SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-K
_____________

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

[ ] 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 333-43195
Commission File Number 333-43195-01

SCOVILL FASTENERS INC.
SCOVILL HOLDINGS INC.
(Exact name of registrants as specified in their respective charters)

Delaware 95-3959561
Delaware 58-2365743
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

Scovill Fasteners Inc.
Scovill Holdings Inc.
1802 Scovill Drive
Clarkesville, Georgia 30523
706-754-4181
(Name, address, including zip code, and telephone number, including area code,
of registrants' principal executive offices)

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Securities registered pursuant to Section 12(b) of the Act: NONE

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Securities registered pursuant to Section 12(g) of the Act: NONE

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

Aggregate market value of voting stock held by non-affiliates of the Registrant:
None. (See Part II, Item 5.)

Number of shares of Common Stock outstanding as of March 15, 2001 was 9,311,000.

SCOVILL HOLDINGS INC.
SCOVILL FASTENERS INC.

Annual Report on Form 10-K
For the Fiscal Year Ended December 31, 2000

TABLE OF CONTENTS

PART I Page No.
--------
Item 1. Business........................................................... 3
Item 2. Properties......................................................... 9
Item 3. Legal Proceedings.................................................. 10
Item 4. Submission of Matters to a Vote of Security Holders................ 10

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters........................................................... 11
Item 6. Selected Financial Data............................................ 11
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 12
Item 7A. Quantitative and Qualitative Disclosures About Market Risk......... 19
Item 8. Financial Statements and Supplementary Data........................ 19
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.............................................. 20

PART III

Item 10. Directors and Executive Officers of the Registrant................. 20
Item 11. Executive Compensation............................................. 21
Item 12. Security Ownership of Certain Beneficial Owners and Management..... 24
Item 13. Certain Relationships and Related Transactions..................... 25

PART IV

Item 14. Exhibits, Financial Statements and Reports on Form 8-K............. 26
INDEX OF FINANCIAL STATEMENTS................................................F-1
SIGNATURES

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PART I

Unless the context otherwise requires, references to the "Company," in this
Report include Scovill Holdings Inc. ("Holdings") and its wholly-owned
subsidiary Scovill Fasteners Inc. ("Fasteners") and their respective operating
subsidiaries and predecessors. This report includes product names, trade names
and marks of companies other than the Company and Holdings. All other company or
product names are trademarks, registered trademarks, trade names or marks of
their respective owners and are not the property of the Company or Holdings.

Certain terms used herein are defined in Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations.

Item 1. Business

Business Overview

Fasteners, whose business has been in continuous operation since 1802, is a
designer, manufacturer and distributor of apparel fasteners and specialty
industrial fasteners. The Scovill name is the oldest and one of the most well
known brands in the fasteners industry. In the year ended December 31, 2000, the
Company sold more than 13 billion fastener units worldwide. The Company has
achieved and maintained its reputation by offering its customers an integrated
system of high quality fasteners, proprietary attaching machines, technical
service, on-site maintenance and customized applications and design services
tailored to individual customer needs.

The Company has two main product segments: the Apparel Group and the
Industrial Group. The Apparel Group, through its Gripper and DuraMark brands,
produces snaps, tack buttons, rivets, burrs and other snap fastener products
used in numerous apparel applications.

The Industrial Group, primarily through its DOT and PCI brands, produces
specialty industrial fasteners including large snaps, windshield clips, turn
buttons, eyelets, grommets, screw studs, gypsy studs and other specialty
fasteners. These products are used in a broad range of industries, including
marine, textile, automotive, aerospace, military, medical/surgical products,
luggage, leather goods, electronic equipment, sporting and recreational goods
and consumer batteries.

Financial information and other disclosures relating to the Company's business
segments and operations in various geographic areas are provided in the Notes to
the Consolidated Financial Statements.

Product Overview

The Company competes in two broad market segments primarily focused on apparel
manufacturers and on producers of specialty industrial products.

The following table sets forth, for the periods specified, the net sales and
the percentage of total net sales contributed by each product category for the
year ended December 31 (dollars in thousands):

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1996 1997 1998 1999 2000
------- ------- ------- ------- -------

Total Net Sales........................ $91,632 $95,861 $92,476 $89,190 $88,288
Apparel Group
Net sales.......................... $48,258 $53,262 $53,444 $52,330 $55,605
% of total net sales............... 52.6% 55.5% 57.8% 58.7% 63.0%
Industrial Group(1)
Net Sales.......................... $19,747 $31,698 $28,161 $27,157 $25,436
% of total net sales............... 21.6% 33.1% 30.4% 30.4% 28.8%
Other(2)
Net sales.......................... $23,627 $10,901 $10,871 $ 9,703 $ 7,247
% of total net sales............... 25.8% 11.4% 11.8% 10.9% 8.2%

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(1) Includes all Canadian operations.
(2) Includes (a) European operations, (b) the zipper product line, which was
discontinued in 1996, and (c) Rau and PCI prior to their integration in
April and October 1996, respectively, into the Clarkesville facility.
Amounts also include Scovill Europe subsequent to the Rau and Daude
acquisitions in January and March 1996.

Apparel Group

Industry Overview

The apparel snap fastener market includes snap fasteners, tack buttons, rivets
and burrs and excludes other apparel devices such as zippers, buttons and
velcro. The apparel fastener market is large, with many customers and suppliers.
The primary customers for apparel snap fasteners are manufacturers of staple
garments such as jeans, infantswear, childrenswear and outerwear. Demand for
apparel snap fasteners is related to apparel industry trends generally, which
are affected by demographics. The production of each category of apparel depends
upon population trends and consumer spending in each apparel category.

Despite improvements in technology, manufacturing processes in the apparel
industry are still quite labor-intensive. Because labor is such a significant
cost component in apparel manufacturing, manufacturers in low-wage, developing
countries enjoy a cost advantage over U.S. manufacturers. In response, many U.S.
companies have been shifting assembly operations to low-wage countries or
turning to foreign-based contractors in an effort to lower their production
costs. As a result, some export growth has consisted of shipments of garment
parts for assembly abroad and subsequent re-importation into the United States.
The Company has been able to follow a large portion of its customers' production
abroad, as evidenced by its more than 4,200 attaching machines located outside
of the United States. In addition, in marketing to national accounts the Company
will continue to implement its "retail pull" strategy by leveraging
relationships with customers that move sourcing abroad and expanding its
distribution channels overseas to better serve them.

Product Lines

The Company's Apparel Group is composed of three main product lines: Gripper,
DuraMark and Attaching Machines. The Apparel Group serves six garment product
segments of the apparel business: infantswear, childrenswear, jeans, workwear,
leisurewear/fashion and disposables. The Company competes in the apparel
fastener business in the Americas, Asia, the Pacific Rim and Europe.

The Company has remained a leader in the apparel business through the
manufacture and sale of its Gripper product line, which consists of a variety of
fasteners such as ring sockets, segmented sockets, short and long prongs and
western pearls. In addition, the Company has continued to grow its DuraMark
product line, which consists of large snap fasteners, tack buttons, rivets and
burrs. Through its "total system" approach, the Company leases approximately
8,000 attaching machines so that customers may attach the apparel fasteners to
their apparel products. When viewed together, the Apparel Group's product
offerings, attaching machines and support services have enabled the Company to
provide a comprehensive fastener system that improves customer product quality
and

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lowers customers' product costs. In connection with the Company's global
expansion strategy, it may, in certain cases, sell its attaching machines rather
than lease them.

The Company seeks to increase revenues from China and other countries in Asia.
Management believes this expansion will allow the Company to maintain its
customer base at U.S. manufacturers who strive to reduce costs, seek sources for
their products outside the United States and enhance their ability to compete
with local manufacturers and distributors.

Gripper. Gripper is a type of snap fastener with a stud-and-socket design
that was trademarked by the Company in 1937. Although Gripper is a versatile
snap fastener that can be used on almost any type of garment, it is most
commonly used with infantswear, toddler clothing, workwear, uniforms, western-
style shirts and womenswear. In addition to apparel applications, Gripper
fasteners are used in toys, wallets and a variety of other accessories.

DuraMark. The DuraMark product line includes large snap fasteners and tack
buttons, rivets and burrs made from brass, steel, aluminum, zinc and copper.
Large snap fasteners differ from Gripper fasteners in that they are based on a
ring-socket design rather than the segmented-socket design used in Gripper
fasteners. The Company's large snap fasteners are marketed under their trade
names: Mighty-Snap and Maxi-Snap. Mighty Snap and Maxi-Snap fasteners are
generally larger than Gripper fasteners and are normally used in apparel-related
applications where greater strength is required, such as outerwear garments.

Tack buttons are most commonly used as the waist-fastening button above the
zipper on jeans or other types of pants. Tack buttons derive their name from the
fact that they are attached to the garment from the back with a tack, rather
than being sewn to the garment. Rivets and burrs are generally sold in tandem
with tack buttons for reinforcement in stressed areas of heavy clothing such as
jeans. In addition to being functional, tack buttons, rivets and burrs typically
serve decorative functions. Accordingly, they have matching finishes and
designs. They are produced in numerous sizes and colors and typically include a
customer brand logo.

Attaching Machine Leases. The Company leases to its customers, pursuant to
short-term lease agreements, approximately 8,000 attaching machines, which are
used at customer locations to attach its products. The reliability and
efficiency of the Company's attaching machinery, which include patented
components, have proven to be key factors in maintaining a stable base of
apparel fastener sales. In connection with the Company's global expansion
strategy, it may, in certain cases, sell its attaching machines rather than
lease them.

The attaching machines are used primarily for apparel products. They are used
less frequently for industrial products because attaching machines are better
suited for high volume, non-bulky items that can be readily fed through the
guides at the point of attachment. Many industrial fasteners are attached by
hand or as part of another manufacturing process.

The Company supplies its customers with three core models of apparel fastener
attaching machinery that can be customized to customers' specifications through
the addition of auxiliary attachments. The Company designs and assembles these
machines and periodically reconditions them in its Clarkesville and Canadian
facilities.

Typically, as part of the leasing arrangements, the Company's field
technicians provide on-site maintenance services with guaranteed 24-hour
response time (primarily in the Americas). Some customers perform the
maintenance themselves with Company-trained personnel. When machines require
more comprehensive reconditioning services, they are sent to the in-house
reconditioning center in Clarkesville, Georgia.

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Industrial Group

Industry Overview

The industrial fastener market serves a wide range of manufacturers, including
those in the marine textiles, automotive, aerospace, military, medical/surgical
products, electronic equipment, sporting goods and consumer battery industries.
Growth in this market is influenced by both the general economy and consumer
purchases of electronics, automobiles, housing and footwear. The industrial
fastener market is large and highly fragmented. The market is comprised of a
variety of niche segments with specialized customers, competitors and products.
The Company estimates that the industry segments in which it currently competes
constitute less than 40% of the overall market. The Company believes that there
is no dominant manufacturer that competes in all of its product lines, and the
Company intends to broaden its participation through new products and product
line extensions.

Product Lines

The Company's Industrial Group is comprised of three main product lines: DOT,
PCI and Plastic Fasteners. Industrial fasteners are sold through direct sales
and authorized distributors to a wide variety of customers, including
manufacturers of marine textiles, sporting and recreational products,
electronics, electrical equipment and footwear. The Company competes mostly in
the specialty fastener market in the Americas (including Canada) and, to a more
limited extent, in Europe and Asia. To remain competitive in the industrial
fastener industry, the Company intends to focus on methods of improving plant
efficiency and cost reduction.

DOT. DOT fasteners include large snaps, windshield clips, turn buttons, screw
studs, gypsy studs and other specialty fasteners. An advantage of certain DOT
products is their locking feature. Examples of DOT products with a locking
feature include Pull-the-DOT, which is a unidirectional lock designed to open
only when properly aligned, and the Common Sense line, which has a positive
locking feature that offers strength and durability. DOT fasteners are used for,
among other things: marine textiles, automobiles, awnings, luggage, athletic
outerwear, sporting goods, tents and packaging.

PCI. With the acquisition of PCI in January 1996, the Company expanded its
industrial product line to include footwear eyelets, grommets, washers,
industrial eyelets, and specialty stampings. The Company's supply division
provides specialized setting tools and supplies so that PCI customers can
customize third-party manufactured attaching machines to accommodate PCI
fasteners. These products are largely able to utilize the DOT distribution
channels.

Plastic Fasteners. The Company's plastic fastener line is principally
composed of three products that are known by their trade names: Whipper Snap,
Color Snap and Tag Lock. The Whipper Snap was the first plastic snap fastener.
Each Whipper Snap is composed of four parts and employs a four-prong design that
grips fabric securely without tearing. Currently, the Whipper Snap is the most
important of the Company's plastic fasteners, measured by sales volumes, and is
primarily sold for use in protective disposable medical apparel. Since late
1992, the demand for disposable medical garments has increased as a result of
new OSHA regulations governing the medical profession.

Color Snaps are used in packaging and other non-apparel applications. The Tag
Lock fastener is a one-way fastener that is most commonly used for one-time use
identification bracelets such as hospital bracelets and amusement park entrance
wristbands.

Manufacturing Operations

In the third and fourth quarters of 1999, the Company implemented a profit
improvement plan (the "Plan"). The Plan included cost reductions in
manufacturing. The effects of the Plan were realized in 2000 and resulted in
increased operating cash flow and operating profit. (See further discussion in
Item 7 - Management Discussion and Analysis).

The manufacture of a majority of the Company's products begins with the
stamping of the relevant raw material. Some products are formed through a series
of stamping steps using progressive dies while others are formed through a
single stamping step using sophisticated forming dies. These products are then
cleaned to reduce

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lubricant residues and prepare the surface for finishing before being assembled
and packed for shipping. To facilitate shipping, the Company works with several
different common carriers and its manufacturing facility is readily accessible
to the interstate highway system. Availability and cost of transportation are
not competitive factors affecting the Company's business in North American
markets.

Insurance

The Company maintains property insurance, liability insurance, business
interruption insurance and other insurance policies customary to the
manufacturing industry. The Company believes that its policies are sufficient to
cover any potential loss or liability that is likely to arise in the future.

Raw Materials

The prices of raw materials are subject to volatility. The Company's principal
raw materials are brass, steel, zinc and nickel alloys, of which brass is the
most significant. These raw materials are commodities that are widely available.

The Company secures its raw material needs with primary vendors through
ongoing negotiations. Depending upon market conditions for basic commodities,
the Company from time to time, will enter into firm purchase commitments with
vendors. There can be no assurance that the Company will be able to set the
price low enough to enable the Company to achieve adequate margins on finished
products, although it has in the past been able to pass a portion of any price
increase in materials to its customers.

The Company has strong relationships with many of the largest suppliers of raw
and processed materials in the United States. The Company's policy is to
establish arrangements with select vendors, based upon price, quality, and
delivery terms. By limiting the number of its suppliers, the Company believes
that it obtains materials of consistently high quality at favorable prices. In
addition to purchase contracts, the Company has tolling agreements with some of
its suppliers whereby the suppliers reprocess the Company's scrap for a fixed
charge. These relationships afford the Company certain purchasing advantages,
including stable supply and favorable pricing arrangements. The Company believes
it is able to obtain favorable pricing of raw materials as it achieves greater
production, due to its ability to place larger orders with commodity suppliers.

Marketing and Sales

The Company's sales and marketing organization consists of four functional
areas: sales, customer service, field service and product support. These four
areas work in close cooperation with one another in an effort to maximize the
Company's sales revenue and to offer superior customer service. The general
marketing strategy of the Company is to differentiate itself from other fastener
manufacturers by offering a full range of premium branded products and services.
Components of this strategy include offering attaching machine service,
engineering and sales support through the maintenance of a network of service
personnel, a direct field sales organization, applications engineering, and
product design and development.

Sales. The sales organization is divided by domestic U.S. regions.
Products in Europe are sold through a combination of direct sales in Belgium,
France, Germany and the United Kingdom as well as through distributors in
fifteen European countries. The Canadian market is served through a combination
of direct sales and distributors. In addition, the Company maintains customers
service centers in Montreal, Canada and Braine le Comte, Belgium. The Company
has an agreement with an Asian distributor, which provides the Company with
expanded distribution capability (including stocking of products) in Southeast
Asia.

Marketing. To reach its markets, the Company employs a general promotional
mix, utilizing a direct field sales staff, a telemarketing group and authorized
distributors. Participation in trade exhibitions, as well as a full advertising
program in trade publications supports the sales activity. The Company's product
management team

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supports the sales organization by focusing on pricing strategy, providing new
product information and by facilitating product improvement projects.

Customer Service. The Company provides customers with a "total system"
approach, which includes the fasteners, attaching equipment and dedicated field
service. The Company believes that its sales depend on in-depth knowledge of
customer manufacturing procedures, responsiveness to product design changes,
consistent product quality, timely delivery, and efficient and reliable
attaching machinery. Typically, the buying decision requires a consensus among
the customer's plant managers, plant engineers and merchandising and purchasing
personnel. The Company's sales force has been able to develop and maintain long-
term customer relationships. The Company's primary customer service center is
located in Clarkesville, Georgia and is dedicated to handling customer orders.
These centers are staffed by service representatives who work with the Company's
sales personnel and customer purchasing representatives to process orders and
ensure that all specifications are met. The customer service center also handles
inquiries regarding order changes, delivery and billing. The Company has a sales
center and distribution warehouse at its facility in Torreon, Mexico. This
center is staffed by bi-lingual customer service representatives.

Field Service. The Company provides product support through a dedicated
field service organization. The Company has field service personnel in North
America who regularly visit customer locations and maintain attaching machines
at customer locations throughout the United States, Mexico, Latin America and
Canada. Through its service representatives, the Company is able to minimize the
downtime of its attaching machinery and increase machine efficiency.

Product Support. The Company's product support includes a quality assurance
department that maintains an applications laboratory staffed by applications
engineers and technicians. The applications laboratory performs a variety of
tests, including strength and durability testing, in order to evaluate the
suitability of a fastener for a customer's application. The Company's
engineering department employs dedicated graphics designers. These designers
work with a CAD/CAM system to adapt customers' logo designs to the Company's
fastener products.

Backlog. At December 31, 2000 and 1999, the Company had an order backlog of
approximately $4.0 million and $6.2 million respectively. Management does not
believe that a material amount of orders constituting such backlog at December
31, 2000 will remain unfilled by the end of May 2001.

Customers. The Company serves two major markets: apparel and industrial. The
Apparel Group serves six primary market segments, consisting of infantswear,
childrenswear, jeans, workwear, leisurewear/fashion and disposables. A trend in
the apparel industry is to move to lower cost production, most commonly in Asia
and Latin America. The Company, with its distribution networks in Mexico and
Asia, is able to help apparel manufacturers with this transition. The
Industrial Group serves six primary market segments, consisting of automotive,
marine textiles, military, leather, sporting goods and medical.

In 2000, no single customer accounted for more than 8% of the Company's total
net sales, and the Company's 10 largest customers accounted for approximately
33% of the Company's total net sales. The Company's broad line of products for
apparel and specialty industrial use reduces its exposure to any one customer
segment and to fashion trends. The Company plans to expand its customer base by
introducing new products and developing applications for existing products. The
loss of any single customer would not have a material adverse effect on the
Company.

Competition. The Company operates in a highly competitive environment. Some
of the Company's competitors have greater financial resources than the Company.
As a result of its presence in both the apparel and industrial markets and the
diversity of its products, the Company believes that no single competitor
competes with the Company across the entire range of the Company's product
lines.

Although the primary competitive factors for the Company's products vary
somewhat across different product categories, the principal factors influencing
competition are breadth of product line, cost of raw materials, cost of
attaching machinery, price, quality and customer service. Brand recognition is
also a differentiating factor in the Apparel Group, which includes the Gripper
product line, and in the Industrial Group, which includes the DOT

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product line. The Company believes that it has remained competitive by
developing strong customer relationships based on its ability to supply quality
products.

Other factors affecting the Company's ability to compete domestically and
internationally include the ability of domestic and foreign manufacturers of
fasteners and other stamped metal products to move capacity quickly into
production in the industry segments in which the Company sells its products. As
a result, the Company faces price competition from a number of sources.

Trademarks and Patents. The Company currently uses numerous trademarks and
trade names in its business, including Color Snap(R), Common Sense(R), DOT(R),
DuraMark(TM), Gemini(TM), Gripper(R), Klikit(R), Maxi-Snap(TM), Mighty-
Snap(TM), PCI(TM), Pull-the-DOT(R), Lift-the-DOT(R), Tag Lock(TM),
Durables(TM), Baby Durables(TM) and Whipper Snap(R). In addition, the
Company owns 16 patents relating to its fasteners and attaching machinery and it
has one patent pending.

The Company also relies upon trade secret protection of its confidential and
proprietary information. The Company routinely enters into confidentiality
agreements with both high- and low-level employees. There can be no assurance
that such measures will be successful or that competitors will not be able to
discover the trade secrets on their own.

Governmental Regulations

A number of regulations affect the Company's business. The Company believes
that it complies with all laws and regulations affecting its business and that
it does not have any material liabilities under such laws and regulations. The
Company also believes that compliance with all such laws and regulations will
not, individually or in the aggregate, have a material adverse effect on the
Company's capital expenditures, earnings or competitive position. See also
"Legal Proceedings--Environmental Matters."

Employees

As of December 31, 2000, the Company employed 628 people. Approximately 123
were employed in administrative and sales positions and 505 were employed in
manufacturing positions. None of the Company's employees at the Clarkesville or
the Montreal facilities is represented by a labor union. The 53 non-management
employees at the Belgium facility belong to a labor union. The Company believes
that its relationships with its employees are satisfactory.

Item 2. Properties

The Company's U.S. manufacturing facilities are situated on 31 acres owned by
the Company in Clarkesville, Georgia (approximately 90 miles northeast of
Atlanta, Georgia) and include a 230,000 square foot building used for
manufacturing and administration, as well as a 26,400 square foot attaching
machine center. The Company also leases manufacturing facilities in Montreal,
Canada, and owns a manufacturing facility in Braine-le-Comte, Belgium.

The Company maintains a central distribution warehouse at its Georgia facility
and a satellite warehouse in Mexico. Its products are also available from
distributor facilities located throughout Canada, the United States, Western
Europe, Central America, South America, and the Far East. Goods are packaged to
meet market needs for safe handling and effective storage, and customized
packaging is available for distributors in select market channels such as the
marine product line.

Item 3. Legal Proceedings

From time to time, the Company is named in claims involving manufacturers,
contractual disputes and other matters arising in the ordinary course of the
Company's business. Currently, no legal proceedings are pending

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against or involve the Company that, in the opinion of management, could
reasonably be expected to have a material adverse effect on the business,
financial condition or results of operations of the Company.

Environmental Matters

Like similar companies, the Company's operations and properties are subject to
a wide variety of increasingly complex and stringent federal, state, local and
foreign environmental laws and regulations, including those governing the use,
storage, handling, generation, treatment, emission, release, discharge and
disposal of certain materials and wastes, the remediation of contaminated soil
and groundwater, and the health and safety of employees (collectively,
"Environmental Laws").

The Company is currently subject, and may in the future be subject, to
liability under Environmental Laws for remediation of contamination at currently
or formerly owned or operated facilities including, presently, remediation at
its Clarkesville, Georgia facility. In addition, from time to time, the Company
has been cited for violations of Environmental Laws. The sanctions for failure
to comply with such Environmental Laws can include significant civil penalties,
injunctive relief and denial or loss of, or imposition of significant
restrictions on, environmental permits. In addition, the Company could be
subject to suit by third parties in connection with violations of or liability
under Environmental Laws. In the event of liability under Environmental Laws,
the Company intends to pursue available statutory and contractual remedies, and
defenses including any applicable rights of contribution and indemnification
from predecessors in interest.

As of December 31, 2000, the Company had reserves of approximately $1.7
million for environmental liabilities. Of the total reserve for environmental
liabilities, $1.3 million represents the maximum amount of contractual payments
pursuant to a settlement agreement with a former parent for remediation at a
former plant facility. Because Environmental Laws have historically become
increasingly more stringent, costs and expenses relating to environmental
control and compliance may increase in the future.

The nature of the Company's current and former operations, and those of its
predecessors, exposes it to the risk of claims with respect to environmental
matters and there can be no assurance that material costs or liabilities will
not be incurred in connection with such claims. Based upon its experience to
date, the Company believes that the future cost of compliance with existing
Environmental Laws, and liability for known environmental claims pursuant to
such Environmental Laws, will not have a material adverse effect on its cash
flow, financial condition or results of operations. However, future events, such
as new information, changes in existing Environmental Laws or their
interpretation, and more vigorous enforcement policies of regulatory agencies,
may give rise to additional expenditures or liabilities that could be material.

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

Not Applicable.

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PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

Neither Holdings nor Fasteners has a class of capital stock, including their
respective classes of common stock, registered pursuant to the Securities
Exchange Act of 1934, as amended. There is no established public trading market
for the Common Stock. Holdings has never declared or paid any cash dividends on
its Common Stock, and Fasteners pays quarterly dividends to Holdings for
management fee purposes, but is otherwise restricted from paying dividends.

The Company amended its Certificate of Incorporation in November 1999 to
convert outstanding Series B Preferred Stock into Common Stock and increased the
number of authorized shares of Common Stock from 6 million to 15 million.
Options, which previously existed, were for a unit consisting of one share each
of Common Stock and Series B Preferred Stock. All options now represent a unit
consisting of two shares of Common Stock. Accordingly, all option and share
information included herein has been adjusted to reflect the total number of
common shares on a retroactive basis.

Item 6. Selected Financial Data

Selected Consolidated Historical Financial Data
(Dollars in thousands)

On November 26, 1997, Scovill Acquisition Inc. purchased all of the
outstanding stock of KSCO Acquisition Corp. ("Predecessor-KSCO").

The following table presents selected historical financial data of the
Company and Predecessor-KSCO as of the dates and for the periods indicated,
including the results of operations of acquired companies from their respective
dates of acquisition. The financial data as of December 31, 2000, 1999, 1998 and
1997 and the years ended December 31, 2000, 1999 and 1998 and for the period
from November 26, 1997 to December 31, 1997 have been derived from the
consolidated financial statements of the Company audited by Arthur Andersen LLP,
independent public accountants. The financial data as of December 31, 1996 and
for the period from January 1, 1997 to November 26, 1997 have been derived from
the consolidated financial statements of Predecessor-KSCO audited by Arthur
Andersen LLP, independent public accountants. The selected historical financial
data should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and notes thereto included elsewhere herein.

The consolidated financial statements of the Company and the Predecessor-KSCO
are not comparable in certain respects.

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Predecessor--KSCO Company
---------------------------|-------------------------------------------------------------
Period From | Period
Year January 1, | From Year Year Year
Ended 1997 to | Inception to Ended Ended Ended
December 31, November 26, | December 31, December 31, December 31, December 31,
1996 1997 | 1997 1998 1999 2000
---------------------------|-------------------------------------------------------------
|
STATEMENT OF OPERATIONS |
DATA |
Net sales.................................. $91,632 $89,167 | $6,694 $92,476 $ 89,190 $ 88,288
Gross profit............................... 27,032 25,164 | 2,103 24,364 19,534 25,339
Operating income (loss)(1)................. 7,424 7,746 | 627 1,732 (12,598) 6,711
Income (loss) before income taxes and |
extraordinary loss........................ 1,021 2,431 | (704) (14,281) (29,691) (8,423)
Net income (loss) available to common |
stockholders(2)........................... $ (852) $ 1,319 | $ (781) $ (9,767) $(28,602) $ (8,515)
======= ======= | ====== ======== ======== ========

Predecessor-KSCO | Company
-----------------|------------------------------------------
December 31 | December 31
1996 | 1997 1998 1999 2000
-----------------|------------------------------------------
|
BALANCE SHEET DATA |
Working capital........................... $ 17,562 | $ 15,815 $ 18,689 $ 14,950 $ 16,154
Total assets.............................. 103,866 | 226,202 217,267 193,390 188,623
Total debt(3)............................. 37,718 | 129,848 141,313 149,929 153,724
Redeemable preferred stock................ -- | 99,400 -- -- --
Stockholders' (deficit) equity............ $ 21,421 | $ 31,409 $ 32,535 $ 4,242 $ (8,926)

(1) The Company began implementing a profit improvement plan in the third
quarter of 1999. In connection with such plan, the Company recorded a
restructuring and asset impairment charge of $12,608, which includes the
impairment of goodwill and certain fixed assets. Also, in connection with
the profit improvement plan, the Company charged $2,676 to cost of sales,
$3,469 to selling, general and administrative expenses and $140 to other
income. Had it not been for such charges, operating income would have been
$6,155.

(2) In January 1996, the Company refinanced its previously existing credit
agreements, which resulted in an extraordinary after-tax charge of $950 in
the first quarter of 1996 from the write-off of related deferred financing
costs.

(3) Excludes off-balance sheet financing pursuant to the Synthetic Lease, that
existed from October 1995 to November 1996, proceeds of which were applied
toward repayment of debt of $31,268 in November 1996.

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and the notes thereto. All dollar figures have
been rounded to the nearest one-tenth of one million for presentation purposes.

Background

Scovill Acquisition Inc. ("SAI") and Scovill Holdings Inc. ("Holdings"), both
Delaware corporations, were formed by Saratoga Partners III, L.P. ("Saratoga")
in 1997 to effect the acquisition of Scovill Fasteners Inc., a Delaware
Corporation ("Fasteners" or the "Company"). SAI purchased KSCO Acquisition
Corporation ("KSCO") in 1997 for approximately $168.8 million less the amount of
indebtedness of the Company existing immediately prior to closing of the
acquisition (including indebtedness that was not repaid in connection with the
transactions). The purchase of KSCO by SAI and the mergers of SAI and KSCO into
Fasteners are together referred to herein as the "Saratoga Acquisition."

The Saratoga Acquisition of Fasteners was accounted for as a purchase.
Accordingly, the consolidated financial statements of Fasteners reflect the
application of the purchase method of accounting effective November 26, 1997. In
connection with the Saratoga Acquisition, the Company issued (the "Initial
Offering") $100,000,000 of 11.25% Senior Notes due 2007 (the "Notes") pursuant
to an Indenture (the "Indenture"). The Company completed an exchange of the
Notes for identical, but publicly tradeable notes pursuant to an exchange offer
registered with the Securities and Exchange Commission ("SEC").

-12-

In connection with the Saratoga Acquisition, Fasteners entered into a new
senior secured credit facility (the "Credit Facility"), consisting of a $28.0
million term loan (the "Term Loan") and a $25.0 million revolving credit
facility (the "Revolving Credit Facility").

In November 1999, the Company entered into an amendment to the Credit Facility
(the "Facility Amendment"), which adjusted the Credit Facility's financial
covenants and provided an additional term loan of up to $10 million (the
"Tranche B Loan"). The Facility Amendment adjusted the Credit Facility's fixed
charge coverage ratio covenant, funded indebtedness to EBITDA ratio covenant and
adjusted the amortization schedule of the Term Loan. The new $10 million
Tranche B Loan was funded through multiple lenders including owners of the
Company. The new Tranche B Loan bears interest at 17.5%, will mature in
November 2004, and is subject to the requirements and conditions set forth in
the Facility Amendment and Credit Facility. The Tranche B Loan does not require
cash interest or principal payments until final maturity. The Company borrowed
$8 million under the Tranche B loan in November 1999 and used the proceeds to
fund an interest payment on its Notes and for other working capital purposes.

During August and September of 2000, the Company borrowed the remaining $2
million allowed under the Tranche B Loan, which was used to fund additional
consideration pursuant to a management consulting arrangement the Company
entered into during 1999.

General

The Company, whose business has been in continuous operation since 1802, is a
designer, manufacturer and distributor of apparel and specialty industrial
fasteners. The Scovill name is the oldest and one of the most well known brands
in the fasteners industry. The Company has achieved and maintained its
reputation by offering its customers an integrated system of high quality
fasteners, proprietary attaching machines, technical service, on-site
maintenance and customized applications and design services tailored to
individual customer needs. The Company has two main product groups: the Apparel
Group and the Industrial Group.

Revenues include sales of fastener products and rental income from the leasing
of attaching machines to customers. Cost of sales includes the costs of raw
materials, labor and variable and fixed manufacturing overhead. Selling, general
and administrative expenses consist primarily of salaries and benefits paid to
sales and administrative personnel, commissions, and travel, marketing and
advertising expenses.

During 1999, the Company recorded restructuring charges related to a profit
improvement plan (the "Plan") designed to cut the operating costs of the Company
through the outsourcing of the production of certain products previously
manufactured by the Company. The charge consisted of (1) a $7.1 million
goodwill impairment charge; (2) $3.2 million of fixed assets written off as they
were designated to be disposed of; (3) $1.5 million in charges related to
severance and trademark impairment charges related to the Company's European
operations; (4) $0.5 million in severance costs for 21 employees terminated as a
result of the Plan (of which $0.2 million was accrued December 31, 1999); and
(5) $0.3 million in other miscellaneous charges. Substantially all of these
amounts accrued were expended as of December 31, 2000.

In connection with the Plan, the Company also charged $2.7 million to cost of
sales relating to reserves for discontinued inventory items, $3.4 million to
general and administrative expenses for costs related to implementing the Plan,
and $0.1 million to other income/expense. The charge to other income/expense
includes $0.6 million related to legal fees from non-operating matters, $0.7
million of product development costs of abandoned projects and $0.2 million of
other miscellaneous charges related to the disposal of a division of the PCI
product line, offset by $1.4 million of income resulting from an adjustment to
the contract with a former parent for environmental obligations. Implementation
of the Plan was completed in the second quarter of 2000 and resulted in
increased operating cash flow and operating profit. Substantially all of the
improvements in the Company's gross profit and Selling General and
Administrative expense as reflected in the Company's consolidated Statement of
Operations for the year ended December 31, 2000 are directly related to the
Plan.

-13-

Results of Operations

Fiscal Year 2000 Compared with Fiscal Year 1999

Net Sales. Net sales decreased $.9 million or 1.0% from $89.2 million to
$88.3 million. European revenues declined $2.5 million or 25.3%, and Industrial
group revenues declined $1.7 million or 6.3% from $27.2 million to $25.4
million, primarily in the PCI product line, as a result of the Company's
strategic decision to rationalize certain of its product offerings. This was
partially offset by increased revenues in the Company's Apparel Group of $3.3
million or 6.3%, reflecting continued growth in shipments to Mexico, which
increased by $3.5 million or 87.5%, and Asia, which increased by $.8 million or
12.9%. U. S. Apparel revenues declined $.8 million or 3.1%, reflecting the
continuing trend by U. S. apparel manufacturers of transferring production to
Mexico and the Caribbean.

Gross Profit. Gross profit of $25.3 million increased $5.8 million or 29.7%
over the prior year level of $19.5 million. This increase is primarily
attributable to the increase in revenues in the continuing product lines which
have higher margins than the product offerings that were rationalized, as well
as cost reduction initiatives of the profit improvement plan which the Company
implemented in the third and fourth quarters of 1999, and completed in the
second quarter of 2000.

Selling, General and Administrative Expenses ("SG&A"). SG&A of $15.8 million
decreased $.4 million or 2.5% from the prior year level of $16.2 million,
reflecting savings realized and prior year costs incurred as a result of the
profit improvement plan which the Company implemented in 1999, partially offset
by additional consulting and legal fees related to the implementation of that
plan. As a percentage of revenues, SG&A decreased from 18.2% in 1999 to 17.9% in
2000, as previously discussed.

Amortization Expense. The balance sheet includes $86.0 million of assets
designated as goodwill and trademarks that represent 45.6% of total assets.
Goodwill arises when an acquiror pays more for a business than the fair value of
the tangible assets and separately measurable intangible net assets acquired.
Amortization expense of $2.8 million decreased $.5 million or 15.4% from the
prior year level of $3.3 million primarily as a result of the impairment charge
of $7.1 million related to goodwill in 1999, along with the completion of the
amortization of the covenants not to compete during the third quarter of 2000.

Generally accepted accounting principles require that Goodwill and all
other intangible assets be amortized over the period benefited. Management has
determined that the period benefited by the goodwill and trademarks will be no
less than 40 years, given, among other things, the fact that the Company has
been in existence for almost 200 years. In the event that management determined
that the period benefited would be less that 40 years due to market conditions
or other external factors, then the Company's operating results could be
significantly impacted as a result of amortizing goodwill and trademarks over a
shorter period.

Operating Income. Operating income increased to $6.7 million in 2000
compared to a loss of $12.6 million in 1999, or an improvement of $19.3 million,
primarily as a result of the above noted improvements in gross profit, SG&A
expenses and amortization expenses, and the impact on 1999 operating income of
the restructuring and asset impairment charge of $12.6 million. (See Fiscal Year
1999 Compared with Fiscal Year 1998).

Other Income/Expense. Other income for 2000 was $3.2 million compared to an
expense of $.3 million for 1999, or an improvement of $3.4 million. Included in
the 2000 amount are the net proceeds from a trademark infrigent settlement. (See
Note 8 of the Notes to Consolidated Financial Statements).

-14-

Interest Expense. Interest expense increased by $1.5 million or 8.7%, from
$16.8 million in 1999 to $18.3 million in 2000 primarily due to higher average
interest rates in 2000 compared to 1999, and accrued interest on the Company's
Tranche B Loan established in November 1999.

Net Tax Provision/(Benefit). The net tax provision in 2000 was $.1 million
related primarily to foreign earnings, compared to a benefit of $1.1 million in
1999. The Company has fully offset its deferred tax liabilities with its
deferred tax assets as of April 1999; therefore, no tax benefit was recognized
subsequent to April 1999.

Net Income/(Loss). Net loss for 2000 was $8.5 million compared to a net
loss of $28.6 million for 1999, or an improvement of $20.1 million, which is
attributable to the factors discussed above.

Fiscal Year 1999 Compared with Fiscal Year 1998

Net Sales. Net sales decreased $3.3 million, or 3.6% from $92.5 million to
$89.2 million. Industrial group revenues declined $1.0 million, or 3.6%, from
$28.2 million to $27.2 million. Such decline was the result of manufacturing
constraints in the PCI product line and limited product offerings. European
operation sales decreased $1.2 million, or 10.7%, from $10.9 million to $9.7
million. In addition, Apparel group revenue decreased by $1.1 million, or 2.1%,
from $53.4 million to $52.3 million.

Gross Profit. Gross profit in 1999 includes $2.7 million of one-time
charges in conjunction with the Company's profit improvement plan. Excluding
these one-time charges, gross profit decreased by $2.2 million, or 8.8%, from
$24.4 million to $22.2 million and gross margin decreased from 26.3% to 24.9%.
The Company has continued to experience negative product sales mix in its
Apparel revenues in Asia as well as within the Industrial Group.

Selling, General and Administrative Expenses ("SG&A"). SG&A increased $0.5
million, or 3.1%, from $15.7 million to $16.2 million and represented 18.2% and
17.0% of sales for the years ended December 31, 1998 and 1999, respectively.
General & Administrative expenses include $3.4 million of non-recurring expenses
related to implementing the profit improvement plan in the third and fourth
quarters of 1999. Excluding these one-time charges, SG&A decreased by $2.9
million, or 18.9%. Such decrease is a result of the restructuring plan
implemented in June 1998 and the profit improvement plan implemented during the
third and fourth quarters of 1999. See discussion regarding restructuring
below.

Amortization expense. The balance sheet includes $88.3 million of assets
designated as goodwill and trademarks that represent 46% of total assets. The
Company recorded an impairment charge of $7.1 million related to goodwill, which
was originally allocated to fixed assets which the Company elected to dispose of
in 1999.

Amortization expense decreased $0.6 million from $3.9 million to $3.3 million
as a result of the full amortization of a non-compete agreement.

Restructuring and Asset Impairment Charge. In the third and fourth quarters
of 1999, the Company began implementing a profit improvement plan (the "Plan").
In connection with the Plan, the Company incurred one-time pre-tax charges in
the fourth quarter of 1999 of $12.6 million. These charges include the
impairment of assets, principally goodwill of $7.1 million. The impairment
charge also includes $3.2 million of fixed assets, including $0.2 million of
disposal costs, which the Company elected to dispose of in 1999, which relate to
the manufacture of certain items in its PCI product line, which will be
outsourced. The assets are expected

-15-

to be disposed of in early 2000. The charge also includes $0.5 million in
severance costs for 21 employees who were terminated in conjunction with the
Plan; $0.2 million of this amount will be paid in subsequent periods through
June 2000 and is included in accrued liabilities as of December 31, 1999. In
addition, the charge includes $1.5 million in charges consisting of severance
costs and write-off of intangibles related to the Company's European operations.
Finally, $0.3 million of miscellaneous costs consisting primarily of costs
related to terminated leases. The Plan is expected to be implemented by the
second quarter of 2000.

In connection with the Plan, the Company also charged $2.7 million to cost of
sales of non-recurring charges relating to reserves for discontinued inventory
items and $0.1 to other income/expense. The charge to other income/expense
includes $0.6 million related to legal fees from non-operating matters, $0.7
million of product development costs of abandoned projects and $0.2 million of
other miscellaneous charges related to the disposal of a division of the PCI
product line, offset by $1.4 million of income resulting from an adjustment to
the contract with a former parent for environmental obligations. Other charges
related to the profit improvement plan included $3.4 million charged to SG&A.

Operating Income. Operating income decreased $14.3 million, from $1.7 million
to an operating loss of $12.6 million primarily as a result of a restructuring
charge of $12.6 million and other non-recurring items included in cost of sales
and SG&A of $2.7 million and $3.4 million, respectively.

Interest Expense. Interest expense increased $0.9 million, from $15.9 million
to $16.8 million due to additional borrowings outstanding under the Revolving
Credit Facility during 1999, the Tranche B Loan established in November 1999, in
addition to an increase in the Company's interest rates.

Net Tax Provision (Benefit). The benefit for income taxes was $1.1 million in
1999 compared to $4.7 million for 1998. The decrease in the income tax benefit
is a result of the Company fully offsetting its deferred tax liabilities with
its deferred tax assets in April 1999; therefore, no income tax benefit was
recognized subsequent to April 1999.

Net Income (Loss). Net loss was $28.6 million for 1999 compared to $9.8
million for 1998, which is attributable to the factors discussed above.

Liquidity and Capital Resources

As of December 31, 2000, $16.8 million was outstanding under the Revolving
Credit Facility with $1.4 million of availability. The Company's sources of
funds include income from operations, borrowings under the Revolving Credit
facility and borrowings under the Tranche B Loan. The Company's liquidity
requirements consist primarily of scheduled payments of principal and interest
on its indebtedness, working capital needs and capital expenditures. The Company
believes that its operating cash flow, together with borrowings under the Credit
Facility, will be sufficient to meet its operating expenses capital
requirements, and debt service requirements through 2001. However, in the
event the Company requires additional capital during such period, it will be
required to secure new capital sources or expand its bank credit facility. In
such event, there can be no assurances that additional capital will be available
or available on terms acceptable to the Company.

In November 1999 the Company entered into an amendment to the Credit Facility
(the "Facility Amendment"), which adjusted the Credit Facility's financial
covenants and provided an additional term loan of up to $10 million (the
"Tranche B Loan"). The Facility Amendment adjusted the Credit Facility's fixed
charge coverage ratio covenant, funded indebtedness to EBITDA ratio covenant and
adjusted the amortization schedule of the Term Loan. The new $10 million
Tranche B Loan was funded through multiple lenders including owners of the
Company. The new Tranche B Loan bears interest at 17.5%, will mature in
November 2004, and is subject to the requirements and conditions set forth in
the Facility Amendment and Credit Facility. The Tranche B Loan does not require
cash interest or principal payments until final maturity. The Company borrowed
$8 million under the Tranche B Loan in November 1999 and used the proceeds to
fund an interest payment on its Notes and for other working capital purposes.
The Company borrowed an additional $2 million, under the Tranche B Loan in 2000,

-16-

solely for the use of funding consideration pursuant to a management consulting
arrangement the Company entered into during 1999.

Scheduled debt repayments under the Credit Facility and the Notes are $3.0
million in 2001, $6.0 million in 2002, $31.1 million in 2003, $10.0 million in
2004 and $100.0 million (representing the Notes) thereafter. Scheduled payments
of interest for 2001 are $11.3 million for the 11.25% Senior Notes due in 2007,
and approximately $4.0 million under the Credit Facility.

Capital Expenditures

The Company's capital expenditures during 2000 aggregated approximately $3.9
million, which were primarily for reconditioning and purchases of attaching
machines and plant machinery and equipment. Capital expenditures for 2001 and
2002 are expected to be less than $5.0 million per year.

Cash Flows

Net cash provided by the Company's operating activities was $1.1 million for
2000. Principal working capital changes included an increase of $.5 million in
accounts payable, a $5.9 million increase in accounts receivable, and a $.7
million increase in inventory. The Company's cash used in investing activities
was $3.9 million for capital expenditures. Net cash provided by financing
activities was $3.9 million, reflecting an increase in borrowings under the
Revolving Credit Facility of $1.9 million, and borrowings of $2.0 million under
the Tranche B Loan.

Net cash used in the Company's operating activities was $4.3 million for
1999. Principal working capital changes included a decrease of $3.2 million in
accounts payable, a $1.6 million increase in accrued expenses, and a $6.1
million decrease in inventory. The Company's cash used in investing activities
was $4.5 million for capital expenditures. Net cash provided by financing
activities was $8.6 million, reflecting an increase in borrowings under the
Revolving Credit Facility of $2.0 million, borrowings of $8.0 million from the
Tranche B Loan, net of repayments of $1.3 million.

The Indenture governing the Notes and the Credit Facility each place
significant restrictions on the Company's ability to incur additional
indebtedness, pay dividends or repurchase stock or make other distributions,
create liens, make certain investments, sell assets, or enter into mergers or
consolidations.

EBITDA

EBITDA is defined for the purpose of this report as net income (loss) before
interest expense (including amortization of deferred financing costs), provision
(benefit) for income taxes, depreciation, amortization, restructuring and assets
impairment charge, non-recurring charges and management fees. EBITDA as defined
for the purpose of this report and under the Company's Credit Facility are
consistent.

The Company has included information concerning EBITDA, as defined, in this
report because certain investors use it as a measure of a company's ability to
service its debt. EBITDA, as defined, is not required or recognized as a
measure of financial performance under generally accepted accounting principles
in the U.S. ("GAAP"), and should not be considered an alternative to net income
determined in accordance with GAAP as an indicator of operating performance or
as an alternative to cash flow from operating activities determined in
accordance with GAAP as a measure of liquidity. The Company's use of EBITDA, as
defined, may not be comparable to similarly titled measures used by other
companies due to their use of different financial statement components in
calculating EBITDA.

-17-

EBITDA has been calculated by the Company as follows:

2000 1999
---------------------------------------

Net Income (loss)............................... $(8,515) $(28,602)
Income tax expense (benefit).................... 92 (1,089)
Interest expense................................ 18,305 16,839
Other (income) expense.......................... (3,171) 254
Depreciation.................................... 9,663 9,775
Amortization.................................... 2,800 3,309
Management fee.................................. 600 600
Non-recurring charges........................... 3,997 6,005
Restructuring and asset impairment charge....... 9 12,608
------- --------
EBITDA $23,780 $ 19,699
======= ========

For the year ended December 31, 2000 compared to the year ended December 31,
1999, EBITDA, as defined, increased $4.1 million, or 20.7%, from $19.7 million
to $23.8 million primarily as a result of improved manufacturing costs and
efficiencies and a decrease in SG&A expenses (excluding non-recurring charges).

Inflation

Inflation has had a nominal impact on operations during the last three years.
Increases in operating costs were consistent with the general inflation rate and
were offset by management cost control measures and productivity improvements.

Hedging Activities

The Company did not engage in hedging activities during 2000. During 1999,
the Company secured the supply of a substantial portion of its copper needs with
primary vendors through June 2000.

Accounting Standards

In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS
133"). SFAS 133, as amended requires companies to record derivatives on the
balance sheet as assets or liabilities, measured at fair value. Gains or losses
resulting from changes in the values of those derivatives would be accounted for
depending on the use of the derivative and whether it qualifies for hedge
accounting. SFAS 133 is effective for the Company on January 1, 2001. This
implementation does not have a significant impact on the Company's financial
condition or results of operations.

"Safe Harbor" Statement

The following "Safe Harbor Statement" is made pursuant to the Private
Securities Litigation Reform Act of 1995. Certain of the statements contained in
the body of this Report are forward-looking statements (rather than historical
facts) that are subject to risks and uncertainties that could cause actual
results to differ materially from those described in the forward-looking
statements. With respect to such forward-looking statements, the Company seeks
the protections afforded by the Private Securities Litigation Reform Act of
1995. Such forward-looking

-18-

statements are based on management's current plans and expectations and are
subject to a number of uncertainties that could cause actual results to differ
materially from those described in such statements. Such uncertainties and risks
include, but are not limited to: the risks and uncertainties inherent in doing
business abroad and the possible negative impact of the North American Free
Trade Agreement (NAFTA) on the Company's sales in the U.S. market; the
availability of, and the ability to close and finance acquisition opportunities
on terms acceptable to the Company; the volatility of the price of raw
materials; increasing competition; reliance on key personnel; increasingly
complex and stringent environmental laws and regulations; the highly leveraged
nature of the Company, its debt service requirements and the operating and
financing restrictions on the Company by the terms of the Credit Facility, the
Indenture, and the other agreements governing the Company's indebtedness; and
general economic conditions. The preceding list of uncertainties, however, is
not intended to be exhaustive, and should be read in conjunction with other
cautionary statements made herein and in the Company's publicly-filed reports
and its Form S-1 Registration Statement, dated December 24, 1997 (Commission
File No. 333-43195), and all amendments thereto (the "Registration Statement"),
including, but not limited to the "Risk Factors" set forth in the Registration
Statement.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Pursuant to the general instructions to Rule 305 of SEC Regulation S-K, the
quantitative and qualitative disclosures called for by this Item 7a and by Rule
305 of SEC Regulation S-K are inapplicable to Holdings and Fasteners at this
time due to materiality.

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary financial information required by
this item are filed as part of this Report on pages F-1 through F-22 and page
S-1 immediately preceding the signature page to this Report.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None

-19-

Part III

Item 10. Directors and Executive Officers

Executive Officers and Directors

Set forth below are the names, ages as of December 31, 2000, and a brief
description of the business experience of each person who serves as an executive
officer or director of Fasteners. The executive officers and directors of
Holdings are the same as those of Fasteners.

Name Age Position
- ---- --- --------------------------------------------
John H. Champagne.............. 52 President/CEO

Vincent H. Catrini............. 52 Executive Vice President, Treasurer,
Chief Financial Officer and Secretary

Robert W. Feltz................ 51 Executive Vice President--Sales and
Marketing

William F. Andrews............. 69 Chairman of the Board

Christian L. Oberbeck.......... 41 Director

Kirk R. Ferguson............... 33 Director

Alan N. Colner................. 46 Director

Mr. Champagne joined the Company as Vice President of Manufacturing in 1996.
He has also served as Executive Vice President - Industrial Group and then
Executive Vice President - Engineering. Mr. Champagne was appointed President
in January 2000. Before joining the Company, Mr. Champagne worked at Rau
Fastener, Inc. from 1968 to 1995, serving as President and Director from 1988 to
1995. He also served as President of Rau Fasteners, LLC from 1995 to 1996.

Mr. Catrini joined the Company in July 2000 as Executive Vice President and
Chief Financial Officer. Prior to that he was Vice President and Chief
Financial Officer of Amnex Inc., a telephone service provider since 1998. From
1996 to 1998 he was a principal at KDC & Company, a management-consulting firm
providing services to small high tech companies. From 1992 to 1995 he was Vice
President/Controller for Porta Systems Corp., and from 1990 to 1992, Vice
President and Chief Financial Officer for BroadBand Technologies, Inc., both
manufacturers of telecommunications equipment. Prior to 1990 he was Vice
President and Chief Financial Officer for TDS Healthcare Services Inc., and Vice
President- Group Controller for ITT Telecommunications North America. Mr.
Catrini received his MBA and BA from New York University.

Mr. Feltz joined the Company as National Sales and Service Manager in 1982. He
was named Executive Vice President - Business Development in September 1997 and
then Executive Vice President - Sales and Marketing in 1998. He has also served
as Vice President of Sales and Marketing Worldwide. Prior thereto, he worked at
Talon Division of Textron and Burroughs Corp (Unisys Inc.). He held various
sales and marketing functions with each firm.

Mr. Andrews has been Chairman of the Company's Board of Directors since 1996.
From 1981 to 1986, he was Chairman, President and Chief Executive Officer of
Scovill Manufacturing, Co., where he worked for more than 20 years. Mr. Andrews
is also Chairman of Northwestern Steel & Wire Company, a manufacturer of
structural beams, rod and wire. From 1993 to 1995, Mr. Andrews was Chairman and
Chief Executive Officer of Amdura Corporation, a manufacturer of hardware and
industrial equipment. From 1990 to 1992, he was President and Chief Executive
Officer of UNR Industries, Inc., a diversified manufacturer of steel products.
Prior to 1990, Mr. Andrews was President of Massey Investment Company and
Chairman, President, and Chief Executive Officer of Singer Sewing Company. Mr.
Andrews is also a director of Black Box Corporation; Johnson Controls, Inc.;
Katy Industries; Navistar, Inc.; Dayton Superior Corporation and Trex Company,
LLC and several privately held companies.

Mr. Oberbeck became a director of the Company upon consummation of the
Saratoga Acquisition and is a member of the Executive committee of the Board of
Directors. Mr. Oberbeck is one of the founders of Saratoga

-20-

Partners where he has been a Managing Director since its formation as an
independent entity in September 1998. Prior to that time Mr. Oberbeck was a
Managing Director of SBC Warburg Dillon Read Inc. since September 1997, the
successor entity of Dillon, Read & Co. Inc. where he was a Managing Director
from February 1995 to September 1997, responsible for the management of the
Saratoga funds. Prior to joining Dillon, Read & Co. Inc., Oberbeck was a
Managing Director of Castle Harlan, Inc. where he worked from October 1987 until
February 1995. Mr. Oberbeck is a Director of Equality Specialties, Inc., J&W
Scientific Incorporated, and Koppers Industries, Inc.

Mr. Colner has been a director of the Company since July 1998. Since August
1996 he has served as Managing Director, Private Equity Investments at Moore
Capital Management, Inc. Before joining Moore, he was a Managing Director of
Corporate Advisors, L.P., the general partner of Corporate Partners, a private
equity fund affiliated with Lazard Freres & Co. LLC. Mr. Colner also serves as
a director of iVillage Inc. and several privately held companies. Mr. Colner
received his M.B.A. from the Stanford University Graduate School of Business and
his B.A. from Yale University.

Mr. Ferguson has been a director of the Company since October 1998. Mr.
Ferguson is a Principal of Saratoga Partners where he has worked since its
formation as an independent entity in September 1998. Prior to that time Mr.
Ferguson had been employed by SBC Warburg Dillon Read Inc. since September 1997,
the successor entity of Dillon, Read & Co. Inc. where he was hired into the
corporate buyout group in May 1997. Before joining Dillon Read, Mr. Ferguson
was an investment professional with Perry Corp. and a consultant with Monitor
Company, Inc. Mr. Ferguson received his M.B.A. from Harvard Business School and
his A.B. from Stanford University.

Board Designations

Pursuant to a Stockholders Agreement among Holdings and certain investors and
members of management, until at least 25% of the Common Stock is publicly
traded, (i) Moore Investments, Ltd. and Remington Investment Strategies, L.P.
together will have the right to designate one member of the Board of Directors
of Holdings so long as such investors together hold at least 50% of their
original investment in Holdings, (ii) Saratoga will have the right to designate
up to five directors and (iii) Co-Investment Partners, L.P. ("Co-Investment
Partners") has the right to receive notice of all meetings of the Board of
Directors of Holdings and to have a representative attend such meetings so long
as it holds at least 50% of its original investment in Holdings.

Item 11. Executive Compensation

Employment Arrangements

In order to assure the continued service of executive management, the Company
operates under employment arrangements ("Employment Arrangements") with
Messrs. Champagne, Catrini and Feltz (each, an "Executive," and together, the
"Executives"). Mr. Champagne serves as President and has an annual salary of
$200,000. Mr. Catrini serves as Chief Financial Officer of the Company and has
an annual salary of $160,000. According to the terms of his employment
contract, Mr. Feltz serves as Executive Vice President- Sales and Marketing and
has an annual salary of $188,000. Each Executive is entitled to participate in
the Company's benefit plans for senior executives and receives certain fringe
benefits, including a car, personal computer and cellular telephone.

Board Member Compensation

The Company may compensate the members of the Board of Directors who are not
full-time employees of the Company on an annual and per meeting basis, in an
amount and on a basis as may be determined in the future. The Company also may
compensate members of committees of the Board of Directors for each Committee
meeting attended. Directors of the Company receive reimbursement of their
reasonable out-of-pocket expenses incurred in connection with their board
activities. The Company has purchased directors' and officers' insurance for its
executive officers and directors.

-21-

New Incentive Stock Option Plan

The Company implemented a new stock option plan (the "New Plan"), effective
April 2, 1998, for key executives and managers which provides for the grant of
stock options ("Options") to purchase 1,100,000 shares of the Common Stock of
Holdings. The New Plan has the following terms: Options granted under the New
Plan will have an exercise price equal to the fair market value of the stock
underlying the Option on the date of the grant, which exercise price will
increase annually at a rate of 9% of the value of the unit (each unit consists
of one share of Common Stock and one share of Series B preferred stock), and
Options will vest over a period of 5 years commencing on the first anniversary
of the date of the grant. Vested options may be exercised by payment of the
exercise price in cash or, if approved by Holdings' stock option committee, by
delivery of a promissory note. Upon a participant's termination of employment
for cause, all of such participant's Options will immediately expire. If a
participant's employment terminates by reason of (i) death, (ii) disability,
(iii) retirement or (iv) voluntary resignation or termination of employment
other than for cause, the participant's unvested Options will immediately expire
and such participant's vested Options will remain exercisable for a period of 90
days. There have been no options granted under this plan as of December 31,
2000.

Compensation of Executive Officers

The following Summary Compensation Table contains information concerning the
compensation provided by the Company in 2000 and 1999 to President and the other
executives other than the President (together, the "Named Executive Officers")
of the Company.

Summary Compensation Table

Long Term
Annual Compensation Compensation
---------------------- ------------
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Compensation
- ------------------------------ ---- -------- -------- ------------ ------------

John H. Champagne................... 2000 $191,253 -- -- --
President and Chief 1999 $140,795 $20,000 -- $3,634(1)
Executive Office

Vincent H. Catrini.................. 2000 $ 79,962 -- -- --
Executive Vice President 1999 -- -- -- --
and Chief Financial Officer

Robert W. Feltz..................... 2000 $184,300 -- -- --
Executive Vice President-- 1999 $162,500 20,000 -- 3,047(1)
Sales and Marketing

David J. Barrett (2)................ 2000 -- -- -- --
Former President and 1999 $243,750 -- -- 4,570(1)
Chief Executive Officer

Martin A. Moore (3)................. 2000 $100,421 -- -- --
Former Executive Vice 1999 $187,819 20,000 -- 3,522(1)
President and Chief
Financial Officer

____
(1) Represents matching contributions made by the Company to the Named
Executive Officers' accounts under the Company's 401(k) plan.
(2) Effective September 23, 1999, David J. Barrett resigned his position with
the Company.
(3) Effective July 2000, Martin A. Moore resigned his position with the
Company.

-22-

The following table sets forth information of the value of unexercised options
held at December 31, 2000 by the Named Executive Officers.

Fiscal Year-End Stock Table

Number of Securities Underlying Value of Unexercised
Unexercised Options at December 31, In-The Money Options at
----------------------------------- ---------------------------
2000(1) December 31, 2000
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------------------------------- ---------------------------

David J. Barrett(2)..... 107,472/0 0/0
Martin A. Moore(2)...... 87,322/0 0/0
Robert W. Feltz......... 73,216/0 0/0
John H. Champagne....... 40,302/0 0/0

_____
(1) Options are exercisable for two shares of Common Stock.
(2) David J. Barrett and Martin A. Moore retain ownership of unexercised options
through November 26, 2007.

-23-

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock at March 15, 2001 of (i) each person known by
Holdings to own beneficially 5% or more of the Common Stock, (ii) each current
director of Holdings, (iii) each Named Executive Officer and (iv) all current
directors and executive officers of Holdings as a group. According to rules
adopted by the SEC, a person is the "beneficial owner" of securities if he or
she has or shares the power to vote them or to direct their investment or has
the right to acquire beneficial ownership of such securities within 60 days
through the exercise of an option, warrant, right of conversion of a security or
otherwise. Except as otherwise noted, the indicated owners have sole voting and
investment power with respect to shares beneficially owned.

Shares Beneficially Owned
----------------------------------
Name Number of Shares Percent of Class
- ---- ----------------- ----------------

Saratoga Partners III, L.P. (1)............................................... 6,255,000 67.2
Co-Investment Partners, L.P. (2).............................................. 2,000,000 21.5
Moore Global Investments, Ltd./ Remington Investment Strategies, L.P. (3)..... 1,400,000 15.0
WLD Partners, Ltd. (4)........................................................ 800,000 8.6
William F. Andrews (5)........................................................ 40,302 *
Christian L. Oberbeck (1)..................................................... 6,255,500 67.2
Alan N. Colner (3)............................................................ 1,400,000 15.0
John H. Champagne (5)......................................................... 214,944 2.3
Robert W. Feltz (6)........................................................... 174,644 1.9
David J. Barrett (6).......................................................... 80,604 *
Martin A. Moore (5)........................................................... 146,432 1.6
All directors and executive officers as a group (9 persons)(6)................ 6,911,926 74.2

_____
* Less than one percent.
(1) Includes (i) 641,828 shares held by Saratoga Partners III, C.V. and (ii)
1,344,000 shares held by Co-Investment Partners L.P. with respect to which
Saratoga Partners III, L.P. has sole voting power pursuant to the Voting
Agreement (see "Certain Transactions--Voting Agreement"). The address of
Saratoga Partners III, L.P. is 535 Madison Avenue, New York, New York 10022.
Saratoga's general partner is DR-Associates IV, L.P., of which the general
partner is Saratoga Associates III LLC ("Saratoga Associates"). Saratoga
Associates has authorized Mr. Oberbeck a director of the Company, to vote
the shares of Common Stock held or controlled by Saratoga Partners III, L.P.
Mr. Oberbeck disclaims beneficial ownership of the shares of Common Stock
held by Saratoga Partners III, L.P.
(2) The address of Co-Investment Partners is 660 Madison Avenue, New York, New
York 10021. Pursuant to the Voting Agreement described in "Item 13--Voting
Agreement", Co-Investment Partners L.P. has granted Saratoga sole voting
power with respect to 1,344,000 of such shares.
(3) Moore Capital Management, Inc., a Connecticut corporation, is vested with
investment discretion with respect to portfolio assets held for the account
of Moore Global Investments, LTD. ("MGI"). Moore Capital Advisors, L.L.C., a
New York limited liability company, is the sole general partner of Remington
Investment Strategies, L.P. ("RIS"). Mr. Louis M. Bacon is the majority
shareholder of Moore Capital Management, Inc., and is the majority equity
holder of Moore Capital Advisors, L.L.C. As a result, Mr. Bacon, though he
disclaims beneficial ownership of such shares, may be deemed to be the
beneficial owner of the aggregate shares by MGI

-24-

and RIS. Alan Colner is a Managing Director, Private Equity Investments, at
Moore Capital Management, Inc., which is the trading advisor of MGI. Mr.
Colner does not have voting or investment power with respect to the shares
of securities owned by MGI or RIS, and disclaims beneficial ownership of
such shares. The address of Moore Capital Management, Inc. is 1251 Avenue of
the Americas, New York, New York 10020. Mr. Martin A. Moore is not
affiliated with any of the entities set forth above.
(4) The address of WLD Partners, Ltd. is Las Olas Centre, 450 East Las Olas
Boulevard, Suite 900, Fort Lauderdale, Florida 33301.
(5) Represents Common Stock issuable upon exercise of options to purchase Common
Stock pursuant to option agreements, which have not yet been executed.
(6) Represents Common Stock issuable upon exercise of options to purchase Common
Stock pursuant to option agreements.
(7) Includes 6,255,000 shares owned and/or voted by Saratoga and as to which Mr.
Oberbeck exercises voting power. Mr. Oberbeck disclaims beneficial ownership
of such shares. See footnote 1 above.

Item 13. Certain Relationships and Related Transactions

Transactions with Saratoga

In connection with the Transactions, the Company entered into an agreement
with Saratoga, pursuant to which the Company will pay a management fee of
$150,000 per quarter to Saratoga (the "Management Services Agreement"). In
addition, Saratoga provides the Company advisory services with regards to
significant business transactions, such as acquisitions, for which the Company
will pay Saratoga compensation comparable for similarly situated companies.
During 2000, the Company recorded $600,000 of management fees to Saratoga and at
December 31, 2000, accrued liabilities includes $900,000 of accrued management
fees. The Company paid $83,000 to Saratoga in December 1999 for fees related to
the Facility Amendment. During 1998, the Company paid $658,000 of management
fees to Saratoga representing management fees for the period from November 26,
1997 to December 31, 1998.

Voting Agreement

Pursuant to an agreement dated February 20, 1998 (the "Voting Agreement"),
Co-Investment Partners has appointed Saratoga as its proxy to vote 134,000 of
the 1,000,000 shares of Common Stock it owned as of that date. The Voting
Agreement will terminate upon at least 20% of the outstanding Common Stock being
offered and sold in a public offering registered under the Act.

-25-

PART IV

Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K

(a) Documents incorporated by reference or filed with this Report

(1) The following financial statements of Scovill Holdings Inc. are included
in Part II, Item 8:

Report of Independent Public Accountants
Consolidated Balance Sheets as of December 31, 2000 and 1999
Consolidated Statements of Operations for the years ended December 31,
2000 and December 31, 1999 and December 31, 1998
Consolidated Statements of Cash Flows for the years ended December 31,
2000 and December 31, 1999 and December 31, 1998
Consolidated Statements of Stockholders' (Deficit) Equity for the years
ended December 31, 2000 December 31. 1999 and December 31, 1998
Notes to Consolidated Financial Statements

(2) Supplemental Consolidated Financial Statement Schedules for each of the
periods in the three years ended December 31, 2000:

Schedule II--Valuation and Qualifying Accounts--Allowance for
Uncollectible Accounts

Schedules other than those referred to above are omitted and are not
applicable or not required, or the required information is shown in the
financial statements or notes thereto.

(3) Exhibits

Exhibit No. Description
- ----------- -----------
3.1 Certificate of Incorporation of Scovill Holdings Inc, as amended.+
3.2 Certificate of Designation, Preferences, and Relative,
Participating, Optional and Other Special Rights of 13 3/4%
Series A Cumulative Redeemable Exchangeable Preferred Stock
3.3 Certificate of Designation, Preferences, and Relative,
Participating, Option and Other Special Rights of Series B
Preferred Stock.++
3.6 Certificate of Amendment of Certificate of Incorporation of AF
Acquisition Corp.++
3.7 Certificate of Amendment of Certificate of Incorporation of Scovill
Apparel Fasteners Inc.++
3.8 Certificate of Amendment of Certificate of Incorporation of Scovill
Apparel Fasteners Inc.++
3.11 Certificate of Amendment of Certificate of Incorporation of Scovill
Fasteners Inc.++
3.12 By-laws of Scovill Fasteners Inc.++
3.13 Certificate of Amendment of Certificate of Incorporation of Scovill
Holdings Inc.
4.02 Amended and Restated Credit Agreement ***
4.1 Indenture dated as of November 26, 1997 among Scovill Acquisition
Inc., Scovill Holdings Inc., as Guarantor, and United States Trust
Company of New as Trustee (including Form of Note).+
10.1 Management Services Agreement among Scovill Fasteners Inc. and
Saratoga Partners III, L.P.**

-26-

Exhibit No. Description
- ----------- -----------
10.2 Tax Sharing Agreement dated as of November 26, 1997 by and among
Scovill Holdings Inc., Scovill Fasteners Inc., and the SFI
Subgroup.++
10.3 Scovill Holdings Inc. Subscription Agreement dated as of
November 26, 1998.++
10.4 Joinder Agreement dated as of February 20, 1998.**
10.5 Voting Agreement dated as of February 20, 1998 by and between
Saratoga Partners III, L.P., Scovill Holdings Inc., and Co-
Investment Partners, L.P.**
10.6 Subscription Agreement dated as of February 20, 1998 by and between
Scovill Holdings Inc. and Co-Investment Partners, L.P.**
10.7 Repurchase and Termination Agreement dated as of February 20, 1998
by and between Scovill Holdings Inc., SBC Warburg Dillon Read Inc.,
BT Alex. Brown Incorporated and United States Trust Company of New
York.**
21.1 List of Subsidiaries of Scovill Holdings Inc.++
21.2 List of Subsidiaries of Scovill Fasteners Inc.++
_____
+ Incorporated by Reference to Exhibit of the same number to the Company's
Registration Statement on Form S-1 (No. 333-43195), as filed with the
Securities and Exchange Commission on December 24, 1997
++ Incorporated by Reference to Exhibit of the same number to the Company's
Amendment No. 1 to Registration Statement on Form S-1 (No. 333-43195), as
filed with the Securities and Exchange Commission on January 13, 1998.
* Incorporated by Reference to Exhibit of the same number to the Company's
Amendment No. 3 to Registration Statement on Form S-1 (No. 333-43195), as
filed with the Securities and Exchange Commission on February 11, 1998.
** Incorporated by Reference to Exhibit of the same number to the Company's
Post-Effective Amendment No. 1 to Registration Statement on Form S-1 (No.
333-43195), as filed with the Securities and Exchange Commission on
February 27, 1998.
*** Incorporated by Reference to Exhibit of the same number to the Company's
Form 10-Q/A as filed with the Securities and Exchange Commission on
December 16, 1999.

(b) Reports of Form 8-K

No Form 8-K was filed during the last quarter of the year ended
December 31, 1999.

-27-

FINANCIAL STATEMENTS INDEX

Page
------

Report of Independent Public Accountants.............................................................. F-2

Consolidated balance sheets as of December 31, 2000 and 1999.......................................... F-3

Consolidated statements of operations for the years ended December 31, 2000, December 31, 1999 and
December 31, 1998.................................................................................... F-4

Consolidated statements of cash flows for the years ended December 31, 2000, December 31, 1999 and
December 31, 1998.................................................................................... F-5

Consolidated statements of stockholders' (deficit) equity for the years ended December 31, 2000,
December 31, 1999 and December 31, 1998.............................................................. F-6

Notes to consolidated financial statements............................................................ F-7

Schedule II--Valuation and Qualifying Accounts--Allowance for Uncollectible Accounts.................. S-1

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of
Scovill Holdings Inc.

We have audited the accompanying consolidated balance sheets of Scovill
Holdings Inc. (a Delaware corporation) and subsidiaries as of December 31, 2000
and December 31, 1999 and the related consolidated statements of operations,
stockholders' (deficit) equity, and cash flows for each of the three years in
the period ended December 31, 2000. These financial statements and the schedule
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and the
schedule referred to below based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Scovill Holdings,
Inc. and subsidiaries as of December 31, 2000 and 1999 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted
in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the financial
statements index is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not a required part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in our audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.

/S/ ARTHUR ANDERSEN LLP

Atlanta, Georgia
March 14, 2001

F-2

Scovill Holdings Inc.
Consolidated Balance Sheets
(in thousands, except share data)

December 31,
--------------------------
2000 1999
-------- --------

ASSETS
Current Assets
Cash and cash equivalents......................................................... $ 765 $ 405
Accounts receivable, net of allowances of $1,571 and $1,722, respectively......... 18,241 12,350
Inventories....................................................................... 19,233 18,493
Other Current Assets.............................................................. 466 522
-------- --------
Total Current Assets........................................................... 38,705 31,770
Property, Plant and Equipment, Net.................................................. 54,997 62,683
Intangible Assets................................................................... 94,921 98,937
-------- --------
$188,623 $193,390
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt.............................................. $ 3,543 $ 910
Accounts payable.................................................................. 7,635 7,137
Accrued liabilities............................................................... 8,688 7,589
Accrued interest.................................................................. 2,685 1,184
-------- --------
Total Current Liabilities...................................................... 22,551 16,820
-------- --------
Long-Term Liabilities
Revolving line of credit.......................................................... 16,818 14,878
Long-term debt, net of current portion............................................ 133,363 134,141
Employee benefits................................................................. 22,717 21,233
Other............................................................................. 2,100 2,076
-------- --------
Total Long-Term Liabilities.................................................... 174,998 172,328
-------- --------
Commitments and Contingencies (Note 14)
Series A Cumulative Redeemable Exchangeable Preferred Stock, $.001 par value,
200,000 shares authorized, none outstanding at December 31, 2000 and 1999
(liquidation preference of $100 per share)........................................ -- --
-------- --------
Stockholders' Equity
Preferred Stock, $.0001 par value, 1,000,000 shares authorized, none issued and
outstanding at December 31, 2000 and 1999......................................... -- --
Series B Preferred Stock, $.0001 par value, 6,000,000 shares authorized,
4,655,500 shares issued and outstanding at December 31, 1998...................... -- --
Common Stock, $.0001 par value, 15,000,000 shares authorized, at
December 31, 2000 and 1999, respectively, 9,311,000 shares issued and outstanding. 1 1
Additional paid-in capital--preferred.............................................. 42,111 42,111
Additional paid-in capital--common................................................. 502 502
Accumulated deficit................................................................ (47,665) (39,150)
Accumulated other comprehensive income (loss)...................................... (3,875) 778
-------- --------
Total Stockholders' (Deficit) Equity........................................... (8,926) 4,242
-------- --------
$188,623 $193,390
======== ========

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

F-3

Scovill Holdings Inc.
Consolidated Statements of Operations
(In thousands, except share data)

Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2000 1999 1998
------------------------------------------------

Net sales..................................... $88,288 $ 89,190 $92,476
Cost of sales................................. 62,949 69,656 68,112
------- -------- -------
Gross profit................................ 25,339 19,534 24,364
Selling expenses.............................. 7,081 9,169 8,861
General and administrative expenses........... 8,738 7,046 6,865
Amortization expense.......................... 2,800 3,309 3,938
Restructuring and asset impairment charge..... 9 12,608 2,968
------- -------- -------

Operating income (loss)..................... 6,711 (12,598) 1,732
Other (income) expense, net................... (3,171) 254 48
Interest expense.............................. 18,305 16,839 15,965
------- -------- -------
Income (loss) before income
tax provision (benefit)...................... (8,423) (29,691) (14,281)
Income tax provision
(benefit).................................... 92 (1,089) (4,744)
------- -------- -------
Net income (loss)............................. (8,515) (28,602) (9,537)
Dividends and accretion on redeemable
preferred stock.............................. -- -- 230
------- -------- -------
Net income (loss) available to common
stockholders................................. $(8,515) $(28,602) $(9,767)
======= ======== =======

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

F-4

Scovill Holdings Inc.
Consolidated Statements of Cash Flows
(in thousands)

The Company
------------------------------------------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2000 1999 1998
-----------------------------------------------------

Cash Flows from Operating Activities:
Net income (loss) available to common
stockholders.................................. $(8,515) $(28,602) $ (9,767)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Depreciation and amortization................. 12,463 13,084 13,944
Amortization of deferred financing fees....... 1,193 889 1,081
Assets impairment charge........................ -- 10,063 940
Non-operating preferred stock dividends -- -- (345)
Deferred income taxes......................... -- (1,521) (4,895)
Changes in operating assets and liabilities
Accounts receivable, net..................... (5,891) (31) (817)
Inventories.................................. (740) 6,080 (281)
Other current assets......................... 56 50 267
Accounts payable............................. 498 (3,179) (3,079)
Accrued liabilities.......................... 2,600 1,614 (3,840)
Other assets and liabilities................. (505) (2,742) 576
------- -------- --------
Net cash (used in) provided by operating
activities..................................... 1,159 (4,295) (6,216)
------- -------- --------

Cash Flows Used In Investing Activities:
Additions to property, plant and equipment...... (3,914) (4,508) (8,332)
------- -------- --------
Cash Flows from Financing Activities:
Net borrowings on line of credit................ 1,940 1,978 12,900
Issuance of long-term debt...................... 2,142 8,000 --
Repayments of long-term debt.................... (125) (1,372) (1,428)
Issuance of common stock........................ -- -- 10,345
Redemption of preferred stock................... -- -- (10,345)
------- -------- --------
Net cash provided by financing activities....... 3,957 8,606 11,472
------- -------- --------
Effect of Changes in Foreign Exchange Rate...... (842) 309 548

Net (Decrease)/Increase in Cash................. 360 112 (2,528)
Cash and Cash Equivalents at Beginning of
Period........................................ 405 293 2,821
------- -------- --------
Cash and Cash Equivalents at End of Period...... $ 765 $ 405 $ 293
======= ======== ========
Supplemental Disclosure of Cash Flow
Information:
Interest paid................................. $16,804 $ 15,460 $16,007
------- --------- ========
Income taxes paid............................. $ 92 $ 264 $ 207
======= ======== ========

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

F-5

Scovill Holdings Inc.
Consolidated Statements of Stockholders' (Deficit) Equity
(in thousands)

Comprehensive Income/(Loss)
----------------------------
Accumulated
Additional Other
Series B Paid- Accumulated Comprehensive Comprehensive
Common Stock Preferred Stock in Capital Deficit Income (loss) Income/(loss)

Balance, December 31, 1997 $1 $- $32,268 $ (781) $ (79)
-------------------------------------------------------------------------------------
Net Income (loss) available
to common stockholders - - - (9,767) - $ (9,767)

Foreign Currency Translation - - - - 548 548

Issuance/redemption of
Common and Preferred Stock - - 10,345 - - -
-------------------------------------------------------------------------------------
Balance, December 31, 1998 1 - 42,613 (10,548) 469 $ (9,219)
----------------------------------------------------------------------- =============

Net Income (loss) available
to common stockholders - - - (28,602) - $(28,602)

Foreign Currency Translation - - - - 309 309
-------------------------------------------------------------------------------------
Balance, December 31, 1999 1 - 42,613 (39,150) 778 $(28,293)
----------------------------------------------------------------------- =============

Net Income (loss) available
to common stockholders - - - (8,515) - $ (8,515)

Adjustment to recognize
additional minimum pension
liability - - - - (3,389) (3,389)

Foreign Currency Translation - - - - (1,264) (1,264)
-------------------------------------------------------------------------------------
Balance, December 31, 2000 $1 $- $42,613 $(47,665) $(3,875) $(13,168)
----------------------------------------------------------------------- =============

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

F-6

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts expressed in thousands, except for share amounts, or as otherwise
noted)

Note 1. Basis of Presentation

The consolidated balance sheets as of December 31, 2000 and 1999 and the
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 2000, include the
accounts of Scovill Holdings Inc., ("Holdings") a Delaware Corporation, and
Scovill Fasteners Inc. ("Fasteners"), a Delaware Corporation and a wholly-owned
subsidiary of Holdings (collectively referred to as the "Company"). Scovill
Acquisition Inc. ("SAI") and Holdings were formed by Saratoga Partners III, L.P.
in 1997 ("Saratoga") to effect the acquisition of the Company. Under a Stock
Purchase Agreement, SAI purchased all of the capital stock of KSCO Acquisition
Corporation ("KSCO") on November 26, 1997 for a purchase price of approximately
$168.8 million less the amount of indebtedness of the Company existing
immediately prior to closing of the acquisition (including indebtedness that was
not repaid in connection with the transactions). Concurrent with the
acquisition, SAI merged with and into KSCO, and KSCO merged with and into
Fasteners, with Fasteners surviving the mergers. The purchase of KSCO capital
stock by SAI and the mergers of SAI and KSCO into Fasteners are together
referred to herein as the "Saratoga Acquisition." The Saratoga Acquisition and
the related application of purchase accounting resulted in changes to the
capital structure of the Predecessor-KSCO and the historical bases of various
assets and liabilities.

The Company is a leading manufacturer of apparel fasteners, such as snaps,
tack buttons and rivets, primarily serving the jeans wear and infantswear market
segments. The Company produces non-apparel fastener products for use in cars,
boats, luggage, leather goods and packaging, generally marketed under the DOT(R)
trademark. Fasteners' other non-apparel products also include industrial and
shoe eyelets and light metal stampings marketed under PCI. The Company also
designs and manufactures fastener-attaching equipment, which is leased to
customers and placed in customers' manufacturing facilities. The Company's
customers include many of the leading apparel design and manufacturing companies
in North America, Europe and Asia.

Certain reclassifications have been made to prior period amounts to conform to
the current period presentation.

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying financial statements include the accounts of Holdings and
Fasteners and it's wholly owned subsidiaries, which consist of Scovill Canada,
Scovill S.A. De C.V., and Scovill Europe. All intercompany transactions and
balances between Holdings, Fasteners and its wholly owned subsidiaries have been
eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets, and
liabilities, the disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

F-7

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Cash and Cash Equivalents

Cash includes cash and cash equivalents, which consist of highly liquid
investments, having original maturities of three months or less when acquired.
Included in accounts payable as of December 31, 2000 and 1999 were $0 and
$360 respectively of cash overdrafts.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined
using the last-in, first-out (LIFO) method for all domestic inventories
(excluding spare parts), which accounted for approximately 48.1% and 44.4% of
all inventories as of December 31, 2000 and 1999, respectively. Cost for the
remaining inventories is determined using the first-in, first-out (FIFO) method.
Inventory costs include materials, labor and manufacturing overhead.

Property, Plant and Equipment

Property, plant and equipment purchased through acquisitions are stated at
fair market value as of the acquisition date, as prescribed by the purchase
method of accounting. Subsequent purchases of property, plant and equipment are
stated at cost, net of accumulated depreciation.

Depreciation is computed on a straight-line basis over the estimated useful
lives of the assets. The following useful lives are used for recognizing
depreciation expense for financial reporting purposes:

Leasehold improvements................................... lease term
Buildings and improvements............................... 5-30 years
Attaching equipment...................................... 8 years
Computer equipment....................................... 3-5 years
Machinery, equipment and tooling......................... 3-12 years

Major renewals and betterments, which extend the useful life of an asset, are
capitalized. Routine maintenance and repairs are expensed as incurred. Upon sale
or retirement of assets, the asset cost and related accumulated depreciation are
removed from the accounts and any related gain or loss is reflected in
operations.

F-8

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Intangible assets

Intangible assets at December 31, 2000 and 1999 consisted of the following:

2000
Accumulated
Gross amortization Net
---------- ------------- ---------

Goodwill...................................... $ 79,057 $ (6,459) $72,598
Trademarks.................................... 14,500 (1,118) 13,382
Deferred financing fees....................... 12,348 (3,499) 8,849
Covenants not to compete...................... 2,547 (2,547) --
Other......................................... 115 (23) 92
-------- -------- -------
$108,567 $(13,646) $94,921
======== ======== =======

1999
Accumulated
Gross amortization Net
---------- ------------- ----------
Goodwill...................................... $ 79,057 $ (4,497) $74,560
Trademarks.................................... 14,500 (755) 13,745
Deferred financing fees....................... 12,348 (2,306) 10,042
Covenants not to compete...................... 2,547 (2,072) 475
Other......................................... 115 -- 115
-------- -------- -------
$108,567 $ (9,630) $98,937
======== ======== =======

Goodwill and trademarks are amortized on a straight-line basis over 40 years.
Deferred financing fees are amortized over the term of the related outstanding
debt. Covenants not to compete represents an agreement with Alper, a former
parent of Fasteners, and is amortized over 5 years.

Goodwill represents the excess of cost over the estimated fair value of the
net assets of acquired businesses. Goodwill arises when an acquiror pays more
for a business than the fair value of the tangible and separately measurable
intangible net assets acquired. Should events or circumstances occur subsequent
to any business acquisition which bring into question the realizable value or
impairment of any component of goodwill, the Company will evaluate the remaining
useful life and balance of goodwill, and make appropriate adjustments in
accordance with Statement of Financial Accounting Standards (SFAS) No. 121
"Accounting for the Impairment of Long Term Assets and for Long Term Assets to
be disposed of". The Company's policy with respect to the recoverability of
goodwill includes an assessment of discounted projected future cash flows,
before interest charges, using an estimated economic rate of return that would
be customary in determining fair value in current markets for similar
businesses.

The Company recorded an impairment charge of $7.1 million related to
goodwill which was originally allocated to fixed assets which the Company
elected to dispose of in 1999. The impairment charge is recorded on the
statement of operations in "Restructuring and asset impairment charge." The
remaining goodwill will continue to be amortized over forty years.

Environmental Matters

Environmental expenditures are expensed or capitalized, depending on their
future economic benefit. Environmental expenditures include site investigation,
physical remediation, operation and maintenance and legal and administrative
costs. Environmental accruals are established for sites where it is probable
that a loss has been incurred and the amount of the loss can be reasonably
estimated.

F-9

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Revenue Recognition

Revenue from the sale of fastener products is recorded on the date goods are
shipped to the customer. Sales returns and allowances are recorded as a charge
against revenue in the period in which the related sales are recognized. Revenue
is recognized for certain relationships upon delivery to US ports in accordance
with delivery terms set forth in specific customer contracts. Revenue from the
lease of attaching machinery is recorded over the applicable rental period.

Effective during the fourth quarter of 2000, the Company implemented Staff
Accounting Bulletin No 101, "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 101 established guidelines with regard to the culmination of the
earnings process and enhanced disclosure requirements concerning revenue
recognition. The implementation of this SAB did not have a significant impact on
the revenue recognition policies followed by the Company.

Income Taxes

Income taxes are recorded in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109
utilizes the asset and liability method, under which deferred income taxes are
recognized for the tax consequences of "temporary differences" by applying
currently enacted statutory rates to differences between the financial statement
carrying amounts and the tax basis of existing assets and liabilities. Under
SFAS 109, the effect on deferred taxes of a change in tax rates is recognized in
income in the period that includes the enactment date.

Fasteners periodically evaluates the recognition of deferred tax assets and
provides a valuation allowance for any portion of such assets for which it is
considered more likely than not that the assets will not be realizable.

Stock

Foreign Currency Translation

The accounts of the Company's foreign subsidiaries are translated in
accordance with Statement of Financial Accounting Standards No. 52, "Foreign
Currency Translation," which requires that foreign currency assets and
liabilities be translated using the exchange rates in effect at the balance
sheet date for current assets and liabilities and using historical rates for
long-term assets, liabilities, and equity amounts. Results of operations are
translated using the average exchange rates prevailing throughout the period.
The effects of unrealized exchange rate fluctuations on translating foreign
currency assets and liabilities into US dollars are recorded as the cumulative
foreign currency translation adjustment as a component of Accumulated Other
Comprehensive Income (Loss). Realized gains and losses from foreign currency
transactions during the years ended December 31, 2000, 1999 and 1998 were not
material.

F-10

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Research and Development Costs

Research, development, pre-production and start-up costs related to both
present and future products are expensed as incurred. Such costs amounted to
$30, $217 and $199, for the years ended December 31, 2000, 1999 and 1998,
respectively, and are classified as a component of "General and administrative
expenses" in the accompanying consolidated statements of operations.

Financial Instruments

The Company had secured a substantial portion of its copper needs with its
primary vendor through June 2000. Due to the favorable pricing available, the
Company secured pricing in lieu of hedging for 2000. The Company used futures
contracts through early 1998 to manage its inventory, both to set pricing on
purchases and to reduce the Company's exposure to price fluctuations. Under
existing accounting literature, these activities are accounted for as hedging
activities. To qualify as a hedge, the item must expose the Company to inventory
pricing risk, and the related contract must reduce that exposure and be
designated by the Company as a hedge. Additionally, to hedge expected
transactions, the significant characteristics and expected terms of such
transactions must be identified and it must be probable that the transaction
will occur.

Gains and losses on futures contracts, including gains and losses upon
termination of the contract, are matched to inventory purchases and are included
in the carrying value of inventory and charged or credited to cost of sales as
such inventory is sold or used in production. There were no hedging instruments
held at December 31, 2000 and 1999.

If derivative transactions do not meet the criteria for hedges, the Company
recognizes unrealized gains or losses as they occur. If a hedged transaction no
longer exists or a hedged anticipated transaction is deemed no longer probable
to occur, cumulative gains and losses on the hedge are recognized immediately in
income and subsequent changes in fair market value of the derivative transaction
recognized in the period the change occurs.

F-11

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

New Accounting Standards

In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS
133"), as amended. This Statement requires companies to record derivatives on
the balance sheet as assets or liabilities, measured at fair value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. SFAS 133 became effective for the Company on January 1,
2001. The implementation of this Statement did not have a significant impact on
the Company's financial condition or results of operations.

Comprehensive Income

The Company adopted SFAS 130, "Reporting Comprehensive Income" in the first
quarter of fiscal 1998. SFAS 130 requires the reporting of a measure of all
changes in equity of an entity that result from recognized transactions and
other economic events other than transactions with owners in their capacity as
owners. Other comprehensive income (loss) for the year ended December 31, 2000,
includes an adjustment to recognize minimum pension liability and foreign
currency translation adjustment, and includes foreign currency translation
adjustment in 1999.

Cumulative balances of the components of accumulated other comprehensive (loss)
income are as follows:

2000 1999
-------------------------
Adjustment to Recognize Additional
Minimum Pension Liability.......... $(3,389) $ --
Foreign Currency Translation
Adjustment......................... (486) 778
------ -----
$(3,875) $ 778
====== =====

Note 3. Inventories

Inventories as of December 31, 2000 and 1999 consisted of the following:

2000 1999
------- -------

Raw Material....................... $ 1,632 $ 1,555
Work in Process.................... 4,357 4,416
Attaching Machine Spare Parts ..... 7,899 7,822
Finished Goods..................... 5,345 4,700
------- -------
$19,233 $18,493
======= =======

The value of inventories is reported net of allowances for obsolete, slow moving
and discontinued product line inventory of $721 and $991 as of December 31,
2000 and 1999, respectively. If the FIFO method had been used to value all
inventories, inventories would have been decreased $1,381 and $610 at December
31, 2000 and 1999 respectively. In 1999, the partial liquidation of the 1997
LIFO base layer decreased cost of sales by $334.

F-12

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Note 4. Property, Plant and Equipment

Property, plant and equipment as of December 31, 2000 and 1999 consisted of the
following:

2000 1999
----------------------------

Land and improvements................... $ 324 $ 324
Computer equipment and software......... 2,510 2,458
Buildings and improvements.............. 7,842 7,735
Attaching equipment..................... 45,175 42,217
Machinery, equipment and tooling........ 25,846 25,249
-------- --------
81,697 77,983
Accumulated depreciation................ (26,700) (15,300)
-------- --------
$ 54,997 $ 62,683
======== ========

Depreciation expense was $9,663 and, $9,775 and $10,006 for the years ended
December 31, 2000, and 1999 and 1998, respectively.

Note 5. Accrued Liabilities

Accrued liabilities as of December 31, 2000 and 1999 consisted of the following:

2000 1999
-----------------------
Salaries, wages and benefits.... $2,645 $1,580
Pension, current portion........ 1,416 2,360
Other........................... 4,627 3,649
------ ------
$8,688 $7,589
====== ======

Note 6. Long-term Debt

Long-term debt as of December 31, 2000 and 1999 consisted of the following:

2000 1999
-------------------------------
Senior notes................... $100,000 $100,000
Term note...................... 25,375 25,500
Tranche B Loan................. 10,000 8,000
Revolving line of credit....... 16,818 14,878
Other.......................... 1,275 1,345
Capital lease obligations...... 256 206
-------- --------
153,724 149,929
Less--Current maturities....... (3,543) (910)
-------- --------
Total long-term debt........... $150,181 $149,019
======== ========

F-13

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Senior Notes

The Senior Notes ("The Notes") are guaranteed by Holdings. Holdings has no
operations other than the payment of a management fee to Saratoga (See Note 13.)
The Notes and the guarantee are senior unsecured obligations of the Company and
bear interest at 11.25% per annum. Interest on the Notes is payable semi-
annually on May 25 and November 25 of each year and matures on November 26,
2007. The Notes are redeemable at the option of the Company, in whole or in
part, at any time after November 30, 2002, at redemption prices as defined, plus
accrued and unpaid interest and Liquidated Damages, as defined. Upon the
occurrence of a change in control, as defined, the Company will be required to
make an offer to purchase all or any part of each holder's Notes at 101% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of the purchase.

All balance sheet amounts are identical between Holdings and Fasteners for each
of December 31, 2000 and 1999, except for the fact that the statement of
operations for Holdings for the years ended December 31, 2000, 1999, and 1998
includes a management fee to Saratoga included in general and administrative
expenses of $600, $600 and $658 respectively, which is not reflected in
Fasteners accounts.

Credit Facility

In connection with the Saratoga Acquisition, Fasteners entered into a Credit
Facility (the "Credit Facility"), consisting of a $28,000 Term Loan and a
$25,000 Revolving Credit Facility. Borrowings under the Credit Facility are
collateralized by all of Fasteners' assets. Borrowing availability under the
Revolving Credit Facility is subject to limitations based on eligible accounts
receivable, eligible inventory and maximum over advance allowance, as defined.
The Credit Facility, as amended, allows Fasteners to choose among interest rate
options of LIBOR plus 3.0% to 3.25% or the Base Rate as defined plus 2.0% to
2.25%. The Credit Facility requires that Fasteners maintain compliance with
certain covenants, which, among other things, require the Company to maintain
ratios related to leverage and cash flow, and limit the level of capital
expenditures and operating leases. The Company believes that its operating cash
flow, together with borrowings under the Credit Facility, will be sufficient to
meet its operating expenses and capital requirements, and its debt service
requirements through 2001. However, in the event the Company requires additional
capital during such period, it will be required to secure new capital sources or
expand its bank credit facility. In such event, there can be no assurances that
additional capital will be available or available on terms acceptable to the
Company. The Credit Facility requires an annual commitment fee of 0.5% of the
total unused commitment, less letters of credit and amounts borrowed, and
requires Fasteners to make quarterly payments of accrued interest outstanding on
the Term Loan and the Revolving Credit Facility.

In November 1999, the Company entered into an amendment to the Credit Facility
(the "Facility Amendment") that adjusted the Credit Facility's financial
covenants and provided an additional term loan of $10 million (the "Tranche B
Loan"). The Facility Amendment adjusted the Credit Facility's fixed charge
coverage ratio covenant, funded indebtedness to EBITDA ratio covenant and
adjusted the amortization schedule of the Term Loan. The new $10 million
Tranche B Loan was funded through lenders including owners of the Company. The
new Tranche B Loan bears interest at 17.5%, will mature in November 2004, and is
subject to the requirements and conditions set forth in the Facility Amendment
and Credit Facility. The Tranche B Loan does not require cash interest or
principal payments until final maturity. Saratoga funded 54% of the Tranche B.
Loan. The Company borrowed $8 million under the Tranche B Loan in November 1999
and used the proceeds to fund an interest payment on its Notes and for other
working capital purposes. The Company borrowed an additional $2 million, under
the Tranche B Loan in 2000, solely for the use of funding additional
consideration pursuant to a management consulting arrangement the Company
entered into during 1999.

As of December 31, 2000, Fasteners had borrowings of $25,375 (at LIBOR)
outstanding under the Term Loan with $16,818 outstanding under the Revolving
Credit Facility and $1,382 of unused credit availability. As of

F-14

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1999, Fasteners had borrowings of $25,500 (at LIBOR) outstanding
under the Term Loan with $14,878 outstanding under the Revolving Credit Facility
and $3,222 of unused credit availability. The Credit Facility expires in
November 2007. Under the Credit Facility, interest rates ranged from 9.4% at
LIBOR to 11.75% at Base Rate and the weighted average interest rate was 10.3%
for the year ended December 31, 2000. The interest rate was 9.79% at LIBOR and
11.75% at Base Rate at December 31, 2000. As of December 31, 2000, the Company
believes that it is in compliance with all provisions of its various loan
agreements.

Other debt at December 31, 2000 and 1999 includes outstanding obligations of
Scovill Europe.

Maturities of long-term debt and capital lease obligations as of December 31,
2000 are as follows:

2001................................. $ 3,543
2002................................. 6,533
2003................................. 31,338
2004................................. 12,260
2005................................. --
Thereafter........................... 100,050
--------
$153,724
========

The carrying value of long-term debt at December 31, 2000 and 1999
approximates fair value.

Note 7. Other Long Term Liabilities

Other long-term liabilities as of December 31, 2000 and 1999 consisted
primarily of liabilities for environmental matters of $1,732 and $1,576 at
December 31, 2000 and 1999, respectively.

Note 8. Other Income/Expense

Other (income)/expense for the year ended December 31, 1999 included income
of $1.4 million related to the settlement of an environmental liability, $0.6
million of expense related to legal fees incurred for non-operating matters,
$0.7 million of product development costs for abandoned projects, $0.2 million
for the loss on sale of a division and $0.2 million of other expenses.

Other (income)/expense for the year ended December 31, 2000 includes the
proceeds from the settlement of a trademark dispute, net of related legal fees
and other expenses.

F-15

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Note 9. Lease Commitments

Operating Leases

Fasteners leases office space, office equipment and vehicles for various
periods through the year 2004. It is expected, in the normal course of
operations, that the leases may be extended or replaced. Certain leases provide
for contingent rentals based upon additional usage of equipment and vehicles in
excess of a specified minimum. Leases for real estate generally include options
to renew for periods ranging from one to ten years. At December 31, 2000, future
minimum annual rental commitments under non-cancellable leases are as follows:

2000.................................. $ 910
2001.................................. 904
2002.................................. 806
2003.................................. 778
2004 and thereafter 759
------
Total minimum lease payments.......... $4,157
======

Rental expense for operating leases was $1,316, $1,225, and $1,182 for the
periods ended December 31, 2000, 1999 and 1998, respectively.

Note 10. Restructuring and Asset Impairment Charge

During 1999, the Company recorded restructuring charges related to a profit
improvement plan (the "Plan") designed to cut the operating costs of the Company
through the outsourcing of the production of certain products previously
manufactured by the Company. The charge consisted of (1) $7.1 million in
goodwill impairment charge as discussed above; (2) $3.2 million of fixed assets
written off as they were designated to be disposed of (3) $1.5 million in
charges related to severance and trademark impairment charges related to the
Company's European operations; (4) $0.5 million in severance costs for 21
employees terminated as a result of the Plan (of which $0.2 million was accrued
December 31, 1999); and (5) $0.3 million in other miscellaneous charges.
Substantially all charges incurred as the result of this plan have been expended
as of December 31, 2000.

In connection with the Plan, the Company also charged $2.7 million to cost of
sales relating to reserves for discontinued inventory items created due to
either low margin or low volume, $3.4 million to general and administrative
expenses for costs related to implementing the Plan, and $0.1 to other
income/expense. The charge to other income/expense includes $0.6 million related
to legal fees from non-operating matters, $0.7 million of product development
costs of abandoned projects and $0.2 million of other miscellaneous charges
related to the disposal of a division of the PCI product line, offset by $1.4
million of income resulting from an adjustment to the contract with a former
parent for environmental obligations.

F-16

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Note 11. Income Taxes

The following is a summary of the components of income (loss) before income
taxes:

---------------------------------------------------------------
Year Ended Year Ended Year Ended
December 31,2000 December 31, 1999 December 31, 1998
---------------------------------------------------------------

Domestic........ $(8,379) $(28,693) $(15,015)
Foreign......... (44) (998) 734
------- -------- --------
$(8,423) $(29,691) $(14,281)
======= ======== ========

The provision (benefit) for income taxes consists of the following:

-------------------------------------------------------------
Year Ended Year Ended Year Ended
December 31, 2000 December 31, 1999 December, 1998
-------------------------------------------------------------

Current.......... -- $ -- $ --
Deferred......... -- (1,521) (4,895)
Foreign.......... 92 432 151
---- ------- -------
$ 92 $(1,089) $(4,744)
==== ======= =======

The difference between the United States Federal statutory income tax rate and
the consolidated effective income tax rate is summarized as follows:

----------------------------------------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2000 1999 1998
----------------------------------------------------

Federal income tax (benefit)
expense at statutory rates.... $(2,645) $(10,095) $(4,856)

State income tax (benefit)
provision, net of federal
taxes......................... (389) (1,485) (714)

Valuation allowance............ 2,224 4,838 --
Amortization of goodwill/
deferred financing fees....... 765 842 852

Non-deductible goodwill
impairment................... -- 4,334 --
Foreign tax impact............. 92 432 151
Other.......................... 45 45 (177)
------- -------- -------
$ 92 $ (1,089) $(4,744)
======= ======== =======

F-17

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Deferred tax consequences of significant temporary differences are as follows as
of December 31, 2000 and 1999:

2000 1999
-----------------------

Deferred tax assets:
NOL carry forward (expiring in 2012 to 2020)................ $ 18,295 $ 17,617
Pension and Postretirement health and life benefits......... 8,786 8,078
Environmental matters....................................... 610 610
Other....................................................... 387 234
-------- --------
28,078 26,539
-------- --------
Deferred tax liabilities:
Fixed assets................................................ $(15,828) $(16,261)
Trademarks.................................................. (5,016) (5,237)
Inventories................................................. (123) (155)
Other....................................................... (49) (48)
-------- --------
(21,016) (21,701)
-------- --------
Net deferred tax asset......................................... 7,062 4,838
-------- --------
Valuation allowance............................................ (7,062) (4,838)
-------- --------
$ - $ -
======== ========

The Company had $46,910 and $45,171 in available net operating loss carry
forwards (NOL's) as of December 31, 2000 and 1999, respectively, which expire at
dates ranging from 2012 to 2020. The Company has determined that it is more
likely than not that these NOL's will not be realized through the generation of
future taxable income. Accordingly, the Company has recorded a 100% valuation
allowance against the assets.

Note 12. Pension And Other Employee Benefit Plans

Pension Plan and Postretirement Plan

Fasteners sponsors noncontributory defined benefit pension plans. On December
31, 1994, Fasteners curtailed future benefits attributable to participants of
its pension plans. The effect of this curtailment resulted in the elimination of
defined pension benefits for all future services of active employees
participating in the plans.

Additionally, Fasteners assumed the obligations of two pension plans sponsored
by PCI, a company acquired in 1996. The PCI plans were merged with Fasteners'
plans effective March 31, 1996.

The Company contributed $2,360 to its pension plan for the year ended
December 31, 2000 and $985 for the year ended December 31, 1999, and will
contribute $1,416 to the plan for 2001.

Fasteners has an additional defined benefit non-qualified pension plan
covering former employees and former employees of PCI. The pension liability
relating to this plan was $806 and $865 at December 31, 2000 and 1999,
respectively, of which $598 and $710 was classified as long-term at December 31,
2000 and 1999, respectively. Pension expense for this plan was $82, $81 and $83
for the periods ended December 31, 2000, 1999, and 1998, respectively.

F-18

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Fasteners sponsors several defined benefit postretirement health and life
insurance benefit plans that cover both salaried and non-salaried former
employees. Fasteners also assumed the obligations of a postretirement health and
life plan for former employees of PCI. All of the participants are retired
employees and beneficiaries, mostly from operations that were previously sold or
discontinued. Fasteners reserves the right to amend or discontinue all or any
part of those plans at any time. Fasteners' funding policy for its
postretirement plans is on a pay-as-you-go basis.

Pension Plan Postretirement Benefit Plan
----------------------------------------------------
December 31, December 31,
Change in benefit obligation 2000 1999 2000 1999
----------------------------------------------------

Benefit obligation at beginning of year................. $27,970 $29,892 $13,312 $13,796
Interest cost........................................... 2,117 2,059 1,112 1,169
Gain/Loss on obligation................................. 448 (902) 15 146
Benefits paid........................................... (3,018) (3,079) (2,071) (1,799)
------- ------- ------- -------
Benefit obligation at end of year....................... 27,517 27,970 12,368 13,312
Less fair value of plan assets.......................... 16,350 19,635 -- --
------- ------- ------- -------
Obligation in excess of plan assets..................... 11,167 8,335 12,368 13,312
Unrecognized net loss (gain)............................ 3,389 (933) -- --
------- ------- ------- -------
Accrued pension/postretirement costs.................... 7,778 9,268 12,368 13,312
Adjustment to recognize minimum pension liabilities..... 3,389 -- -- --
------- ------- ------- -------
Total accrued pension/postretirement costs after
additional minimum liability........................... 11,167 9,268 12,368 13,312
Less current portion.................................... (1,416) (2,360) -- --
------- ------- ------- -------
Long-term liabilities................................... $ 9,751 $ 6,908 $12,368 $13,312
======= ======= ======= =======

Pension Plans Postretirement Benefit Plan
-----------------------------------------------------
December 31, December 31,
Change in plan assets 2000 1999 2000 1999
-----------------------------------------------------

Fair value of plan assets at the beginning of the
year................................................... $19,635 $19,221 N/A N/A
Actual return on plan assets........................... (2,627) 2,508
Employer contributions.................................. 2,360 985
Benefits paid........................................... (3,018) (3,079)
------- -------
Fair value of plan assets at end of year................ $16,350 $19,635
======= =======

F-19

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Net pension and postretirement benefit cost consisted of the following:

Pension Plan
-----------------------------------------------------------------------------
Year Ended Year Ended Year Ended
December 31, 2000 December 31, 1999 December 31, 1998
-----------------------------------------------------------------------------

Interest cost......................... $ 2,117 $ 2,059 $ 2,018
Actual return on plan assets.......... (1,738) (1,874) (2,113)
Net amortization and deferral......... -- -- 426
------- ------- -------
Net periodic benefit cost............. $ 379 $ 185 $ 331
======= ======= =======

Postretirement Benefit Plan
-------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended
December 31, 2000 December 31, 1999 December 31, 1998
-------------------------------------------------------------------------------------

Interest cost...................... $ 1,112 $ 1,169 $ 1,019
Net amortization and deferral...... 15 146 --
------- ------- -------
Net periodic benefit cost.......... $ 1,127 $ 1,315 $ 1,019
======= ======= =======

The following is a summary of assumptions used to reflect expectations of
future economic conditions as they relate to Fasteners' pension and
postretirement plans:

Weighted-average assumptions as of Pension Plan Postretirement Benefit Plan
December 31 2000 1999 2000 1999
- --------------------------------------------------------------------------------------------------------------------------

Discount rate 8.00% 8.00% 8.00% 8.00%
Expected return on plan assets 9.00% 10.00% N/A N/A

For measurement purposes, a 7.5% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 2001; the rate was assumed
to decrease gradually to 5% for 2005 and remain at that level thereafter. The
health care cost trend rate has a significant effect on the amounts reported.

An increase or decrease in the health care cost trend rate of one percentage
point would have the following effect on the postretirement cost and obligation
as of December 31, 2000:

1% point 1% point
Increase Decrease
---------------------------------------

Effect on total service and interest cost components $1,052 $(1,142)
Effect on postretirement obligation 83 (91)

401(k) Plan

Fasteners sponsors a 401(k) savings plan for salaried and non-salaried
employees. Participation in the plan is optional. Employer contributions are
equal to 50% of employee contributions, up to 5% of the participant's annual
salary, subject to certain limitations. Fasteners' contributions to this plan
were $217, $264 and $291 for the periods ended December 31, 2000, 1999 and 1998,
respectively.

F-20

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Stock Options

During October 1995, Fasteners granted certain executives options to purchase
a total of 727,000 shares of common stock. These options, which represent a unit
consisting of two shares of Common Stock, vested immediately upon a change in
control or over a three-year period upon achievement of specified performance
targets. As of December 31, the options are summarized as follows:

2000 1999 1998
----------------------------------------------------

Options outstanding, beginning of year....... 180,688 180,688 180,688
Options outstanding, end of year............. 180,688 180,688 180,688
Options exercisable.......................... -- -- --
Exercise price............................... $ 2.56 $ 2.56 $ 2.56
Grant date................................... February 1997 February 1997 February 1997
Options exercised/surrendered................ -- -- --

On the date of the Saratoga Acquisition, outstanding options that had not been
exercised were to be rolled into options of the Company at equivalent economic
values. Agreements have been executed for two of the four individuals who rolled
over options representing 180,688 options. For the remaining two individuals,
option agreements for 127,624 options have not yet been finalized and such
options are considered surrendered and remain unissued as of December 31, 2000.

Fasteners adopted only the disclosure provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation"
("SFAS 123"). No compensation cost has been recognized for the stock options
granted. Had compensation cost of Fasteners' stock options granted been
determined consistent with the provisions of SFAS 123, Fasteners' would have
recorded no compensation cost as all outstanding options were fully vested as of
December 31, 2000 and 1999 and no options were issued during the years then
ended.

Note 13. Related Party Transactions

Holdings entered into a management agreement with Saratoga in which Holdings
pays $150 per quarter to Saratoga. Such payment is funded with a dividend from
Fasteners and is recorded as an operating expense of Holdings. The Company
accrued $600 in management fees to Saratoga for each of the three years ended
December 31, 2000. Additionally, the Company paid Saratoga $83 for fees related
to the Facility Amendment in December 1999. At December 31, 2000 accrued
liabilities includes $900 in unpaid management fees.

F-21

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Note 14. Commitments And Contingencies

Fasteners is occasionally a party to litigation, claims and assessments from
outside parties during the normal course of business. Management does not
believe that the unfavorable resolution of any such matters currently existing
would have a material unfavorable impact upon the Company's financial position
or results of operations.

As a result of Fasteners' almost 200 years of industrial operations, Fasteners
is involved in environmental protection matters relating to the discharge of
materials into the environment. Fasteners is currently involved in clean-ups of
a current and a former operating location. Fasteners has established accruals
for those hazardous waste sites where it is probable that a loss has been
incurred and the amount of the loss can be reasonably estimated. At December 31,
2000, Fasteners has accruals for environmental matters of $1,732, which are not
anticipated to be of a capital nature. Of the total reserve for environment
liabilities, $1,250 represents the maximum contractual payments to a former
parent. The reliability and precision of the loss estimates are affected by
numerous factors, such as the complexity of investigation and remediation, the
stage of site evaluation, the allocation of responsibility among potentially
responsible parties and the assertion of additional claims. Fasteners adjust its
accruals from time to time as a result of changes in performance standards,
remediation technology, available information and other relevant factors. The
expected payments for environmental obligations consist of $223 in 2001, $473
in 2002, $623 in 2003 and $504 thereafter.

Note 15. Business Segments

The Company's businesses are organized and internally reported as three
segments: Apparel, Industrial, and European operations. The European operations
include some of the same products as both apparel and industrial. However, the
European operations are managed separately and thus reported as a separate
segment. Sales are reported and classified based on the customers' location.

The Company's customers include many large and well-known apparel and
industrial manufacturing companies. In each of calendar 2000 and 1999, no single
customer accounted for more than 8% of the Company's total net sales, and the
Company's ten largest customers accounted for approximately 33% and 30%,
respectively, of the Company's total net sales. The Company's broad line of
products for apparel and specialty industrial use reduces its exposure to any
one-customer segment and to fashion trends.

Business Segment Other /
Information European Total
Year Apparel Industrial (1) Operations (2) Company
-----------------------------------------------------------------------------------------------------------

Net Sales 2000 $55,605 $25,436 $ 7,247 $88,288
1999 52,330 27,157 9,703 89,190
1998 53,444 28,161 10,871 92,476

Operating Income (3) 2000 $16,114 $ 6,894 $ 772 $23,780
1999 14,279 4,774 646 19,699
1998 13,539 5,139 624 19,302

Identifiable Assets 2000 $55,917 $13,791 $ 5,706 $75,414
1999 47,730 9,742 6,035 63,507

F-22

SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(1) Includes all Canadian operations.
(2) Represents Scovill Europe operations.
(3) Operating Income (i) includes allocations of general and administrative
expenses based on sales and (ii) excludes depreciation, amortization,
restructuring and asset impairment charge, charges the Company has deemed to
be non-recurring for internal reporting purposes and management fees.

The following is a reconciliation of operating income from reportable segments
above to operating income on the financial statements:

2000 1999 1998
- -------------------------------------------------------------------------------------------

Operating income from reportable segments $23,780 $ 19,699 $ 19,302
Depreciation (9,663) (9,775) (10,006)
Amortization (2,800) (3,309) (3,938)
Management fee (600) (600) (658)
Other non-recurring charges (3,997) (6,005) --
Restructuring charge (9) (12,608) (2,968)
------- -------- --------
Total operating income (loss) $ 6,711 $(12,598) $ 1,732
======= ======== ========

The following is a reconciliation of identifiable assets from reportable
segments to the financial statements:

2000 1999
-----------------------

Identifiable assets from reportable segments $ 75,414 $ 63,507
Assets not identifiable by reportable segment 113,209 129,883
-------- --------
Total assets $188,623 $193,390
======== ========

The Company only segregates certain assets for reporting purposes, including
the assets of the Company's subsidiaries, inventory and attaching
equipment.

F-23

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Scovill Holdings Inc.
Scovill Fasteners Inc.

/s/ John H. Champagne
------------------------
John H. Champagne,
President
Date: March 30, 2001

Each person whose signature appears below hereby constitutes and appoints
John H. Champagne and Vincent H. Catrini the true and lawful attorneys-in-fact
and agents of the undersigned, with full power of substitution and
resubstitution, for and in the name, place and stead of the undersigned, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Report, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Commission, and hereby grants
to such attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

/s/ JOHN H. CHAMPAGNE President/Chief Executive Officer March 30, 2001
- ---------------------
John H. Champagne

/s/ VINCENT H. CATRINI Executive Vice President and March 30, 2001
- ---------------------- Chief Financial Officer and
Vincent H. Catrini Principal Accounting Officer

/s/ WILLIAM F. ANDREWS Chairman of the Board March 30, 2001
- ----------------------
William F. Andrews

/s/ CHRISTIAN L. OBERBECK Director March 30, 2001
- -------------------------
Christian L. Oberbeck

/s/ KIRK R. FERGUSON Director March 30, 2001
- --------------------
Kirk R. Ferguson

SCHEDULE II

SCOVILL HOLDINGS INC.

VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

Balance at Additions charged Balance at
Classification of Beginning to costs and Deductions from end of
Period expenses reserve period
- --------------------------------------------------------------------------------------------------------------------------------

VALUATION AND QUALIFYING
ACCOUNTS DEDUCTED FROM THE
ASSETS TO WHICH THEY APPLY:
For the year ended December 31, 2000 $1,722 $291 $442 $1,571
====== ==== ==== ======
For the year ended December 31, 1999 $1,132 $921 $331 $1,722

For the year ended December 31, 1998 $ 894 $677 $439 $1,132
====== ==== ==== ======

Restructuring Revenues

For the year ended December 31, 2000 $ 200 - $200 $ -
====== ==== ==== ======
For the year ended December 31, 1999 $ - $500 $300 $ 200
====== ==== ==== ======

S-1