FALCON BUILDING PRODUCTS INC, 10-Q, 1999-08-16

FALCON BUILDING PRODUCTS INC
10-Q, 1999-08-16
FABRICATED STRUCTURAL METAL PRODUCTS

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__________________________________________________________

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

For the quarterly period ended June 30, 1999

Commission file number: 1-13418

FALCON BUILDING PRODUCTS, INC.
(Exact Name of Registrant as Specified in Its Charter)

DELAWARE 36-3931893
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

233 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
(Address of Principal Executive Office)

(312) 906-9700
(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No .

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.

As of July 31, 1999, Falcon Building Products, Inc. had the
following shares of its various classes of common stock outstanding:

985,441 shares of Class A Common Stock
6,721,536 shares of Class B Common Stock
838,574 shares of Class C Common Stock
17,000 shares of Class D Common Stock

____________________________________________________________

FALCON BUILDING PRODUCTS, INC.
FORM 10-Q
JUNE 30, 1999
INDEX

PART I. Financial Information: ......... PAGE NO.

Item 1. Financial Statements

Condensed Consolidated Balance Sheets ................

Condensed Consolidated Statements of Income...........

Condensed Consolidated Statements of Cash Flows.......

Notes to Condensed Consolidated Financial Statements..

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

PART II. Other Information:

Item 6. Exhibits and Reports on Form 8-K.................

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
(UNAUDITED)
<S> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents...................................... $ 21.8 $ 66.4
Trade receivables, net......................................... 14.9 .
Inventories, net............................................... 108.8 78.8
Other current assets........................................... 71.9 42.2
Total current assets........................................... 217.4 187.4
Property, plant and equipment, net................................. 130.1 109.8
Goodwill........................................................... 71.8 59.4
Other long-term assets............................................. 23.2 24.8
Total assets................................................... $ 442.5 $ 381.4

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current portion long-term debt................................. $ 2.2 $ 2.0
Accounts payable............................................... 74.0 58.0
Accrued liabilities............................................ 76.6 57.0
Total current liabilities...................................... 152.8 117.0
Senior indebtedness................................................ 177.8 175.7
Senior subordinated notes.......................................... 270.6 264.3
Accrued employee benefit obligations............................... 16.4 13.3
Other long-term liabilities........................................ 20.9 25.8
Total liabilities.............................................. 638.5 596.1

Stockholders' equity (deficit):
Common stock................................................... 0.1 0.1
Notes receivable arising from stock purchase plan.............. (1.7) (1.8)
Retained deficit............................................... (191.1) (209.7)
Pension liability adjustment................................... (3.3) (3.3)
Total stockholders' equity (deficit)........................... (196.0) (214.7)
Total liabilities and stockholders' equity......................... $ 442.5 $ 381.4

</TABLE>

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

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN MILLIONS)
(UNAUDITED)

<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1999 1998 1999 1998

<S> <C> <C> <C> <C>
Net sales.................................... $ 281.9 $ 190.9 $ 500.3 $ 362.3
Cost of sales................................ 228.2 156.1 407.9 302.4
Gross earnings........................... 53.7 34.8 92.4 59.9
Selling and administrative expenses.......... 27.4 16.5 49.1 31.2
Ultravent adjustment......................... . . (12.0) .
Securitization expense....................... 1.2 1.0 2.2 1.9
Operating income......................... 25.1 17.3 53.1 26.8
Net interest expense......................... 11.2 10.9 21.8 21.6
Income before income taxes................... 13.9 6.4 31.3 5.2
Provision for income taxes................... 5.6 2.6 12.7 2.1
Net income................................... $ 8.3 $ 3.8 $ 18.6 $ 3.1

</TABLE>

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

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1999 1998

<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................... $ 18.6 $ 3.1
Adjustments to reconcile net income to net cash from (used in)
operating activities:
Depreciation and amortization............................... 12.0 9.7
Accretion of debt discount on subordinated debt............. 6.3 5.7
Deferred income tax provision............................... 3.5 .
Ultravent adjustment........................................ (12.0) .
Cash effect of changes in working capital balances, accrued
employee benefit obligations, and other long-term
liabilities, excluding the effects of acquisitions........ (31.9) 2.4
Net cash from (used in) operating activities ................. (3.5) 20.9

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of businesses........................................ (26.0) (4.0)
Capital expenditures.......................................... (13.2) (9.6)
Other......................................................... (0.1) (0.8)
Net cash used in investing activities......................... (39.3) (14.4)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on debt.......................................... (1.8) (0.3)
Other......................................................... . (0.1)
Net cash used in financing activities......................... (1.8) (0.4)

CHANGE IN CASH AND CASH EQUIVALENTS............................. (44.6) 6.1
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.................. 66.4 29.9
CASH AND CASH EQUIVALENTS, END OF PERIOD........................ $ 21.8 $ 36.0

</TABLE>

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

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)

(1) SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION:

The accompanying unaudited Condensed Consolidated Financial Statements of
Falcon Building Products, Inc. ("Falcon" or the "Company"), have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for a
complete set of financial statements. In the opinion of management, all
adjustments considered necessary, consisting only of normal recurring
adjustments except for the Ultravent adjustment, are included for fair
presentation. Operating results for the quarter and six months ended June 30,
1999 are not necessarily indicative of results that may be expected for the full
year. The unaudited Condensed Consolidated Financial Statements should be read
in conjunction with the audited Consolidated Financial Statements of the Company
for the year ended December 31, 1998.

(2) ACQUISITIONS

On January 22, 1999, the Company acquired the assets and business of The
Penn Ventilation Companies, Inc. ("Penn Ventilation") a manufacturer of air
moving and control equipment for commercial and industrial applications. The
consideration for Penn Ventilation consisted of $26.0 million in cash, a $3.0
million three-year interest bearing note and non-compete agreement payments
totaling $3.0 million payable over three years. The acquisition was accounted
for as a purchase and resulted in $13.7 million of goodwill that is being
amortized over 40 years. The allocation of the purchase price to both tangible
and intangible assets is still in process. Penn Ventilation is part of the
Company's Air Distribution Products segment.

(3) INVENTORIES

Inventory consists of the following (in millions):

JUNE 30, DECEMBER 31,
1999 1998
(UNAUDITED)

Raw materials and supplies $ 48.1 $ 28.7
Work in process........... 15.5 12.0
Finished goods............ 45.2 38.1
$ 108.8 $ 78.8

(4) ACCOUNTS RECEIVABLE

Included in the Company's Condensed Consolidated Financial Statements as of
June 30, 1999, in other current assets, is a net residual interest of $51.1
million associated with $150.9 million of receivables sold under the accounts
receivable securitization program as of that date, compared to a net residual
interest of $22.5 million associated with the $106.7 million of receivables sold
as of December 31, 1998. The expense incurred on the sale of receivables under
this program is presented as Securitization expense in the Condensed
Consolidated Statement of Income. The accounts receivable shown on the
Condensed Consolidated Balance Sheet relate primarily to Penn Ventilation, which
are expected to be sold under the Company's accounts receivable securitization
program later in 1999.

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999
(UNAUDITED)

(5) RESTRUCTURING AND OTHER CHARGES

In the third and fourth quarters of 1998, the Company recorded
restructuring and other charges totaling $8.8 million, $7.9 million related to
the reorganization of its Plumbing Fixtures business (the "Reorganization Plan")
and $0.9 million related to the consolidation of two Air Distribution Products
manufacturing plants. Of the $8.8 million of restructuring and other charges
recorded, $3.1 million were non-cash charges and $5.7 million were cash charges.
Approximately $2.9 million of the cash charges have been expended through June
30, 1999.

(6) LONG-TERM DEBT

Senior indebtedness consists of the following (in millions):

JUNE 30, DECEMBER 31,
1999 1998
(UNAUDITED)

Bank Credit Facility:
Revolver........... $ . $ .
Term............... 173.5 173.5
Total.............. 173.5 173.5
Other................ 6.5 4.2
Less: Current Portion (2.2) (2.0)
Senior indebtedness $177.8 $175.7

At June 30, 1999, the Company was in compliance with all covenants of the
Bank Credit Facility. Availability under the revolving portion of this facility
was $120.7 million at June 30, 1999.

Senior Subordinated Notes consist of the following (in millions):

JUNE 30, DECEMBER 31,
1999 1998
(UNAUDITED)

Notes................ $ 145.0 $ 145.0
Discount Notes....... 125.6 119.3
$ 270.6 $ 264.3

(7) COMMITMENTS AND CONTINGENCIES

As further discussed in the Company's Annual Report on Form 10-K, in 1997,
the Company recorded a pre-tax charge of $32.8 million ($20.0 million, net of
income tax) for an estimate of its share of the cost of a Corrective Action
Program in the United States, resolution of litigation in Canada and the United
States including class action litigation, legal fees and other costs related to
an issue regarding high temperature plastic venting. In April of 1999, the
first full heating season covered by the Corrective Action Program was
completed. The detailed, Company specific information regarding the estimated
replacement cost and the number of units replaced during the heating season
enabled the Company to revise certain assumptions including a reduction in both
the estimated replacement cost and the number of units to be replaced over the
life of the program. The revision of the above assumptions resulted in a $12
million pre-tax reduction of the aforementioned reserve in the first quarter of
1999.

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999
(UNAUDITED)

(8) GUARANTOR SUBSIDIARIES

The Company's payment obligations under the Notes and the Discount Notes
are fully and unconditionally guaranteed on a joint and several basis
(collectively, the "Guarantees") by the subsidiaries of the Company
(collectively, the "Guarantor Subsidiaries"), other than Falcon Receivable
Program, Inc., a special purpose corporation formed for the Company's accounts
receivable securitization program. The obligations of each Guarantor Subsidiary
under its Guarantee are subordinated to such subsidiary's obligations under its
guarantee of the Bank Credit Facility.

Presented below is condensed consolidating financial information for Falcon
Building Products, Inc. ("Parent Company"), the Guarantor Subsidiaries and
Falcon Receivable Program, Inc. (the "Non-Guarantor Subsidiary"). In the
Company's opinion, separate financial statements and other disclosures
concerning each of the Guarantor Subsidiaries would not provide additional
information that is material to investors. Therefore, the Guarantor
Subsidiaries are combined in the presentation below.

Investments in subsidiaries are accounted for by the Parent Company on the
equity method of accounting. Earnings of subsidiaries are, therefore, reflected
in the Parent Company's investments in and advances to/from subsidiaries account
and earnings. The elimination entries eliminate investments in subsidiaries and
intercompany balances and transactions. Parent Company pretax expense has been
allocated to the Guarantor Subsidiaries on a quarterly basis in 1999 as compared
to an annual basis in December 1998.

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999
(UNAUDITED)

(8) GUARANTOR SUBSIDIARIES (CONTINUED)

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
June 30, 1999
(dollars in millions)
(Unaudited)

<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents........ $ 18.6 $ 2.0 $ 1.2 $ . $ 21.8
Trade receivables, net........... . 14.9 . . 14.9
Inventories, net................. .. 108.8 . . 108.8
Other current assets............. 0.1 20.7 51.1 . 71.9
Total current assets............. 18.7 146.4 52.3 . 217.4

Property, plant and equipment, net... 0.5 129.6 . . 130.1
Goodwill............................. . 71.8 . . 71.8
Investment in and advances
to/from subsidiaries............. 218.7 (119.6) (46.0) (53.1) .
Other long-term assets............... 19.6 3.6 . . 23.2
Total assets..................... $ 257.5 $ 231.8 $ 6.3 $ (53.1) $ 442.5

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current portion long-term debt... $ 1.0 $ 1.2 $ . $ . $ 2.2
Accounts payable................. 0.3 73.7 . . 74.0
Accrued liabilities.............. 2.5 73.8 0.3 . 76.6
Total current liabilities........ 3.8 148.7 0.3 . 152.8
Long-term debt....................... 443.1 5.3 . . 448.4
Other long-term liabilities.......... 5.8 31.5 . . 37.3
Total liabilities................ 452.7 185.5 0.3 . 638.5

Stockholders' equity (deficit):
Common stock..................... 0.1 . . . 0.1
Additional paid-in capital....... . 42.9 6.5 (49.4) .
Retained earnings (deficit)...... (191.1) 4.2 (0.5) (3.7) (191.1)
Pension liability adjustment..... (2.5) (0.8) . . (3.3)
Other............................ (1.7) . . . (1.7)
Total stockholders' equity (deficit) (195.2) 46.3 6.0 (53.1) (196.0)

Total liabilities and stockholders'
equity............................. $ 257.5 $ 231.8 $ 6.3 $ (53.1) $ 442.5

</TABLE>

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
JUNE 30, 1999

(8) GUARANTOR SUBSIDIARIES (CONTINUED)

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 1998
(dollars in millions)

<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents........ $ 62.7 $ 0.9 $ 2.8 $ . $ 66.4
Inventories, net................. . 78.8 . . 78.8
Other current assets............. 0.5 19.2 22.5 . 42.2
Total current assets............. 63.2 98.9 25.3 . 187.4

Property, plant and equipment, net... 0.5 109.3 . . 109.8
Goodwill............................. . 59.4 . . 59.4
Investment in and advances
to/from subsidiaries............. 163.2 (109.6) (18.9) (34.7) .
Other long-term assets............... 21.8 3.0 . . 24.8
Total assets..................... $248.7 $161.0 $ 6.4 $ (34.7) $381.4

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current portion long-term debt... $ 1.0 $ 1.0 $ . $ . $ 2.0
Accounts payable................. 0.1 57.9 . . 58.0
Accrued liabilities.............. 18.4 38.3 0.3 . 57.0
Total current liabilities........ 19.5 97.2 0.3 . 117.0
Long term debt....................... 436.8 3.2 . . 440.0
Other long-term liabilities.......... 6.3 32.8 . . 39.1
Total liabilities................ 462.6 133.2 0.3 . 596.1

Stockholders' equity (deficit):
Common stock..................... 0.1 . . . 0.1
Additional paid-in capital....... . 42.9 6.5 (49.4) .
Retained earnings (deficit)...... (209.7) (14.3) (0.4) 14.7 (209.7)
Pension liability adjustment..... (2.5) (0.8) . . (3.3)
Other............................ (1.8) . . . (1.8)
Total stockholders' equity (deficit) (213.9) 27.8 6.1 (34.7) (214.7)

Total liabilities and stockholders'
equity............................ $248.7 $161.0 $ 6.4 $(34.7) $381.4

</TABLE>

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999
(UNAUDITED)

(8) GUARANTOR SUBSIDIARIES (CONTINUED)

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended June 30, 1999
(dollars in millions)
(Unaudited)

<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C>
Net sales................................ $ . $ 281.9 $ . $ . $ 281.9
Cost of sales............................ . 228.2 . . 228.2
Gross earnings....................... . 53.7 . . 53.7
Selling and administrative expenses...... 1.8 25.6 . . 27.4
Securitization expense................... 1.9 . (0.7) . 1.2
Operating income (loss).............. (3.7) 28.1 0.7 . 25.1
Corporate allocation..................... (14.4) 14.4 . . .
Net interest expense..................... 10.2 0.2 0.8 . 11.2

Income (loss) before income taxes........ 0.5 13.5 (0.1) . 13.9
Provision (benefit) for income taxes..... 0.7 4.9 . . 5.6

Income (loss) before equity in income of
consolidated subsidiaries............ (0.2) 8.6 (0.1) . 8.3
Equity in income of consolidated subsidiaries 8.5 . . (8.5) .

Net income (loss)........................ $ 8.3 $ 8.6 $ (0.1) $ (8.5) $ 8.3

</TABLE>

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999
(UNAUDITED)

(8) GUARANTOR SUBSIDIARIES (CONTINUED)

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended June 30, 1998
(dollars in millions)
(Unaudited)

<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C>
Net sales................................ $ . $ 190.9 $ . $ . $ 190.9
Cost of sales............................ . 156.1 . . 156.1
Gross earnings....................... . 34.8 . . 34.8
Selling and administrative expenses...... 1.9 14.6 . . 16.5
Securitization expenses.................. 1.9 . (0.9) . 1.0
Operating income (loss).............. (3.8) 20.2 0.9 . 17.3
Net interest expense..................... 10.5 . 0.4 . 10.9

Income (loss) before income taxes........ (14.3) 20.2 0.5 . 6.4
Provision (benefit) for income taxes..... (5.1) 7.6 0.1 2.6

Income (loss) before equity in income of
consolidated subsidiaries............ (9.2) 12.6 0.4 . 3.8
Equity in income of consolidated subsidiaries 13.0 . . (13.0) .

Net income............................... $ 3.8 $ 12.6 $ 0.4 $ (13.0) $ 3.8

</TABLE>

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999
(UNAUDITED)

(8) GUARANTOR SUBSIDIARIES (CONTINUED)

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
Six Months Ended June 30, 1999
(dollars in millions)
(Unaudited)

<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C>
Net sales................................ $ . $ 500.3 $ . $ . $ 500.3
Cost of sales............................ . 407.9 . . 407.9
Gross earnings....................... . 92.4 . . 92.4
Selling and administrative expenses...... 3.9 45.2 . . 49.1
Ultravent adjustment..................... . (12.0) . . (12.0)
Securitization expense................... 3.6 . (1.4) . 2.2
Operating income (loss).............. (7.5) 59.2 1.4 . 53.1
Corporate Allocation..................... (28.5) 28.5 . . .
Net interest expense..................... 20.1 0.3 1.4 . 21.8

Income before income taxes............... 0.9 30.4 . . 31.3
Provision for income taxes............... 0.8 11.9 . . 12.7

Income before equity in income of
consolidated subsidiaries............ 0.1 18.5 . . 18.6
Equity in income of consolidated subsidiaries 18.5 . . (18.5) .

Net income............................... $ 18.6 $ 18.5 $ . $ (18.5) $ 18.6

</TABLE>

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999
(UNAUDITED)

(8) GUARANTOR SUBSIDIARIES (CONTINUED)

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
Six Months Ended June 30, 1998
(dollars in millions)
(Unaudited)

<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C>
Net sales................................ $ . $ 362.3 $ . $ . $ 362.3
Cost of sales............................ . 302.4 . . 302.4
Gross earnings....................... . 59.9 . . 59.9
Selling and administrative expenses...... 3.4 27.8 . . 31.2
Securitization expenses.................. 3.0 . (1.1) . 1.9
Operating income (loss).............. (6.4) 32.1 1.1 . 26.8
Net interest expense..................... 20.7 0.1 0.8 . 21.6

Income (loss) before income taxes........ (27.1) 32.0 0.3 . 5.2
Provision (benefit) for income taxes..... (10.4) 12.4 0.1 . 2.1

Income (loss) before equity in income of
consolidated subsidiaries............ (16.7) 19.6 0.2 . 3.1
Equity in income of consolidated subsidiaries 19.8 . . (19.8) .

Net income............................... $ 3.1 $ 19.6 $ 0.2 $ (19.8) $ 3.1

</TABLE>

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999
(UNAUDITED)

(8) GUARANTOR SUBSIDIARIES (CONTINUED)

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 1999
(dollars in millions)
(Unaudited)

<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C>
Cash flows from (used in) operating $ (7.2) $ 32.4 $ (28.7) $ . $ (3.5)
activities...............................
Cash flows from (used in) investing
activities:
Purchase of business................. . (26.0) . . (26.0)
Capital expenditures................. . (13.2) . . (13.2)
Other................................ 0.2 (0.3) . . (0.1)
Net cash from (used in) investing
activities......................... 0.2 (39.5) . . (39.3)

Cash flows from (used in) financing
activities:
Advances (to) from affiliate......... (37.0) 9.9 27.1 . .
Net payments on debt................. . (1.8) . . (1.8)
Other................................ (0.1) 0.1 . . .
Net cash from (used in) financing
activities......................... (37.1) 8.2 27.1 . (1.8)

Change in cash and cash equivalents...... (44.1) 1.1 (1.6) . (44.6)
Cash and cash equivalents, beginning of
period............................... 62.7 0.9 2.8 . 66.4
Cash and cash equivalents, end of period. $ 18.6 $ 2.0 $ 1.2 $ . $ 21.8

</TABLE>

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999
(UNAUDITED)

(8) GUARANTOR SUBSIDIARIES (CONTINUED)

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 1998
(dollars in millions)
(Unaudited)

<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C>
Cash flows from (used in) operating
activities............................ $ (20.9) $ 54.6 $ (12.8) $ . $ 20.9

Cash flows used in investing activities:
Purchase of business................. . (4.0) . . (4.0)
Capital expenditures................. (0.4) (9.2) . . (9.6)
Other................................ 0.2 (1.0) . . (0.8)
Net cash used in investing
activities........................ (0.2) (14.2) . . (14.4)

Cash flows from (used in) financing
activities:
Advances (to) from affiliate......... 26.8 (40.1) 13.3 . .
Net payments on debt................. . (0.3) . . (0.3)
Other................................ (0.1) . . . (0.1)
Net cash from (used in) financing
activities........................ 26.7 (40.4) 13.3 . (0.4)

Change in cash and cash equivalents...... 5.6 . 0.5 . 6.1
Cash and cash equivalents, beginning of
period............................... 29.1 0.7 0.1 . 29.9
Cash and cash equivalents, end of period. $ 34.7 $ 0.7 $ 0.6 $ . $ 36.0

</TABLE>

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999
(UNAUDITED)

(9) BUSINESS SEGMENT INFORMATION

The Company has three operating segments: Air Distribution Products, Air
Power Products and Plumbing Fixtures. In January 1999 the Company acquired Penn
Ventilation (see Note 2), which is included as part of the Air Distribution
Products segment.

<TABLE>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998 1999 1998
(IN MILLIONS) (IN MILLIONS)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET SALES:
Air Distribution Products...............$ 84.1 $ 51.8 $ 153.3 $ 97.1
Air Power Products...................... 157.0 99.0 269.4 188.7
Plumbing Fixtures....................... 40.8 40.1 77.6 76.5
Total................................ $ 281.9 $ 190.9 $ 500.3 $ 362.3

SEGMENT PROFITABILITY:(a)
Air Distribution Products...............$ 12.0 $ 8.6 $ 19.9 $ 14.1
Air Power Products...................... 20.2 10.7 33.1 16.7
Plumbing Fixtures....................... 1.6 4.9 4.4 9.3
Total................................$ 33.8 $ 24.2 $ 57.4 $ 40.1

RECONCILIATION OF SEGMENT PROFITABILITY
TO INCOME BEFORE INCOME TAXES:
Total segment profitability...............$ 33.8 $ 24.2 $ 57.4 $ 40.1
Corporate................................. (1.6) (1.6) (3.3) (2.8)
Non-cash retiree medical.................. (0.1) (0.1) (0.3) (0.3)
Ultravent adjustment...................... . . 12.0 .
Depreciation and amortization............. (5.8) (4.2) (10.5) (8.3)
Net interest expense...................... (11.2) (10.9) (21.8) (21.6)
Securitization expense.................... (1.2) (1.0) (2.2) (1.9)
Income before incomes taxes.............$ 13.9 $ 6.4 $ 31.3 $ 5.2

JUNE 30, DECEMBER 31,
1999 1998
(IN MILLIONS)
(UNAUDITED)
SEGMENT ASSETS(b):
Air Distribution Products............................................. $ 173.3 $ 110.3
Air Power Products.................................................... 222.4 166.7
Plumbing Fixtures..................................................... 106.1 100.0
Total Segment Assets............................................... $ 501.8 $ 377.0

RECONCILIATION OF SEGMENT ASSETS TO TOTAL ASSETS:
Total Segment Assets.................................................. $ 501.8 $ 377.0
Securitized Receivables............................................... (150.9) (106.7)
Corporate and other(c)................................................ 91.6 111.1
Total Assets....................................................... $ 442.5 $ 381.4

/TABLE>

(a) Profitability represents income before interest expense and income taxes,
excluding the following: (i) depreciation and amortization expense; (ii) the
Ultravent adjustment; (iii) securitization expense; and (iv) non-cash charges.
(b) Segment assets include accounts receivable sold under the securitization
program.
(c) Corporate and other represents corporate assets, primarily consisting of
cash, deferred financing fees and residual interest in accounts receivable sold
under the securitization program.

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999
(UNAUDITED)

(10) OTHER MATTERS

On June 30, 1999, an outstanding option to purchase all of the issued and
outstanding capital stock of Mansfield Plumbing Products, Inc., a wholly owned
subsidiary of the Company, expired without being exercised pursuant to the terms
of the option. The option was granted on December 30, 1998 to the Company's
stockholders in exchange for a payment to the Company of $1.0 million. See the
Company's Annual Report on Form 10-K for further discussion about the option.
In the second quarter of 1999, the Company recorded a gain of $0.3 million (net
of legal, advisory and accounting expenses of $0.7 million) associated with this
transaction. The net gain has been included in selling and administrative
expense in the Company's Condensed Consolidated Statement of Income.

(11) SUBSEQUENT EVENTS

On August 13, 1999, the Company entered into a definitive agreement for the
sale of its Air Power Products segment to Pentair, Inc. for consideration of
$460 million subject to closing date adjustments. The transaction is expected
to be completed in September. The Company intends to use the net proceeds to
repay a portion of or all of the Bank Credit Facility.

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

GENERAL

Following is a discussion of the results of operations of the Company and
its subsidiaries for the quarter and six months ended June 30, 1999 as compared
to the quarter and six months ended June 30, 1998, which should be read in
conjunction with the Condensed Consolidated Financial Statements included herein
and the Company's Annual Report on Form 10-K for the year ended December 31,
1998.

QUARTER ENDED JUNE 30, 1999 COMPARED TO QUARTER ENDED JUNE 30, 1998

The following table reflects the Company's historical results of operations
for the quarter ended June 30, 1999 compared to the results for the comparable
period of 1998.

</TABLE>
<TABLE>

QUARTER ENDED JUNE 30,
1999 1998
% OF % OF
AMOUNT SALES AMOUNT SALES

<S> <C> <C> <C> <C>
Net Sales:
Air Distribution Products $ 84.1 29.8% $ 51.8 27.1%
Air Power Products....... 157.0 55.7 99.0 51.9
Plumbing Fixtures........ 40.8 14.5 40.1 21.0
Total Net Sales....... $ 281.9 100.0% $ 190.9 100.0%

Profitability: (a)
Air Distribution Products $ 12.0 14.3% $ 8.6 16.6%
Air Power Products....... 20.2 12.9% 10.7 10.8%
Plumbing Fixtures........ 1.6 3.9% 4.9 12.2%
Segment total ........ 33.8 12.0% 24.2 12.6%
Corporate................ (1.6) n/a (1.6) n/a
Total................. $ 32.2 11.4% $ 22.6 11.8%

</TABLE>

(a)Profitability represents income before interest expense and income taxes,
excluding the following: (i) depreciation and amortization expense; (ii) the
Ultravent. adjustment; (iii) securitization expense; and (iv) non-cash
charges. The percentage of sales for profitability by segment is relative
to each segment's sales.

Net Sales

Air Distribution Products net sales for the quarter increased $32.3 million
to $84.1 million, an increase of 62.4% over the comparable 1998 period.
Excluding the effects of acquisitions in 1998 and 1999, net sales increased $8.2
million. This increase was primarily the result of increased market penetration
slightly offset by reduced pricing.

Air Power Products net sales increased $58.0 million to $157.0 million for
the quarter, or 58.6% over 1998 results. This increase was primarily due to
increased volume of generators as a result of greater consumer awareness of the
need for portable alternative power. Increased volume of compressors and
pressure washers also attributed substantially to the increase as a result of
increased market penetration.

Plumbing Fixtures net sales increased $0.7 million to $40.8 million for the
second quarter of 1999 versus $40.1 million in 1998 primarily due to price
increases and product mix.

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)

Profitability

Air Distribution Products profitability increased $3.4 million or 39.5%
over the second quarter of 1998. Excluding the effect of acquisitions in 1998
and 1999, profitability increased $0.9 million. This increase was primarily due
to increased volume and cost reduction programs, partially offset by reduced
pricing, and production inefficiencies and increased distribution costs. The
decline in profitability margin was due to the acquisition of Penn Ventilation,
which currently generates lower operating margins than the base business.

Air Power Products profitability increased $9.5 million to $20.2 million,
an increase of 88.8% over results of the comparable 1998 period. This increase
was primarily due to increased volume, favorable product mix and manufacturing
efficiencies, partially offset by increased selling and administrative expenses.

Plumbing Fixtures profitability decreased $3.3 million to $1.6 million from
the second quarter of 1998. This decrease was due principally to increased
manufacturing inefficiencies, primarily in the Company's Texas plant, increased
workers compensation costs, increased medical insurance costs due to more severe
claims than normal, and increased marketing and distribution costs.

In July 1999, the Company learned that it will be replaced during the
fourth quarter of 1999 as a supplier of china and steel product to its largest
plumbing products customer. While the future loss of this customer is not
material to the Company's financial condition or results of operations, net
sales in the Plumbing Fixtures segment would have been 14% lower in 1998 and 16%
lower in the six months ended June 30, 1999 without sales to that customer. The
Company is currently exploring what impact this future loss of business, if not
replaced with other customers, may have on the Plumbing Fixtures segment's
operations in the future.

Depreciation and amortization increased from the second quarter of 1998
primarily as a result of acquisitions.

SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998

The following table reflects the Company's historical results of operations
for the six months ended June 30, 1999 compared to the results for the
comparable period of 1998.

<TABLE>
SIX MONTHS ENDED JUNE 30,
1999 1998
% OF % OF
AMOUNT SALES AMOUNT SALES

<S> <C> <C> <C> <C>
Net Sales:
Air Distribution Products $ 153.3 30.6% $ 97.1 26.8%
Air Power Products....... 269.4 53.9 188.7 52.1
Plumbing Fixtures........ 77.6 15.5 76.5 21.1
Total Net Sales....... $ 500.3 100.0% $ 362.3 100.0%

Profitability: (a)
Air Distribution Products $ 19.9 13.0% $ 14.1 14.5%
Air Power Products....... 33.1 12.3% 16.7 8.9%
Plumbing Fixtures........ 4.4 5.7% 9.3 12.2%
Segment total ........ 57.4 11.5% 40.1 11.1%
Corporate................ (3.3) n/a (2.8) n/a
Total................. $ 54.1 10.8% $ 37.3 10.3%

</TABLE>

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- (CONTINUED)

Net Sales

Air Distribution Products net sales increased $56.2 million to $153.3
million or 57.9% over 1998 results. Excluding the effect of acquisitions in
1998 and 1999, net sales increased $16.4 million. This increase was primarily
due to increased volume in all product lines as a result of increased market
penetration, slightly offset by reduced pricing.

Air Power Products net sales increased $80.7 million to $269.4 million, or
42.7% over the comparable 1998 period. This increase was primarily due to
increased volume of generators, compressors and pressure washers due to
increased market penetration and continued consumer awareness of the need for
portable alternative power. These increases were partially offset by reduced
pricing of certain pressure washer accounts.

Plumbing Fixtures net sales increased $1.1 million to $77.6 million over
the comparable 1998 period. This increase was primarily due to favorable
pricing and product mix.

Profitability

Air Distribution Products profitability increased $5.8 million to $19.9
million or 41.1% over the comparable 1998 period. Excluding the effect of
acquisitions in 1998 and 1999, profitability increased $3.0 million. This
increase was primarily due to increased volume and cost reduction programs,
partially offset by reduced pricing, as well as production inefficiencies and
increased distribution costs. The decline in profitability margin was due to
the acquisition of Penn Ventilation, which generates lower operating margins
than the base business.

Air Power Products profitability increased $16.4 million to $33.1 million
or 98.2% over the first six months of 1998. This increase was primarily due to
increased volume, favorable product mix and manufacturing efficiencies. These
increases were partially offset by increased selling and distribution expenses.
Additionally, Air Power Products sold its OEM healthcare pump line which
resulted in a gain of $0.4 million in the first quarter of 1999.

Plumbing Fixtures profitability decreased $4.9 million to $4.4 million in
1999 versus $9.3 million in 1998. This decrease was due principally to
increased manufacturing inefficiencies, primarily in the Company's Texas plant,
increased workers compensation costs, increased medical insurance costs due to
more severe claims than normal, and increased marketing and distribution costs.

Depreciation and amortization increased from 1998 primarily as a result of
acquisitions.

As discussed in Note 7 to the Company's Condensed Consolidated Financial
Statements, the Company reduced its accrual for its share of a Corrective Action
Program related to high temperature plastic venting and other related costs by
$12 million in the first quarter of 1999. In April of 1999, the first full
heating season covered by the Corrective Action Program was completed. The
detailed, Company specific information regarding the estimated replacement cost
and the number of units replaced during the heating season enabled the Company
to revise certain assumptions, including a reduction in both the estimated
replacement cost and the number of units to be replaced over the life of the
program.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities was $3.5 million for the first six
months of 1999, compared to a source of $20.9 million for the comparable 1998
period. The change of $24.4 million was primarily due to an increase in working
capital requirements to support the growth in overall sales volume.

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- (CONTINUED)

As discussed in Note 2 to the Company's Condensed Consolidated Financial
Statements, the Company acquired the assets and business of Penn Ventilation on
January 22, 1999. The consideration for Penn Ventilation consisted of $26.0
million in cash, a $3.0 million three-year interest bearing note and non-compete
agreement payments totaling $3.0 million payable over three years.

The Company believes that operating cash flows, availability under the Bank
Credit Facility and funds available under its accounts receivable securitization
program will be sufficient to pay interest on outstanding debt, meet current
maturities, pay income taxes, fund capital expenditures and meet other operating
needs for the foreseeable future.

YEAR 2000 READINESS PROGRAM

The Company and each of its operating subsidiaries have implemented a Year
2000 readiness program with the objective of having all of their significant
business systems, including those that affect facilities and manufacturing
activities, functioning properly with respect to the Year 2000 issues before
January 1, 2000. Executive management and the Board of Directors continue to
regularly monitor the status of the Company's Year 2000 remediation plans. In
addition, the Company is engaged in assessing the Year 2000 issue with
significant suppliers and customers.

The assessment phase of the Year 2000 readiness program, which identified
the business systems that may require remediation or replacement and established
priorities for repair or replacement, has been completed. The second phase of
the Year 2000 readiness program, which involves the actual remediation and
replacement of business systems, is substantially complete. The Company's
objective is to complete final testing by the third quarter of 1999.

As part of the Year 2000 readiness program, significant service providers,
vendors, suppliers and customers that are believed to be critical to business
operations after January 1, 2000, have been identified and steps have been
undertaken to reasonably ascertain their stage of Year 2000 readiness through
questionnaires, interviews, on-site visits and other available means. These
activities are intended to provide a means of managing risk, but cannot
eliminate the potential for disruption due to third party failure.

Because of the number of business systems used by the Company, in addition
to the significant number of third parties that the Company depends on, the
Company presently believes that it is possible that it may experience some
disruption in its business due to the Year 2000 issue. More specifically,
because of the interdependent nature of business systems, the Company and its
operating subsidiaries could be materially adversely affected if utilities,
private businesses and governmental entities with which they do business or that
provide essential services are not Year 2000 compliant.

The possible consequences of the Company or third parties not being fully
Year 2000 compliant by January 1, 2000 include, among other things, delays in
the delivery of products, delays in the receipt of supplies, invoice and
collection errors, inventory and supply obsolescence, and possible temporary
plant closings. Consequently, the business and results of operations of the
Company could be materially adversely affected by a temporary inability of the
Company and its operating subsidiaries to conduct their businesses in the
ordinary course for a period of time after January 1, 2000. The Company is
currently developing a contingency plan with respect to the Year 2000 issue, and
expects that such a plan will be completed prior to year-end. Failure to meet
critical milestones identified in the Company's plans would precipitate
alternative actions, including an acceleration of any contingency plan.

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- (CONTINUED)

It is currently estimated that the aggregate cost of the Company's Year
2000 readiness program will approximate between $1.3 and $1.5 million, of which
approximately $1.3 million has been expensed through June 30, 1999. These costs
are being expensed as incurred and are being funded through operating cash flow.
The costs associated with the replacement of computerized systems or equipment,
substantially all of which would be capitalized, are not included in the above
estimates.

The estimates and conclusions herein contain forward-looking statements and
are based on management's best estimates of future events. Risks to completing
the Company's Year 2000 readiness plan include the availability of resources,
our ability to discover and correct the potential Year 2000 sensitive problems
which could have a serious impact on specific facilities, and the ability of
suppliers to bring their systems into Year 2000 compliance.

FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits:

10.1 - Supplemental Executive Retirement Plan Agreement dated April
30, 1999 between the Company and Gus J. Athas.

10.2 - Supplemental Executive Retirement Plan Agreement dated April
30, 1999 between the Company and Sam A. Cottone.

99.1 - Letter to Bondholders

99.2 - Press Release related to the sale of DeVilbiss Air Power
Company.

b) Reports on Form 8-K

Current report on Form 8-K, dated June 30, 1999, related to the
expiration of the Mansfield Plumbing Products, Inc. option.

SIGNATURES

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

FALCON BUILDING PRODUCTS, INC.

By: /s/ Sam A. Cottone
Sam A. Cottone
Executive Vice President
and Chief Financial Officer

Dated: August 16, 1999

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S JUNE 30, 1999 QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 22
<SECURITIES> 0
<RECEIVABLES> 16
<ALLOWANCES> (1)
<INVENTORY> 109
<CURRENT-ASSETS> 217
<PP&E> 251
<DEPRECIATION> (121)
<TOTAL-ASSETS> 442
<CURRENT-LIABILITIES> 153
<BONDS> 448
0
0
<COMMON> 0
<OTHER-SE> (196)
<TOTAL-LIABILITY-AND-EQUITY> 442
<SALES> 500
<TOTAL-REVENUES> 500
<CGS> 408
<TOTAL-COSTS> 408
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22
<INCOME-PRETAX> 31
<INCOME-TAX> 13
<INCOME-CONTINUING> 18
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18
<EPS-BASIC> 0
<EPS-DILUTED> 0

</TABLE>

EXHIBIT 99.1

August 16, 1999

Dear Falcon Building Products, Inc. Bondholders:

A copy of the Falcon Building Products, Inc (the "Company") Form 10-Q is
enclosed. A summary of the unaudited financial results follows (dollars in
millions):

<TABLE>
PERIODS ENDED JUNE 30
1999 1998
SIX SIX
QUARTER MONTHS QUARTER MONTHS
<S> <C> <C> <C> <C>
Net sales
Air Distribution Products............$ 84.1 $ 153.3 $ 51.8 $ 97.1
Air Power Products................... 157.0 269.4 99.0 188.7
Plumbing Fixtures.................... 40.8 77.6 40.1 76.5
Total.............................. $ 281.9 $ 500.3 $190.9 $362.3

Operating income.........................$ 25.1 $ 53.1 $ 17.3 $ 26.8
Net interest expense (a)................. $ 10.5 $ 20.4 $ 10.2 $ 20.2
Cash interest expense (a)................$ 7.1 $ 13.8 $ 7.2 $ 14.2
EBITDA (b)............................... $ 31.0 $ 51.9 $ 21.7 $ 35.4
EBITDA _ for the four quarters ended..... $ 93.6 $ 67.0
Ratio of EBITDA to interest expense (c).. 2.3 x 1.7 x
Ratio of EBITDA to cash interest
expense (c)............................ 3.3 x 2.3 x
Leverage Ratios:
Senior debt to EBITDA (d)............ 1.7 x 2.1 x
Total debt to EBITDA (d)............. 4.6 x 6.0 x

</TABLE>

(a) Excludes amortization of debt issuance costs.

(b) EBITDA represents operating earnings before non-recurring Ultravent
adjustment, restructuring charges, and depreciation and amortization expense.
EBITDA is presented as management believes it provides useful information
regarding a company's ability to incur and/or service debt. However, EBITDA
should not be considered in isolation or as a substitute for net income or
cash flow data prepared in accordance with generally accepted accounting
principles, or as a measure of a company's profitability or liquidity.

(d) Senior debt and total debt is net of unencumbered cash. Ratios are
calculated using EBITDA for the four quarters ended June 30th.

For the quarter ended June 30, 1999, net sales amounted to $281.9 million, an
increase of $91.0 million or 47.7% above the second quarter of 1998, while sales
for the six months ended June 30, 1999 amounted to $500.3 million, an increase
of $138.0 million over the 1998 period. The Warrior Glass and Penn Ventilation
acquisitions collectively contributed $24.1 and $39.8 million to the sales
increase in the second quarter of 1999 and year-to-date, respectively, within
our Air Distribution segment. Continued strength in residential construction
along with wholesaler consolidation continues to benefit our Air Distribution
business primarily in residential and light commercial vents and registers as
well as duct products. The sales growth within our Air Power Products business
is the result of the significant consumer demand for generators. Greater
consumer awareness of the benefits of having portable alternative power
available to compensate for possible interruptions due to storms, temporary
excess demands on electric utilities, and concerns with an uninterrupted power
source into the year 2000. Additionally, we continue to experience year-over-
year growth in our compressor/tool product as a result of new account
penetrations at The Home Depot and overall product penetration under the
Craftsman. label through Sears. We experienced a slower start in consumer
demand for pressure washer products in 1999 due to an exceptionally wet and cool
spring. However, pressure washer sales volume in the second quarter of 1999
increased over the second quarter of last year causing year-to-date volume to
exceed last year by approximately $10 million. Sales in the Plumbing Fixtures
business were slightly ahead of last year for the quarter and year-to-date.

EBITDA and EBITDA margins of $31.0 million and 11.0%, respectively, for the
second quarter of 1999 exceeded last year's second quarter by $9.3 million and
0.4% points, respectively. The margin improvement was primarily attributable to
improved manufacturing efficiencies and productivity within our Air Power
Products segment driven by the increased volume and cost reduction programs.
While overall earnings increased within our Air Distribution segment, operating
margin as a percentage of sales decreased due to the integration of the two
acquisitions. The historical contribution margins of these added product lines
have been below those of the remaining combined product lines within the Air
Distribution segment. Cost reduction opportunities for these acquisitions
through capital investment, manufacturing process changes, and distribution and
procurement synergies should serve to enhance margins as the integration plan is
successfully executed. Our Plumbing Fixtures segment's profitability continues
to be negatively impacted primarily by manufacturing inefficiencies within our
Texas operations, driven partially by the lack of adequately skilled labor
resources in this area of the country. Additionally, this segment has
experienced abnormally high employee medical and workers compensation costs in
1999. In July 1999, the Company learned that it will be replaced during the
fourth quarter of 1999 as a supplier of china and steel products to its largest
plumbing products customer. While the future loss of this customer is not
material to the Company's financial condition or results of operations, net
sales in the Plumbing Fixtures segment would have been 14% lower in 1998 and 16%
lower in the six months ended June 30, 1999 without sales to that customer. The
Company is currently exploring what impact this future loss of business, if not
replaced with other customers, may have on the Plumbing Fixtures segment's
operations in the future. We continue to institute process flow changes and
operational controls and incentives to enhance the operations at this plant.
Further restructuring of this business is being evaluated to improve the
Plumbing Fixtures manufacturing and operating cost structure.

The Company continues to have significant liquidity to fund operations and make
new investments. At June 30, 1999, the Company had $21.8 million of
unrestricted cash and $120.7 million of borrowing availability under its
revolving credit facility.

On August 13, 1999, the Company entered into a definitive agreement for the sale
of its Air Power Products segment to Pentair, Inc. for consideration of $460
million subject to closing date adjustments. The transaction is expected to be
completed in September. The Company intends to use the net proceeds to repay a
portion of or all of the Bank Credit Facility.

As disclosed in an 8-K filed in early July, the option previously sold to the
Company's shareholders to purchase the Plumbing Fixtures business expired
unexercised. The Company continues to explore other strategic alternatives for
this business including further restructuring of its operations.

We thank you for your continued support and confidence.

William K. Hall
Chairman, President & Chief
Executive Officer

Forward-looking statements in this letter are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Act of 1995. Investors are
cautioned that actual results may differ substantially from such forward-looking
statements. Forward-looking statements involve risks and uncertainties,
including but not limited to, changes in general economic conditions,
fluctuations in interest rates, increases in raw materials and labor costs,
levels of competition and other factors detailed from time to time in the
Company's filings with the Securities and Exchange Commission.

EXHIBIT 10.1

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT

This agreement (the "Agreement") is made and effective as of April 30,
1999 between FALCON BUILDING PRODUCTS, INC. (the "Company") and GUS J. ATHAS,
an individual residing at 1240 Hawthorne Lane, Downers Grove, Illinois 60515
(the "Executive").

WHEREAS, the parties have entered into an Employment Agreement made
effective as of May 22, 1997, as amended, whereby the Company has secured the
exclusive services of the Executive (the "Employment Agreement"); and

WHEREAS, in lieu of a funded supplemental executive retirement plan
pursuant to Section 3(b) of the Employment Agreement, the parties wish to have
the Company provide supplemental executive retirement plan benefits ("SERP
benefits") on an unfunded basis pursuant to the provisions of this Agreement;

NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:

1. Definitions. Unless otherwise defined herein, terms defined in the
Employment Agreement shall be used as so defined.

2. Supplemental Executive Retirement Benefits.

(a) Time of Payment. Subject to satisfaction of the vesting
requirements set forth in Section 2(c) hereof and except as otherwise provided
in this Section 2, the Executive shall be entitled to receive SERP benefits for
a ten-year period, the first such payment to be made on July lst of 2004 and
additional payments to be made on each succeeding July 1 through and including
2013 (each such date being hereinafter called a "Benefit Payment Date").

(b) Amount of Benefit. The amount payable to the Executive on each
Benefit Payment Date shall be such amount as shall be necessary to leave the
Executive with $200,000 net after the payment of applicable income taxes (the
"Maximum SERP Benefit"), or, if less than 100% vesting is attained, such lesser
amount as shall correspond to the degree of vesting attained. In calculating
the amount payable in any year, the Company shall use the federal and state
income tax rates applicable to the Executive (determined in the manner
prescribed below), giving effect to any reduction in the effective federal rate
to reflect the deduction for state income taxes paid. However, no account
shall be given to any interest or penalty arising from Executive's failure to
pay taxes in a timely manner, nor to any excise taxes arising from the
characterization of any payment hereunder as a "parachute payment". For
purposes of this calculation, the federal rate applicable to the Executive
(before reduction to reflect the deduction for state income taxes paid, as set
forth above) in any year shall be the highest actual marginal rate applied in
the Executive's federal income tax return for the preceding year and the state
income tax rate applicable to the Executive shall be the lower of (i) the
effective rate imposed by the state of Illinois for the year of payment, or
(ii) the effective rate applicable to such year in the state in which the
Executive then resides. The Executive shall provide such information as the
Company shall reasonably request to determine the applicable rates.

(c) Vesting. The Executive shall be deemed to have vested in one-
seventh of the Maximum SERP Benefit (i.e., a net after-tax benefit of
$28,571.43 per year for ten years commencing in 2004) on December 31, 1997, and
shall vest in an additional one-seventh of the Maximum SERP Benefit on each of
the next six anniversaries of such date provided the Executive is a full time
Executive of the Company on any such date.

(d) Termination of Employment. In the event the Executive's
employment with the Company shall terminate prior to December 31, 2003, vesting
and payment of SERP benefits hereunder shall be determined in accordance with
the following provisions:

(i) Death or Disability. In the event the Executive's
employment is terminated prior to December 31, 2003 because of his death, then
the Executive shall thereupon be fully vested in the Maximum SERP Benefit and,
in lieu of payment of the Maximum SERP Benefit over a ten-year period
commencing in 2004, the Executive's Beneficiary shall receive a lump sum
payment of death benefits proceeds under a term life insurance policy in the
applicable amount set forth in Exhibit I hereto. The Company shall assist in
applying for such death benefits proceeds as expeditiously as possible
following the Executive's death. In the event the Executive's employment is
terminated prior to December 31, 2003 because of his permanent disability (as
determined under the Company's long-term disability program), then the
Executive shall be vested in his SERP benefits through the date of such
termination, vesting for the year of termination being prorated, on a monthly
basis, through the end of the last complete calendar month preceding such
termination. Thus, for example, if such termination shall occur on September
30, 2000, the Executive shall be deemed to have satisfied three years and nine
months of the vesting requirement and shall be vested in 3.75/7 of the Maximum
SERP Benefit. In the event of such a termination because of permanent
disability, the Executive shall receive his vested net after tax SERP benefit
over a ten-year period commencing in 2004, or, in the sole and absolute
discretion of the Board of Directors of the Company (the "Board"), in lieu of
such benefit, a lump sum payment on the first anniversary of the Executive's
termination of a net after tax actuarially equivalent amount, discounted to
present value at an eight percent (8 %) annual interest rate.

(ii) Termination Without Good Cause or With Good Reason. In
the event that the Executive's employment is terminated prior to December 31,
2003 either by the Company without Good Cause or by the Executive with Good
Reason, then, except as otherwise provided in Section 2(d)(iv) hereof with
respect to approval by the Company's Board of Directors of the date selected by
the Executive to retire from the Company, the Executive shall thereupon be
deemed to be fully vested in the Maximum SERP Benefit, such benefit to be paid
in accordance with Section 2(a). For all purposes of this Section 2, the term
"Good Cause" shall have the meaning ascribed to it in the Employment Agreement
but shall not include the Executive's death or permanent disability, which are
provided for in Section 2(d)(i) above and the term "Good Reason" shall have the
meaning ascribed to it in the Employment Agreement.

(iii) Termination With Good Cause or Without Good Reason. In
the event that the Executive's employment is terminated prior to December 31,
2003 either by the Company with Good Cause or by the Executive without Good
Reason, then the Executive shall be vested in his SERP benefits through the
date of such termination, vesting for the year of termination being prorated,
on a monthly basis, through the end of the last complete calendar month
preceding such termination. Payment of such vested SERP benefits shall be made
in accordance with Section 2(a).

(iv) The Company's Board of Directors shall, in its sole and
absolute discretion, (i) have the right to grant its approval to the date
selected by the Executive to retire from the Company, and (ii) in the event it
grants such approval, to determine the amount of additional vesting, if any, in
the Maximum SERP Benefit, up to 100% vesting, that the Executive shall be
treated as having attained, any benefit attributable to any such additional
vesting to be paid in accordance with Section 2(a) hereof. This Section
2(d)(iv) shall supersede and replace in its entirety Section 5(c)(iii) of the
Employment Agreement to the extent that the latter section relates to vesting
of the Executive's supplemental retirement benefits upon the Executive's
termination of the Employment Agreement and his employment by the Company for
Good Reason, in circumstances where Good Reason exists because of the
Executive's retirement from the Company on a date that is mutually agreed upon
by the Company and the Executive.

3. Acceleration of Payment. Notwithstanding the foregoing Section 2,
the Board, in its sole discretion, may accelerate the payment of all or part of
the Executive's SERP benefits if so requested by the Executive or, after the
Executive's death, by his Beneficiary; provided, however, that any such
accelerated payment may be permitted only in case of an unforeseeable emergency
(within the meaning of Section 457 of the Internal Revenue Code and the
regulations promulgated thereunder) that is caused by an event beyond the
control of the Executive or his Beneficiary and that would result in severe
financial hardship to such person if accelerated payment were not permitted.
Any such accelerated payment shall be limited to the amount necessary to meet
or satisfy the emergency.

4. Designation of Beneficiary. Executive shall file with the Company a
written designation of one or more persons as the Beneficiary who shall be
entitled to receive the amounts, if any, payable hereunder after Executive's
death. Executive may, from time to time, revoke or change his Beneficiary
designation without the consent of any prior Beneficiary by filing a new
designation with the Company. The last such designation received by the
Company shall be controlling; provided, however, that no designation, or change
or revocation thereof, shall be effective unless received by the Company prior
to Executive's death, and in no event shall it be effective as of a date prior
to such receipt. If no such Beneficiary designation is in effect at the time
of Executive's death, or if no designated Beneficiary survives Executive,
Executive's estate shall be deemed to have been designated his Beneficiary and
the executor or administrator thereof shall receive the amount, if any, payable
hereunder after Executive's death. If the Company is in doubt as to the right
of any person to receive all or part of such amount, the Company may retain
such amount until the rights thereto are determined, or the Company may pay
such amount into any court of appropriate jurisdiction and such payment shall
be a complete discharge of the liability of the Company therefor.

5. Administration of the Agreement and Claims.

a) Administration. This Agreement shall be administered by a
committee composed of the Board ("the Committee") which shall have full power,
discretion and authority to interpret, construe and administer this Agreement
and any part thereof

b) Claims for Benefits. Any claim for SERP benefits by Executive or
anyone claiming through Executive under this Agreement shall be delivered in
writing by the claimant to the Committee. The claim shall identify the
benefits being requested and shall include a statement of the reasons why the
benefits should be granted. The Committee shall grant or deny the claim. If
the claim is denied in whole or in part, the Committee shall give written
notice to the claimant setting forth: (a) the reasons for the denial, (b)
specific reference to pertinent provisions of the Agreement on which the denial
is based, (c) a description of any additional material or information necessary
to request a review of the claim and an explanation of why such material or
information is necessary, and (d) an explanation of the Agreement's claim
review procedure. The notice shall be furnished to the claimant within a
period of time not exceeding 90 days after receipt of the claim, except that
such period of time may be extended, if special circumstances should require,
for an additional 90 days commencing at the end of the initial 90-day period.
Written notice of any such extension shall be given to the claimant before the
expiration of the initial 90-day period and shall indicate the special
circumstances requiring the extension and the date by which the final decision
is expected to be rendered.

(c) Appeals Procedure. A claimant who has been denied a claim for
benefits, in whole or in part, may, within a period of 60 days following his
receipt of the denial, request a review of such denial by filing a written
notice of appeal with the Committee. In connection with an appeal, the
claimant (or his authorized representative) may review pertinent documents and
may submit evidence and arguments in writing to the Committee. The Committee
may decide the questions presented by the appeal, either with or without
holding a hearing, and shall issue to the claimant a written notice setting
forth: (a) the specific reasons for the decision and (b) specific reference to
the pertinent provisions of the Agreement on which the decision is based. The
notice shall be issued within a period of time not exceeding 60 days after
receipt of the request for review; except that such period of time may be
extended, if special circumstances (including, but not limited to, the need to
hold a hearing) should require, for an additional 60 days commencing at the end
of the initial 60-day period. Written notice of any such extension shall be
provided to the claimant prior to the expiration of the initial 60-day period.

6. Executive is Unsecured Creditor. Executive shall be a general
unsecured creditor of the Company with respect to his right to receive payments
of SERP benefits hereunder. This Agreement represents a mere promise by the
Company to make payments of deferred compensation (i.e., SERP benefits) in the
future. All payments of deferred compensation to be made hereunder shall be
paid from the general funds of the Company. It is the intention of the Company
and Executive that this Agreement and the Company's obligation to make payments
of deferred compensation hereunder be unfunded both for tax purposes and for
purposes of Title I of ERISA.

7. Substantial Subsidiary Business Disposition. In the event that the
Company engages in a "Substantial Subsidiary Business Disposition", as
hereinafter defined, the Company, after consultation with the Executive, shall
take such steps as are reasonably appropriate to assure the satisfaction of the
Company's obligations to make payments of SERP benefits under this Agreement,
consistent with the intention of the parties that any such steps shall not
cause immediate taxation of the Executive with respect to his SERP benefits and
shall not subject the Company's obligations under this Agreement to the
substantive provisions of Title I of ERISA. For purposes of this paragraph,
"Substantial Subsidiary Business Disposition" shall mean the occurrence of both
(i) the sale of eighty percent (80%) or more of either the stock or the net
value of the assets of any two of the three corporations now wholly owned by
the Company (including, for purposes of determining such net asset value, the
assets of any subsidiary of any such corporation), i.e., Mansfield Plumbing
Products, Inc., DeVilbiss Air Power Company, and Hart & Cooley, Inc., whether
or not such sales occur simultaneously, and (ii) the distribution to the
shareholders of the Company at any time whatsoever subsequent to the first of
such sales, of an aggregate amount equal to more than twenty-five percent (25%)
of the proceeds (whether paid directly from such proceeds or from the company's
general funds), net of transaction expenses, of such sales.

8. No Assignment of Rights. This Agreement shall be binding upon and
inure to the benefit of the Company and its successors and assigns, and
Executive, his Beneficiary and his estate. The rights of Executive, his
Beneficiary and his estate to payments of SERP benefits hereunder are expressly
declared not to be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors of Executive, his Beneficiary or his estate. Any attempted
disposition of such rights shall be null and void.

9. Facility of Payment. If the Committee shall find that any person to
whom any payment is payable under the Agreement is unable to care for his
affairs because of illness or accident, or is a minor, then any payment due
(unless a prior claim therefor shall have been made by a duly appointed
guardian, committee or other legal representative) may, if the Committee so
elects, be paid to his spouse, a child, a parent, or a brother or sister, or
any other person deemed by the Committee to have incurred expenses for such
person otherwise entitled to payment, in such manner and proportions as the
Committee may determine. Any such payment shall be a complete discharge of the
liabilities of the Company under the Agreement as to the amount of the payment.

10. Satisfaction of Employment Agreement. The Executive acknowledges that
the execution of this Agreement by the parties satisfies the Company's
obligation to establish a funded supplemental executive retirement plan as set
forth in Section 3(b) of the Employment Agreement.

11. Notices. Unless either party notifies the other to the contrary, any
notice required hereunder shall be duly given if delivered in person or by
certified or registered first class mail (a) if to the Company, to the
President, Falcon Building Products, Inc., 233 South Wacker Drive, Suite 3500,
Chicago, Illinois 60606, and (b) if to Executive, to the address shown at the
beginning of this Agreement.

12. Entire Agreement. The terms and provisions of this Agreement
constitute the entire agreement between the parties and supersede any previous
oral or written communications, representations or agreements with respect to
the subject matter hereof.

13. Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if the invalid or
unenforceable provision had been omitted.

14. Successors. The Company's obligation hereunder shall be binding legal
obligations of any successor to all or substantially all of the Company's
business by purchase, merger, consolidation or otherwise. The Executive may
not assign this Agreement during his life, and upon his death, this Agreement
shall be binding upon and inure to the benefit of his heirs, legatees and the
legal representative of each.

15. Governing Law; Legal Proceeding. This Agreement shall be governed by
and construed and interpreted pursuant to the laws of the State of Illinois
from time to time in effect. Venue for any legal proceeding arising under this
Agreement shall lie in a court of competent jurisdiction located in Cook
County, Illinois.

16. Amendment. This Agreement may be amended only by a written document
signed by both parties.

IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first above written.

Falcon Building Products, Inc.

By: /s/ Gus J. Athas By: /s/ William K. Hall

Its: Executive Vice President for Its: Chairman and Chief
Administration, General Counsel Executive Officer
& Secretary

EXHIBIT I

FALCON BUILDING PRODUCTS, INC.
LUMP-SUM AMOUNTS
PAYABLE UPON DEATH

Calendar Year Lump Sum
Of Death Payment *

1999 986,000

2000 1,065,000

2001 1,151,000

2002 1,243,000

2003 1,342,000

* The lump-sum amounts set forth in this Exhibit I represent the payments to be
made to the Executive's Beneficiary pursuant to Section 2(d)(i) of the Agreement
upon Executive's death prior to December 31, 2003. The parties have assumed
that such payments will represent death benefit proceeds under a term life
insurance policy insuring the Executive's life and will not be subject to income
taxation upon receipt by the Executive's Beneficiary. In such event, the lump
sum payment shall represent payment in full of the Company's obligations under
the Agreement. If, however, such lump sum payment shall be subject to income
tax upon receipt by the Executive's Beneficiary, then such lump sum payment
shall be increased by such amount as shall be necessary to leave the Executive's
beneficiary with the applicable lump sum amount set forth in this Exhibit I net
after the payment of applicable income taxes.

EXHIBIT 10.2

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT

This agreement (the "Agreement") is made and effective as of April 30,
1999 between FALCON BUILDING PRODUCTS, INC. (the "Company") and SAM A. COTTONE,
an individual residing at 175 North Harbor Drive, Apartment 5107, Chicago,
Illinois 60601 (the "Executive").

NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:

1. Definitions. Unless otherwise defined herein, terms defined in the
Employment Agreement shall be used as so defined.

2. Supplemental Executive Retirement Benefits.

5. Administration of the Agreement and Claims.

16. Amendment. This Agreement may be amended only by a written document
signed by both parties.

IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first above written.

Falcon Building Products, Inc.

By: /s/ Sam A. Cottone By: /s/ William K. Hall
Its: Executive Vice President-Finance Its: Chairman and Chief
and Chief Financial Officer Executive Officer

EXHIBIT I

FALCON BUILDING PRODUCTS, INC.
LUMP-SUM AMOUNTS
PAYABLE UPON DEATH

Calendar Year Lump Sum
Of Death Payment *

1999 986,000

2000 1,065,000

2001 1,151,000

2002 1,243,000

2003 1,342,000

EXHIBIT 99.2

FOR IMMEDIATE RELEASE CONTACT: WILLIAM K. HALL
AUGUST 13, 1999 312.906.9700

FALCON BUILDING PRODUCTS SELLS
DEVILBISS AIR POWER COMPANY TO PENTAIR

Chicago, Illinois - Falcon Building Products, Inc. announced today that it has
entered into a definitive agreement for the sale of its wholly-owned air power
tools division, DeVilbiss Air Power Company, to Pentair, Inc. (NYSE:PNR) for
consideration of $460 million subject to customary closing date adjustments.
The transaction is expected to be completed in September.

DeVilbiss Air Power Company is a leading manufacturer of air compressors,
pressure washers, generators and associated tools and accessories. The
Company's products are directed at the consumer, do-it-yourself and contractor
markets and are sold primarily through the home improvement and building
products retail channel. For the latest twelve months ended June 30, 1999
DeVilbiss generated revenues of approximately $470 million.

William K. Hall, Chief Executive Officer of Falcon Building Products, stated
that: "DeVilbiss has been an extremely strong performer under Falcon's
ownership. The Company has consistently introduced new products, gained new
customers and, as a result, gained substantial market share in its target
markets. The success of DeVilbiss is directly attributable to the commitment
and excellence of the management and employee base led by Bill Allen, DeVilbiss'
President and Chief Executive Officer." Mr. Hall continued: "The Board of
Directors of Falcon determined that the next phase of growth for DeVilbiss would
be enhanced under the stewardship of a large, multi-national corporation with
consumer, commercial and industrial market capabilities. The Board is very
pleased with the agreement reached with Pentair since it delivers the best value
to Falcon's constituents as well as establishes DeVilbiss on a solid foundation
for future growth."

Upon the sale of DeVilbiss, Falcon Building Products, headquartered in Chicago,
will continue to own Hart & Cooley, Inc., a leading manufacturer of heating,
ventilation and air conditioning (HVAC) products, and Mansfield Plumbing
Products, Inc., a manufacturer of high quality plumbing fixtures for the
residential construction and remodeling markets.

* * *

Any statements made about the Company's anticipated financial results are
forward-looking statements subject to risks and uncertainties such as those
described in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998. Actual results may differ materially from anticipated
results.