAH, and are
guaranteed by USI Atlantic. The Senior

                                      F-81
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--LONG-TERM DEBT (CONTINUED)
Notes are redeemable at the option of the Company, in whole or in part, at a
redemption price equal to the greater of (i) 100% of the principal amount to be
redeemed or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest on the Senior Notes to be redeemed,
discounted at a rate based on the yield to maturity of the comparable U.S.
Government securities plus a spread (10 basis points for the 7.25% Notes and 50
basis points for the 7.125% Notes) plus, in each case, accrued interest to the
date of redemption. The Notes contain restrictions on dividends as well as the
purchase of common stock for treasury. See below regarding the security
interests granted to the holders of the Senior Notes as a result of the
Restructured Facilities.

    The Company also was a borrower along with USI under a five-year revolving
line of credit providing for borrowings in both U.S. dollars and foreign
currencies, which had original availability of $750 million (the "Credit
Agreement"). The Credit Agreement, which was permanently reduced over time to an
availability of $500 million, was scheduled to terminate on December 12, 2001.
The Credit Facility and Credit Agreement (together, the "Revolving Facilities")
were restructured on August 15, 2001 into an amended credit facility providing
for, among other things, an increase in availability to $830 million and an
extension of the final maturity of the debt through November 30, 2002.

    Although the Revolving Facilities were previously unsecured, the lenders of
the Revolving Facilities were granted on April 30, 2001 security interests in
substantially all of the assets of USI and its domestic subsidiaries, including
shares of the USI's domestic subsidiaries and 65% of the shares of certain of
the USI's foreign subsidiaries. As a result of having the Revolving Facilities
secured, the Rexair guarantee referred to below became secured with certain
assets. In addition, the Senior Notes also became equally and ratably secured
with the Revolving Facilities and the Rexair Guaranty with respect to the assets
of USI and its subsidiaries that are subject to the covenant restrictions under
the Senior Notes. The covenants contained in the indentures under which the
Senior Notes were issued apply to USI, the Company and any domestic subsidiary
that is a "significant subsidiary" (within the meaning of rule 1-02(w) of
Regulation S-X promulgated under the Securities and Exchange Act of 1934 or any
successor provision).

    On August 15, 2001, USI finalized a comprehensive restructuring of its bank
debt and the bank debt of Rexair, which was re-acquired from Strategic on the
same date (See NOTE 4). The amended facilities (together the "Restructured
Facilities") extend the final maturity date of the USI's debt under the
Revolving Facilities to November 30, 2002, which coincides with the final
maturity of the amended Rexair Credit Facility. The Restructured Facilities
provide for an increase in availability under the Credit Agreement from
$500 million to $830 million, the termination of the multi-currency borrowing
feature under the Credit Agreement, the elimination of the 364-day Credit
Facility and scheduled permanent reductions of the USI's senior debt (a
combination of the Restructured Facilities, the Senior Notes and other defined
obligations) during the term of the Restructured Facilities. The required
cumulative permanent reductions of USI's senior debt are scheduled at
$75 million, $200 million, $450 million and $600 million for the periods ending
December 31, 2001, March 31, 2002, June 30, 2002 and October 15, 2002,
respectively, with the remaining balance of the Restructured Facilities due in
full on November 30, 2002. USI expects to satisfy operating liquidity needs
through operating cash flow. However, it will have to sell a substantial amount
of its assets and restructure or refinance its debt to satisfy the required
cumulative permanent reductions.

    On December 21, 2001, the USI obtained a waiver (the "December 2001 Waiver")
from its lenders under the Restructured Facilities that permitted the Company to
satisfy the remaining balance of the

                                      F-82
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--LONG-TERM DEBT (CONTINUED)
December 31, 2001 $75 million reduction through a permanent reduction of the
unfunded commitments under the Restructured Facilities, to the extent not
satisfied through cash flow or asset sale proceeds.

    The Restructured Facilities require USI, the Company and Rexair to maintain
minimum monthly EBITDA, as defined, comply with maximum monthly capital
expenditure limits; USI and Rexair maintain minimum availability (as defined)
under the Restructured Facility of no less than $25 million and comply with
other customary affirmative and negative covenants. In addition, the amended
Rexair Credit Facility, which provides a term loan of $175 million and
availability under a revolver of $20 million, requires that excess cash
generated by Rexair be segregated from excess cash generated by the remainder of
USI's operations and used only to reduce the debt outstanding on the Rexair
Credit Facility. Rexair's availability under the revolver will be permanently
reduced by $5 million on May 31, 2002. In connection with the term loan, Rexair
will be required to make payments of $2.2 million each in December 2001 and
March 2002 and $4.4 million each in June 2002 and September 2002. Such payments
are credited towards the scheduled permanent reductions of the Company's senior
debt. The Senior Notes and the Restructured Facilities contain cross-default and
cross-acceleration provisions.

    The Restructured Facilities provide for increasing interest rates over the
remaining term. The spreads over London Interbank Offered Rate ("LIBOR") was 275
basis points until December 31, 2001, after which the spread increases by 50
basis points each quarter thereafter. The Restructured Facilities also provides
for several new fees including an unused commitment fee of 0.50% and a facing
fee on all outstanding letters of credit of 0.25% per annum. At USI's option, up
to 0.50% of the interest rate applicable to borrowings may be paid through the
issuance of notes.

    The security interests that were granted to the lenders of the Revolving
Facilities on April 30, 2001 remain in place under the debt restructuring, as do
the arrangements to equally and ratably secure the Rexair Guaranty and to
equally and ratably secure the Senior Notes. In addition, certain subsidiaries
of USI that are not subject to the Senior Notes' covenant restrictions have
guaranteed the Restructured Facilities. Under the Restructured Facilities, USI
also agreed to provide the lenders with security interests in the shares and
assets of certain foreign subsidiaries.

    Under the Restructured Facilities, substantially all sales proceeds are
required to be applied to reduce USI's funded and unfunded senior debt, on a pro
rata basis. The senior debt includes the Senior Notes in those cases when USI or
any subsidiary subject to the Senior Notes' covenants completes an asset sale.
Proceeds allocable to the Senior Notes and other defined obligations are
required to be deposited in cash collateral account for the benefit of the
relevant holders; any claims of the lenders of the Restructured Facilities to
amounts on deposit in the cash collateral accounts are subordinated to the
claims of the relevant holders, including the payment in full of the Senior
Notes. Any reductions of senior debt with asset sale proceeds are credited
dollar-for-dollar towards the scheduled permanent reductions.

    At December 31, 2001, excluding all amounts related to the amended Rexair
Credit Facility and after giving effect to the approximate $58 million reduction
pursuant to the December 2001 waiver, the Company had approximately
$766 million committed under the Restructured Facilities, of which approximately
$669 million had been utilized and the balance of $97 million was available. At
December 31, 2001, $5.7 million was available for borrowing solely by Rexair
under the amended Rexair Credit Facility. These amounts are net of letters of
credit outstanding of $15.0 and $13.6 million at December 31, 2001 and
September 30, 2001, respectively. In addition, USI had letters of credit

                                      F-83
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--LONG-TERM DEBT (CONTINUED)
outstanding with other financial institutions totalling $41.4 million as of both
December 31, 2001 and September 30, 2001.

    Interest paid to non-affiliates was $44.8 million, $46.1 million and
$14.5 million in fiscal 2001, 2000 and 1999, respectively.

    Notes Payable to Affiliates consists of the following:

<Table>
<Caption>
                                                                 SEPTEMBER 30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
6.50% Notes Payable.........................................   $ 0.2      $  --
7.50% Notes Payable.........................................    22.9       22.9
8.25% Notes Payable.........................................     6.5        3.7
                                                               -----      -----
                                                               $29.6      $26.6
                                                               =====      =====
</Table>

    The notes payable to Affiliates are unsecured and payable upon demand.
Interest paid to Affiliates during fiscal 2001, 2000, and 1999 was
$1.2 million, $0.1 million, and $9.1 million, respectively.

NOTE 9--PENSION AND OTHER RETIREMENT PLANS

DOMESTIC BENEFIT ARRANGEMENTS

    The Company and its subsidiaries sponsor a number of non-contributory
defined benefit pension plans covering the majority of its United States
employees. The benefits under these plans are based primarily on years of
credited service and compensation as defined under the respective plan
provisions. The Company's funding policy is to contribute amounts to the plans
sufficient to meet the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974, plus additional amounts as the Company
may determine to be appropriate from time to time.

    The Company and certain of its subsidiaries also sponsor defined
contribution plans. Contributions relating to defined contribution plans are
made based upon the respective plans' provisions.

    The Company also provides health care and life insurance benefits to certain
groups of retirees with most retirees contributing a portion of the costs.

                                      F-84
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)
    The assumptions and the net periodic pension income for the Company's
defined benefit plans, as well as the total contributions charged to pension
expense for the defined contribution plans covering employees in the United
States are presented below:

<Table>
<Caption>
                                                                                                  OTHER
                                                                 PENSION BENEFITS               BENEFITS
                                                          ------------------------------   -------------------
                                                            2001       2000       1999       2000       1999
                                                          --------   --------   --------   --------   --------
<S>                                                       <C>        <C>        <C>        <C>        <C>
ASSUMPTIONS
Discount rate...........................................    7.5%       8.0%       7.5%       8.0%       7.5%
Rate of compensation increases..........................    4.5%       4.5%       4.5%        --         --
Expected rate of return on assets.......................    9.5%       9.5%       9.5%        --         --
</Table>

<Table>
<Caption>
                                                                                                   OTHER
                                                                  PENSION BENEFITS               BENEFITS
                                                           ------------------------------   -------------------
                                                             2001       2000       1999       2000       1999
                                                           --------   --------   --------   --------   --------
                                                                              (IN MILLIONS)
<S>                                                        <C>        <C>        <C>        <C>        <C>
COMPONENTS OF NET PERIODIC (INCOME) COST
Defined benefit plans:
Service cost.............................................   $ 0.1      $  1.1     $ 1.1       $0.2       $0.2
Interest cost............................................     0.2         1.5       1.3        0.3        0.4
Expected return on plan assets...........................    (0.1)       (1.4)     (1.4)        --         --
Prior service costs......................................      --         0.2       0.1         --         --
Net actuarial gain.......................................      --         0.1       0.2         --         --
Curtailments.............................................      --        (1.1)      0.2         --        0.1
                                                            -----      ------     -----       ----       ----
Periodic cost of defined benefit plans...................     0.2         0.4       1.5        0.5        0.7
Income from participation in USI Group Plan..............    (2.0)       (5.3)     (3.4)        --         --
Curtailment in USI Group Plan............................      --       (18.5)       --         --         --
                                                            -----      ------     -----       ----       ----
Net period (income) cost:
Defined benefit plans....................................    (1.8)      (23.4)     (1.9)       0.5        0.7
Defined contribution plans...............................     0.2         0.7       0.4         --         --
                                                            -----      ------     -----       ----       ----
Net periodic (income) cost...............................   $(1.6)     $(22.7)    $(1.5)      $0.5       $0.7
                                                            =====      ======     =====       ====       ====
</Table>

    The fiscal year 2000 curtailment gains totaling $19.6 million are related to
the sale of the Diversified businesses and are included in the statement of
operations caption "Gain on sale of businesses."

                                      F-85
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)
    The following table provides a reconciliation of changes in the projected
benefit obligation, fair value of plan assets and the funded status of the
Company's defined benefit pension and postretirement benefit plans to the
amounts recorded in the Company's balance sheet at September 30:

<Table>
<Caption>
                                                           PENSION BENEFITS          OTHER BENEFITS
                                                        ----------------------   ----------------------
                                                          2001          2000       2001          2000
                                                        --------      --------   --------      --------
                                                                         (IN MILLIONS)
<S>                                                     <C>           <C>        <C>           <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION:
Benefit obligation at beginning of year...............   $ 0.9         $35.6      $ 0.3         $ 9.1
Service cost..........................................     0.1           1.1         --           0.2
Interest cost.........................................     0.2           1.5         --           0.3
Actuarial (gains) losses..............................    (0.1)          3.6        0.1            --
Benefits paid.........................................    (0.1)         (0.6)        --          (0.1)
Acquisition (divestitures)............................    15.6         (40.3)       1.5          (9.2)
                                                         -----         -----      -----         -----
Benefit obligation at end of year.....................   $16.6         $ 0.9      $ 1.9         $ 0.3
                                                         =====         =====      =====         =====
CHANGE IN FAIR VALUE OF PLAN ASSETS:
Fair value of plan assets at beginning of year........   $  --         $29.5      $  --         $  --
Actual return on plan assets..........................    (0.4)          1.4         --            --
Contributions.........................................      --           0.9         --           0.1
Benefits paid.........................................    (0.1)         (0.6)        --          (0.1)
Acquisitions (divestitures)...........................    12.2         (31.2)        --            --
                                                         -----         -----      -----         -----
Fair value of plan assets at end of year..............   $11.7         $  --      $  --         $  --
                                                         =====         =====      =====         =====
FUNDED STATUS OF PLANS:
Plan assets less than projected benefit obligation....   $(4.9)        $(0.9)     $(1.9)        $(0.3)
Unrecognized net actuarial losses.....................     0.8           0.1        0.1            --
Unrecognized prior service cost.......................      --           0.3         --            --
                                                         -----         -----      -----         -----
Total recognized......................................   $(4.1)        $(0.5)     $(1.8)        $(0.3)
                                                         =====         =====      =====         =====
AMOUNTS RECORDED IN THE BALANCE SHEET CONSIST OF:
Prepaid benefits......................................   $  --         $  --      $  --         $  --
Accrued benefits......................................    (4.4)         (1.0)      (1.8)         (0.3)
Intangible assets.....................................      --           0.1         --            --
Accumulated other comprehensive income................     0.3           0.4         --            --
                                                         -----         -----      -----         -----
Total recognized......................................    (4.1)         (0.5)      (1.8)         (0.3)
Participation in USI Group Plan.......................     6.7           4.6         --            --
                                                         -----         -----      -----         -----
Total amount recorded in the consolidated balance
  sheet...............................................   $ 2.6         $ 4.1      $(1.8)        $(0.3)
                                                         =====         =====      =====         =====
</Table>

    The fiscal 2001 other benefits balance of $1.8 million primarily relates to
Rexair, which was acquired on August 15, 2001.

    At September 30, 2001 and 2000, the Company has a net pension asset of
$6.7 million and $4.6 million, respectively, which reflects the Company's
recorded balance which is included in a USI group pension plan. As of
September 30, 2001, the USI group pension plan's fair value of the plan

                                      F-86
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)
assets of $270.1 million exceeds the present value of its accumulated benefit
obligation by approximately $97.6 million.

    The aggregate projected benefit obligation and the aggregate fair value of
plan assets, for the plans that have a projected benefit obligation in excess of
plan assets, are $16.6 million and $11.7 million, respectively, in 2001 and
$0.9 million and zero, respectively, in 2000.

    The aggregate accumulated benefit obligation and the aggregate fair value of
plan assets, for the plans that have an accumulated benefit obligation in excess
of plan assets, are $15.1 million and $11.7 million, respectively, in 2001 and
$0.9 million and zero, respectively, in 2000.

    The assets for the Company's U.S. plans are included in a master trust which
principally invests in listed stocks and bonds, including common stock of the
Company. Included in plan assets were 1,333,100 and 1,253,100 shares of the
Company's common stock at September 30, 2001 and 2000, respectively,
representing $3.1 million and $12.5 million of the master trust's assets for the
same respective periods. During fiscal 2001 and 2000, $0.1 million and
$0.2 million, respectively, in dividends were paid to the master trust.

    The weighted average annual assumed rate of increase in the per capita cost
of covered benefits (i.e., the health care cost trend rate) for the other
postretirement benefit plans was 8.5% for 2001 and is assumed to decrease 0.5% a
year to 5.5%. A one-percentage-point change in the assumed health care cost
trend rate would have the following effects at and for the year ended
September 30, 2001 (in millions):

    Effect of a 1% increase in the health care cost trend rate on:

<Table>
<S>                                                           <C>
Service cost plus interest cost.............................  $  --
Accumulated postretirement benefit obligation...............    0.1
</Table>

    Effect of a 1% decrease in the health care cost trend rate on:

<Table>
<S>                                                           <C>
Service cost plus interest cost.............................  $  --
Accumulated postretirement benefit obligation...............   (0.1)
</Table>

    Certain of the Company's discontinued operations participate in
multi-employer plans, which provide defined benefits to union employees.
Contributions relating to multi-employer plans are based on negotiated
collective bargaining agreements.

FOREIGN BENEFIT ARRANGEMENTS

    The Company's foreign defined benefit pension plan covers salaried employees
of Spring Ram, which was acquired in July 1999 (see Note 4).

                                      F-87
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)
    The assumptions used and the net periodic pension cost for the Company's
foreign defined benefit plans are presented below:

<Table>
<Caption>
                                                                     PENSION BENEFITS
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
ASSUMPTIONS
Discount rate...............................................    6.25%       6.5%      6.0%
Rate of compensation increase...............................    3.25%      3.75%      4.0%
Expected return on assets...................................     7.5%       8.5%      7.0%
</Table>

<Table>
<Caption>
                                                                     PENSION BENEFITS
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN MILLIONS)
<S>                                                           <C>        <C>        <C>
COMPONENTS OF NET PERIODIC BENEFIT (INCOME) COST
Defined benefit plans:
  Service cost..............................................   $ 0.5      $ 0.7       $0.1
  Interest cost.............................................     2.1        2.1        0.3
  Expected return on plan assets............................    (3.5)      (2.6)      (0.4)
  Curtailments..............................................      --       (0.9)        --
                                                               -----      -----       ----
  Net periodic benefit income...............................   $(0.9)     $(0.7)      $ --
                                                               =====      =====       ====
</Table>

                                      F-88
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--PENSION AND OTHER RETIREMENT PLANS (CONTINUED)
    The following table provides a reconciliation of changes in the projected
benefit obligation, the fair value of plan assets and the funded status of the
Company's foreign defined benefit pension plans with the amounts recognized in
the Company's balance sheet as of September 30:

<Table>
<Caption>
                                                                 PENSION BENEFITS
                                                              ----------------------
                                                                2001          2000
                                                              --------      --------
                                                                  (IN MILLIONS)
<S>                                                           <C>           <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION
Benefit obligation at beginning of year.....................   $33.4         $38.0
Service cost................................................     0.5           0.7
Interest cost...............................................     2.1           2.1
Employee contributions......................................     0.4           0.6
Foreign currency exchange rate changes......................      --          (4.1)
Actuarial (gain) loss.......................................     3.7          (2.0)
Settlements/curtailments....................................      --          (0.9)
Benefits paid...............................................    (1.5)         (1.0)
                                                               -----         -----
Benefit obligation at end of year...........................   $38.6         $33.4
                                                               =====         =====
CHANGE IN FAIR VALUE OF PLAN ASSETS
Fair value of plan assets at beginning of year..............   $39.8         $38.5
Actual return on plan assets................................    (0.8)          5.1
Foreign currency exchange rate changes......................      --          (4.2)
Employer contributions......................................     0.5           0.8
Employee contributions......................................     0.4           0.6
Benefits paid...............................................    (1.5)         (1.0)
                                                               -----         -----
Fair value of plan assets at end of year....................   $38.4         $39.8
                                                               =====         =====
FUNDED STATUS OF PLANS
Plan assets in excess of (less than) projected benefit
  obligation................................................   $(0.2)        $ 6.4
Unrecognized net actuarial (gains) losses...................     5.8          (2.2)
                                                               -----         -----
Total recognized in the consolidated balance sheet..........   $ 5.6         $ 4.2
                                                               =====         =====
AMOUNTS RECOGNIZED IN THE BALANCE SHEET CONSIST OF
Prepaid benefits............................................   $ 5.6         $ 4.2
                                                               =====         =====
</Table>

                                      F-89
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10--INCOME TAXES

    Income (loss) before income taxes consists of:

<Table>
<Caption>
                                                                       FISCAL YEARS
                                                                    ENDED SEPTEMBER 30
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN MILLIONS)
<S>                                                           <C>        <C>        <C>
United States...............................................   $(13.6)    $ 86.1     $49.2
Foreign.....................................................    (42.2)      36.9      29.1
                                                               ------     ------     -----
                                                               $(55.8)    $123.0     $78.3
                                                               ======     ======     =====
</Table>

    The provisions for federal, foreign, and state income taxes consist of:

<Table>
<Caption>
                                                                    FISCAL YEARS ENDED
                                                                       SEPTEMBER 30
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN MILLIONS)
<S>                                                           <C>        <C>        <C>
Current:
Federal.....................................................   $ 7.5      $ 9.4      $14.2
Foreign.....................................................     7.6       12.3        8.0
State.......................................................     4.1        4.9        1.2
                                                               -----      -----      -----
Total.......................................................    19.2       26.6       23.4
Deferred....................................................   (10.6)      21.9        1.7
                                                               -----      -----      -----
                                                               $ 8.6      $48.5      $25.1
                                                               =====      =====      =====
</Table>

<Table>
<Caption>
                                                                    FISCAL YEARS ENDED
                                                                       SEPTEMBER 30
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN MILLIONS)
<S>                                                           <C>        <C>        <C>
Statutory federal income tax provision......................   $(19.6)    $43.1      $27.4
Foreign income tax differential.............................       --      (0.4)      (0.5)
State income taxes (net of federal benefit).................      2.7       3.2        0.8
Goodwill amortization.......................................      1.4       2.4        1.0
Non-deductible goodwill impairment..........................     21.3        --         --
Non-deductible restructuring changes........................      2.8        --         --
Resolution of tax contingencies.............................       --        --       (3.9)
Miscellaneous...............................................       --       0.2        0.3
                                                               ------     -----      -----
                                                               $  8.6     $48.5      $25.1
                                                               ======     =====      =====
</Table>

                                      F-90
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10--INCOME TAXES (CONTINUED)

<Table>
<Caption>
                                                                 SEPTEMBER 30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Deferred tax liabilities:
  Property, plant and equipment.............................   $  3.4     $  1.4
  Post retirement net pension assets........................      1.9       23.9
  Other.....................................................     22.1         --
                                                               ------     ------
Total deferred tax liabilities..............................     27.4       25.3
                                                               ------     ------
Deferred tax assets:
  Accruals and allowances...................................     24.2       17.1
  Postretirement benefits...................................      0.6        0.6
  Deductible goodwill.......................................       --        0.8
  Expected benefit from disposal............................     57.7
  Other.....................................................       --        0.2
                                                               ------     ------
  Gross deferred tax assets.................................     82.5       18.7
                                                               ------     ------
  Valuation allowance.......................................    (57.7)        --
                                                               ------     ------
Total deferred tax asset....................................     24.8       18.7
                                                               ------     ------
Net deferred tax liabilities................................   $ (2.6)    $ (6.6)
                                                               ======     ======
</Table>

    The Company has established a valuation allowance related to deferred tax
assets resulting from the losses recognized in connection with the Disposal
Plan, reflecting the uncertainty of the future realization of these assets.

    The classification of the deferred tax balances is:

<Table>
<Caption>
                                                                 SEPTEMBER 30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Current asset...............................................   $ 24.7     $ 18.6
Current liabilities.........................................       --         --
                                                               ------     ------
                                                                 24.7       18.6
                                                               ------     ------
Noncurrent asset............................................      0.1        0.1
Noncurrent liability........................................    (27.4)     (25.3)
                                                               ------     ------
Net noncurrent liabilities..................................    (27.3)     (25.2)
                                                               ------     ------
Net deferred tax liability..................................   $ (2.6)    $ (6.6)
                                                               ======     ======
</Table>

                                      F-91
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

    The table below shows the Company's future minimum lease payments due under
non-cancelable leases as of September 30, 2001. These minimum lease payments
(presented in millions) do not include facility leases that were accrued as
restructuring costs (See Note 6).

<Table>
<S>                                                           <C>
2002........................................................  $10.0
2003........................................................    7.0
2004........................................................    4.7
2005........................................................    3.7
2006........................................................    3.2
Thereafter..................................................    0.8
                                                              -----
Total minimum lease payments................................  $29.4
                                                              =====
</Table>

    Rent expense, including equipment rental, was approximately $9.0 million,
$9.4 million and $6.3 million in 2001, 2000 and 1999, respectively.

LITIGATION

    The Company is subject to a wide range of environmental protection laws. The
Company has remedial and investigatory activities underway at approximately 38
sites, of which the Company has been named as a Potentially Responsible Party
("PRP") at 14 "superfund" sites pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or comparable statutes.

    It is often difficult to estimate the future impact of environmental
matters, including potential liabilities. The Company accrues for losses
associated with environmental remediation obligations when such losses are
probable and reasonably estimable. This practice is followed whether the claims
are asserted or unasserted. Reserves for estimated losses from environmental
remediation are, depending on the site, based primarily upon internal or third
party environmental studies, and estimates as to the number, participation level
and financial viability of any other PRP's, the extent of contamination and the
nature of required remedial actions. Such accruals are adjusted as further
information develops or circumstances change. Costs of future expenditures for
environmental remediation obligations are not discounted to their present fair
value. Recoveries of environmental remediation costs from other parties are
recognized as assets when their receipt is deemed probable. Management expects
that the amount reserved will be paid out over the periods of remediation for
the applicable sites which range up to 30 years and that such reserves are
adequate based on all current data. Each of the sites in question is at various
stages of investigation or remediation; however, no information currently
available reasonably suggests that projected expenditures associated with
remedial action or compliance with environmental laws for any single site or for
all sites in the aggregate, will have a material adverse affect on the Company's
financial condition, results of operations or cash flows.

    At September 30, 2001, the Company had accrued approximately $10.4 million
($0.9 million accrued as current liabilities; $9.5 million as non-current
liabilities) for various environmental related liabilities of which the Company
is aware. The Company believes that the range of liability for such matters is
between approximately $5.7 million and $14.6 million.

                                      F-92
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--COMMITMENTS AND CONTINGENCIES (CONTINUED)
    Also, certain of the Company's subsidiaries are defendants or plaintiffs in
lawsuits that have arisen in the normal course of business. While certain of
these matters involve substantial amounts, it is management's opinion, based on
the advice of counsel, that the ultimate resolution of such litigation and
environmental matters will not have a material adverse effect on the Company's
financial condition, results of operations or cash flows.

    The Company's domestic subsidiaries participate in casualty insurance
programs of the Company and USI, which are principally self-insured programs. At
September 30, 2001, the Company's portion of these programs amounting to
$6.1 million is included in other liabilities. The subsidiaries of the Company
have issued standby letters of credit guaranteeing financial responsibility for
its self-insured casualty programs amounting to $1.5 million. In addition, USI
has issued standby letters of credit guaranteeing financial responsibility for
its self-insured casualty programs.

    In addition, at September 30, 2001, the subsidiaries of the Company have
issued documentary letters of credit and the banker's acceptances totalling
$7.6 million related to shipments from the Far East.

NOTE 12--SEGMENT DATA

    The Company currently operates in one reportable segment--Bath & Plumbing.
Bath & Plumbing manufacturers whirlpools, spas, faucets, chinaware, bathtubs,
showertub enclosures, bath accessories, plumbing fittings, others behind the
wall plumbing products and vacuum cleaners. Prior to March 2000 (see NOTE 4),
the Company also operated a myriad of businesses through its Diversified
segment. These businesses manufactured automotive interiors,
precision-engineered products for the automotive, jet aviation and electronics
industries and various other consumer products. The Company's products are
primarily sold to the home improvement and home construction markets through
mass merchandisers, hardware stores, home centers, distributors, wholesalers and
other outlets.

    The financial information of the segments is regularly evaluated by the
corporate operating executives in determining resource allocation and assessing
performance and is periodically reviewed by the Company's Board of Directors.
The Company's senior management evaluates the performance of each business
segment based on its operating results and, other than general corporate
expenses, allocates specific corporate overhead to each segment. Accounting
policies for the segments are the same as those for the Company (see NOTE 3).

                                      F-93
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12--SEGMENT DATA (CONTINUED)
    The following is a summary of our significant accounts and balances by
segment, reconciled to our consolidated totals.

<Table>
<Caption>
                                                       BATH &                              CONSOLIDATED
                                                      PLUMBING   DIVERSIFIED   CORPORATE      TOTAL
                                                      --------   -----------   ---------   ------------
                                                                        (IN MILLIONS)
<S>                                                   <C>        <C>           <C>         <C>
NET SALES
2001................................................   $683.6      $   --      $     --      $  683.6
2000................................................    802.8       412.4            --       1,215.2
1999................................................    410.9       411.4            --         822.3
TOTAL OPERATING INCOME (LOSS)(1)
2001................................................   $(16.7)     $   --      $  (14.1)     $  (30.8)
2000................................................     91.1        37.4          (9.9)        118.6
1999................................................     54.2        44.6          (6.1)         92.7
CAPITAL EXPENDITURES
2001................................................   $ 17.6      $  0.2      $     --      $   17.8
2000................................................     10.9        12.6           0.1          23.6
1999................................................      5.3        10.5           0.6          16.4
DEPRECIATION AND AMORTIZATION
2001................................................   $ 17.7      $  0.4      $     --      $   18.1
2000................................................     17.8        12.3           0.4          30.5
1999................................................      6.7        11.5           0.4          18.6
ASSETS(2)
2001................................................   $697.4      $   --      $1,195.8      $1,893.2
2000................................................    650.1          --       1,553.4       2,203.5
1999................................................    681.1       613.1         897.5       2,191.7
</Table>

------------------------

(1) Operating income (loss) for the Bath & Plumbing segment includes
    restructuring, impairment and other non-recurring charges of $60.8 million
    in fiscal 2001 (See Note 6). Operating losses for corporate included
    management fees charged to the Company by USI of $13.1 million,
    $10.8 million, and $6.2 million in fiscal 2001, 2000 and 1999, respectively.

(2) Corporate assets include net assets held for sale of $455.5 million,
    $801.3 million, and $740.8 million and amounts due from affiliates of
    $681.7 million, $709.3 million and $101.2 for fiscal 2001, 2000 and 1999,
    respectively.

    Aside from the operating income (loss) amounts noted above, the Company's
income from continuing operations includes interest income and expense, equity
earnings or losses in investees, other income and expense items and income
taxes, none of which are included in the Company's measurement of segment
operating profit. Corporate assets consist primarily of real property, cash and
cash equivalents and other investments.

    The Company's operations are principally located in North America and Europe
and to a lessor extent, in other regions of the world. The Company's country of
domicile is the United States. Export sales represented 5%, 12%, and 32% of the
Company's total net sales for fiscal years 2001, 2000 and

                                      F-94
<Page>
                             USI GLOBAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12--SEGMENT DATA (CONTINUED)
1999, respectively. Principal international markets served include Europe, South
America, Canada and Asia.

    The following table presents certain data by geographic areas.

<Table>
<Caption>
                                                                   FOR THE FISCAL YEARS
                                                                   ENDED SEPTEMBER 30,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN MILLIONS)
<S>                                                           <C>        <C>        <C>
NET SALES
United States...............................................   $405.1    $  831.8    $636.1
Foreign.....................................................    278.5       383.4     186.2
                                                               ------    --------    ------
Total net sales.............................................   $683.6    $1,215.2    $822.3
                                                               ======    ========    ======
OPERATING (LOSS) INCOME
United States...............................................   $ (3.1)   $   61.8    $ 66.7
Foreign.....................................................    (27.7)       56.8      26.0
                                                               ------    --------    ------
Total operating (loss) income...............................   $(30.8)   $  118.6    $ 92.7
                                                               ======    ========    ======
LONG-LIVED ASSETS
United States...............................................   $264.4    $  175.5    $383.4
Foreign.....................................................    102.6       168.4     218.3
                                                               ------    --------    ------
Total long-lived assets.....................................   $367.0    $  343.9    $601.7
                                                               ======    ========    ======
</Table>

                                      F-95
<Page>
                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
U.S. Industries, Inc.

    We have audited the consolidated balance sheets of JUSI Holdings, Inc. (the
"Company") as of September 30, 2001 and 2000, and the related consolidated
statements of operations, cash flows and changes in stockholder's equity for
each of the three years in the period ended September 30, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company at
September 30, 2001 and 2000, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended September 30,
2001, in conformity with accounting principles generally accepted in the United
States.

    The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As more fully described in Note 2, the
Company is an indirect wholly owned subsidiary of U.S. industries, Inc and
subsidiaries ("USI"), and the Company is a borrower under certain debt
instruments guaranteed by USI. USI is required under its restructured credit
facilities to make cumulative reductions of its senior debt of $450 million by
June 30, 2002. USI needs to generate sufficient funds to make such reductions,
restructure or refinance its debt. The Company's capital stock and substantially
all of its assets have been pledged as collateral under USI's restructured
credit facilities and senior notes. These conditions raise substantial doubt
about USI's and the Company's ability to continue as a going concern. USI's
management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that may result from the
outcome of this uncertainty.

                                          /s/ Ernst & Young LLP

New York, New York
January 14, 2002

                                      F-96
<Page>
                              JUSI HOLDINGS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                 (IN MILLIONS)

<Table>
<Caption>
                                                                    FISCAL YEARS ENDED
                                                                       SEPTEMBER 30
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net sales...................................................  $ 411.9     $857.0    $1,223.4
Operating costs and expenses:
  Cost of products sold.....................................    307.5      636.6       913.6
  Selling, general and administrative expenses..............     94.5      148.9       194.6
  Management fees...........................................      7.5        8.0         9.1
  Other non-recurring operating expenses....................       --         --         0.7
                                                              -------     ------    --------
Operating income............................................      2.4       63.5       105.4
Interest income from affiliates.............................     20.6        3.5          --
Interest expense to Parent and affiliates...................    (27.1)     (38.1)      (51.4)
Interest income.............................................      0.2        1.0         0.2
Interest expense............................................     (2.4)      (0.4)       (4.7)
Gain on sale of diversified businesses......................       --       60.2          --
Equity (loss) earnings in investees.........................     (1.4)       3.1          --
Other income (expense), net.................................    (21.9)      (3.4)       11.9
                                                              -------     ------    --------
Income (loss) before income taxes, discontinued operations
  and cumulative effect of accounting change................    (29.6)      89.4        61.4
(Benefit) provision for income taxes........................     (5.2)      27.2        24.9
                                                              -------     ------    --------
Income (loss) from continuing operations....................    (24.4)      62.2        36.5
Discontinued operations:
  Income (loss) from operations (net of income tax
  provisions of $6.2, $26.9 and $28.2, respectively)........     (1.7)      45.2        47.8
  Loss from disposals (net of income tax benefit of
  $10.2)....................................................   (149.8)        --          --
                                                              -------     ------    --------
(Loss) income from discontinued operations..................   (151.5)      45.2        47.8
                                                              -------     ------    --------
(Loss) income before cumulative effect of accounting
  change....................................................   (175.9)     107.4        84.3
Cumulative effect of accounting change, net of taxes of $0.8
  in 2001...................................................     (0.7)        --          --
                                                              -------     ------    --------
Net (loss) income...........................................  $(176.6)    $107.4    $   84.3
                                                              =======     ======    ========
</Table>

                            See accompanying notes.

                                      F-97
<Page>
                              JUSI HOLDINGS, INC.

                          CONSOLIDATED BALANCE SHEETS

                      (IN MILLIONS, EXCEPT SHARE AMOUNTS)

<Table>
<Caption>
                                                               AT SEPTEMBER 30,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
                                     ASSETS
Current assets:
  Cash and cash equivalents.................................  $   10.2   $    3.2
  Trade receivables, net of allowances of $3.6 in 2001 and
    $1.2 in 2000............................................      78.1       93.7
  Inventories, net..........................................      72.5       57.1
  Deferred income taxes.....................................      12.5       15.1
  Net assets held for sale..................................     431.8      353.1
  Other current assets......................................       4.2        3.2
                                                              --------   --------
Total current assets........................................     609.3      525.4

Property, plant and equipment, net..........................      53.8       28.6
Net assets held for sale....................................        --      372.2
Due from Parent and affiliates..............................     723.4      582.8
Other assets................................................      20.0       21.7
Goodwill, net...............................................     210.7      146.9
Notes receivable from affiliates............................     315.9      315.9
                                                              --------   --------
                                                              $1,933.1   $1,993.5
                                                              ========   ========
                      LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
  Current maturities of long-term debt......................  $   10.0   $     --
  Trade accounts payable....................................      30.0       29.2
  Accrued expenses and other current liabilities............      33.9       26.1
  Notes payable to Parent and affiliates....................      94.7       94.7
                                                              --------   --------
Total current liabilities...................................     168.6      150.0

Long-term debt..............................................     156.2         --
Deferred income taxes.......................................      25.1       20.7
Other liabilities...........................................      33.5      111.7
Notes payable to Parent.....................................     316.8      316.8
                                                              --------   --------
Total liabilities...........................................     700.2      599.2

Commitments and contingencies

Stockholder's equity
Common stock (par value $.01) per share, authorized 1000
  shares; issued and outstanding 100 shares.................        --         --
Paid-in capital.............................................     890.0      890.0
Retained earnings...........................................     346.4      523.0
Accumulated other comprehensive loss........................      (3.5)     (18.7)
                                                              --------   --------
Total stockholder's equity..................................   1,232.9    1,394.3
                                                              --------   --------
                                                              $1,933.1   $1,993.5
                                                              ========   ========
</Table>

                            See accompanying notes.

                                      F-98
<Page>
                              JUSI HOLDINGS, INC.

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

              FISCAL YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
                      (IN MILLIONS, EXCEPT SHARE AMOUNTS)

<Table>
<Caption>
                                                                               ACCUMULATED
                                                                                  OTHER       COMPREHENSIVE
                                              COMMON    PAID-IN    RETAINED   COMPREHENSIVE      INCOME
                                              STOCK     CAPITAL    EARNINGS      (LOSS)          (LOSS)        TOTAL
                                             --------   --------   --------   -------------   -------------   --------
<S>                                          <C>        <C>        <C>        <C>             <C>             <C>
Balance at September 30, 1998..............    $ --      $743.0     $331.3       $ (7.3)                      $1,067.0

Net income.................................                           84.3                       $  84.3          84.3

Capital contribution from Parent...........               147.0                                                  147.0

Translation adjustment.....................                                        (4.9)            (4.9)         (4.9)

Minimum pension liability adjustment.......                                         6.1              6.1           6.1
                                                                                                 -------

Other comprehensive income.................                                                          1.2
                                                                                                 -------

Total comprehensive income.................                                                      $  85.5
                                               ----      ------     ------       ------          =======      --------

Balance at September 30, 1999..............      --       890.0      415.6         (6.1)                       1,299.5

Net income.................................                          107.4                       $ 107.4         107.4

Sale of Diversified businesses:

  Minimum pension liability adjustment.....                                         1.7              1.7           1.7

Translation adjustment.....................                                       (14.7)           (14.7)        (14.7)

Minimum pension liability adjustment.......                                         0.4              0.4           0.4
                                                                                                 -------

Other comprehensive income.................                                                        (12.6)
                                                                                                 -------

Total comprehensive income.................                                                      $  94.8
                                               ----      ------     ------       ------          =======      --------

Balance at September 30, 2000..............      --       890.0      523.0        (18.7)                       1,394.3

Net loss...................................                         (176.6)                      $(176.6)       (176.6)

Discontinued operations:

  Translation adjustment...................                                        14.3             14.3          14.3

  Minimum pension liability adjustment.....                                         7.2              7.2           7.2

Fair value of derivatives adjustment.......                                        (1.4)            (1.4)         (1.4)

Translation adjustment.....................                                         1.0              1.0           1.0

Minimum pension liability adjustment.......                                        (5.9)            (5.9)         (5.9)
                                                                                                 -------

Other comprehensive income.................                                                         15.2
                                                                                                 -------

Total comprehensive income.................                                                      $(161.4)
                                               ----      ------     ------       ------          =======      --------

Balance at September 30, 2001..............    $ --      $890.0     $346.4       $ (3.5)                      $1,232.9
                                               ====      ======     ======       ======                       ========
</Table>

                            See accompanying notes.

                                      F-99
<Page>
                              JUSI HOLDINGS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                FOR THE FISCAL YEARS ENDED
                                                                      SEPTEMBER 30,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
OPERATING ACTIVITIES:
  (Loss) income from continuing operations..................  $ (24.4)   $  62.2    $  36.5
  Adjustments to reconcile income (loss) from continuing
    operations to net cash provided by operating activities:
    Depreciation and amortization...........................     10.4       18.9       27.8
    Benefit for deferred income taxes.......................     (0.1)      (0.7)      (2.3)
    Provision for doubtful accounts.........................      2.0        2.2        2.9
    Gain on sale of excess real estate......................       --       (3.2)     (12.6)
    Equity loss (earnings) in investee......................      1.4       (3.1)        --
    Gain on sale of businesses..............................       --      (60.2)        --
  Changes in operating assets and liabilities, excluding the
    effects of acquisitions and dispositions:
      Decrease (increase) in trade receivables..............     22.7      (18.8)     (13.8)
      Decrease (increase) in inventories....................      1.6       (4.7)      (8.2)
      Decrease (increase) in other current assets...........      0.1       (6.2)       2.9
      (Increase) decrease in other assets...................     (2.3)      13.9       (4.6)
      Decrease in trade accounts payable....................     (1.8)     (10.5)      (2.7)
      Decrease (increase) in accrued expenses and other
       liabilities..........................................     (5.0)      (0.1)       2.4
      Increase (decrease) in other liabilities..............     (4.6)      (2.9)       1.9
      Other, net............................................      6.1         --        0.8
                                                              -------    -------    -------
        Net cash provided by (used in) operating activities
        of continuing operations............................     10.7      (13.2)      31.0
                                                              -------    -------    -------
  (Loss) Income from discontinued operations................   (151.5)      45.2       47.8
  Adjustments to reconcile (loss) income from discontinued
    operations to net cash provided by (used in)
    discontinued operations:
      Loss on disposal of discontinued operations...........    149.8         --         --
      Impairment and other non-recurring charges............     54.0         --         --
      Other decreases (increases) in net assets held for
       sale.................................................     20.2      (20.1)      40.0
                                                              -------    -------    -------
        Net cash provided by (used in) discontinued
        operations..........................................     72.5       25.1       87.8
                                                              -------    -------    -------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES.........     83.2       11.9      118.8
                                                              -------    -------    -------
INVESTING ACTIVITIES:
    Proceeds from sale of businesses........................       --      354.3       71.1
    Acquisition of companies, net of cash acquired..........       --         --      (17.0)
    Loans to affiliates.....................................       --     (106.9)        --
    Purchases of property, plant and equipment..............    (10.8)     (17.9)     (29.6)
    Proceeds from sales of property, plant and equipment....      0.3         --        3.9
    Proceeds from sale of excess real estate................       --        5.5       25.3
                                                              -------    -------    -------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES.........    (10.5)     235.0       53.7
                                                              -------    -------    -------

FINANCING ACTIVITIES:
    Proceeds from long-term debt............................      9.3         --         --
    Repayment of long-term debt.............................    (12.5)      (0.8)      (0.9)
    Net transfers with Parent and affiliates................    (64.2)    (244.7)    (177.7)
                                                              -------    -------    -------
NET CASH USED IN FINANCING ACTIVITIES.......................    (67.4)    (245.5)    (178.6)
                                                              -------    -------    -------
Effect of exchange rate changes on cash and cash
  equivalents...............................................      1.7       (1.3)       3.0
                                                              -------    -------    -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............      7.0        0.1       (3.1)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............      3.2        3.1        6.2
                                                              -------    -------    -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD..................  $  10.2    $   3.2    $   3.1
                                                              =======    =======    =======
</Table>

                            See accompanying notes.

                                     F-100
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--BASIS OF PRESENTATION

    The accompanying consolidated financial statements include the consolidated
operations of JUSI Holdings, Inc. ("JUSI" or "the Company") a wholly-owned
subsidiary of USI Global Corporation ("Global" or "the Parent") and an indirect
subsidiary of U.S. Industries, Inc. ("USI"). JUSI is a holding company whose
principal operating subsidiaries are Jacuzzi Inc. and Rexair, Inc. These
entities manufacture and distribute a full line of whirlpool baths, spas,
swimming pool equipment and premium vacuum cleaners.

    JUSI's other principal subsidiaries are classified as discontinued
operations and include several of USI's domestic and European commercial and
institutional lighting businesses and USI's domestic lawn and garden businesses
(see Note 5).

    USI and certain subsidiaries of USI (referred to herein as "Affiliates")
have provided certain corporate general and administrative services to JUSI
including legal, financial, tax, risk management and employee benefits. A
portion of the related costs has been allocated to JUSI based on the percentage
of the JUSI's sales to the consolidated sales of USI as management fees. JUSI's
management believes such amounts are reasonable; however, they may not be
indicative of the Company's costs as a separate entity.

    JUSI operates on a 52- or 53-week fiscal year ending on the Saturday nearest
to September 30. The fiscal year periods presented in our consolidated financial
statements consisted of the 52 weeks ending on September 29, 2001,
September 30, 2000 or October 2, 1999, but are presented as of September 30 in
each of those years for convenience. Businesses over which the Company has the
ability to exercise significant influence are accounted for using the equity
method. In March 2000, JUSI completed the disposition of a majority equity
interest in its Diversified segment. Since then, JUSI has accounted for its
retained interest in the Diversified segment under the equity method of
accounting (See NOTE 4). The Company eliminates intercompany balances and
transactions when consolidating the account balances of its subsidiaries.

NOTE 2--GOING CONCERN

    The accompanying consolidated financial statements have been prepared on a
going concern basis of accounting and do not reflect any adjustments that might
result if JUSI was unable to continue as a going concern. On August 15, 2001,
USI finalized a comprehensive restructuring of its bank debt and the bank debt
of Rexair, Inc. ("Rexair"), a former subsidiary that was reacquired from
Strategic Industries, LLC ("Strategic") on the same date. The amended facilities
(together the "Restructured Facilities") extend the final maturity date of USI's
debt under its credit agreement to November 30, 2002, which coincides with the
final maturity of the amended Rexair Credit Facility. The Restructured
Facilities provide for scheduled permanent reductions of USI's senior debt (a
combination of the Restructured Facilities, senior notes of USI and other
defined obligations) during the term of the Restructured Facilities. The
required cumulative permanent reductions of USI's senior debt are scheduled at
$75 million, $200 million, $450 million and $600 million for the periods ending
December 31, 2001, March 31, 2002, June 30, 2002, and October 15, 2002,
respectively. The remaining balance of the Restructured Facilities is due in
full on November 30, 2002. JUSI's capital stock and substantially all of its
assets have been pledged as collateral under USI's senior debt. USI expects to
satisfy operating liquidity needs through operating cash flow. However, it will
have to sell a substantial amount of its assets and restructure or refinance its
debt to satisfy the required cumulative permanent reductions.

                                     F-101
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--GOING CONCERN (CONTINUED)
    On December 28, 2001, the Board of Directors of USI approved a formal
Disposal are Plan for five businesses in order to meet the scheduled reductions.
Three of the businesses to be disposed of included in the accompanying financial
statements, Ames True Temper, Lighting Corporation of America and SiTeco
Lighting, and have an estimated net realizable value of $431.8 million. The
Disposal Plan calls for the sale of these businesses over the next 12 months.
The net assets of the discontinued businesses are included in net assets held
for sale in all periods presented.

    USI and JUSI entered into an agreement to sell Ames True Temper on
December 24, 2001 for approximately $165 million in cash. The sale, which is
subject to the completion of financing and other customary closing conditions,
is currently expected to close in January 2002. Upon closing, the entire net
cash proceeds will be applied to reduce USI's funded and unfunded senior debt.

    USI is pursuing the sale of the Strategic Notes together with the equity
interest in Strategic at an amount expected to approximate the September 30,
2001 carrying value. Upon closing, the entire net cash proceeds will be applied
to reduce USI's funded and unfunded senior debt.

    The net proceeds from the sale of Ames True Temper and the Strategic Notes
are expected to be sufficient to fund the required reductions of USI's senior
debt through March 31, 2002.

    USI continues to actively pursue its Disposal Plan. However, there can be no
assurance when or whether USI will consummate any of these transactions. If USI
is unable to consummate asset disposals as outlined in its Disposal Plan in time
to meet scheduled amortizations, USI expects to seek a further restructuring of
its credit facilities. Furthermore, the proceeds of the Disposal Plan, if
consummated in its entirety, and the sale of the Strategic Notes will be
insufficient to repay the Restructured Facilities upon their maturity in
November 2002. Accordingly, USI will have to restructure or refinance its
existing Restructured Facilities. USI believes it will be able to restructure or
refinance its existing Restructured Facilities before their scheduled maturity
in November 2002. However, there can be no assurance that it will be able to do
so.

    USI's and the Company's independent auditors have included a going concern
explanatory paragraph in their audit reports accompanying the September 30, 2001
consolidated financial statements of both USI and the Company. The paragraph
states that USI's need to generate sufficient funds to make the required
cumulative reductions of senior debt of $450 million by June 30, 2002 through
asset sales or a restructuring or refinancing raises substantial doubt about
USI's and the Company's ability to continue as a going concern.

NOTE 3--ACCOUNTING POLICIES

    USE OF ESTIMATES: Accounting guidelines require that the Company make
estimates and assumptions that affect amounts reported in its financial
statements and accompanying notes. Actual results could differ from those
estimates.

    FOREIGN CURRENCY TRANSLATION: The Company's subsidiaries outside of the
United States record transactions using their local currency as their functional
currency. In accordance with Statement of Financial Accounting Standards
("SFAS") No. 52, "Foreign Currency Translation," the assets and liabilities of
the Company's foreign subsidiaries are translated into U.S. dollars using the
exchange rates in effect at the balance sheet dates. Revenues, expenses and cash
flow items are translated at average daily exchange rates for the period. The
translation adjustments that result from translating the balance sheets at
different rates than the statements of operations are included in

                                     F-102
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
accumulated other comprehensive income, which is a separate component of the
Company's stockholders' equity.

    CASH AND CASH EQUIVALENTS: The Company considers all highly liquid
investments with original maturities of three months or less to be cash
equivalents. Except for certain cash balances owned by the Company, cash
accounts have been controlled on a centralized basis by an Affiliate, which
sweeps cash receipts and funds cash disbursements of the Company. The net
results of cash transactions between or on behalf of the Company, including
intercompany advances, are included in the consolidated balance sheets as due
from affiliates.

    TRADE RECEIVABLES AND CONCENTRATION OF CREDIT RISK: The Company records an
allowance for doubtful accounts, reducing its receivables balance to an amount
the Company estimates is collectible from its customers.

    The Company principally operates in the United States. The Company performs
periodic credit evaluations of its customers' financial condition and generally
does not require collateral. The Company encounters a certain amount of credit
risk as a result of a concentration of receivables among a few significant
customers. One customer represents approximately 11% and 24% of the Company's
trade receivables balance at September 30, 2001 and 2000, respectively, and 17%,
11%, and 7% of its sales for the years ending September 30, 2001, 2000, and
1999, respectively. Credit losses have not been significant and are within
management's expectations.

    INCOME TAXES: Deferred tax assets and liabilities represent the tax effects,
based on current law, of any temporary differences in the timing of when
revenues and expenses are recognized for tax purposes and when they are
recognized for financial statement purposes. The deferred tax assets are
reviewed periodically for recoverability and valuation allowances are provided
as necessary.

    The Company's United States earnings have been included in the consolidated
federal income tax return filed by USI. The Company provided for income taxes in
the accompanying consolidated financial statements as if it were a stand-alone
entity and filed separate income tax returns from USI. Federal taxes currently
payable have been included in payable to affiliate. Income taxes paid to state,
local and foreign jurisdictions during fiscal 2001, 2000 and 1999 were
$1.1 million, $2.9 million and $4.4 million, respectively.

    INVENTORIES: The Company's inventories are valued at the lower of
cost,determined under the first-in, first-out method, or market. The Company's
inventories can be categorized as follows:

<Table>
<Caption>
                                                              AT SEPTEMBER 30,
                                                             -------------------
                                                               2001       2000
                                                             --------   --------
                                                                (IN MILLIONS)
<S>                                                          <C>        <C>
Finished products..........................................   $35.6      $26.6
In-process products........................................     2.4        1.5
Raw materials..............................................    34.5       29.0
                                                              -----      -----
                                                              $72.5      $57.1
                                                              =====      =====
</Table>

    PROPERTY, PLANT AND EQUIPMENT: The Company records its property, plant and
equipment at cost. The Company records depreciation and amortization in a manner
that recognizes the cost of its depreciable assets in operations over their
estimated useful lives using the straight-line

                                     F-103
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
method. The Company estimates the useful lives of its depreciable assets to be
20-50 years for buildings and 3-10 years for machinery, equipment and furniture.
Leasehold improvements are amortized over the shorter of the terms of the
underlying leases, including probable renewal periods, or the estimated useful
lives of the improvements.

    Property, plant and equipment consisted of:

<Table>
<Caption>
                                                             AT SEPTEMBER 30,
                                                            -------------------
                                                              2001       2000
                                                            --------   --------
                                                               (IN MILLIONS)
<S>                                                         <C>        <C>
Land and buildings........................................   $ 32.0     $ 18.0
Machinery, equipment and furniture........................     60.1       40.7
Accumulated depreciation..................................    (38.3)     (30.1)
                                                             ------     ------
                                                             $ 53.8     $ 28.6
                                                             ======     ======
</Table>

    Depreciation and amortization consist of:

<Table>
<Caption>
                                                             FOR THE FISCAL YEARS
                                                             ENDED SEPTEMBER 30,
                                                        ------------------------------
                                                          2001       2000       1999
                                                        --------   --------   --------
                                                                (IN MILLIONS)
<S>                                                     <C>        <C>        <C>
Depreciation..........................................   $ 5.3      $12.1      $19.4
Amortization of goodwill..............................     5.1        6.8        8.4
                                                         -----      -----      -----
                                                         $10.4      $18.9      $27.8
                                                         =====      =====      =====
</Table>

    OTHER ASSETS: Included in other assets are excess properties held for sale
consisting of land and buildings no longer used in operations. These assets are
carried at the lower of cost or fair value less costs to sell. The carrying
value of such properties was $10.1 million and $14.6 million as of
September 30, 2001 and 2000, respectively. In fiscal 2001 the Company recorded a
loss from excess properties of $0.2 million, compared to income from excess
properties of $2.7 million and $12.2 million in fiscal 2000 and 1999,
respectively. This amount is included in other (income) expense, net and
consists of net gains on the sale of these properties, adjustments to net
realizable value and the carrying costs incurred in the period.

    GOODWILL: Goodwill represents the excess of the purchase price over the fair
value of net assets acquired. The Company reviews operating results and other
relevant factors every fiscal quarter for each of its businesses to determine if
there are indications that the carrying value of its long-lived assets,
including goodwill, may be impaired. When there are indicators of impairment,
the Company first assesses the recoverability of goodwill associated with
long-lived assets in accordance with the requirements of Statement of Financial
Accounting Standards No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
AND LONG-LIVED ASSETS TO BE DISPOSED OF, which requires impairment losses to be
recorded when the undiscounted cash flows estimated to be generated by those
assets are less than the carrying amount of those assets. In addition, an
enterprise level assessment of the recoverability of any remaining goodwill is
performed using the fair value methodology, as permitted under APB No. 17. In
the event that such fair value is below the carrying value of an enterprise, for
those companies with goodwill, the Company reduces goodwill to the extent it is
impaired based upon fair value.

                                     F-104
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
    The fair value methodology is applied to determine the recoverable value for
each business on a stand-alone basis using ranges of fair values obtained from
independent appraisers. In developing these ranges, the independent appraisers
consider (a) publicly available information, (b) financial projections of each
business based on management's best estimates, (c) the future prospects of each
business as discussed with senior operating and financial management,
(d) publicly available information regarding comparable publicly traded
companies in each industry, (e) market prices, capitalizations and trading
multiples of comparable public companies and (f) other information deemed
relevant. In reviewing these valuations and considering the need to record a
charge for impairment of enterprise value and goodwill to the extent it is part
of the enterprise value, the Company also evaluates solicited and unsolicited
bids for the businesses of the Company. Goodwill is amortized straight-line over
the estimated future periods to be benefited (ranging from 20 to 40 years,
primarily 40 years). Accumulated amortization aggregated $67.4 million and
$62.3 million at September 30, 2001 and 2000, respectively.

    ACCRUED EXPENSES AND OTHER LIABILITIES: Accrued expenses and other current
liabilities consisted of the following:

<Table>
<Caption>
                                                               AT SEPTEMBER 30
                                                               2001       2000
                                                             --------   --------
                                                                (IN MILLIONS)
<S>                                                          <C>        <C>
Compensation related.......................................   $ 8.8      $ 3.9
Other......................................................    25.1       22.2
                                                              -----      -----
                                                              $33.9      $26.1
                                                              =====      =====
</Table>

    FAIR VALUE OF FINANCIAL INSTRUMENTS: SFAS No. 107, DISCLOSURE ABOUT FAIR
VALUE OF FINANCIAL INSTRUMENTS, requires that the Company disclose the fair
value of its financial instruments when it is practical to estimate. The Company
has determined the estimated fair values of its financial instruments, which are
either recognized in the Company's consolidated balance sheets or disclosed
within these notes, using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting market
data to develop estimates of fair value. Accordingly, the estimates presented
are not necessarily indicative of the amounts the Company could realize in a
current market exchange.

    Short-Term Assets and Liabilities: The fair values of the Company's cash and
cash equivalents, trade receivables and accounts payable approximate their
carrying values because of their short-term nature.

    Interest Rate Swaps and Foreign Currency Contracts: The fair value of the
Company's interest rate swap and foreign currency contracts is the amount the
Company would receive or have to pay to terminate the agreement at the reporting
date, taking into account current interest rates and exchange rates. The fair
value of the interest rate swap is provided to the Company by its financial
institution, the counterparty to the interest rate swap agreement. For more
information on these financial instruments, see the DERIVATIVE FINANCIAL
INSTRUMENTS section of this note.

    REVENUE RECOGNITION: The Company currently records revenue when delivery has
occurred and title has passed to the customer. Provisions are made for warranty
and return costs at the time of sale. Such provisions have not been material to
the Company.

                                     F-105
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
    ACCOUNTING CHANGE: In December 1999, the Securities and Exchange Commission
("SEC") issued Staff Accounting Bulletin ("SAB") No. 101, REVENUE RECOGNITION IN
FINANCIAL STATEMENTS, which, along with other guidance, clarified the SEC's
views on various revenue recognition and reporting matters. As a result, the
Company changed its method of accounting for certain sales transactions.
Historically, the Company recognized revenue upon shipment of products to the
customer because, even though some products were shipped FOB destination, the
Company used a common carrier and thus gave up substantially all the risks of
ownership. Under the new accounting method adopted retroactive to October 1,
2000, the Company now recognizes revenue when title passes. The net effect of
the accounting change was not material to the results for the year ended
September 30, 2001. Net sales for the year ended September 30, 2001 includes
$4.4 million of net sales that prior to the accounting change, had been
recognized through September 30, 2000. The pro forma amounts, had the new
revenue recognition method been applied retroactively to prior periods, were not
materially different from the amounts shown in the Company's consolidated
statements of operations for the years ended September 30, 2000 and 1999.
Therefore, these amounts have not been presented.

    SHIPPING AND HANDLING FEES AND COSTS: After adopting Emerging Issues Task
Force ("EITF") Issue No. 00-10, ACCOUNTING FOR SHIPPING AND HANDLING FEES AND
COSTS, the Company classifies amounts charged to its customers for shipping and
handling as revenues, while shipping and handling costs are recorded as cost of
goods sold.

    ADVERTISING COSTS: Advertising costs are charged to expense when incurred.
The Company participates in cooperative advertising programs with certain
customers for which the Company reimburses a portion of advertising costs.
Advertising expense totaled $15.6 million, $19.2 million and $15.6 million in
2001, 2000 and 1999, respectively.

    RESEARCH AND DEVELOPMENT COSTS: Research and development costs are expensed
as incurred. Such amounts totaled $3.4 million, $3.6 million and $2.0 million in
2001, 2000 and 1999, respectively.

    DERIVATIVE FINANCIAL INSTRUMENTS: Effective October 1, 2000, the Company
adopted SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES, as amended, which requires that all derivative instruments be
reported on the balance sheet at fair value and establishes criteria for
designation and effectiveness of hedging relationships. The Company uses several
types of derivative financial instruments including interest rate swaps, forward
contracts and debt denominated in a foreign currency to hedge its exposure to
volatility in interest rates and currency exchange rates.

INTEREST RATE HEDGING

    The Company hedged a portion of its variable-rate debt by entering into an
interest rate swap in which the Company agreed to exchange, at specified
intervals, the calculated difference between fixed and variable interest amounts
on $90 million of its debt. The swap, which matures on June 30, 2002, is
designated as a cash flow hedge of the underlying variable-rate interest
payments and is recorded as a current liability in the Company's balance sheet.
Since an assessment of the hedging relationship revealed that it was 100%
effective, the entire unrealized loss, net of tax, is recorded in accumulated
other comprehensive income ("OCI") within stockholder's equity. As of
September 30, 2001, there was an unrealized loss of $1.4 million in OCI related
to this contract. The amounts in OCI will be recognized as additional interest
expense over the term of the swap agreement.

                                     F-106
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
FORWARD EXCHANGE

    The Company manufactures and sells its products in a number of countries
throughout the world and, as a result, is exposed to movements in foreign
currency exchange rates. The primary purpose of the Company's foreign currency
hedging activities is to manage the volatility associated with foreign currency
payments to related entities or to vendors for purchases of materials and with
foreign currency collections from customers in the normal course of business.
The Company utilizes forward exchange contracts with maturities of less than
twelve months, which qualify as foreign currency hedges. These hedges are
intended to offset the effect of transaction gains and losses, which arise when
payments or collections in a foreign currency are made or received one to three
months after the asset or liability is generated. The fair value of these
instruments at September 30, 2001 was negligible. Since the Company's assessment
of these hedges revealed no ineffectiveness, gains and losses on these
instruments are deferred in OCI, net of tax, until the underlying transaction
gain or loss is recognized in earnings. Amounts in OCI will be reclassified into
earnings within the next twelve months.

    COMPREHENSIVE INCOME (LOSS): Comprehensive income (loss) represents the
change in stockholders' equity from transactions and other events and
circumstances arising from non-stockholder sources. The Company's comprehensive
income (loss) for 2001, 2000 and 1999 consisted of net income (loss), foreign
currency translation adjustments, minimum pension liability adjustments and
unrealized gains and losses on derivatives established as cash flow hedges, net
of applicable income taxes.

    Components of accumulated other comprehensive income (loss) consist of the
following (in millions):

<Table>
<Caption>
                                                                                              ACCUMULATED
                                                                MINIMUM                          OTHER
                                                  FOREIGN       PENSION       FAIR VALUE     COMPREHENSIVE
                                                 CURRENCY      LIABILITY    OF DERIVATIVES      (LOSS)
                                                TRANSLATION    ADJUSTMENT     ADJUSTMENT        INCOME
                                               -------------   ----------   --------------   -------------
                                               (IN MILLIONS)
<S>                                            <C>             <C>          <C>              <C>
September 30, 1998...........................       $  2.3       $(9.6)         $  --            $ (7.3)
Fiscal 1999 change...........................         (4.9)        6.1                              1.2
                                                    ------       -----          -----            ------
September 30, 1999...........................         (2.6)       (3.5)            --              (6.1)
Fiscal 2000 change...........................        (14.7)        2.1                            (12.6)
                                                    ------       -----          -----            ------
September 30, 2000...........................        (17.3)       (1.4)            --             (18.7)
Fiscal 2001 change...........................         15.3         1.3           (1.4)             15.2
                                                    ------       -----          -----            ------
September 30, 2001...........................       $ (2.0)      $(0.1)         $(1.4)           $ (3.5)
                                                    ======       =====          =====            ======
</Table>

    STOCK-BASED COMPENSATION: The Company does not have stock-based compensation
plans separate from USI; however, the Company does participate in USI's
stock-based compensation plans. Consistent with USI, the Company accounts for
participation in these plans in accordance with Accounting Principles Board
Opinion No. 25 ("APB 25"), ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES and related
interpretations in accounting for stock based compensation. The pro forma effect
on net income had compensation cost for awards of stock-based compensation been
determined using the fair value method prescribed by Statement of Financial
Accounting Standards No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, were not
materially different from the amounts presented in the Company's consolidated

                                     F-107
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACCOUNTING POLICIES (CONTINUED)
statements of operations for the periods ended September 30, 2001, 2000 and
1999. Therefore, these amounts have not been presented.

    Certain key employees of the Company participate in stock incentive plans of
USI that provide for awards of restricted stock and options to purchase USI
common stock at prices equal to the fair value of the underlying shares at the
date of the grant. The Company recognized compensation expense of less than
$0.1 million in fiscal 2001 for vesting restricted stock awards. As of
September 30, 2001, an aggregate of approximately 0.5 million options to
purchase shares of USI common stock were held by Company employees.

    INCOME (LOSS) PER SHARE: Historical income (loss) per share information is
not presented because the Company was comprised of direct or indirect
subsidiaries of the Parent.

    NEW ACCOUNTING PRONOUNCEMENTS: In June 2001, the Financial Accounting
Standards Board ("FASB") issued Statements of Financial Accounting Standards
No. 141, BUSINESS COMBINATIONS, and No. 142, GOODWILL AND OTHER INTANGIBLE
ASSETS, effective for fiscal years beginning after December 15, 2001. Under the
new rules, goodwill and intangible assets deemed to have indefinite lives will
no longer be amortized but will be subject to annual impairment tests in
accordance with the Statements. Other intangible assets will continue to be
amortized over their useful lives. SFAS 141 is effective commencing July 1,
2001, and the Company has elected to adopt SFAS 142 as of October 1, 2001.
Accordingly, as of October 1, 2001, the Company will no longer amortize
goodwill.

    In August 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT
OR DISPOSAL OF LONG-LIVED ASSETS. The FASB's new rules on asset impairment
supersede SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
FOR LONG-LIVED ASSETS TO BE DISPOSED OF and provide a single accounting model
for long-lived assets to be disposed of. Although retaining many of the
fundamental recognition and measurement provisions of SFAS No. 121, the new
rules significantly change the criteria that would have to be met to classify an
asset as held-for-sale. The new rules also supersede the provisions of APB
Opinion No. 30, REPORTING THE RESULTS OF OPERATIONS--REPORTING THE EFFECTS OF
DISPOSAL OF A SEGMENT OF A BUSINESS, AND EXTRAORDINARY, UNUSED AND INFREQUENTLY
OCCURRING EVENTS AND TRANSACTIONS, with regard to reporting the effects of a
disposal of a segment of a business and require expected future operating losses
from discontinued operations to be displayed in discontinued operations in the
period(s) in which the losses are incurred (rather than as of the measurement
date as presently required by APB No. 30). The Statement is effective for the
Company in the beginning of fiscal year 2003. The Company does not believe this
statement will have a material effect on the earnings or financial position of
the Company.

NOTE 4--ACQUISITIONS AND DISPOSITIONS OF BUSINESSES

ACQUISITION OF BUSINESSES

    The pro forma effects of the acquisitions detailed below are not material to
the Company's results of operations and are not presented herein. These
acquisitions have been accounted for as purchases and their results of
operations are included in the financial statements from the dates of
acquisition.

    Contemporaneously with the closing of its debt restructuring on August 15,
2001 (see Note 7), the Company re-acquired the 75% equity interest in
Rexair, Inc. ("Rexair"), the manufacturer of "Rainbow" vacuum cleaners,
previously sold to Strategic Industries, LLC ("Strategic") as part of the
Diversified transactions in March 2000. The purchase consideration included
$27.4 million in face value

                                     F-108
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--ACQUISITIONS AND DISPOSITIONS OF BUSINESSES (CONTINUED)
of Strategic's senior notes and the assumption of borrowings outstanding under
Rexair's $200 million credit facility (see DISPOSITIONS OF BUSINESSES below). In
connection with the reacquisition, the Company reduced the reacquired basis in
Rexair by the amount of its previously deferred gain and reclassified its
retained 25% share of Rexair's net liabilities from other long-term liabilities.
The allocation of the purchase consideration, including the deferred gain and
the carrying value of the retained liabilities, to the assets acquired and
liabilities assumed resulted in the goodwill and other intangible assets of
approximately $68.9 million, the majority of which have indefinite lives and
will not be amortized. In addition, the Company expensed $17.4 million of
deferred transaction costs associated with the March 2000 sale of Rexair. The
results of Rexair have been included in the Bath and Plumbing segment since it
was reacquired. The Company accounted for Rexair under the equity method of
accounting during the time period when the Company held only a 25% interest,
from March 24, 2000 until August 15, 2001.

    In June 1999, the Company purchased the assets of Gatsby Spas, Inc.
("Gatsby") for approximately $17.0 million in cash, resulting in goodwill of
$9.6 million. Gatsby manufactures and distributes spas. The results of Gatsby
are included in Bath and Plumbing Segment.

    In April 1999, Global contributed to the Company the stock of the businesses
Dual-Lite and True Temper. The contribution was recorded at the historical
carrying value of the net assets at the time of contribution which was
approximately $147.0 million. The results of True Temper and Dual-Lite are
included in Discontinued Operations (see Note 5).

DISPOSITIONS OF BUSINESSES

    On March 24, 2000, the Company disposed of a majority equity interest in its
Diversified segment in two separate transactions. In the first transaction, the
Company disposed of the following subsidiaries: Bearing Inspection, Inc.;
BiltBest Products, Inc.; EJ Footwear Corp. (including Georgia Boot Inc. and
Lehigh Safety Shoe Co.); Garden State Tanning Inc.; Huron Inc.; Leon
Plastics Inc.; Native Textiles Inc. and SCF Industries, Inc. The Company
received gross cash proceeds of approximately ($160.0) million, retained a
preferred equity interest in the buyer, Strategic, having a stated value of
approximately $19.5 million, retained a common equity interest in Strategic of
17.7% and received approximately $209 million aggregate principal amount of 12%
(12.5% effective August 18, 2000) senior notes (the "Strategic Notes") due 2007.
In addition, Strategic assumed approximately $8 million of existing bank debt.
As a result of its disposal of the Diversified businesses, the Company recorded
a pre-tax gain of $60.2 million.

    In the second transaction, Rexair sold newly issued shares to Strategic
representing, after issuance, 75% of the equity interest in Rexair. The Company
received approximately $195.0 million in cash and retained a 25% direct equity
interest in Rexair. In addition, the Company guaranteed Rexair's $200 million
credit facility. In connection with the Rexair transaction, the Company recorded
an other liability of $82.2 million, related to its retained 25% share of
Rexair's net liabilities and a deferred gain, which, together with the deferral
of the related transaction costs, was to be deferred until the release of the
Company's guarantee of Rexair's credit facility. Rexair was re-acquired on
August 15, 2001. Accordingly, the deferred transaction costs were expensed in
full at such date, and the deferred gain as well as the Company's retained 25%
share of Rexair's net liabilities reduced the reacquired basis in Rexair (See
ACQUISITIONS OF BUSINESSES above).

                                     F-109
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--ACQUISITIONS AND DISPOSITIONS OF BUSINESSES (CONTINUED)

    In July 2000, the Company transferred the Strategic Notes and certain of the
cash proceeds received to USI in exchange for a note receivable from USI in the
amount of $315.9 million, bearing interest of 6.5% per annum and maturing in
fiscal 2005.

    During the first quarter of fiscal 2000, the Company disposed of assets
relating to its ladder operations and the infant and children footwear
operation. The total proceeds of these separate transactions were
$17.0 million, which approximated their carrying value. The Company has retained
certain product liabilities of the ladder operations.

NOTE 5--DISCONTINUED OPERATIONS

    On December 28, 2001, the Board of Directors of USI approved a formal
Disposal Plan for five businesses in connection with USI's obligation to pay
debt amortization as set forth in the restructured debt agreements. In
connection with the Disposal Plan, the Company recorded a charge of
$149.8 million, which represented the difference between the historical net
carrying value and the estimated net realizable value of those businesses, (Ames
True Temper, Lighting Corporation of America, and Siteco Lighting) which are
included within the consolidated operations of JUSI. The Disposal Plan calls for
the sale of these businesses over the next 12 months. The net assets of the
discontinued businesses are included in net assets held for sale for all periods
presented.

    The operating results of these businesses have been included in discontinued
operations for all periods presented. Summarized results of discontinued
operations are as follows:

<Table>
<Caption>
                                                                FOR THE FISCAL YEARS ENDED
                                                                      SEPTEMBER 30TH
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN MILLIONS)
<S>                                                           <C>        <C>        <C>
Net sales...................................................  $1,111.5   $1,156.7   $1,122.5
Operating Income............................................       5.6       72.7       80.1
Income (loss) from operations before income taxes...........       4.5       72.1       76.0
</Table>

    Included in the losses are goodwill impairment charges totaling
$54.0 million in fiscal 2001. This goodwill impairment charge resulted from an
evaluation of the recoverability of goodwill performed by the Company in
accordance with its accounting policy (see NOTE 3). The impairment charges were
recorded as part of continuing operations before the approval of the Disposal
Plan. The charges were reclassified into discontinued operations after the
approval of the Disposal Plan.

    Amounts classified as net assets held for sale consist of the following:

<Table>
<Caption>
                                                                AT SEPTEMBER 30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Net current assets..........................................   $106.6     $353.3
Property, plant and equipment, net..........................    217.8      209.3
Other non-current assets and liabilities, net...............    107.4      162.7
                                                               ------     ------
Net assets held for sale....................................   $431.8     $725.3
                                                               ======     ======
</Table>

    The Company disposed of the domestic operations of the Ertl Company Inc.
("Ertl") in the second quarter of fiscal 1999. Ertl's domestic companies were
sold for proceeds of approximately $71 million, which approximated their
carrying value. The Company has reflected this business as a discontinued
operation.

                                     F-110
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--RESTRUCTURING AND OTHER NON-RECURRING CHARGES

    During fiscal 1999, the Company expanded its 1998 restructuring plan related
to its footwear operations by closing a second domestic manufacturing facility.
The closure of the second facility was completed by June 1999, with its
production being outsourced to offshore vendors. As a result, the Company
recorded restructuring charges of $1.7 million primarily for the costs of
terminating 110 employees and the write-off of impaired fixed assets.
Furthermore, the Company recorded other non-recurring charges for inventory
obsolescence totaling $0.9 million, which were recorded as cost of goods sold.
The restructuring charges resulting from the closing of the Company's footwear
facility were offset by a $1.0 million reduction in severance costs that were
originally set up in 1998 for the Company's vacuum cleaner and textile
operations. Voluntary departures prior to final termination resulted in
severance payments that were lower than previously estimated. The Company
subsequently sold its footwear, vacuum cleaner and textile operations (see Note
4). Also, during fiscal 1999, the Diversified segment recorded $6.1 million in
charges and losses related to the closure of an unprofitable window operation.

OTHER

    During 2001, the Company recorded $17.4 million in deferred transaction
costs related to the original sale of Rexair in March 2000 once the business was
re-acquired in August 2001. These costs have been classified as "other expenses"
in the Company's consolidated statement of operations.

NOTE 7--LONG-TERM DEBT

    Long-term debt at September 30, 2001 consists of the following:

<Table>
<S>                                                           <C>
Restructured Facilities, Rexair.............................  $ 166.2
Less current maturities.....................................    (10.0)
                                                              -------
Long-term debt..............................................  $ 156.2
                                                              =======
</Table>

    The entire September 30, 2001 balance of long term debt is due in fiscal
2002.

    On August 15, 2001, USI finalized a comprehensive restructuring of its bank
debt and the bank debt of Rexair, which was re-acquired from Strategic on the
same date (See NOTE 4). The amended facilities (including the Rexair Credit
Facility the "Restructured Facilities") extend the final maturity date of the
USI's debt under its Revolving Facilities to November 30, 2002, which coincides
with the final maturity of the amended Rexair Credit Facility.

    The Restructured Facilities require Rexair to maintain minimum monthly
EBITDA, as defined, comply with maximum monthly capital expenditure limits and
comply with other customary affirmative and negative covenants. In addition, the
amended Rexair Credit Facility, which provides a term loan of $175 million and
availability under a revolver of $20 million, requires that excess cash
generated by Rexair be segregated from excess cash generated by the remainder of
USI's operations and used only to reduce the debt outstanding on the Rexair
Credit Facility. Rexair's availability under its revolver will be permanently
reduced by $5 million on May 31, 2002. In connection with its term loan, Rexair
will be required to make payments of $2.2 million each in December 2001 and
March 2002 and $4.4 million each in June 2002 and September 2002. The Rexair
debt and the debt of USI and its subsidiaries contain cross-default and
cross-acceleration provisions.

    The Restructured Facilities provide for increasing interest rates over the
remaining term. The spreads over London Interbank Offered Rate ("LIBOR") was 275
basis points until December 31, 2001, after which the spread will begin
increases by 50 basis points each quarter thereafter. The

                                     F-111
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7--LONG-TERM DEBT (CONTINUED)
Restructured Facilities also provides for several new fees including an unused
commitment fee of 0.50% and a facing fee on all outstanding letters of credit of
0.25% per annum. At the Company's option, up to 0.50% of the interest rate
applicable to borrowings may be paid through the issuance of notes.

    The lenders under the amended Rexair Credit Facility have been granted a
security interest in substantially all of USI's assets, along with the lenders
of the Restructured Facilities and the relevant holders of USI's Senior Notes.
This security interest was granted to the lenders under the Rexair Credit
Facility as a result of USI's guarantee of Rexair's debt. This security interest
was granted on April 30, 2001. Certain other debt of USI is also equally and
ratably secured with USI's Restructured Facilities and the amended Rexair Credit
Facility.

    Under the Restructured Facilities, substantially all sales proceeds are
required to be applied to reduce USI's funded and unfunded senior debt, on a pro
rata basis including the Rexair Credit Facility.

    At December 31, 2001 Rexair had $5.7 million available under the amended
Rexair Credit Facility. Such availability was solely available to Rexair.
Interest paid on the Rexair Credit Facility was $1.6 million in fiscal 2001.

    Notes Payable to Parent and Affiliates consists of the following:

<Table>
<Caption>
                                                                 SEPTEMBER 30
                                                                (IN THOUSANDS)
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
8.00% notes payable.........................................   $ 14.0     $ 14.0
7.00% notes payable.........................................      3.0        3.0
6.50% notes payable.........................................    349.9      349.9
5.50% notes payable.........................................     39.2       39.2
5.25% notes payable.........................................      5.4        5.4
                                                               ------     ------
                                                               $411.5     $411.5
                                                               ======     ======
</Table>

    The notes payable to Affiliates are unsecured with $94.7 million payable on
demand, $302.8 million maturing in fiscal 2005, and $14.0 million maturing in
fiscal 2006. Interest paid to Parent and Affiliates during fiscal 2001, 2000,
and 1999 was $47.4 million, $44.4 million, and $20.9 million, respectively.

                                     F-112
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--PENSION AND RETIREMENT PLANS

DOMESTIC BENEFIT ARRANGEMENTS

    The Company and its subsidiaries sponsor a number of non-contributory
defined benefit pension plans covering the majority of its United States
employees. The benefits under these plans are based primarily on years of
credited service and compensation as defined under the respective plan
provisions. The Company's funding policy is to contribute amounts to the plans
sufficient to meet the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974, plus additional amounts as the Company
may determine to be appropriate from time to time.

    The Company and certain of its subsidiaries also sponsor defined
contribution plans. Contributions relating to defined contribution plans are
made based upon the respective plans' provisions.

    The Company also provides health care and life insurance benefits to certain
groups of retirees with most retires contributing a portion of the costs.

    The assumptions and the net periodic pension income for the Company's
defined benefit plans, as well as the total contributions charged to pension
expense for the defined contribution plans covering employees in the United
States are presented below:

<Table>
<Caption>
                                                                  PENSION BENEFITS                    OTHER BENEFITS
                                                        ------------------------------------      ----------------------
                                                          2001          2000          1999          2000          1999
                                                        --------      --------      --------      --------      --------
<S>                                                     <C>           <C>           <C>           <C>           <C>
Assumptions
Discount rate.........................................     7.5%           8.0%         7.5%          8.0%          7.5%
Rate of compensation increases........................     4.5%           4.5%         4.5%           --            --
Expected rate of return on assets.....................     9.5%           9.5%         9.5%           --            --
</Table>

<Table>
<Caption>
                                                                  PENSION BENEFITS                    OTHER BENEFITS
                                                        ------------------------------------      ----------------------
                                                          2001          2000          1999          2000          1999
                                                        --------      --------      --------      --------      --------
                                                                                 (IN MILLIONS)
<S>                                                     <C>           <C>           <C>           <C>           <C>
Components of net periodic benefit (income) cost
Defined benefit plans:
  Service cost........................................   $ 0.1         $  1.1        $ 2.3          $0.2          $0.4
  Interest cost.......................................     0.2            1.5          2.7           0.3           0.7
  Expected return on plan assets......................    (0.1)          (1.4)        (2.8)           --            --
  Prior service costs.................................      --            0.2          0.3            --           0.1
  Amortization of unrecognized transition asset.......      --             --         (0.1)           --            --
  Net actuarial gain..................................      --            0.1          0.4            --            --
  Curtailments........................................      --           (1.1)         0.5            --           0.2
                                                         -----         ------        -----          ----          ----
Periodic cost of defined benefit plans................     0.2            0.4          3.3           0.5           1.4
(Income) of participation in USI Group Plan...........    (2.0)          (5.3)        (6.9)           --            --
Curtailment in USI Group Plan.........................      --          (18.5)          --            --            --
                                                         -----         ------        -----          ----          ----
Net period (income) cost:
  Defined benefit plans...............................    (1.8)         (23.4)        (3.6)          0.5           1.4
  Defined contribution plans..........................     0.2            0.7          0.9            --            --
                                                         -----         ------        -----          ----          ----
Net periodic (income) cost............................   $(1.6)        $(22.7)       $(2.7)         $0.5          $1.4
                                                         =====         ======        =====          ====          ====
</Table>

    The fiscal year 2000 curtailment gains totaling $19.6 million are related to
the sale of the Diversified businesses and are included in the statement of
operations caption "Gain (loss) on sale of businesses."

                                     F-113
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--PENSION AND RETIREMENT PLANS (CONTINUED)
    The following table provides a reconciliation of changes in the projected
benefit obligation, fair value of plan assets and the funded status of the
Company's defined benefit pension and postretirement benefit plans to the
amounts recorded in the Company's balance sheet at September 30:

<Table>
<Caption>
                                                                 PENSION BENEFITS             OTHER BENEFITS
                                                              ----------------------      ----------------------
                                                                2001          2000          2001          2000
                                                              --------      --------      --------      --------
                                                                                (IN MILLIONS)
<S>                                                           <C>           <C>           <C>           <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION:
Benefit obligation at beginning of year.....................   $ 0.9         $35.6         $ 0.3         $ 9.1
Service cost................................................     0.1           1.1            --           0.2
Interest cost...............................................     0.2           1.5            --           0.3
Actuarial (gains) losses....................................    (0.1)          3.6           0.1            --
Benefits paid...............................................    (0.1)         (0.6)           --          (0.1)
Acquisition (divestitures)..................................    15.6         (40.3)          1.5          (9.2)
                                                               -----         -----         -----         -----
Benefit obligation at end of year...........................   $16.6         $ 0.9         $ 1.9         $ 0.3
                                                               =====         =====         =====         =====
CHANGE IN FAIR VALUE OF PLAN ASSETS:
Fair value of plan assets at beginning of year..............   $  --         $29.5         $  --         $  --
Actual return on plan assets................................    (0.4)          1.4            --            --
Contributions...............................................      --           0.9            --           0.1
Benefits paid...............................................    (0.1)         (0.6)           --          (0.1)
Acquisitions (divestitures).................................    12.2         (31.2)           --            --
                                                               -----         -----         -----         -----
Fair value of plan assets at end of year....................   $11.7         $  --         $  --         $  --
                                                               =====         =====         =====         =====
FUNDED STATUS OF PLANS:
Plan assets less than projected benefit obligation..........   $(4.9)        $(0.9)        $(1.9)        $(0.3)
Unrecognized net actuarial losses...........................     0.8           0.1           0.1            --
Unrecognized prior service cost.............................      --           0.3            --            --
                                                               -----         -----         -----         -----
Total recognized............................................   $(4.1)        $(0.5)        $(1.8)        $(0.3)
                                                               =====         =====         =====         =====
</Table>

<Table>
<Caption>
                                                                 PENSION BENEFITS             OTHER BENEFITS
                                                              ----------------------      ----------------------
                                                                2001          2000          2001          2000
                                                              --------      --------      --------      --------
                                                                                (IN MILLIONS)
<S>                                                           <C>           <C>           <C>           <C>
AMOUNTS RECORDED IN THE BALANCE SHEET CONSIST OF
Prepaid benefits............................................   $  --         $  --         $  --         $  --
Accrued benefits............................................    (4.4)         (1.0)         (1.8)         (0.3)
Intangible assets...........................................      --           0.1            --            --
Accumulated other comprehensive income......................     0.3           0.4            --            --
                                                               -----         -----         -----         -----
Total recognized............................................    (4.1)         (0.5)         (1.8)         (0.3)
Participation in USI Group Plan.............................     6.7           4.6            --            --
                                                               -----         -----         -----         -----
Total amount recorded in the consolidated balance sheet.....   $ 2.6         $ 4.1         $(1.8)        $(0.3)
                                                               =====         =====         =====         =====
</Table>

                                     F-114
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--PENSION AND RETIREMENT PLANS (CONTINUED)
    The fiscal 2001 other benefits balance of $1.8 million primarily relates to
Rexair, which was acquired on August 15, 2001.

    At September 30, 2001 and 2000, the Company has a net pension asset of
$6.7 million and $4.6 million, respectively, which reflects the Company's
recorded balance which is included in a USI group pension plan. As of
September 30, 2001, the USI group pension plan's fair value of the plan assets
of $270.1 million exceeds the present value of its accumulated benefit
obligation by approximately $97.6 million.

    The aggregate projected benefit obligation and the aggregate fair value of
plan assets, for the plans that have a projected benefit obligation in excess of
plan assets, are $16.6 million and $11.7 million, respectively, in 2001 and
$0.9 million and zero, respectively, in 2000.

    The aggregate accumulated benefit obligation and the aggregate fair value of
plan assets, for the plans that have an accumulated benefit obligation in excess
of plan assets, are $15.1 million and $11.7 million, respectively, in 2001 and
$0.9 million and zero, respectively, in 2000.

    The assets for the Company's U.S. plans are included in a master trust which
principally invests in listed stocks and bonds, including common stock of the
Company. Included in plan assets were 1,333,100 and 1,253,100 shares of the
Company's common stock at September 30, 2001 and 2000, respectively,
representing $3.1 million and $12.5 million of the master trust's assets for the
same respective periods. During fiscal 2001 and 2000, $0.1 million and
$0.2 million, respectively, in dividends were paid to the master trust.

    The weighted average annual assumed rate of increase in the per capita cost
of covered benefits (i.e., the health care cost trend rate) for the other
postretirement benefit plans was 8.5% for 2001 and is assumed to decrease 0.5% a
year to 5.5%. A one-percentage-point change in the assumed health care cost
trend rate would have the following effects at and for the year ended
September 30, 2001 (in millions):

<Table>
<S>                                                           <C>
Effect of a 1% increase in the health care cost trend rate
  on:

  Service cost plus interest cost...........................  $  --
  Accumulated postretirement benefit obligation.............    0.1

Effect of a 1% decrease in the health care cost trend rate
  on:

  Service cost plus interest cost...........................  $  --
  Accumulated postretirement benefit obligation.............   (0.1)
</Table>

    Certain of the Company's discontinued operations participate in
multi-employer plans, which provide defined benefits to union employees.
Contributions relating to multi-employer plans are based on negotiated
collective bargaining agreements.

                                     F-115
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--INCOME TAXES

    Income (loss) before income taxes consists of:

<Table>
<Caption>
                                                                 FISCAL YEARS
                                                             ENDED SEPTEMBER 30,
                                                        ------------------------------
                                                          2001       2000       1999
                                                        --------   --------   --------
                                                                (IN MILLIONS)
<S>                                                     <C>        <C>        <C>
United States.........................................   $(28.4)    $89.4      $61.4
Foreign...............................................     (1.2)       --         --
                                                         ------     -----      -----
                                                         $(29.6)    $89.4      $61.4
                                                         ======     =====      =====
</Table>

    The provisions for federal, foreign, and state income taxes consist of:

<Table>
<Caption>
                                                                 FISCAL YEARS
                                                             ENDED SEPTEMBER 30,
                                                        ------------------------------
                                                          2001       2000       1999
                                                        --------   --------   --------
                                                                (IN MILLIONS)
<S>                                                     <C>        <C>        <C>
Current:
  Federal.............................................   $ (5.4)    $26.4      $24.0
  Foreign.............................................     (0.6)       --         --
  State...............................................      0.9       1.5        3.2
                                                         ------     -----      -----
                                                           (5.1)     27.9       27.2
  Deferred............................................     (0.1)     (0.7)      (2.3)
                                                         ------     -----      -----
Total.................................................   $ (5.2)    $27.2      $24.9
                                                         ======     =====      =====
</Table>

<Table>
<Caption>
                                                                 FISCAL YEARS
                                                             ENDED SEPTEMBER 30,
                                                        ------------------------------
                                                          2001       2000       1999
                                                        --------   --------   --------
                                                                (IN MILLIONS)
<S>                                                     <C>        <C>        <C>
Statutory federal income tax provision................   $(10.3)    $31.3      $21.0
Foreign income tax differential.......................     (0.1)       --         --
State income taxes (net of federal benefit)...........      0.6       1.0        2.1
Goodwill amortization.................................      1.4       1.9        1.4
Miscellaneous.........................................      0.1      (7.0)        .4
Non-deductible restructuring charges..................      3.1
                                                         ------     -----      -----
                                                         $ (5.2)    $27.2      $24.9
                                                         ======     =====      =====
</Table>

                                     F-116
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--INCOME TAXES (CONTINUED)

<Table>
<Caption>
                                                                 SEPTEMBER 30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Deferred tax liabilities:
  Property, plant and equipment.............................   $ (1.8)    $ (1.0)
  Net pension assets........................................    (22.4)     (20.4)
  Post retirement...........................................     (1.3)        --
  Other.....................................................     (0.3)        --
                                                               ------     ------
Total deferred tax liabilities..............................    (25.8)     (21.4)
                                                               ------     ------
Deferred tax assets:
  Accruals and allowances...................................     12.6       13.5
  Inventory.................................................      0.6        0.7
  Deductible goodwill.......................................                 0.7
  Expected benefit from disposal............................     52.4        0.9
                                                               ------     ------
    Gross deferred tax assets...............................     65.6       15.8
  Valuation allowance.......................................    (52.4)
                                                               ------     ------
Total deferred tax assets...................................     13.2       15.8
                                                               ======     ======
Net deferred tax liabilities................................   $(12.6)    $ (5.6)
                                                               ======     ======
</Table>

    The Company has established a valuation allowance principally related to
deferred tax assets resulting from the losses recognized in connection with the
Disposal Plan, reflecting the uncertianty of the future realization of these
assets.

    The classification of the deferred tax balances is:

<Table>
<Caption>
                                                                 SEPTEMBER 30
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                 (IN MILLIONS)
<S>                                                           <C>        <C>
Current asset...............................................   $ 12.5     $ 15.1
Current liabilities.........................................       --         --
                                                               ------     ------
                                                                 12.5       15.1
                                                               ------     ------
Noncurrent asset............................................      0.7        0.7
Noncurrent liability........................................    (25.8)     (21.4)
                                                               ------     ------
Net noncurrent liabilities..................................    (25.1)     (20.7)
                                                               ------     ------
Net deferred tax liability..................................   $(12.6)    $ (5.6)
                                                               ======     ======
</Table>

                                     F-117
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10--COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

    The table below shows the Company's future minimum lease payments due under
non-cancelable leases as of September 30, 2001. These minimum lease payments
(presented in millions) do not include facility leases that were accrued as
restructuring costs (See Note 6).

<Table>
<S>                                                           <C>
2002........................................................   $ 7.9
2003........................................................     5.5
2004........................................................     3.7
2005........................................................     3.2
2006........................................................     3.0
Thereafter..................................................     0.6
                                                               -----
Total minimum lease payments................................   $23.9
                                                               =====
</Table>

    Rent expense, including equipment rental, was approximately $8.3 million,
$6.8 million and $10.3 million in 2001, 2000 and 1999, respectively.

LITIGATION

    The Company is subject to a wide range of environmental protection laws. The
Company has remedial and investigatory activities underway at approximately 34
sites, of which the Company has been named as a Potentially Responsible Party
("PRP") at 13 "superfund" sites pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or comparable statutes.

    It is often difficult to estimate the future impact of environmental
matters, including potential liabilities. The Company accrues for losses
associated with environmental remediation obligations when such losses are
probable and reasonably estimable. This practice is followed whether the claims
are asserted or unasserted. Reserves for estimated losses from environmental
remediation are, depending on the site, based primarily upon internal or third
party environmental studies, and estimates as to the number, participation level
and financial viability of any other PRP's, the extent of contamination and the
nature of required remedial actions. Such accruals are adjusted as further
information develops or circumstances change. Costs of future expenditures for
environmental remediation obligations are not discounted to their present fair
value. Recoveries of environmental remediation costs from other parties are
recognized as assets when their receipt is deemed probable. Management expects
that the amount reserved will be paid out over the periods of remediation for
the applicable sites which range up to 30 years and that such reserves are
adequate based on all current data. Each of the sites in question is at various
stages of investigation or remediation; however, no information currently
available reasonably suggests that projected expenditures associated with
remedial action or compliance with environmental laws for any single site or for
all sites in the aggregate, will have a material adverse affect on the Company's
financial condition, results of operations or cash flows.

                                     F-118
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10--COMMITMENTS AND CONTINGENCIES (CONTINUED)

    At September 30, 2001, the Company had accrued approximately $6.1 million
($.9 million accrued as current liabilities; $5.2 million as non-current
liabilities) for various environmental related liabilities of which the Company
is aware. The Company believes that the range of liability for such matters is
between approximately $4.7 million and $9.6 million.

    Also, certain of the Company's subsidiaries are defendants or plaintiffs in
lawsuits that have arisen in the normal course of business. While certain of
these matters involve substantial amounts, it is management's opinion, based on
the advice of counsel, that the ultimate resolution of such litigation and
environmental matters will not have a material adverse effect on the Company's
financial condition, results of operations or cash flows.

    The Company's domestic subsidiaries participate in casualty insurance
programs of the Company and USI, which are principally self-insured programs. At
September 30, 2001, the Company's portion of these programs amounting to
$4.5 million is included in other liabilities. The subsidiaries of the Company
have issued standby letters of credit guaranteeing financial responsibility for
its self-insured casualty programs amounting to $1.5 million. In addition, USI
has issued standby letters of credit guaranteeing financial responsibility for
its self-insured casualty programs.

    In addition, at September 30, 2001, the subsidiaries of the Company have
issued documentary letters of credit and the banker's acceptances totaling
$7.6 million related to shipments from the Far East.

NOTE 11--SEGMENT INFORMATION

    The Company currently operates in one reportable segment--Bath and Plumbing.
Bath and Plumbing manufactures whirlpools, spas, faucets, chinaware, bathtubs,
showertub enclosures, bath accessories, and vacuum cleaners. Prior to
March 2000 (see NOTE 4), the Company also operated a wide range of businesses
through its Diversified segment. These businesses manufactured automotive
interiors, precision-engineered products for the automotive, jet aviation and
electronics industries and various other consumer products. The Company's
products are primarily sold to the home improvement and home construction
markets through mass merchandisers, hardware stores, home centers, distributors,
wholesalers and other outlets.

    The financial information of the segments is regularly evaluated by the
corporate operating executives in determining resource allocation and assessing
performance and is periodically reviewed by the Company's Board of Directors.
The Company's senior management evaluates the performance of each business
segment based on its operating results and, other than general corporate
expenses, allocates specific corporate overhead to each segment. Accounting
policies for the segments are the same as those for the Company (see NOTE 3).

                                     F-119
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--SEGMENT INFORMATION (CONTINUED)
    The following is a summary of our significant accounts and balances by
segment, reconciled to our consolidated totals.

<Table>
<Caption>
                                                        PLUMBING   DIVERSIFIED   CORPORATE    TOTAL
                                                        --------   -----------   ---------   --------
                                                                        (IN MILLIONS)
<S>                                                     <C>        <C>           <C>         <C>
NET SALES
  2001................................................   $411.9      $   --      $     --    $  411.9
  2000................................................    487.0       370.0            --       857.0
  1999................................................    467.2       756.2            --     1,223.4

TOTAL OPERATING INCOME (LOSS)(1)
  2001................................................   $ 10.9      $   --      $   (8.5)        2.4
  2000................................................     37.3        33.1          (6.9)       63.5
  1999................................................     31.6        82.3          (8.5)      105.4

CAPITAL EXPENDITURES
  2001................................................   $ 10.8      $   --      $     --    $   10.8
  2000................................................      5.3        12.6            --        17.9
  1999................................................      5.6        24.0            --        29.6

DEPRECIATION AND AMORTIZATION
  2001................................................   $ 10.4      $   --      $     --    $   10.4
  2000................................................      9.1         9.8            --        18.9
  1999................................................      8.5        19.3            --        27.8

ASSETS(1)
  2001................................................   $429.9      $   --      $1,503.2    $1,933.1
  2000................................................    333.8          --       1,659.7     1,993.5
  1999................................................    341.2       518.2       1,461.6     2,321.0
</Table>

------------------------

(1) Operating losses for corporate included management fees charged to the
    Company by USI of $7.5 million, $8.0 million, and $9.1 million in fiscal
    2001, 2000 and 1999, respectively.

(2) Corporate assets include net assets held for sale of $431.8 million,
    $725.3 million, and $608.1 million for fiscal 2001, 2000 and 1999,
    respectively, and amounts due from Parent and affiliates of
    $1,039.3 million, $898.7 million and $819.7 million for fiscal 2001, 2000
    and 1999, respectively.

    Aside from the operating income (loss) amounts noted above, the Company's
income from continuing operations includes interest income and expense, equity
earnings or losses in investees, other income and expense items and income
taxes, none of which are included in the Company's measurement of segment
operating profit. Corporate assets consist primarily of real property, cash and
cash equivalents and other investments.

    The Company's operations are principally located in North America. The
Company's country of domicile is the United States. Export sales represented 8%,
16% and 21% of the Company's total net sales for fiscal years 2001, 2000 and
1999, respectively. Principal international markets served include Europe, South
America, Canada and Asia.

                                     F-120
<Page>
                              JUSI HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--SEGMENT INFORMATION (CONTINUED)
    The following table presents certain data by geographic areas.

<Table>
<Caption>
                                                                     FISCAL YEARS
                                                                  ENDED SEPTEMBER 30
                                                            ------------------------------
                                                              2001       2000       1999
                                                            --------   --------   --------
                                                                    (IN MILLIONS)
<S>                                                         <C>        <C>        <C>
NET SALES
United States.............................................   $411.9     $837.9    $1,194.3
Foreign...................................................       --       19.1        29.1
                                                             ------     ------    --------
Total net sales...........................................   $411.9     $857.0    $1,223.4
                                                             ======     ======    ========
OPERATING INCOME
United States.............................................   $  2.4     $ 64.6    $  106.9
Foreign...................................................       --       (1.1)       (1.5)
                                                             ------     ------    --------
Total operating income....................................   $  2.4     $ 63.5    $  105.4
                                                             ======     ======    ========
LONG-LIVED ASSETS
United States.............................................   $264.5     $175.5    $  382.8
Foreign...................................................       --         --         1.8
                                                             ------     ------    --------
Total long-lived assets...................................   $264.5     $175.5    $  384.6
                                                             ======     ======    ========
</Table>

                                     F-121