<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

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

                  For the quarterly period ended March 31, 2001
OR

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

                 For the transition period from ______ to ______

                         Commission file number: 1-06725

                                 LCA GROUP INC.
             (Exact name of registrant as specified in its charter)

          DELAWARE
(State or other jurisdiction of                    51-0305205
incorporation or organization)                  (I.R.S.Employer
                                               Identification No.)


                            c/o U.S. INDUSTRIES, INC.
                              101 WOOD AVENUE SOUTH
                                ISELIN, NJ 08830
                    (Address of principal executive offices)
                                 (732) 767-0700
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:
Yes |X|   No |_|
<PAGE>

                                 LCA GROUP INC.

                                      INDEX
                                                                            Page
                                                                             No.
                                                                            ----

PART I.   FINANCIAL INFORMATION

          Item 1. Financial Statements

                  Combined Condensed Statements of Operations
                  for the Three and Six Months Ended March 31, 2001
                  and 2000................................................   1

                  Combined Condensed Balance Sheets, March 31, 2001
                  and September 30, 2000..................................   2

                  Combined Condensed Statements of Cash Flows
                  for the Six Months Ended March 31, 2001 and 2000........   3

                  Notes to Combined Condensed Financial Statements........   4

          Item 2. Management's Discussion and Analysis of Financial
                  Condition and Results of Operations.....................  10

          Item 3. Quantitative and Qualitative Disclosures About
                  Market Risk.............................................  14


PART II.  OTHER INFORMATION

          Item 6. Exhibits................................................  16


SIGNATURES................................................................  17
<PAGE>

PART 1.    FINANCIAL INFORMATION.

ITEM 1.    FINANCIAL STATEMENTS.


                                 LCA GROUP INC.
                   COMBINED CONDENSED STATEMENTS OF OPERATIONS
                       (IN MILLIONS EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                 Three Months Ended     Six Months Ended
                                                     March 31,              March 31,
                                                     ---------              ---------
                                                 2001        2000        2001       2000
                                               --------    --------    --------   --------
<S>                                            <C>         <C>         <C>        <C>
Net Sales                                      $  213.8    $  238.3    $  429.4   $  463.5
Operating costs and expenses:
  Cost of products sold                           144.3       163.6       290.3      314.8
  Selling, general and administrative expenses     60.8        65.0       122.4      127.3
  Management fee and divisional overhead            2.1         1.1         4.0        3.2
                                               --------    --------    --------   --------
Operating income                                    6.6         8.6        12.7       18.2
Interest expense to Affiliates                     (3.2)       (3.2)       (6.5)      (6.5)
Interest expense                                   (0.1)       (0.2)       (0.3)      (0.4)
Interest income                                    --           0.1         0.2        0.3
Loss on sale of business                           (7.0)       --          (7.0)      --
Other expense, net                                 --          --          (0.2)      --
                                               --------    --------    --------   --------
Income (loss) before income taxes                  (3.7)        5.3        (1.1)      11.6
Provision for income taxes                         (1.3)       (2.1)       (2.3)      (4.6)
                                               --------    --------    --------   --------
Net income (loss)                              $   (5.0)   $    3.2    $   (3.4)  $    7.0
                                               ========    ========    ========   ========


Pro-forma basic and diluted loss per share     $  (0.67)               $  (0.46)
                                               ========                ========
</TABLE>

              SEE NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS.


                                       1
<PAGE>

                                 LCA GROUP INC.
                        COMBINED CONDENSED BALANCE SHEETS
                                  (IN MILLIONS)

<TABLE>
<CAPTION>
                                                              March 31,  September 30,
                                                                2001        2000
                                                               -------     -------
                                                             (unaudited)
<S>                                                            <C>         <C>
                         ASSETS
Current assets:
  Cash and cash equivalents                                    $   7.2     $   7.8
  Trade receivables, net                                         148.6       171.7
  Inventories                                                    158.1       165.8
  Deferred income taxes                                            9.2         9.3
  Other current assets                                             6.4        10.7
                                                               -------     -------

    Total current assets                                         329.5       365.3

Property, plant and equipment, net                               155.7       158.0
Pension assets                                                    10.4         6.7
Other assets                                                       1.7         2.1
Goodwill, net                                                     68.4        70.1
                                                               -------     -------
                                                               $ 565.7     $ 602.2
                                                               =======     =======

             LIABILITIES AND INVESTED CAPITAL

Current liabilities:
  Notes payable                                                $   2.3     $   3.9
  Trade accounts payable                                          51.3        59.5
  Accrued expenses and other liabilities                          51.1        57.1
  Income taxes payable                                             3.3         4.8
                                                               -------     -------

    Total current liabilities                                    108.0       125.3

Deferred income taxes                                              6.3         5.3
Other liabilities                                                 39.0        43.5
Notes payable to Affiliates                                      201.6       201.6
Interest payable to Affiliates                                    30.3        23.7
                                                               -------     -------

    Total liabilities                                            385.2       399.4
Commitments and contingencies
Invested capital                                                 180.5       202.8
                                                               -------     -------
                                                               $ 565.7     $ 602.2
                                                               =======     =======
</TABLE>

              SEE NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS.


                                       2
<PAGE>

                                 LCA GROUP INC.
                   COMBINED CONDENSED STATEMENTS OF CASH FLOWS
                             (IN MILLIONS-UNAUDITED)

<TABLE>
<CAPTION>
                                                                Six Months Ended
                                                                    March 31,
                                                                2001       2000
                                                                ----       ----
<S>                                                            <C>        <C>
OPERATING ACTIVITIES:
  Net income (loss)                                            $  (3.4)   $   7.0
  Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
    Depreciation and amortization                                 13.0       12.9
    Provision for doubtful accounts                                0.9        0.2
    Provision for deferred income taxes                            1.3        0.2
    Loss on sale of business                                       7.0         --
    Loss on sale of property, plant and equipment                  0.2         --
Changes in operating assets and liabilities,
   excluding the effects of acquisitions and dispositions          7.7       (5.9)
                                                               -------    -------
NET CASH PROVIDED BY OPERATING ACTIVITIES                         26.7       14.4

INVESTING ACTIVITIES:
  Acquisition of companies, net of cash acquired                    --       (1.9)
  Purchases of property, plant and equipment                     (15.1)     (12.1)
  Proceeds from sales of property, plant and equipment             0.3        0.4
  Other investing activities                                      (0.6)       0.1
                                                               -------    -------
NET CASH USED IN INVESTING ACTIVITIES                            (15.4)     (13.5)

FINANCING ACTIVITIES:
  Repayment of long-term debt                                     (0.1)        --
  Proceeds from affiliate debt                                      --        6.6
  Repayment of notes payable                                      (1.8)      (5.3)
  Proceeds from notes payable                                      0.3        6.1
  Increase in interest payable to Affiliates                       6.5        6.5
  Dividends to Affiliates                                         (1.2)      (1.2)
  Net transfers with Affiliates                                  (14.3)      (5.7)
                                                               -------    -------

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES              (10.6)       7.0

Effect of exchange rate changes on cash and cash equivalents      (1.3)      (4.7)
                                                               -------    -------

 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                 (0.6)       3.2
                                                               -------    -------

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                   7.8        9.1
                                                               -------    -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                     $   7.2    $  12.3
                                                               =======    =======
</TABLE>

              SEE NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS.


                                       3
<PAGE>

                                 LCA GROUP INC.
                NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS
                                 MARCH 31, 2001

NOTE 1-BASIS OF PRESENTATION AND DESCRIPTION OF COMPANY

      The accompanying combined condensed financial statements include the
combined operations of LCA Group Inc. (the "Company"), which is comprised of
subsidiaries currently owned, directly or indirectly by U.S. Industries, Inc.
(the "Parent" or "USI"). The Company, through these USI subsidiaries,
manufactures and distributes indoor and outdoor lighting fixtures, hand tools,
saws and cutting and industrial tools for markets in North America and Europe.
These subsidiaries are grouped into two segments: Lighting (Lighting Corporation
of America, Inc., Columbia Lighting Inc., Dual-Lite Inc., Kim Lighting Inc.,
Architectural Area Lighting Inc., Spaulding Lighting Inc., Progress Lighting
Inc., Prescolite Inc. and SiTeco Holding GmbH) and Industrial Tools (Spear &
Jackson plc and Bowers Group plc).

      In contemplation of the spin-off and distribution to its stockholders by
USI of the ownership in the Company, all the issued and outstanding common stock
or net operating assets of certain companies and other assets and interests will
be transferred to the Company (the "Spin-off Transactions"). At March 31,2001,
the Company had no separate legal status or existence as a combined group. These
financial statements are presented on a going concern basis as if the Company
had existed as a corporation separate from USI during the periods presented and
include the historical net assets and results of operations directly related to
the Company's operations. The Securities and Exchange Commission ("SEC")
declared the Company's Registration Statement on Form 10 effective on January 3,
2001. On January 25, 2001, USI announced that the spin-off of the Company
had been delayed. Although the spin-off was not completed within the time
period contemplated, USI is continuing to pursue the spin-off, completion of
which would be subject to satisfaction of financing conditions, further review
by USI's Board of Directors and the setting of a new record date.

      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 the Company based on the
percentage of the Company's sales to the consolidated sales of USI as management
fees. The Company's management believes such amounts are reasonable; however
they may not be indicative of the Company's ongoing costs as a separate
public entity. Additionally, the direct costs attributable to division
management are included in management fees and divisional overhead in
the accompanying combined condensed financial statements.

      The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information,
Article 10 of Regulation S-X and with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The interim financial data for the three and six months ended March 31, 2001 and
2000 are unaudited and, in the opinion of management, reflect all necessary
adjustments for a fair presentation of the financial position and results of
operations for the interim periods on a consistent basis. Such adjustments were
of a normal and recurring nature. The results of operations for the three and
six month periods ended March 31, 2001 are not necessarily indicative of those
for the full fiscal year ending September 30, 2001. For further information,
refer to the Combined Financial Statements and footnotes thereto included in the
Company's Form 10 for the year ended September 30, 2000.

      The Company's fiscal year ends on the Saturday nearest to September 30.
All three and six month data contained in this report reflect results of
operations for the 13-week periods and 26-week periods ended on the Saturday
closest to March 31, 2001 and 2000, respectively, but are presented as of such
date for convenience.


                                       4
<PAGE>

                                 LCA GROUP INC.
          NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 31, 2001

NOTE 2-INVENTORIES

    Inventories consist of the following:

<TABLE>
<CAPTION>
                                                              (in millions)
                                                        March 31,      September 30,
                                                        ---------      -------------
                                                          2001            2000
                                                          ----            ----
                                                       (unaudited)
<S>                                                      <C>             <C>
Finished products                                        $  74.0         $  78.6
Work-in process                                             26.3            26.7
Raw materials                                               57.8            60.5
                                                         -------         -------
                                                         $ 158.1         $ 165.8
                                                         =======         =======
</TABLE>

NOTE 3-NOTES PAYABLE AND LONG-TERM DEBT

      Notes Payable to Affiliates consists of the following:

<TABLE>
<CAPTION>
                                                              (in millions)
                                                        March 31,      September 30,
                                                        ---------      -------------
                                                          2001            2000
                                                          ----            ----
                                                       (unaudited)
<S>                                                      <C>             <C>
6.5% Notes Payable to Affiliates                         $ 195.0         $ 195.0
6.25% Notes Payable to Affiliates                            6.6             6.6
                                                         -------         -------
Notes Payable to Affiliates                              $ 201.6         $ 201.6
                                                         =======         =======
</TABLE>

The 6.5% and 6.25% notes are unsecured and mature in fiscal 2005.

      The European lighting business maintains a working capital line of credit
of $1.0 million at March 31, 2001 and September 30, 2000, denominated in
Austrian schillings. Amounts outstanding under this line of credit at March 31,
2001 and September 30, 2000 was $1.0 million with an interest rate ranging from
3.0% to 4.4%. In addition, the European lighting business maintains working
capital lines of credit guaranteed by USI of $18.0 million and $22.5 million at
March 31, 2001 and September 30, 2000, respectively, denominated in German
Marks. Amounts outstanding under these lines of credit at September 30, 2000
were $1.7 million with an interest rate of 5.5%. No amounts were outstanding on
these lines of credit at March 31, 2001.

      Spear & Jackson maintains short-term credit facilities of $2.9 million and
$5.2 million at March 31, 2001 and September 30, 2000, respectively, primarily
denominated in French francs and Australian dollars of which $0.4 million was
guaranteed by USI at September 30, 2000. No amounts were guaranteed by USI at
March 31, 2001 on these short-term credit facilities. Amounts outstanding under
these lines of credit at March 31, 2001 and September 30, 2000 were $0.8 million
and $1.2 million, respectively, with interest rates ranging from 5.0% to 12.6%.
In addition, Spear & Jackson maintains a line of credit guaranteed by USI of
$4.2 million and $4.4 million at March 31, 2001 and September 30, 2000,
respectively, denominated in British pounds. Amounts outstanding under this line
of credit at March 31, 2001 were $0.5 million with an interest rate of 6.75%. No
amounts were outstanding on this line of credit at September 30, 2000.

      In addition, although USI's Revolving Credit Facilities were previously
unsecured, as a result of the their amendment, the lenders of the Revolving
Credit Facilities were granted on April 30, 2001 security interests in
substantially all of the assets and shares of USI's domestic subsidiaries
(which includes all LCA Group subsidiaries with the exception of SiTeco
Holdings GmbH, Spear & Jackson plc and Bowers Group plc) and 65% of the
shares of certain of the USI's foreign subsidiaries. As a result of having
the Revolving Credit Facilities secured, USI's long-term notes and the Rexair
guarantee (referred to below) became secured on an equal and ratable basis
with the Revolving Credit Facilities.

      USI announced on March 26, 2001 that it had signed a commitment letter
with several banks for a new $700 million credit facility. The commitment
expires on May 15, 2001; however, USI has requested and believes it will obtain
an extension of the commitment. The new $700 million credit facility is subject
to, among other things, the completion of a Rule 144A offering of 10 year
senior subordinated notes in the aggregate principal amount of $550 million.
The new credit facility would replace USI's Revolving Credit Facilities and a
portion of its Notes, repay the Rexair credit facility referred to below and
provide additional capacity for working capital. There can be no assurance
that USI will be able to consummate any refinancing. The failure to
consummate a refinancing could have a material adverse affect on USI and the
Company.

      USI is the guarantor of a $200 million credit facility ($170.6 million
outstanding as of March 31, 2001) of a former subsidiary, Rexair, Inc.
("Rexair"). USI's current debt structure does not have the capacity to fund
this guarantee if required. If USI were unable to repay the outstanding
amounts of the Rexair credit facility, if required by the Rexair lenders, it
would constitute a default of the Rexair guarantee. This default could then
trigger cross-default provisions in USI's Notes and Revolving Credit
Facilities. The remedies for these events of default could include, under
certain specified circumstances, accelerating the amounts due under the Notes
and Revolving Credit Facilities. If the amounts due under the Notes and
Revolving Credit Facilities were accelerated, USI would not be able to repay
such amounts without consummating a refinancing.

NOTE 4-COMMITMENTS AND CONTINGENCIES

      The Company is subject to a wide range of environmental protection laws.
The Company has remedial and investigatory activities underway at approximately
6 sites, of which the Company has been named as a Potentially

                                       5
<PAGE>

                                 LCA GROUP INC.
          NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 31, 2001

NOTE 4-COMMITMENTS AND CONTINGENCIES (CONTINUED)

Responsible Party ("PRP") at 4 "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 unless the aggregate amount of the obligation and the amount and timing of
the cash payments are fixed or readily determinable. The Company has not
discounted any obligations as these criteria have not been met. Recoveries of
environmental remediation costs from other parties are recognized as assets when
their receipt is deemed probable. Management expects that the amount accrued
will be paid out over the periods of remediation for the applicable sites which
range up to 30 years and that all such reserves are adequate based on all
current data. Each of the sites in question are 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 March 31, 2001, the Company had accrued $4.3 million for various
environmental related liabilities of which the Company is aware. The Company
believes that the range of liability for such matters is between $1.1 million
and $5.2 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.


                                       6
<PAGE>

                                 LCA GROUP INC.
          NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 31, 2001

NOTE 5-SEGMENT DATA

      The Company's operations are classified into two business segments:
Lighting and Industrial Tools. These operations are conducted primarily in the
United States, and to a lesser extent, in other regions of the world. The
following table presents certain information about the Company by segment:

<TABLE>
<CAPTION>
                                    (in millions-unaudited) (in millions-unaudited)
                                      For the Three Months    For the Six Months
                                        Ended March 31,        Ended March 31,
                                       ------------------    ------------------
                                        2001       2000       2001       2000
                                       -------    -------    -------    -------
<S>                                    <C>        <C>        <C>        <C>
Net Sales:
  Lighting                             $ 186.3    $ 202.3    $ 376.3    $ 399.0
  Industrial Tools                        27.5       36.0       53.1       64.5
                                       -------    -------    -------    -------
    Totals                             $ 213.8    $ 238.3    $ 429.4    $ 463.5
                                       =======    =======    =======    =======


Operating Income (Loss):
  Lighting                             $   8.8    $   7.8    $  18.1    $  18.3
  Industrial Tools                        (0.1)       1.9       (1.4)       3.1
  Management fees and
   divisional overhead                    (2.1)      (1.1)      (4.0)      (3.2)
                                       -------    -------    -------    -------

    Total Operating Income                 6.6        8.6       12.7       18.2
                                       -------    -------    -------    -------

Interest expense to Affiliates            (3.2)      (3.2)      (6.5)      (6.5)
Interest expense                          (0.1)      (0.2)      (0.3)      (0.4)
Interest income                           --          0.1        0.2        0.3
Loss on sale of business                  (7.0)      --         (7.0)      --
Other expense, net                        --         --         (0.2)      --
                                       -------    -------    -------    -------
Income (loss) before income taxes         (3.7)       5.3       (1.1)      11.6
Provision for income taxes                (1.3)      (2.1)      (2.3)      (4.6)
                                       -------    -------    -------    -------
Net income (loss)                      $  (5.0)   $   3.2    $  (3.4)   $   7.0
                                       =======    =======    =======    =======
</TABLE>


                                       7
<PAGE>

                                 LCA GROUP INC.
          NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 31, 2001

NOTE 6-COMPREHENSIVE INCOME (LOSS)

      The components of the Company's comprehensive income (loss) were as
follows:

<TABLE>
<CAPTION>
                                      (in millions - unaudited)   (in millions - unaudited)
                                            Three Months                 Six Months
                                           Ended March 31,             Ended March 31,
                                           2001       2000             2001       2000
                                           ----       ----             ----       ----
<S>                                     <C>        <C>              <C>        <C>
Net income (loss)                       $  (5.0)   $   3.2          $  (3.4)   $   7.0
Foreign currency translation
    adjustment                             (8.8)      (6.3)            (3.2)     (13.8)
Reclassification adjustment for
     translation realized in net loss      (0.2)      --               (0.2)      --
                                        -------    -------          -------    -------
    Comprehensive income (loss)         $ (14.0)   $  (3.1)         $  (6.8)   $  (6.8)
                                        =======    =======          =======    =======
</TABLE>

NOTE 7-EARNINGS PER SHARE

       Historical earnings per share are not presented because the Company was
comprised of direct or indirect subsidiaries of the Parent.

      The pro-forma loss per share was calculated assuming that 7,428,000 shares
of the Company's common stock will be issued upon the spin-off. One share of the
Company's common stock will be issued for every ten USI shares. The pro-forma
loss per share does not include the effect of any options that might be issued
by the Company subsequent to the spin-off.

NOTE 8-DISPOSITION OF BUSINESSES

      In March 2001, the Company sold its saws division of Spear & Jackson plc.
As a result, the Company recorded a loss of $7.0 million on the transaction. The
results of the saws division are included in the Industrial Tools segment until
the date of disposal.

NOTE 9-NEW ACCOUNTING STANDARDS

      Effective October 1, 2000, the Company adopted Financial Accounting
Standard 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 forward
contracts to hedge its exposure to volatility in currency exchange rates. In
accordance with its risk management policies, the Company formally documents its
hedge relationships, including identification of the hedging instrument and the
hedged items, as well as its risk management objectives and strategies for
undertaking the hedge transaction. The Company also formally assesses, both at
inception and at least quarterly thereafter, whether the derivatives that are
used in hedging transactions are highly effective in offsetting changes in
either the fair value or cash flows of the hedged item. If a derivative ceases
to be a highly effective hedge, the Company discontinues hedge accounting. The
Company does not enter into derivative instruments for speculation or trading
purposes.

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 vendors for purchases of materials in the normal course of business.
The Company primarily 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 in a foreign currency are made one to three months after the
liability is generated. The fair value of these instruments at March 31, 2001
was less than $0.1 million. Since an assessment of these hedges revealed no
ineffectiveness, gains and losses on these instruments are deferred in
accumulated other comprehensive income (OCI), net of tax, until the underlying
transaction gain or loss is recognized in earnings. Amounts in OCI are expected
to be reclassified into earnings within the next twelve months.


                                       8
<PAGE>

                                 LCA GROUP INC.
          NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 31, 2001

NOTE 10-INCOME TAXES

      The Company disposed of its saws division of Spear & Jackson plc in the
second quarter of fiscal 2001. This transaction resulted in a $7.0 million loss
which was not deductible for tax purposes.


                                       9
<PAGE>

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

      We operate and manage lighting and industrial tools businesses. Our
operating companies are divided into two business groups: Lighting and
Industrial Tools.

      The following table presents, for the three and six months ended March 31,
2001 and 2000, net sales and operating income of our two business groups. This
historical financial information may not be indicative of our future financial
performance as an independent company and does not reflect the pro forma
adjustments giving effect to the spin-off presented in "Unaudited Pro Forma
Combined Condensed Financial Data."

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                       (in millions)           (in millions)
                                       Three Months             Six Months
                                      Ended March 31,         Ended March 31,
                                    -------------------------------------------
                                     2001        2000        2001        2000
                                    -------     -------     -------     -------
<S>                                 <C>         <C>         <C>         <C>
Net Sales:
  Lighting                          $ 186.3     $ 202.3     $ 376.3     $ 399.0
  Industrial Tools                     27.5        36.0        53.1        64.5
                                    -------     -------     -------     -------
    Totals                          $ 213.8     $ 238.3     $ 429.4     $ 463.5
                                    =======     =======     =======     =======

Operating Income (Loss):
Lighting                            $   8.8     $   7.8     $  18.1     $  18.3
Industrial Tools                       (0.1)        1.9        (1.4)        3.1
Management fees and
   divisional overhead                 (2.1)       (1.1)       (4.0)       (3.2)
                                    -------     -------     -------     -------

    Total Operating Income          $   6.6     $   8.6     $  12.7     $  18.2
                                    =======     =======     =======     =======
</TABLE>

DISCLOSURE CONCERNING FORWARD-LOOKING STATEMENTS

      All statements, other than statements of historical fact, included in the
following Management's Discussion or elsewhere in this Quarterly Report are, or
may be deemed to be, forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Various economic and competitive factors could cause actual results to
differ materially from the expectations reflected in such forward-looking
statements, including factors which are outside the control of the Company, such
as interest rates, foreign currency exchange rates, instability in domestic and
foreign financial markets, consumer spending patterns, energy costs and
availabilty, freight costs, availability of consumer and commercial credit,
levels of residential and commercial construction, adverse weather, and
changes in raw material costs, along with the other factors noted in this Report
and in other documents filed by the Company with the Securities and Exchange
Commission. In addition, the Company's future results are subject to
uncertainties relating to the Company's ability to consummate its business
strategy, including realizing market synergies and cost savings from the
integration of its acquired businesses. All subsequent written and oral
forward-looking statements attributable to the Company are expressly qualified
in their entirety by the foregoing factors.

THREE MONTHS ENDED MARCH, 2001
COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

INTRODUCTION

      The Company had sales of $213.8 million and operating income of $6.6
million for the quarter ended March 31, 2001, compared to sales of $238.3
million and operating income of $8.6 million for the same period in the prior
year. Sales decreased $24.5 million (10.3%) and operating income decreased $2.0
million (23.3%) from the same period of the prior year.


                                       10
<PAGE>

      Lighting had sales of $186.3 million and operating income of $8.8 million
for the three months ended March 31, 2001. Sales decreased of $16.0 million
(7.9%) and operating income increased $1.0 million (12.8%), respectively, from
the second quarter of fiscal 2000. Weakness in the economy has negatively
impacted sales volume at the residential and the commercial and institutional
indoor and outdoor divisions. Sales also decreased due to lost contribution from
the discontinuance of an unprofitable residential product line and unfavorable
currency translation at the European division. Operating income increased due to
lower period costs primarily in the commercial and institutional indoor division
despite costs incurred at the residential division associated with moving some
production offshore and lower sales levels.

      Industrial Tools had sales of $27.5 million and an operating loss of $0.1
million for the three months ended March 31, 2001, decreases of $8.5 million
(23.6%) and $2.0 million, respectively, from the second quarter of fiscal
2000. Sales were negatively impacted by the unfavorable translation effect of
converting U.K. results into U.S. dollars. In addition, sales and operating
income decreased due to poor weather in the U.K., a slowdown in the industrial
sector and competition from cheaper imports.

      Management fee and divisional overhead costs of $2.1 million, increased
$1.0 million from the second quarter of fiscal 2000. This increase is primarily
due to the Company having a greater percentage of USI's consolidated sales in
the three months ended March 31, 2001 compared to the three months ended March
31, 2000.

DISPOSITION OF BUSINESSES

      In March 2001, the Company sold its saws division of Spear & Jackson plc.
The Company recorded a loss of $7.0 million on the transaction. The results of
the saws division are included in the Industrial Tools segment until the date
of disposal.

INTEREST AND TAXES

      Total interest expense of $3.3 and $3.4 million for the three months ended
March 31, 2001 and 2000, respectively, primarily represents interest on
outstanding notes payable to affiliates. Interest income of $0.1 million for the
three months ended March 31, 2000 reflects short-term investments of excess cash
at foreign operations.

      The provision for income taxes was $1.3 million for the three months ended
March 31, 2001, on a pre-tax loss of $3.7 million. The three months ended March
31, 2001 includes a non-deductible loss of $7.0 million on the sale of the saws
division. Excluding this loss, the effective tax rate would have been
approximately 39%. The provision for income taxes was $2.1 million for three
months ended March 31, 2000, on pre-tax income of $5.3 million (an effective tax
rate of approximately 40%).

SIX MONTHS ENDED MARCH 31, 2001
COMPARED TO SIX MONTHS ENDED MARCH 31, 2000

INTRODUCTION

      The Company had sales of $429.4 million and operating income of $12.7
million for the six months ended March 31, 2001, compared to sales of $463.5
million and operating income of $18.2 million for the same period in the prior
year. Sales decreased $34.1 million (7.4%) and operating income decreased $5.5
million (30.2%) from the same period of the prior year.

      Lighting had sales of $376.3 million and operating income of $18.1 million
for the six months ended March 31, 2001, decreases of $22.7 million (5.7%) and
$0.2 million (1.1%), respectively, from the same period of fiscal 2000. The
decrease in sales is primarily attributable to lower volume at the residential
and the commercial and institutional indoor division due to the slowing economy,
unfavorable currency translation at the European division, and lost contribution
from the discontinuance of an unprofitable residential product line. These
decreases were partially offset by strength at the architectural outdoor
lighting business. Operating income decreased due to the lower sales levels and
costs incurred at the residential division associated with moving some
production offshore. These decreases were partially offset by lower period costs
primarily in the commercial and institutional indoor division.

      Industrial Tools had sales of $53.1 million and an operating loss of $1.4
million for the six months ended March 31, 2001, decreases of $11.4 million
(17.7%) and $4.5 million, respectively, from the comparable of fiscal 2000.
Sales decreased due to the unfavorable translation effect of converting U.K.
results into U.S. dollars, partially offset by the inclusion of S&J France
acquired in December 1999. In addition, sales and operating income have been
negatively


                                       11
<PAGE>

impacted by a slowdown in the industrial sector, poor weather in the U.K. and
competition in the U.K. market due to cheaper imports.

      Management fee and divisional overhead costs of $4.0 million, increased
$0.8 million (25.0%) from the same period of fiscal 2000. This increase is
primarily due to the Company having a greater percentage of USI's consolidated
sales in the six months ended March 31, 2001 compared to the six months ended
March 31, 2000, partially offset by a decrease in the lighting divisional office
costs.

OTHER INCOME, NET

      Other expense, net, in fiscal 2001 includes a loss of $0.2 million on
the sale of property, plant and equipment.

DISPOSITION OF BUSINESSES

      In March 2001, the Company sold its saws division of Spear & Jackson plc.
The Company recorded a loss of $7.0 million on the transaction. The results of
the saws division are included in the Industrial Tools segment until the date
of disposal.

INTEREST AND TAXES

      Total interest expense of $6.8 million and $6.9 million for the six months
ended March 31, 2001 and 2000, respectively, primarily represents interest on
outstanding notes payable to affiliates. Interest income of $0.2 million and
$0.3 million for six months ended March 31, 2001 and 2000, respectively,
reflects short-term investments of excess cash at foreign operations.

      The provision for income taxes was $2.3 million for the six months ended
March 31, 2001, on a pre-tax loss of $1.1 million. The six-months ended March
31, 2001 includes a non-deductible loss of $7.0 million on the sale of the saws
division. Excluding this loss, the effective tax rate would have been
approximately 39%. The provision for income taxes was $4.6 million for the six
months ended March 31, 2000, on pre-tax income of $11.6 million (an effective
tax rate of approximately 40%).

LIQUIDITY AND CAPITAL RESOURCES

      Prior to and during the six months ended March 31, 2001, we financed our
operations and capital and other expenditures from a combination of cash
generated from operations, notes, credit lines, Revolving Credit Facility,
and invested capital provided by USI or its affiliates. This arrangement will
continue to be in effect until the consummation of the spin-off, after which
we expect to meet all cash requirements through internally-generated funds
and borrowings under a new credit facility and other available sources.

      Our ability to generate cash available for the repayment of debt will
depend upon numerous business factors, including conditions in the U.S. and
world economies, the level of demand for our products, changes in raw material
costs, the level of capital expenditures and working capital requirements.
Excess cash flow from operations (after capital expenditures) is expected to
satisfy our minimal amortization requirements under a new credit facility after
the spin-off.

      In addition, although USI's Revolving Credit Facilities were previously
unsecured, as a result of the their amendment, the lenders of the Revolving
Credit Facilities were granted on April 30, 2001 security interests in
substantially all of the assets and shares of USI's domestic subsidiaries
(which includes all LCA Group subsidiaries with the exception of SiTeco
Holdings GmbH, Spear & Jackson plc and Bowers Group plc) and 65% of the
shares of certain of the USI's foreign subsidiaries. As a result of having
the Revolving Credit Facilities secured, USI's long-term notes and the Rexair
guarantee (referred to below) became secured on an equal and ratable basis
with the Revolving Credit Facilities.

      USI announced on March 26, 2001 that it had signed a commitment letter
with several banks for a new $700 million credit facility. The commitment
expires on May 15, 2001; however, USI has requested and believes it will obtain
an extension of the commitment. The new $700 million credit facility is subject
to, among other things, the completion of a Rule 144A offering of 10 year
senior subordinated notes in the aggregate principal amount of $550 million.
The new credit facility would replace USI's Revolving Credit Facilities and a
portion of its Notes, repay the Rexair credit facility referred to below and
provide additional capacity for working capital. There can be no assurance
that USI will be able to consummate any refinancing. The failure to
consummate a refinancing could have a material adverse affect on USI and the
Company.

      USI is the guarantor of a $200 million credit facility ($170.6 million
outstanding as of March 31, 2001) of a former subsidiary, Rexair, Inc.
("Rexair"). USI's current debt structure does not have the capacity to fund
this guarantee if required. If USI were unable to repay the outstanding
amounts of the Rexair credit facility, if required by the Rexair lenders, it
would constitute a default of the Rexair guarantee. This default could then
trigger cross-default provisions in USI's Notes and Revolving Credit
Facilities. The remedies for these events of default could include, under
certain specified circumstances, accelerating the amounts due under the Notes
and Revolving Credit Facilities. If the amounts due under the Notes and
Revolving Credit Facilities were accelerated, USI would not be able to repay
such amounts without consummating a refinancing.

      Operating activities provided cash of $26.7 million for the six months
ended March 31, 2001, compared with $14.4 million for the comparable period of
the prior year. The increase was primarily due to lower working capital
requirements reflecting lower accounts receivable and inventory balances in the
Lighting segment.

      Investing activities used cash of $15.4 million for the six months ended
March 31, 2001, compared to $13.5 million for the comparable period of the prior
year. The six months ended March 31, 2001 cash was used primarily for capital
expenditures. The six months ended March 31, 2000 cash was used primarily for
the acquisition of Spear & Jackson France and capital expenditures.

      Financing activities used cash of $10.6 million for the six months ended
March 31, 2001, compared to providing $7.0 million for the comparable period of
the prior year. The six months ended March 31, 2001 cash used primarily related
repayment of notes payable and net transfers and dividends to affiliates
partially offset by an increase in interest payable to affiliates. The six
months ended March 31, 2000 cash provided related to proceeds of affiliated debt
and notes payable and an increase in interest payable to affiliates partially
offset by repayment of notes payable and transfers and dividends to affiliates.


                                       12
<PAGE>

      Total invested capital decreased $22.3 million from September 30, 2000,
primarily due to the Company's six months comprehensive loss of $6.8 million and
net transactions with affiliates of $14.3 million.

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA

      The following unaudited pro forma combined condensed financial data
reflect the spin-off as if it occurred as of March 31, 2001 for unaudited pro
forma combined condensed balance sheet purposes and as of October 1, 1999 for
the unaudited pro forma combined condensed statement of operations. The
unaudited pro forma combined condensed financial data reflect our expected
capitalization as a result of the spin-off, the incurrence of indebtedness under
a new credit facility and interest expense (including amortization of
capitalized costs) relating to such borrowings. This data does not necessarily
reflect our results of operations or financial position had the indebtedness
actually been incurred and the spin-off actually been consummated as of such
dates. Also, this data is not necessarily indicative of our future results of
operations or future financial position. The Company is still in the process of
obtaining financing for the spin-off. The pro-forma credit facility herein
assumes $200 million in borrowings.

<TABLE>
<CAPTION>
                                                                           As of March 31, 2001
                                                               -------------------------------------------
                                                               Actual     Pro-forma Adjustments   Pro-forma
                                                               ------     ---------------------   ---------
                                                                         (In millions - unaudited)
<S>                                                            <C>               <C>
                      ASSETS
Current assets:
  Cash and cash equivalents...........................         $   7.2           $                 $   7.2
  Trade receivables, net..............................           148.6                               148.6
  Inventories.........................................           158.1                               158.1
  Deferred income taxes...............................             9.2                                 9.2
  Other current assets................................             6.4                                 6.4
                                                               -------           -------           -------
    Total current assets..............................           329.5                               329.5
Property, plant and equipment, net....................           155.7                               155.7
Pension assets........................................            10.4                                10.4
Other assets..........................................             1.7               7.0 (A) (C)       8.7
Goodwill, net.........................................            68.4                                68.4
                                                               -------           -------           -------
                                                               $ 565.7           $   7.0           $ 572.7
                                                               =======           =======           =======

            LIABILITIES AND INVESTED CAPITAL
Current liabilities:
  Notes payable.......................................         $   2.3           $  (2.3)(C)       $    --
  Trade accounts payable..............................            51.3                                51.3
  Accrued expenses and other liabilities..............            51.1                                51.1
  Income taxes payable................................             3.3                                 3.3
                                                               -------           -------           -------
    Total current liabilities.........................           108.0              (2.3)            105.7

Long-term debt........................................                             200.0 (B)         200.0
Deferred income taxes.................................             6.3                                 6.3
Other liabilities.....................................            39.0                                39.0
Notes payable to Affiliates...........................           201.6            (201.6)(B) (C)         -
Interest payable to Affiliates........................            30.3             (30.3)(C)             -
                                                               -------           -------           -------
    Total liabilities.................................           385.2             (34.2)            351.0
Commitments and contingencies.........................
Invested capital/Stockholders' equity.................           180.5              41.2 (C)         221.7
                                                               -------           -------           -------
                                                               $ 565.7           $   7.0           $ 572.7
                                                               =======           =======           =======
</TABLE>

      (A) To capitalize the cost of obtaining financing under a new credit
facility, which will be amortized over a five-year period.

      (B) To reflect initial borrowings of $200 million under a new credit
facility, which will be utilized for the repayment of notes payable to
affiliates.

      (C) To reflect the amount of notes and interest payable to affiliates that
would be forgiven by USI assuming $200 million in borrowings, the payment by USI
of $7 million in debt financing costs and the $2.3 million repayment of notes
payable by USI.


                                       13
<PAGE>

              PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  For the Six Months Ended
                                                                      March 31, 2001
                                                          -----------------------------------------
                                                          Actual   Pro-forma Adjustmenst  Pro-forma
                                                          -------          ------          -------
                                                                         (unaudited)
                                                             (In millions, except per share data)
<S>                                                       <C>              <C>             <C>
Net Sales.........................................        $ 429.4          $               $ 429.4
Operating costs and expenses:
  Cost of products sold...........................          290.3                            290.3
  Selling, general and administrative expenses....          122.4             3.0  (A)       125.4
  Management fee and divisional overhead..........            4.0            (4.0) (A)           -
                                                          -------          ------          -------
Operating income..................................           12.7             1.0             13.7
Interest expense to Affiliates....................           (6.5)            6.5  (B)           -
Interest expense..................................           (0.3)           (8.7) (B)        (9.0)
                                                                             (0.7) (C)        (0.7)
Interest income...................................            0.2                              0.2
Loss on sale of business..........................           (7.0)                            (7.0)
Other expense, net................................           (0.2)                            (0.2)
                                                          -------          ------          -------
Loss before income taxes..........................           (1.1)           (1.9)            (3.0)
Benefit (provision) for income taxes..............           (2.3)            0.8  (D)        (1.5)
                                                          -------          ------          -------
Net loss..........................................        $  (3.4)         $ (1.1)         $  (4.5)
                                                          =======          ======          =======

Basic and diluted loss per share (E)..............        $ (0.46)                         $ (0.61)
                                                          =======                          =======
</TABLE>

(A)   To eliminate management fees allocated from USI and divisional overhead,
      and to record selling, general and administrative expenses that we expect
      to incur following the spin-off, which includes approximately $6 million
      in annual expenses for which the Company is committed, principally
      compensation expense and leases for the corporate headquarters and
      related equipment. In addition, the Company expects to incur
      approximately $4 million in professional fees, outside services, bonuses,
      travel and administrative services that are not subject to binding
      commitments of the Company and thus not included in the pro-forma
      adjustment.

(B)   To reflect interest expense on initial borrowings under a new credit
      facility at an assumed interest rate of 9% per year and eliminate interest
      cost on notes payable to affiliates and existing third party debt. For
      each 1/8% change in the assumed interest rate, pro forma interest expense
      would change by approximately $0.3 million per year.

(C)   To amortize the cost of obtaining financing ($7.0 million) over the term
      of a credit facility.

(D)   To reflect tax effects of above adjustments (A through C) at a tax rate of
      40% (inclusive of federal, state and local taxes).

(E)   Basic and diluted loss per share have been determined assuming that
      7,428,000 shares of our common stock will be issued upon the spin-off. One
      share of our common stock will be issued for every ten USI shares.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

      In the normal course of doing business, we are exposed to the risks
associated with changes in interest rates and currency exchange rates. To limit
the risks from such fluctuations, USI has in the past entered into various
hedging transactions. Subsequent to the spin-off, we may borrow in foreign
currency-denominated borrowings to effectively hedge a portion of our net
investments in subsidiaries in foreign countries. We are also exposed to foreign
currency exchange risk related to our international operations and our U.S.
businesses, which import or export goods.

      Effective October 1, 2000, the Company adopted Financial Accounting
Standard 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 forward
contracts to hedge its exposure to volatility in currency exchange rates. In
accordance with its risk management policies, the Company formally documents its
hedge relationships, including identification of the hedging instrument and the
hedged items, as well as its risk management objectives and strategies for
undertaking the hedge transaction. The Company also formally assesses, both at
inception and at least quarterly thereafter, whether the derivatives that are
used in hedging transactions are highly effective in offsetting changes in
either the fair value or cash


                                       14
<PAGE>

flows of the hedged item. If a derivative ceases to be a highly effective hedge,
the Company discontinues hedge accounting. The Company does not enter into
derivative instruments for speculation or trading purposes.

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 vendors for purchases of materials in the normal course of business.
The Company primarily 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 in a foreign currency are made one to three months after the
liability is generated. The fair value of these instruments at March 31, 2001
was less than $0.1 million. Since an assessment of these hedges revealed no
ineffectiveness, gains and losses on these instruments are deferred in
accumulated other comprehensive income (OCI), net of tax, until the underlying
transaction gain or loss is recognized in earnings. Amounts in OCI are expected
to be reclassified into earnings within the next twelve months.


                                       15
<PAGE>

         PART II. OTHER INFORMATION.

ITEM 6.  EXHIBITS

(a)   Exhibits

      None


                                       16
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                          LCA GROUP INC.

Date: May 15, 2001
                                    By:   /s/ JAMES O'LEARY
                                          -----------------------------
                                          James O'Leary
                                          (Principal Executive Officer)


                                          /s/ NICOLA ROSSI
                                          -----------------------------
                                          Nicola Rossi
                                          Corporate Controller
                                          (Principal Accounting Officer)


                                       17