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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

(Mark One)


/x/

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

For the quarterly period ended JuneSeptember 30, 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 No. 333-76055


UNITED INDUSTRIES CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization)
 43-1025604
(I.R.S Employer
Identification No.)

8825 Page Boulevard
St. Louis, Missouri 63114
(Address of principal executive office, including zip code)


(314) 427-0780
(Registrant's telephone number, including area code)


    Indicate by check mark whether the registrant: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 / /

    As of JuneSeptember 30, 2001, the Registrant had 27,550,00027,721,000 Class A voting and 27,550,00027,721,000 Class B non-voting shares of common stock outstanding and 15,000 non-voting shares of Class A preferred stock outstanding.





PART 1
FINANCIAL INFORMATION

FINANCIAL INFORMATION
ITEMItem 1. Financial Statements

UNITED INDUSTRIES CORPORATION


BALANCE SHEETS

JUNE
SEPTEMBER 30, 2001 AND 2000, AND DECEMBER 31, 2000


(Dollars in thousands)

(Unaudited)



 June 30,
 June 30,
 December 31,
 
 September 30,
 September 30,
 December 31,
 


 2001
 2000
 2000
 
 2001
 2000
 2000
 
ASSETSASSETS       ASSETS       
Current assets:Current assets:       Current assets:       
Cash and cash equivalents $ $ $ 
Accounts receivable (less allowance for doubtful accounts of $1,419 and $1,609 at June 30, 2001 and 2000 and $777 at December 31, 2000) 77,040 76,041 19,944 
Inventories 38,149 38,899 47,007 
Prepaid expenses 4,835 2,924 6,357 
Cash and cash equivalentsCash and cash equivalents $ $17,146 $ 
Accounts receivable (less allowance for doubtful accounts of $843 and $875 at September 30, 2001 and 2000 and $777 at December 31, 2000)Accounts receivable (less allowance for doubtful accounts of $843 and $875 at September 30, 2001 and 2000 and $777 at December 31, 2000) 36,855 31,376 19,944 
InventoriesInventories 33,779 31,799 47,007 
Prepaid expensesPrepaid expenses 4,777 2,666 6,357 
 
 
 
   
 
 
 
 Total current assets 120,024 117,864 73,308 Total current assets 75,411 82,987 73,308 

Equipment and leasehold improvements, net

Equipment and leasehold improvements, net

 

24,276

 

26,336

 

24,736

 
Equipment and leasehold improvements, net 24,223 25,871 24,736 
Deferred income taxDeferred income tax 116,763 116,268 116,763 Deferred income tax 116,763 116,268 116,763 
Other assetsOther assets 18,632 20,489 20,087 Other assets 17,915 19,806 20,087 
 
 
 
   
 
 
 
 Total assets $279,695 $280,957 $234,894 Total assets $234,312 $244,932 $234,894 
 
 
 
   
 
 
 

LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 
LIABILITIES AND STOCKHOLDERS' DEFICIT       

Current liabilities:

Current liabilities:

 

 

 

 

 

 

 
Current liabilities:       
Current maturities of long-term debt and capital lease obligation $5,693 $6,096 $5,675 
Accounts payable 29,527 24,109 18,625 
Accrued expenses 33,887 27,840 24,791 
Short-term borrowings 18,550 21,050 15,000 
Current maturities of long-term debt and capital lease obligationCurrent maturities of long-term debt and capital lease obligation $5,699 $6,096 $5,675 
Accounts payableAccounts payable 13,146 11,789 18,625 
Accrued expensesAccrued expenses 26,898 23,049 24,791 
Short -term borrowingsShort -term borrowings  15,000 15,000 
 
 
 
   
 
 
 
 Total current liabilities 87,657 79,095 64,091 Total current liabilities 45,743 55,934 64,091 
Long-term debtLong-term debt 323,693 349,125 329,000 Long-term debt 321,039 349,125 329,000 
Capital lease obligationCapital lease obligation 4,428 5,345 4,626 Capital lease obligation 4,329 5,261 4,626 
Other liabilitiesOther liabilities 16,167 11,922 7,940 Other liabilities 16,198 6,725 7,940 
 
 
 
   
 
 
 
 Total liabilities 431,945 445,487 405,657 Total liabilities 387,309 417,045 405,657 
Stockholders' deficitStockholders' deficit       Stockholders' deficit       
Common Stock (27.7 million shares of $0.01 par value Class A and 27.7 million $0.01 par value Class B)Common Stock (27.7 million shares of $0.01 par value Class A and 27.7 million $0.01 par value Class B) 554 554 554 
Preferred Stock (15,000 shares of $0.01 par value Class A )Preferred Stock (15,000 shares of $0.01 par value Class A )    
WarrantsWarrants 2,784  2,784 
Additional paid-in capitalAdditional paid-in capital 139,051 126,865 139,081 
Accumulated deficitAccumulated deficit (291,993) (296,832) (310,482)
Accumulated other comprehensive lossAccumulated other comprehensive loss (693)   
Common stock held in grantor trustCommon stock held in grantor trust (2,700) (2,700) (2,700)
Common Stock (27.6 million shares of $0.01 par value Class A and 27.6 million $0.01 par value Class B) 554 554 554   
 
 
 
Preferred Stock (15,000 shares of $0.01 par value Class A)    Total stockholders' deficit (152,997) (172,113) (170,763)
Warrants 2,784  2,784   
 
 
 
Additional paid-in capital 139,081 126,865 139,081 Total liabilities and stockholders' deficit $234,312 $244,932 $234,894 
Accumulated deficit (291,640) (289,249) (310,482)  
 
 
 
Accumulated other comprehensive loss (329)   
Common stock held in grantor trust (2,700) (2,700) (2,700)
 
 
 
 
 Total stockholders' deficit (152,250) (164,530) (170,763)
 
 
 
 
 Total liabilities and stockholders' deficit $279,695 $280,957 $234,894 
 
 
 
 

See accompanying notes to financial statements

2



UNITED INDUSTRIES CORPORATION


STATEMENTS OF OPERATIONS


FOR THE THREE AND SIXNINE MONTHS ENDED JUNESEPTEMBER 30, 2001 AND 2000


(Dollars in thousands)

(Unaudited)



 Three months ended June 30,
 Six months ended June 30,

 Three months ended September 30,
 Nine months ended
September 30,



 2001
 2000
 2001
 2000

 2001
 2000
 2001
 2000
Sales before promotion expenseSales before promotion expense $124,428 $123,508 $212,864 $212,054Sales before promotion expense $60,541 $51,080 $273,405 $263,134
Promotion expensePromotion expense 9,781 9,307 18,298 16,958Promotion expense 4,748 4,056 23,046 21,014
 
 
 
 
 
 
 
 
Net salesNet sales 114,647 114,201 194,566 195,096Net sales 55,793 47,024 250,359 242,120
 
 
 
 
 
 
 
 

Operating costs and expenses:

Operating costs and expenses:

 

 

 

 

 

 

 

 
Operating costs and expenses:        
Cost of goods sold 60,748 62,134 104,707 105,971Cost of goods sold 30,104 26,563 134,811 132,535
Selling, general and administrative expenses 22,121 17,767 42,185 39,406Selling, general and administrative expenses 16,970 15,043 59,155 54,449
 
 
 
 
Dursban related expenses (see note 9)  8,000  8,000
 Total operating costs and expenses 82,869 79,901 146,892 145,377  
 
 
 
 
 
 
 
Total operating costs and expenses 47,074 49,606 193,966 194,984
Operating income 31,778 34,300 47,674 49,719
 
 
 
 
Operating income (loss)Operating income (loss) 8,719 (2,582) 56,393 47,136
Interest expenseInterest expense 9,388 10,479 19,401 21,084Interest expense 8,407 10,120 27,808 31,204
 
 
 
 
 
 
 
 
Income before provision for income taxes 22,390 23,821 28,273 28,635
Income tax expense 6,637 5,366 8,284 6,363
Income (loss) before provision for income taxesIncome (loss) before provision for income taxes 312 (12,702) 28,585 15,932
Income tax expense (benefit)Income tax expense (benefit) 91 (5,120) 8,375 1,243
 
 
 
 
 
 
 
 
Net income $15,753 $18,455 $19,989 $22,272
Net income (loss)Net income (loss) $221 $(7,582)$20,210 $14,689
 
 
 
 
 
 
 
 

See accompanying notes to financial statements.

3



UNITED INDUSTRIES CORPORATION


STATEMENTS OF CASH FLOWS


FOR THE SIXNINE MONTHS ENDED JUNESEPTEMBER 30, 2001 AND 2000


(Dollars in thousands)

(Unaudited)



 Six months ended June 30,
 
 Nine months ended
September 30,

 


 2001
 2000
 
 2001
 2000
 
Cash flows from operating activities:Cash flows from operating activities:     Cash flows from operating activities:     
Net income $19,989 $22,272 Net income $20,210 $14,689 
Adjustments to reconcile net income to net cash used by operating activities:     Adjustments to reconcile net income to net cash used by operating activities:     
 Non cash reduction of capital lease obligation  (1,182) Non cash reduction of capital lease obligation  (1,182)
 Depreciation and amortization 2,436 2,881  Depreciation and amortization 3,658 4,088 
 Amortization of deferred financing fees 1,346 1,140  Amortization of deferred financing fees 2,018 1,779 
 Unrealized loss on interest rate swap, net of taxes (329)   Unrealized loss on interest rate swap, net of taxes (693)  
 Provision for deferred income tax expense 8,284 6,363  Provision for deferred income tax expense 8,375 1,243 
 Changes in assets and liabilities:      Changes in assets and liabilities:     
 Increase in accounts receivable (57,096) (56,876) Increase in accounts receivable (16,911) (12,211)
 Decrease in inventories 8,858 14,344  Decrease in inventories 13,228 21,444 
 Decrease in prepaid expenses 1,522 577  Decrease in prepaid expenses 1,580 835 
 Increase in accounts payable and accrued expenses 23,465 11,153  Increase (decrease) in accounts payable and accrued expenses 294 (13,437)
 Decrease in Dursban charge (4,614)   Increase (decrease) in Dursban charge (5,385) 7,479 
 Decrease in other assets 11 33  Decrease (increase) in other assets 6 (75)
 Other, net (57) 77  Other, net (148)  
 
 
   
 
 
 Net cash used by operating activities 3,815 782  Net cash provided by operating activities 26,232 24,652 
Investing activities:Investing activities:     Investing activities:     
Purchases of equipment and leasehold improvements (1,878) (2,606)Purchases of equipment and leasehold improvements (2,998) (3,175)
 
 
   
 
 
 Net cash used by investing activities (1,878) (2,606) Net cash used for investing activities (2,998) (3,175)

Financing activities:

Financing activities:

 

 

 

 

 

Financing activities:

 

 

 

 

 
Transaction costs related to the redemption of treasury stock  (12,175)Transaction costs related to the redemption of treasury stock  (12,175)
Debt issuance costs  (903)Debt issuance costs  (924)
Proceeds from the issuance of debt 3,550 21,050 Proceeds from the issuance of debt  15,000 
Repayment of borrowings on revolver and other debt (5,487) (6,148)Repayment of borrowings on revolver and other debt (23,234) (6,232)
 
 
   
 
 
 Net cash provided by (used for) financing activities (1,937) 1,824  Net cash used for financing activities (23,234) (4,331)

Net increase (decrease) in cash and cash equivalents

 


 


 
Net increase in cash and cash equivalentsNet increase in cash and cash equivalents  17,146 
Cash and cash equivalents—beginning of periodCash and cash equivalents—beginning of period   Cash and cash equivalents—beginning of period   
 
 
   
 
 
Cash and cash equivalents—end of periodCash and cash equivalents—end of period $ $ Cash and cash equivalents—end of period $ $17,146 
 
 
   
 
 
Noncash financing activity:     
Execution of capital lease $ $5,344 Noncash financing activity:     
Dividends declared $1,146 $  Execution of capital lease $ $5,344 
 Dividends declared $1,719 $ 

See accompanying notes to financial statements.

4


UNITED INDUSTRIES CORPORATION

NOTES TO FINANCIAL STATEMENTS

(Dollars in thousands)

(Unaudited)

Note 1—Basis of presentation

    The accompanying unaudited financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year. These statements should be read in conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-K of United Industries Corporation (the "Company") for the year ended December 31, 2000.

Note 2—Inventories

    Inventories are as follows:


 June 30,
 June, 30
 December 31,
 

 2001
 2000
 2000
  September 30,
2001

 September 30,
2000

 December 31,
2000

 
Raw materials $8,895 $7,494 $10,663  $7,421 $7,715 $10,663 
Finished goods 30,658 32,391 37,343  27,593 25,071 37,343 
Allowance for obsolete and slow-moving inventory (1,404) (986) (999) (1,235) (987) (999)
 
 
 
  
 
 
 
Total inventories $38,149 $38,899 $47,007  $33,779 $31,799 $47,007 
 
 
 
  
 
 
 

Note 3—Equipment and leasehold improvements, net

    Equipment and leasehold improvements are as follows:


 June 30,
 June 30,
 December 31,

 2001
 2000
 2000
 September 30,
2001

 September 30,
2000

 December 31,
2000

Machinery and equipment $28,773 $27,421 $27,435 $29,460 $27,514 $27,435
Office furniture and equipment 10,951 9,784 10,565 11,120 10,227 10,565
Automobiles, trucks and aircraft 6,156 6,290 6,067 6,156 6,412 6,067
Leasehold improvements 7,108 6,956 7,043 7,372 6,985 7,043
 
 
 
 
 
 
 52,988 50,451 51,110 54,108 51,138 51,110
Less: accumulated depreciation 28,712 24,115 26,374 29,885 25,267 26,374
 
 
 
 
 
 
 $24,276 $26,336 $24,736 $24,223 $25,871 $24,736
 
 
 
 
 
 

5


Note 4—Other4-Other assets

    Other assets are as follows:


 June 30,
 June 30,
 December 31,
 

 2001
 2000
 2000
  September 30,
2001

 September 30,
2000

 December 31,
2000

 
Goodwill $7,175 $7,988 $7,988  $7,175 $7,988 $7,988 
Accumulated amortization  (1,461) (2,075) (2,175) (1,510) (2,130) (2,175)
 
 
 
  
 
 
 
  5,714  5,913  5,813  5,665 5,858 5,813 
 
 
 
  
 
 
 
Deferred financing fees  18,067  17,087  18,067  18,067 17,108 18,067 
Accumulated amortization  (5,757) (3,131) (4,411) (6,429) (3,770) (4,411)
 
 
 
  
 
 
 
  12,310  13,956  13,656  11,638 13,338 13,656 
 
 
 
  
 
 
 
Other  608  620  618  612 610 618 
 
 
 
  
 
 
 
Total other assets $18,632 $20,489 $20,087  $17,915 $19,806 $20,087 
 
 
 
  
 
 
 

Note 5—Accrued5-Accrued expenses

    Accrued expensedexpenses are as follows:


 June 30,
 June 30,
 December 31,

 2001
 2000
 2000
 September 30,
2001

 September 30,
2000

 December 31,
2000

Advertising and promotional $13,506 $11,615 $5,520 $10,513 $8,009 $5,520
Dursban charge  1,452    6,066 681 7,479 6,066
Interest  3,834  4,019  3,886 7,723 3,782 3,886
Cash overdraft  7,414  6,586  6,181 1,171  6,181
Dividend payable  1,466    320 2,039  320
Severence charges  457  1,168  1,010 205 952 1,010
Other  5,758  4,452  1,808 4,566 2,827 1,808
 
 
 
 
 
 
Total accrued expenses $33,887 $27,840 $24,791 $26,898 $23,049 $24,791
 
 
 
 
 
 

6


Note 6—Long-term6-Long-term debt and credit facilities

    Long-term debt is comprised of the following:


 June 30,
 June 30,
 December 31,
 


 2001
 2000
 2000
 
 September 30,
2001

 September 30,
2000

 December 31,
2000

 
Senior Credit Facility:Senior Credit Facility:          Senior Credit Facility:       
Term Loan A $43,817 $57,500 $48,430 Term Loan A $41,511 $57,500 $48,430 
Term Loan B  135,183  147,375  135,878 Term Loan B 134,835 147,375 135,878 
Revolving Credit Facility  18,550  21,050  15,000 Revolving Credit Facility  15,000 15,000 
97/8% Series B Registered Senior Subordinated Notes97/8% Series B Registered Senior Subordinated Notes  150,000  150,000  150,000 97/8% Series B Registered Senior Subordinated Notes 150,000 150,000 150,000 
 
 
 
   
 
 
 
  347,550  375,925  349,308   326,346 369,875 349,308 
Less portion due within one yearLess portion due within one year  (23,857) (26,800) (20,308)Less portion due within one year (5,307) (20,750) (20,308)
 
 
 
   
 
 
 
Total long-term debt net of current portionTotal long-term debt net of current portion $323,693 $349,125 $329,000 Total long-term debt net of current portion $321,039 $349,125 $329,000 
 
 
 
   
 
 
 

    The Senior Credit Facility was provided by NationsBank, N.A., Morgan Stanley Senior Funding, Inc. and CIBC Inc. and consists of (i) a $80,000 revolving credit facility (the "Revolving Credit Facility"); (ii) a $75,000 term loan facility ("Term Loan A"); and (iii) a $150,000 term loan facility ("Term Loan B"). The Revolving Credit Facility and Term Loan A matures on January 20, 2005, and Term Loan B matures on January 20, 2006. The Revolving Credit Facility is subject to a clean-down period during which the aggregate amount outstanding under the Revolving Credit Facility shall not exceed $10.0 million for 30 consecutive days occurring during the period between August 1 and November 30 in each calendar year. On JuneSeptember 30, 2001, $18,550$0 was outstanding under the Revolving Credit Facility. There were no compensating balance requirements for the Revolving Credit Facility at JuneSeptember 30, 2001.

    The principal amount of Term Loan A is to be repaid in twenty-three consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20, 2005. The principal amount of Term Loan B is to be repaid in twenty-seven consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20, 2006.

    The Senior Credit Facility agreement contains restrictive affirmative, negative and financial covenants. Affirmative and negative covenants put restrictions on levels of investments, indebtedness, insurance and capital expenditures. Financial covenants require the maintenance of certain financial ratios at defined levels. At JuneSeptember 30, 2001, the Company was in compliance with all financial covenants.

    Under the covenants, interest on the Revolving Credit Facility, Term Loan A and Term Loan B ranges from 250 to 400 basis points above LIBOR depending on certain financial ratios. Unused commitments under the Revolving Credit Facility are subject to a 50 basis point annual commitment fee. LIBOR was 3.86%2.63% at JuneSeptember 30, 2001.

7


Note 6—Long-term debt and credit facilities (continued)

    The Senior Credit Facility may be prepaid at any time in whole or in part without premium or penalty. During fiscal 2000, principal payments on Term Loans A and B of $14.1 million and $12.2 million, respectively, were paid, which included optional principal prepayments of $4.1 million

7


and $10.8 on Term Loan A and Term Loan B, respectively. During the sixnine month period ended JuneSeptember 30, 2001, optional principal prepayments of $4.6 million and $.7$0.7 million on Term Loan A and Term Loan B, respectively, were paid. The optional payments were made in order for the Company to remain two quarterly payments ahead.ahead of scheduled payments. According to the Senior Credit Facility agreement, each prepayment on Term Loan A and Term Loan B can be applied to the next principal repayment installments. Management intends to pay a full year of principal repayment installments in 2001 in accordance with the Senior Credit Facility agreement.

    In November 1999, the Company issued 97/8% Senior Subordinated Notes for $150 million that are due April 1, 2009.

    Interest accrues at the rate of 97/8% per annum, payable semi-annually on each April 1 and October 1.

    Substantially all of the properties and assets of the Company and substantially all of the properties and assets of the Company's future domestic subsidiaries secure obligations under the Senior Credit Facility.

    The carrying amount of the Company's obligation under the Senior Credit Facility approximate fair value because the interest rates are based on floating interest rates identified by reference to market rates.

    Aggregate maturities under the Senior Credit Facility (excluding the Revolving Credit Facility) and the Senior Subordinated Notes are as follows:

2001 Remainder of year $ $
2002 10,614 7,961
2003 15,804 15,804
2004 17,534 17,534
2005 102,382 102,382
Thereafter 182,666 182,665
 
 
 $329,000 $326,346
 
 

Note 7—Commitments7-Commitments

    The Company leases the majority of its operating facilities from a company owned by a significant shareholder of the Company under various operating leases expiring December 31, 2010. The Company has options to terminate the leases on a year-to-year basis by giving advance notice of at least twelve months. The Company leases a portion of its operating facilities from the same company under a sublease agreement expiring on December 31, 2005. The Company has two five-year options to renew this lease, beginning January 1, 2006. Management believes that the terms and expenses associated with

8


the related party leases described above are similar to those negotiated by unrelated parties at arm's length.

8


    The Company is obligated under other operating leases for use of warehouse space. The leases expire at various dates through December 1, 2006. Five of the leases provide as many as five five-year options to renew.

    The Company is involved in litigation and arbitration proceedings in the normal course of business that assert product liability and other claims. The Company is contesting all such claims. When it appears probable in management's judgment that the Company will incur monetary damages or other costs in connection with such claims and proceedings, and such costs can be reasonably estimated, appropriate liabilities are recorded in the financial statements and charges are made against earnings.

    Management believes the possibility of a material adverse effect on the Company's consolidated financial position, results of operations and cash flows from the claims and proceedings described above is remote.

Note 9—8—Contingencies

    The Company is involved in litigation and arbitration proceedings in the normal course of business that assert product liability and other claims. The Company is contesting all such claims. When it appears probable in management's judgment that the Company will incur monetary damages or other costs in connection with such claims and proceedings, and such costs can be reasonably estimated, appropriate liabilities are recorded in the financial statements and charges are made against earnings.

    Management believes the possibility of a material adverse effect on the Company's consolidated financial position, results of operations and cash flows from the claims and proceedings described above is remote.

Note 10—9—Dursban ChargeRelated Expenses

    During 2000 the US Environmental Protection Agency and manufacturers of chlorpyrifos (the active ingredient in Dursban pesticidal products) entered into a voluntary agreement that provides for withdrawal of virtually all residential uses of Dursban. Formulation of new Dursban products intended for residential use were required to cease by December 1, 2000. Formulators can no longer sell such products to retailers as of February 1, 2001 and retailers will no longer be able to sell Dursban products after December 31, 2001. A charge of $8,000 was recorded in September 2000 for costs associated with this agreement. The Company believes that the accrual is adequate as of JuneSeptember 30, 2001.

9


    Details of this charge and the accrual balances remaining are as follows:


 Accrual Balances
at the end of 2000

 Year to Date
2001 Utilization

 Amount to be utilized
during remainder of 2001

  Accrual Balances
at the end of 2000

 Year to Date
2001 Utilization

 Amount to be utilized
during remainder of 2001

 
Customer returns and markdowns $4,509 $2,707 $1,802  $4,509 $3,461 $1,048 
Inventory 1,118 1,064 54  1,118 1,064 54 
Disposal and related costs 439 843 (404) 439 860 (421)
 
 
 
  
 
 
 
 $6,066 $4,614 $1,452  $6,066 $5,385 $681 
 
 
 
  
 
 
 

Note 11—10—Shipping and handling costs

    Certain shippingShipping and handling costs are included in the selling, general and administrative expenses line item on the Company's Statements of Operations. The amount included is $4,230$2,902 and $4,139$2,593 for the three months ended JuneSeptember 30, 2001 and 2000, respectively. The amount included is $7,906$10,808 and $7,752$10,345 for the sixnine months ended JuneSeptember 30, 2001 and 2000, respectively.

9


Note 12—11—Derivatives and Hedging Activities

    The Company is exposed to market risks relating to changes in interest rates. The Company does not enter into derivatives or other financial instruments for trading or speculative purposes. The Company enters into financial instruments to manage and reduce the impact of changes in interest rates.

    Effective April 1, 2001, the Company entered into two interest rate swaps that have fixed the interest rate as of April 30, 2001 for $75.0 million of variable rate debt under the Senior Credit Facility. The interest rate swaps are for $50.0 and $25.0 million of the Senior Credit Facility and will terminate on April 30, 2002. The fixed LIBOR interest rates are 4.74% and 4.66%, for the $50.0 and $25.0 million interest rate swaps respectively. The Company's objective is to manage the cash flow risks associated with its variable rate debt and not to trade such instruments for profit andor loss. The Company's interest rate hedges are classified as cash flow hedges. For a cash flow hedge, the ineffectiveunrealized portion is deferred in accumulated other comprehensive income on the balance sheet until the transaction is realized, at which time any deferred hedging gains or losses are recorded in earnings. The fair value of the interest rate swaps is reported as a liability and as a component of comprehensive income in Stockholders' deficit at JuneSeptember 30, 2001. The JuneSeptember 30, 2001 fair value is $0.3$0.7 million.

Note 13—12—Comprehensive Income

    Comprehensive income differs from net income due to the cash flow hedge. Comprehensive income (loss) for the three and sixnine months ended JuneSeptember 30, 2001 was $15,424($143) and $19,660,$19,517 respectively.

10


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

FORWARD-LOOKING STATEMENTS

    Certain statements contained herein constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this report regarding the Company's financial position, business strategy, budgets and plans and objectives of management for future operations are forward-looking statements. Although the management of the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from those contemplated or projected, forecasted, estimated or budgeted in or expressed or implied by such forward-looking statements. Such factors include, among others, the risks and other factors set forth under Item 7A in the Company's Annual Report on Form 10-K for the year ended December 31, 2000 as well as the following: general economic and business conditions; governmental regulations; industry trends; the loss of major customers or suppliers; cost and availability of raw materials; changes in business strategy or development plans; availability and quality of management; and availability, terms and deployment of capital. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

    The Company is the leading manufacturer and marketer of value-oriented branded products for the consumer lawn and garden pesticide and household insecticide markets in the United States. The Company manufactures and markets one of the broadest lines of pesticides in the industry, including herbicides and indoor and outdoor insecticides, as well as insect repellents and water-soluble fertilizers, under a variety of brand names. The Company believes that the key drivers of growth for the $2.7 billion consumer lawn and garden pesticide and household insecticide retail markets include: (a) the aging of the population of the United States; (b) growth in the home improvement center and mass merchandiser channels; and (c) shifting consumers preferences' toward value-oriented branded products.

    The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the historical financial information included in the unaudited quarterly financial statements and the related notes to the unaudited quarterly financial statements contained elsewhere in this report.

Results of Operations

    The following discussion regarding results of operations refers to net sales, cost of goods sold and selling and general and administrative expenses, which the Company defines as follows:

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    The following table sets forth the percentage relationship of certain items in the Company's Statements of Operations to net sales for the three months ended JuneSeptember 30, 2001 and JuneSeptember 30, 2000:



 Three Months Ended June 30,
 
 Three Months Ended
September 30,

 


 2001
 2000
 
 2001
 2000
 
Net sales:Net sales:     Net sales:     
Value brands 81.9%74.1%Value brands 76.6%74.6%
Opening price point brands 18.1 25.9 Opening price point brands 23.4 25.4 
 
 
   
 
 
Total net salesTotal net sales 100.0 100.0 Total net sales 100.0 100.0 
Operating costs and expenses:Operating costs and expenses:     Operating costs and expenses:     
Cost of goods sold 53.9 54.4 Cost of goods sold 54.0 56.5 
Selling, general and administrative expenses 19.3 15.6 Selling, general and administrative expenses 30.4 32.0 
Dursban related expenses (see note 10)  17.0 
 
 
 
Total operating costs and expensesTotal operating costs and expenses 72.3 70.0 Total operating costs and expenses 84.4 105.5 
 
 
   
 
 
Operating income 27.7 30.0 
Operating income (loss)Operating income (loss) 15.6 (5.5)
Interest expenseInterest expense 8.2 9.2 Interest expense 15.1 21.5 
 
 
   
 
 
Income before provision for income taxes 19.5 20.8 
Income tax expense 5.8 4.6 
Income (loss) before provision for income taxesIncome (loss) before provision for income taxes 0.6 (27.0)
Income tax expense (benefit)Income tax expense (benefit) 0.2 (10.9)
 
 
   
 
 
Net income 13.7%16.2%
Net income (loss)Net income (loss) 0.4%(16.1%)
 
 
   
 
 

Three Months Ended JuneSeptember 30, 2001 compared to Three Months Ended JuneSeptember 30, 2000

    Net Sales.  Net sales increased 0.4%18.7% to $114.6$55.8 million for the three months ended JuneSeptember 30, 2001 from $114.2$47.0 million for the three months ended JuneSeptember 30, 2001. This increase was driven by a combination of offsetting factors including:

    Net sales of the Company's value brands increased 11.0%22.0% to $93.9$42.8 million for the three months ended JuneSeptember 30, 2001 from $86.4$35.1 million for the three months ended JuneSeptember 30, 2000. Value brandThe increase in value brands was lead by insect repellent sales to home centers and mass merchants. Demand for mass merchants were better aligned with consumer demand. Increase in hardware channels increased $4.2 million primarily due to additional product listings that were secured. The gains achievedsecured aided in the hardware channel, were partially offset by the lost sales of products that contain chlorpyrifos. During 2000 the US Environmental Protection Agency and manufacturers of chlorpyrifos (the active ingredient in Dursban pesticidal products) entered into a voluntary agreement that provided for the withdrawal of virtually all residential uses of Dursban.increase. The Increase in promotion expense was due to growth of the home centers business. The Increase in demand for insect repellants and termiticides was related primarily to weather conditions.

    Net sales of opening price point brands decreased 30.0%increased 8.9% to $20.7$13.0 million for the three months ended JuneSeptember 30, 2001 from $29.6$12.0 million for the three months ended JuneSeptember 30, 2000. The decreaseincrease was drivenlead by sales of insecticides at home centers and mass merchants, which was partially offset by the loss of the Kmart Kgro business that was discontinued in the third quarter of 2000.

    Gross Profit.  Gross profit increased 3.5%25.6% to $53.9$25.7 million for the three months ended JuneSeptember 30, 2001 compared to $52.1$20.5 million for the three months ended JuneSeptember 30, 2000. As a percentage of sales, gross profit increased to 47.0%46.0% for the three months ended JuneSeptember 30, 2001 as compared to 45.6%43.5% for

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the three months ended JuneSeptember 30, 2000. The increase in gross profit as a

12


percentage of sales was the result of the change in mix of sales to more value brand sales, which are higher margin products.

    Selling, General and Administrative Expenses.  Selling, general and administrative expenses increased 24.5%12.8% to $22.1$17.0 million for the three months ended JuneSeptember 30, 2001 from $17.8$15.0 million for the three months ended JuneSeptember 30, 2000. As a percentage of net sales, selling, general and administrative expenses increaseddecreased to 19.3%30.4% for the three months ended JuneSeptember 30, 2001 from 15.6%32.0% for the three months ended JuneSeptember 30, 2000. The increase is attributed to greater advertising spending to support the value brands along with additional spending for in-store sales and supportincrease in the home centers. Prior year expenses also reflect avariable cost reduction duerelated to the impact of the termination of a capital lease.increase in sales volume. The double-digit percentage increase should not be viewed as a trend for the future.

    Dursban Related Expenses.  During 2000, the Company recorded a non-recurring expense of $8.0 million as a result of the EPA and the manufacturers of Dursban voluntary withdrawal of the active chemical in the Company's products. There were no related charges in 2001. See footnote 9 to Financial Statements.

Operating Income.  Operating income decreased 7.4%increased 437.7% to $31.8$8.7 million for the three months ended JuneSeptember 30, 2001 from $34.3a loss of $2.6 million for the three months ended JuneSeptember 30, 2000. As a percentage of net sales, operating income decreasedincreased to 27.7%15.6% for the three months ended JuneSeptember 30, 2001 from 30.0%(5.5%) for the three months ended JuneSeptember 30, 2000. Increase was driven by the $8.0 million charge for Dursban related expenses, during the three months ended September 30, 2000.

    Income tax expense.  For the three months ended JuneSeptember 30, 2001, the Company's effective income tax rate is 28.0%29.3%, which reflects the estimated utilization of the goodwill deduction in fiscal year 2001. The goodwill deduction and corresponding release of valuation allowance is related to the step up in tax basis in conjunction with the Recapitalization. On January 20, 1999, pursuant to a Recapitalization agreement with UIC Holdings, L.L.C. (the "Equity Investor"), which is owned by Thomas H. Lee Equity Fund IV, L.P. ("THL Fund IV" and, together with its affiliates, the "THL Parties"), the Company was recapitalized (the "Recapitalization").

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    The following table sets forth the percentage relationship of certain items in the Company's Statements of Operations to net sales for the sixnine months ended JuneSeptember 30, 2001 and JuneSeptember 30, 2000:



 Six Months Ended June 30,
 
 Nine Months Ended
September 30,

 


 2001
 2000
 
 2001
 2000
 
Net sales:Net sales:     Net sales:     
Value brands 82.6%75.7%Value brands 81.2%75.5%
Opening price point brands 17.4 24.3 Opening price point brands 18.8 24.5 
 
 
   
 
 
Total net salesTotal net sales 100.0 100.0 Total net sales 100.0 100.0 
Operating costs and expenses:Operating costs and expenses:     Operating costs and expenses:     
Cost of goods sold 53.8 54.3 Cost of goods sold 53.8 54.7 
Selling, general and administrative expenses 21.7 20.2 Selling, general and administrative expenses 23.6 22.5 
Dursban charge   Dursban related expenses (see note 9)  3.3 
 
 
   
 
 
Total operating costs and expensesTotal operating costs and expenses 75.5 74.5 Total operating costs and expenses 77.5 80.5 
 
 
   
 
 
Operating incomeOperating income 24.5 25.5 Operating income 22.5 19.5 
Interest expenseInterest expense 10.0 10.8 Interest expense 11.1 12.9 
 
 
   
 
 
Income before provision for income taxesIncome before provision for income taxes 14.5 14.7 Income before provision for income taxes 11.4 6.6 
Income tax expenseIncome tax expense 4.3 3.3 Income tax expense 3.3 0.5 
 
 
   
 
 
Net incomeNet income 10.2%11.4%Net income 8.1%6.1%
 
 
   
 
 

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SixNine Months Ended JuneSeptember 30, 2001 compared to SixNine Months Ended JuneSeptember 30, 2000

    Net Sales.  Net sales decreased 0.3%increased 3.4% to $194.6$250.4 million for the sixnine months ended JuneSeptember 30, 2001 from $195.1$242.1 million for the sixnine months ended JuneSeptember 30, 2000. This decreaseincrease was driven by a combination of offsetting factors including:

    Net sales of the Company's value brands increased 8.7%11.3% to $160.6$203.4 million for the sixnine months ended JuneSeptember 30, 2001 from $147.7$182.8 million for the sixnine months ended JuneSeptember 30, 2000. Value brand sales of Spectracide Terminate™ increased $6.0$5.9 million primarily due to focused marketing programs and replenishment of inventory levels at retail. The gains achieved by Spectracide Terminate™, were partially offset by loss sales of products that contained chlorpyrifos. During 2000 the US Environmental Protection Agency and manufacturers of chlorpyrifos (the active ingredient in Dursban pesticidal products) entered into a voluntary agreement that provided for the withdrawal of virtually all residential uses of Dursban. The increaseIncrease in demand for insect repellants is related primarily to weather conditions.

    Net sales of opening price point brands decreased 28.3%20.8% to $33.9$47.0 million for the sixnine months ended JuneSeptember 30, 2001 from $47.4$59.3 million for the sixnine months ended JuneSeptember 30, 2000. The decrease was driven by the loss of the Kmart Kgro business that was discontinued in the third quarter of 2000. The decrease was partially offset by sales of insect repellants.

    Gross Profit.  Gross profit increased 0.8%5.4% to $89.9$115.5 million for the sixnine months ended JuneSeptember 30, 2001 compared to $89.1$109.6 million for the sixnine months ended JuneSeptember 30, 2000. As a percentage of sales, gross profit increased to 46.2% for the sixnine months ended JuneSeptember 30, 2001 as compared to 45.7%45.3% for the six

14


nine months ended JuneSeptember 30, 2000. The increase in gross profit as a percentage of sales was the result of change in mix of sales to value brands, which are higher margin products.

    Selling, General and Administrative Expenses.  Selling, general and administrative expenses increased 7.1%8.6% to $42.2$59.2 million for the sixnine months ended JuneSeptember 30, 2001 from $39.4$54.4 million for the sixnine months ended JuneSeptember 30, 2000. As a percentage of net sales, selling, general and administrative expenses increaseddecreased to 21.7%23.6% for the sixnine months ended JuneSeptember 30, 2001 from 20.2%25.8% for the sixnine months ended JuneSeptember 30, 2000. The increase is attributed to greater advertising spending to support the value brands, along with additional spending for in-store sales and support in the home centers. Prior year expenses also reflect a cost reduction due to the impact of the termination of a capital lease.

    Dursban Related Expenses.  During 2000, the Company recorded a non-recurring expense of $8.0 million as a result of the EPA and the manufacturers of Dursban voluntary withdrawal of the active chemical in the Company's products. There were no related charges in 2001. See footnote 9 to Financial Statements.

Operating Income.  Operating income decreased 4.1%increased 19.6% to $47.7$56.4 million for the sixnine months ended JuneSeptember 30, 2001 from $49.7$47.1 million for the sixnine months ended JuneSeptember 30, 2000. As a percentage of net sales, operating income decreasedincreased to 24.5%22.5% for the sixnine months ended JuneSeptember 30, 2001 from 25.5%19.5% for the sixnine months ended JuneSeptember 30, 2000. Increase was primarily driven by the $8.0 million charge for Dursban related expenses, during the three months ended September 30, 2000.

14


    Income tax expense.  For the sixnine months ended JuneSeptember 30, 2001, the Company's effective income tax rate is 28.0%29.3%, which reflects the estimated utilization of the goodwill deduction in fiscal year 2001. The goodwill deduction and corresponding release of valuation allowance is related to the step up in tax basis in conjunction with the Recapitalization. On January 20, 1999, pursuant to a Recapitalization agreement with UIC Holdings, L.L.C. (the "Equity Investor"), which is owned by Thomas H. Lee Equity Fund IV, L.P. ("THL Fund IV" and, together with its affiliates, the "THL Parties"), the Company was recapitalized (the "Recapitalization").

Liquidity and Capital Resources

    Historically, the Company has utilized internally generated funds and borrowings under credit facilities to meet ongoing working capital and capital expenditure requirements. As a result of the Recapitalization, the Company has significantly increased cash requirements for debt service relating to the Company's Senior Subordinated Notes and Senior Credit Facility. As of December 31, 2000, the Company had total debt outstanding of $354.3 million. As of JuneSeptember 30, 2001, the Company had total debt outstanding of $352.4$331.1 million. The Company will rely on internally generated funds and, to the extent necessary, borrowings under the Company's Revolving Credit Facility to meet liquidity needs.

    The Company's Senior Credit Facility consists of:

    The Company's Revolving Credit Facility and the Term Loan A mature in January 2005, and the Term Loan B matures in January 2006. The Revolving Credit Facility is subject to a clean-down period during which the aggregate amount outstanding under the Revolving Credit Facility shall not exceed $10.0 million for 30 consecutive days occurring during the period August 1 and November 30 in each calendar year. The Company was in compliance with debt covenants at September 30, 2001.

    The Company's principal liquidity requirements are for working capital, capital expenditures and debt service under the Senior Credit Facility and the notes.Senior Subordinated Notes. Cash flow from continuing operations provided net cash of approximately $3.8$26.2 million and $0.8$24.7 million for the sixnine months ended JuneSeptember 30, 2001 and JuneSeptember 30, 2000, respectively. Net cash used byrelated to operating activities fluctuates during the year as the seasonal nature of the Company's sales results in a significant increase in working capital (primarily

15


accounts receivable and inventory) during the first half of the year, with the second and third quarters being significant cash collection periods.

    In November 1999, the Company issued 97/8% Senior Subordinated Notes for $150 million that are due April 1, 2009.

    Interest accrues at the rate of 97/8% per annum, payable semi-annually on each April 1 and October 1.

    Capital expenditures are related to the enhancement of the Company's existing facilities and the construction of additional productions and distribution capacity. Cash used for capital was $1.9$3.0 million and $2.6$3.2 million for the sixnine months ended JuneSeptember 30, 2001 and JuneSeptember 30, 2000, respectively. In addition, the Company entered into a capital lease agreement in March 2000 for $5.3 million. Cash used for capital expenditures for the remainder of fiscal 2001 is expected to be less than $5.0 million.

    The principal amount on Term Loan A is to be repaid in twenty-three consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20, 2005. The principal amount of Term Loan B is to be repaid in twenty-seven consecutive quarterly installments commencing June 30, 1999 with a final balloon installment due January 20, 2006.

    The Company believes that cash flow from operations, together with available borrowings under the Revolving Credit Facility, will be adequate to meet the anticipated requirements for working

15


capital, capital expenditures and scheduled principal and interest payments for at least the next two years. However, the Company cannot ensure that sufficient cash flow will be generated from operations to repay the notesSenior Subordinated Notes and amounts outstanding under the Senior Credit Facility at maturity without requiring additional financing. The Company's ability to meet debt service and clean-down obligations and reduce debt will be dependent on the Company's future performance, which in turn, will be subject to general economic conditions and to financial, business and other factors, including factors beyond the Company's control. Because a portion of the Company's debt bears interest at floating rates, the Company's financial condition is and will continue to be affected by changes in prevailing interest rates.

Seasonality

    The Company's business is highly seasonal because the Company's products are used primarily in the spring and summer. For the past two years, approximately 75% of the Company's net sales have occurred in the first and second quarters. The Company's working capital needs, and correspondingly the Company's borrowings, peak near the end of the Company's first quarter.

Impact of 2000 Dursban Withdrawal (See Note 9)

    During 2000, the U.S. Environmental Protection Agency and manufacturers of chlorpyrifos (the active ingredient in Dursban pesticidal products) entered into a voluntary agreement that provides for withdrawal of virtually all residential uses of Dursban. Formulation of new Dursban products intended for residential use were required to cease by December 1, 2000. Formulators can no longer sell such products to retailers as of February 1, 2001. Retailers will no longer be able to sell Dursban products after December 31, 2001.

    The Company recorded a charge of $8.0 million in September 2000 for costs associated with this agreement. The Company currently has replacement chemicals for Dursban, and the replacement chemicals are currently being used in production of new pesticidal products.

Facility Consolidation

    The Company has been reviewing potential efficiencies and logistic opportunities related to warehousing and distribution. As a result the Company will be moving into a new warehouse facility, which will allow the consolidation of three existing facilities. As a result of the move, the Company will take a one-time charge during the fourth quarter of 2001, after a review of related leasehold improvements, duplicate lease payments and slow-moving inventory that doesn't justify the move to the new facility has been completed.

Recently Issued Accounting Pronouncements

    The Emerging Issues Task Force (EITF) issued EITF 00-25. This issue addresses when consideration from a vendor to a retailer (a) in connection with the retailer's purchase of the vendor's

16


products or (b) to promote sales of the vendor's products by the retailer should be classified in the vendor's income statement as a reduction of revenue. The Company has adopted EITF 00-25 for fiscal year 2001. The Company has reclassified all trade and co-op promotional expense in the Statements of Operations to net sales.

    In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141 (SFAS 141), "Business Combinations." SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 and establishes specific criteria for recognition of intangible assets separately from goodwill. For business combinations initiated after June 30, 2001, SFAS 141 also requires that unallocated negative goodwill be written off immediately as an extraordinary gain. Any unamortized deferred credit arising from a

16


business combination completed before July 1, 2001 will be recognized as the cumulative effect of a change in accounting principle. The Company is currently evaluating the impact of SFAS 141 on its financial statements.

    Also in July 2001, the FASB issued SFAS 142, "Goodwill and Other Intangible Assets". SFAS 142 eliminates the amortization of goodwill and instead requires goodwill to be tested for impairment annually. Also, intangible assets are required to be amortized over their useful lives and reviewed for impairment in accordance with SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." Under SFAS 142, if the intangible asset has an indefinite useful life, it is not amortized until its life is determined to be finite. The Company is required to adopt SFAS 142 no later than the first quarter of fiscal 2003, but is permitted to adopt as of the first quarter of fiscal 2002. The Company is currently evaluating the impact of SFAS 142 on its financial statements.

17    The FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143") in 2001. SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Company is required to adopt SFAS 143 no later than the first quarter of fiscal 2003, but is permitted to adopt earlier. The Company is currently evaluating the impact of SFAS 143 on its financial statements.


    The FASB issued SFAS No. 143, "Accounting for the Impairment or Disposal of Long-Lived Assets," which provides guidance on the accounting for the impairment or disposal of long-lived assets. The provisions of the Statement are effective for financial statements issued for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years, although early adoption is allowed. The Company is currently evaluating the impact of SFAS 144 on its financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate

    The Company is exposed to market risks relating to changes in interest rates. The Company does not enter into derivatives or other financial instruments for trading or speculative purposes. The Company enters into financial instruments to manage and reduce the impact of changes in interest rates.

    The Company manages interest rate risk by balancing the amount of fixed and variable debt. For fixed rate debt, interest rate changes affect the fair market value of such debt but do not impact earnings or cash flows. Conversely for variable rate debt, interest rate changes generally do not affect the fair market value of such debt but do impact future earnings and cash flows, assuming other factors are held constant. As of JuneSeptember 30, 2001, variable rate debt was $197.6$176.3 million, which includes the interest rate swaps as discussed below.

    The Company entered into two interest rate swaps that have fixed the interest rate as of April 30, 2001 for $75.0 million of variable rate debt under the Senior Credit Facility. The interest rate swaps are for $50.0 and $25.0 million of the Senior Credit Facility and will terminate on April 30, 2002. The fixed LIBOR interest rates are 4.74% and 4.66%, for the $50.0 and $25.0 million interest rate swaps, respectively. The change in fair value of the interest rate swaps is reported as a liability and as a component of comprehensive income in Stockholders' deficit at JuneSeptember 30, 2001. The JuneSeptember 30, 2001, reduction in fair value of $0.3$0.7 million is net of taxes.

    Interest ranges from 250 to 400 basis points above LIBOR depending on certain financial ratios. LIBOR was 3.86%2.63% on JuneSeptember 30, 2001.

17


Exchange Rate

    The Company does not use derivative instruments to hedge against foreign currency exposures related to transactions denominated in other than the Company's functional currency. Substantially all foreign currency transactions are denominated in United States dollars.

Commodity Price

    The Company does not use derivative instruments to hedge its exposures to changes in commodity prices. The Company utilizes various commodity and specialty chemicals in its production process. Purchasing procedures and arrangements with major customers serve to mitigate its exposure to price changes in commodity and specialty chemicals.

18



Part II

OTHER INFORMATION

Item 1. Legal Proceedings.

The Company has no reportable legal proceedings in the current period.

Item 2. Changes in Securities.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted.

Item 5. Other Information.None.

    None.

Item 6. Exhibits and Reports on Form 8-K

19



SIGNATURES

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

  UNITED INDUSTRIES CORPORATION

Dated: AugustNovember 14, 2001

 

By:

/s/ 
DANIEL J. JOHNSTON   
Name: Daniel J. Johnston
Title:  Executive Vice President and Chief
Chief Financial Officer


QuickLinks

PART 1 FINANCIAL INFORMATION
FINANCIAL INFORMATION ITEMItem 1. Financial Statements
UNITED INDUSTRIES CORPORATION
BALANCE SHEETS
JUNE SEPTEMBER 30, 2001 AND 2000, AND DECEMBER 31, 2000
(Dollars (Dollars in thousands) (Unaudited)
UNITED INDUSTRIES CORPORATION
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIXNINE MONTHS ENDED JUNESEPTEMBER 30, 2001 AND 2000
(Dollars (Dollars in thousands) (Unaudited)
UNITED INDUSTRIES CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE SIXNINE MONTHS ENDED JUNESEPTEMBER 30, 2001 AND 2000
(Dollars (Dollars in thousands) (Unaudited)
UNITED INDUSTRIES CORPORATION NOTES TO FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited)
Part II
OTHER INFORMATION
SIGNATURES