LCA CORP, 10-12B, EX-2, 2000-09-29

LCA CORP
10-12B, EX-2, 2000-09-29

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<PAGE>

EXHIBIT 2.1

<PAGE>

[LETTERHEAD OF U.S. INDUSTRIES, INC.]

, 2000

Dear Stockholder:

I am pleased to enclose a copy of the information statement describing LCA
Corporation ('LCA'), the company through which we intend to spin-off our
lighting and industrial tools businesses to our stockholders. When the spin-off
is completed, LCA will be a New York Stock Exchange-listed company entirely
separate from USI. It will own and operate Lighting Corporation of America, the
fourth largest lighting fixture manufacturer in the United States, SiTeco, a
major European lighting fixture manufacturer, and Spear & Jackson, an
international manufacturer of industrial hand tools.

You will receive 1 share of LCA common stock for every 10 shares of USI
common stock you hold at the close of business on , 2000. You will
not be required to make any payment or take any other action to receive your LCA
common stock. However, you may be required to pay tax on the shares of LCA you
receive.

The spin-off is conditioned upon completion of the new financing
arrangements for LCA described in the information statement. Subject to this,
the spin-off is expected to occur, and regular way NYSE trading in LCA common
stock is expected to commence, on , 2000.

Our Board of Directors approved the spin-off following a full review of
various alternatives to improve company performance. The Board concluded that
repositioning USI as a company focused on consumer-oriented, branded building
products -- such as Jacuzzi, Ames, True Temper, Sundance Spas and Zurn -- would
achieve greater shareholder value over time.

Following the spin-off, we believe our lighting and industrial tools
businesses will be better able to develop along an independent strategic path
with increased senior management attention. We would like to thank Jim O'Leary
and the members of his team who are leaving USI for their many contributions
to our company and wish them tremendous success at LCA.

Sincerely,

David H. Clarke
Chairman and Chief Executive Officer

<PAGE>

ANNEX A
PRELIMINARY COPY, DATED SEPTEMBER 29, 2000
SUBJECT TO COMPLETION OR AMENDMENT

INFORMATION STATEMENT
LCA CORPORATION
COMMON STOCK
(INCLUDING ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)

[LOGO]

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You should consider We have prepared this information statement to provide
carefully the risk you with information regarding the proposed spin-off to U.S.
factors beginning on Industries, Inc. stockholders of all of our shares of common
page 7 of this stock. At the time of the spin-off, we will own and operate
information statement. the lighting and industrial tools businesses of USI.

The spin-off does not If you are a USI stockholder at the close of business on
require approval by USI , 2000, you will receive 1 share of our common stock
stockholders. Therefore, for every 10 shares of USI common stock you hold at that
USI is not asking you time (together with cash instead of any fraction of a share
for a proxy and requests to which you would be entitled). The spin-off will take
that you do not send USI effect on , 2000 and certificates for our shares
a proxy. will be mailed to you on or about , 2000. You will
not be required to make any payment for the shares of our
common stock that you will receive in the spin-off. However,
you may be required to pay tax on the shares you receive.

This information If you have any questions regarding the spin-off, you
statement is not an may call ChaseMellon Shareholder Services, L.L.C., telephone
offer to sell, or a number 1-800-522-6645.
solicitation of an offer
to buy, any of our
securities or those of
USI.
</TABLE>

No public market currently exists for our common stock. However, we are
seeking to list our common stock on the New York Stock Exchange. If the shares
are accepted for listing on the New York Stock Exchange, we expect that a
'when-issued' market will develop on or shortly before the record date for the
spin-off and regular way trading will begin on the first business day after the
effective date of the spin-off.

Proposed New York Stock Exchange Trading Symbol

'_______'
-------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OUR COMMON STOCK, OR DETERMINED IF THIS
INFORMATION STATEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

We first mailed this information statement to USI stockholders on ,
2000.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT ON FORM 10 RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES WILL NOT BE ISSUED
PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PRELIMINARY
INFORMATION STATEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY THESE SECURITIES.

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TABLE OF CONTENTS

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PAGE
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Questions and Answers About the
Spin-off............................ ii
Expected Timetable for the Spin-off... iii
Forward Looking Statements............ iv
Summary............................... 1
Risk Factors.......................... 7
The Spin-off.......................... 11
Capitalization........................ 15
Selected Combined Financial Data...... 16
Unaudited Pro Forma Combined Condensed
Financial Data...................... 17
Pro Forma Combined Condensed Statement
of Operations....................... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 20
Business.............................. 25
Management............................ 31
Executive Compensation................ 33
Projected Ownership of Our Stock
Immediately after the Spin-off...... 37
</TABLE>

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<CAPTION>
PAGE
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Description of Capital Stock.......... 38
Rights Plan........................... 39
Purposes and Effects of Certain
Provisions of Certificate of
Incorporation, By-Laws and Delaware
Statutory Law....................... 42
Limitation on Liability and
Indemnification of Officers and
Directors........................... 45
Additional Information................ 46
Index to Combined Financial
Statements.......................... F-1
ANNEX
A Amended and Restated Certificate of
Incorporation of LCA Corporation... A-1
B LCA Corporation Stock Incentive
Plan............................... B-1
C Material Federal Income Tax
Consequences of Awards and Material
Federal Income, Estate and Gift Tax
Consequences Relating to the
Transfer of Options Under Our Stock
Incentive Plan..................... C-1
</TABLE>

<PAGE>

QUESTIONS AND ANSWERS ABOUT THE SPIN-OFF

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WHAT IS THE SPIN-OFF? USI intends to pay a dividend to its stockholders consisting
of all of our shares of common stock. The dividend is known
as a spin-off. At the time of the spin- off, we will own and
operate the lighting and industrial tools businesses of USI.

WHAT WILL I RECEIVE IN For every 10 shares of USI stock that you hold at the close
THE SPIN-OFF? of business on , 2000, you will receive 1 share of
our common stock. You will receive cash (net of applicable
fees) instead of any fraction of a share to which you would
be entitled. You will receive these automatically without
any required payment or other action on your part. Under our
direct registration program, unless you give us instructions
to do otherwise, your ownership of our common stock will be
recorded electronically on our books and records rather than
evidenced by a physical stock certificate.

WHEN WILL THE SPIN-OFF The spin-off will be completed as soon as possible after the
OCCUR? conditions to the spin-off are met. These conditions include
completion of financing.

DO I HAVE TO PAY TAXES In general, the distribution of LCA stock (including the
ON THE RECEIPT OF value of fractional shares) by USI may be treated as a
LCA COMMON STOCK? dividend, return of basis, and/or taxable gain to USI's
stockholders. The receipt of cash in lieu of fractional
shares may result in the recognition of gain or loss to the
stockholder equal to the difference between the cash
received and the tax basis allocated to such stockholder's
fractional share interest. To review the material federal
income tax consequences in greater detail, see 'The
Spin-off -- Material Federal Income Tax Consequences'.

WILL LCA COMMON We do not expect to pay cash dividends on our stock for the
STOCK PAY DIVIDENDS? foreseeable future.

WILL MY LCA Yes, we anticipate that our common stock will be traded on
COMMON STOCK BE LISTED the NYSE under the symbol ' ,' subject to official notice
ON THE NEW YORK STOCK of issuance.
EXCHANGE?

WHAT WILL HAPPEN TO USI will continue to own and operate its other
USI AND MY EXISTING USI businesses -- including USI Bath and Plumbing, and USI
COMMON STOCK? Hardware and Tools. USI stock will continue to trade on the
NYSE under the symbol 'USI.' The spin-off will not affect
the number of outstanding shares of USI stock or any rights
of USI stockholders.

WHAT WILL HAPPEN TO THE Beginning on or about , 2000, and continuing through
TRADING OF USI AND , 2000, you will only be able to sell your USI stock
LCA COMMON STOCK? with due bills for our stock. This means that you will give
up your right to receive our stock if you sell your USI
stock during this time and you will have to deliver the
certificate for our stock to the buyer of your USI stock
once you receive our stock certificate.

Beginning on , 2000, we expect that regular way
trading in our stock will begin on the NYSE.
</TABLE>

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NOTE TO READERS

Closer to completion of the spin-off, we will update this document to
reflect information that will depend upon market conditions at that time,
including:

the amount and other terms of the indebtedness we will incur under a
new credit facility, and

our pro forma financial condition and results of operations, which will
give effect to the terms of the financing.

EXPECTED TIMETABLE FOR THE SPIN OFF

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<S> <C>
[day], [date], 2000................................ 'When issued' trading in our common stock commences on the
NYSE.

[day], [date], 2000................................ 'When issued' trading in USI ex distribution commences on
the NYSE.

[day], [date], 2000................................ USI common stock commences trading with due bills attached
on the NYSE.

[day], [date], 2000................................ Spin-off record date for holders of USI common stock (
p.m. New York time.)

[day], [date], 2000................................ Spin-off effective date for holders of USI common stock.

[day], [date], 2000................................ Distribution date.

[day], [date], 2000................................ Ex-entitlement date for the stock dividend for USI common
stock trading on the NYSE.

[day], [date], 2000................................ Regular way trading in our common stock commences on the
NYSE.

[day], [date], 2000................................ Settlement date for due bills.

[day], [date], 2000................................ Settlement date for 'when-issued' trading in our common
stock on the NYSE.

[day], [date], 2000................................ Settlement date for 'when-issued' trading in USI ex
distribution.
</TABLE>

iii

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FORWARD LOOKING STATEMENTS

We have made forward-looking statements in this information statement.
Forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. Forward-looking statements are statements, other than statements of
historical facts, that address activities, events or developments that we expect
or anticipate will or may occur in the future, including such items as business
strategy and measures to implement strategy, competitive strengths, objectives,
goals, growth of our business and operations, plans and references to future
success.

Forward-looking statements also include any other statements that include
words such as 'anticipate,' 'believe,' 'plan,' 'estimate,' 'intend' and other
similar expressions.

Forward-looking statements are based on certain assumptions and analyses we
have made in light of our experience and our perception of historical trends,
current conditions, expected future developments and other factors that we
believe are appropriate. Whether actual results and developments will conform
with our expectations and predictions is subject to a number of risks and
uncertainties, including, among others noted in this information statement, the
following:

interest rates,

foreign currency exchange rates,

instability in domestic and foreign markets,

consumer spending patterns,

availability of consumer and commercial credit,

the effect of changes in domestic and foreign laws and regulations
(including government subsidies, tariffs and international trade
regulations), and

product initiatives and other actions taken by competitors, changes in
raw material costs and our suppliers' continuing ability to fulfill our
purchasing requirements.

All of the forward-looking statements made in this information statement are
qualified by these cautionary statements, and we cannot assure you that the
results or developments we have anticipated will be realized. Even if the
results and developments in our forward-looking statements are substantially
realized, we cannot assure you that they will have the expected consequences to,
or effects on us, or our business or operations.

<PAGE>

SUMMARY

This summary highlights selected information from this information
statement, but does not contain all details concerning the spin-off of our
common stock to USI stockholders, including information that may be important to
you. To better understand the spin-off and our business and financial position,
you should carefully review this entire document. References to 'LCA,' 'the
Company,' 'we,' 'us' or 'our' mean LCA Corporation and its subsidiaries and
assume the spin-off has already occurred. References to 'USI' mean U.S.
Industries, Inc. and its subsidiaries (excluding, if the reference is to a date
or period of time after the spin-off, USI and its subsidiaries). References to
'fiscal' are to the applicable fiscal year ended September 30.

THE COMPANY

LCA, a wholly owned subsidiary of USI, is a major manufacturer and
distributor of lighting fixtures and industrial tools. In fiscal 1999, we had
net sales of $917.5 million and operating income of $54.5 million before
corporate costs.

We estimate that our lighting business is the fourth largest producer of
lighting fixtures in North America and Europe. Collectively, the lighting
businesses produce and market a complete offering of indoor and outdoor lighting
for the commercial, institutional and residential markets. Our business has in
excess of 5,700 employees worldwide. It has manufacturing facilities in six U.S.
states, California, Connecticut, South Carolina, Ohio, Arkansas and
Pennsylvania, in addition to operations in Mexico, Puerto Rico, Germany,
Slovenia and Austria. The lighting business's sales organization consists of
both independent manufacturers' sales representatives (agents) and its own
factory sales force employees. Our division sells products through a variety of
distribution channels, including electrical distributors, lighting showrooms,
home centers and national accounts. The lighting business's major brands hold
substantial market positions within each of the product segments in which they
participate. Our lines cover the full range from specification grade products,
which meet the particular performance and design standards of architects and
other professional lighting specifiers, to commodity grade products, which
satisfy general requirements for varied applications.

Our industrial tools business was acquired by USI in 1997 through the
acquisition of Spear & Jackson, a leading European hand tools manufacturer
founded in 1760. Our industrial tools business manufactures and distributes a
broad range of industrial tools, metrology products and magnetic products. The
division has over 1,375 employees worldwide. Products are sold through various
distribution channels, including in-house sales managers and merchandisers,
independent sales agents and industrial and engineering distributors, as well as
direct sales to retailers and end users. Our industrial tools business's major
brands hold substantial market positions within many of the product segments in
which they participate.

The following table presents our major brands and product offerings:

<PAGE>

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<S> <C>
Spaulding Outdoor lighting systems for the commercial market. Products
include outdoor area luminaires and poles, canopy lights,
low level lights and flood lights.
Architectural Period-style and contemporary site lighting fixtures for the
Area Lighting commercial outdoor market. Product categories include: pole
and wall-mounted luminaires, concrete bollards and custom
fixtures/poles.
Dual-Lite; Complete offering of life safety lighting products for
Prescolite Life Safety commercial and institutional applications. Products include:
exit signage, emergency back-up lighting, high frequency
'powerpack' inverters and central AC inverter systems.
Columbia Full line of specification and commodity grade fluorescent
lighting fixtures for use in commercial and institutional
applications. Products include parabolic and lensed
troffers, strip lights, wraparounds and a variety of
recessed surface and specialty units.
Alera Linear fluorescent indirect, direct/indirect and direct
lighting systems.
Prescolite Extensive line of specification grade recessed downlighting,
track lighting and surface-mounted lighting for the
commercial and residential markets.
Moldcast High performance oriented rugged commercial outdoor
luminaires. Products include a broad selection of
contemporary and period style outdoor lighting fixtures with
precise optics.
SiTeco Major European source of technical lighting systems and
services including: industrial lighting, task lighting,
roadway lighting and sports arena lighting. Product lines
are 'Siemens,' 'SiTeco,' 'Knoblich Licht' and 'Elektrokovina
Svetilke' serving the commercial and industrial market.

INDUSTRIAL TOOLS
Spear & Jackson Extensive line of high quality lawn and garden and hand tools
including digging and cultivating tools, cutting and shear
tools, striking tools, contractor tools, agricultural tools,
pliers, retail hand tools, screwdrivers, hammers and
plumbers tools.
Eclipse Full line of top quality hand tools including: hacksaws,
frames and blades, riveters and engineer tools.
Eliot Lucas Pliers, woodsaws and builder tools.
Bowers; Moore & Wright Precision tools, measuring instruments and calibration
services.
</TABLE>

ADDRESS AND TELEPHONE NUMBER

We are a Delaware corporation. Our principal executive offices will be
located at Iselin, New Jersey and our telephone number at that address will be
(732) 767-0700.

<PAGE>

THE SPIN-OFF

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Company Doing the Spin-off........... U.S. Industries, Inc., a Delaware corporation.
Company Resulting from the LCA Corporation, a Delaware corporation.
Spin-off...........................
Conditions to the Spin-off........... Completion of the spin-off is subject to the availability of
proceeds under our new credit facility.
Spin-off Ratio....................... 1 share of our common stock for every 10 shares of USI
common stock held of record on the spin-off record date.
Spin-off Record Date................. , 2000 (5:00 p.m. New York time).
Spin-off Effective Date.............. , 2000.
Trading in USI Common Stock from the
Spin-off Record Date up to and
Including the Spin-off Effective
Date............................... During this period, USI stock will trade on the NYSE with
due bills attached. The due bills will entitle a purchaser
of USI stock during this period to receive 1 share of our
stock for every 10 shares purchased. If the spin-off
conditions are not satisfied and the spin-off is not
completed, the due bills will become null and void.
Our Outstanding Stock................ Based on approximately 77 million shares of USI common stock
outstanding at the close of business on , 2000,
approximately 7.7 million shares of our stock will be
distributed in the spin-off. These shares will constitute
all of our capital stock that will be outstanding
immediately following the spin-off. After the spin-off, we
will recommend the issuance to our executive officers and
other key employees of a total of shares of our
common stock, which will be subject to certain restrictions.
In addition, we will issue a total of shares of our
common stock to our non-employee directors. After taking
into account these issuances, we will have shares of
common stock outstanding. After the spin-off, we will also
recommend the issuance to our executive officers and other
key employees of options to purchase the total number of
shares of our common stock determined by dividing $
million by the fair market value of our common stock on the
date of grant (up to a maximum of shares). See
'Executive Compensation -- Stock Incentive Plan.'
Interests in Fractions of
Shares............................. Fractions of shares of our common stock will not be issued
directly to stockholders in the spin-off. Instead, fractions
of shares will be aggregated by the dividend agent and sold
on the NYSE. The net cash proceeds of these sales will be
paid ratably to USI stockholders otherwise entitled to
fractions of shares. See 'The Spin-off -- Fractions of
Shares.'
Direct Registration.................. Upon completion of the spin-off, we will issue the
appropriate number of shares of our common stock to you
through direct registration rather than issuing a physical
stock certificate unless you give specific instructions to
do otherwise. See 'The Spin-off -- Direct Registration of
Our Common Stock.'
</TABLE>

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<S> <C>
Dividend Agent....................... The dividend agent is ChaseMellon Shareholder Services
L.L.C. Its address, telephone number and website are:
Chase Mellon Shareholder Services
Overpeck Centre
85 Challenger Rd.
Ridgefield Park, N.J. 07660
Phone: 1-800-522-6645
Website: www.chaseMellon.com
Material Federal Income Tax
Consequences to USI Stockholders... In general, the distribution of LCA's stock (including the
value of fractional shares) by USI may be treated as a
dividend, return of basis and/or taxable gain to USI's
Stockholders. The fractional shares to which the USI
Stockholders would otherwise be entitled will be sold and
the receipt of cash in lieu of fractional shares may result
in the recognition of gain or loss to the stockholder equal
to the difference between the cash received and the tax
basis allocated to such stockholder's fractional share
interest. The tax basis of the fractional shares will be the
fair market value thereof on or near the date of the
distribution. To review the material federal income tax
consequences in greater detail, see 'The
Spin-off -- Material Federal Income Tax Consequences.'
Trading Market and Symbol for Our
Common Stock....................... We are seeking to list our common stock on the NYSE under
the proposed symbol ' .' Prior to the spin-off, we do
not expect there to be any public trading market for our
common stock except that our common stock is expected to
trade on a 'when-issued' basis on the NYSE beginning on
, 2000, for settlement on , 2000. If
the spin-off is not completed, all 'when-issued' trading in
our common stock will be null and void. If the spin-off is
completed, we expect that 'regular way' trading in our
common stock on the NYSE will commence at 9:30 a.m. New York
time, on , 2000, subject to official notice of
issuance. See 'Risk Factors -- There Is No Trading History
For Our Common Stock and We Do Not Expect to Pay Dividends'
and 'The Spin-off -- Listing and Trading of Our Common
Stock.'
Transfer Agent and Registrar for the
Common Stock....................... The transfer agent and registrar for our common stock will
be [ ].
Agreements between LCA and USI and
Relationship after the Spin-off.... After the spin-off, we and USI will operate independently of
each other as separate public companies. Neither we nor USI
will own each other's stock (except, in the near-term, for a
limited number of shares held in employee benefit plan
trusts). All directors, executives and employees of USI who
join us will cease to be directors, executives or employees
of USI. See 'The Spin-off -- Agreements between LCA and USI
and Relationship after the Spin-off.'
</TABLE>

<PAGE>

SUMMARY COMBINED FINANCIAL DATA

The historical selected combined financial data of the Company set forth
below for each of the years in the three year period ended September 30, 1999
are derived from the audited combined financial statements of the Company, which
are included elsewhere in this information statement. The historical selected
combined financial data for the nine months ended June 30, 2000 and 1999 and for
the years ended September 30, 1996 and 1995 are unaudited but, in our opinion,
have been prepared on a basis consistent with that for the three-year period
ended September 30, 1999. The interim financial data include all adjustments
that management considers necessary for a fair presentation of interim results.
Historical financial information may not be indicative of our future performance
as an independent company. Furthermore, the historical financial data presented
below do not reflect certain pro forma adjustments giving effect to the spin-off
which are reflected in 'Unaudited Pro Forma Combined Condensed Financial Data.'
The information set forth below should be read in conjunction with 'Management's
Discussion and Analysis of Financial Condition and Results of Operations' and
the Combined Financial Statements and notes thereto. See 'Index to Combined
Financial Statements.' Historical basic and diluted earnings per share and
dividend data have not been presented, as the capital structure of the
businesses that comprise the Company prior to the spin-off is not indicative of
its capital structure following the spin-off.

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<CAPTION>
NINE MONTHS
ENDED FISCAL YEAR ENDED
JUNE 30, SEPTEMBER 30,
--------------- -------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales....................... $698.9 $677.0 $917.5 $856.1 $537.7 $508.1 $ 492.0
Cost of products sold........... 475.8 461.1 628.7 590.5 374.3 356.1 351.1
Selling, general and
administrative expenses....... 191.9 175.8 234.3 203.9 119.5 116.1 115.7
Restructuring charges(A)........ -- -- -- 2.3 -- -- 99.7
Operating income(A)............. 26.6 33.7 46.6 51.1 34.7 29.6 (76.2)
Net income (loss)............... 9.8 14.4 20.2 23.1 13.0 12.9 (100.1)
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents....... $ 14.1 $ 5.0 $ 9.1 $ 12.4 $ 0.1 $ 0.1 $ 0.2
Working capital................. 246.0 230.5 231.9 214.4 122.5 118.5 111.5
Total assets.................... 706.7 669.6 688.1 617.3 285.5 280.5 266.1
Total debt(B)................... 208.7 203.3 205.8 201.7 195.0 195.0 195.0
Invested capital................ 309.0 287.0 290.1 234.1 17.1 12.9 13.1
OTHER DATA:
Capital expenditures............ 16.0 21.3 31.2 23.7 12.6 10.5 8.4
Depreciation and amortization... 19.4 17.7 23.8 21.0 9.8 9.0 13.2
</TABLE>

---------

(A) The Company changed its accounting policy for evaluating goodwill
impairment in fiscal 1995, resulting in a charge of $97.9 million to the
lighting segment. Fiscal 1995 operating income includes charges of $1.8
million to close certain underutilized facilities of the lighting
operations. Fiscal 1998 includes restructuring charges of $2.3 million
related to the closing of a manufacturing and distribution facility in the
lighting segment.

(B) Amounts primarily represent intercompany notes payable to affiliates.

<PAGE>

SUMMARY UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA

The following summary unaudited pro forma combined condensed financial data
reflect the spin-off as if it occurred as of June 30, 2000 for unaudited pro
forma combined condensed balance sheet purposes and October 1, 1998 for the
unaudited pro forma combined condensed statement of operations of each of the
periods presented. The unaudited pro forma combined condensed financial data
reflect our expected capitalization as a result of the spin-off, the incurrence
of a total of approximately $207.0 million of indebtedness under the new credit
facility and interest expense (including amortization of capitalized costs)
relating to such borrowings. This data does not necessarily reflect our results
of operations or financial position had the spin-off actually been completed as
of the dates shown. Also, these data are not necessarily indicative of our
future results of operations or future financial position. See 'Capitalization'
and 'Unaudited Pro Forma Combined Condensed Financial Data.'

<TABLE>
<CAPTION>
NINE MONTHS
ENDED JUNE 30,
FISCAL YEAR ENDED -------------------
SEPTEMBER 30, 1999 2000 1999
------------------ ---- ----
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
DATA:
Net sales............................................ $917.5 $698.9 $677.0
Operating income..................................... 44.5 23.7 32.6
Interest expense..................................... (20.7) (15.7) (15.7)
Net income........................................... 14.6 4.9 10.4
Basic and diluted earnings per share................. $ 1.90 $ 0.64 $ 1.34
Shares outstanding................................... 7.7 7.7 7.7
</TABLE>

<TABLE>
<CAPTION>
AT JUNE 30, 2000
----------------
(IN MILLIONS, EXCEPT
PER SHARE DATA)
<S> <C>
PRO FORMA COMBINED CONDENSED BALANCE SHEET DATA:
Cash and cash equivalents............................... $ 14.1
Working capital......................................... 246.0
Total assets............................................ 713.7(A)
Total debt.............................................. 214.1
Total liabilities....................................... 382.6
Stockholders' equity.................................... 331.1(A)
Book value per share.................................... 43.06
</TABLE>

---------

(A) Subsequent to June 30, 2000, the Company will record a goodwill impairment
charge of $83 million with no related tax benefit. Accordingly, the pro
forma Total assets and Stockholders' equity will be reduced by such amount
due to this write-off.

<PAGE>

RISK FACTORS

You should carefully consider the following risk factors relating to the
ownership of common stock in our company.

WE WILL HAVE SUBSTANTIAL INDEBTEDNESS

As of June 30, 2000, after giving pro forma effect to the spin-off,
including our expected initial borrowings under the new credit facility we would
have had combined indebtedness of approximately $214.1 million and stockholders'
equity of approximately $331.1 million. Subsequent to June 30, 2000, we will
record a goodwill impairment charge amounting to approximately $83 million, with
no related tax benefit. Accordingly, stockholders' equity will be reduced by
such amount for this write-off. After giving pro forma effect to the additional
interest expense and other changes in expenses expected after the spin-off, we
would have had earnings per share of $1.90 for fiscal 2000 instead of earnings
per share of $2.63 based on the assumed number of shares outstanding of
7,690,000. See 'Capitalization' and 'Unaudited Pro Forma Combined Condensed
Financial Data.' The new credit facility will require us to repay $ million
principal amount of term loans on or before . Accordingly, our excess cash
flow from operations (after capital expenditures) during this period will be
dedicated in substantial part to meeting debt service and amortization
requirements, thereby reducing the availability of our cash flow to fund working
capital, capital expenditures and other general corporate purposes. Our ability
to generate cash available for the repayment of debt will depend upon numerous
business factors, many of which are outside our control. See 'Forward Looking
Statements.'

We believe that our cash flow from operations, available cash and available
borrowings under our new credit facility will be adequate to meet our liquidity
needs for at least the next twelve months. We cannot assure you, however, that
our business will generate sufficient cash flow from operations or that future
borrowings will be available to us under the new credit facility in an amount
sufficient to enable us to fund our liquidity needs. To the extent that cash
flow from operations is insufficient to cover our working capital, capital
expenditure and debt service requirements, we, in order to pay such expenses,
may seek to obtain funds from additional borrowings, sell a portion of our
businesses, engage in sale/leaseback transactions and/or raise equity capital.
We cannot assure you of the availability or accessibility of these or other
similar transactions, or that these or other similar transactions could be
accomplished on terms favorable to us. We cannot assure you that we will be able
to refinance any of our indebtedness on commercially reasonable terms or at all.

In addition, the new credit facility will contain covenants restricting,
among other things, our ability to incur additional indebtedness and create
liens. These restrictions could have important consequences to us. For example,
they could:

increase our vulnerability to general adverse economic and industry
conditions;

limit our flexibility in planning for, or reacting to, changes in our
businesses and the industries in which we operate;

place us at a competitive disadvantage compared to our competitors that
have less debt; and/or

limit, along with the financial and other restrictive covenants of our
indebtedness, among other things, our ability to borrow additional
funds.

See 'Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Liquidity and Capital Resources -- New Credit Facility.'

THERE IS NO TRADING HISTORY FOR OUR COMMON STOCK AND WE DO NOT EXPECT TO PAY
DIVIDENDS

Although we are seeking to list our common stock on the New York Stock
Exchange, there is no existing market for our common stock. We cannot assure you
as to the trading prices for our common stock either in the 'when issued' market
or after 'regular way' trading begins. Until our common stock is fully
distributed and an orderly market develops, the trading prices for our common
stock may be adversely affected by the sale of a substantial number of shares.
Prices for our common stock may also be influenced by the depth and liquidity of
the market for our common stock, investor perceptions

<PAGE>

about us and our businesses, our future financial results, the absence of cash
dividends on our common stock and general economic and market conditions.

We do not expect to pay cash dividends on our common stock for the
foreseeable future. We will be restricted from paying dividends under the terms
of our new credit facility.

WE ARE A NEW COMPANY AND OUR HISTORICAL FINANCIAL INFORMATION MAY NOT BE USEFUL
IN PREDICTING FUTURE RESULTS.

The historical financial information included in this Information Statement
is that of USI's lighting and industrial tools businesses (i.e., those parts of
USI being distributed to LCA) and not of LCA and may not necessarily reflect the
results of operations, financial position and cash flows had LCA operated as a
separate stand-alone entity during the periods presented. This historical
financial information does not reflect any changes that may occur in the funding
and operations of LCA as a result of the Spin-off.

OUR BUSINESSES OPERATE IN HIGHLY COMPETITIVE MARKETS AND COMPETE WITH MANY
LARGER AND BETTER CAPITALIZED COMPANIES

Generally, our operating companies are subject to competition from a
substantial number of regional, national and international competitors, many of
which have greater financial, manufacturing, engineering and other resources
than our operating companies. Many of these competitors can be expected to
continue to improve the design and performance of their products and to
introduce new products with competitive price and performance characteristics.
Many of our subsidiaries' products are not protected by any proprietary rights
such as patents. Although we believe that our operating companies have certain
advantages over their competitors, realizing and maintaining such advantages
will require continued and, in some cases, increased investment by our operating
companies in manufacturing, research and development, quality standards,
marketing and customer service and support. We cannot assure you that our
operating companies will have sufficient resources to continue to make such
investments or that they will be successful in maintaining such advantages.
Failure to make such investments or to maintain such advantages could have a
material adverse effect on our business, financial condition and results of
operations.

THERE ARE NUMEROUS RISKS ASSOCIATED WITH CONDUCTING OPERATIONS IN INTERNATIONAL
MARKETS

Our operating companies manufacture and assemble products at numerous
facilities, some of which are located outside the United States. We also obtain
components and finished goods from suppliers located outside the United States.
Although we have not experienced significant problems conducting operations in
or obtaining supplies from these areas, changes in local economic or political
conditions could affect our manufacturing, assembly and distribution
capabilities and have a material adverse effect on our business, financial
condition and results of operations. Additional risks inherent in our
international business activities generally include unexpected changes in
regulatory requirements, tariffs and other trade barriers, changes in local
economic or political conditions, longer accounts receivable payment cycles,
difficulties in managing international operations, potentially adverse tax
consequences, restrictions on repatriation of earnings and the burdens of
complying with a wide variety of foreign laws. In fiscal 1999, we derived
approximately 36.6% of our net sales from customers outside the United States.
At June 30, 2000, we held $293.8 million of assets outside of the United States.

Decreases in the value of foreign currencies relative to the U.S. dollar
could result in losses from foreign currency conversions. We make limited use of
derivative products in order to hedge our foreign exchange exposure. We also
borrow in foreign currencies to effectively hedge a portion of our net
investment in our foreign subsidiaries.

WE ARE DEPENDENT ON CERTAIN INDUSTRIES

A significant portion of our lighting business's sales are made to customers
in the new construction, renovation and remodeling industries. These industries
are cyclical in nature and subject to changes in general economic conditions. In
addition, sales of the industrial tools division are dependent on the retail,
wholesale and industrial markets for our product line. Economic downturns and
the potential

<PAGE>

declines in construction and demand for industrial tools may have a material
adverse effect on our net sales and operating income.

AN INCREASE IN THE PRICE OF RAW MATERIALS OR FINISHED GOODS COULD ADVERSELY
AFFECT OUR OPERATIONS

Our operating companies purchase most of the raw materials for their
products on the open market, and rely on third parties for the sourcing of
finished goods. As such, our cost of products sold may be affected by changes in
the market price of raw materials or sourcing services and finished goods. We do
not generally engage in commodity hedging transactions for raw materials.
Significant increases in the prices of our operating companies' products due to
increases in the cost of raw materials or sourcing could have a negative effect
on demand for their respective products and on profitability as well as a
material adverse effect on our business, financial condition and results of
operations.

OUR BUSINESS COULD SUFFER IN THE EVENT OF A WORK STOPPAGE BY OUR UNIONIZED LABOR
FORCE.

We believe that we have satisfactory relations with our unions and,
therefore, anticipate reaching new agreements on satisfactory terms as existing
agreements expire. However, new agreements may not be reached without a work
stoppage or strike or reached on terms satisfactory to us. A prolonged work
stoppage or strike could have a material adverse effect on our results of
operations.

WE FACE ENVIRONMENTAL REGULATION OF OUR OPERATIONS

Our businesses are subject to a variety of federal, state, local and foreign
governmental regulations relating to the use, transportation, storage,
discharge, emission or disposal of hazardous substances and wastes, remediation
of contamination associated with releases of hazardous substances at our
facilities and at off-site disposal locations, and worker health and safety.
These regulations are complex, change frequently and have tended to become more
stringent over time.

Based on our experience to date, we believe that the future cost of
compliance with existing environmental regulations and the future cost of
necessary investigation or remediation of contamination will not have a material
adverse effect on our business, financial condition or results of operations.
Nevertheless, future events, such as discovery of unknown contamination,
compliance with more stringent regulations, or more vigorous enforcement
policies by regulatory agencies or stricter or different interpretations of
existing regulations, could require us to make material expenditures. See
'Business -- Governmental Regulation.'

WE HAVE NO OPERATING HISTORY AS AN INDEPENDENT PUBLIC COMPANY AND ARE DEPENDENT
ON KEY PERSONNEL

We do not have an operating history as an independent public company. Our
businesses have historically relied on USI for certain administrative services
and financial support. After the spin-off, this will no longer be the case.

Our success as an independent public company depends to a significant extent
on the continued services of our senior management and other members of
management. We could be adversely affected if any of these persons were
unwilling or unable to continue in our employ.

WE WILL BE SUBJECT TO CERTAIN PROVISIONS THAT COULD DELAY OR PREVENT A CHANGE OF
CONTROL

Prior to the spin-off we will enter into a rights agreement under which
preferred stock purchase rights will attach to our presently outstanding shares
of common stock and to all shares of common stock to be issued afterwards
(including common stock that will trade on a 'when issued' basis) until the
rights expire. The rights may cause substantial dilution to a person or group
that acquires 15% or more of our common stock unless the rights are first
redeemed by our board of directors. Unless earlier redeemed, the rights will
expire in October 2010. In addition, our certificate of incorporation and by-
laws and Delaware statutory law contain several provisions that could have the
effect of delaying or preventing our change of control in a transaction not
approved by our board of directors. Accordingly,

<PAGE>

our stockholders could be prevented from realizing a premium on their shares if
such a transaction was not approved by our board of directors. Our agreements
with our executive officers and certain other key employees may have the effect
of making a change of control more expensive. See 'Executive Compensation,'
'Rights Plan,' and 'Purposes and Effects of Certain Provisions of Certificate of
Incorporation, By-Laws and Delaware Statutory Law.'

THE SPIN-OFF

MANNER OF EFFECTING THE SPIN-OFF

The spin-off will be effected by a stock dividend paid to holders of record
of USI common stock. The spin-off ratio will be 1 share of our common stock for
every 10 shares of USI common stock outstanding on the spin-off record date. USI
stockholders will not be required to pay for shares of our common stock received
in the spin-off or to surrender or exchange USI common stock in order to receive
shares of our common stock. All shares of our common stock received by USI
stockholders in connection with the spin-off will be fully paid and
non-assessable. USI stockholders do not have any appraisal rights in connection
with the spin-off.

During the period beginning on or about , 2000 and continuing through
, 2000, USI common stock will trade on the NYSE with due bills attached.
The due bills will entitle a purchaser of USI common stock during this period to
receive 1 share of our common stock for every 10 shares purchased. If the
spin-off is not completed, all due bills attached to USI common stock will
become null and void.

In order to be entitled to receive shares of our common stock in the
spin-off, USI stockholders must be holders of record of USI common stock at 5:00
p.m. New York time on the spin-off effective date, which is expected to be
, 2000.

The dividend agent is ChaseMellon Shareholder Services L.L.C. We have a
direct registration (book entry) program with respect to ownership of our common
stock. Upon completion of the spin-off, we will issue the appropriate shares of
our common stock to you through direct registration rather than issuing a
physical stock certificate unless you give specific instructions to do
otherwise. See ' -- Direct Registration of Our Common Stock.'

FRACTIONS OF SHARES

No certificates representing fractions of shares will be issued directly as
part of the spin-off. Instead of receiving a fraction of a share, each USI
Stockholder of record on the spin-off effective date who would otherwise be
entitled to receive a fraction of a share will receive cash. As soon as
practicable after the spin-off effective date, ChaseMellon will aggregate and
sell all fractions of shares of our common stock on the NYSE at then prevailing
market prices and distribute the aggregate proceeds (net of fees) ratably to
stockholders entitled to them. See ' -- Material Federal Income Tax
Consequences' below for a discussion of the federal income tax treatment of the
sale of interests in fractions of shares.

RESULTS OF THE SPIN-OFF

Following the spin-off, we will be a separate, publicly-traded company that
holds the USI lighting and industrial tools businesses. Immediately after the
spin-off, based on the number of outstanding shares of USI common stock and the
number of record holders on , 2000, we expect to have approximately 7.7
million shares of common stock outstanding, held by approximately
record holders (excluding shares of our common stock that we
anticipate will be issued, subject to certain restrictions, to executive
officers and other key employees, and shares of our common stock that
will be issued to our non-employee directors after the spin-off effective date
as described under 'Executive Compensation'). The actual number of shares of our
common stock to be issued will be determined as of the spin-off effective date.

Following the spin-off, USI will continue to own and operate its other
businesses -- including USI bath and plumbing, and USI hardware and tools. The
spin-off will not affect the number of outstanding shares of USI common stock or
any rights of USI stockholders.

<PAGE>

LISTING AND TRADING OF OUR COMMON STOCK

Our common stock has been authorized for listing on the NYSE under the
symbol ' ', subject to official notice of issuance. Prior to the spin-off, we
do not expect any public trading market for our common stock to exist except
that, beginning on , 2000, our common stock is expected to trade on a
'when-issued' basis on the NYSE for settlement when our common stock is issued
on , 2000. The term 'when-issued' means trading in shares prior to the
time certificates are actually available or issued. If the spin-off conditions
are not satisfied and the stock dividend is not paid, all such 'when-issued'
trading will become null and void. If the spin-off conditions are satisfied and
the stock dividend is paid on the spin-off effective date, it is expected that
'regular way' trading in our common stock on the NYSE will commence at 9:30 a.m.
New York time on , 2000, subject to official notice of issuance.

The shares of our common stock issued to USI stockholders will be freely
transferable, except for shares received by persons who may be deemed to be our
'affiliates' under the Securities Act. Persons who may be deemed to be our
affiliates after the spin-off generally include individuals or entities that
control, are controlled by, or are under common control with us and may include
certain of our officers and directors. Persons who are our affiliates will be
permitted to sell their shares of our common stock only pursuant to an effective
registration statement under the Securities Act or an exemption from the
registration requirements of the Securities Act, such as the exemptions afforded
by Section 4(1) of the Securities Act and Rule 144 under the Securities Act
(with the exemption under Rule 144 not available until 90 days after the date of
this information statement).

Certain USI subsidiaries, including certain of the subsidiaries to be
transferred to us, presently maintain tax-qualified profit-sharing and savings
plans that hold, among other assets, USI common stock. Certain of our
subsidiaries will continue to maintain these plans or establish new plans to
which liabilities and assets, including USI common stock, will be transferred in
connection with the spin-off. Based upon their ownership of USI common stock on
the spin-off record date after giving effect to these transfers, USI plans and
our plans are expected to hold approximately and shares of our common
stock, respectively, and our plans are expected to hold approximately
shares of USI common stock. The trustees of the USI plans presently intend to
dispose of all of our common stock acquired in the spin-off. We expect that
participants in our plans will be permitted to redirect any investments in USI
common stock to other permitted investments under such plans for a period of
time. However, after such time, the trustees of our plans intend to dispose of
all USI common stock held in our plans and invest the net proceeds of such
dispositions in shares of our common stock, subject to the exercise of the
trustee's fiduciary duties under applicable law. The dispositions will be made
on behalf of participating employees and subject to the exercise of the
trustees' fiduciary duties under applicable law. The timing of dispositions and
acquisitions will be determined by plan administrators and trustees or by their
independent institutional investment managers, subject to their exercise of
fiduciary duties under applicable law. We and USI cannot predict the timing of
dispositions and acquisitions, but we expect that they will occur during the
first few months following the spin-off. Dispositions are expected to be made,
to the extent practicable by exchanges of our common stock and USI common stock
between plans at prices based upon publicly-reported trading prices and also by
open market sales. See 'Projected Ownership of Our Stock Immediately after the
Spin-off.'

For a discussion of certain uncertainties that should be considered when
trading in our common stock, see 'Risk Factors -- There is No Trading History
for Our Common Stock and We Do Not Expect to Pay Dividends.'

DIRECT REGISTRATION OF OUR COMMON STOCK

We will have a direct registration (book entry) program with respect to
record ownership of our common stock. Direct registration is a service that
allows shares to be owned, reported and transferred electronically without
having a physical stock certificate issued. Persons who acquire shares of our
common stock will not receive a physical stock certificate (unless certificates
are requested); rather, ownership of the shares is recorded in the names of such
persons electronically on our books and records. Direct registration is intended
to alleviate problems relating to stolen, misplaced or lost stock certificates
and to reduce the paperwork relating to the transfer of ownership of our common
stock.

<PAGE>

Under direct registration, the voting, dividend and other rights and
benefits of holders of our common stock remain the same as with holders of
certificates.

Upon completion of the spin-off, we will mail you a statement confirming the
issuance to you of the appropriate shares of our common stock through direct
registration, rather than issuing a physical stock certificate unless you give
specific instructions to do so. The mailing will explain how to obtain a
physical certificate, if you wish.

The requirements for transferring book entry shares are the same as for
shares represented by a physical stock certificate except that, with direct
registration, there is no certificate to surrender. Our common stock owned
through the direct registration program may be sold and transferred through a
stock broker or through , the transfer agent for our common stock.

In order to utilize the services of a stock broker, you must first add the
appropriate stock broker information to the direct registration account
maintained by the transfer agent. Thereafter, you may by telephone transfer our
common stock to a brokerage account with such stock broker and then may sell or
transfer such shares by giving instructions to the broker.

Alternatively, shares of our common stock owned through direct registration
may be sold or transferred through the services of the transfer agent. Sales
will be made through the transfer agent when practicable, but at least once each
week. The transfer agent cannot accept instructions to sell shares on a specific
day or at a specific price. The price per share will be the average price per
share of all of our common stock sold during the period by the transfer agent
for holders of book entry shares.

AGREEMENTS BETWEEN LCA AND USI AND RELATIONSHIP AFTER THE SPIN-OFF

After the spin-off, we and USI will operate independently of each other as
separate public companies. Neither we nor USI will have any beneficial stock
ownership interest in the other (although employee benefits plan trusts
sponsored by us and USI and/or certain of our or their subsidiaries will, in the
near term, hold certain of the other company's shares). All directors,
executives and employees of USI who join us will cease to be directors,
executives or employees of USI.

We will enter into agreements with USI providing for the transfer of the USI
lighting and industrial tools businesses to us prior to the spin-off. We will
also enter into agreements with USI that will define our responsibilities
regarding the following:

indemnification against certain liabilities, including liabilities for
taxes; and

corporate transitional matters, including the provision of services and
the transfer of assets and liabilities under employee benefit plans.

These agreements will be negotiated before the spin-off and thus will be
negotiated between affiliated parties. Accordingly, we cannot assure you that
any of these agreements, or that any of the transactions provided for in these
agreements, will be effected on terms at least as favorable to us or to USI as
could have been obtained from unaffiliated third parties.

Following the spin-off, additional or modified agreements, arrangements and
transactions may be entered into by us and USI. Any such future agreements,
arrangements and transactions will be determined through arm's-length
negotiation between the parties.

The following is a summary of certain agreements, arrangements and
transactions to be entered into between us and USI and our and its respective
subsidiaries. Certain of these agreements will be filed as exhibits to this
information statement, and the following descriptions are qualified in their
entirety by reference to such exhibits.

Agreements to Effect the Transfer of the Lighting and Industrial Tools
Businesses of USI. The assets and liabilities of USI's lighting and industrial
tools businesses will be transferred by USI and its subsidiaries to us. We and
USI will each agree to execute and deliver such further assignments, documents
of transfer, deeds and instruments as may be necessary for the more effective
implementation of such transfers.

Some assignments and transfers may require prior consent by third parties
and various filings or recordings with governmental entities. Some permits or
licenses may require reapplication by us, and

<PAGE>

reissuance in our name. If consent to the assignment or reissuance of any
contract, license or permit being transferred is not obtained, we and USI will
develop alternative approaches so that, to the maximum extent possible, we will
receive the benefits of the contract, license or permit and will discharge the
duties and bear the costs and risks under the contract, license or permit. We
will bear the risk that the alternative arrangements will not provide us with
the full benefits of the contract, license or permit. We and USI, however,
believe that all necessary consents and reissuances that are material to us will
be obtained.

Indemnification Agreement. In connection with the spin-off, we will enter
into an indemnification agreement with USI. Under the agreement, subject to
certain exceptions, we will agree to indemnify USI against all liabilities,
litigation and claims arising out of USI's lighting and industrial tools
businesses (including liabilities for claims relating to or arising out of the
assets, businesses and operations previously conducted by these businesses or
their predecessors, subject to certain exceptions). USI will agree to indemnify
us against (1) all liabilities, litigation and claims arising out of all USI
operations other than the lighting and industrial tools businesses,
(2) liabilities (including liabilities under the Securities Exchange Act of
1934) for statements included in this information statement and USI's prior SEC
filings and (3) certain other liabilities. Neither we nor USI will be entitled
to a recovery to the extent any liability is covered by proceeds received by it
from any third-party insurance policy. In circumstances in which the potential
liability is joint, we and USI will share responsibility for the liability on a
mutually agreed basis consistent with the principles established in the
indemnification agreement.

The indemnification agreement will set forth procedures for notification and
payment of claims, use and preservation of records and resolution of disputes.
Liability for tax-related matters will be governed by the tax sharing and
indemnification agreement described below.

Tax Sharing and Indemnification Agreement. We will enter into a tax sharing
and indemnification agreement with USI that will govern the allocation between
us of federal, state, local and foreign tax liabilities and related tax matters,
such as the preparation and filing of tax returns and the conduct of audits and
other tax proceedings, for taxable periods before and after the spin-off.

In general, the tax sharing agreement will provide that (1) USI will be
responsible for, and will indemnify us and our subsidiaries against, tax
liabilities that relate to the period up to and including the date of the
spin-off and (2) we will be responsible for, and will indemnify USI and its
subsidiaries against, our tax liabilities for taxable periods beginning after
the date of the spin-off.

Corporate Transition Agreement. We will enter into a corporate transition
agreement with USI, pursuant to which we will perform for USI several services
on a transitional basis. These services will include, financial reporting,
payroll, stock options, employee benefits and certain risk management
administration, and treasury services, which includes cash management. The
corporate transition agreement will be for a term of no greater than 18 months.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

Tax Consequences to U.S. Stockholders. The distribution by USI to its
holders of common stock of the stock of LCA is a taxable 'Spin-off' and may be
characterized as a dividend taxable as ordinary income to the extent of USI's
current and accumulated earnings and profits. The amount of the distribution
will be equal to the fair market value of the distributed shares (including the
value of fractional shares). (The fair market value of the shares will be its
market value determined on or near the date of distribution based on the NYSE
price of the LCA common stock on the first day of trading.) To the extent that
all or part of a distribution to a holder exceeds such holder's allocable share
of USI's current and accumulated earnings and profits, such amount will first be
treated as a return of capital that will reduce the holder's adjusted tax basis
in his shares of USI's stock and then to the extent that the distribution
exceeds such basis, such excess will be treated as gain received from a sale or
exchange of stock and taxed as either short term or long term capital gain,
(depending upon whether the holder's holding period for such stock has been
equal to or less than one year). In addition, each stockholder of USI who
receives cash proceeds in lieu of fractional interests in shares of LCA may
recognize gain or loss equal to the difference between such proceeds and the tax
basis allocated to such stockholder's fractional share interest.

<PAGE>

A corporate stockholder will generally be entitled to a 70% (or 80%, if the
corporate holder owns more than 20% of USI's stock) dividends-received deduction
with respect to distributions that are treated as dividends on shares of USI's
stock that the corporate holder has held for more than 45 days during the 90 day
period that begins 45 days before the stock becomes ex-dividend. A corporation's
holding period for this purpose is reduced by periods during which the
corporation's risk of loss with respect to the shares is considered diminished
by reason of certain options, contracts to sell or other similar transactions.
In addition, the dividends-received deduction may be reduced or eliminated if a
corporation has indebtedness 'directly attributable to its investment' in
portfolio stock.

A corporate holder is required to reduce its basis (but not below zero) in
USI's stock by the non-taxed portion (generally the portion eligible for the
dividends-received deduction described above) of an 'extraordinary dividend', if
the holder has not held such stock subject to a risk of loss for more than two
years before USI declared, announced, or agreed to, the amount or payment of
such dividend, whichever is earliest. (An 'extraordinary dividend' means any
dividend with respect to a share of stock if the amount of such dividend equals
or exceeds 10% of the corporate holder's adjusted basis in such share of stock.)
If any part of the non-taxed portion of an extraordinary dividend has not been
applied to reduce the basis as a result of the limitation on reducing basis
below zero, such part will be treated as gain from the sale or exchange of stock
for the taxable year in which the extraordinary dividend is received.

In addition, for purposes of computing its alternative minimum tax
liability, a corporate holder may, in general, be required to include in its
alternative minimum taxable income a portion of any dividends-received deduction
allowed in computing regular taxable income.

Tax Consequences to Non-U.S. Stockholders. Foreign Stockholders who receive
distributions of LCA's stock from USI may be subject to a 30-percent withholding
tax on the gross amount of the distribution unless an applicable tax treaty
reduces or eliminates that tax. However, if income from the investment in USI's
common stock is treated as effectively connected with a non-U.S. stockholder's
conduct of a U.S. trade or business (or, if an income tax treaty applies, is
attributable to a U.S. permanent establishment), the non-U.S. stockholders
generally will be subject to federal income tax at graduated rates, in the same
manner as U.S. stockholders are treated with respect to such distributions (and
also may be subject to the 30-percent branch profits tax, in the case of a
non-U.S. stockholder that is a non-U.S. corporation).

Backup Withholding Requirements. The distribution of LCA's stock may be
subject to backup withholding at a rate of 31-percent on the amount due to
non-exempt United States Holders for whom backup holding applies with regard to
the payment of dividends and to certain foreign stockholders who do not
establish an exemption from backup withholding tax.

The summary of federal income tax consequences set forth above may not be
applicable to stockholders who receive their shares of our common stock through
the exercise of employee stock options or otherwise as compensation or who are
otherwise subject to special treatment under the Internal Revenue Code. All
stockholders should consult their own tax advisors as to the particular tax
consequences to them, including the applicability and effect of state, local and
foreign tax laws.

REASONS FOR FURNISHING THIS INFORMATION STATEMENT

This information statement is being furnished by USI solely to provide
information to USI stockholders about, subject to the satisfaction of the
spin-off conditions, the receipt of our common stock pursuant to the spin-off.
It is not, and is not to be construed as, an inducement or encouragement to buy
or sell any of our securities or those of USI. The information contained in this
information statement is believed by us and USI to be accurate as of the date
set forth on its front cover. Changes may occur after that date, and neither we
nor USI will update the information except in the normal course of our
respective public disclosure practices.

<PAGE>

CAPITALIZATION

The following table, which is unaudited, sets forth, as of June 30, 2000,
our capitalization as adjusted to reflect the spin-off and the incurrence of
indebtedness under the new credit facility, as if these transactions had
occurred as of that date. This data should be read in conjunction with
'Unaudited Pro Forma Combined Condensed Financial Data,' 'Management's
Discussion and Analysis of Financial Condition and Results of Operations' and
the Combined Financial Statements and notes. See 'Index to Combined Financial
Statements.'

<TABLE>
<CAPTION>
AS OF JUNE 30, 2000
--------------------------------------
PRO FORMA
ACTUAL ADJUSTMENTS AS ADJUSTED
------ ----------- -----------
(IN MILLIONS)
<S> <C> <C> <C>
Long-Term Debt (including current portion):
Notes payable......................................... $ 7.1 $-- $ 7.1
New credit facility................................... -- 207.0 207.0
Notes and interest payable to affiliates.............. 222.1 (222.1) --
------ ------- ------
Total long-term debt (including current
portion)........................................ $229.2 $ (15.1) $214.1
Stockholders' Equity (Deficit):
Common stock, shares authorized, par value
$0.01 per share, shares issued and
outstanding (as adjusted)........................... $ -- $-- $--
Preferred stock, shares authorized, none
issued and outstanding.............................. -- -- --
Paid-in-Capital....................................... -- 331.1 (A) 331.1
Invested Capital...................................... 309.0 (309.0) --
------ ------- ------
Total invested capital/stockholders' equity....... 309.0 22.1 331.1(B)
------ ------- ------
Total capitalization.......................... $538.2 $ 7.0 $545.2(B)
------ ------- ------
------ ------- ------
</TABLE>

---------

(A) To reflect the net effect on invested capital.

<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
Invested Capital............................................ $309.0
Portion of notes payable to affiliate forgiven.............. 22.1
------
$331.1
------
------
</TABLE>

(B) Subsequent to June 30, 2000, the Company will record a goodwill impairment
charge of approximately $83 million with no related tax benefit.
Accordingly, the pro forma Stockholders' equity and Total capitalization
will be reduced by such amount due to this write-off.

<PAGE>

SELECTED COMBINED FINANCIAL DATA

<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
NINE MONTHS ENDED FISCAL YEAR ENDED
JUNE 30, SEPTEMBER 30,
------------------------------------- ------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales.................... $698.9 $677.0 $917.5 $856.1 $537.7 $508.1 $492.0
Cost of products sold........ 475.8 461.1 628.7 590.5 374.3 356.1 351.1
Selling, general and
administrative expenses.... 191.9 175.8 234.3 203.9 119.5 116.1 115.7
Restructuring charges(A)..... -- -- -- 2.3 -- -- 99.7
Operating income(A).......... 26.6 33.7 46.6 51.1 34.7 29.6 (76.2)
Net income (loss)............ 9.8 14.4 20.2 23.1 13.0 12.9 (100.1)
BALANCE SHEET DATA (AT PERIOD
END):
Cash and cash equivalents.... $ 14.1 $ 5.0 $ 9.1 $ 12.4 $ 0.1 $ 0.1 $ 0.2
Working capital.............. 246.0 230.5 231.9 214.4 122.5 118.5 111.5
Total assets................. 706.7 669.6 688.1 617.3 285.5 280.5 266.1
Total debt(B)................ 208.7 203.3 205.8 201.7 195.0 195.0 195.0
Invested capital............. 309.0 287.0 290.1 234.1 17.1 12.9 13.1
OTHER DATA:
Capital expenditures......... 16.0 21.3 31.2 23.7 12.6 10.5 8.4
Depreciation and
amortization............... 19.4 17.7 23.8 21.0 9.8 9.0 13.2
</TABLE>

---------

(B) Amounts primarily represent intercompany notes payable to affiliates.

<PAGE>

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA

The following unaudited pro forma combined condensed financial data reflect
the spin-off as if it occurred as of June 30, 2000 for unaudited pro forma
combined condensed balance sheet purposes and as of October 1, 1998 for the
unaudited pro forma combined condensed statement of operations. The unaudited
pro forma combined condensed financial data reflect our expected capitalization
as a result of the spin-off, the incurrence of indebtedness under the new credit
facility and interest expense (including amortization of capitalized costs)
relating to such borrowings. This data do not necessarily reflect our results of
operations or financial position had the indebtedness actually been incurred and
the spin-off actually been consummated as of such dates. Also, this data are not
necessarily indicative of our future results of operations or future financial
position.

The pro forma combined condensed financial data will be revised in the
definitive information statement to reflect the information that will depend
upon market conditions at the time of the spin-off, including the amount and
other terms of the indebtedness we will incur under a new credit facility.

<TABLE>
<CAPTION>
AS OF JUNE 30, 2000
--------------------------------
PRO-FORMA
ACTUAL ADJUSTMENTS PRO-FORMA
------ ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents.............................. $ 14.1 $ $ 14.1
Trade receivables, net................................. 172.0 172.0
Inventories............................................ 169.7 169.7
Deferred income taxes.................................. 9.1 9.1
Other current assets................................... 7.2 7.2
------ ------- ------
Total current assets............................... 372.1 -- 372.1
Property, plant and equipment, net......................... 166.7 166.7
Pension assets............................................. 7.4 7.4
Other assets............................................... 1.1 7.0 (A) 8.1
Goodwill, net.............................................. 159.4 159.4(D)
------ ------- ------
$706.7 $ 7.0 $713.7
------ ------- ------
------ ------- ------

LIABILITIES AND INVESTED CAPITAL
Current liabilities:
Notes payable.......................................... $ 7.1 $ 7.1
Trade accounts payable................................. 58.6 58.6
Accrued expenses and other liabilities................. 58.0 58.0
Income taxes payable................................... 2.4 2.4
------ ------- ------
Total current liabilities.......................... 126.1 -- 126.1
Long term debt............................................. 207.0 (B) 207.0
Deferred income taxes...................................... 2.5 2.5
Other liabilities.......................................... 47.0 47.0
Notes payable to Affiliates................................ 201.6 (201.6)(B)(C) --
Interest payable to Affiliates............................. 20.5 (20.5)(B) --
------ ------- ------
Total liabilities.................................. 397.7 (15.1) 382.6
Commitments and contingencies..............................
Invested capital........................................... 309.0 22.1 (C)(D) 331.1
------ ------- ------
$706.7 $ 7.0 $713.7
------ ------- ------
------ ------- ------
</TABLE>

---------

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

<PAGE>

(footnotes continued from previous page)

(B) To reflect initial borrowings under the new credit facility, of which $200
million will be utilized for the repayment of notes payable to affiliated,
including accrued interest thereon and $7 million for the payment of debt
financing costs.

(C) To reflect the amount of notes payable to affiliates that would be forgiven
by USI assuming $207 million in borrowings.

(D) Subsequent to June 30, 2000, the Company will record a goodwill impairment
charge amounting to approximately $83 million, with no related tax benefit.
Accordingly the pro forma goodwill and invested capital will be reduced by
such amount due to this write-off.

PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
JUNE 30, 2000
------------------------------------
PRO-FORMA
ACTUAL ADJUSTMENTS PRO-FORMA
------ ----------- ---------
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C>
Net Sales................................................... $698.9 $698.9
Operating costs and expenses:
Cost of products sold................................... 475.8 475.8
Selling, general and administrative expenses............ 191.9 7.5 (A) 199.4
Management fee and divisional overhead.................. 4.6 (4.6)(A) --
------ ------ ------
Operating income............................................ 26.6 (2.9) 23.7
Interest expense to Affiliates.............................. (9.8) 9.8 (B) --
Interest expense............................................ (0.6) (14.0)(B) (15.7)
(1.1)(C)
Interest income............................................. 0.4 -- 0.4
------ ------ ------
Income before income taxes.................................. 16.6 (8.2) 8.4
Provision for income taxes.................................. (6.8) 3.3 (D) (3.5)
------ ------ ------
Net income.................................................. $ 9.8 $ (4.9) $ 4.9
------ ------ ------
------ ------ ------
Basic and diluted earnings per share(E)..................... $ 1.27 $ 0.64
------ ------
------ ------
</TABLE>

<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
JUNE 30, 1999
------------------------------------
PRO-FORMA
ACTUAL ADJUSTMENTS PRO-FORMA
------ ----------- ---------
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C>
Net Sales................................................... $677.0 $677.0
Operating costs and expenses:
Cost of products sold................................... 461.1 461.1
Selling, general and administrative expenses............ 175.8 7.5 (A) 183.3
Management fee and divisional overhead.................. 6.4 (6.4)(A) --
------ ------ ------
Operating income............................................ 33.7 (1.1) 32.6
Interest expense to Affiliates.............................. (9.5) 9.5 (B) --
Interest expense............................................ (0.6) (14.0)(B) (15.7)
(1.1)(C)
Interest income............................................. 0.5 -- 0.5
------ ------ ------
Income before income taxes.................................. 24.1 (6.7) 17.4
Provision for income taxes.................................. (9.7) 2.7 (D) (7.0)
------ ------ ------
Net income.................................................. $ 14.4 $ (4.0) $ 10.4
------ ------ ------
------ ------ ------
Basic and diluted earnings per share(E)..................... $ 1.87 $ 1.35
------ ------
------ ------
</TABLE>

<PAGE>

PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
SEPTEMBER 30, 1999
------------------------------------
PRO-FORMA
ACTUAL ADJUSTMENTS PRO-FORMA
------ ----------- ---------
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C>
Net Sales................................................... $917.5 $917.5
Operating costs and expenses:
Cost of products sold................................... 628.7 628.7
Selling, general and administrative expenses............ 234.3 10.0 (A) 244.3
Management fee and divisional overhead.................. 7.9 (7.9)(A) --
------ ------ ------
Operating income............................................ 46.6 (2.1) 44.5
Interest expense to Affiliates.............................. (12.7) 12.7 (B) --
Interest expense............................................ (0.7) (18.6)(B) (20.7)
(1.4)(C)
Interest income............................................. 0.6 -- 0.6
------ ------ ------
Income before income taxes.................................. 33.8 (9.4) 24.4
Provision for income taxes.................................. (13.6) 3.8 (D) (9.8)
------ ------ ------
Net income.................................................. $ 20.2 $ (5.6) $ 14.6
------ ------ ------
------ ------ ------
Basic and diluted earnings per share(E)..................... $ 2.63 $ 1.90
------ ------
------ ------
</TABLE>

---------

(A) To eliminate management fees allocated from USI and divisional overhead,
and to record estimated selling, general and administrative expenses that
we expect to incur following the spin-off, including management and
director compensation, net of a transition service agreement fee that will
be charged to USI for services that we will perform for USI.

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

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

(E) Basic and diluted earnings per share have been determined assuming that
7,690,000 shares of our common stock will be issued upon the spin-off.

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

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

The following table presents, for each of the last three fiscal years and
the nine months ended June 30, 2000 and 1999, net sales and operating income of
our two business groups. The historical net sales and operating income data for
the two business groups for the nine months ended June 30, 2000 and 1999 are
unaudited but have been prepared on a basis consistent with the audited periods.
This historical financial information may not be indicative of our future
financial performance as an independent company and does not reflect the pro
forma adjustments giving effect to the spin-off presented in 'Unaudited Pro
Forma Combined Financial Data.'

<TABLE>
<CAPTION>
FOR NINE MONTHS FOR THE FISCAL YEARS ENDED
ENDED JUNE 30, SEPTEMBER 30,
--------------- ---------------------------
2000 1999 1999 1998 1997
---- ---- ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
NET SALES
Lighting................................... $603.2 $590.9 $804.0 $765.5 $537.7
Industrial Tools........................... 95.7 86.1 113.5 90.6 --
------ ------ ------ ------ ------
Total net sales........................ $698.9 $677.0 $917.5 $856.1 $537.7
------ ------ ------ ------ ------
------ ------ ------ ------ ------

OPERATING INCOME
Lighting(A)................................ $ 26.8 $ 35.9 $ 48.3 $ 53.5 $ 43.9
Industrial Tools........................... 4.4 4.2 6.2 5.9 --
Management fees and divisional overhead.... (4.6) (6.4) (7.9) (8.3) (9.2)
------ ------ ------ ------ ------
Total operating income................. $ 26.6 $ 33.7 $ 46.6 $ 51.1 $ 34.7
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>

---------

(A) In fiscal 1998, operating income includes restructuring charges of $2.3
million other related charges of $0.5 million. See Note 4 to the Combined
Financial Statements.

RESULTS OF OPERATIONS

NINE MONTHS ENDED JUNE 30, 2000 COMPARED TO NINE MONTHS ENDED JUNE 30, 1999

Net Sales and Operating Income

We had total net sales of $698.9 million and total operating income of $26.6
million for the nine months ended June 30, 2000, a sales increase of $21.9
million (3.2%) and a decrease in operating income of $7.1 million (21.1%) from
the nine months ended June 30, 1999.

Lighting had net sales of $603.2 million and operating income of $26.8
million for the nine months ended June 30, 2000, an increase in sales of $12.3
million (2.1%) and a decrease in operating income of $9.1 million (25.3%) from
the same period last year. Sales increased due to the full period inclusion of
Dual-Lite which was acquired in March 1999 of the prior year. This was offset by
sales decreases in the residential division where certain unprofitable product
lines were discontinued. The decrease in operating income is mainly the result
of discontinuing certain residential product lines, which resulted in
nonrecurring exit charges of $3.5 million. In addition, the residential division
incurred approximately $2 million in costs associated with moving some
production offshore. Our commercial and institutional indoor division reported
lower operating income as a result of inventory write-offs from a SKU
rationalization program and lower pricing due to competition.

Industrial Tools had net sales of $95.7 million and operating income of $4.4
million for the nine months ended June 30, 2000, increases in sales and
operating income of $9.6 million (11.1%) and $0.2 million (4.8%), respectively,
from the same period last year. The increase in sales are mainly related to

<PAGE>

the acquisition of S&J France in December 1999 and Bowers plc in January 1999.
These increases were partially offset by the unfavorable translation effect of
converting UK results into US dollars. Also, results have been impacted by
severe competition in the United Kingdom market due to lower cost imports from
the Far East.

In June 2000, upon expiration of the contingency period related to the
December 1997 acquisition of Spear & Jackson, USI made additional cash payments
of `L'47 million ($71 million), to the former owners of Spear & Jackson. A
portion of the contingent cash payment ($36 million) was recorded as an
adjustment to invested capital as it was based upon the market value of USI's
common stock price at the end of the contingency period, and the remainder of
the cash payment ($35 million) was recorded as additional goodwill as it related
to the settlement of additional contingent consideration. Due to indications of
impairment based on the additional consideration paid for Spear & Jackson and
its current operating results and future projections, we evaluated the
recoverability of the Spear & Jackson goodwill in accordance with its accounting
policy as described in Note 2 to the Combined Financial Statements included
elsewhere in this Information Statement. In arriving at the fair value of Spear
& Jackson we considered a number of factors including: 1) competition from less
expensive imports; 2) declining margins on exports; 3) general decline in the
industrial sector in the United Kingdom; 4) Spear & Jackson's long-term
financial plan; and 5) analysis of values for similar companies. In determining
the amount of the impairment, USI compared the net book value to the estimated
fair market values of Spear & Jackson. Based on the above, we will record an
impairment charge of approximately $83 million in September 2000. The effect of
this charge will reduce future goodwill amortization by approximately $2.2
million per annum.

Management fees and divisional overhead costs of $4.6 million, decreased
$1.8 million (28.1%) from prior year due to the elimination of the lighting
divisional office in November 1999 and the prior year included a severance
charge of $1.4 million related to division management.

Interest and Taxes

Total interest expense of approximately $10.4 million for the nine months
ended June 30, 2000, increased $0.3 million (3.0%) from the comparable period of
fiscal 1999. The increase reflects higher levels of outstanding notes payable to
affiliates.

Interest income was less than $1 million in both periods reflecting
short-term investments of excess cash at foreign operations.

Our provision for income taxes was $6.8 million on pre-tax income of $16.6
million (a 40.9% effective rate) for the nine months ended June 30, 2000,
compared to $9.7 million on pre-tax income of $24.1 million (a 40.2% effective
rate) for the nine months ended June 30, 1999.

FISCAL 1999 COMPARED TO FISCAL 1998

Net Sales and Operating Income

We had total net sales of $917.5 million and total operating income of $46.6
million for the fiscal year ended September 30, 1999, a sales increase of $61.4
million (7.2%) and a decrease in operating income of $4.5 million (8.8%) from
the same period in the prior year. Included in the fiscal 1998 operating income
were restructuring and other related costs of $2.8 million relating to the
closure of a manufacturing and distribution facility in the commercial and
institutional indoor division.

Lighting had net sales of $804.0 million and operating income of $48.3
million for the fiscal year ended September 30, 1999, a sales increase of $38.5
million (5.0%) and a decrease in operating income of $5.2 million (9.7%) from
the prior year. The increase in sales is mainly related to the first time
inclusion of the Dual-Lite safety division acquired in March 1999. Residential
lighting sales to the home center market and outdoor lighting were also higher.
The decrease in operating income is mainly the result of difficult conditions in
the commercial and institutional indoor markets, which were impacted by pricing
pressures and inventory write-downs relating to the exit of the light controls
product lines. The fiscal 1998 results included $2.8 million of restructuring
and other related costs. In addition, the European business reported a decrease
in operating income resulting from price declines and start-up

<PAGE>

costs to open new sales offices in other European countries. These decreases
were partially offset by higher income from residential and outdoor lighting
products and the first time inclusion of Dual-Lite.

Industrial Tools had net sales of $113.5 million and operating income of
$6.2 million for the fiscal year ended September 30, 1999, reflecting a sales
increase of $22.9 million (25.3%) and an increase in operating income of $0.3
million (5.1%). The increase in sales is mainly related to the first time
inclusion of Bowers plc which was acquired in January 1999. This was partially
offset by generally lower margins resulting from pricing pressure of cheaper
imports into the UK market.

Management fees and divisional overhead costs of $7.9 million decreased $0.4
million (4.8%), mainly due to a decrease in the allocation from USI as a result
of lower USI corporate costs. Included in the fiscal 1999 costs is approximately
$1.4 million related to severance costs attributable to division management.

Restructuring

In June 1998, USI reviewed its long-term strategy and reviewed the operating
performance and future prospects of each of its businesses. As a result, USI
adopted a plan to improve efficiency and enhance competitiveness at some of our
operations. The restructuring plan included the closing of a manufacturing and
distribution facility in our Lighting segment. The restructuring did not have a
significant impact on our ongoing operations during the periods that
manufacturing was transitioned from the facility closed. The expected benefits
we expect from the restructuring are primarily reduced fixed costs associated
with leased facilities and reduced compensation costs.

The principal, pre-tax components of the fiscal 1998 restructuring charge
were $1.3 million in lease obligations and $1.0 million in severance costs.
During fiscal 1998 the Company made cash payments of $1.1 million, with the
remaining $1.2 million paid in fiscal 1999. In addition, we also incurred $0.5
million of product change costs related to the elimination of product lines.
After an income tax benefit of $1.1 million, the charges detailed above reduced
net income for the period ended September 30, 1998 by $1.7 million.

Interest and Taxes

Total interest expense of $13.4 million for the fiscal year ended
September 30, 1999, decreased $0.3 million (2.2%) from the comparable period of
fiscal 1998. The decrease reflects lower levels of third party debt outstanding,
as the interest expense to affiliates remained the same as the prior year.
Interest income was less than $1 million in both periods reflecting short-term
investments of excess cash at foreign operations.

The provision for income taxes was $13.6 million on pre-tax income of $33.8
million (a 40.2% effective rate) for the fiscal year ended September 30, 1999
compared to $15.3 million on pre-tax income of $38.4 million (a 39.8% effective
rate) for the fiscal year ended September 30, 1998.

FISCAL 1998 COMPARED TO FISCAL 1997

Net Sales and Operating Income

We had total net sales of $856.1 million and total operating income of $51.1
million for the fiscal year ended September 30, 1998, reflecting a sales
increase of $318.4 million (59.2%) and an operating income increase of $16.4
million (47.3%) from the same period in the prior year.

Lighting had net sales of $765.5 million and operating income of $53.5
million for the fiscal year ended September 30, 1998, reflecting a sales
increase of $227.8 million (42.4%) and an operating income increase of $9.6
million (21.9%) from the same period last year. The increase in sales is mainly
related to the first time inclusion of the European division acquired in October
1997. Residential and outdoor lighting product sales and operating income both
increased due to further market penetration. However, these improvements were
offset by weakness in the commercial and institutional indoor market which was
negatively impacted by pricing pressures associated with competitive market
conditions.

<PAGE>

Industrial Tools had net sales of $90.6 million and operating income of $5.9
million for the fiscal year ended September 30, 1998. Our Spear & Jackson
division was acquired in December 1997, and accordingly fiscal 1998 was the
first year of results for this division.

Interest and Taxes

Total interest expense of $13.7 million for the fiscal year ended September
30, 1998, increased $0.5 million (3.8%) from the comparable period in fiscal
1997. The increase reflects higher notes payable at the European lighting
division, which was acquired in October 1997. Interest income increased $1
million from fiscal 1997 due to the European lighting division investing excess
cash in short-term investments.

The provision for income taxes was $15.3 million on pre-tax income of $38.4
million (a 39.8% effective rate) for the fiscal year ended September 30, 1998
compared to $8.5 million on pre-tax income of $21.5 million (a 39.5% effective
rate) for the fiscal year ended September 30, 1997.

LIQUIDITY AND CAPITAL RESOURCES

Prior to and during the nine months ended June 30, 2000, we financed our
operations and capital and other expenditures from a combination of cash
generated from operations, notes, credit lines, and invested capital provided by
USI or its affiliates. This arrangement will continue to be in effect until the
consummation of the spin-off, after which we expect to meet all cash
requirements through internally-generated funds and borrowings under our new
credit facility and other available sources.

Our ability to generate cash available for the repayment of debt will depend
upon numerous business factors, including conditions in the U.S. and world
economies, the level of demand for our products, changes in raw material costs,
the level of capital expenditures and working capital requirements. Excess cash
flow from operations (after capital expenditures) is expected to satisfy our
minimal amortization requirements under the new credit facility after the
spin-off. If our excess cash flow from operations (after capital expenditures),
together with any net disposition proceeds realized by us, is insufficient to
satisfy debt amortization requirements under the new credit facility, we will be
required to renegotiate the terms of, or refinance, the new credit facility. See
' -- New Credit Facility' below.

NINE MONTHS ENDED JUNE 30, 2000 COMPARED TO NINE MONTHS ENDED JUNE 30, 1999

Operating activities provided cash of $21.4 million for the nine months
ended June 30, 2000, compared with $14.4 million for the prior year. The
increase was primarily due to lower working capital requirements reflecting
lower accounts receivable and inventories.

Investing activities used cash of $88.7 million for the nine months ended
June 30, 2000, compared with $90.6 million for the prior year. The nine months
ended June 30, 2000 cash was used for the Spear & Jackson additional
consideration and capital expenditures. The nine months ended June 30, 1999 cash
was used for the acquisitions of Dual-Lite and Bowers plc and capital
expenditures.

Financing activities provided cash of $78.5 million for the nine months
ended June 30, 2000, compared with $74.9 million for the prior year. The nine
months ended June 30, 2000 cash provided related to capital contributions from
affiliates that the Company used for the Spear & Jackson additional
consideration. The nine months ended June 30, 1999 cash provided related to
capital contributions from affiliates that the Company used for the Dual-Lite
and Bowers acquisitions.

FISCAL 1999 COMPARED TO FISCAL 1998

Our operating activities provided cash of $34.0 million for fiscal 1999
compared with $9.3 million for the prior year. The increase was primarily due to
lower working capital requirements in fiscal 1999 as compared to fiscal 1998. In
fiscal 1998, we had to make working capital investments in the European lighting
division shortly after the October 1997 acquisition.

<PAGE>

Investing activities used cash of $94.2 million for fiscal 1999, compared
with $61.2 million for the prior year. The fiscal 1999 cash was used for
acquisitions of Dual-Lite and Bowers plc and capital expenditures. The fiscal
1998 cash was used for capital expenditures and the acquisitions of the European
lighting division and Spear & Jackson.

Financing activities provided cash of $60.9 million for fiscal 1999,
compared with $62.7 million for the prior year. The fiscal 1999 cash provided
related to capital contributions from affiliates that the Company used for the
Dual-Lite and Bowers acquisitions. The fiscal 1998 cash provided related to
capital contributions from affiliates that the Company used for the European
lighting and Spear & Jackson acquisitions and repayment of long-term debt at
Spear & Jackson.

FISCAL 1998 COMPARED TO FISCAL 1997

Operating activities provided cash of $9.3 million for fiscal 1998 compared
with $21.9 million for the prior year. The decrease was primarily due to higher
working capital requirements in fiscal 1998 as compared to fiscal 1997. In
fiscal 1998, the Company had to make working capital investments in the European
lighting division shortly after the October 1997 acquisition.

Investing activities used cash of $61.2 million for fiscal 1998, compared
with $12.6 million for the prior year. The fiscal 1998 cash was used for capital
expenditures and for the acquisition of the European lighting division. The
fiscal 1997 cash was used for capital expenditures.

Financing activities provided cash of $62.7 million for fiscal 1998,
compared with cash used of $9.5 million for the prior year. The fiscal 1998 cash
provided related to capital contributions from affiliates that the Company used
for acquisitions and repayment of long-term debt at Spear & Jackson. The fiscal
1997 cash used related to net transfers with affiliates.

NEW CREDIT FACILITY

At or about the time of the spin-off, we intend to enter into a new credit
facility with as administrative agent, and a syndicate of banks. We will
amend this filing to include a description of our new credit facility.

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of doing business, we are exposed to the risks
associated with changes in interest rates and currency exchange rates. To limit
the risks from such fluctuations, USI has in the past entered into and we
anticipate in the future entering into various hedging transactions that have
been authorized pursuant to our policies and procedures. See Note 2 to the
Combined Financial Statements included elsewhere in this Information Statement.
We do not engage in such transactions for trading purposes. We anticipate to
utilize foreign currency-denominated borrowings to effectively hedge a portion
of our net investments in subsidiaries in foreign countries. We are also exposed
to foreign currency exchange risk related to our international operations and
our U.S. businesses, which import or export goods. We have made limited use of
financial instruments to manage this risk.

EFFECT OF INFLATION

Because of the relatively low levels of inflation experienced in our
principal markets, inflation did not have a material impact on our results of
operations in fiscal 1999, 1998 or 1997 or the nine months ended June 30, 2000.

<PAGE>

BUSINESS

GENERAL

Our industrial tools business was acquired by USI in fiscal 1998 through the
acquisition of Spear & Jackson, a leading European hand tools manufacturer
founded in 1760. Our industrial tools business manufactures and distributes a
broad range of lawn and garden tools, hand tools, metrology products, magnetic
products, industrial saws and wood carving tools. The division has over 1,375
employees worldwide. Products are sold through various distribution channels,
including in-house sales managers and merchandisers, independent sales agents
and industrial and engineering distributors, as well as direct sales to
retailers and end users. Our industrial tools business's major brands hold
substantial market positions within many of the product segments in which they
participate.

The following table presents our major brands and product offerings:

<TABLE>
<S> <C>
LIGHTING
Progress Leading single source supplier of residential and light
commercial decorative lighting fixtures. Product offering
consists of over 3,000 stock keeping units including:
chandeliers, hall and foyer, pendants, close-to-ceiling,
bath and vanity, sconces, modular fluorescent, undercabinet,
outdoor, landscape, track and recessed lighting.
Kim Premier specification product line of architectural outdoor
lighting fixtures and equipment for the commercial and
residential markets. Product categories include:
pole-mounted luminaires, bollards, parking garage
luminaires, flood lights, wall-mounted luminaries and
landscape fixtures.
Spaulding Complete outdoor lighting systems for the commercial market.
Products include outdoor area luminaires, canopy lights, low
level lights and flood lights.
Architectural Period-style and contemporary site lighting fixtures for the
Area Lighting commercial outdoor market. Product categories include: pole
and wall-mounted luminaires, concrete bollards and custom
fixtures/poles.
Dual-Lite Complete offering of life safety lighting products for
Prescolite Life commercial and institutional applications. Products include:
Safety exit signage, emergency back-up lighting, high frequency
'powerpack' inverters and central AC inverter systems.
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Columbia Full line of specification and commodity grade fluorescent
lighting fixtures for use in commercial and institutional
applications. Products include parabolic and lensed
troffers, strip lights, wraparounds and a variety of
recessed surface and specialty units.
Alera Linear fluorescent indirect, direct/indirect and direct
lighting systems.
Prescolite Extensive line of specification grade recessed downlighting,
track lighting and surface-mounted lighting for the
commercial and residential markets.
Moldcast High performance oriented rugged commercial outdoor
luminaires. Products include a broad selection of
contemporary and period style outdoor lighting fixtures with
precise optics.
SiTeco Major European source of technical lighting systems and
services including: industrial lighting, task lighting,
roadway lighting and sports arena lighting. Product lines
are 'Siemens', 'SiTeco', 'Knoblich Licht' and 'Elektrokovina
Svetilke' serving the commercial and industrial market.

LIGHTING

Our lighting business is international. We operate our domestic lighting
businesses through our Lighting Corporation of America subsidiary. We operate
our European lighting business through our SiTeco Holding GmbH subsidiary.

LIGHTING CORPORATION OF AMERICA

Our domestic lighting businesses are collectively known as Lighting
Corporation of America. Lighting Corporation of America subsidiaries manufacture
and distribute indoor and outdoor lighting fixtures for markets in North
America.

Lighting Corporation of America's size, broad range of quality products and
strong distribution network allow it to compete as a major supplier in the
commercial/institutional and residential markets. Our outdoor lighting products
are sold under the Kim, Spaulding, Moldcast and Architectural Area Lighting
brand names. These products include street, area, parking garage and landscape
lighting. Outdoor lighting products are sold to electrical distributors and
national accounts. National customer accounts include service stations,
automobile dealerships and fast food restaurants. Indoor commercial/industrial
lighting products, which are sold under the Columbia, Prescolite and Dual-Lite
brand names through electrical distributors and national accounts, include
incandescent and compact fluorescent, down light fixtures, emergency and exit
lighting, and other fluorescent lighting fixtures. Our sales organization
includes independent manufacturer's sales representatives (agents) as well as
factory sales force employees. Most of our agents also represent a complementary
line of lighting products for industrial applications, allowing us access to
essentially all categories of customers for lighting fixtures.

We believe that Lighting Corporation of America is the largest residential
lighting manufacturer in North America, principally selling under the Progress
brand name. Progress' products include

<PAGE>

chandeliers, hall and foyer sconces, pendants, bath and vanity, ceiling,
fluorescent, under-cabinet, track, outdoor and landscape lighting. Residential
lighting products are sold to home centers, lighting showrooms and electrical
distributors, who sell to builders, electrical contractors and consumers.

Sales of lighting products are seasonal to a degree, with weather affecting
construction and outdoor installation.

Progress Lighting, Inc. Progress is the leading supplier of residential and
light commercial decorative lighting fixtures in North America. Progress' sales
are primarily classified as non-portable residential lighting fixtures. The
current product offering consists of over 3,000 stock keeping units (SKU's)
including: chandeliers, hall and foyer, close-to-ceiling, sconces, pendants,
modular fluorescent, undercabinet, bath and vanity, outdoor, landscape, track
and recessed.

Progress' products are marketed principally with a factory sales force.
Targeted market segments include single family and multi-family residential
construction, light commercial construction and consumer. Targeted international
markets are principally in North and South America. Its products are sold
through several channels of distribution, primarily electrical distributors,
lighting showrooms and home centers.

Progress has an in-house product development group which introduces major
new products semi-annually. The company's manufacturing facilities are in
Cowpens, South Carolina and Baja, Mexico.

Kim Lighting, Inc./Architectural Area Lighting, Inc. Kim Lighting Inc.
(which consists of both Kim and the Architectural Areas Lighting Unit 'AAL')
manufactures products for the architectural outdoor lighting market, primarily
for projects which are specified by architects, lighting consultants, landscape
architects and engineering consultants. This market is characterized by a strong
emphasis on aesthetics, architectural relevance, performance and quality.
Approximately 80% of the business is new construction with the balance serving
the renovation market.

Kim is a recognized innovator in the industry. Its products are primarily
designed for contemporary architecture and intended to be aesthetically
compatible with surrounding structures and an integral part of the architectural
design. In addition to aesthetics, Kim products place great emphasis on quality
and performance.

AAL products are designed for contemporary and traditional architecture. AAL
products are often selected as an accent to the site and architecture. Many AAL
products utilize Kim optical systems.

Spaulding Lighting, Inc. Spaulding has a broad array of products for the
outdoor lighting markets. Spaulding's principal markets are commercial and
institutional large area parking such as shopping malls and supermarkets,
petroleum service station areas and canopy lighting, automobile dealership
exterior illumination and quick service restaurant and convenience store outdoor
lighting. Spaulding exterior lighting projects are prominently displayed in Las
Vegas, Atlantic City, New York and other major U.S. cities.

Spaulding was started in 1955 as Whiteway Manufacturing and initially served
as a quick service lighting supplier to gasoline service stations. Over time it
expanded into a national, full-line outdoor lighting company.

Dual-Lite Inc. Dual-Lite is a leader in the United States life safety
market, participating in all three market segments: emergency lighting, exit
signs, and central inverter systems. The company has two brands, Dual-Lite and
Prescolite Life Safety. The company is a leader in central inverter systems and
believes it is the second largest U.S. manufacturer of exit signs and emergency
lighting units.

Headquartered in Cheshire, Connecticut, the majority of the company's
manufacturing occurs in Naguabo, Puerto Rico, with some products manufactured by
third parties using company designs.

The company produces some of the industry's most popular products, such as
the Dual-Lite EZ-2 and the 'Liteforms' collection. The Prescolite EMAX and PCX
Series are also well known brands.

Dual-Lite generally sells its products via Lighting's commercial and
institutional combined sales force, relying on independently contracted
manufacturer's representatives to market its products to electrical
distributors, contractors, specifiers and end users.

Columbia Lighting, Inc. Columbia is a leading manufacturer of commercial and
industrial fluorescent lighting products. The company's manufacturing processes
include metal fabrication, finishing and final assembly. The company's products
are sold through independent lighting

<PAGE>

manufacturers/sales representatives and distributed through electrical
wholesalers and national accounts. End use applications are primarily new
commercial construction or renovation projects, which include office, school,
retail and institutional construction. Primary buying influences include
architects, consulting engineers, lighting designers, electrical wholesalers,
electrical contractors, building owners and facility managers.

Prescolite, Inc. Prescolite produces residential, light commercial and
specification grade point source lighting products for indoor lighting
applications. These products are segmented into residential and light commercial
downlighting, specification grade downlighting, track lighting, and surface
lighting product lines.

Prescolite's products are sold by commercial and industrial manufacturers
representatives to traditional electrical wholesalers/distributors for the
residential and light commercial markets. Primary buying influences for
Prescolite include lighting consultants and electrical engineers. Secondary
influences include architects, interior designers and contractors. Prescolite
was founded in 1944.

SiTeco Holding GmbH

SiTeco, formerly Siemens Lighting, was acquired in October 1997 by USI.
SiTeco is a leading European provider of technical lighting systems and services
including industrial lighting, lighting solutions, task lighting, road lighting
and sports arena lighting. We estimate that SiTeco is the fourth largest
supplier of technical lighting products, systems and services in Europe. In
addition, SiTeco subsidiaries are well established in most major southern and
central European markets.

SiTeco is headquartered in Germany. It has manufacturing facilities in
Germany, Austria and Slovenia.

INDUSTRIAL TOOLS

We operate our industrial tools business through our Spear & Jackson
subsidiary. Spear & Jackson, established in 1760, is a leading European
manufacturer and distributor of a broad line of lawn and garden tools, hand
tools, metrology products, magnetic products, industrial saws and wood carving
tools. Products are sold under several brand names including Spear & Jackson,
Neill Tools, Eclipse, Bowers and Moore & Wright.

Spear & Jackson distributes products primarily through independent wholesale
distributors, home centers, mass merchants and large buying groups including
cooperatives.

RAW MATERIALS COSTS

Most of our businesses are dependent, to varying degrees, on the
availability of raw materials, including plastics, aluminum, copper, nickel,
cobalt, molybdenum, tungsten, certain grades of steel, wood, glass and
corrugated packaging materials as well as ballasts and sockets for lighting
fixtures. The impact of raw material price increases on the operating income of
our businesses depends on their ability to pass along cost increases to our
customers. Although raw material shortages or price increases from time to time
may have an adverse effect on the results of operations of our individual
businesses, we do not believe that these factors are material to us on a
consolidated basis.

COMPETITION

We will encounter competition in all areas of our business. The methods of
competition vary depending on the market into which we are selling. We compete
primarily on the basis of product quality, brand name, technology or innovation,
price, performance and customer service. No single company will compete directly
with us in all of our product lines, but various companies will compete with us
in one or more product lines. In total, we have many competitors varying in
size. Some have substantially greater sales and assets than us while other
companies are smaller than us.

EMPLOYEES

As of the date of this filing, we had approximately 5,700 employees in the
lighting business and 1,375 employees in the industrial tools business.
Approximately 51% of the employees in the lighting

<PAGE>

business were represented by Unions, and approximately 45% of the employees in
the industrial tools business were represented by unions. We believe that our
relations with employees and unions generally are good.

GOVERNMENT REGULATION

Our businesses are subject to numerous federal, state, local and foreign
laws and regulations concerning such matters as zoning, health and safety and
protection of the environment. We believe that our businesses are currently
operating in substantial compliance with, or under approved variances from such
various federal, state, local and foreign laws and regulations.

Approximately six of our present or former operating sites, or portions
thereof are the subject of investigations, monitoring or remediation under the
Comprehensive Environmental Response Compensation and Liability Act of 1980
('CERCLA'), the Federal Resource Conservation and Recovery Act or comparable
state statutes or agreements with third parties. These proceedings are in
various stages ranging from monitoring at one site to implementation of clean-up
or remediation of the other sites. We do not believe that any of these
proceedings will have a material adverse effect on our business or financial
condition.

In addition, certain of LCA's operating units have been named as potentially
responsible parties at three off-site disposal sites under CERCLA or comparable
state statutes in a number of federal and state proceedings. In each of these
matters our operating units are working with the claims in a responsible and
appropriate manner and the cleanup effort at each site is in the advanced stages
of remediation or monitoring. Under CERCLA and other similar statutes, any
generator of hazardous waste sent to a hazardous waste disposal site is
potentially responsible for all clean-up, remediation and response costs
required for such site, irrespective of the amount of waste which the generator
sent to the site. We do not believe that any of the pending proceedings will
have a material adverse effect on our business or financial condition.

LCA's operating units make significant capital and maintenance expenditures
to comply with zoning, water, air and solid hazardous waste and related
environmental and health and safety regulations. The amount of expenditures in
future years will depend on legal and technological developments which cannot be
predicted at this time. Future costs for environmental compliance cannot be
predicted with precision and there can be no certainty with respect to any
remedial investigations or cleanup of affected property.

Laws and regulations protecting the environment may in certain circumstances
impose 'strict liability', rendering a person liable for environmental damage
without regard to negligence or fault on the part of such person. In addition,
we cannot predict whether modifications of existing laws or regulations or the
adoption of new laws or regulations, or presently unidentified environmental
conditions or unanticipated enforcement actions, particularly with respect to
environmental standards, could require material capital expenditures or
otherwise have a material adverse effect on our business or financial condition.

At September 30, 1999, we had accrued approximately $5.0 million for various
known environmental related liabilities. We believe that the range of liability
for such matters is between $1.0 million and $5.2 million. We cannot predict
whether future developments in laws and regulations concerning environmental
protection will affect our earnings or cash flow in a materially adverse manner
or whether our operating units will be successful in meeting future demands of
regulatory agencies in a manner which will not have a material adverse effect on
our business or financial conditions.

<PAGE>

BACKLOG ORDERS

The Company's backlogs believed to be firm as of September 30, 1999 and 1998
were as follows:

<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
---------------
1999 1998
---- ----
(IN MILLIONS)
<S> <C> <C>
Lighting.................................................... $81.6 $74.7
Industrial Tools............................................ 0.2 0.6
----- -----
Total Backlogs.............................................. $81.8 $75.3
----- -----
----- -----
</TABLE>

PATENTS AND TRADEMARKS

Our businesses have numerous United States and foreign patents, patent
applications, registered trademarks and trade names, and licenses. We believe
that certain of our trademarks and trade names are of material importance to us.
None of our material trademarks or trade names are of limited duration. Although
protection of the our patents and related technologies are important components
of our business strategy, none of our individual patents is material to the
company.

PROPERTIES

Our lighting business owns or leases approximately 50 plants and other
properties. Our industrial tools business owns or leases approximately 27 plants
and other properties. None of our individual properties is considered to have a
value that is significant in relation to our assets as a whole. We believe that
our properties are well maintained and are in good operating condition. Our
properties are deemed to be suitable and adequate for our present needs. We
believe that we have additional capacity available at most of our production
facilities and that we could significantly increase production without
substantial capital expenditures.

LEGAL PROCEEDINGS

We are a party to legal proceedings that are considered to be either
ordinary, routine litigation incidental to our business, or immaterial to our
financial condition, results of operations or our cash flows. For information
concerning environmental proceedings, see 'Business -- Governmental Regulation.'

<PAGE>

MANAGEMENT

DIRECTORS

After the spin-off, our board of directors will consist of persons who
will be divided into three equal classes each having a three-year term. The
executive officers who are expected to serve as directors after the spin-off are
presented below. We will name our additional directors in an amendment to this
filing.

<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
James O'Leary........................ Chairman and Chief Executive Officer
</TABLE>

James O'Leary, 37, has served USI as Executive Vice President since
September 1, 1999 and as a Director at USI since February 2000. He was Senior
Vice President and Chief Financial Officer at USI from June 1998. He served as
Corporate Controller of USI from its 1995 demerger from Hanson PLC until
June 1998 and was elected as a Vice President in January 1996. Mr. O'Leary is a
Director of Strategic Industries LLC and Rexair Holdings Inc.

Committees. After the spin-off, our board of directors is expected to
establish and designate a compensation committee and an audit committee.
Directors who are also our officers or employees will not be permitted to serve
on either committee. The functions of these standing committees will be as
follows:

Compensation Committee. The compensation committee will set the
compensation of all executive officers subject to the terms of their
employment agreements and administer and make awards under our stock
incentive plan and other incentive plans. The committee will also review the
competitiveness of management compensation and benefit programs and
principal employee relations policies and procedures. All of the members of
the compensation committee are intended to be 'disinterested' within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, and
'outside directors' within the meaning of Section 162(m) of the Internal
Revenue Code ('Code Section 162(m)').

Audit Committee. The Audit Committee will be responsible for matters
relating to accounting policies and practices, financial reporting and
internal controls. Its functions will include recommending to the Board the
appointment of the Company's independent accountants; reviewing with
representatives of the independent accountants the scope of the audit of our
financial statements, results of audits, audit costs, recommendations with
respect to internal controls and financial matters and non-audit services;
and periodically meeting with or receiving reports from our principal
financial and accounting officers.

Fees. Non-employee directors will receive an annual cash retainer of $
plus $ for each board meeting and $ for each committee meeting attended
and reimbursement of all reasonable expenses incurred in connection with such
meetings. We will pay the premiums on directors' and officers' liability and
travel accident insurance policies insuring directors. Each non-employee
director will also receive initial and annual stock grants and stock option
grants. See 'Executive Compensation -- Stock Incentive Plan'.

EXECUTIVE OFFICERS

The following individuals are expected to serve as our executive officers at
the time of the spin-off. Our board of directors may appoint additional
executive officers from time to time. We will name additional officers in an
amendment to this filing.

<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
James O'Leary Chairman and Chief Executive Officer
Steven C. Barre Senior Vice President, General Counsel and Secretary
Joseph P. McPartland Group Vice President
Diana E. Burton Vice President
Nicola Rossi Corporate Controller
</TABLE>

For biographical information concerning Mr. O'Leary, see ' -- Directors'
above.

<PAGE>

Steven C. Barre, 41, has served USI as Vice President, General Counsel and
Secretary of USI since April 1, 2000. Previously, he served as Associate General
Counsel of USI since its 1995 demerger from Hanson in 1995. Prior thereto,
Mr. Barre served as Associate General Counsel of Hanson Industries, the U.S. arm
of Hanson PLC.

Joseph P. McPartland, 59, has served USI as Vice President and CFO of USI's
Hardware and Tools unit since June 1998. From July 1997 until June 1998 he
served as Executive Vice President and CFO of O. Ames Co., a USI Subsidiary.
From September 1996 until June 1997, he served on the corporate staff of USI
working on corporate development projects. Prior to September 1996,
Mr. McPartland was the President of Jade Corporation, then a USI subsidiary,
from March 1994 until September 1996.

Diana E. Burton, 55, has served USI as Vice President -- Investor Relations
since USI's demerger from Hanson in 1995. Previously, she was a Vice President
of Marine Harvest International, Inc., a company engaged in the farming and
distribution of seafood products, with principal responsibility for
administration and investor relations.

Nicola Rossi, 34, has served at USI as Corporate Controller since April 1,
2000 and was Assistant Corporate Controller from June 1999. Previously, he was
Director of Corporate Accounting for the Great Atlantic & Pacific Tea Company,
Inc. from November 1995 through May 1999.

<PAGE>

EXECUTIVE COMPENSATION

The following is a description of the executive compensation arrangements
and benefit plans adopted or expected to be adopted by us, most of which are
substantially similar to those in effect at USI. After completion of the
spin-off, none of our officers will participate in any USI benefit plans, except
to the extent they are entitled to exercise any vested USI stock options
pursuant to such plans for a period of time following the spin-off. For
information regarding our assumption of certain liabilities and assets of the
USI plans, see 'The Spin-off -- Agreements Between LCA and USI and Relationship
after the Spin-off -- Corporate Transition Agreement.'

We will disclose additional information with respect to our executive
compensation programs in an amendment to this filing.

EMPLOYMENT AGREEMENTS

The following is a summary of the employment agreements of each of the
individuals who is expected to become one of our five most highly compensated
executive officers after the spin-off.

The employment agreements provide for Messrs. O'Leary, McPartland, Barre,
Rossi and Ms. Burton to serve, commencing on the date of the spin-off (the
'Commencement Date'), respectively, as our Chairman, Chief Executive Officer and
Director; as Group Vice President; as Senior Vice President, General Counsel and
Secretary; as Corporate Controller; and as Vice President for Corporate
Communications. Unless terminated earlier as discussed below, the term of
employment under each agreement will expire on the anniversary of the
Commencement Date subject to automatic extension for an additional year term on
each applicable anniversary unless either party gives at least 90 days' prior
written notice of non-extension.

The employment agreements provide that we will pay Messrs. O'Leary,
McPartland, Barre, Rossi and Ms. Burton annual base salaries at rates of not
less than $ , $ , $ , $ and $ , respectively. Commencing
with fiscal 2001, each executive will be eligible to receive an annual cash
bonus, with a target bonus potential equal to at least %, %, %, %
and % of his base salary, respectively, based on the achievement of a
performance target established by the Compensation Committee under a bonus plan
qualifying the bonuses as 'performance-based' for purposes of Code
Section 162(m).

The employment agreements also will provide for (i) indemnification of the
executives for actions in their corporate capacity and directors and officers
liability insurance, (ii) coverage in most instances for legal fees incurred in
enforcing their rights under their respective employment agreements,
(iii) confidentiality provisions applicable to the period during and after the
employment term and a provision prohibiting the solicitation of our employees
during the employment term and for a period of two years afterwards and
(iv) severance payments under certain circumstances.

STOCK INCENTIVE PLAN

On , 2000, our board of directors and USI, as our sole
stockholder, approved the LCA Corporation Stock Incentive Plan (the 'SIP'). The
following description of the SIP is qualified in its entirety by reference to
the SIP, which has been filed as an exhibit to the registration statement of
which this information statement is a part.

Purpose. The purpose of the SIP is to enhance our profitability and value
for the benefit of our stockholders by enabling us (i) to offer our employees
and our affiliates stock options, restricted stock and other stock-based awards,
thereby creating a means to raise the level of stock ownership by employees in
order to attract, retain and award such individuals and strengthen the mutuality
of interests between our employees and stockholders and (ii) to pay non-employee
directors a portion of their annual retainer fee in the form of shares of our
common stock and stock options and to make certain other awards of our common
stock and grants of stock options to non-employee directors thereby attracting,
retaining and rewarding such non-employee directors or consultants, and
strengthening the mutuality of interests between our non-employee directors and
stockholders. It is

<PAGE>

estimated that we and our affiliates will have approximately employees and
we will have non-employee directors who will be eligible for participation
in the SIP.

Administration. The provisions of the SIP, as applied to eligible employees,
will be administered and interpreted by a committee of the board, which will
consist of two or more non-employee directors, each of whom is intended to be a
non-employee director as defined in Rule 16b-3 and an outside director as
defined under Code Section 162(m) (the 'Committee'). With respect to awards to
non-employee directors, the SIP will be administered by the board and references
to the Committee below will be deemed to refer to the board. Awards under the
SIP may not be made on or after the tenth anniversary of approval thereof, but
awards granted prior to such date may extend beyond that date.

Available Shares. The aggregate number of shares of our common stock subject
to awards under the SIP may not exceed shares. The maximum number of shares
of common stock with respect to which any stock option which may be granted
under the SIP during any of our fiscal years to any individual will be
shares and of Restricted Stock subject to performance goals will be shares.
The maximum number of shares of common stock subject to other stock-based awards
which may be granted under the SIP for any fiscal year to any individual will
not exceed shares; provided that the foregoing limit does not apply to
other stock-based awards used to make payments under any other of our plans or
those of our subsidiaries.

In general, upon the cancellation or expiration of an award, the unissued
shares of common stock subject to such awards will again be available for awards
under the SIP, but will not be available for the individual limits.

Options. Under the SIP, the Committee may grant non-qualified stock options
and incentive stock options ('ISOs') to purchase shares of our common stock. The
Committee will determine the number of shares of common stock subject to each
option, the term of each option (which may not exceed ten years (or five years
in the case of an ISO granted to a 10% or greater shareholder), the exercise
price (which must equal 100% or, in the case of an ISO granted to a 10% or
greater shareholder, 110% of the fair market value of our common stock at the
time of grant), the time or times at which the option may be exercised and the
other material terms of each option. Payment of the exercise price may be made
(i) in cash or by check, bank draft or money order, (ii) the delivery of
irrevocable instructions to a broker to deliver promptly to us an amount equal
to the purchase price, or (iii) on such other terms and conditions as may be
acceptable to the Committee.

The SIP will authorize the Committee, if it decides in its sole discretion,
to permit 'reloads' of options exercised, including, without limitation,
permitting reloads under which options are granted for the same number of shares
as were used to pay the exercise price or withholding. The Committee may also at
any time offer to buy out a recipient's option subject to such terms and
conditions as the Committee may determine.

Restricted Stock. The Committee may also award shares of restricted stock.
The Committee will determine the employees eligible for such awards and the
terms and conditions of such awards, including, without limitation, the timing
of such awards, the number of shares awarded, the vesting schedule and the right
to acceleration thereof. The Committee may condition the grant or vesting of
Restricted Stock upon the attainment of such factors as the Committee may
determine, in its sole discretion. Upon the award of any shares of restricted
stock, the recipient will have all rights of a stockholder with respect to the
shares, including voting, tender and dividend rights, subject to the conditions
and restrictions generally applicable to restricted stock or specifically set
forth in the recipient's restricted stock award agreement. Recipients of
restricted stock must enter into a restricted stock award agreement with LCA, in
such form as the Committee determines, which shall state the restrictions to
which the shares are subject and the date or dates on which such restrictions
will lapse.

Other Stock-Based Awards. The Committee may also grant other stock-based
awards under the SIP to eligible employees that are payable in, valued in whole
or in part by reference to, or otherwise based on or related to shares of our
common stock, including but not limited to shares of common stock in payment of
the amounts due under an incentive or performance plan sponsored or maintained
by us or any of our subsidiaries and stock appreciation rights (either
separately or in tandem with stock options

<PAGE>

and stock equivalent units). Subject to the provisions of the SIP, the Committee
will have the authority to determine the recipients to whom and the time or
times at which such awards will be made, the number of shares of common stock to
be awarded pursuant to or referenced by such award and all other conditions of
the awards. The Committee may also provide for the grant of such awards upon the
completion of a specified performance period and/or achievement of performance
goals. The performance criteria that may be selected by the Committee will be
based on one or more of the following criteria: (i) the attainment of certain
target levels of, or a specified increase in, our enterprise value or value
creation targets (or that of any of our subsidiaries, divisions or other
operational units); (ii) the attainment of certain target levels of, or a
percentage increase in, our after-tax or pre-tax profits including, without
limitation, that attributable to our continuing and/or other operations (or that
of any of our subsidiaries, divisions, or other operational units), (iii) the
attainment of certain target levels of, or a specified increase in, our
operational cash flow (or that of any of our subsidiaries, divisions or other
operational units), (iv) the attainment of a certain level of reduction of, or
other specified objectives with regard to limiting the level of increase in, all
or a portion of our bank debt or other of our long-term or short-term public or
private debt or other similar financial obligations, (v) the attainment of a
specified percentage increase in earnings per share or earnings per share from
our continuing operations (or that of any of our subsidiaries, divisions or
other operational units), (vi) the attainment of certain target levels of, or a
specified percentage increase in, our net sales, net income or earnings before
income tax or other exclusions (or that of any of our subsidiaries, divisions,
or other operational units); (vii) the attainment of certain target levels of,
or a specified increase in, our return on capital employed or return on invested
capital (or that of any of our subsidiaries, divisions or other operational
units); (viii) the attainment of certain target levels of, or a percentage
increase in, our after-tax or pre-tax return on stockholder equity (or that of
any of our subsidiaries, divisions or other operational units); (ix) the
attainment of certain target levels in the fair market value of our shares of
common stock; and (x) the growth in the value of an investment in our common
stock assuming the reinvestment of dividends. Other performance goals may be
used to the extent such goals satisfy the requirements of Code Section 162(m) or
the award is not intended to satisfy the requirements of Code Section 162(m).

Non-Employee Director Awards. In an amendment, we will specify the terms of
our non-employee director awards.

Change in Control. Unless determined otherwise by the Committee at the time
of grant, upon a Change in Control of LCA (as defined in the SIP), except as
provided in this paragraph, all conditions, restrictions and limitations in
effect with respect to the exercise of any option or any restricted stock award
will immediately lapse and no other conditions will be applied. However, no
acceleration of exercisability shall occur with regard to certain options that
the Committee determines in good faith prior to a Change in Control will be
honored or assumed or new rights substituted therefor by a participant's
employer immediately following the Change in Control, unless the Committee
determines otherwise. The award agreement issued in connection with an other
stock-based award will determine the effect of a Change in Control on such
award. Further, if the transaction constituting a Change in Control is to be
treated as a 'pooling of interests' for financial reporting purposes, then there
shall be no acceleration of exercisability, vesting or lapse of the applicable
restriction period to the extent LCA's independent public accountants determine
in good faith that such acceleration would preclude 'pooling of interests'
accounting.

Amendment and Termination. The Board may at any time amend any or all of the
provisions of the SIP, or suspend or terminate it entirely, retroactively or
otherwise, except that unless otherwise required by law or specially provided in
the SIP, the rights of a participant with respect to awards granted prior to
such amendment, suspension or termination, may not be impaired without the
consent of such participant. In addition, without the approval of the
stockholders of LCA in accordance with Delaware law, to the extent required
under Code Section 162(m) or to the extent applicable to ISOs, Section 422 of
the Internal Revenue Code, no amendment may be made which would: (1) increase
the aggregate number of shares of our common stock that may be issued;
(2) increase the maximum individual participant limitations for a fiscal year;
(3) change the classification of employees eligible to receive awards;
(4) extend the maximum option term; or (5) require stockholder approval in order
for the SIP to continue to comply with the applicable provisions of Code
Section 162(m) or, to the extent applicable to ISOs, Section 422 of the Internal
Revenue Code. The Board may amend the provisions of the Plan

<PAGE>

applicable to non-employee director awards to provide for additional or
different awards to non-employee directors or to effect any other amendment
deemed appropriate.

Nontransferability. Awards granted under the SIP generally will be
nontransferable, except that the Committee may, in its sole discretion and
subject to certain limitations, permit the transfer of nonqualified stock
options at the time of grant or thereafter to certain 'family members' of the
recipient.

Federal Income Tax Consequences. For information concerning the federal
income tax consequences of Awards and related matters, please see Annex C.

Post Spin-off Awards. Details to be provided in an amendment to this filing

RETIREMENT PROGRAM

We anticipate adopting a tax-qualified retirement program to provide pension
benefits to our executive officers and corporate office employees. Certain of
our subsidiaries sponsor their own pension benefit plans. Substantially all
full-time U.S. employees who are at least 21 years old and have completed at
least one year of service with us or USI's subsidiaries will be eligible to
participate in the retirement program or retirement programs of the operating
company by which they are employed (each of our subsidiaries will provide their
own retirement programs and plans to their employees). Employees will become
vested in their benefits under the retirement programs after five years of
service, reflecting service with USI or its subsidiaries. Normal retirement
typically will be the later of age 65 or five years of service; however,
employees who work beyond their normal retirement age will continue to accrue
benefits.

It is anticipated that we will also adopt a non-qualified, unfunded,
deferred compensation plan to be known as the LCA Corporation Supplemental
Retirement Plan (the 'SRP'). Certain of our subsidiaries also sponsor
non-qualified, unfunded deferred compensation plans for their employees. The
purpose of the SRP will be to maintain, as a minimum level of benefits, benefits
which were provided while employed by USI, including any benefits in excess of
the Internal Revenue Code Sections 415 and 401(a)(17) limitations. The defined
terms in this paragraph will have the same meanings as in the SRP, the
retirement plan or as stated herein.

Under our retirement program, comprised of a tax qualified pension plan and
the SRP, the annual retirement benefits of our executive officers will equal the
greater of (i) the product of (a) % of an employee's final average earnings
minus % of such employee's social security benefit, multiplied by the number
of years of credited service (to a maximum of 25). All defined terms have the
same meanings as in the retirement plan or SRP or as stated herein. The
following table shows the estimated annual retirement benefits that would be
payable under the retirement program to our executive officers, assuming
retirement at age 65 on the basis of a straight-life annuity. The table includes
benefits payable from the tax qualified retirement plan and the SRP.

<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE
AVERAGE --------------------------------------------------------------------------
EARNINGS 10 15 20 25 30 35 40
-------- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000............. $ 23,200 $ 34,800 $ 46,400 $ 58,000 $ 58,000 $ 58,000 $ 58,000
200,000............. 49,900 74,850 99,800 124,750 124,750 124,750 124,750
300,000............. 76,600 114,900 153,200 191,500 191,500 191,500 191,500
400,000............. 103,300 154,950 206,600 258,250 258,250 258,250 258,250
500,000............. 130,000 195,000 260,000 325,000 325,000 325,000 325,000
600,000............. 156,700 235,050 313,400 391,750 391,750 391,750 391,750
</TABLE>

The following persons expected to become our five highest paid executive
officers after the spin-off will be credited with the indicated years of service
as of the spin-off under the USI retirement plan, rounded to the nearest
one-tenth of a year: . Other of our officers will also be
credited with their indicated years of service as recognized under the USI
Retirement Plan as of the spin-off.

<PAGE>

PROJECTED OWNERSHIP OF OUR STOCK IMMEDIATELY AFTER THE SPIN-OFF

The following table sets forth the projected beneficial ownership of our
common stock immediately after the spin-off by each of our directors, the
executive officers who are expected to be our five most highly compensated
executive officers in fiscal 2000 and all directors and executive officers as a
group. The projections are based upon available information concerning these
individuals' ownership of USI common stock at , 2000. The projections
also assume the issuance of shares of restricted common stock under the
SIP and a total of shares of common stock to our non-employee directors
but do not take into account (1) any shares of USI common stock acquired
pursuant to the exercise of options previously granted under USI compensation
programs but not exercised as of , 2000 or (2) any shares of our common
stock that may be issued upon the exercise of stock options expected to be
granted to executive officers and other key employees pursuant to the SIP after
the spin-off. See 'Executive Compensation -- Stock Incentive Plan.'

<TABLE>
<CAPTION>
NUMBER OF SHARES PROJECTED
TO BE BENEFICIALLY % OF SHARES
NAME OWNED OUTSTANDING
---- ----- -----------
<S> <C> <C>
James O'Leary.....................................
Steven C. Barre...................................
Joseph P. McPartland..............................
Diana E. Burton...................................
Nicola Rossi......................................
All directors and executive officers as a group
( persons).....................................
</TABLE>

Based upon information available to USI concerning the ownership of USI
common stock at 2000, no person is projected to own beneficially more
than 5% of the outstanding common stock on the date of the spin-off except as
follows:

<TABLE>
<CAPTION>
NAME AND ADDRSS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
----------------------------------- ---------------- ----------------
<S> <C> <C>
Harris Associates L.P. .................................
Two North LaSalle Street, Suite 500
Chicago, Illinois 60602 -- --
AXA-UAP ................................................
23, Avenue Matigon
75008 Paris France; -- --
Franklin Mutual Advisers, LLC ..........................
777 Mariners Island Blvd.
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078 -- --
SASCO Capital, Inc. ....................................
10 Sasco Hill Road
Fairfield, CT 06430 -- --
</TABLE>

For information concerning the projected beneficial ownership of our common
stock by our and USI's employee benefit plan trusts, see 'The
Spin-off -- Listing and Trading of Our Common Stock.'

<PAGE>

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED CAPITAL STOCK

Under our certificate of incorporation that will be in effect at the time of
the spin-off, the form of which is attached as Annex A to this information
statement, we will have authority to issue a total of shares of all
classes of stock, of which may be shares of preferred stock, par value
$0.01 per share, and may be shares of common stock, par value $0.01 per
share.

Based on the number of shares of USI common stock outstanding as of ,
2000 and the dividend ratio, it is expected that 7.7 million shares of our
common stock will be distributed to USI stockholders in the spin-off. All of
these shares will be fully paid and non-assessable. The common stock to be
distributed will constitute all of the shares of our capital stock that will be
outstanding immediately after the spin-off. After giving effect to recommended
awards of shares of restricted common stock to executive officers and other key
employees and the issuance of a total of shares of common stock to non-employee
directors, the total expected number of outstanding shares of common stock will
be . In addition, shortly after the spin-off, we will recommend the
issuance to executive officers and other key employees of options to purchase
the aggregate number of shares of common stock as shall be determined by
dividing $ million by the fair market value of our common stock on the date of
grant (up to a maximum of shares); the number of shares expected to be
outstanding excludes any shares that may be issued upon exercise of such
options. See 'Executive Compensation -- Stock Incentive Plan.'

COMMON STOCK

Holders of our common stock are entitled to one vote for each share on all
matters voted on by stockholders. Holders of common stock do not have cumulative
voting rights in the election of directors. The first annual meeting of
stockholders is expected to be held during calendar 2001.

Holders of our common stock do not have subscription, redemption or
conversion privileges. Subject to the preferences or other rights of any
preferred stock that we may issue from time to time, holders of our common stock
are entitled to participate ratably in dividends on our common stock as declared
by our board of directors. Holders of our common stock are entitled to share
ratably in all assets available for distribution to our stockholders in the
event of liquidation or dissolution, subject to distribution of the preferential
amount, if any, to be distributed to holders of preferred stock.

PREFERRED STOCK

The certificate of incorporation that will be in effect at the time of the
spin-off will authorize our board of directors, without any vote or action by
the holders of our common stock, to issue up to shares of preferred
stock from time to time in one or more series. Our board is authorized to
determine the number of shares and designation of any series of preferred stock
and the dividend rights, dividend rate, conversion rights and terms, voting
rights (full or limited, if any), redemption rights and terms, liquidation
preferences and sinking fund terms of any series of preferred stock. Issuances
of preferred stock would be subject to the applicable rules of the NYSE or other
organizations on whose systems the stock of may then be quoted or listed.
Depending upon the terms of preferred stock established by our board of
directors, any or all series of preferred stock could have preference over our
common stock with respect to dividends and other distributions and upon
liquidation. Issuance of any such shares with voting powers, or issuance of
additional shares of our common stock, would dilute the voting power of our
outstanding common stock. Series A preferred stock is issuable under the
circumstances described in 'Rights Plan' below. We have no other present plans
to issue any Preferred Stock.

NO PREEMPTIVE RIGHTS

No holder of any of our capital stock authorized at the time of the spin-off
will have any preemptive right to subscribe for or purchase any of our
securities of any class or kind.

TRANSFER AGENT AND REGISTRAR

will be the transfer agent and registrar for our common stock
commencing upon the date of the spin-off.

<PAGE>

RIGHTS PLAN

Each share of our common stock to be issued from and after the date of this
information statement (including common stock that will trade on a 'when issued'
basis) will have attached to it one right to purchase from us one one-hundredth
(1/100) of a share of our series A preferred stock at an initial price of
$ per one one-hundredth (1/100) of a share (the 'exercise price'). Unless
earlier redeemed, or extended, the rights will expire in October, 2010.

The rights, unless earlier redeemed, extended or modified by our board of
directors or extended or modified as described above, will become exercisable by
each record holder thereof, other than the Acquiring Person (as defined below),
upon the close of business on the day (the 'Rights Distribution Date') which is
the earlier of (1) the tenth day following a public announcement that a person
or group of affiliated or associated persons, with certain exceptions set forth
below, has acquired beneficial ownership of 15% or more of our outstanding
voting stock (an 'Acquiring Person') and (2) the tenth business day (or such
later date as may be determined by our board of directors prior to such time as
any person or group of affiliated or associated persons becomes an Acquiring
Person) after the date of the commencement or announcement of a person's or
group's intention to commence a tender or exchange offer the consummation of
which would result in the ownership of 15% or more of our outstanding voting
stock (even if no shares are actually purchased pursuant to such offer). Before
the rights distribution date, the rights will not be exercisable, will not be
represented by a separate certificate, and will not be transferable apart from
our common stock. An Acquiring Person does not include (A) prior to the
spin-off, USI, (B) us, (C) any of our subsidiaries, (D) any of our employee
benefit plans or employee stock plans or those of any of our subsidiaries, or
any trust or other entity organized, appointed, established or holding our
common stock for or pursuant to the terms of any such plan (E) any person whose
ownership of 15% or more of the shares of our voting stock then outstanding
results solely from its ownership of 15% or more of the USI common stock
outstanding on the spin-off record date provided such person is not an Acquiring
Person within the meaning of the USI rights plan, or (F) any person or group
whose ownership of 15% or more of the shares of our voting stock then
outstanding results solely from (1) any action or transaction or transactions
approved by our board of directors before such person or group became an
Acquiring Person or (2) a reduction in the number of issued and outstanding
shares of our voting stock pursuant to a transaction or transactions approved by
our board of directors (provided that any person or group that does not become
an Acquiring Person by reason of clause (1) or (2) above shall become an
Acquiring Person upon acquisition of an additional 1% of our voting stock unless
such acquisition of additional voting stock will not result in such person or
group becoming an Acquiring Person by reason of such clause (1) or (2)). For
purposes of the foregoing, our outstanding voting stock includes our stock that
trades on a 'when issued' basis on a national securities exchange (such as the
NYSE), on the National Association of Securities Dealers' Automated Quotation
System or otherwise.

Our rights agreement provides that when a person or group of affiliated or
associated persons becomes an Acquiring Person (other than pursuant to a
Qualifying Tender Offer (as defined below)), the Acquiring Person's rights will
thereupon become null and void.

The rights agreement provides that until the Rights Distribution Date, the
rights will be transferred with and only with our common stock. Until the Rights
Distribution Date (or earlier redemption or expiration of the rights), our
common stock certificates will contain a legend incorporating the rights
agreement by reference. Until the Rights Distribution Date (or earlier
redemption or expiration of the rights), the surrender for transfer of any of
our common stock certificates will also constitute the transfer of the rights
associated with our common stock represented by such certificate. As soon as
practicable following the Rights Distribution Date, separate certificates
evidencing the rights ('rights certificates') will be mailed to holders of
record of our common stock as of the close of business on the Rights
Distribution Date and such separate certificates alone will evidence the rights
from and after the Rights Distribution Date.

Our series A preferred stock is nonredeemable and, unless otherwise provided
in connection with the creation of a subsequent series of preferred stock,
subordinate to any other series of our preferred stock. Our series A preferred
stock may not be issued except upon exercise of rights. Each share of our series
A preferred stock will be entitled to receive when, as and if declared, a
quarterly dividend in an

<PAGE>

amount equal to the greater of $ per share or 100 times the cash dividends
declared on our common stock. In addition, our series A preferred stock is
entitled to 100 times any non-cash dividends (other than dividends payable in
equity securities) declared on our common stock, in like kind. In the event of
our liquidation, the holders of our series A preferred stock will be entitled to
receive a payment in an amount equal to the greater of $ per one
one-hundredth share or 100 times the payment made per share of our common stock.
Each share of our series A preferred stock will have 100 votes, voting together
with our common stock. In the event of any merger, consolidation or other
transaction in which our common stock is changed, exchanged or converted, each
share of series A preferred stock will be entitled to receive times the
amount received per share of our common stock. The rights of our series A
preferred stock as to dividends, liquidation and voting are protected by
anti-dilution provisions.

The number of shares of our series A preferred stock issuable upon exercise
of the rights is subject to certain adjustments from time to time in the event
of a stock dividend on, or a subdivision, combination or issuance of capital
stock in a reclassification of, our common stock. The exercise price for the
rights is subject to adjustment in certain circumstances, including certain
distributions of cash or other property to holders of our common stock.

Unless the rights are earlier redeemed, in the event that, at any time on or
after the Rights Distribution Date (except for any transaction approved by a
majority of the disinterested directors (as defined in the rights agreement)),
we were to be acquired in a merger or other business combination (in which any
shares of our common stock are changed or converted into or exchanged for other
securities or assets) or more than 50% of our assets or earning power and those
of our subsidiaries (taken as a whole) were to be sold or transferred in one or
a series of related transactions, the rights agreement provides that proper
provision will be made so that each holder of record of a right, other than the
Acquiring Person, will from and after that date have the right to receive, upon
payment of the exercise price, that number of shares of common stock of the
acquiring company having a market value at the time of such transaction equal to
two times the exercise price. In addition, unless the rights are earlier
redeemed, in the event that a person or group becomes the beneficial owner of
15% or more of our voting stock (other than pursuant to a tender or exchange
offer (a 'Qualifying Tender Offer') for all outstanding shares of our common
stock that is approved by our board of directors, after taking into account our
long-term value and all other factors they consider relevant), the rights
agreement provides that proper provision will be made so that each holder of
record of a right, other than the Acquiring Person, will thereafter have the
right to receive, upon payment of the exercise price, that number of shares of
our series A preferred stock having a market value at the time of the
transaction equal to two times the exercise price (such market value to be
determined with reference to the market value of our common stock as provided in
the rights agreement).

Fractions of shares of our series A preferred stock (other than fractions
which are integral multiples of one one-hundredth of a share) may, at our
election, be evidenced by depositary receipts. We may also issue cash in lieu of
fractional shares which are not integral multiples of one one-hundredth of a
share.

At any time on or prior to the close of business on the earlier of (1) the
tenth day after the time that a person has become an Acquiring Person (or such
later date as a majority of our board of directors and a majority of our
disinterested directors may determine) and (2) October , 2010, we may redeem
the rights in whole, but not in part, at a price of $.01 per right, subject to
adjustment (the 'Redemption Price'). The rights may be redeemed after the time
that any person has become an Acquiring Person (other than pursuant to a
Qualifying Tender Offer). Immediately upon the effective time of the action of
our board of directors authorizing redemption of the rights, the right to
exercise the rights will terminate and the only right of the holders of rights
will be to receive the Redemption Price.

For as long as the rights are then redeemable, we may, except with respect
to the Redemption Price or shortening the Final Expiration Time, amend the
rights in any manner, including an amendment to extend the time period in which
the rights may be redeemed. At any time when the rights are not then redeemable,
we may amend the rights in any manner that does not materially adversely affect
the interests of holders of the rights as such. Amendments to the rights
agreement from and after the time

<PAGE>

that any person becomes an Acquiring Person (other than pursuant to a Qualifying
Tender Offer) require the approval of a majority of our directors.

Until a right is exercised, the holder, as such, will have no rights as a
holder of common stock, including, without limitation, the right to vote or to
receive dividends. Holders of our common stock may, depending upon the
circumstances, recognize taxable income should the rights become exercisable or
upon the occurrence of certain events thereafter.

A copy of the rights agreement has been filed as an exhibit to the
registration statement of which this information statement forms a part. This
summary description of the rights does not purport to be complete and is
qualified in its entirety by reference to the rights agreement which is
incorporated in this summary description herein by reference.

<PAGE>

PURPOSES AND EFFECTS OF CERTAIN PROVISIONS OF
CERTIFICATE OF INCORPORATION,
BY-LAWS AND DELAWARE STATUTORY LAW

GENERAL

The provisions of our Certificate of Incorporation, our By-Laws and Delaware
statutory law described in this section may delay or make it more difficult for
someone to acquire us without the approval of our board. These provisions could
have the effect of discouraging third parties from making acquisition proposals
although such proposals, if made, might be considered desirable by a majority of
our stockholders. These provisions may also have the effect of making it more
difficult for third parties to cause the replacement of our current management
without the concurrence of our board.

A copy of the Certificate of Incorporation is attached to this Information
Statement as Appendix A and is incorporated herein by reference. The following
description of certain provisions of the Certificate of Incorporation and the
By-Laws is qualified in its entirety by reference to the Certificate of
Incorporation and the By-Laws.

CLASSIFIED BOARD OF DIRECTORS

The Certificate of Incorporation provides for our board, effective upon
completion of the spin-off, to be divided into three classes of directors
serving staggered three year terms. As a result, approximately one-third of our
board will be elected each year. See 'Management -- Directors.'

We believe a classified board will help to assure the continuity and
stability of our board, and our business strategies and policies as determined
by our board, because a majority of the directors at any given time will have
prior experience as our directors. This provision should also help to ensure
that our board, if confronted with an unsolicited proposal from a third party
that has acquired a block of our voting stock, will have sufficient time to
review the proposal and appropriate alternatives and to seek the best available
result for all stockholders.

This provision could prevent a party who acquires control of a majority of
the outstanding voting stock from obtaining control of our board until the
second annual stockholders' meeting following the date the acquiror obtains the
controlling stock interest, could have the effect of discouraging a potential
acquiror from making a tender offer or otherwise attempting to obtain control of
us and could thus increase the likelihood that incumbent directors will retain
their positions.

NUMBER OF DIRECTORS; REMOVAL; VACANCIES

The Certificate of Incorporation and the By-Laws provide that the number of
directors shall not be less than nor more than and, except as may be
provided in the terms of any series of preferred stock created by resolutions of
the board, shall be determined from time to time exclusively by a vote of a
majority of our board then in office. The Certificate of Incorporation also
provides that our board shall have the exclusive right, except as may be
provided in the terms of any series of preferred stock created by resolutions of
the board, to fill vacancies, including vacancies created by expansion of our
board. Furthermore, except as may be provided in the terms of any preferred
stock created by resolution of our board with respect to the election of
directors by the holders of such series, directors may be removed by
stockholders only for cause and only by the affirmative vote of at least 66 2/3%
of the voting power of all of the shares of our capital stock then entitled to
vote generally in the election of directors, voting together as a single class.
These provisions, in conjunction with the provision of the Certificate of
Incorporation authorizing our board to fill vacant directorships, could prevent
stockholders from removing incumbent directors without cause and filling the
resulting vacancies with their own nominees.

NO STOCKHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS

The Certificate of Incorporation provides that, except as may be provided in
the terms of any series of preferred stock created by resolution of our board,
stockholder action can be taken only at an annual

<PAGE>

or special meeting of stockholders and cannot be taken by written consent in
lieu of a meeting. The Certificate of Incorporation also provides that special
meetings of the stockholders can only be called by the Chairman of the Board or
by the Secretary pursuant to a resolution approved by a majority of our board
then in office. Stockholders are not permitted to call a special meeting of
stockholders.

ADVANCE NOTICE FOR RAISING BUSINESS OR MAKING NOMINATIONS AT MEETINGS

The By-Laws establish an advance notice procedure with regard to stockholder
proposals and nominations of individuals for election to the Board of Directors.
In general, notice of a stockholder proposal or a director nomination for an
annual meeting must be delivered to us at our executive offices 120 days or more
before the date of the anniversary of the last annual stockholders' meeting
(unless the meeting is to be held more than 60 days in advance of such
anniversary date, in which event the stockholder proposal or director nomination
shall be delivered to us no later than the close of business on the 15th day
following the day on which notice of the meeting was given) and must contain
specified information and conform to certain requirements, as set forth in the
By-Laws. Notice of a director nomination for a special meeting must be received
by us no later than the 15th day following the day on which notice of the date
of a special meeting of stockholders was given. If the presiding officer at any
stockholders' meeting determines that a stockholder proposal or director
nomination was not made in accordance with the By-Laws, we may disregard such
proposal or nomination.

The notice of any nomination for election as a director must set forth the
name, date of birth, business and residence address of the person or persons to
be nominated; the business experience during the past five years of such person
or persons; whether such person or persons are or have ever been at any time
directors, officers or owners of 5% or more of any class of capital stock,
partnership interests or other equity interest of any corporation, partnership
or other entity; any directorships held by such person or persons in any company
with a class of securities registered pursuant to Section 12 of the Exchange Act
or subject to the requirements of Section 15(d) of such Act or any company
registered as an investment company under the Investment Company Act of 1940, as
amended; and whether, in the last five years, such person or persons are or have
been convicted in a criminal proceeding or have been subject to a judgment,
order, finding or decree of any federal, state or other governmental entity,
concerning any violation of federal, state or other law, or any proceeding in
bankruptcy, which conviction, order, finding, decree or proceeding may be
material to an evaluation of the ability or integrity of the nominee; and the
consent of each such person to serve as a director if elected. The person
submitting the notice of nomination, and any person acting in concert with such
person, must provide their names and business addresses, the name and address
under which they appear on our books (if they so appear), and the class and
number of shares of our capital stock that are beneficially owned by them.

AMENDMENTS TO BY-LAWS

The Certificate of Incorporation provides that our board or the holders of
at least 66 2/3% of the voting power of all shares of our capital stock then
entitled to vote generally in the election of directors, voting together as a
single class, have the power to amend or repeal our By-Laws.

AMENDMENT OF THE CERTIFICATE OF INCORPORATION

Any proposal to amend, alter, change or repeal any provision of the
Certificate of Incorporation, except as may be provided in the terms of any
preferred stock created by resolution of our board and which relate to such
series of preferred stock, generally requires approval by the affirmative vote
of both a majority of the members of our board then in office and a majority
vote of the voting power of all of the shares of our capital stock entitled to
vote generally in the election of directors, voting together as a single class.
However, any proposal to amend, alter, change or repeal the provisions of the
Certificate of Incorporation relating to (1) the classification of our board,
(2) removal of Directors, (3) the prohibition of stockholder action by written
consent or stockholder calls for special meetings, (4) amendment of By-Laws, or
(5) amendment of the Certificate of Incorporation requires approval by

<PAGE>

the affirmative vote of 66 2/3% of the voting power of all of the shares of our
capital stock entitled to vote generally in the election of directors, voting
together as a single class.

PREFERRED STOCK AND ADDITIONAL COMMON STOCK

Under the Certificate of Incorporation, our board will have the authority to
provide by resolution for the issuance of shares of one or more series of
preferred stock. Our board is authorized to fix by resolution the terms and
conditions of each such other series. See 'Description of Capital Stock --
Preferred Stock.'

We believe that the availability of our preferred stock, in each case
issuable in series, and additional shares of common stock could facilitate
certain financings and acquisitions and provide a means for meeting other
corporate needs which might arise. The authorized shares of our preferred stock,
as well as authorized but unissued shares of common stock will be available for
issuance without further action by our stockholders, unless stockholder action
is required by applicable law or the rules of any stock exchange on which any
series of our stock may then be listed, or except as may be provided in the
terms of any preferred stock created by resolution of our board.

These provisions give our board the power to approve the issuance of a
series of preferred stock, or additional shares of common stock, that could,
depending on its terms, either impede or facilitate the completion of a merger,
tender offer or other takeover attempt. For example, the issuance of new shares
of preferred stock might impede a business combination if the terms of those
shares include voting rights which would enable a holder to block business
combinations or, alternatively, might facilitate a business combination if those
shares have general voting rights sufficient to cause an applicable percentage
vote requirement to be satisfied.

Moreover, the series A preferred stock is issuable under the circumstances
provided for in the rights agreement upon exercise of the rights. See 'Rights
Plan.'

DELAWARE BUSINESS COMBINATION STATUTE

Section 203 of the Delaware General Corporations Loans (the 'DGCL'),
provides that, subject to certain exceptions specified therein, an 'interested
stockholder' of a Delaware corporation may not engage in any business
combination with the corporation for a three-year period following the time that
such stockholder becomes an 'interested stockholder' unless (1) prior to such
time, the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
'interested stockholder', (2) upon consummation of the transaction which
resulted in the stockholder becoming an 'interested stockholder,' the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding certain shares), or
(3) at or subsequent to such time, the business combination is approved by the
board of directors of the corporation and authorized at an annual or special
meeting of stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the 'interested stockholder.'
Except as otherwise specified in Section 203, an 'interested stockholder' is
defined to include (1) any person that is the owner of 15% or more of the
outstanding voting stock of the corporation, or is an affiliate or associate of
the corporation and was the owner of 15% or more of the outstanding voting stock
of the corporation at any time within three years immediately prior to the
relevant date and (2) the affiliates and associates of any such person.

Under certain circumstances, Section 203 makes it more difficult for a
person who would be an 'interested stockholder' to effect various business
combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. The Certificate of Incorporation does not exclude us from the
restrictions imposed under Section 203. The provisions of Section 203 may
encourage companies interested in acquiring us to negotiate in advance with our
board, since the stockholder approval requirement would be avoided if a majority
of the directors then in office approve either the business combination or the
transaction which results in the stockholder becoming an interested stockholder.
These provisions also may have the effect of preventing changes in our
management. It is possible that such provisions could make it more difficult to
accomplish transactions which stockholders may otherwise deem to be in their
best interests.

<PAGE>

LIMITATION ON LIABILITY AND
INDEMNIFICATION OF OFFICERS AND DIRECTORS

LIMITATION ON LIABILITY OF DIRECTORS

Pursuant to authority conferred by Section 102 of the DGCL, Article VII of
our Certificate of Incorporation eliminates the personal liability of our
directors to us or our stockholders for monetary damages for breach of fiduciary
duty, including without limitation directors serving on committees of the board
of directors. Directors remain liable for:

(1) any breach of the duty of loyalty to us or our stockholders,

(2) any act or omission not in good faith or which involves intentional
misconduct or a knowing violation of law,

(3) any violation of Section 174 of the DGCL, which proscribes the
payment of dividends and stock purchases or redemptions under certain
circumstances, and

(4) any transaction from which directors derive an improper personal
benefit.

Article VII further provides that any future repeal or amendment of its
terms will not adversely affect any rights of directors existing thereunder with
respect to acts or omissions occurring prior to such repeal or amendment.
Article VII also incorporates any future amendments to Delaware law which
further eliminate or limit the liability of directors.

INDEMNIFICATION AND INSURANCE

In accordance with Section 145 of the DGCL, which provides for the
indemnification of directors and officers under certain circumstances,
Article XIV of our By-Laws grants our directors and officers a right to
indemnification, to the fullest extent permitted by law, for all expenses,
liabilities and losses relating to civil, criminal, administrative or
investigative proceedings to which they are a party (1) by reason of the fact
that they are or were our directors or officers or (2) by reason of the fact
that, while they are or were our directors or officers, they are or were serving
at our request as directors, officers, members, employees, fiduciaries or agents
of another corporation, partnership, joint venture, trust or enterprise.
Article IV further permits us to indemnify other employees and agents to the
fullest extent permitted by law, for all expenses, liabilities and losses
relating to civil, criminal, administrative or investigative proceedings to
which they are a party by reason of their employment or agency relationship.
Article XIV further provides for the mandatory advancement of expenses incurred
by present officers and directors in defending such proceedings in advance of
their final disposition upon delivery to us by the indemnitee of an undertaking
to repay all amounts so advanced if it is ultimately determined that such
indemnitee is not entitled to be indemnified under Article XIV. Article XIV
further provides that expenses incurred by our former directors or officers or
other employees or agents in defending such proceedings may be paid in advance
of their final disposition upon such terms and conditions, if any, as we deem
appropriate. We may not indemnify or make advance payments to any person in
connection with proceedings initiated against us by such person without the
authorization of our board of directors, except with respect to compulsory
counterclaims, cross-claims, third-party claims or in connection with suits
seeking to enforce rights to indemnification or advancement of expenses as
otherwise ordered by a court of competent jurisdiction.

In addition, in the event that any successor provisions or amendments to the
DGCL provide indemnification rights broader than permitted prior thereto,
Article XIV allows such broader indemnification rights to apply retroactively
with respect to any predating alleged action or inaction and also allows the
indemnification to continue after an indemnitee has ceased to be a director or
officer of the corporation and to inure to the benefit of the indemnitee's
heirs, executors and administrators.

Article XIV further provides that the right to indemnification is not
exclusive of any other right which any indemnitee may have or thereafter acquire
under any statute, the Certificate of Incorporation or By-Laws, any agreement or
vote of stockholders or disinterested directors or otherwise, and allows us to
indemnify and advance expenses to any person whom the corporation has the power
to indemnify under the DGCL or otherwise.

<PAGE>

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted for directors and officers and controlling persons pursuant to
the foregoing provisions, we have been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.

Our By-Laws authorize us to purchase insurance for our directors, officers
and employees, and persons who serve at our request as directors, officers,
members, employees, fiduciaries or agents of other enterprises against any
expense, liability or loss incurred in such capacity, whether or not we would
have the power to indemnify such persons against such expense or liability under
the By-Laws. We intend to maintain insurance coverage for our officers and
directors as well as insurance coverage to reimburse us for potential costs of
its corporate indemnification of directors and officers.

ADDITIONAL INFORMATION

We have filed the registration statement with the Commission with respect to
the common stock. This information statement does not contain all of the
information set forth in the registration statement and the exhibits thereto, to
which reference is hereby made. This information statement describes the
material terms and conditions of each contract, agreement or other document
referred to herein or filed as an exhibit to the registration statement;
however, with respect to each such contract, agreement or other document,
reference is made to such exhibit for a more complete description of the matter
involved, and each description thereof contained in this information statement
shall be deemed qualified in its entirety by such reference. The registration
statement and the exhibits thereto filed by us with the Commission may be
inspected at the public reference facilities of the Commission listed below.

After the spin-off, we will be subject to the information requirements of
the Exchange Act and, in accordance therewith, will file reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at its principal offices at
450 Fifth Street, N.W., Washington, D.C. 10549, and at its regional offices at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material may be obtained at prescribed rates from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549. Materials that we file electronically with the Commission are available
at the Commission's website (http://www.sec.gov), which contains reports,
proxies and information statements and other information regarding issuers that
file electronically with the Commission. Application has been made to list our
common stock on the NYSE and, if and when such common stock commences trading on
the NYSE, such reports, proxy statements and other information concerning LCA
will be available for inspection at the NYSE, 20 Broad Street, New York, New
York 10005.

-------------------
We intend to furnish our stockholders with annual reports containing
consolidated financial statements (beginning with fiscal 2000) audited by
independent accountants.

<PAGE>

LCA CORPORATION
INDEX TO COMBINED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
COMBINED FINANCIAL STATEMENTS ----
<S> <C>
Report of Ernst & Young LLP................................. F-2
Combined Statement of Operations............................ F-3
Combined Balance Sheets..................................... F-4
Combined Statements of Cash Flows........................... F-5
Combined Statements of Changes in Invested Capital.......... F-6
Notes to Combined Financial Statements...................... F-7
Schedule II -- Valuation and Qualifying Accounts............ S-1
</TABLE>

F-1

<PAGE>

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of
U.S. INDUSTRIES, INC.

We have audited the accompanying combined balance sheets of LCA Corporation
(the 'Company') as of September 30, 1999 and 1998, and the related combined
statements of operations, cash flows, and changes in invested capital for each
of the three years in the period ended September 30, 1999. Our audits also
included the financial statement schedule listed in the index to the combined
financial statements. These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of the Company at
September 30, 1999 and 1998, and the combined results of its operations and its
cash flows for each of the three years in the period ended September 30, 1999,
in conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

/s/ Ernst & Young LLP

New York, New York
May 2, 2000

F-2

<PAGE>

LCA CORPORATION
COMBINED STATEMENTS OF OPERATIONS

See notes to combined financial statements.

F-3

<PAGE>

LCA CORPORATION
COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
AT JUNE 30, AT SEPTEMBER 30,
----------- -----------------
2000 1999 1998
---- ---- ----
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................... $ 14.1 $ 9.1 $ 12.4
Trade receivables, net.................................. 172.0 173.4 158.9
Inventories............................................. 169.7 172.8 162.3
Deferred income taxes................................... 9.1 9.1 7.6
Other current assets.................................... 7.2 8.6 9.6
------ ------ ------
Total current assets................................ 372.1 373.0 350.8
Property, plant and equipment, net.......................... 166.7 176.4 168.6
Pension assets.............................................. 7.4 5.5 5.1
Other assets................................................ 1.1 1.6 1.7
Goodwill, net............................................... 159.4 131.6 91.1
------ ------ ------
$706.7 $688.1 $617.3
------ ------ ------
------ ------ ------

LIABILITIES AND INVESTED CAPITAL (DEFICIT)
Current liabilities:
Notes payable........................................... $ 7.1 $ 10.8 $ 6.7
Trade accounts payable.................................. 58.6 62.7 61.0
Accrued expenses and other liabilities.................. 58.0 64.8 63.0
Income taxes payable.................................... 2.4 2.8 5.7
------ ------ ------
Total current liabilities........................... 126.1 141.1 136.4
Deferred income taxes....................................... 2.5 2.5 2.1
Other liabilities........................................... 47.0 48.8 49.7
Notes payable to Affiliates................................. 201.6 195.0 195.0
Interest payable to Affiliates.............................. 20.5 10.6 --
------ ------ ------
Total liabilities................................... 397.7 398.0 383.2
Commitments and contingencies
Invested capital............................................ 309.0 290.1 234.1
------ ------ ------
$706.7 $688.1 $617.3
------ ------ ------
------ ------ ------
</TABLE>

See notes to combined financial statements.

F-4

<PAGE>

LCA CORPORATION
COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED FOR THE FISCAL YEARS ENDED
JUNE 30, SEPTEMBER 30,
--------------- ---------------------------
2000 1999 1999 1998 1997
---- ---- ---- ---- ----
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Operating activities:
Net income....................................... $ 9.8 $ 14.4 $ 20.2 $ 23.1 $ 13.0
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................ 19.4 17.7 23.8 21.0 9.8
Provision for deferred income taxes.......... -- -- (0.7) 0.5 (0.1)
Provision for doubtful accounts.............. 1.2 1.1 1.0 2.5 0.9
Changes in operating assets and liabilities,
excluding the effects of acquisitions and
dispositions:
(Increase) decrease in trade receivables..... 2.2 1.6 (3.5) (20.9) (3.0)
(Increase) decrease in inventories........... 5.0 (1.3) (1.1) (23.3) 1.8
Decrease in other current assets............. 1.4 2.7 1.1 10.5 0.9
Decrease (increase) in other non-current
assets..................................... (1.4) (1.2) 0.2 (1.0) (0.4)
Decrease in trade accounts payable........... (6.2) (9.4) (3.3) (3.2) (1.7)
(Decrease) increase in income taxes
payable.................................... (0.3) (0.6) (2.2) 4.9 (0.5)
(Decrease) increase in accrued expenses and
other liabilities.......................... (6.8) (4.4) (5.0) (8.0) 1.0
Increase (decrease) in other non-current
liabilities................................ (2.9) (5.5) 3.9 6.5 (0.1)
Other, net................................... -- (0.7) (0.4) (3.3) 0.3
------ ------ ------ ------ ------
Net cash provided by operating activities.... 21.4 14.4 34.0 9.3 21.9
Investing activities:
Acquisition of companies, net of cash acquired... (73.3) (64.9) (64.9) (37.6) --
Loan receivable from affiliates, net............. -- (5.5) -- -- --
Purchases of property, plant and equipment....... (16.0) (21.3) (31.2) (23.7) (12.6)
Proceeds from sales of property, plant and
equipment...................................... 0.6 1.1 1.9 0.1 --
------ ------ ------ ------ ------
Net cash used in investing activities........ (88.7) (90.6) (94.2) (61.2) (12.6)
Financing activities:
Proceeds from affiliate debt..................... 6.6 -- -- -- --
Proceeds from notes payable...................... 8.8 4.2 7.6 5.3 --
Repayment of notes payable....................... (11.8) (2.9) (3.0) (2.9) --
Proceeds from long-term debt..................... -- -- -- 0.2 --
Repayment of long-term debt...................... -- -- -- (33.3) --
Increase in interest payable to Affiliates....... 9.9 9.4 10.6 -- --
Capital contributions from Affiliates............ 71.4 69.6 62.6 76.4 --
Dividends to Affiliates.......................... (1.2) (1.4) (10.1) (6.3) --
Net transfers with Affiliates.................... (5.2) (4.0) (6.8) 23.3 (9.5)
------ ------ ------ ------ ------
Net cash provided by (used in) financing
activities................................. 78.5 74.9 60.9 62.7 (9.5)
Effect of exchange rate changes on cash.............. (6.2) (6.1) (4.0) 1.5 0.2
------ ------ ------ ------ ------
Net increase in cash and cash equivalents.... 5.0 (7.4) (3.3) 12.3 --
Cash and cash equivalents at beginning of year....... 9.1 12.4 12.4 0.1 0.1
------ ------ ------ ------ ------
Cash and cash equivalents at end of period........... $ 14.1 $ 5.0 $ 9.1 $ 12.4 $ 0.1
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>

See notes to combined financial statements.

F-5

<PAGE>

LCA CORPORATION
COMBINED STATEMENTS OF CHANGES IN INVESTED CAPITAL
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C> <C>
Balance at September 30, 1996............................... $ 12.9
Net income.................................................. $ 13.0
Translation adjustment...................................... 0.2
Minimum pension liability adjustment........................ 0.5
------
Comprehensive income........................................ 13.7
Net transactions with Affiliates............................ (9.5)
------
Balance at September 30, 1997............................... 17.1
Net income.................................................. 23.1
Translation adjustment...................................... 7.2
Minimum pension liability adjustment........................ (2.3)
------
Comprehensive income........................................ 28.0
Capital contributions from Affiliates....................... 172.0
Dividends to Affiliates..................................... (6.3)
Net transactions with Affiliates............................ 23.3
------
Balance at September 30, 1998............................... 234.1
Net income.................................................. 20.2
Translation adjustment...................................... (11.4)
Minimum pension liability adjustment........................ 1.5
------
Comprehensive income........................................ 10.3
Capital contributions from Affiliates....................... 62.6
Dividends to Affiliates..................................... (10.1)
Net transactions with Affiliates............................ (6.8)
------
Balance at September 30, 1999............................... 290.1
Net income (unaudited)...................................... 9.8
Translation adjustment (unaudited).......................... (19.9)
------
Comprehensive income (unaudited)............................ (10.1)
Capital contributions from Affiliates (unaudited)........... 71.4
Dividends to Affiliates (unaudited)......................... (1.2)
Payment for guarantee of USI stock (unaudited).............. (36.0)
Net transactions with Affiliates (unaudited)................ (5.2)
------
Balance at June 30, 2000 (unaudited)........................ $309.0
------
------
</TABLE>

See notes to combined financial statements.

F-6

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION AND DESCRIPTION OF COMPANY

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

In contemplation of the spin-off and distribution to its stockholders by USI
of the ownership in the Company, all the issued and outstanding common stock or
net operating assets of certain companies and other assets and interests will be
transferred to the Company (the 'Spin-off Transactions'). At June 30, 2000, the
Company had no separate legal status or existence as a combined group. These
financial statements are presented on a going concern basis as if the Company
had existed as a corporation separate from USI during the periods presented and
include the historical net assets and results of operations directly related to
the Company's operations. The combined financial data for the nine months ended
June 30, 2000 and 1999 are unaudited. In the opinion of the Company they have
been prepared on a basis consistent with that for the three year period ended
September 30, 1999. The interim financial data include all adjustments that
management considered necessary for a fair presentation of interim results.

USI and certain subsidiaries of USI (referred to herein as 'Affiliates')
have provided certain corporate general and administrative services to the
Company including legal, finance, tax, risk management and employee benefits. A
portion of the related costs has been allocated to the Company based on the
percentage of the Company's sales to the consolidated sales of USI as management
fees. The Company's management believes such amounts are reasonable; however,
they may not be indicative of the Company's ongoing costs as a separate public
entity. Additionally, the direct costs attributable to division management are
included in management fees and divisional overhead in the accompanying combined
financial statements.

NOTE 2. ACCOUNTING POLICIES

Fiscal Year: The Company's fiscal year ends on the Saturday nearest to
September 30. All fiscal year data contained herein reflect results of
operations for the 52, 53 and 52 week periods ended on the Saturday nearest to
September 30, 1999, 1998 and 1997, respectively, but are presented as of such
date for convenience of reference.

Principles of Combination: The combined financial statements include the
accounts of the Company and its subsidiaries. Intercompany accounts and
transactions are eliminated.

Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Cash Equivalents: Cash equivalents represent short-term, highly liquid
investments, which have maturities of ninety days or less when purchased. Except
for certain cash balances owned by the Company, cash accounts have been
controlled on a centralized basis by an Affiliate. Accordingly, cash receipts
and disbursements have been made through Affiliates. The net results of cash
transactions between or on behalf of the Company, including intercompany
advances are included in the combined balance sheets as invested capital.

F-7

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Depreciation and Amortization:

<TABLE>
<CAPTION>
FOR THE NINE FOR THE FISCAL
MONTHS ENDED YEARS ENDED
JUNE 30, SEPTEMBER 30,
------------- --------------------
2000 1999 1999 1998 1997
---- ---- ---- ---- ----
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Depreciation...................................... $16.7 $15.4 $20.7 $18.7 $8.8
Amortization of goodwill.......................... 2.7 2.3 3.1 2.3 1.0
----- ----- ----- ----- ----
$19.4 $17.7 $23.8 $21.0 $9.8
----- ----- ----- ----- ----
----- ----- ----- ----- ----
</TABLE>

Trade Receivables and Concentrations of Credit Risk:

<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT JUNE 30, -----------------
2000 1999 1998
---- ---- ----
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C>
Trade receivables............................... $183.5 $184.3 $168.8
Allowance for doubtful accounts................. (11.5) (10.9) (9.9)
------ ------ ------
$172.0 $173.4 $158.9
------ ------ ------
------ ------ ------
</TABLE>

The Company operates principally in the United States and Europe, and to a
lesser extent, in Mexico and Canada. The Company performs periodic credit
evaluations of its customers' financial condition and generally does not require
collateral. Credit losses have been within management's estimates.

Inventories:

<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT JUNE 30, -----------------
2000 1999 1998
---- ---- ----
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C>
Finished products............................... $ 80.8 $ 78.6 $ 70.2
In-process products............................. 24.7 26.7 28.5
Raw materials................................... 64.2 67.5 63.6
------ ------ ------
$169.7 $172.8 $162.3
------ ------ ------
------ ------ ------
</TABLE>

Inventories are valued at the lower of cost, determined under the first-in,
first-out method, or market.

Property, Plant and Equipment:

<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT JUNE 30, -----------------
2000 1999 1998
---- ---- ----
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C>
Land and buildings............................. $112.7 $ 117.0 $ 117.3
Machinery, equipment and furniture............. 201.1 193.3 170.8
Accumulated depreciation....................... (147.1) (133.9) (119.5)
------ ------- -------
$166.7 $ 176.4 $ 168.6
------ ------- -------
------ ------- -------
</TABLE>

Property, plant and equipment are stated on the basis of cost less
accumulated depreciation provided under the straight-line method. Buildings are
depreciated based on lives ranging from twenty to forty years, and machinery,
equipment and furniture based on lives ranging from three to ten years.

F-8

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

In March 1998, the AICPA issued SOP 98-1, Accounting For the Costs of
Computer Software Developed For or Obtained For Internal Use (the 'SOP'). The
Company adopted the SOP on October 1, 1998. The SOP required the capitalization
of certain costs incurred after the date of adoption in connection with
developing or obtaining software for internal use. The impact of adopting this
SOP was not material.

Goodwill: Goodwill represents the excess of the purchase price over the fair
value of net assets acquired. The Company reviews operating results and other
relevant facts every fiscal quarter for each of its businesses to determine if
there are indications that the carrying value of an enterprise may be impaired.
The fair value methodology is used by the Company to ascertain the
recoverability of the carrying value of an enterprise, when there are
indications of impairment. In the event that such fair value is below the
carrying value of an enterprise, for those companies with goodwill, the Company
first reduces goodwill and then other long-lived assets to the extent such
differential exists.

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

Goodwill is amortized straight-line over forty years, which is the estimated
future period to be benefited. Accumulated amortization aggregated $166.2
million and $163.1 million at September 30, 1999 and 1998, respectively.
Amortization of goodwill amounted to $3.1 million, $2.3 million and $1.0 million
for fiscal 1999, 1998 and 1997, respectively. See subsequent events note.

Accrued Expenses and Other Liabilities:

Accrued Expenses and other liabilities, consist of the following:

<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT JUNE 30, -----------------
2000 1999 1998
---- ---- ----
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C>
Compensation related............................. $21.0 $27.4 $27.9
Other............................................ 37.0 37.4 35.1
----- ----- -----
$58.0 $64.8 $63.0
----- ----- -----
----- ----- -----
</TABLE>

Foreign Currency Translation: The functional currency of each of the
Company's foreign operations is the local currency. Assets and liabilities of
foreign subsidiaries are translated at the exchange rates in effect at the
balance sheet dates, while revenue, expenses and cash flows are translated at
average exchange rates for the period. Translation gains and losses are included
in invested capital and comprehensive income.

Income Taxes: Deferred tax assets and liabilities are computed based on the
difference between the financial reporting and tax bases of assets and
liabilities using enacted tax rates and laws. Deferred income tax expense or
benefit is based on the changes in the asset or liability from period to period.

The Company's United States earnings have been included in the consolidated
federal income tax return filed by USI. The Company provided for income taxes in
the accompanying financial statements as if it were a stand-alone entity and
filed separate income tax returns from USI. Federal taxes currently

F-9

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

payable have been included in Invested Capital. Income taxes paid to foreign
jurisdictions during fiscal 1999, 1998 and 1997 were $7.1 million, $1.1 million
and $1.5 million, respectively.

Upon completion of the anticipated spin-off, such operations would no longer
qualify to be members of the USI consolidated group and, accordingly, will file
the applicable income tax returns in the appropriate jurisdictions. The Company
and certain of its subsidiaries will enter into tax sharing and indemnification
agreements in which USI and certain of its subsidiaries generally will agree to
indemnify the Company and its subsidiaries for all income tax liabilities in
respect to periods prior to such spin-off.

Revenue Recognition: Revenue is recognized upon shipment of product to the
customer. Provisions are made for warranty and return costs at the time of sale.
Such provisions have not been material.

Advertising Costs: Advertising costs are expensed as incurred. Such amounts
totaled $12.4 million, $12.6 million, and $7.0 million for fiscal 1999, 1998,
and 1997, respectively.

Research and Development Costs: Research and development costs are expensed
as incurred. Such amounts totaled $6.1 million, $6.4 million, and $1.2 million
for fiscal 1999, 1998 and 1997, respectively.

Fair Value of Financial Instruments: The fair value of all short-term
financial instruments approximate their carrying value due to their short
maturity. The fair value of the notes payable to Affiliates is also estimated to
approximate its carrying amount since it is contemplated that these notes will
be repaid at face value upon the completion of the spin-off.

Derivative Financial Instruments: In June 1998, the Financial Accounting
Standards Board issued Statement No. 133, Accounting for Derivative Instruments
and Hedging Activities, which is required to be adopted beginning in fiscal
2001. The statement will require the Company to recognize all derivatives on the
balance sheet at fair value. Derivatives that are not hedges must be adjusted to
fair value through income. If the derivative is a hedge, depending on the nature
of the hedge, changes in the fair value of derivatives will either be offset
against the change in fair value of the hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings. Management does not anticipate that
the adoption of the new Statement will have a significant effect on earnings or
the financial position of the Company.

Segment Reporting: In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information ('Statement 131'), which is
effective for years beginning after December 15, 1997. Statement 131 establishes
standards for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers.

Comprehensive Income: During fiscal 1999, the Company adopted Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income. This
statement establishes standards for reporting and display of comprehensive
income and its components in the financial statements. Reclassification of
financial statements for prior periods is required. Comprehensive income is net
income and other items, which may include foreign currency translation
adjustments, minimum pension liability adjustments and unrealized gains and
losses on marketable securities classified as available-for-sale. Accumulated
comprehensive income at September 30, 1999 and 1998 consists of ($0.3) million
and $11.1 million of cumulative translation adjustment, respectively, and ($1.0)
million and ($2.5) million of additional minimum pension liability, respectively
net of tax benefit.

Stock Based Compensation: The Company does not have stock-based compensation
plans separate from USI; however, the Company does participate in USI's
stock-based compensation plans. Consistent with USI, the Company accounts for
participation in these plans in accordance with Accounting Principles Board
Opinion No. 25, 'Accounting for Stock Issued to Employees' and related
interpretations in measuring compensation costs for its stock options and
discloses pro forma net

F-10

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

income as if compensation costs had been determined consistent with the SFAS No.
123, 'Accounting for Stock-based Compensation'. The Company has no stock options
outstanding as of September 30, 1999.

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

NOTE 3. ACQUISITIONS

In March 1999, the Company purchased the assets of the Dual-Lite business
('Dual-Lite') for approximately $46.1 million in cash, resulting in goodwill of
$36.4 million. Dual-Lite manufactures emergency lights and central inverter
systems. The results of Dual-Lite are included in the Lighting segment.

In January 1999, the Company purchased the Bowers Group PLC ('Bowers') for
approximately $15.6 million in cash, resulting in goodwill of $10.2 million.
Bowers manufactures metrology instruments. The results of Bowers are included in
Industrial Tools segment.

The proforma effect of the acquisitions and the aggregate assets acquired
and liabilities assumed detailed above is not material. These acquisitions have
been accounted for as purchases and their results of operations are included in
the financial statements from the date of acquisition.

In December 1997, the Company purchased Spear & Jackson plc ('Spear &
Jackson') for $11.1 million in cash and $95.6 million in the Company's Common
Stock (3,685,520 shares), resulting in initial goodwill of approximately $63.5
million. Spear & Jackson manufactures and distributes hand tools, saws, cutting
and industrial tools. The purchase price was subject to a cash contingency,
payable on or before June 2000. The cash contingency was based upon certain
performance criteria and the market value of the Company's stock. See subsequent
events note. The results of Spear & Jackson are included in the Industrial Tools
segment.

In October 1997, the Company purchased the assets of Siemens AG's European
commercial lighting operations for $67.0 million. The acquired business is a
leading European manufacturer and marketer of standard and customized indoor and
outdoor lighting products for commercial and industrial use. The business,
renamed SiTeco, operates manufacturing facilities in Germany, Austria, and
Slovenia. The results of SiTeco are included in the Lighting segment.

The following summarizes the allocation of the consideration paid for Spear
& Jackson and SiTeco to the fair market value of the aggregate assets acquired
and liabilities assumed by the Company (in millions):

<TABLE>
<S> <C>
Assets, net of cash acquired................................ $ 212.7
Assumed liabilities......................................... (143.0)
Goodwill.................................................... 63.5
-------
$ 133.2
-------
-------
</TABLE>

These acquisitions have been accounted for as purchases and their results of
operations have been included in the financial statements from the date of
acquisition.

NOTE 4. RESTRUCTURING

In June 1998, USI reviewed its long-term strategy and reviewed the operating
performance and future prospects of each of its businesses. As a result, USI
adopted a plan to improve efficiency and enhance competitiveness at some of the
Company's operations. The restructuring plan included the closing of a
manufacturing and distribution facility in the Lighting segment. The
restructuring did not have a significant impact on the ongoing operations during
the periods that manufacturing was

F-11

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

transitioned from the facility closed. The expected benefits from the
restructuring are primarily reduced fixed costs associated with leased
facilities and reduced compensation costs.

The principal, pre-tax components of the fiscal 1998 restructuring charge
were $1.3 million in lease obligations and $1.0 million in severance costs.
During Fiscal 1998 the Company made cash payments of $1.1 million, with the
remaining $1.2 million paid in fiscal 1999. In addition, the Company also
incurred $0.5 million of product change costs related to the elimination of
product lines. After an income tax benefit of $1.1 million, the charges detailed
above reduced net income for the period ended September 30, 1998 by $1.7
million.

NOTE 5. NOTES PAYABLE

At September 30, 1999 and 1998 the Company had unsecured notes payable to
Affiliates of $195.0 million and $195.0, respectively. The notes mature in
fiscal 2005 and interest is payable at 6.5% per annum. Interest paid was $2.1
million, $12.7 million, and $13.2 million in fiscal 1999, 1998, and 1997,
respectively.

The European lighting business maintains working capital lines of credit
guaranteed by USI of $50.0 million and $9.1 million at September 30, 1999 and
1998, respectively, primarily denominated in German Marks. Amounts outstanding
under these lines of credit at September 30, 1999 and 1998 were $7.9 million and
$3.9 million, respectively, with interest rates ranging from 2.8% to 4.1%.
Interest paid was $0.3 million and $0.6 million in fiscal 1999 and 1998,
respectively.

Spear & Jackson maintains short-term credit facilities of $9.8 and $9.5 at
September 30, 1999 and 1998, respectively, primarily denominated in French
francs, British pounds and Australian dollars. Amounts outstanding under these
lines of credit at September 30, 1999 and 1998 were $2.9 million and $2.8
million, respectively, with interest rates ranging from 4.0% to 12.0%. Interest
paid was $0.4 million and $0.3 million in fiscal 1999 and 1998, respectively. In
addition, Spear & Jackson maintains a line of credit guaranteed by USI of $5.1
million and $5.0 million at September 30, 1999 and 1998, respectively. No
amounts were outstanding on this line of credit at September 30, 1999 and 1998.

NOTE 6. PENSION AND OTHER POST-RETIREMENT BENEFITS

The Company has noncontributory defined benefit plans covering substantially
all of its United States employees. The benefits under these plans are based
primarily on years of credited service and compensation as defined under the
respective plan provisions. The Company's funding policy is to contribute
amounts to the plans sufficient to meet the minimum funding requirements set
forth in the Employee Retirement Income Security Act of 1974, plus such amounts
as the Company may determine to be appropriate from time to time. The Company
also provides health care and life insurance benefits for certain groups of
retirees. These plans are typically partially contributory by the retirees, but
are reflected as liabilities in the Company's balance sheets.

The Company sponsors defined contribution plans. Contributions relating to
defined contribution plans are made based upon the respective plans' provisions.
In the United States, the Company also participates in multi-employer plans,
which provide defined benefits to union employees of the Company's subsidiaries.
Contributions relating to multi-employer plans are based on negotiated
collective bargaining agreements.

The following table provides a reconciliation of changes in the projected
benefit obligation, fair value of plan assets and the funded status of the
Company's U.S. defined benefit pension and post-retirement benefit plans with
the amounts recognized in the Company's balance sheet at September 30:

F-12

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
------------------ ---------------
1999 1998 1999 1998
---- ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Changes in projected benefit obligation:
Benefit obligation at beginning of year................. $78.9 $63.6 $ 4.8 $ 4.5
Service cost............................................ 3.4 2.7 0.1 0.1
Interest cost........................................... 5.2 4.7 0.2 0.2
Actuarial (gain) loss................................... (8.2) 13.7 (0.1) 0.4
Benefits paid........................................... (5.5) (6.0) (0.5) (0.4)
Plan amendments......................................... -- 0.2 -- --
----- ----- ----- -----
Benefit obligation at end of year................... $73.8 $78.9 $ 4.5 $ 4.8
----- ----- ----- -----
----- ----- ----- -----
Changes in fair value of plan assets:
Fair value of assets at beginning of year............... $70.5 $77.9 $-- $--
Actual return on plan assets............................ 10.2 (2.0) -- --
Employer contributions.................................. 0.6 0.6 0.4 0.5
Benefits paid........................................... (5.5) (6.0) (0.4) (0.5)
----- ----- ----- -----
Fair value of assets at end of year................. $75.8 $70.5 $-- $--
----- ----- ----- -----
----- ----- ----- -----
Funded status of plans:
Plan assets greater (less) than projected benefit
obligation............................................ $ 2.0 $(8.4) $(4.5) $(4.8)
Unrecognized transition asset........................... (0.2) (0.3) -- --
Unrecognized net actuarial (gain) loss.................. (3.6) 8.8 2.2 2.6
Unamortized prior service cost.......................... 1.8 1.8 (1.9) (2.1)
----- ----- ----- -----
Net amount recognized............................... $-- $ 1.9 $(4.2) $(4.3)
----- ----- ----- -----
----- ----- ----- -----
Amounts recognized in the balance sheet consist of:
Accrued benefits........................................ $(7.0) $(6.8) $(4.2) $(4.3)
Prepaid benefits........................................ 4.7 4.0 -- --
Intangible asset........................................ 0.8 1.1 -- --
Accumulated other comprehensive income.................. 1.5 3.6 -- --
----- ----- ----- -----
Total amount recognized............................. $-- $ 1.9 $(4.2) $(4.3)
----- ----- ----- -----
----- ----- ----- -----
</TABLE>

The aggregate projected benefit obligation and the aggregate fair value of
plan assets, for the plans that have projected benefit obligation in excess of
plan assets, are $60.5 million and $54.9 million, respectively, in 1999 and
$64.7 million and $51.1 million, respectively, in 1998.

The aggregate accumulated benefit obligation and the aggregate fair value of
plan assets, for the plans that have accumulated benefit obligation in excess of
plan assets, are $16.5 million and $14.0 million, in 1999 and $17.3 million and
$12.7 million, respectively, in 1998.

The Company's plan assets in the pension plans are included in a master
trust managed by USI, which principally invests in listed stocks and bonds,
including common stock of USI. USI's common stock included in plan assets was
983,100 and 783,100 shares at September 30, 1999 and 1998, representing $15.5
million and $11.8 million of the master trust's assets for the same respective
periods. During 1999, $0.2 million in dividends on USI stock was paid to the
master trust.

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

F-13

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
------------------------- -------------------------
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
(IN MILLIONS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C>
Weighted-average assumptions as of
September 30:
Discount rate....................... 7.50% 6.75% 7.50% 7.50% 6.75% 7.50%
Expected return on plan assets...... 9.50% 9.50% 9.00% -- -- --
Rate of compensation increase....... 4.50% 4.25% 4.50% -- -- --
Components of net periodic benefit cost:
Defined benefit plans:
Service cost........................ $ 3.4 $ 2.7 $ 2.5 $ 0.1 $ 0.1 $ 0.1
Interest cost....................... 5.2 4.7 4.4 0.2 0.2 0.4
Expected return on plan assets...... (6.4) (6.0) (5.4) -- -- --
Amortization on unrecognized
transition asset.................. (0.1) (0.1) (0.1) -- -- --
Prior service cost.................. 0.3 0.2 0.3 (0.2) (0.2) --
Net actuarial losses................ 0.2 -- -- 0.2 0.2 0.1
----- ----- ----- ----- ----- -----
Net periodic benefit cost for defined
benefit plans......................... 2.6 1.5 1.7 0.3 0.3 0.6
Defined contribution plans.............. 0.6 0.3 0.6 -- -- --
Multi-employer plans.................... 0.5 0.8 0.4 -- -- --
----- ----- ----- ----- ----- -----
Net periodic benefit cost............... $ 3.7 $ 2.6 $ 2.7 $ 0.3 $ 0.3 $ 0.6
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----
</TABLE>

The weighted average annual assumed rate of increase in the per capita cost
of covered benefits (i.e., the health care cost trend rate) for the other
post-retirement benefit plans was 9.0% for 1999 and is assumed to decrease 0.5%
a year to 5.5%. A one-percentage-point change in the assumed health care cost
trend rate would have the following effects at, and for the year ended,
September 30, 1999 (in millions):

<TABLE>
<S> <C>
Effect of a 1% increase in the health care cost trend rate
on:
Service cost plus interest cost......................... $--
Accumulated post-retirement benefit obligation.......... 0.3
Effect of a 1% decrease in the health care cost trend rate
on:
Service cost plus interest cost......................... --
Accumulated post-retirement benefit obligation.......... (0.3)
</TABLE>

The tables above set forth the historical components of the net periodic
pension cost and a reconciliation of the funded status of the pension and other
post-retirement benefit plans for the employees associated with the Company and
is not necessarily indicative of the amounts to be recognized by the Company on
a prospective basis.

F-14

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Foreign Benefit Arrangements

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

<TABLE>
<CAPTION>
PENSION BENEFITS
-------------------
1999 1998
---- ----
(IN MILLIONS)
<S> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year................. $ 143.3 $ --
Service cost............................................ 4.0 3.4
Interest cost........................................... 8.5 7.5
Employee contributions.................................. 0.9 0.8
Foreign currency exchange rate changes.................. (5.9) 3.4
Actuarial (gain)/loss................................... (0.1) 11.6
Benefits paid........................................... (6.8) (5.9)
Acquisition............................................. -- 122.5
-------- --------
Benefit obligation at end of year................... 143.9 143.3
-------- --------
-------- --------
Change in fair value of plan assets:
Fair value of assets at beginning of year............... 101.2 --
Actual return on plan assets............................ 17.5 1.7
Employer contributions.................................. 1.6 0.2
Employee contributions.................................. 0.6 0.8
Foreign currency exchange rate changes.................. (3.0) 1.0
Benefits Paid........................................... (6.8) (5.9)
Acquisitions............................................ -- 103.4
-------- --------
Fair value of assets at end of year................. 111.1 101.2
-------- --------
-------- --------
Funded status of plans:
Plan assets in excess of (less than) projected benefit
obligation............................................ (32.8) (42.2)
Unrecognized net actuarial gains........................ 7.8 18.0
-------- --------
Total recognized in the consolidated balance
sheet............................................. (25.0) (24.2)
-------- --------
-------- --------
Amounts recognized in the balance sheet consist of:
Accrued benefits........................................ (25.0) (24.2)
-------- --------
Total recognized in the consolidated balance
sheet............................................. $ (25.0) $ (24.2)
-------- --------
-------- --------
</TABLE>

F-15

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The assumptions used and net periodic cost for the Company's foreign defined
benefit plans are presented below (in millions, except percentages):

<TABLE>
<CAPTION>
PENSION BENEFITS
-----------------------------
1999 1998
---- ----
<S> <C> <C>
Weighted-average assumption as of September 30:
Discount rate................................... 5.75% to 6.5% 6.0% to 7.5%
Rate of compensation increase................... 2.5% to 4.0% 2.5% to 4.5%
</TABLE>

<TABLE>
<CAPTION>
PENSION
BENEFITS
-------------
1999 1998
---- ----
<S> <C> <C>
Components of net periodic benefit cost
Service cost............................................ $ 4.0 $ 3.4
Interest cost........................................... 8.5 7.5
----- -----
Total periodic cost..................................... $12.5 $10.9
----- -----
----- -----
</TABLE>

NOTE 7. LEASES

Rental expense for operating leases was $8.9 million, $6.5 million and $4.2
million for the fiscal years ended September 30, 1999, 1998, and 1997.

Future minimum rental commitments under noncancellable operating leases as
of September 30, 1999 are:

<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
2000............................................ $ 9.4
2001............................................ 6.8
2002............................................ 6.0
2003............................................ 3.8
2004............................................ 3.4
Thereafter...................................... 3.2
-----
Total minimum lease payments.................... $32.6
-----
-----
</TABLE>

NOTE 8. INCOME TAXES

Income before taxes consists of:

<TABLE>
<CAPTION>
FOR THE FISCAL YEARS
ENDED SEPTEMBER 30,
---------------------
1999 1998 1997
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
United States.......................................... $18.5 $22.3 $21.5
Foreign................................................ 15.3 16.1 --
----- ----- -----
$33.8 $38.4 $21.5
----- ----- -----
----- ----- -----
</TABLE>

F-16

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

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

<TABLE>
<CAPTION>
FOR THE FISCAL YEARS
ENDED SEPTEMBER 30,
---------------------
1999 1998 1997
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Current:
Federal............................................ $11.1 $ 8.8 $ 7.7
Foreign............................................ 2.4 5.3 --
State.............................................. 0.8 0.7 0.9
----- ----- -----
14.3 14.8 8.6
Deferred........................................... (0.7) 0.5 (0.1)
----- ----- -----
$13.6 $15.3 $ 8.5
----- ----- -----
----- ----- -----
</TABLE>

<TABLE>
<CAPTION>
FOR THE FISCAL YEARS
ENDED SEPTEMBER 30,
--------------------
1999 1998 1997
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Statutory federal income tax provision.................. $11.8 $13.4 $7.6
Foreign income tax differential......................... 0.9 1.1 --
State income taxes (net of federal benefit)............. 0.5 0.4 0.6
Goodwill amortization................................... 0.3 0.3 0.3
Miscellaneous........................................... 0.1 0.1 --
----- ----- ----
$13.6 $15.3 $8.5
----- ----- ----
----- ----- ----
</TABLE>

<TABLE>
<CAPTION>
AT SEPTEMBER 30,
-----------------
1999 1998
---- ----
(IN MILLIONS)
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment.......................... $(8.3) $(6.3)
Net pension assets..................................... (1.0) (0.3)
----- -----
Total deferred tax liabilities..................... (9.3) (6.6)
----- -----
Deferred tax assets:
Accruals and allowances................................ 11.2 9.8
Post retirement benefits............................... 1.8 1.8
Inventory.............................................. 1.3 0.1
Other.................................................. 1.6 0.4
----- -----
Total deferred tax assets.......................... 15.9 12.1
----- -----
Net deferred tax asset............................. $ 6.6 $ 5.5
----- -----
----- -----
</TABLE>

The classification of the deferred tax balances is:

<TABLE>
<S> <C> <C>
Current asset............................................... $10.0 $ 7.6
Current liability........................................... (0.9) --
----- -----
9.1 7.6
----- -----
Noncurrent asset............................................ 5.8 4.8
Noncurrent liability........................................ (8.3) (6.9)
----- -----
(2.5) (2.1)
----- -----
Net deferred tax asset.................................. $ 6.6 $ 5.5
----- -----
----- -----
</TABLE>

F-17

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 9. STOCK COMPENSATION PLANS

Certain key employees of the Company participate in stock incentive plans of
USI that provide for awards of restricted stock and stock options to purchase
USI common stock at prices equal to the fair value of the underlying shares at
the date of grant. The compensation expense related to the award of USI
restricted stock to key employees of the Company was $0.2 million, $0.1 million
and $0.1 million for fiscal 1999, 1998 and 1997, respectively, and is included
in the combined financial statements of the Company. Options awarded to
employees of the Company under the USI plans vest 25% per year until fully
vested after four years. Restrictions on stock awarded to employees of the
Company under the USI plans lapse either in tranches periodically throughout a
seven-year period or at the expiration of the seven-year period.

Under USI's compensation plans, the independent directors, officers and
employees may be granted options to purchase USI's stock at no less than the
fair market value of the date of the option grant. The Company has adopted the
disclosure-only provisions of SFAS 123. Accordingly, no compensation cost has
been recognized for the stock option plans. Had compensation cost for USI's
stock option plan been determined based on the fair market value at the grant
date for awards in fiscal 1999, 1998 and 1997, consistent with the provision of
SFAS 123, the Company's net income would have been adjusted to the pro forma
amounts indicated below:

<TABLE>
<CAPTION>
FOR THE FISCAL
YEARS ENDED
---------------------
1999 1998 1997
---- ---- ----
(IN MILLIONS, EXCEPT
PER SHARE)
<S> <C> <C> <C>
Net income-as reported................................. $20.2 $23.1 $13.0
Net income -- pro forma................................ 20.0 23.0 12.9
</TABLE>

These pro forma amounts may not be representative of future disclosures
since the estimated fair value of stock options is amortized to expense over the
vesting period, and additional options may be granted in future years. The fair
value for these options was estimated at the date of grant using the
Black-Scholes model with the following assumptions:

<TABLE>
<CAPTION>
USI PLANS
---------
<S> <C>
Expected dividend yield at date of grant:
1999.................................................... 1.15%
1998.................................................... .74%
1997.................................................... 0.00%
Expected stock price volatility:
1999.................................................... 36.80%
1998.................................................... 40.40%
1997.................................................... 36.30%
Risk-free interest rate:
1999.................................................... 6.10%
1998.................................................... 5.83%
1997.................................................... 5.78%
Expected life of options.................................... 4 years
</TABLE>

The weighted-average fair value of options, calculated using the
Black-Scholes option pricing model, granted during 1999, 1998 and 1997 is $5.47,
$9.96 and $7.52, respectively. A summary of the

F-18

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Company's stock option activity and related information for employees who worked
directly for the Lighting and Industrial Tools businesses for the years ended
September 30 follows:

<TABLE>
<CAPTION>
1999 1998 1997
------------------ ------------------ ------------------
WEIGHTED WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE NUMBER AVERAGE
OF EXERCISE OF EXERCISE OF EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Outstanding -- beginning of
year........................ 207,687 $15.38 233,248 $11.84 262,817 $ 8.78
Granted....................... 136,500 16.98 46,750 27.03 72,250 20.50
Exercised..................... (11,427) 8.88 (53,869) 9.50 (75,021) 8.77
Cancelled/expired............. (28,563) 20.08 (18,442) 17.23 (26,798) 13.75
------- ------ ------- ------ ------- ------
Outstanding -- end of year.... 304,197 $15.90 207,687 $15.38 233,248 $11.84
------- ------ ------- ------ ------- ------
------- ------ ------- ------ ------- ------
Exercisable -- end of year.... 131,179 $11.72 66,500 $10.51 48,815 $ 8.76
------- ------ ------- ------ ------- ------
------- ------ ------- ------ ------- ------
</TABLE>

The following table summarizes the status of the stock options outstanding
and exercisable at September 30, 1999:

<TABLE>
<CAPTION>
STOCK OPTIONS
STOCK OPTIONS OUTSTANDING EXERCISABLE
-------------------------------- ------------------
WEIGHTED WEIGHTED WEIGHTED
NUMBER REMAINING AVERAGE NUMBER AVERAGE
OF CONTRACTUAL EXERCISE OF EXERCISE
EXERCISE PRICES OPTIONS LIFE PRICE OPTIONS PRICE
--------------- ------- ---- ----- ------- -----
<S> <C> <C> <C> <C> <C>
$8.75 to $10.33...................... 104,560 5.70 $ 8.77 103,623 $ 8.76
$16.13 to $17.00..................... 123,000 9.15 16.98 -- --
$20.50 to $28.00..................... 76,637 7.75 23.91 27,556 22.87
------- ---- ------ ------- ------
Total............................ 304,197 7.61 $15.90 131,179 $11.72
------- ---- ------ ------- ------
------- ---- ------ ------- ------
</TABLE>

NOTE 10. COMMITMENTS AND CONTINGENCIES

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

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

F-19

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

environmental laws for any single site or for all sites in the aggregate, will
have a material adverse affect on the Company's financial condition, results of
operations or cash flows.

At September 30, 1999, the Company had accrued approximately $5.0 million
for various environmental related liabilities of which the Company is aware. The
Company believes that the range of liability for such matters is between
approximately $1.0 million and $5.2 million.

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

NOTE 11. SEGMENT DATA

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

<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED SEPTEMBER 30,
---------------------------------------------------
NET SALES OPERATING INCOME
------------------------ ------------------------
1999 1998 1997 1999 1998 1997
------ ------ ------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Business segments:
Lighting(1).............................. $804.0 $765.5 $537.7 $ 48.3 $ 53.5 $ 43.9
Industrial Tools......................... 113.5 90.6 -- 6.2 5.9
Management fees and divisional
overhead............................... -- -- -- (7.9) (8.3) (9.2)
------ ------ ------ ------ ------ ------
$917.5 $856.1 $537.7 46.6 51.1 34.7
------ ------ ------
------ ------ ------
Interest expense to Affiliates........... (12.7) (12.7) (13.2)
Interest expense......................... (0.7) (1.0) --
Interest income.......................... 0.6 1.0 --
------ ------ ------
Income before income taxes............... 33.8 38.4 21.5
Provision for income taxes............... (13.6) (15.3) (8.5)
------ ------ ------
Net income............................... $ 20.2 $ 23.1 $ 13.0
------ ------ ------
------ ------ ------
</TABLE>

---------

(1) Operating income for the year ended September 30, 1998 includes
restructuring charges of $2.3 million and restructuring related charges of
$0.5 million.

F-20

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED JUNE 30,
----------------------------------------
OPERATING
NET SALES INCOME
------------------ ----------------
2000 1999 2000 1999
------ ------ ----- -----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Business segments:
Lighting............................................. $603.2 $590.9 $26.8 $35.9
Industrial Tools..................................... 95.7 86.1 4.4 4.2
Management fees and divisional overhead.............. (4.6) (6.4)
------ ------ ----- -----
$698.9 $677.0 26.6 33.7
------ ------ ----- -----
------ ------ ----- -----
Interest expense to Affiliates....................... (9.8) (9.5)
Interest expense..................................... (0.6) (0.6)
Interest income...................................... 0.4 0.5
----- -----
Income before income taxes........................... 16.6 24.1
Provision for income taxes........................... (6.8) (9.7)
----- -----
Net income........................................... $ 9.8 $14.4
----- -----
----- -----
</TABLE>

The following table presents certain information about the Company by
segment:

<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED
SEPTEMBER 30,
---------------------------
1999 1998 1997
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Assets
Lighting................................................ $525.9 $468.3 $286.8
Industrial Tools........................................ 162.2 149.0 --
------ ------ ------
Total Assets........................................ $688.1 $617.3 $286.8
------ ------ ------
------ ------ ------

Depreciation and Goodwill Amortization
Lighting................................................ $ 19.5 $ 17.6 $ 9.8
Industrial Tools........................................ 4.3 3.4 --
------ ------ ------
Total Depreciation and Goodwill Amortization........ $ 23.8 $ 21.0 $ 9.8
------ ------ ------
------ ------ ------

Capital Expenditures
Lighting................................................ $ 27.6 $ 19.0 $ 12.6
Industrial Tools........................................ 3.7 4.7 --
------ ------ ------
Total Capital Expenditures.......................... $ 31.3 $ 23.7 $ 12.6
------ ------ ------
------ ------ ------
</TABLE>

F-21

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12. GEOGRAPHIC AREAS

The following table presents certain information about the Company by
geographic areas (in millions):

<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED
SEPTEMBER 30,
---------------------------
1999 1998 1997
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Net Sales
United States........................................... $582.6 $567.3 $533.4
Foreign................................................. 334.9 288.8 4.3
------ ------ ------
Total Net Sales..................................... $917.5 $856.1 $537.7
------ ------ ------
------ ------ ------

Operating Income(1)
United States........................................... $ 30.8 $ 34.4 $ 34.6
Foreign................................................. 15.8 16.7 0.1
------ ------ ------
Total Operating Income.............................. $ 46.6 $ 51.1 $ 34.7
------ ------ ------
------ ------ ------

Long-lived Assets
United States........................................... $146.8 $102.5 $101.2
Foreign................................................. 161.2 157.2 0.2
------ ------ ------
Total long-lived assets............................. $308.0 $259.7 $101.4
------ ------ ------
------ ------ ------
</TABLE>

---------

(1) Operating earnings for the year ended September 30, 1998 included
restructuring charges of $2.3 million; all of these charges relate to
operating earnings within the United States.

NOTE 13. QUARTERLY FINANCIAL DATA (UNAUDITED)

Selected quarterly financial information for the fiscal years ended
September 30, 1999 and 1998 is as follows (in millions):

<TABLE>
<CAPTION>
1999 1998
--------------------------------------- ---------------------------------------
QUARTER ENDED DEC. 31 MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30 SEPT. 30
------------- ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales................ $217.0 $224.8 $235.2 $240.5 $198.0 $218.1 $212.8 $227.2
Gross profit............. 69.7 70.4 75.7 73.0 61.4 68.4 64.5 71.3
Net income............... 4.7 3.9 5.8 5.8 5.4 5.1 4.3 8.3
</TABLE>

The results for the quarters ended June 30 and September 30, 1998 include
$2.2 million and $0.1 million of restructuring costs, respectively. All periods
presented are 13 weeks except for the quarter ended December 31, 1998, which is
14 weeks.

F-22

<PAGE>

LCA CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 14. SUBSEQUENT EVENTS (UNAUDITED)

Due to indications of impairment based on the additional consideration paid
for Spear & Jackson and its current operating results, the Company evaluated the
recoverability of the Spear & Jackson goodwill in accordance with its accounting
policy as described in Note 2. In arriving at the fair value of Spear & Jackson
the Company considered a number of factors including 1) Competition from less
expensive imports; 2) declining margins on exports; 3) general decline in the
industrial sector in the United Kingdom 4) Spear & Jackson's long-term financial
plan and 5) analysis of values for similar companies. In determining the amount
of the impairment, USI compared the net book value to the estimated fair values
of Spear & Jackson. Based on the above, the Company will record in September
2000 an impairment charge to the goodwill of Spear & Jackson of $83 million. The
effect of this charge will reduce future goodwill amortization by approximately
$2.2 million per annum.

F-23

<PAGE>

SCHEDULE II

LCA CORPORATION
VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
<S> <C> <C> <C> <C> <C>
ADDITIONS
-----------------------
BALANCE AT CHARGED TO CHARGED TO NET BALANCE AT
BEGINNING OF COSTS AND OTHER ADDITIONS END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
------------------------------------ ------------ ---------- ---------- ---------- ----------
(IN MILLIONS)

Year ended September 30, 1997
Deducted from asset accounts:
Allowance for doubtful
accounts...................... $5.8 $0.9 $ -- $(1.2)(1) $ 5.5
Year ended September 30, 1998
Deducted from asset accounts:
Allowance for doubtful
accounts...................... $5.5 $2.5 $ -- $ 1.9(1)(2) $ 9.9
Year ended September 30, 1999
Deducted from asset accounts:
Allowance for doubtful
accounts...................... $9.9 $1.0 $ -- $10.9
</TABLE>

---------

(1) Uncollectible accounts written off, net of recoveries

(2) Amount in connection with acquisition.

S-1

<PAGE>

ANNEX A

FORM OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
LCA CORPORATION

LCA Corporation, a corporation organized and existing under the laws of the
State of Delaware, hereby certifies as follows:

1. The name of the Corporation is LCA Corporation (the 'Corporation'). The
Corporation was originally incorporated under the name The Lighting Corporation
of America. The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on September 30, 1987
under the name HKID 14 Inc. There have been two Certificates of Amendment to the
Certificate of Incorporation filed with the Secretary of State of Delaware. On
April 4, 1988, the name of the Corporation was changed to JWSP Holdings, Inc.
and on May 1, 1997 the name of the Corporation was changed to Lighting
Corporation of America. This Amended and Restated Certificate of Incorporation
restates and further amends the Certificate of Incorporation of the Corporation,
as heretofore amended, and has been adopted and approved in accordance with the
provisions of Sections 245 and 242 of the Delaware General Corporation Law.
Stockholder approval of this Amended and Restated Certificate of Incorporation
was effected by written consent in accordance with Section 228 of the Delaware
General Corporation Law.

2. The text of the Certificate of Incorporation of the Corporation, as
heretofore amended, hereby is amended and restated to read in its entirety is as
follows:

ARTICLE I

NAME

The name of the Corporation is LCA Corporation.

ARTICLE II

ADDRESS OF REGISTERED OFFICE;
NAME OF REGISTERED AGENT

The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, 19801. The name of its registered agent at
that address in the State of Delaware is The Corporation Trust Company.

ARTICLE III

PURPOSE AND POWERS

The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may now or hereafter be organized under the Delaware
General Corporation Law ('Delaware Law'). It shall have all powers that may now
or hereafter be lawful for a corporation to exercise under Delaware Law.

ARTICLE IV

CAPITAL STOCK

SECTION 4.1 Total Number of Shares of Stock. The total number of shares of
capital stock of all classes that the Corporation shall have authority to issue
is shares. The authorized capital stock is divided into 2,000,000 (Two
Million) shares of preferred stock, of the par value of $.01 each (the

A-1

<PAGE>

'Preferred Stock'), and shares of common stock, of the par value of $.01
each (the 'Common Stock').

SECTION 4.2 Preferred Stock. (a) The shares of Preferred Stock of the
Corporation may be issued from time to time in one or more series thereof, the
shares of each series to have such voting powers, full or limited, or no voting
powers, and such designations, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or restrictions
thereof, as are stated and expressed herein or in the resolution or resolutions
providing for the issue of such series, adopted by the board of directors of the
Corporation (the 'Board of Directors') as hereinafter provided.

(b) Authority is hereby expressly granted to the Board of Directors, subject
to the provisions of this Article IV and to the limitations prescribed by
Delaware Law, to authorize the issue of one or more series of Preferred Stock
and with respect to each such series to fix by resolution or resolutions
providing for the issue of each series the voting powers, full or limited, if
any, of the shares of such series and the designations, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof. The authority of the Board of Directors
with respect to each series shall include, but not be limited to, the
determination or fixing of the following:

(i) the maximum number of shares to constitute such series (which may
subsequently be increased or decreased by resolutions of the Board of
Directors unless otherwise provided in the resolution providing for the
issue of such series), the distinctive designation thereof and the stated
value thereof if different than the par value thereof;

(ii) the dividend rate of such series, the conditions and dates upon
which such dividends shall be payable, the relation that such dividends
shall bear to the dividends payable on any other class or classes of stock
or any other series of any class of stock of the Corporation, and whether
such dividends shall be cumulative or noncumulative;

(iii) whether the shares of such series shall be subject to redemption,
in whole or in part, and if made subject to such redemption the times,
prices and other terms and conditions of such redemption, including whether
or not such redemption may occur at the option of the Corporation or at the
option of the holder or holders thereof or upon the happening of a specified
event;

(iv) the terms and amount of any sinking fund established for the
purchase or redemption of the shares of such series;

(v) whether or not the shares of such series shall be convertible into
or exchangeable for shares of any other class or classes of any stock or any
other series of any class of stock of the Corporation, and, if provision is
made for conversion or exchange, the times, prices, rates, adjustments, and
other terms and conditions of such conversion or exchange;

(vi) the extent, if any, to which the holders of shares of such series
shall be entitled to vote with respect to the election of directors or
otherwise;

(vii) the restrictions, if any, on the issue or reissue of any
additional Preferred Stock;

(viii) the rights of the holders of the shares of such series upon the
dissolution of, or upon the subsequent distribution of assets of, the
Corporation; and (ix) the manner in which any facts ascertainable outside
the resolution or resolutions providing for the issue of such series shall
operate upon the voting powers, designations, preferences, rights and
qualifications, limitations or restrictions of such series.

SECTION 4.3 Common Stock. The shares of Common Stock of the Corporation
shall be of one and the same class. The holders of Common Stock shall have one
vote per share of Common Stock on all matters on which holders of Common Stock
are entitled to vote.

ARTICLE V

BOARD OF DIRECTORS

SECTION 5.1 Powers of Board of Directors. The business and affairs of the
Corporation shall be managed by or under the direction of its Board of
Directors, which shall consist of not fewer than three

A-2

<PAGE>

or more than eleven members. In furtherance, and not in limitation, of the
powers conferred by Delaware Law, the Board of Directors is expressly authorized
to:

(a) adopt, amend, alter, change or repeal the By-Laws of the
Corporation; provided, however, that no By-Laws hereafter adopted shall
invalidate any prior act of the directors that would have been valid if such
new By-Laws had not been adopted;

(b) determine the rights, powers, duties, rules and procedures that
affect the power of the Board of Directors to manage and direct the business
and affairs of the Corporation, including the power to designate and empower
committees of the Board of Directors, to elect, appoint and empower the
officers and other agents of the Corporation, and to determine the time and
place of, and the notice requirements for, Board meetings, as well as the
quorum and voting requirements for, and the manner of taking, Board action;
and

(c) exercise all such powers and do all such acts as may be exercised or
done by the Corporation, subject to the provisions of Delaware Law, this
Certificate of Incorporation, and the By-Laws of the Corporation.

SECTION 5.2 Number of Directors. Except as may be provided in a resolution
or resolutions providing for any series of Preferred Stock pursuant to Article
IV hereof with respect to any directors elected by the holders of such series,
and subject to Section 5.1 of this Certificate of Incorporation, the number of
directors constituting the Board of Directors shall be determined from time to
time exclusively by a vote of a majority of the Board of Directors in office at
the time of such vote.

SECTION 5.3 Classified Board of Directors. The directors shall be divided
into three classes, with each class to be as nearly equal in number as
reasonably possible, and with the initial term of office of the first class of
directors to expire at the annual meeting of stockholders, the initial term
of office of the second class of directors to expire at the annual meeting
of stockholders and the initial term of office of the third class of directors
to expire at the annual meeting of stockholders, in each case upon the
election and qualification of their successors. Commencing with the annual
meeting of stockholders, directors elected to succeed those directors whose
terms have thereupon expired shall be elected to a term of office to expire at
the third succeeding annual meeting of stockholders after their election, and
upon the election and qualification of their successors. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain or attain the number of directors in each class as
nearly equal as reasonably possible, but in no case will a decrease in the
number of directors shorten the term of any incumbent director.

SECTION 5.4 Vacancies. Except as may be provided in a resolution or
resolutions providing for any series of Preferred Stock pursuant to Article IV
hereof with respect to any directors elected by the holders of such series, any
vacancies in the Board of Directors for any reason and any newly created
directorship resulting by reason of any increase in the number of directors may
be filled only by the Board of Directors, acting by a majority of the remaining
directors then in office, although less than a quorum, or by a sole remaining
director, and any directors so appointed shall hold office until the next
election of the class of which such directors have been chosen and until their
successors are elected and qualified.

SECTION 5.5 Removal of Directors. Except as may be provided in a resolution
or resolutions providing for any series of Preferred Stock pursuant to Article
IV hereof with respect to any directors elected by the holders of such series,
any director, or the entire Board of Directors, may be removed from office at
any time, but only for cause, and only by the affirmative vote of the holders of
at least 66 2/3% of the voting power of all of the shares of capital stock of
the Corporation then entitled to vote generally in the election of directors,
voting together as a single class.

ARTICLE VI

STOCKHOLDER ACTIONS AND MEETINGS OF STOCKHOLDERS

Except as may be provided in a resolution or resolutions providing for any
class or series of Preferred Stock pursuant to Article IV hereof, any action
required or permitted to be taken by the stockholders of the Corporation must be
effected at a duly called annual or special meeting of such

A-3

<PAGE>

holders and may not be effected by any written consent in lieu of a meeting by
such holders. Special meetings of stockholders of the Corporation may be called
only by the Chairman of the Board or by the Secretary upon direction of the
Board of Directors pursuant to a resolution adopted by a majority of the members
of the Board of Directors then in office. Elections of directors need not be by
written ballot, unless otherwise provided in the By-Laws. For purposes of all
meetings of stockholders, aquorum shall consist of a majority of the shares
entitled to vote at such meeting of stockholders, unless otherwise required by
law.

ARTICLE VII

LIMITATION ON LIABILITY OF DIRECTORS

No person shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director, including
without limitation directors serving on committees of the Board of Directors;
provided, however, that the foregoing shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware Law, or (iv) for any transaction from which the
director derived an improper personal benefit. If Delaware Law is amended
hereafter to authorize corporate action further eliminating or limited the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
Delaware Law, as so amended. Any amendment, repeal or modification of this
Article VII shall not adversely affect any right or protection of a director of
the Corporation existing hereunder with respect to any act or omission occurring
prior to such amendment, repeal or modification.

ARTICLE VIII

AMENDMENT OF BY-LAWS

The Board of Directors shall have the power to adopt, amend, alter, change
or repeal any By-Laws of the Corporation. In addition, the stockholders of the
Corporation may adopt, amend, alter, change or repeal any By-Laws of the
Corporation by the affirmative vote of the holders of at least 66 2/3% of the
voting power of all of the shares of capital stock of the Corporation then
entitled to vote generally in the election of directors, voting together as a
single class (notwithstanding the fact that a lesser percentage may be specified
by Delaware Law).

ARTICLE IX

AMENDMENT OF CERTIFICATE OF INCORPORATION

The Corporation hereby reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation in any manner
permitted by Delaware Law and all rights and powers conferred upon stockholders,
directors, and officers herein are granted subject to this reservation. Except
as may be provided in a resolution or resolutions providing for any series of
Preferred Stock pursuant to Article IV hereof and that relate to such series of
Preferred Stock, any such amendment, alteration, change or repeal shall require
the affirmative vote of both (a) a majority of the members of the Board of
Directors then in office and (b) a majority of the voting power of all of the
shares of capital stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class; except that any
proposal to amend, alter, change or repeal the provisions of Articles 5.3,
Article 5.5, Article VI, Article VIII and this Article IX shall require the
affirmative vote of 66 2/3% of the voting power of all of the shares of capital
stock entitled to vote generally in the election of directors, voting together
as a single class.

ARTICLE X

SEVERABILITY

In the event that any provision of this Certificate of Incorporation
(including any provision within a single Section, paragraph or sentence) is held
by a court of competent jurisdiction to be invalid, void or

A-4

<PAGE>

otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the full extent permitted by law.

THE UNDERSIGNED, being the Senior Vice President, General Counsel and
Secretary of the Corporation, for the purpose of amending and restating the
Certificate of Incorporation of the Corporation pursuant to Delaware Law, does
make this Certificate, hereby declaring and certifying that this is the act and
deed of the Corporation and that the facts herein stated are true, and
accordingly have hereunto set my hand as of .

.....................................
STEVEN C. BARRE,
Senior Vice President, General Counsel
and Secretary

A-5

<PAGE>

ANNEX B

LCA CORPORATION STOCK INCENTIVE PLAN*

---------
* To be provided in an amendment to this filing.

B-1

<PAGE>

ANNEX C

MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF AWARDS AND
MATERIAL FEDERAL INCOME, ESTATE AND GIFT TAX CONSEQUENCES
RELATING TO THE TRANSFER OF OPTIONS
UNDER OUR STOCK INCENTIVE PLAN

The following discussions of the principal federal income tax consequences
with respect to options, restricted stock and non-employee director awards under
the SIP and the income, estate and gift tax consequences relating to the
transfer of options are based on statutory authority and judicial and
administrative interpretations as of the date of this information statement,
which are subject to change at any time (possibly with retroactive effect). The
discussions are limited to the U.S. tax consequences to individuals who are
citizens or residents of the U.S. other than those individuals who are taxed on
a residence basis in a foreign country. U.S. tax law is technical and complex
and the discussion below represents only a general summary.

THE FOLLOWING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND
DOES NOT PURPORT TO ADDRESS ALL THE TAX CONSIDERATIONS THAT MAY BE RELEVANT.
EACH RECIPIENT OF A GRANT IS URGED TO CONSULT HIS OWN TAX ADVISOR AS TO THE
SPECIFIC TAX CONSEQUENCES TO SUCH GRANTEE OF THE GRANT AND THE DISPOSITION OF
COMMON STOCK.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF AWARDS

Options. No income will be recognized by the recipient at the time of the
grant of a non-qualified stock option.

On exercise of a non-qualified stock option (and provided the common stock
issued is not restricted stock), the amount by which the fair market value of
the common stock on the date of exercise exceeds the option exercise price will
be taxable to the recipient as ordinary income. The recipient's tax basis in the
shares of common stock received upon exercise of an option will be equal to the
amount of cash paid on exercise, plus the amount of ordinary income recognized
as a result of the receipt of such shares. The subsequent disposition of shares
acquired upon exercise of a non-qualified stock option will ordinarily result in
capital gain or loss. If the common stock received upon exercise of an option is
restricted stock, the rules described below with regard to restricted stock will
apply.

A recipient who is an officer or director of ours or a beneficial owner of
more than ten percent (10%) of any class of registered equity securities of ours
should consult with his or her tax advisor as to whether, as a result of Section
16(b) of the Exchange Act and the rules and regulations thereunder that are
related thereto, the timing of income recognition is deferred for any period
following the exercise of an option (the 'Deferral Period'). If there is a
Deferral Period, absent a written election (pursuant to Section 83(b) of the
Internal Revenue Code) filed with the Internal Revenue Service within 30 days
after the date of transfer of the shares of common stock pursuant to the
exercise of the option to include in income, as of the transfer date, the excess
(on such date) of the fair market value of such shares over their exercise
price, recognition of income by the recipient could, in certain instances, be
deferred until the expiration of the Deferral Period.

The ordinary income recognized by employees with respect to the transfer of
shares upon exercise of an option under the SIP will be subject to both wage
withholding and employment taxes.

We will generally be entitled, subject to the possible application of Code
Section 162(m) as discussed below and Section 280G of the Internal Revenue Code
as discussed below, to a deduction in connection with the recipient's exercise
of a stock option in an amount equal to the income recognized by the recipient.

A recipient who is granted an ISO generally does not recognize any taxable
income at the time of the grant or exercise of the option. Similarly, we
generally are not entitled to any tax deduction at the time of the grant or
exercise of the ISO. The aggregate fair market value of common stock (determined
at the date of grant) with respect to which ISOs can be exercisable for the
first time by a recipient

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during any calendar year cannot exceed $100,000. Any excess will be treated as a
non-qualified stock option. If (i) the recipient makes no disposition of the
shares acquired pursuant to an ISO within two (2) years from the date of grant
or within one (1) year from the exercise of the option, and (ii) at all times
during the period beginning on the date of grant of the option and ending on the
day three (3) months before the date of such exercise, the recipient was an
employee of ours or any of our subsidiaries, any gain or loss recognized on a
subsequent disposition of the shares will be treated as a long-term capital gain
or loss. Under such circumstances, we will not be entitled to any deduction for
federal income tax purposes. If the recipient disposes of the shares before the
later of such dates or was not employed by us or any of our subsidiaries during
the entire applicable period, the recipient will have ordinary income equal to
the difference between the exercise price of the shares and the market value of
the shares on the date of exercise, and we will be entitled to a corresponding
tax deduction, subject to the application of Code Section 162(m) of the Code and
Section 280G of the Internal Revenue Code.

Upon exercise of an ISO, the excess of the fair market value of the stock at
exercise over the exercise price is an adjustment in determining the recipient's
alternative minimum taxable income. The adjusted basis of the stock for
alternative minimum tax purposes will be the sum of the exercise price paid and
the amount included in the recipient's alternative minimum taxable income.

Restricted Stock. The recipient of a restricted stock award may elect under
Section 83(b) of the Internal Revenue Code, to include in ordinary income, as
compensation at the time restricted stock is first issued, the excess of the
fair market value of such shares at the time of issuance over the amount paid,
if any, by the employee for such shares. Unless an election under Section 83(b)
of the Internal Revenue Code is timely made (no later than the expiration of the
30 day period following the time of issuance), no taxable income will be
recognized by the recipient of a restricted stock award until such shares are no
longer subject to the restrictions or the risk of forfeiture (collectively, the
'Restrictions'). However, when the Restrictions lapse, the recipient will
recognize ordinary income in an amount equal to the excess of the fair market
value of the common stock on the date of lapse over the amount paid, if any, by
the recipient for such shares. The ordinary income recognized by a recipient
with respect to restricted stock awarded pursuant to the SIP will be subject to
both wage withholding and employment taxes.

If an election under Section 83(b) of the Internal Revenue Code is made,
dividends received on shares which are subject to Restrictions will be treated
as dividend income. If a recipient does not make an election under Section 83(b)
of the Internal Revenue Code, dividends received on the common stock prior to
the time the Restrictions on such shares lapse will be treated as additional
compensation, and not dividend income, for federal income tax purposes, and will
be subject to wage withholding and employment taxes.

In general, a deduction will be allowed to us for federal income tax
purposes (subject to the discussion below regarding Code Section 162(m)) in an
amount equal to the ordinary income recognized by a recipient with respect to
restricted stock awarded pursuant to the SIP.

If, subsequent to the lapse of Restrictions on his or her common stock, the
recipient sells such shares, the difference, if any, between the amount realized
from such sale and the tax basis of such shares to the holder will ordinarily
result in capital gain or loss. A recipient's tax basis in restricted stock
received pursuant to the SIP will be equal to the sum of the price paid for such
shares, if any, and the amount of ordinary income recognized by such recipient
of such shares on the lapse of Restrictions thereon.

If an election under Section 83(b) of the Internal Revenue Code is made and,
before the Restrictions on the shares lapse, the shares which are subject to
such election are resold to us or are forfeited, (i) no deduction would be
allowed to such recipient for the amount included in the income of such
recipient by reason of such election under Section 83(b) of the Internal Revenue
Code, and (ii) the recipient would recognize a loss in an amount equal to the
excess, if any, of the amount paid for such restricted stock over the amount
received by the recipient upon such resale or forfeiture (which loss would
ordinarily be a capital loss). In such event, we would be required to include in
our income the amount of any deduction previously allowable to us in connection
with the transfer of such shares.

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Director's Common Stock Awards. The fair market value of an award of shares
of common stock will be includible in the non-employee director's income as
ordinary income at the time of the award, subject to the timely making of an
election under Section 83(b) of the Internal Revenue Code, as discussed above,
and will result in deferral of income recognition to the extent that as a result
of Section 16(b) of the Exchange Act the timing of recognition is deferred for a
period following the award. The recipient should consult with his or her tax
advisor with regard to the extent of such deferral. We will be entitled to a
deduction for the value of such award when the non-employee director recognizes
income, but such amounts are not subject to wage withholding or employment taxes
by us.

Parachute Payments. In the event that the payment or exercisability of any
award under the SIP is accelerated because of a change in ownership (as defined
in Section 280G(b)(2) of the Internal Revenue Code) and the value of such
payment or exercisability of an award, either alone or together with any other
payments made to the recipient by us, constitute 'excess parachute payments'
under Section 280G of the Internal Revenue Code, then, subject to certain
exceptions, a portion of such payments would be nondeductible to us and the
recipient would be subject to a 20% excise tax on such portion of the payment.

Section 162(m) of the Code. Code Section 162(m) denies a deduction to any
corporation, whose common shares are publicly held, for compensation paid to
certain covered employees in a taxable year to the extent that such compensation
exceeds $1,000,000. Covered employees are a company's chief executive officer on
the last day of the taxable year and any other individual whose compensation is
required to be reported to shareholders under the Exchange Act by reason of
being among the four highest compensated officers for the taxable year and who
are employed on the last day of the taxable year. The amount of ordinary income
recognized by a recipient in the year of exercise of a stock option is
considered in determining whether a covered employee's compensation exceeds
$1,000,000. Compensation paid under certain qualified performance based
compensation arrangements, which (among other things) provide for compensation
based on pre-established performance goals established by a compensation
committee that is comprised solely of two or more outside directors and which is
disclosed to, and approved by, the majority of our stockholders, is not
considered in determining whether a covered employee's compensation exceeds
$1,000,000. It is intended that the options granted under the SIP (but not the
restricted stock), will satisfy the requirements of Code Section 162(m) so that
the awards will not be included in a covered employee's compensation for the
purposes of determining whether such covered recipient's compensation exceeds
$1,000,000; however the effect of Code Section 162(m) on the deductibility of
such covered employee compensation cannot be ascertained with certainty. As a
result, notwithstanding the foregoing discussion, no assurance can be given as
to the deductibility of the covered employee compensation under Code Section
162(m).

MATERIAL FEDERAL INCOME, ESTATE AND GIFT TAX CONSEQUENCES RELATING TO THE
TRANSFER OF OPTIONS

Federal Income Taxation. The transfer of a non-qualified stock option by the
holder of a non-qualified stock option ('Optionee') to a permitted transferee
('Permitted Transferee') will not cause the Optionee to recognize taxable income
or gain at the time of transfer. If and when the Permitted Transferee
subsequently exercises the non-qualified stock option, the Optionee will
recognize taxable income at that time in an amount equal to the excess, if any,
of the fair market value of the common shares received by the Permitted
Transferee on exercise (determined on the exercise date) over the exercise price
of the non-qualified stock option. The Permitted Transferee's tax basis with
respect to the shares received upon exercise of the non-qualified stock option
will be equal to the fair market value of the shares on the date that the
non-qualified stock option is exercised (i.e., the exercise price plus the
amount of income recognized by the Optionee).

Federal Gift and Estate Taxation. An Optionee's transfer of a non-qualified
stock option by gift will be subject to federal gift tax except to the extent it
is excludible by the gift tax annual exclusion of $10,000 per donee, is within
the combined federal estate and gift tax exception discussed below, or is to a
person's spouse. In addition, upon the death of a participant, the value of an
option that has not previously been 'transferred' will be includible in the
participant's gross estate for federal estate tax purposes. Transfers to spouses
are not subject to such taxes, and there is combined lifetime gift and

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estate tax exclusion (known as the 'applicable exclusion amount'), which is
$675,000 per person in 2000 and increases incrementally to $1,000,000 in 2006
under current law).

In general, under IRS Revenue Ruling 98-21, the transfer to a family member,
for no consideration, of an option, is a completed gift on the later of (1) the
transfer or (2) the time when the donee's right to exercise the option is no
longer conditioned on the performance of services by the transferor. If the
option becomes exercisable in stages, each portion of the option that becomes
exercisable at a different time is treated as a separate option for the purpose
of applying this analysis.

Pursuant to IRS Revenue Procedure 98-34, the Internal Revenue Service will
treat an option as properly valued for gift (and estate) tax purposes, provided
that the employee follows a generally recognized option pricing model, such as
the Black-Scholes model or an accepted version of the binomial model. The
selected model, however, must consider (as of the valuation date) the following
factors: (1) the option's exercise price; (2) the option's expected life; (3)
the current trading price of the underlying stock; (4) the expected volatility
of the underlying stock; (5) the expected dividends on the underlying stock; and
(6) the risk-free interest rate over the remaining option term. The option
pricing model must be applied properly and reasonable factors must be used when
applying the option pricing model. In addition, a discount to the valuation
produced by the option pricing model must not be considered in order to rely on
Revenue Procedure 98-34.

Reliance on Revenue Procedure 98-34 for valuing options is not mandatory,
but provides a 'safe harbor.' Moreover, to rely on IRS Revenue Procedure 98-34
for valuing options, the factors used in the valuation must be computed in the
manner described in that Revenue Procedure, including the option's expected
life, the expected volatility factor of the underlying stock, the expected
dividends on the underlying stock with respect to the option and the factor used
for determining a risk-free interest rate.

Employees who use the methodology described in IRS Revenue Procedure 98-34
to value their options should write 'FILED PURSUANT TO REV. PROC. 98-34' on the
applicable gift (or estate) tax return.

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