USA DETERGENTS INC, 10-K, 2000-03-28

USA DETERGENTS INC
10-K, 2000-03-28
SOAP, DETERGENTS, CLEANG PREPARATIONS, PERFUMES, COSMETICS

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UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 0-26568

USA DETERGENTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 11-2935430
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

1735 JERSEY AVENUE
NORTH BRUNSWICK, NEW JERSEY 08902
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(732) 828-1800

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE
None ON WHICH REGISTERED
Not Applicable

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, $.01 par value
(TITLE OF CLASS)

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

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

The number of shares outstanding of the Registrant's Common Stock, as of
March 10, 2000, was 13,825,602 shares. The aggregate market value of the
Registrant's Common Stock held by non-affiliates of the Registrant (based upon
the closing price of such stock on the Nasdaq National Market on March 10, 2000
and the assumption for this computation only that all directors and executive
officers are affiliates) was $34,564,005. Documents Incorporated by Reference:
Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act on
or before April 30, 2000, incorporated by reference into Parts II and III.

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Unless otherwise indicated, all information in this Form 10-K has been adjusted
to reflect (i) a reorganization of the company into a Delaware corporation
effected in August 1995, (ii) the issuance of approximately 88,167 shares of
Common Stock for each share of Common Stock of the Company's predecessor in
connection with the reorganization and (iii) a 3-for-2 stock split effected in
the form of a 50% stock dividend paid on February 9, 1996 (the "Stock Split").
Unless the context otherwise requires, the "Company" or "USA Detergents" shall
mean USA Detergents, Inc., its wholly-owned subsidiaries and its predecessor to
the reorganization.

The Company's quarterly and annual operating results are affected by a wide
variety of factors that could materially and adversely affect actual results,
including competition from other suppliers of laundry and household cleaning
products; changes in consumer preferences and spending habits; the inability to
successfully manage growth; seasonality; the inability to introduce and the
timing of the introduction of new products; the inability to obtain adequate
supplies or materials at acceptable prices; the inability to reduce expenses to
a level commensurate with revenues; and the inability to negotiate acceptable
credit terms with current or prospective lenders. As a result of these and
other factors, the Company may experience material fluctuations in future
operating results on a quarterly or annual basis, which could materially and
adversely affect its business, financial condition, operating results, and
stock price. Furthermore, this document and other documents filed by the
Company with the Securities and Exchange Commission (the "SEC") contain certain
forward looking statements with respect to the business of the Company,
including prospective financing arrangements and the industry in which it
operates. These forward looking statements are subject to certain risks and
uncertainties, including those mentioned above, which may cause actual results
to differ significantly from these forward looking statements. The Company
undertakes no obligation to publicly release the results of any revisions to
these forward looking statements which may be made to reflect events or
circumstances after the date when such statements were made or to reflect the
occurrence of unanticipated events. An investment in the Company involves
various risks, including those mentioned above and those which are detailed
from time to time in the Company's SEC filings including this Form 10-K.

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PART I

ITEM 1. BUSINESS

GENERAL

USA Detergents is a leading manufacturer and marketer of quality, nationally
distributed value brand laundry and household cleaning products. The Company
operates in one industry segment and its products are sold to customers
principally in the United States. The Company currently markets its products in
eight laundry and household product categories and features thirteen distinct
value brands. Two of the Company's brands, XTRA (Registered Trademark) and
Nice'n FLUFFY (Registered Trademark) , according to Information Resources Inc.
Retail Review Data (IRI DATA) currently rank among the five largest brands in
their respective product categories in terms of total retail volume sales in
the United States. XTRA (Registered Trademark) and Nice'n FLUFFY (Registered
Trademark) represented 66.6% and 18.5%, respectively, of the Company's net
sales in 1999. The Company sells its products to large and small retailers
throughout the United States including supermarkets, mass merchandisers,
variety and dollar stores, drug stores and small grocery stores.

HOUSEHOLD PRODUCTS MARKET OVERVIEW

The Company believes the market for laundry and household cleaning products
("Household Products") in which it competes or intends to compete consists of
the following eleven product categories: liquid laundry detergent, powder
laundry detergent, liquid fabric softener, fabric softener sheets, household
cleaners, dish detergent, personal soap products, air fresheners, bleaches, rug
and upholstery cleaners and floor cleaners.

The Company views the market for Household Products as being segmented into
four types of brands: value brands, store brands, midpriced brands and premium
priced brands. The Company believes that consumer purchases of Household
Products are determined, in large part, by price, with certain consumers
willing to pay a premium for leading national brand names and the latest
packaging and technology while other consumers demand value priced brands
incorporating certain features found in premium priced products. The Company
believes the primary characteristics of each of these types of brands are as
follows:

Value Brands. Value brands are sold to retailers and consumers at prices
significantly below most other brands of Household Products. Value brands
generally incorporate packaging features and product quality comparable to
premium priced and midpriced brands and typically are offered with only the
most popular product features and in only the most popular sizes. Value brands
are usually not advertised or promoted directly to the consumer by the value
brand supplier.

Store Brands. Store brands are marketed through various retail outlets under
retailer affiliated (private) labels and are typically manufactured to the
specifications of individual retailers. Store brands typically are supported by
limited retailer advertising.

Mid-Priced Brands. Mid-priced brands generally attempt to capitalize on their
existing or historical brand equity, are supported by limited consumer
advertising and are positioned as comparable but less expensive alternatives to
premium-priced brands.

Premium-Priced Brands. Premium-priced brands focus on promoting brand loyalty
and consumer awareness of product features through significant national
advertising. Premium-priced brands are supported by extensive research and
development to design state-of-the-art packaging and product features and to
develop new products.

BUSINESS STRATEGY

The Company's objective is to be the leading supplier of value brand Household
Products. The Company's business strategy is to enable retailers to increase
sales and realize attractive profit margins on the Company's products while
providing value to consumers. There can be no assurance that the Company will
be successful in continuing to meet its objectives or in successfully pursuing
its strategies. The key elements of the Company's business strategy are
described below:

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VALUE TO RETAILERS

The Company focuses on assisting the retailer to profitably optimize its retail
space in traditionally low margin Household Products categories. The Company
provides retailers with merchandising support relating to product mix, shelf
display and pricing strategies, and promotional programs which are designed to
increase sales of the Company's products. The Company's emphasis on being a
low-cost supplier allows it to sell its Household Products to retailers at
prices which enable these retailers to offer a lower price to consumers while
realizing relatively attractive margins. The Company also seeks to build strong
relationships with retailers by providing them with a high level of customized
service including direct shipments, electronic data interchange, mixed product
pallets and flexible, prompt delivery.

VALUE TO CONSUMERS

The Company offers consumers attractively packaged, quality brand name products
at prices significantly below most other brands. This combination of high
product quality and low prices offers consumers an attractive alternative to
other brands. The Company's emphasis is on cost controls which enables it to
maintain its pricing to the consumer.

BRAND AND CORPORATE IDENTIFICATION

The Company seeks to develop strong brand and corporate name recognition among
retailers and strong brand recognition and brand loyalty among consumers. The
Company believes that colorful and graphic packaging combined with recognizable
product names and the Company's commitment to quality and low price along with
a consistent reliable supply, contribute to strong brand awareness and
purchaser confidence at the consumer level, and generate increased product
sales. The Company further believes that development of corporate and brand
name recognition of the Company and its products among retailers enables the
Company to introduce new products more effectively.

FURTHER MARKET PENETRATION

The Company focuses its sales efforts on supermarkets, mass merchandisers,
variety and dollar stores, drug stores and small grocery stores, particularly
those with a retailing philosophy that closely corresponds to the Company's
high value, low cost marketing concepts. The Company intends to continue
increasing its market penetration by distributing its products through
additional supermarkets, as well as other retail outlets. For the quarter ended
December 31, 1999, IRI DATA indicates that the Company's XTRA (Registered
Trademark) liquid laundry detergent and Nice'n FLUFFY (Registered Trademark)
liquid fabric softener were sold to retailers representing 71.0% and 71.1%,
respectively, of all commodity volume ("ACV") distribution within the food,
drug and mass merchants sector. ACV distribution for a product represents the
percentage of food, drug and mass merchant retail outlets (as measured by
aggregate retail sales) which sold that product during a specified time period
in the United States. The Company intends to use the access to retailers it has
gained through the success of its XTRA (Registered Trademark) and Nice'n
FLUFFY (Registered Trademark) brands to increase the penetration of its other
products through these existing retail outlets.

CONTROLLED EXPANSION OF PRODUCT LINE

The Company introduced 86 new products in 1999 and 23 new products in 1998,
including reformulations and alternate sizes. Net sales of products introduced
in 1999 were $5.5 million, or 2.3% of net sales for the year ended December 31,
1999.

PRODUCTS

The Company currently sells its products primarily in eight Household Product
categories under thirteen distinct brand names. The Company's products include
the following:

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PRODUCT CATEGORY PRIMARY COMPANY BRANDS
---------------- ----------------------
(HOUSEHOLD PRODUCTS)
Liquid Laundry Detergent ......... XTRA (Registered Trademark)
Powder Laundry Detergent ......... XTRA (Registered Trademark)
Liquid Fabric Softener ........... Nice'n FLUFFY (Registered Trademark)
Fabric Softener Sheets ........... Nice'n FLUFFY (Registered Trademark)
Household Cleaners ............... Touch of Glass (Registered Trademark),
Swiss Pine (Registered Trademark),
Tile Action (Trade Mark), Fabulous (Trade
Mark), Plumber's Aid (Registered Trademark),
Captain Shine (Registered Trademark),
Power Scrub (Trade Mark)
Dish Detergent ................... XTRA (Registered Trademark) Plus,
Crystal Shine (Registered Trademark)
Personal Soap Products ........... Fine Care (Registered Trademark)
Air Fresheners ................... Country Air (Registered Trademark)

(AUTOMOTIVE PRODUCTS)
Automotive Products .............. Speedway (Registered Trademark)

The Company's laundry detergents and fabric softeners accounted for an
aggregate of approximately 85.2% and 85.5% of the Company's net sales in 1999
and 1998, respectively, with XTRA (Registered Trademark) liquid laundry
detergent accounting for 51.1% and 49.9% of net sales in these periods,
respectively. The Company's financial results and condition are substantially
dependent on the continued success and growth of sales of these products. A
number of factors could limit sales of these products by the Company, or the
profitability of such sales, including competitive efforts by other
manufacturers of similar products, shifts in consumer preferences or
introduction and acceptance of alternative product offerings.

PRODUCT DESIGN AND DEVELOPMENT

The Company consistently seeks to enhance the value of its products by either
improving their performance and packaging or lowering their cost and
historically has passed substantially all cost savings on to the retailer. The
Company places considerable emphasis on packaging quality and uses premium
quality materials and appealing, colorful graphic designs with the objective of
providing its products with the same or better shelf appeal than premium and
mid-priced brands.

Most of the important product enhancements in the Household Products industry
during the past several years have been developed by the research and
development departments of the premium-priced brand companies and the chemical
companies that supply the Household Products industry. Rather than maintain a
large research and development department, the Company works closely with its
suppliers, distributors and other industry participants to identify, and in
some cases anticipate, technological and design innovations which may be
incorporated into the Company's products. Generally, the Company adopts product
and packaging features after they have gained general market acceptance and
believes that it has typically been one of the first value brand suppliers to
incorporate features comparable to the successful innovations of these larger
competitors. The Company only incorporates features which it believes are
valued by its consumer base. The Company believes that its approach to product
design and development minimizes costs associated with significant research and
development, limits the introduction of unproven innovations and features, and
reduces the need to spend heavily to advertise new product developments or to
educate consumers.

MARKETING AND DISTRIBUTION

The Company sells its products to large and small retailers principally
throughout the United States. The Company's various branded products
historically have been sold primarily to supermarkets, mass merchandisers,
variety and dollar stores, drug stores and small grocery stores. Significant
customers of the Company include WalMart Stores, Inc., Super-Value Inc., KMart
Corp., Fleming Companies Inc., and Walgreen Co. The following table sets forth
the Company's percentage of net sales for fiscal 1997, 1998 and 1999 by retail
distribution channel:

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<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
------------------------------------
DISTRIBUTION CHANNEL 1997 1998 1999
- -------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Supermarkets ...................... 44.3% 46.6% 49.8%
Mass Merchandisers ................ 24.0% 24.1% 19.0%
Variety and Dollar Stores ......... 10.9% 11.6% 11.6%
Drug Stores ....................... 11.2% 7.9% 7.9%
Small Grocery and Other ........... 9.6% 9.8% 11.7%
----- ----- -----
Total .......................... 100.0% 100.0% 100.0%
===== ===== =====
</TABLE>

The Company's largest customer, WalMart accounted for approximately 12.4%,
10.8% and 9.2% of net sales in 1997, 1998 and 1999, respectively. No other
customer of the Company accounted for more than 10% of the Company's net sales
during 1998 or 1999. As is customary in the Household Products industry, the
Company does not have long-term contracts with its customers. A significant
reduction of purchases by any of the Company's largest customers could have a
material adverse effect on the Company's business and results of operations.

As of December 31, 1999, the Company sold its products through its own 38
person national sales department, which included seven regional offices,
supported by a network of 87 independent brokers and sales representatives. In
1999, approximately 67% of the Company's net sales were generated by its
internal sales force with independent broker assistance, with the remaining 33%
of net sales generated without broker assistance. Each salesperson is
compensated by salary and commissions.

The Company seeks to provide retailers with high levels of sales and
merchandising support and delivery services. The Company's sales and
merchandising support and delivery services are designed to assist retailers in
increasing sales of the Company's products through development of improved
packaging, product mix, shelving and pricing strategies, and effective
promotional programs. To provide better delivery service to its customers, the
Company is flexible as to the amounts and combinations of products it will
deliver and generally strives to deliver products within one to seven business
days of receiving an order. With certain retailers, the Company uses electronic
data interchange ("EDI") systems that interface directly with the customer's
product ordering process.

Substantially all product distribution is centralized at the Company's
facilities in New Jersey, Missouri and Illinois. Products generally are
delivered to a retailer's distribution center, although the Company distributes
products representing a limited amount of net sales directly to retail outlets.
Substantially all of the Company's products are delivered by independent
trucking companies.

Beginning in the latter part of the third quarter of 1996 and during 1997, the
Company experienced distribution difficulties and late customer deliveries
primarily attributable to the Company's rapid growth in sales and the
assimilation of three new manufacturing and distribution facilities. The effect
of these factors was an increase in the costs associated with plant
integration, distribution and customer returns and allowances, thus having a
material adverse effect on the results of the Company's operations for 1997.
During 1998 and 1999, the Company made significant improvements in its
operating processes through automation and integration of manufacturing and
maintenance systems, improvements in supply chain planning and inventory
control procedures. While the Company continually works with its customers to
establish and assure efficient distribution, there can be no assurance that its
efforts will be successful or that similar or new problems with distribution
will not occur in the future.

MANUFACTURING AND SUPPLY

During 1999, the Company manufactured substantially all of its liquid products
at its facilities in North Brunswick, New Jersey and in Harrisonville,
Missouri. The manufacturing process at the Company's facilities consists of
blending liquid chemicals and fragrance, which the Company purchases from
independent suppliers, and packaging these blends to create finished products.
Blending is done according to or by modifying formulas provided by the
Company's chemical suppliers. The Company conducts quality control tests on raw
materials on a regular basis and also conducts stringent quality control tests
on its products during and after the manufacturing process. During 1999, the
Company manufactured

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substantially all of its powder products at its powder detergent facility in
Chicago, as well as at its Harrisonville, Missouri facility using its recently
acquired dry-blend powder detergent line. Any extended interruption of
operations at the Company's manufacturing facilities could have a material
adverse effect on the Company's business and results of operations. For the
year ended December 31, 1999, the Company purchased approximately 78.7% of its
liquid chemicals from three suppliers, Stepan Company, Union Carbide and Henkel
Corporation.

Substantially all of the bottles, closures and labels used by the Company
during 1999 at its manufacturing facilities were purchased from Owens Illinois
Plastics Products Inc., Owens Illinois Closure Inc., and Owens-Illinois Labels,
Inc. (collectively referred to as "Owens"). The Owens plants used in connection
with the manufacture of such bottles are located near the Company's
manufacturing facilities and the majority of each Owens plant's production is
dedicated to the Company. In January 1999, the Company and Owens amended the
current agreement between the two companies which expires on December 31, 2003.
The Company has agreed to purchase all currently supplied materials from Owens
in return for Owens' agreement to dedicate certain of its machinery to meet the
Company's packaging requirements and provide additional machinery if necessary.
Certain molds used to manufacture the Company's packaging are not owned by the
Company.

In September 1999, the Company entered into an agreement with Inland Container
to purchase substantially all its corrugated boxes that the Company uses over
the next four years in consideration of certain cost reductions.

The Company's reliance on a sole supplier or limited group of suppliers and
subcontractors involves several risks, including increased risk of inability to
obtain adequate supplies, or assure acceptable quality, and reduced control
over pricing and timely delivery. Although the timeliness, quality and pricing
of deliveries from the Company's suppliers have been acceptable to date and the
Company believes that additional sources of supply generally are available,
there can be no assurance that supplies will be available on an acceptable
basis or that delays in obtaining new suppliers, particularly of plastic
bottles, will not occur. The Company's inability to obtain adequate supplies of
chemicals, packaging materials, manufacturing equipment or finished products at
acceptable prices could have a material adverse effect on the Company's
business. See Item 7 -- "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Current Developments."

In January 1996, the Company entered into a lease for a facility located in
Edison, New Jersey. Until 1997, this facility was used for the manufacture of
the Company's scented candle air freshener products, as well as for additional
warehouse and distribution capacity. In May 1997, the Company, as part of its
cost reduction strategy, closed its Edison, New Jersey facility and moved its
candle manufacturing operation to the Company's North Brunswick, New Jersey
facility. In addition, in 1997 the Company purchased a new facility adjacent to
its existing North Brunswick, New Jersey facility to consolidate its East Coast
warehousing operations. See Item 2. "Properties" and Item 7. "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Restructuring Costs."

The Company also has certain products manufactured to the Company's
specifications by independent contractors. The Company subcontracts the
manufacture of products based on cost effectiveness, manufacturing capacity and
a desire to avoid large capital commitments associated with manufacturing
before the Company can determine the long term success of such products. The
Company's purchases from subcontractors generally are made pursuant to purchase
orders.

In 1998 and continuing during 1999, the Company began manufacturing products on
behalf of certain customers in order to maximize the manufacturing capacity,
operational efficiencies and the technological advancements that the Company
has developed. The Company intends to enter into only those arrangements that
it believes will be beneficial to the Company and fit with its strategic goals.

INVENTORY PRACTICE AND ORDER BACKLOG

The Household Products industry generally is characterized by prompt delivery
of products by suppliers. The Company strives to maintain the time between the
Company's receipt of a customer's order and shipment to the customer at one to
seven business days. The Company generally maintains between two

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and ten days of finished core products inventory. As a result of the short lead
time between the order and delivery of its products, the Company does not
maintain a significant backlog. The Company experienced distribution
difficulties beginning in the latter part of the third quarter of 1996 and
during 1997 attributable to the Company's rapid growth in sales and the
assimilation of three new manufacturing and distribution facilities. See
"--Marketing and Distribution."

INTELLECTUAL PROPERTY

Brand identification is an important element in marketing the Company's
products and the Company recognizes the importance of its trademarks to the
success of its business. The Company obtains trademarks for certain of its
brands and has registered or has applications pending to register certain
trademarks with the United States Patent and Trademark Office. In addition, the
Company has registered or applied for registration of certain of its trademarks
in a number of foreign countries. Due to the importance of package design,
labels, trademarks and trade dress to its business, the Company has taken, and
expects to continue to take, vigorous action to protect against infringement of
its trademarks and copyrights.

Although the Company considers certain of its packaging, labels, trademarks and
designs to be proprietary, certain of this packaging, labels, trademarks and
designs is not protected by copyright or trademark registration. In addition,
the Company from time to time has received, and may receive in the future,
communications from third parties asserting and challenging intellectual
property rights relating to the Company's products, labels, trademarks and
packaging. There can be no assurance that third parties will not successfully
assert claims against the Company with respect to existing or future products
or packaging. Should the Company be found to infringe upon the intellectual
property rights of others, the Company could be required to cease use of
certain products, trademarks, labels or packaging or pay damages to the
affected parties, either of which could have a material adverse effect on the
business and operations of the Company.

Substantial costs also may be incurred by the Company in redesigning its labels
or packaging, in selecting and clearing a new trademark or in defending any
legal action taken against it. Packaging, labels, trademarks and designs
generally are reviewed by the Company's intellectual property counsel prior to
their general adoption and usage.

Manufacturers normally seek United States and foreign patent protection for the
chemical formulations that they develop and numerous third party patents that
relate to laundry and household cleaning products are on file with the United
States Patent and Trademark Office. Formulations of the products produced by
the Company generally are provided by the Company's third party chemical
suppliers who are responsible for the intellectual property, if any, in such
formulations. The Company believes it has been able to introduce products
comparable to those introduced by most of its competitors by using
manufacturing methods or materials that are not protected by patents or by
acquiring patented formulations.

COMPETITION

The Company experiences substantial competition from a number of suppliers of
laundry and household cleaning products, including larger premium priced,
midpriced and private label suppliers. Many of these suppliers have
substantially greater financial, technical, marketing, distribution and other
resources than the Company. In addition, there are several value brand
suppliers which compete directly with the Company. The Company believes its
products compete primarily on the basis of price, product performance and
customer service and the Company does not intend to compete on the basis of
premium priced brand product features.

The Company estimates, based on Information Resources Inc. consumer products
market analysis for the year ended December 31, 1999, that the two largest
suppliers in the laundry and household cleaning products industry were Procter
& Gamble Co. and Unilever N.V. These two suppliers accounted for an aggregate
of approximately 60.6% and 18.2% of 1999 domestic retail sales of liquid
laundry detergents and liquid fabric softeners, respectively. These two product
categories accounted for 51.1% and 17.4%, respectively, of the Company's net
sales in 1999.

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The laundry and household cleaning products industry is characterized by
substantial price competition which is effected through changes in price,
product size and promotions. The Company believes it typically is not affected
by price changes initiated by larger premium priced or midpriced suppliers
whose pricing is substantially higher than the Company's pricing. Some
suppliers of value brands or store brands compete directly with the Company as
low price suppliers. Competitors may attempt to gain market share by offering
products at prices at or below those typically offered by the Company. Such
competitive pricing has in certain cases necessitated and may continue to
necessitate price reductions by the Company and has and may continue to result
in lost orders. There can be no assurance that future price or product changes
by the Company's competitors will not have a material adverse effect on the
Company or that the Company will be able to react with price or product changes
of its own to maintain its current market position.

EMPLOYEES

As of December 31, 1999, the Company had 607 fulltime employees, of whom 74
worked in executive, administrative or clerical capacities, 402 worked in
design and manufacturing, 93 worked in warehouse facilities and 38 worked in
sales. The Company believes that its relations with its employees are good. The
Company has never experienced any interruption of any of its operations due to
a labor disagreement with its employees. The Company also utilizes temporary
employees as necessary.

ENVIRONMENTAL REGULATION

The Company is subject to various federal, state and local environmental laws
and regulations, including those relating to wastewater discharge, air quality
and the storage, handling and disposal of a variety of substances. Some of the
chemicals used by the Company and stored at its manufacturing facility are
materials regulated by federal or state environmental protection agencies.
While the Company has not had to make significant capital expenditures for
environmental compliance, the Company cannot predict with any certainty its
future capital expenditure requirements for environmental compliance because of
continually changing compliance standards and technology. Consequently,
unforeseen expenditures required to comply with such laws and regulations,
including unforeseen environmental liabilities, could have a material adverse
effect on the Company's business. The Company maintains $6.0 million of
insurance coverage for environmental liabilities. See Item 2, "Properties."

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth-certain information with respect to the
executive officers and significant employees of the Company as of December 31,
1999:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- ----- --------
<S> <C> <C>
Uri Evan ................... 64 Chairman of the Board; Chief Executive Officer
Daniel Bergman ............. 42 Vice President; Director of New York Metro Sales; Secretary; Director
Albert DeChellis ........... 50 Vice President of Sales and Marketing
Richard D. Coslow .......... 58 Executive Vice President; Chief Financial Officer; Treasurer
Keith Spero ................ 46 Executive Vice President; General Manager; Assistant Secretary
</TABLE>

URI EVAN has been Chairman of the Board of the Company since 1989 and Chief
Executive Officer since 1993. Mr. Evan is a cofounder of Net Grocer Inc., a
nationwide, low-cost interactive grocery shopping service on the Internet. From
1991 to 1992, he served as Chairman and Chief Executive Officer of I. Rokeach &
Sons Inc., a kosher food manufacturing and marketing company. From 1988 to
1990, Mr. Evan was Chairman and Chief Executive Officer of Newrock Development
Inc., a real estate development company. From 1969 to 1986, Mr. Evan was
President and Chief Executive Officer of Engineering Services Group, a Tel Aviv
based international engineering, printing and publishing conglomerate of which
he was a cofounder. From 1970 to 1982, he served as Chairman of Organization
and Management Sciences Consultants Ltd., an Israeli management and computer
sciences firm of which he was a cofounder.

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<PAGE>

DANIEL BERGMAN was a founder of the Company, has been a Vice President of the
Company since June 1995 and has been Director of New York Metro Sales,
Secretary and a director of the Company since 1988. Between 1987 and 1991, Mr.
Bergman was President of Carnegie International Inc., a retail and export
electronics company, and between 1984 and 1987, Mr. Bergman was a Vice
President of Nikora International Inc., a retail and export electronics
company.

ALBERT DECHELLIS was appointed Vice President of Sales and Marketing in January
2000. He joined the Company in February 1999 as Vice President of Business
Development. From 1994 to 1998, he served as President of the Fragrance
Division and International Division of Renaissance Cosmetics. From 1992 to
1994, he served as President of Benckiser Consumer Products. From 1987 to 1992,
he served as Vice President of Sales for Benckiser Consumer Products. From 1971
to 1987, he held various sales management positions with the Consumer Division
of Ecolab Inc.

RICHARD D. COSLOW has been Executive Vice President and Chief Financial Officer
since August 1998 and was Senior Vice President and Chief Financial Officer
from April 1997 to August 1998. From 1984 to 1997, he was Vice President and
Controller for Toshiba America Consumer Products, Inc., an international
diversified consumer products company. From 1982 to 1984, he was Vice President
of Finance for Endless Energy, Inc. and Jocelyn Management, Inc. From 1980 to
1982 he served as Vice President and Controller for Mego International, Inc.
From 1967 to 1980 he held various positions with Deloitte and Touche including
Senior Audit Manager. Mr. Coslow is a Certified Public Accountant.

KEITH A. SPERO has been Vice President of Distribution since joining the
Company in 1996. In August 1998, he became Executive Vice President and General
Manager of the Company. From 1995 to 1996, he was Director of Delivery Center
Operations at Office Max, Inc. From 1993 to 1995, he was Category Manager of
Plastipak Packaging, Inc. From 1980 to 1993, he held various managerial
positions in distribution operations and production management at The Clorox
Company. From 1975 to 1980, he also held various positions at the Colgate
Pamolive Company.

ITEM 2. PROPERTIES

The Company currently conducts a substantial portion of its operations from a
360,000 square foot facility located in North Brunswick, New Jersey. The
Company's executive offices and its manufacturing, distribution and
administration departments are all located in that facility. The lease relating
to this facility expires in 2004, subject to two five-year extensions. The
Company also leases seven additional sales offices throughout the United
States.

In January 1996, the Company entered into a lease for a 175,000 square foot
facility located in Edison, New Jersey. This facility was used by the Company
for the manufacture of the Company's scented candle air freshener products, as
well as for additional warehouse and distribution capacity. In May 1997, the
Company, as part of its cost reduction strategy, closed its Edison, New Jersey
facility and moved its candle manufacturing operation to the Company's North
Brunswick, New Jersey facility. This facility was subleased to a tenant on June
1, 1998, which subsequently filed for bankruptcy on February 11, 1999. During
the second quarter of 1999, the Company obtained possession of the facility and
subsequently subleased the facility for the remainder of the lease term, which
expires in 2001.

In August 1996, the Company purchased a 360,000 square foot facility located in
Harrisonville, Missouri for the production and distribution of liquid and
powder laundry products.

10
<PAGE>

complete indemnity against any claims or obligations to clean up the property
which may be asserted against the Company and which arise from any hazardous
wastes that existed on the property on the date acquired by the Company. While
the Company believes it has taken adequate steps to protect its interests,
there can be no assurance that the Company will not incur costs in connection
with environmental matters concerning the property. In March 2000, the Company
announced its intention to sell this facility which represents excess capacity.
The Company expects that when and if the transaction is completed, it will
realize in excess of its carrying value and the funds generated by the sale
should be available to retire debt and invest in appropriate market and capital
opportunities.

During June 1997, the Company exercised its purchase option, by the
cancellation of a $2,250,000 promissory note, to acquire a 100,000 square foot
powder plant facility located in Chicago. This facility provides the Company
with most of its powder production requirements. As part of the transaction,
the Company assumed a land lease upon which the Company's Chicago operations
are located. The lease, which expires in 2080, provides for rent to be paid
annually in the amount of $9,000 plus a variable amount adjusted for inflation
for additional parking areas.

For the fiscal year ended December 31, 1999, the Company recorded total rent
expense and real estate taxes for all properties, excluding the Edison
facility, of approximately $1.7 million, offset in part by income from rent and
property tax of approximately $1.2 million.

ITEM 3. LEGAL PROCEEDINGS

On May 5, 1997, a securities class action lawsuit entitled Feldbaum v. USA
Detergents, Inc., et al., No. 97-CV-3227, was filed in the U.S. District Court
for the Eastern District of Pennsylvania against the Company and certain of its
current and former officers and directors. The Feldbaum case subsequently was
transferred to the U.S. District Court for the District of New Jersey. On May
15, 1997, a second securities class action lawsuit entitled Einhorn v. USA
Detergents, Inc. et al., No. 97-2459, was filed against the Company and certain
of its current and former officers and directors in the U.S. District Court for
the District of New Jersey. Since the Einhorn lawsuit was filed, twelve
additional securities class action lawsuits were filed in the U.S. District
Court for the District of New Jersey against the Company and certain of its
current and former officers and directors. The class actions purported to be
brought on behalf of all persons who purchased the Company's common stock
between June 5, 1996, at the earliest, and May 8, 1997, at the latest (the
"putative class period"). The class actions generally alleged that, during the
putative class period, the defendants made false or misleading public statements
and engaged in improper accounting practices, which caused the price of the
Company's common stock to be artificially inflated. The class actions asserted
that the defendants' conduct violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, and SEC Rule 10b-5 promulgated thereunder, as well as
state common law. In June and July 1997, the U.S. District Court for the
District of New Jersey entered orders consolidating all of the pending class
actions with the Einhorn case.

In December 1998, the Company finalized an agreement to settle for $10.0
million the consolidated stockholder class action. The Company's total cost
under the agreement, including legal fees, after insurance and other
participation, was approximately $3.3 million, all of which was paid in
November 1998. The Company recorded a charge in that amount during the second
quarter of 1998. After notice to the class, on December 14, 1998, the court
granted final approval of the proposed settlement and dismissed the class
actions.

In connection with the quarterly and annual results of operations originally
reported by the Company for certain fiscal quarters in 1996 and 1997 and the
fiscal year ended December 31, 1996, the Company received a formal request from
the Securities and Exchange Commission (the "SEC") for the production of
various documents and the testimony of certain current and former employees.
The Company has been providing documentation and other materials to the SEC in
response to the request, and the testimony of certain persons has been taken.

11
<PAGE>

precluded under local ordinances from using wells on its site to draw water for
production purposes. On October 20, 1997, the Company commenced an action in
the Superior Court of New Jersey, Chancery Division, Middlesex County,
challenging NBWC's claim and seeking injunctive relief to prevent NBWC from
taking any steps to discontinue water and sewer service pending resolution of
the claim. As a result of the institution of the litigation, the Company and
NBWC entered into a Consent Order to prevent discontinuation of water and sewer
service. Pursuant to the terms of this Consent Order, the Company has paid
approximately $860,000 to NBWC since October 1997.

On March 10, 1998, the Court entered an Order granting the Company's motion for
partial summary judgment. The Court ruled that local ordinances did not
preclude use of the wells for manufacturing purposes. This ruling was appealed
to the Appellate Division of Superior Court by the defendants.

Since commencement of the litigation, the parties have engaged in substantive
and detailed settlement discussions. On January 11, 1999, the parties agreed in
principle upon a settlement, under which the Company has paid an additional
$40,000 to NBWC, which represents certain unpaid, contested sewer charges for
1998. In addition, the Company agreed to pay a total of $600,000 over three
years plus simple interest at a rate of 5% in return for NBWC granting the
Company a perpetual license at no additional costs to use the wells up to the
full extent ultimately permitted by the NJDEP. The pending litigation,
including the appeal of the March 10, 1998 order has been dismissed.

The Company is also involved in various routine legal proceedings of a nature
it deems to be customary to a company of its size. The Company believes the
ultimate disposition of these actions will not have a material adverse effect
on its financial position and results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

12
<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The Company's shares of common stock (the "Common Stock") are quoted on the
Nasdaq National Market under the symbol "USAD". The Common Stock was initially
offered to the public on August 7, 1995 at $9.67 per share (the "1995 IPO").
The following table sets forth for the periods indicated the high and low
reported last sale prices per share for the Common Stock as reported by The
Nasdaq National Market.

<TABLE>
<CAPTION>
HIGH LOW
----------- ----------
<S> <C> <C>
1998
First Quarter .................................. $ 14.69 $ 7.75
Second Quarter ................................. 17.94 $ 12.25
Third Quarter .................................. 17.25 6.25
Fourth Quarter ................................. 10.25 6.00

1999
First Quarter .................................. $ 7.50 $ 6.00
Second Quarter ................................. 6.88 4.63
Third Quarter .................................. 6.00 4.31
Fourth Quarter ................................. 6.31 2.38

2000
First Quarter (through March 10, 2000) ......... $ 3.13 $ 2.17
</TABLE>

The number of stockholders of record of the Common Stock on March 10, 2000 was
63. On March 10, 2000, the last reported sale price of the Common Stock as
reported by The Nasdaq National Market was $2.50 per share.

SALES OF UNREGISTERED SECURITIES

On December 26, 1997, the Company granted a warrant to purchase 350,000 shares
of Common Stock to Frederick R. Adler, a director of the Company, in
consideration of the issuance of a note from Mr. Adler in the amount of
$175,000 and investment banking services to be rendered by Mr. Adler during the
three year period commencing January 1, 1998. The warrant is exercisable
beginning December 2000 or, if earlier, upon the occurrence of an "Accelerating
Event" as defined in the warrant, at an exercise price of $7.875 per share of
Common Stock (the market price of the Common Stock on the grant date). The
Company valued the warrant at approximately $375,000, the amount specified by
an independent banking and valuation firm engaged by the Company. The value of
the warrant, net of consideration to be received, was deferred and is being
amortized over the three year consulting period.

On February 25, 1998, in connection with the amendment of the terms of the
Company's then-existing credit facility with PNC Bank, National Association
("PNC"), the Company issued to PNC a warrant to purchase 140,000 shares of
Common Stock. The warrant is presently exercisable and has an exercise price of
$12.15 per share, subject to certain anti-dilution adjustments. The warrant
issued to PNC also provides for certain registration rights with respect to the
shares acquired upon exercise of the warrant.

On February 25, 1998, in connection with the amendment of the Company's
then-existing credit facility with PNC, the Company issued to 101 Realty
Associates, L.L.C. a warrant to purchase 98,524 shares of Common Stock. The
warrant is presently exercisable and has an exercise price of $10.50 per share,
subject to certain anti-dilution adjustments.

See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."

13
<PAGE>

DIVIDEND POLICY

The Company has not paid dividends (other than S Corporation distributions
prior to the 1995 IPO) and does not anticipate paying any dividends in the
foreseeable future. Certain of the Company's credit facilities contain
restrictions on the Company's ability to declare and pay dividends.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS EXCEPT PER SHARE
DATA)

The following selected financial data are derived from the audited consolidated
financial statements of the Company. No cash dividends, other than S
Corporation distributions, were paid for any years presented.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1995 1996 1997 1998 1999
------------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales ............................................ $ 104,878 $ 172,424 $ 227,269 $ 220,099 $ 242,726
Cost of goods sold ................................... 72,921 121,498 175,851 147,677 163,964
--------- --------- --------- --------- ---------
Gross profit ......................................... 31,957 50,926 51,418 72,422 78,762
Selling, general and administrative expenses ......... 22,232 43,878 70,336 62,109 72,667
Restructuring costs (2) .............................. 0 0 2,379 730 0
Litigation settlement (1) ............................ 0 0 0 3,266 0
--------- --------- --------- --------- ---------
Income/(loss) from operations ........................ 9,725 7,048 (21,297) 6,317 6,095
Interest expense-net ................................. 544 868 3,232 5,032 4,370
--------- --------- --------- --------- ---------
Income/(loss) before provision (benefit) for
income tax .......................................... 9,181 6,180 (24,529) 1,285 1,725
Income tax provision/(benefit) ....................... 2,156 2,473 (3,448) 137 75
--------- --------- --------- --------- ---------
Income/(loss) before extraordinary charge ............ 7,025 3,707 (21,081) 1,148 1,650
Extraordinary charge ................................. 0 0 0 282 64
--------- --------- --------- --------- ---------
Net income/(loss) .................................... $ 7,025 $ 3,707 $ (21,081) $ 866 $ 1,586
========= ========= ========= ========= =========
Basic income/(loss) per share before
extraordinary charge ................................ $ 0.27 $ (1.53) $ .08 $ .12
Extraordinary charge ................................. 0 0 ( .02) (.01)
--------- --------- --------- ---------
Basic net income/(loss) per share .................... $ 0.27 $ (1.53) $ .06 $ .11
========= ========= ========= =========
Weighted average shares outstanding -- basic ......... 13,589 13,789 13,823 13,826
========= ========= ========= =========
Diluted income/(loss) per share before
extraordinary charge ................................ $ 0.27 $ (1.53) $ .08 $ .12
Extraordinary charge ................................. 0 0 ( .02) .01
--------- --------- --------- ---------
Diluted net income/(loss) per share .................. $ 0.27 $ (1.53) $ 0.06 $ .11
========= ========= ========= =========
Weighted average shares outstanding --
diluted ............................................. 13,840 13,789 14,069 13,867
========= ========= ========= =========
PRO FORMA INCOME STATEMENT DATA (3):
Earnings before income tax as reported ............... $ 9,181
Pro forma income tax provision ....................... 3,756
---------
Pro forma net income ................................. $ 5,425
=========
Pro forma basic net income per share ................. $ 0.43
=========
Weighted average number of shares
outstanding ......................................... 12,494
=========
Pro forma diluted net income per share ............... $ 0.43
=========
Weighted average number of shares outstanding
and dilutive options ................................ 12,553
=========
Working capital ...................................... $ 11,132 $ 35,283 $ 6,703 $ 2,496 $ 8,003
Total assets ......................................... 40,590 98,476 102,808 90,929 94,686
Short-term debt ...................................... 7,320 5,819 2,501 3,334 3,534
Long-term debt ....................................... 1,830 29,311 38,998 32,969 36,953
Stockholders' equity ................................. 20,292 36,099 15,584 17,314 18,900
</TABLE>

14
<PAGE>

- ----------
(1) Litigation settlement includes the Company's total cost under the
agreement to settle the consolidated stockholder class action, including
legal fees. All such costs were expensed and paid in 1998.

(2) Restructuring cost includes the cost of moving the Company's candle
production line and inventory, the write off of related leasehold
improvements and a provision for future lease expenses in connection with
the shut down of the Company's Edison, New Jersey facility.

(3) Pro forma net income represents net income less a provision for income
taxes that would have been required had the Company been taxed as a C
corporation during the entire period presented. The Company elected to be
treated as a Subchapter S corporation until August 10, 1995 (one day
prior to the closing of the Company's Initial Public Offering and, as a
result, was not subject to federal and certain state income taxes prior
to that time. No pro forma adjustments have been made for additional
compensation expense paid to the existing stockholders of the Company who
are officers of the Company associated with the termination of the
Company's corporation status in connection with the 1995 IPO or for a
reduction in interest expense relating to the assumed pay down of
borrowings under the Company's then-existing working capital line of
credit with the net proceeds of the 1995 IPO, because the net effect of
such adjustments is not material.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated certain income
statement data expressed as a percentage of net sales. Certain column totals
set forth may not add due to rounding.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Net sales ............................................ 100.0% 100.0% 100.0%
Cost of goods sold ................................... 77.4 67.1 67.6
----- ----- -----
Gross profit ......................................... 22.6 32.9 32.4
Selling, general and administrative expenses ......... 31.0 28.2 29.9
Restructuring costs .................................. 1.0 0.3 --
Litigation settlement ................................ -- 1.5 --
----- ----- -----
Income/(loss) from operations ........................ ( 9.4) 2.9 2.5
Interest expenses -- net ............................. 1.4 2.3 1.8
----- ----- -----
Income/(loss) before income taxes .................... (10.8) 0.6 0.7
Provision (benefit) for income taxes ................. ( 1.5) -- --
Extraordinary charge ................................. -- 0.1 --
----- ----- -----
Net income (loss) .................................... ( 9.3) 0.4 0.7
===== ===== =====
</TABLE>

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

Net sales for the year ended December 31, 1999 increased 10.3% to $242.7
million from $220.1 million for the year ended December 31, 1998. The increase
was primarily attributable to an increase in unit sales of laundry detergents
and household cleaners due to the expanded distribution of current products and
the introduction of new products.

Gross profit for the year ended December 31, 1999 increased 8.8% to $78.8
million from $72.4 million for the year ended December 31, 1998. Gross profit
as a percentage of net sales decreased to 32.4% for the year ended December 31,
1999 from 32.9% for the same period in 1998. The decrease in gross profit as a
percentage of net sales was primarily attributable to an increase of 0.4% in
direct labor costs.

15
<PAGE>

Selling, general and administrative expenses increased 17.0% to $72.7 million
for the year ended December 31, 1999 from $62.1 million for the year ended
December 31, 1998. As a percentage of net sales, these expenses increased to
29.9% for the year ended December 31, 1999 from 28.2% for the same period in
1998. The increase as a percentage of net sales was primarily due to increases
of 1.3% in marketing funds (co-op advertising, promotional allowances and
slotting amortization), 0.2% in freight to customers and 0.1% in selling
expenses, offset in part by a decrease of 0.3% in general and administrative
expenses.

In 1998, the Company recorded $730,000 of restructuring charges relating to its
future lease commitment (net of sublease income) and associated lease expenses
for its Edison, New Jersey facility which was closed during the second quarter
of 1997. See "Item 2. Properties."

In December 1998, the Company settled for $10.0 million a consolidated
stockholder class action lawsuit. The Company's total cost under the agreement,
including legal fees, after insurance and other participation, was
approximately $3.3 million, and the Company recorded a litigation settlement
charge in that amount during the second quarter of 1998. This amount was paid
in November 1998.

Interest and amortization of deferred financing costs-net decreased to $4.4
million for the year ended December 31, 1999 from $5.0 million for the year
ended December 31, 1998. The higher costs during 1998 were primarily the result
of the accelerated amortization of warrant and bank closing costs in 1998
directly related to the Company's efforts to refinance its then existing credit
facility. See -- "Liquidity and Capital Resources -- Bank Debt."

Income tax provision for the year ended December 31, 1999 of approximately
$75,000 and the income tax provision for the year ended December 31, 1998 of
approximately $137,000 are based on actual tax computations for each of the
periods. The difference between the effective rate and the statutory rate for
1999 relates primarily to the application of the allowable portion of the
Company's net operating loss carry forward.

The extraordinary charge of approximately $64,000 and $282,000 for the years
ended December 31, 1999 and 1998, respectively, relates to the write-off of
deferred financing costs related to the early extinguishments of the PNC debt.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

Net sales for the year ended December 31, 1998 decreased 3.2% to $220.1 million
from $227.3 million in the year ended December 31, 1997. The decrease was
primarily due to a decrease in unit sales of household cleaners and air
fresheners offset by an increase in unit sales of liquid and powder laundry
detergents.

Gross profit for the year ended December 31, 1998 increased 40.9% to $72.4
million from $51.4 million for the year ended December 31, 1997. Gross profit
as a percentage of net sales increased to 32.9% for the year ended December 31,
1998 from 22.6% for the same period in 1997. The increase in gross profit as a
percentage of net sales was primarily attributable to a decrease of 8.1% in
material costs due to more favorable pricing and manufacturing efficiencies,
and to a lesser extent, by decreases as a percentage of net sales in
distribution, manufacturing overhead, direct labor and facilities overhead
costs, resulting from improved cost control measures.

Selling, general and administrative expenses decreased 11.7% to $62.1 million
for the year ended December 31, 1998 from $70.3 million for the year ended
December 31, 1997. As a percentage of net sales, these expenses decreased to
28.2% for the year ended December 31, 1998 from 31.0% for the same period in
1997. The decrease as a percentage of net sales was primarily due to decreases
of .6% in marketing funds (co-op advertising, promotional allowances and
slotting amortization), 1.7% in freight to customers and .7% in selling
expenses, offset by an increase of .2% in general and administrative expenses.

In December 1998, the Company settled for $10.0 million a consolidated
stockholder class action lawsuit. The Company's total cost under the agreement,
including legal fees, after insurance and other

16
<PAGE>

participation, was approximately $3.3 million, and the Company recorded a
litigation settlement charge in that amount during the second quarter of 1998.
This amount was paid in November 1998. On December 14, 1998, the Court granted
final approval of the proposed settlement and dismissed the class action
lawsuit. See "Item 3. Legal Proceedings."

Interest and amortization of deferred financing costs-net increased to $5.0
million for the year ended December 31, 1998 from $3.2 million for the year
ended December 31, 1997, primarily as a result of higher average outstanding
borrowings and the accelerated amortization of warrant and bank closing costs
directly related to the Company's efforts to refinance its then existing credit
facility. See -- "Liquidity and Capital Resources -- Bank Debt."

Income tax provision for the year ended December 31, 1998 of $137,000 and the
income tax benefit for the year ended December 31, 1997 of $3.4 million are
based on actual tax computations for each of the periods. The difference
between the effective rate and the statutory rate for 1998 relates primarily to
the application of the allowable portion of the Company's net operating loss
carry forward.

The extraordinary charge of $282,000 relates to the write-off of deferred
financing costs related to the early extinguishment of the PNC debt.

SEASONALITY

The Company has experienced, and may experience in the future, quarter to
quarter fluctuations in its operating results as a result of the timing and
introduction of new products and the tendency of certain retailers to provide
reduced or less desirable display space for the Company's laundry detergent
products during the holiday shopping season.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1999, the Company's working capital was $8.0 million compared
to working capital of $2.5 million at December 31, 1998.

Net cash provided by operating activities for the year ended December 31, 1999
was $3.8 million compared to $10.3 million in the prior year. The cash provided
by operating activities in 1999 resulted primarily from depreciation and
amortization of $11.1 million, net income of $1.6 million, loss on the disposal
of fixed assets of $0.2 million and decreased inventory of $0.2 million offset,
in part by an increase in accounts receivable of $3.9 million, an increase in
prepaid expenses, cash overdraft and other current and non-current assets of
$3.0 million, a decrease in accounts payable and accrued expenses of $2.1
million, a decrease in the provision for customer allowances and doubtful
accounts of $0.1 million and amortization of deferred rent of $0.2 million.

Net cash used in investing activities for the year ended December 31, 1999 was
$4.6 million relating primarily to the acquisition and upgrades of production
equipment and information systems. The Company anticipates that capital
expenditures for 2000 will be approximately $5.0 million, which includes
expenditures for continued enhancements to the Company's manufacturing,
distribution and information systems.

Net cash provided by financing activities for the year ended December 31, 1999
was $1.0 million which resulted primarily from an increase in net borrowings
under the Company's credit facilities of $6.2 million offset in part by an
increase in restricted funds of $2.0 million, a decrease in notes payable of
$2.0 million, an increase in deferred financing costs of $.7 million, a
decrease in other current and non-current liabilities of $.5 million.

17
<PAGE>

Bank Debt and Other Debt

On February 25, 1998, the Company and PNC Bank National Association ("PNC")
entered into an amended and restated Loan and Security Agreement, which
replaced the Company's prior credit facility with PNC and which waived all
defaults under the prior facility. Under the amended agreement, the Company
made a principal payment of $5.0 million and granted PNC a security interest in
substantially all of the assets of the Company. The balance of the then
outstanding principal indebtedness, approximately $35.0 million, was extended
to January 4, 1999. Of the $5.0 million paid to PNC, $4.0 million was loaned to
the Company by 101 Realty Associates, L.L.C. ("101 Realty"), at a rate of 9.5%
per annum. 101 Realty is a New Jersey limited liability company owned by Uri
Evan, the Company's Chairman and Chief Executive Office, Dinah Evan, Mr. Evan's
wife, Daniel Bergman, a Director and beneficial owner of more than 5% of the
Company's outstanding Common Stock, and Frederick J. Horowitz, Mark Antebi and
Joseph Cohen, each of whom was the beneficial owner of more than 5% of the
Company's outstanding Common Stock at the time the loan was made. The loan from
101 Realty was secured by a second mortgage on one of the Company's properties,
subject to a first mortgage held by PNC in the amount of $5 million.
Additionally, each of Messrs. Evan, Horowitz, Bergman, Cohen and Antebi jointly
and severally guaranteed repayment of an additional $5 million of the Company's
then outstanding indebtedness to PNC.

In connection with the transaction, PNC received a warrant to purchase 140,000
shares and 101 Realty received a warrant to purchase 98,524 shares of the
Company's Common Stock. In conjunction with the issuance of the PNC warrant,
the Company recognized, in the first quarter of 1998, a deferred charge of
approximately $415,000, which was originally amortized over the period ending
June 30, 1999. In connection with the issuance of 101 Realty warrant, the
Company recognized a deferred charge of $335,000 in the first quarter of 1998.
This charge was deferred and is being amortized over the period ending March
31, 2001.

On August 14, 1998, the Company entered into a Loan and Security Agreement (the
"FINOVA Agreement") with a syndicate of lenders including FINOVA Capital
Corporation ("FINOVA"), as agent for itself and other lenders, providing the
Company with up to $48.5 million of available financing. The Agreement consists
of a five-year revolving credit facility of up to $40.0 million, subject to
availability based on eligible accounts receivable and inventory, and two
five-year term loans aggregating $8.5 million. The revolving credit facility
bears interest at rate of prime plus .75%. On December 31, 1999, the rate was
9.25% and net availability to the Company under the revolving credit facility
was $5.3 million.

Term Loan A in the original amount of $6.4 million is repayable in 59 fixed
monthly principal payments of $76,190 and a final principal payment of
$1,904,767. This loan bears interest at a fixed rate of 9.33%. Term Loan B in
the original amount of $2.1 million is repayable in 60 fixed monthly principal
payments of $35,000. This loan bears interest at prime plus 2.0%. On December
31, 1999, the interest rate was 10.50%.

The FINOVA Agreement contains various covenants which include, among other
things, specified levels of debt to equity, current ratios, a minimum net worth
and a minimum senior debt service coverage ratio. The FINOVA Agreement also
prohibits the payment of dividends and the incurrence of new debt. Amounts
outstanding under the FINOVA Agreement are secured by a first priority security
interest in substantially all of the assets of the Company and its
subsidiaries, except for certain real estate.

Twenty-five million dollars of the initial proceeds form the FINOVA Agreement
was used to pay down the Company's credit facility with PNC. In connection with
this payment, the due date of the remaining $10.1 million of debt owed to PNC
was extended until June 30, 1999, personal guarantees by certain stockholders
of the Company aggregating $5.0 million were cancelled and the number of shares
of Common Stock issuable to PNC pursuant to a previously issued warrant was
fixed at a minimum level of approximately 140,000 shares, subject to certain
anti-dilution provisions.

On February 26, 1999, the Company refinanced its existing indebtedness by
amending and restating the FINOVA Agreement to provide for an additional $14.5
million of financing. The additional financing is to be repaid in monthly
installments based upon a ten-year amortization schedule with interest at prime

18
<PAGE>

plus 1.0%. At December 31, 1999, the interest rate was 9.5%. All indebtedness
to FINOVA is due in September 2003. The Company used $10.1 million of the
additional facility to pay off its remaining indebtedness to PNC. An additional
$4.0 million of the proceeds were set aside for the repayment of the Company's
indebtedness to 101 Realty, provided the Company meets certain working capital
levels and achieves specified profitability levels. In May, 1999 the Company
released $2.0 million of the reserved proceeds to pay down a portion of its
indebtedness to 101 Realty. The FINOVA Agreement provides for the reserved
funds to be used to pay down a portion of the $14.5 million of additional
indebtedness to the extent the Company does not meet the working capital and
profitability levels required for the repayment of the 101 Realty indebtedness.
The increase in availability under the FINOVA Agreement required the granting
of a first mortgage security interest to FINOVA and the other participating
lenders on the Company's real property located in New Jersey and Missouri.

During the year ended December 31, 1999, the Company recorded an extraordinary
charge of approximately $64,000 related to the early termination of the
Company's indebtedness to PNC.

The Company requires the availability of sufficient cash flow and borrowing
capacity to finance its operations, meet its debt service obligations and fund
future capital expenditure requirements. Management believes the Company's
present credit facility will adequately support its ongoing, debt service and
capital expenditure requirements for at least the next twelve months. The
Company's operating plan for the remainder of 2000 includes improving its cost
control programs and selling a distribution facility. If the Company is
successful in selling its distribution facility, management believes it will
realize an amount in excess of its current carrying value.

ENVIRONMENTAL REGULATION

CURRENT DEVELOPMENTS

In 1999, the cost of resin and paperboard increased approximately $.17 per
pound and $50 per ton, respectively. These increases have impacted and will
continue to impact the cost of plastic bottles and corrugated boxes that the
Company uses. In the first two moths of fiscal 2000 the cost of fuel used by
the companies independent freight carriers has increased $.19 per gallon. Based
on the above, our freight carriers have passed some of these costs onto the
Company. There can be no assurance that future price increases from the
Company's suppliers will not have a material adverse effect on the Company or
that the Company will be able to react with price or product changes or other
manufacturing efficiencies of its own to offset these price increases.

INFLATION

Other than described under the heading "Current Developments" above, the
Company does not believe that the relatively moderate rates of inflation which
recently have been experienced in the United States have had a significant
effect on net sales or profitability.

NEW FINANCIAL ACCOUNTING STANDARDS

In June, 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities". SFAS 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities, requiring the recognition of all derivatives as either
assets or liabilities and to measure those instruments at fair value, as well
as to identify the conditions for which a derivative may be specifically
designated as a hedge. SFAS 133 will be effective for the Company's first
quarter ending December 13, 2001. The Company does not expect any material
impact on the financial conditions or operations from adoption of SFAS No. 133.

19
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Fair Value of Financial Instruments -- The estimated fair values of financial
instruments have been determined by the Company using available market
information and appropriate valuation methodologies. However, considerable
judgment is required in interpreting market data to develop the estimates of
fair value. Accordingly, the estimates presented herein are not necessarily
indicative of the amounts that the Company could realize in a current market
exchange.

The Company has not entered into, and does not expect to enter into, financial
instruments for trading or hedging purposes.

The Company is currently exposed to material future earnings or cash flow
exposures from changes in interest rates on long-term debt obligations since
the majority of the Company's long-term debt obligations are at variable rates.
The Company does not currently anticipate entering into interest rate swap
and/or similar instruments.

The following methods and assumptions were used to estimate the fair value of
the financial instruments: Trade accounts receivable and payables and accrued
expenses -- The fair value of these receivables and payables equal their
carrying value because of their short maturities.

Revolving Credit Line and Terms Loans -- Interest rates that are currently
available to the Company for issuance of debt with similar terms and remaining
maturities are used to estimate fair value for debt issues for which no market
quotes are available. The carrying amount of these debt facilities is believed
to be a reasonable estimate of fair value. The fair market value of the
Company's short and long-term debt is not contingent upon interest rates.

Interest Rates. The Company is exposed to market risk from changes in the
interest rates on a significant portion of its outstanding indebtedness.
Certain outstanding balances under the Credit Agreement bear interest at a
variable rate based on a margin over Prime. Based on the amount outstanding as
of December 31, 1999, a 100 basis point change in interest rates would result
in an approximate $334,000 change to the Company's annual interest expense. For
fixed rate debt interest rate changes affect the fair market value of such
debt, but do not impact the Company's earnings or cash flows.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See financial statements and supplementary data required pursuant to this Item
beginning on page F-1 of this Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

20
<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information contained under the heading "Proposal No. 1 -- Election of
Directors" in the Company's definitive Proxy Statement (the "Proxy Statement")
relating to the Company's Annual Meeting of Stockholders scheduled to be held
on May 17, 2000, to be filed pursuant to Regulation 14A of the Securities
Exchange Act of 1934 with the Securities and Exchange Commission, is
incorporated herein by reference. See "Business -- Executive Officers of the
Registrant" in Item 1 of this Report on Form 10-K for information regarding the
Company's executive officers.

ITEM 11. EXECUTIVE COMPENSATION

The information contained under the heading "Executive Compensation" in the
Company's Proxy Statement is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information contained under the heading "Beneficial Ownership of Common
Stock" in the Company's Proxy Statement is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information contained under the headings entitled "Executive Compensation
- -- Compensation Committee Interlocks and Insider Participation" and "Certain
Transactions" in the Company's Proxy Statement is incorporated herein by
reference.

21
<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K

(a) 1. Financial Statements.

The Financial Statements and Financial Statement Schedules are listed
in the accompanying index to financial statements beginning on page
F-1 of this report.

2. Financial Statement Schedule.

Schedule II -- Valuation and Qualifying Accounts

3. Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
3.1 Certificate of Incorporation. (1)

3.2 Amended and Restated By-Laws of the Registrant. (5)

4.1 See Exhibits 3.1 and 3.2 for provisions of the Certificate of Incorporation and By-Laws
of the Registrant defining the rights of holders of Common Stock of the Registrant. (1)

4.2 Specimen Common Stock Certificate. (1)

4.3 Form of Registration Rights Agreements between the Registrant, Frederick R. Adler
and Blair Effron. (1)

10.1 Lease Agreement dated January 15, 1993 between Maurice M. Weill, Trustee for
GEEMAC Property, and the Registrant. (1)

10.2 Supply Agreement dated November 29, 1994 between Owens-Illinois Plastic Products
Inc., Owens-Illinois Closure Inc. and the Registrant. (1)

10.3 Amendment No. 2 dated August 1, 1997 to Supply Agreement, dated November 29,
1994, between Owens-Illinois Plastic Products Inc., Owens-Illinois Plastic Products Inc.,
Owens-Illinois Closure Inc. and the Registrant. (2) (9) (confidentiality note)*

10.4 Amended and Restated Employment Agreement with Uri Evan dated
January 1996. (2)**

10.5 Employment Agreement with Daniel Bergman.

10.6 Forms of Employment Agreement with Frank Corella.

10.7 Loan Agreement dated April 15, 1993 between the New Jersey Economic Development
Authority and the Registrant. (1)

10.8 Reimbursement Agreement dated April 15, 1993 between Banque Nationale de Paris,
Houston Agency and the Registrant. (1)

10.9 Security Agreement dated April 15, 1993 between the New Jersey Economic
Development Authority and the Registrant. (1)

10.10 Amended and Restated Loan Agreement dated February 25, 1998 between PNC Bank,
N.A. and the Registrant.

10.11 1995 Stock Option Plan. (1)**

10.12 Stock Option Plan for Non-Employee Directors. (1)**

10.13 Form of Directors and Officers Indemnity Agreement. (1)

10.14 Lease Agreement dated January 26, 1996 between M&E Co. and the Registrant. (2)

10.15 Purchase and Sale Agreement dated January 22, 1997 between The Okonite Company,
Inc. and the Registrant. (3)
</TABLE>

22
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
10.16 Letter Agreement dated May 5, 1997 between the Registrant and Harold J. Macsata. (4)

10.17 Letter Agreement dated April 14, 1997 between the Registrant and Mark Antebi. (4)

10.18 Letter Agreement dated April 14, 1997 between the Registrant and Joseph Cohen. (4)

10.19 Employment Agreement dated March 26, 1997 between the Registrant and Richard D.
Coslow. (4)**

10.20 Employment Agreement, dated July 31, 1997 between the Registrant and
Guilio Perillo. (4)**

10.21 Stock Purchase Agreement dated June 30, 1997 between the Registrant, Big Cloud
Powder Corporation and Chicago Contract Powder Corporation. (4)

10.22 Warrant dated February 25, 1998 issued by the Registrant to PNC Bank, N.A.5

10.23 Mortgage and Security Agreement dated February 25, 1998 between the Registrant and
PNC Bank, N.A. (5)

10.24 Letter Agreement dated February 25, 1998 between the Registrant and 101 Realty
Associates, L.L.C. (5)

10.25 Mortgage and Security Agreement dated February 25, 1998 between the Registrant and
101 Realty Associates, L.L.C. (5)

10.26 Warrant dated December 26, 1997 issued by the Registrant to Frederick R. Adler. (5)

10.27 Agreement dated December 26, 1997 between Frederick R. Adler and the
Registrant. (5)

10.28 Warrant dated April 30, 1998 issued by the Registrant to 101 Realty Associates,
L.L.C. (6)

10.29 Amended and Restated Warrant dated August 14, 1998 issued by the Registrant to PNC
Bank, N.A. (7)

10.30 Second Amended and Restated Loan and Security Agreement dated August 14, 1998
between the Registrant and PNC Bank, N.A. (7)

10.31 Amended and Restated Loan and Security Agreement dated February 25, 1999 between
the Registrant and a syndicate of lenders including FINOVA Capital Corporation, First
Source Financial LLP and LaSalle Business Credit, Inc. (8)

10.32 Amended and Restated Revolving Loan Note dated February 25, 1999 issued by the
Registrant to FINOVA Capital Corporation. (8)

10.33 Amended and Restated Term Loan A Note dated February 25, 1999 issued by the
Registrant to FINOVA Capital Corporation. (8)

10.34 Amended and Restated Term Loan B Note dated February 25, 1999 issued by the
Registrant to FINOVA Capital Corporation. (8)

10.35 Amended and Restated Agency Agreement dated February 25, 1999 between the
Registrant to FINOVA Capital Corporation, First Source Financial LLP and LaSalle
Business Credit. (8)

10.36 Term Loan C Note, dated February 25, 1999 issued by the Registrant to FINOVA
Capital Corporation

10.37 Amendment No. 1 to Amended and Restated Loan and Security Agreement dated as of
November 5, 1999 between Registrant and FINOVA Capital Corporation.

10.38 Subordination Agreement, dated as of February 25, 1999, by and among the Registrant,
101 Realty Associate, L.L.C. and FINOVA Capital Corporation (for itself and certain
other institutions). (9)

10.39 West Coast Supply Agreement, dated December 7, 1995, between the Registrant and
Owens-Brockway Plastic Product. (9)***
</TABLE>

23
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
10.40 Kansas City/Harrisonville, MO Supply Agreement, dated as of December 18, 1996,
between the Registrant and Owens-Brockway Plastic Products Inc. (9)***

10.41 Amendment to Label Supply Agreement between Owens-Illinois Labels, Inc. and USA
Detergents which was effective January 1, 1997 between the Registrant and
Owens-Illinois Closure, Inc.(9)***

10.42 Trigger Sprayer Supply Agreement, dated May 29, 1997, between the Registrant and
Owens-Illinois Closure, Inc.***

10.43 Supply Agreement, dated July 15, 1997, between the Registrant and Owens-Illinois
Labels Inc.***

10.44 Amendment to Existing Supply Agreements between USA Detergents and
Owens-Illinois Plastic Products Inc., Owens-Illinois Closure Inc. and Owens-Illinois
Labels Inc., dated January 1, 1999, between the Registrant and Owens-Illinois Plastic
Products Inc., Owens-Illinois Closure Inc. and Owens-Illinois Labels, Inc. (9)***

21 Subsidiaries of the Company. (5)

23 Consent of Deloitte & Touche LLP.

27 Financial Data Schedule.
</TABLE>

(b) Reports on Form 8-K:

NONE.

* Confidentiality Requested, confidential portions have been omitted and
filed separately with the Commission, as required by Rule 406(b) of the
Securities Act of 1933.

** Management contract, or compensatory plan or arrangement.

1. Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (No. 33-93488), which exhibit is incorporated herein by reference.

2. Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (No. 333-1386), which exhibit is incorporated herein by reference.

3. Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, which exhibit is incorporated herein
by reference.

4. Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997, which exhibit is incorporated
herein by reference.

5. Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, which exhibit is incorporated herein
by reference.

6. Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1998, which exhibit is incorporated
herein by reference.

7. Previously filed as an exhibit to the Company's Quarterly report on Form
10-Q for the quarter ended September 30, 1998.

8. Previously filed as an exhibit to the Company's Quarterly report on Form
10-Q for the quarter ended March 30, 1999.

9. Previously filed as an exhibit to the Company's Quarterly report on Form
10-Q for the quarter ended June 30, 1999.

24
<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Reports ........................................................ F-2

Consolidated Balance Sheets at December 31, 1999 and 1998 ............................ F-3

Consolidated Statements of Operations for the years ended December 31, 1999, 1998
and 1997 ............................................................................ F-4

Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998
and 1997 ............................................................................ F-5

Consolidated Statements of Stockholders' Equity for the years ended December 31, 1999,
1998 and 1997 ....................................................................... F-6

Notes to Consolidated Financial Statements for the years ended December 31, 1999, 1998
and 1997 ............................................................................ F-7
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of USA Detergents, Inc.:

We have audited the accompanying consolidated balance sheets of USA Detergents,
Inc. and subsidiaries (the "Company") as of December 31, 1999 and 1998, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1999. Our
audits also included the financial statement schedule listed in the index at
Item 14(a)(2). These consolidated financial statements and the financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on the consolidated financial
statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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, such consolidated financial statements present fairly, in all
material respects, the financial position of USA Detergents, Inc. and
subsidiaries at December 31, 1999 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1999 in conformity with generally accepted accounting principles. Also, in
our opinion, the financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.

/s/ Deloitte & Touche LLP

New York, New York
March 3, 2000

F-2
<PAGE>

USA DETERGENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1999 1998
------------ ------------
<S> <C> <C>
Current assets:
Cash ....................................................................... $ 254 $ --
Accounts receivable, net of customer allowances and doubtful accounts of
$997 and $1,111 at December 31, 1999 and 1998, respectively................ 23,662 19,683
Inventories ................................................................ 14,504 14,668
Refundable income taxes .................................................... 3,127 3,221
Prepaid expenses and other current assets .................................. 4,599 4,591
--------- ---------
Total current assets .................................................... 46,146 42,163
Property and equipment -- net .............................................. 43,417 45,245
Restricted funds ........................................................... 2,002 --
Deferred financing costs ................................................... 1,604 1,376
Other non-current assets ................................................... 1,517 2,145
--------- ---------
Total assets ............................................................ $ 94,686 $ 90,929
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt .......................................... $ 3,534 $ 3,334
Cash overdraft ............................................................. 1,229 476
Accounts payable ........................................................... 17,785 22,670
Accrued expenses ........................................................... 15,255 12,457
Other current liabilities .................................................. 340 730
--------- ---------
Total current liabilities ............................................... 38,143 39,667
Long-term debt -- net of current portion ................................... 34,953 32,969
Long-term note payable ..................................................... 2,000 --
Other non-current liabilities .............................................. 19 90
Deferred rent payable ...................................................... 671 889
--------- ---------
Total liabilities ....................................................... 75,786 73,615
--------- ---------
Commitments and Contingencies
Stockholders' equity:
Preferred stock -- no par value; authorized 1,000,000 shares, none issued .. -- --
Common stock -- $.01 par value; authorized 30,000,000 shares, issued and
outstanding 13,825,602 shares at December 31, 1999 and December 31,
1998 respectively ......................................................... 138 138
Additional paid-in capital ................................................. 29,200 29,200
Deficit .................................................................... (10,263) (11,849)
Note receivable from shareholder ........................................... (175) (175)
--------- ---------
Total stockholders' equity .............................................. 18,900 17,314
--------- ---------
Total liabilities and stockholders' equity .............................. $ 94,686 $ 90,929
========= =========
</TABLE>

See Notes to Consolidated Financial Statements.

F-3
<PAGE>

USA DETERGENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Net sales ............................................................ $ 242,726 $ 220,099 $ 227,269
Cost of goods sold ................................................... 163,964 147,677 175,851
--------- --------- ---------
Gross profit ......................................................... 78,762 72,422 51,418
--------- --------- ---------
Selling, general and administrative .................................. 72,667 62,109 70,336
Restructuring costs .................................................. -- 730 2,379
Litigation settlement ................................................ -- 3,266 --
--------- --------- ---------
72,667 66,105 72,715
--------- --------- ---------
Income (loss) from operations ........................................ 6,095 6,317 (21,297)
Interest and amortization of deferred financing costs -- net ......... 4,370 5,032 3,232
--------- --------- ---------
Income (loss) before provision (benefit) for income taxes ............ 1,725 1,285 (24,529)
Provision (benefit) for income taxes ................................. 75 137 (3,448)
--------- --------- ---------
Income (loss) before extraordinary charge ............................ 1,650 1,148 (21,081)
Extraordinary charge ................................................. 64 282 --
--------- --------- ---------
Net income (loss) .................................................... $ 1,586 $ 866 $ (21,081)
========= ========= =========
Basic income (loss) per share before extraordinary charge ............ $ .12 $ .08 $ (1.53)
Extraordinary charge ................................................. .01 .02 --
--------- --------- ---------
Basic net income (loss) per share .................................... $ .11 $ .06 $ (1.53)
========= ========= =========
Weighted average shares outstanding -- basic ......................... 13,826 13,823 13,789
========= ========= =========
Diluted income (loss) per share before extraordinary charge .......... $ .12 $ .08 $ (1.53)
Extraordinary charge ................................................. .01 .02 --
--------- --------- ---------
Diluted net income (loss) per share .................................. $ .11 $ .06 $ (1.53)
========= ========= =========
Weighted average shares outstanding -- diluted ....................... 13,867 14,069 13,789
========= ========= =========
</TABLE>

See Notes to Consolidated Financial Statements.

F-4
<PAGE>

USA DETERGENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1999 1998 1997
----------- ----------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ...................................................... $ 1,586 $ 866 $ (21,081)
Adjustments to reconcile net income/(loss) to net cash
provided by operating activities:
Depreciation and amortization .......................................... 6,183 5,259 4,223
Loss on disposal of fixed assets ....................................... 235 -- --
Amortization of deferred financing costs ............................... 532 1,818 490
Amortization of slotting ............................................... 3,594 4,081 4,149
Other amortization ..................................................... 755 692 578
Change in the provision for customer allowances and doubtful
accounts ............................................................. (114) 244 (482)
Change in deferred rent ................................................ (203) (127) (103)
Decrease in deferred tax asset ......................................... -- -- 534
Decrease in deferred tax liability ..................................... -- -- (735)
Changes in operating assets and liabilities:
(Increase)/decrease in accounts receivable ............................. (3,865) 4,422 3,456
Decrease in inventories ................................................ 164 1,365 11,795
Increase in prepaid expenses and other current assets .................. (3,602) (4,274) (4,492)
Increase in other non-current assets ................................... (195) (360) (124)
Increase in cash overdraft ............................................. 753 476 --
(Decrease)/increase in accounts payable and accrued expenses ........... (2,087) (8,012) 17,911
(Increase)/decrease in refundable income taxes ......................... 94 3,899 (2,865)
--------- -------- ---------
Net cash provided by operating activities ........................... 3,830 10,349 13,254
--------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment ..................................... (4,590) (4,832) (20,862)
--------- -------- ---------
Net cash used in investing activities ............................... (4,590) (4,832) (20,862)
--------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of current portion of long-term debt .................... -- (1,226) (305)
Repayment of PNC debt .................................................. (10,081) -- --
Net proceeds from/(repayments to) credit facilities .................... 16,265 (7,695) 6,674
Increase in restricted funds ........................................... (2,002) -- --
(Decrease)/increase in note payable .................................... (2,000) 4,000 --
(Decrease)/increase in other current liabilities ....................... (405) 527 38
Increase in/(repayments of) Oracle purchase obligation ................. -- (1,367) 1,367
Increase in deferred financing costs ................................... (692) (1,808) (1,057)
(Decrease)/increase in other non-current liabilities ................... (71) 90 --
Exercise of options .................................................... -- 114 366
--------- -------- ---------
Net cash provided by/(used in) financing activities ................. 1,014 (7,365) 7,083
--------- -------- ---------
Net increase/(decrease) in cash ......................................... 254 (1,848) (525)
Cash at beginning of period ............................................. -- 1,848 2,373
--------- -------- ---------
Cash at December 31, .................................................... $ 254 $ $ 1,848
========= ======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS FOR
OPERATING ACTIVITIES:
Interest paid .......................................................... $ 3,740 $ 3,388 $ 2,738
========= ======== =========
Income taxes paid ...................................................... $ 226 $ 113 $ 263
========= ======== =========
Income tax refunds received ............................................ $ 173 $ 3,956 $ 645
========= ======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS FROM
INVESTING AND FINANCING ACTIVITIES:
Value of warrants issued in connection with bank and related party
financings ........................................................... $ 750 $ 375
======== =========
Exercise of purchase option to acquire a plant facility by cancellation
of note .............................................................. $ 2,250
=========
</TABLE>

See Notes to Consolidated Financial Statements.

F-5
<PAGE>

USA DETERGENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
----------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
-------- -------- -------------- --------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1996 -- -- $13,752,570 $ 138
Net Loss ...........................
Warrant issued in connection
with consulting agreement .........
Stock options exercised ............ 53,709
----------- -----
BALANCE, December 31, 1997 -- -- 13,806,279 138
Net income .........................
Warrants issued in connection
with financing agreements .........
Stock options exercised ............ 19,323
----------- -----
BALANCE, December 31, 1998 13,825,602 138
Net income ......................... -- -- ----------- -----
BALANCE, December 31, 1999 -- -- 13,825,602 $ 138
== == =========== =====

<CAPTION>
ADDITIONAL TOTAL
PAID-IN RETAINED NOTE STOCKHOLDERS'
CAPITAL EARNINGS RECEIVABLE EQUITY
------------ ------------ ----------- --------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1996 $27,595 $ 8,366 -- $ 36,099
Net Loss ........................... (21,081) (21,081)
Warrant issued in connection
with consulting agreement ......... 375 (175) 200
Stock options exercised ............ 366 366
------- --------- ------ ---------
BALANCE, December 31, 1997 28,336 (12,715) (175) 15,584
Net income ......................... 866 866
Warrants issued in connection
with financing agreements ......... 750 750
Stock options exercised ............ 114 114
------- --------- ------ ---------
BALANCE, December 31, 1998 29,200 (11,849) (175) 17,314
Net income ......................... 1,586 1,586
------- --------- ------ ---------
BALANCE, December 31, 1999 $29,200 $ (10,263) $ (175) $ 18,900
======= ========= ====== =========
</TABLE>

See Notes to Consolidated Financial Statements.

F-6
<PAGE>

USA DETERGENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

1. PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

USA Detergents, Inc. (the "Company") manufactures and markets nationally
distributed value brand laundry and household cleaning products. The Company
operates in one industry segment and its products are sold to customers
principally in the United States.

Basis of Presentation -- The accompanying Financial Statements include the
accounts of the Company and its wholly owned subsidiaries. All intercompany
accounts and transactions have been eliminated in consolidation.

Inventories -- Inventories are stated at the lower of cost, determined by using
the first-in, first-out method, or market. The Company periodically reviews
inventory for slow moving or obsolete items. Such items are written down to net
realizable value and have not been material for any period presented.

Slotting fees -- The Company incurs certain costs in connection with placing
its products. These costs are known in the trade as "slotting fees." Such fees
are amortized by the Company over a one year period from the date incurred.
Deferred slotting fees are included in prepaid expenses and other current
assets and approximated $1,170,000 and $1,002,000, at December 31, 1999 and
1998, respectively.

Concentration of Credit Risk -- The financial instruments which potentially
subject the Company to concentration of credit risk consist principally of
accounts receivable. The Company grants credit to customers based on an
evaluation of the customer's financial condition. Exposure to losses on
receivables is principally dependent on each customer's financial condition.
The Company controls its exposure to credit risks through credit approvals,
credit limits and monitoring procedures and establishes allowances for
anticipated losses.

Long-Lived Assets -- Long-lived assets are assessed for recoverability on an
ongoing basis. The Company measures impairment by comparing the carrying value
of the long-lived asset to the estimated undiscounted future cash flows
expected to result from the use of the assets and their eventual disposition.
If the sum of the expected undiscounted cash flows is less that the carrying
amount of the assets, the Company would recognize an impairment loss. The
impairment loss, if determined to be necessary, would be measured as the amount
by which the carrying amount of the asset exceeds the fair value of the asset.
No impairment was indicated as of December 31, 1999.

Depreciation and Amortization -- Depreciation of property and equipment is
provided for by using the straightline method over the estimated useful lives
of the respective assets. Amortization of leasehold improvements is provided
for by the straight-line method over the life of the asset or the lease term,
whichever is shorter. Improvements are capitalized, while repairs and
maintenance costs are charged to operations as incurred.

Trademark and Deferred Loan Costs -- Other assets include trademark costs,
which are being amortized using the straight-line method over a period of 10
years, and loan closing costs, which are being amortized over the life of the
loan. Amortization expense of the trademark costs was $55,174, $48,619 and
$42,243 for the years ended December 31, 1999, 1998 and 1997, respectively.

Income Taxes -- Deferred taxes on income are provided to reflect the tax effect
of temporary differences between the financial reporting and tax basis of
assets and liabilities. The principal items giving rise to deferred taxes are
the use of accelerated depreciation methods for tax purposes, straightlining of
step rentals, tax loss carryovers and differences in the timing of the
deductibility of certain expenses between income tax and financial reporting.
The Company records valuation allowances based on management's best estimate of
the amount of such deferred tax assets that more likely than not will be
realized.

Fair Value of Financial Instruments -- The estimated fair values of financial
instruments have been determined by the Company using available market
information and appropriate valuation methodolo-

F-7
<PAGE>

gies. However, considerable judgment is required in interpreting market data to
develop the estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange.

The following methods and assumptions were used to estimate the fair value of
the financial instruments:

Trade accounts receivable and payables and accrued expenses -- The fair value
of these receivables and payables equal their carrying value because of their
short maturities.

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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Revenue Recognition -- Revenue is recognized at the time merchandise is
shipped.

Stock-Based Compensation -- Stock-based compensation is recognized using the
intrinsic value method. For disclosure purposes, pro forma net income (loss)
and pro forma net income (loss) per share are provided as if the fair value
method was applied.

Basic and Diluted Net Income (Loss) per Share -- Basic net income (loss) per
share excludes dilution and is computed by dividing net income (loss) by the
weighted average number of shares outstanding for each period presented.
Diluted net income (loss) per share is computed by dividing net income (loss)
by the weighted average number of shares outstanding plus the dilutive
potential common shares which will result from the assumed exercise of stock
options or warrants.

The following is a reconciliation of the weighted average shares used in the
computations of basic and dilutive net income (loss) per share (in thousands):

<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- ---------
<S> <C> <C> <C>
Weighted average common shares outstanding
used for basic net income (loss) per share ............ 13,789 13,823 13,826
Dilutive stock options and warrants ..................... -- 246 41
------ ------ ------
Weighted average common shares outstanding
used for dilutive net income (loss) per share ......... 13,789 14,069 13,867
====== ====== ======
</TABLE>

For 1997, 1998 and 1999, 121,054, 447,969 and 983,751, respectively, options
have been excluded from the computation of dilutive net income (loss) per share
because the impact would be antidilutive.

New Accounting Pronouncements -- In June, 1998, the Financial Accounting
Standards Board issued SFAS No. 133 "Accounting for Derivative Instruments and
Hedging Activities". SFAS 133 establishes accounting and reporting standards
for derivative instruments and for hedging activities, requiring the
recognition of all derivatives as either assets or liabilities and to measure
those instruments at fair value, as well as to identify the conditions for
which a derivative may be specifically designated as a hedge. SFAS 133 will be
effective for the Company's first quarter ending December 31, 2001. The Company
does not expect any material impact on its financial condition or operations
from adoption of SFAS No. 133.

F-8
<PAGE>

2. INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1999
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Raw material. ........... $ 8,121 $ 8,950
Finished goods. ......... 6,547 5,554
------- -------
$14,668 $14,504
======= =======

</TABLE>

3. PROPERTY AND EQUIPMENT

Property and equipment, at cost, consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
ESTIMATED
1998 1999 USEFUL LIFE
---------- ---------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Machinery and equipment ................................ $33,003 $35,093 6 to 10 years
Furniture and fixtures. ................................ 3,624 7,361 3 to 7 years
Leasehold improvements. ................................ 8,895 9,347 Term of lease
Construction in progress. .............................. 2,578 548
Land. .................................................. 3,833 3,833
Building. .............................................. 7,424 7,424 25 years
------- -------
59,357 63,606
Less accumulated depreciation and amortization ......... 14,112 20,189
------- -------
$45,245 $43,417
======= =======
</TABLE>

Depreciation and amortization expense amounted to $4,223, $5,259 and $6,183 for
the years ended December 31, 1997, 1998 and 1999, respectively.

4. DEBT

At December 31, 1998 and 1999, debt consists of:

<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
FINOVA Revolving Credit Facility ............ $14,055 $18,976
FINOVA Term Loan A .......................... 6,172 5,086
FINOVA Term Loan B .......................... 1,995 1,575
FINOVA Term Loan C -- Mortgage .............. -- 12,850
101 Realty Associates Note Payable .......... 4,000 2,000
PNC Bridge Loan II .......................... 10,000 --
PNC Capital Expenditure Facility ............ 81 --
------- -------
36,303 40,487
Less amount due in one year ................. 3,334 3,534
------- -------
$32,969 $36,953
======= =======

</TABLE>

F-9
<PAGE>

Annual maturities of bank and other long-term debt, are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
------------------------
<S> <C>
2000 ................... $ 3,534
2001 ................... 4,972
2002 ................... 2,784
2003 ................... 29,197
-------
$40,487
=======
</TABLE>

On August 14, 1998, the Company entered into a Loan and Security Agreement (the
"FINOVA Agreement") with a syndicate of lenders including FINOVA Capital
Corporation ("FINOVA"), as agent for itself and other lenders, providing the
Company with up to $48.5 million of available financing. The Agreement consists
of a five-year revolving credit facility of up to $40.0 million, subject to
availability based on eligible accounts receivable and inventory, and two
five-year term loans aggregating $8.5 million. The revolving credit facility
bears interest at a rate of prime plus .75%. On December 31, 1999, the rate was
9.25% and net availability to the Company under the revolving credit facility
was $5.3 million.

Twenty-five million dollars of the initial proceeds from the FINOVA Agreement
was used to pay down the Company's credit facility with PNC. In connection with
this payment, the due date of the remaining

F-10
<PAGE>

$10.1 million of debt owed to PNC was extended until June 30, 1999, personal
guarantees by certain stockholders of the Company aggregating $5.0 million were
cancelled and the number of shares of Common Stock issuable to PNC pursuant to
a previously issued warrant was fixed at a minimum level of approximately
140,000 shares, subject to certain anti-dilution provisions.

On February 26, 1999, the Company refinanced its existing indebtedness by
amending and restating the FINOVA Agreement to provide for an additional $14.5
million ("Term Loan C") of financing. The additional financing is to be repaid
in monthly installments based upon a ten-year amortization schedule with
interest at prime plus 1.0%. At December 31, 1999, the interest rate was 9.5%.
All indebtedness to FINOVA is due in September 2003. The Company used $10.1
million of the additional facility to pay off its remaining indebtedness to
PNC. An additional $4.0 million of the proceeds were set aside for the
repayment of the Company's indebtedness to 101 Realty, provided the Company
meets certain working capital levels and achieves specified profitability
levels. In May, 1999 the Company released $2.0 million of the reserved proceeds
to pay down a portion of its indebtedness to 101 Realty. The FINOVA Agreement
provides for the reserved funds to be used to pay down a portion of the $14.5
million of additional indebtedness to the extent the Company does not meet the
working capital and profitability levels required for the repayment of the 101
Realty indebtedness. The increase in availability under the FINOVA Agreement
required the granting of a first mortgage security interest to FINOVA and the
other participating lenders on the Company's real property located in New
Jersey and Missouri.

During the year ended December 31, 1999, the Company recorded an extraordinary
charge of approximately $64,000 related to the early termination of the
Company's indebtedness to PNC.

5. COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

On May 5, 1997, a securities class action lawsuit entitled Feldbaum v. USA
Detergents, Inc., et al., No. 97-CV-3227, was filed in the U.S. District Court
for the Eastern District of Pennsylvania against the Company and certain of its
current and former officers and directors, the Feldbaum case subsequently was
transferred to the U.S. District Court for the District of New Jersey. On May
15, 1997, a second securities class action lawsuit entitled Einhorn v. USA
Detergents, Inc. et al., No. 97-2459, was filed against the Company and certain
of its current and former officers and directors in the U.S. District Court for
the District of New Jersey. Since the Einhorn lawsuit was filed, twelve
additional securities class action lawsuits were filed in the U.S. District
Court for the District of New Jersey against the Company and certain of its
current and former officers and directors. The class actions purported to be
brought on behalf of all persons who purchased the Company's common stock
between June 5, 1996, at the earliest, and May 8, 1997, at the latest (the
"putative class period"). The class actions generally alleged that, during the
putative class period, the defendants made false or misleading public
statements and engaged in improper accounting practices, which caused the price
of the Company's common stock to be artificially inflated. The class actions
asserted that the defendants' conduct violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and SEC Rule 10b-5 promulgated thereunder, as
well as state common law. In June and July 1997, the U.S. District Court for
the District of New Jersey entered orders consolidating all of the pending
class actions with the Einhorn case. In August 1997, the court entered an order
establishing a master docket for the consolidated class actions, In re USA
Detergents, Inc. Securities Litigation, Master File No. 97-CV-2459 (MTB), and
appointed lead plaintiffs and lead plaintiffs' co-lead counsel.

In December 1998, the Company finalized an agreement to settle for $10.0
million the consolidated stockholder class action. The Company's total cost
under the agreement, including legal fees, after insurance and other
participation, was approximately $3.3 million which was paid in November 1998.
The Company recorded a charge in that amount during the second quarter of 1998.
After notice to the class, the court, on December 14, 1998 granted final
approval of the proposed settlement and dismissed the class actions.

F-11
<PAGE>

received a formal request from the Securities and Exchange Commission (the
"SEC") for the production of various documents and the testimony of certain
current and former employees. The Company has been providing documentation and
other materials to the SEC in response to the request, and the testimony of
certain persons has been taken.

On September 12, 1997, the Company was made aware of a claim by North Brunswick
Water, LLC and North Brunswick Township (collectively "NBWC") covering among
other things, unpaid water and sewer charges. The initial amount of this claim
was $5,000,000. NBWC also claimed that the Company was precluded under local
ordinances from using wells on its site to draw water for production purposes.
On October 20, 1997, the Company commenced an action in the Superior Court of
New Jersey, Chancery Division, Middlesex County, challenging NBWC's claim and
seeking injunctive relief to prevent NBWC from taking any steps to discontinue
water and sewer service pending resolution of the claim. As a result of the
institution of the litigation, the Company and NBWC entered into a Consent
Order to prevent discontinuation of water and sewer service. Pursuant to the
terms of this Consent Order, the Company has paid approximately $860,000 to
NBWC since October 1997.

LEASES

The Company is committed under various operating leases which expire at varying
dates through the year 2080. Aggregate minimum future lease payments, exclusive
of payments for real estate taxes and operating costs, are as follows (in
thousands):

<TABLE>
<CAPTION>
GROSS RENT SUB LEASE
YEAR ENDING DECEMBER 31, COMMITMENT INCOME
------------------------ ------------ ----------
<S> <C> <C>
2000. ....................... $ 3,230 $1,131
2001. ....................... 2,449 --
2002. ....................... 2,168 --
2003. ....................... 2,077 --
2004. ....................... 553 --
Thereafter. ................. 912 --
------- ------
$11,389 $1,131
======= ======
</TABLE>

Rent expense, net of sublease income, charged to operations amounted to
$3,165,000, $3,030,000 and $606,000 for the years ended December 31, 1997, 1998
and 1999, respectively, including real estate taxes and operating escalations.

Rent expense recognized annually differs from actual rent paid as a result of
free rent periods and escalations in base rent provided in the leases.
Accordingly, the Company has recorded deferred rent of $1,091,000 and $889,000
at December 31, 1998 and 1999, respectively. This amount is being amortized by
the straightline method over the life of the lease. The amortization of the
deferred rent was $37,636, $37,636 and $202,636 for the years ended December
31, 1997, 1998 and 1999, respectively.

F-12
<PAGE>

SERVICING AGREEMENT

Substantially all of the bottles, closures and labels used by the Company
during 1999 at its manufacturing facilities were purchased from Owens Illinois
Plastics Products Inc., Owens Illinois Closure Inc., and Owens Illinois Labels,
Inc. (collectively referred to as "Owens"). Effective January 1, 1999, the
Company and Owens agreed in principle to amend its current agreement that
expires December 31, 2003. The monthly payment of $1,317,566 is subject to
maximum annual increases of 2%, which will be applied against the purchase
price of packaging materials. The agreement provides for the vendor to commit
exclusive use of certain machines for the production of packaging material for
the Company.

PROFIT SHARING PLAN

The Company had a profit sharing plan in 1997, which was based on the amount by
which the Company's operating gross margin (the "OGM"), as defined in a fiscal
year, exceeded ten percent. If the Company's OGM exceeded ten percent, a
percentage of that excess was placed in a bonus pool based on a predetermined
formula provided that the total amount available for distribution was only
based on annual gross sales up to $200 million. Fifty-two percent of the bonus
pool was allocated for distribution to senior executives. Of the remainder of
the bonus pool, no participant was able to receive a distribution greater than
50% of his or her base salary. Amounts not allocated for distribution under the
bonus pool would not be distributed. For the year ended December 31, 1997,
there were no distributions under the plan.

In 1998, the Company replaced the OGM Plan with a bonus plan for certain
employees based on the level of operating income achieved excluding
restructuring and litigation settlement charges. If the Company's 1998 and 1999
operating income, as defined, achieved 85% or greater of a predetermined
amount, a bonus could be distributed based upon a predetermined formula. For
the years ended December 31, 1998 and 1999, approximately $415,000 and $0 was
distributed under the plan, respectively.

401-K PLAN

The Company has a qualified 401-K retirement plan (the "Plan") that covers
substantially all employees of the Company. For the years ended December 31,
1997, 1998 and 1999 the Company made matching contributions of approximately
$30,000, $60,000 and $135,000, respectively. The Company has the option of
changing the matching contribution each year, and the right to amend, modify or
terminate the Plan.

EMPLOYMENT AGREEMENTS

The Company is obligated under various employment agreements expiring in 2000.
As of December 31, 1999, the minimum amount payable in 2000 approximates
$206,000.

RELATED PARTY TRANSACTIONS

On February 7, 2000, the Company granted an option to purchase 200,000 shares
of Common Stock to Frederick R. Adler, a director of the Company, in
consideration for consulting services to be rendered by Mr. Adler during the
four year period commencing January 1, 2000. The option is subject to
shareholders' approval of an amendment to increase the number of shares
available under the Company's 1995 Stock Option Plan. The option vests over a
four year period beginning January 1, 2001, at an exercise price of $2.78 per
share of Common Stock (110% the market price of the Common Stock on the grant
date). The Company valued the option at approximately $50,000, the amount
specified by an independent banking and valuation firm engaged by the Company.
The value of the option was deferred and will be amortized over the four year
consulting period.

The Company's Chief Executive Officer, Chairman of the Board, and a principal
stockholder of the Company, was also a director, officer and stockholder of
American Value Brands Inc. ("AVB") and another director and principal
stockholder of the Company, was also a director and stockholder of AVB.

Purchases made by AVB amounted to $45,430, $0 and $0 for the years ended
December 31, 1997, 1998 and 1999, respectively.

F-13
<PAGE>

The Company, during the year ended December 31, 1997, incurred rental expenses
of approximately $90,000 for the use of a portion of AVB's warehouse. In 1998
and 1999, the Company did not utilize this warehouse. At December 31, 1998 and
1999 the amount due from or to AVB was $0.

In 1998, the Company signed a consulting agreement with one of its shareholders
for $75,000. The agreement states that the shareholder will assist the Company
in two transactions. A portion of the fee, $25,000 was paid in advance during
1998, while the remaining amount will only be paid if and when the transactions
are completed.

TAX EXAMINATION

The Internal Revenue Service is currently examining the Company's 1996 amended
federal income tax return. To date, management has not been notified of any
proposed adjustment. Management believes that any adjustment which results from
this examination, if any, will not have a material impact on the Company's
results of operations or financial condition.

RESTRUCTURING COSTS

In May 1997, the Company, as part of its cost-reduction strategy, decided to
close its Edison, New Jersey facility and move its candle manufacturing
operations to the Company's North Brunswick, New Jersey facility at an
estimated cost of $2.4 million. These restructuring costs, which were expensed
in 1997 included the write-off of leasehold improvements, a provision for a
portion of the future lease commitment and associated lease expenses. On June
15, 1999 the Company subleased this facility to a new tenant. At December 31,
1999, the remaining accrual for restructuring costs approximated $141,000.

ENVIRONMENTAL REGULATION

In March 1997, the Company purchased a 650,000 square foot facility in North
Brunswick, New Jersey, adjacent to the Company's existing facility, as part of
its efforts to consolidate its East Coast warehousing and distribution
operations. As of December 31, 1999, the Company subleases a total of
approximately 400,000-square feet of this facility to three tenants. This
property is currently the subject of an Administrative Consent Order issued by
the New Jersey Department of Environmental Protection (the "NJDEP"), relating
to the remediation of certain hazardous wastes which were discharged onto the
property by the prior owner. The prior owner has undertaken substantial
remediation efforts to date to clear the property of these hazardous wastes and
has posted a bond with the NJDEP to secure the costs to continue these cleanup
activities. In addition, the prior owner has provided the Company with an
undertaking to complete the cleanup of the property to the standards required
by the NJDEP, and a complete indemnity against any claims or obligations to
clean up the property which may be asserted against the Company and which arise
from any hazardous wastes that existed on the property on the date acquired by
the Company. While the Company believes it has taken adequate steps to protect
its interests, there can be no assurance that the Company will not incur costs
in connection with environmental matters concerning the property. In March
2000, the Company announced its intention to sell this facility which
represents excess capacity. The Company expects that when and if the
transaction is completed, it will realize proceeds in excess of its carrying
value and that the funds generated by the sale should be available to retire
debt and invest in appropriate market and capital opportunities.

F-14
<PAGE>

6. INCOME TAXES

Components of income taxes are as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1998 1999
------------ ------ -----
(IN THOUSANDS)
<S> <C> <C> <C>
Federal ................. $ (3,524) $130 $48
State and local ......... 277 7 27
Deferred ................ (201) 0 0
-------- ---- ---
$ (3,448) $137 $75
======== ==== ===
</TABLE>

Temporary differences which give rise to deferred tax liabilities and assets at
December 31, 1998 and 1999 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities
Depreciation ..................................... $ (3,947) $ (4,132)
-------- --------

Deferred tax assets:
Straight-lining of step rental increases ......... 422 343
Allowance for bad debts .......................... 429 385
Net operating loss carryover ..................... 6,110 6,819
Alternative Minimum Tax Credit ................... 312 321
Inventory capitalization ......................... 297 203
Miscellaneous .................................... 1,349 1,144
Restructuring reserve ............................ 420 54
Bonus Accrual .................................... 182 0
-------- --------
9,521 9,269
-------- --------
Net deferred tax assets: $ 5,574 $ 5,137
Valuation allowance ............................... (5,574) (5,137)
-------- --------

Net deferred tax asset ............................ $ 0 $ 0
======== ========
</TABLE>

A reconciliation of income taxes at the Federal statutory rate to amounts
provided is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1997 1998 1999
------------ --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Tax provision computed at statutory rate ....................... $ (8,426) $ 341 $ 565
State and local income taxes net of federal tax effect ......... (950) 4 18
Valuation allowance ............................................ 5,808 (462) (321)
Permanent differences and other -- net ......................... 120 254 (187)
-------- ------ ------
$ (3,448) $ 137 $ 75
======== ====== ======
</TABLE>

At December 31, 1999 the Company had operating loss carryovers for tax purposes
of approximately $16.5 million which expire in 2013. At December 31, 1998 and
1999, a valuation allowance of $5,574,000 and $5,137,000, respectively, has
been provided as the realization of the deferred tax assets is not assured.

F-15
<PAGE>

7. SIGNIFICANT CUSTOMERS AND SUPPLIERS AND INFORMATION ABOUT PRODUCTS

The Company's largest customer, WalMart, accounted for 12.4%, 10.8% and 9.2% of
sales, respectively, in the years ended December 31, 1997, 1998 and 1999. No
other customer of the Company accounted for more than 10.0% of the Company's
net sales. As is customary in the industry, the Company does not have long term
contracts with its customers.

Certain chemicals, packaging materials and manufacturing equipment used in
connection with the manufacture of the Company's products as well as certain
finished products sold by the Company are obtained from a sole or a limited
group of suppliers and subcontractors. The Company's reliance on a sole
supplier or limited groups of suppliers and subcontractors involves several
risks, including increased risk of inability to obtain adequate supplies, and
reduced control over pricing and timely delivery. Although the timeliness,
quality and pricing of deliveries from the Company's suppliers have been
acceptable to date and the Company believes that additional sources of supply
are generally available, there can be no assurance that supplies will be
available on an acceptable basis or that delays in obtaining new suppliers,
particularly of plastic bottles, will not have an adverse effect on the
Company.

8. STOCK OPTIONS

1995 Stock Option Plan -- Effective in August 1995, the Company adopted the USA
Detergents, Inc. 1995 Stock Option Plan (the "1995 Plan"), pursuant to which
options to acquire an aggregate of 388,935 shares of Common Stock were
available for grant to key employees and consultants of the Company or any of
its subsidiaries. In May 1999, the maximum number of shares of Common Stock
authorized to be granted under the 1995 Plan was increased to 1,250,000. The
1995 Plan authorizes the Board to issue incentive stock options ("ISO's"), as
defined in Section 422A(b) of the Internal Revenue Code (the "Code"), and stock
options that do not conform to the requirements of that Code section
("NonISO's"). The exercise price of each ISO may not be less than 100% of the
fair market value of the Common Stock at the time of grant, except that in the
case of a grant to an employee who owns 10% or more of the outstanding stock of
the Company or any subsidiary ("10% Stockholder"), the exercise price shall not
be less than 110% of such fair market value. The exercise price of each NonISO
may not be less than the par value of the Common Stock. Generally, options will
vest over a three to five year period and may not be exercised after the tenth
anniversary (fifth anniversary in the case of an ISO granted to a 10%
Shareholder) of their grant. Options may not be transferred during the lifetime
of an option holder. No stock options may be granted under the 1995 Plan after
2005.

Non-Employee Directors' Plan. -- Effective in August 1995, the Company adopted
a Stock Option Plan for NonEmployee Directors (the "Directors' Plan"), pursuant
to which options to acquire an aggregate of 75,000 shares of Common Stock may
be granted to nonemployee directors. The Directors' Plan provides for the
automatic grant to each of the Company's nonemployee directors of (1) an option
to purchase 4,500 shares of Common Stock on the later of the date of such
director's initial election or appointment to the Board of Directors or the
date of adoption of the Directors' Plan, and (2) an option to purchase 4,500
shares of Common Stock on each annual anniversary of such election or
appointment, provided that such individual is on that anniversary date a
nonemployee director. The options will have an exercise price of 100% of the
fair market value of the Common Stock on the date of grant, have a ten year
term and become exercisable in four equal quarterly installments commencing on
the date which is three months after the date of the grant thereof, subject to
acceleration in the event of a change of control (as defined in the Directors'
Plan). The options may be exercised by payment in cash, check or shares of
Common Stock.

In December 1993, the Company granted an option to an executive covering
119,145 shares of common stock exercisable in four annual installments
beginning December 31, 1995. This option is exercisable at $2.00 per share.
Through December 31, 1999, 69,145 shares have been purchased pursuant to the
exercise of this option.

F-16
<PAGE>

Activity in the 1995 Plan and the Directors' Plan is as follows:

<TABLE>
<CAPTION>
WEIGHTED OPTIONS
NUMBER OF AVERAGE PRICE AVAILABLE FOR
OPTIONS PER SHARE GRANT AT END OF YEAR
------------- --------------- ---------------------
<S> <C> <C> <C>
Options outstanding, December 31, 1996 ......... 317,072 $ 11.69
Granted in 1997 ................................ 394,662 17.15
Canceled. ...................................... (257,001) 16.33
Exercised ...................................... (54,084) 11.72
--------
Options outstanding, December 31, 1997 ......... 400,649 9.92 674,351
=======
Granted in 1998 ................................ 278,850 7.91
Canceled. ...................................... (100,912) 11.76
Exercised ...................................... (19,323) 5.87
--------
Options outstanding, December 31, 1998 ......... 559,264 9.45 515,836
=======
Granted in 1999 ................................ 595,500 5.36
Canceled ....................................... (129,700) 7.77
--------
Options outstanding, December 31, 1999 ......... 1,025,064 7.29 299,936
========= =======
</TABLE>

The following table summarizes information about fixed-price options
outstanding at December 31, 1999:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
RANGE OF NUMBER REMAINING AVERAGE NUMBER WEIGHTED
EXERCISE OUTSTANDING AT CONTRACTUAL EXERCISE EXERCISEABLE AVERAGE
PRICES DECEMBER 31, 1999 LIFE PRICE AT DECEMBER 31, 1999 EXERCISE PRICE
- ------------------ ------------------- ------------- ---------- ---------------------- ---------------
<S> <C> <C> <C> <C> <C>
$2.00 to $2.00 40,427 $ 4.00 $ 2.00 40,427 $ 2.00
$2.00 to $12.67 52,061 5.00 8.52 52,061 8.52
$9.67 to $31.50 32,363 6.00 17.91 32,363 17.91
$8.69 to $13.25 147,313 7.00 9.01 91,562 9.19
$7.81 to $14.38 230,350 8.00 9.65 62,113 10.20
$5.06 to $7.50 522,550 9.00 5.38 1,125 6.44
------- ------
1,025,064 279,651
========= =======
</TABLE>

Activity regarding warrants issued by the Company is as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF PRICE
WARRANTS PER SHARE
----------- ----------
<S> <C> <C>

Granted in 1997 .......................................... 350,000 $ 7.88
-------
Warrants outstanding, December 31, 1997 .................. 350,000 7.88
Granted in 1998 .......................................... 238,524 11.47
-------
Warrants outstanding, December 31, 1998 and 1999 ......... 588,524 8.33
=======
</TABLE>

The Company applies the provisions of APB Opinion 25 and related
interpretations in accounting for its stock options. Accordingly, no
compensation cost has been recognized for the foregoing options. The excess, if
any, of fair market value of shares on the measurement date over the exercise
price is charged to operations each year as the options become exercisable. Had
compensation cost for these options been determined using the Black-Scholes
option-pricing model described in FASB Statement 123, the Company would have
recorded additional aggregate compensation expense of approximately $1,040,000
in 1999, $1,161,000 in 1998 and $973,000 in 1997 which would be expensed over
the option's vesting period. The assumptions used in the option-pricing model
include a risk-free interest rate of 4.5%-6.0%, expected

F-17
<PAGE>

life of 3 years and expected volatility of 85%-59.46%. Dividends are assumed to
be zero. The pro forma impact of following the provisions of FASB Statement No.
123 on the Company's net income (loss) and net income (loss) per share would be
as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1997 1998 1999
------------- ---------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net income (loss) ........................... -- as reported $ (21,081) $ 866 $ 1,586
========= ====== =======
-- pro forma $ (21,914) $ (295) $ 546
========= ====== =======
Basic net income (loss) per share ........... -- as reported $ (1.53) $ .06 $ .11
========= ====== =======
-- pro forma $ (1.59) $ (.02) $ .04
========= ======= =======
Diluted net income (loss) per share ......... -- as reported $ (1.53) $ .06 $ .11
========= ======= =======
-- pro forma $ (1.59) $ (.02) $ .04
========= ======= =======
Weighted average fair value of
options granted during the period ........... $ 4.23 $ 3.89 $ 3.15
========= ======= =======
</TABLE>

9. SEGMENT DISCLOSURE

The Company operates in one significant business segment -- household products.
Operations of the household cleaning, automotive products and air fresheners
are included with household products for purposes of segment reporting.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Liquid Laundry ................... $124,033 $108,729 $102,044
Fabric Softeners ................. 45,147 45,120 46,363
Powder Laundry ................... 37,623 34,335 37,045
Other Household Products ......... 35,923 31,914 41,817
-------- -------- --------
Net Sales ......................... $242,726 $220,099 $227,269
======== ======== ========
</TABLE>

The largest product within the liquid and powder laundry detergent group is
Xtra (Registered Trademark) . Nice'N Fluffy (Registered Trademark) is the
largest product within the fabric softener group. Other household products
include general purpose cleaners, dish detergents and air fresheners.

F-18
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report on Form 10-K
to be signed on its behalf by the undersigned, thereunto duly authorized.

USA DETERGENTS, INC.

Dated: March 28, 2000 By: /s/ Uri Evan
-------------------------------
Name: Uri Evan
Title: Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report on Form 10-K has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
----------- ------- ------
<S> <C> <C>
/s/ Uri Evan Chief Executive Officer and Chariman of the
- ------------------------- Board of Directors March 28, 2000
Uri Evan

/s/ Richard D. Coslow Chief Financial Officer (Principal Financial
- ------------------------- Oficer and Principal Accounting Officer) March 28, 2000
Richard D. Coslow

/s/ Daniel Bergman
- -------------------------
Daniel Bergman Vice President and Secretary March 28, 2000

/s/ Frederick R. Adler
- -------------------------
Frederick R. Adler Director March 28, 2000

/s/ Richard A. Mandell
- -------------------------
Richard A. Mandell Director March 28, 2000

/s/ Christopher D. Illick
- -------------------------
Christopher D. Illick Director March 28, 2000
</TABLE>

F-19
<PAGE>

USA DETERGENTS, INC. AND SUBSIDIARIES

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS (000'S)

<TABLE>
<CAPTION>
ADDITIONS
CHARGED
BALANCE AT (REDUCTIONS)
BEGINNING TO PROFIT BALANCE AT
DESCRIPTION OF PERIOD AND LOSS DEDUCTIONS(A) END OF PERIOD
- ----------- ------------ ------------- --------------- --------------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Year ended December 31, 1997 ......... $1,349 $475 $957 $ 867
Year ended December 31, 1998 ......... $ 867 $540 $296 $1,111
Year ended December 31, 1999 ......... $1,111 $ (7) $107 $ 997
</TABLE>

- ----------
(A) Represents write-offs of uncollectible accounts receivable.

F-20
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<S> <C>
3.1 Certificate of Incorporation. (1)

3.2 Amended and Restated By-Laws of the Registrant. (5)

4.1 See Exhibits 3.1 and 3.2 for provisions of the Certificate of Incorporation and By-Laws of
the Registrant defining the rights of holders of Common Stock of the Registrant. (1)

4.2 Specimen Common Stock Certificate. (1)

4.3 Form of Registration Rights Agreements between the Registrant, Frederick R. Adler and
Blair Effron. (1)

10.1 Lease Agreement dated January 15, 1993 between Maurice M. Weill, Trustee for
GEEMAC Property, and the Registrant. (1)

10.2 Supply Agreement dated November 29, 1994 between Owens-Illinois Plastic Products Inc.,
Owens-Illinois Closure Inc. and the Registrant. (1)

10.3 Amendment No. 1 dated December 1995 to Supply Agreement, dated November 29,
1994, between Owens-Illinois Plastic Products Inc., Owens-Illinois Plastic Products Inc.,
Owens-Illinois Closure Inc. and the Registrant. (2) (confidentiality note)*

10.4 Amended and Restated Employment Agreement with Uri Evan dated January 1996. (2)**

10.5 Employment Agreement with Daniel Bergman.

10.6 Forms of Employment Agreement with Frank Corella.

10.7 Loan Agreement dated April 15, 1993 between the New Jersey Economic Development
Authority and the Registrant. (1)

10.8 Reimbursement Agreement dated April 15, 1993 between Banque Nationale de Paris,
Houston Agency and the Registrant. (1)

10.9 Security Agreement dated April 15, 1993 between the New Jersey Economic
Development Authority and the Registrant. (1)

10.10 Amended and Restated Loan Agreement dated February 25, 1998 between PNC Bank,
N.A. and the Registrant.

10.11 1995 Stock Option Plan.(1)**

10.12 Stock Option Plan for Non-Employee Directors.(1)**

10.13 Form of Directors and Officers Indemnity Agreement.(1)

10.14 Lease Agreement dated January 26, 1996 between M&E Co. and the Registrant.(2)

10.15 Purchase and Sale Agreement dated January 22, 1997 between The Okonite Company,
Inc. and the Registrant.(3)

10.16 Letter Agreement dated May 5, 1997 between the Registrant and Harold J. Macsata.(4)

10.17 Letter Agreement dated April 14, 1997 between the Registrant and Mark Antebi.(4)

10.18 Letter Agreement dated April 14, 1997 between the Registrant and Joseph Cohen.(4)

10.19 Employment Agreement dated March 26, 1997 between the Registrant and Richard D.
Coslow.(4)**
</TABLE>

F-21
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<S> <C>
10.20 Employment Agreement, dated July 31, 1997 between the Registrant and Guilio
Perillo.(4)**

10.21 Stock Purchase Agreement dated June 30, 1997 between the Registrant, Big Cloud
Powder Corporation and Chicago Contract Powder Corporation.(4)

10.22 Warrant dated February 25, 1998 issued by the Registrant to PNC Bank, N.A.(5)

10.23 Mortgage and Security Agreement dated February 25, 1998 between the Registrant and
PNC Bank, N.A.(5)

10.24 Letter Agreement dated February 25, 1998 between the Registrant and 101 Realty
Associates, L.L.C.(5)

10.25 Mortgage and Security Agreement dated February 25, 1998 between the Registrant and
101 Realty Associates, L.L.C.(5)

10.26 Warrant dated December 26, 1997 issued by the Registrant to Frederick R. Adler.(5)

10.27 Agreement dated December 26, 1997 between Frederick R. Adler and the Registrant.(5)

10.28 Warrant dated April 30, 1998 issued by the Registrant to 101 Realty Associates, L.L.C.(6)

10.29 Amended and Restated Warrant dated August 14, 1998 issued by the Registrant to PNC
Bank, N.A.(7)

10.30 Second Amended and Restated Loan and Security Agreement dated August 14, 1998
between the Registrant and PNC Bank, N.A.(7)

10.32 Amended and Restated Revolving Loan Note dated February 25, 1999 issued by the
Registrant to FINOVA Capital Corporation.(8)

10.33 Amended and Restated Term Loan A Note dated February 25, 1999 issued by the
Registrant to FINOVA Capital Corporation.(8)

10.34 Amended and Restated Term Loan B Note dated February 25, 1999 issued by the
Registrant to FINOVA Capital Corporation.(8)

10.35 Amended and Restated Agency Agreement dated February 25, 1999 between the
Registrant to FINOVA Capital Corporation, First Source Financial LLP, Merrill Lynch
Business Financial Services, Inc. and Foothill Capital Corporation.(8)

10.36 Term Loan C Note, dated February 25, 1999 issued by the registrant to FINOVA Capital
Corporation.(8)

10.37 Amendment No. 1 to Amended and Restated Loan and Security Agreement dated as of
November 5, 1999 between Registrant and FINOVA Capital Corporation.

10.38 Subordination Agreement, dated as of February 25, 1999, by and among the Registrant,
101 Realty Associate, L.L.C. and FINOVA Capital Corporation (for itself and certain
other institutions). (9)

10.39 West Coast Supply Agreement, dated December 7, 1995, between the Registrant and
Owens-Brockway Plastic Product. (9)***

21 Subsidiaries of the Company.(5)

</TABLE>

F-22
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<S> <C>
23 Consent of Deloitte & Touche LLP.

27 Financial Data Schedule.
</TABLE>

- ----------
* Confidentiality Requested, confidential portions have been omitted and
filed separately with the Commission, as required by Rule 406(b) of the
Securities Act of 1933.

** Management contract, or compensatory plan or arrangement.

1. Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (No. 33-93488), which exhibit is incorporated herein by reference.

2. Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (No. 333-1386), which exhibit is incorporated herein by reference.

3. Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, which exhibit is incorporated herein
by reference.

4. Previously filed as an exhibit to the Company's Annual Report on Form 10-Q
for the quarter ended June 30, 1997, which exhibit is incorporated herein
by reference.

5. Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, which exhibit is incorporated herein
by reference.

6. Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1998, which exhibit is incorporated
herein by reference.

7. Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998.

8. Previously filed as an exhibit to the Company's Quarterly report on Form
10-Q for the quarter ended March 30, 1999.

9. Previously filed as an exhibit to the Company's Quarterly report on Form
10-Q for the quarter ended June 30, 1999.

F-23

<PAGE>
FINOVA

AMENDMENT NO. 1 TO
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

CO-BORROWERS: USA DETERGENTS, INC., a Delaware corporation ("USA")
BIG CLOUD POWDER CORPORATION, a Delaware corporation ("POWDER")
CHICAGO MANAGEMENT POWDER CORP., a Delaware corporation
("MANAGEMENT")
CHICAGO CONTRACT POWDER CORPORATION, an Illinois corporation
("CONTRACT")

ADDRESS: 1735 Jersey Avenue
North Brunswick, NJ 08902

DATE: AS OF NOVEMBER 5, 1999

THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
("AMENDMENT" ), dated the date set forth above, is entered into by and between
the Co-Borrowers named above (jointly and severally, individually and
collectively, "BORROWER"), whose address is set forth above, and FINOVA Capital
Corporation ("FINOVA"), in its capacity as contractual representative for itself
and the other Lenders (as defined below), who has an office at 355 South Grand
Avenue, Suite 2400, Los Angeles, California 90071.

RECITALS
--------

A. Borrower, FINOVA, as Agent, and the Lenders (as defined therein) are
parties to that certain Amended and Restated Loan and Security Agreement dated
FEBRUARY 25, 1999 (as amended hereby, together with the "Schedule" thereto, as
defined therein, the "LOAN AGREEMENT");

B. The Lenders and the Agent (with the consent of the Lenders), have agreed
to enter into this Amendment on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and adequacy

<PAGE>

of which are hereby acknowledged, Borrower, Lenders and Agent agree to the
amendments with respect to the Loan Agreement and the other Loan Documents as
set forth below. Capitalized terms used in this Amendment which are not
otherwise defined herein shall have the meanings given such terms in the Loan
Agreement.

1. AMENDMENTS TO LOAN AGREEMENT. As of the date hereof, the financial
covenants set forth in Section 6.1.13 (page S-7 of the Schedule) and the Capital
Expenditures negative covenant set forth in Section 6.2 (page S-10 of the
Schedule), are hereby restated as follows:

a. CURRENT RATIO. Borrower shall maintain a ratio of Current Assets to
Current Liabilities of not less than the following:

Period Ending
(tested at each
calendar quarter end) Current Ratio
-------------------- -------------
12/31/98 1.0 to 1.0
03/31/99 1.0 to 1.0
06/30/99 1.0 to 1.0
09/30/99 1.0 to 1.0
12/31/99 1.0 to 1.0
DURING FISCAL YEAR 2000 1.0 to 1.0
DURING FISCAL YEAR 2001 1.1 to 1.0
DURING FISCAL YEAR 2002 and 1.1 to 1.0
thereafter

provided that for purposes of this calculation,
Current Liabilities shall exclude: (i) Mandatory Term
Loan C Payments, and (ii) Obligations under the Loans;
but in each case shall include regularly scheduled
current portions of long term Indebtedness for
Borrowed Money. For purpose of this computation, that
portion of obligations of Borrower under loans that
are classified as a current liability for financial
reporting purposes under GAAP (i.e., balloon portion
of Term Loan A, Term Loan C, and the balance of the
Revolving Credit Loans in the year such obligations
become due), except for regularly scheduled payments,
are to be excluded.

2
<PAGE>

b. DEBT TO NET WORTH. Borrower shall maintain a ratio of Indebtedness for
Borrowed Money to Net Worth of not greater than the
following for each period set forth below:

Period Ending
(tested at each
calendar quarter end) Debt to Net Worth
-------------------- -----------------
12/31/98 2.40 TO 1.0
03/31/99 2.40 TO 1.0
06/30/99 2.30 TO 1.0
09/30/99 2.20 TO 1.0
12/31/99 2.26 TO 1.0
03/31/00 2.04 TO 1.0
06/30/00 1.86 TO 1.0
09/30/00 1.67 TO 1.0
12/31/00 and thereafter 1.60 TO 1.0

3
<PAGE>

c. NET WORTH. Borrower shall maintain Net Worth of not less than the
following amounts for each period set forth below:

Period Ending
(tested at each
calendar quarter end) Net Worth
-------------------- ---------
12/31/98 $17,000,000.00

03/31/99 $18,000,000.00

06/30/99 $19,000,000.00

09/30/99 $20,000,000.00

12/31/99 $18,160,000,00

03/31/00 $18,275,000.00

06/30/00 $19,360,000.00

09/30/00 $20,625,000.00

12/31/00 $21,900,000.00

03/31/01 $22,900,000.00

06/30/01 $23,900,000.00

09/30/01 $24,900,000.00

12/31/01, and thereafter $25,900,000.00

4
<PAGE>

d. SENIOR DEBT SERVICE
COVERAGE RATIO As of the last day of each calendar quarter ended
MARCH 31, JUNE 30, SEPTEMBER 30 or DECEMBER 31, the
ratio of Borrower's Operating Cash Flow/Actual to
Borrower's Senior Contractual Debt Service for the
consecutive 12-month period ending as of such date
must be at least the following:

Period Ending Senior Debt Service
(tested at each -------------------
calendar quarter end) Coverage Ratio
-------------------- --------------
12/31/98 1.20 TO 1.0

03/31/99 1.20 TO 1.0

06/30/99 1.20 TO 1.0

09/30/99 1.50 TO 1.0

12/31/99 1.10 TO 1.0

03/31/00 1.10 TO 1.0

06/30/00 1.19 TO 1.0

09/30/00 1.25 TO 1.0

12/31/00 1.35 TO 1.0

03/31/00, and thereafter 1.50 TO 1.0

e. NEGATIVE COVENANTS (SECTION 6.2):

CAPITAL EXPENDITURES: Borrower shall not make or incur any Capital
- -------------------- Expenditure if, after giving effect thereto, the
aggregate amount of all Capital Expenditures by
Borrower (i) for the calendar quarter ended DECEMBER
31, 1999, would exceed $1,250,000, (ii) for the
calendar quarter ended MARCH 31, 2000, would exceed
$350,000, (iii) for the calendar quarter ended JUNE
30, 2000, would exceed $1,300,000, (iv) for the
calendar quarter ended SEPTEMBER 30, 2000, would
exceed $2,350,000, (iv) for the calendar quarter ended
DECEMBER 31, 2000, would exceed $1,000,000, and (v) in
any fiscal year thereafter, would exceed $2,000,000;
provided however, that such Capital Expenditure limit
may be increased to $7,000,000 commencing with the
2001 fiscal year and each year thereafter, in each
case, if Borrower

5
<PAGE>

demonstrates to Agent prior to making such increased
capital expenditures that, according to the Compliance
Certificate and financial statements for the prior
fiscal year end, Borrower would have been in
compliance with the Senior Debt Service Coverage Ratio
requirements set forth above for such prior fiscal
year, after adjustment for the higher Capital
Expenditure amount.

f. ADDITIONAL PROVISIONS. The following shall be added as a new
subparagraphs 3(g), 3(h) and 3(i) to the "Additional Provisions" section of
the Schedule (at the top of S-16):

(g) Extension of 1999 Mandatory Term Loan C Prepayment. With respect to
subparagraph 3(e) (Mandatory Tenn Loan C Prepayments) set forth above, Agent and
the Lenders agree that, solely as a result of Borrower's failure to comply with
the consolidated net income requirement for the 1999 fiscal year and the
consolidated EBITDA requirement for the 1999 fiscal year (as set forth in
subsection 3(d) above), Agent and the Lenders shall not cause the $2,000,000 of
the Cash Collateral Amount to be applied as a mandatory prepayment to Term Loan
C provided that Agent and the Lenders expressly reserve the right to so apply
such Cash Collateral Amount at any time after the occurrence and during the
continuance of an Event of Default.

(h) 2000 Fiscal Year. If: (i) no Event of Default has occurred and is
continuing under this Agreement and no Event of Default would result from the
making of the 2000 101 Realty Payment (as hereinafter defined), (ii) according
to Borrower's audited financial statements for the 2000 fiscal year, as
certified by the Borrower's Chief Financial Officer, Borrower has: (x) a
consolidated net income for the 2000 fiscal year, as determined in accordance
with GAAP, of at least $4,000,000, and (y) a consolidated EBITDA, as determined
in accordance with GAAP, of at least $8,690,000, and (iii) Borrower will have at
least $2,000,000 of Excess Availability under the Revolving Credit Loans after
giving effect to the 2000 101 Realty Payment (collectively, the "2000 101 REALTY
PAYMENT REQUIREMENTS"), then Borrower may direct Agent in writing and Agent
shall cause the remaining TWO MILLION DOLLARS ($2,000,000) of the Cash
Collateral Amount to be paid to 101 Realty as a final principal prepayment in
respect of Borrower's mortgage indebtedness to 101 Realty (collectively, the
"2000 101 REALTY PAYMENT"). Borrower shall have up to THIRTY (30) days after the
date of delivery to Agent of its certified annual audited financial statements
and Compliance Certificate required pursuant to this Agreement (the "2000
DELIVERY DATE") to provide written notice to Agent stating that Borrower is in
compliance with the foregoing 2000 101 Realty Payment Requirements and directing
Agent to cause the 2000 101 Realty Payment to be paid to 101 Realty.

(i) 2000 Mandatory Term Loan C Prepayments. In the event that Borrower is
unable to comply with the foregoing requirements for a 2000 101 Realty Payment
within such thirty (30) day period following the 2000 Delivery Date or if
Borrower does not deliver its certified audited financial statements to Agent
within the time period required in Section 9.1(b) of this Agreement, then, upon
written notification to Borrower at any time thereafter, Agent shall, if so
directed by the Required Lenders, cause to be paid to the Lenders the remaining
TWO MILLION DOLLAR ($2,000,000)

6
<PAGE>

of the Cash Collateral Amount as a mandatory prepayment, to be applied in the
inverse order of maturity, to the Obligations outstanding under Term Loan C.

g. LOAN DOCUMENTS. As of the date of this Amendment, the term "Loan
Documents" as defined in Section 1.1 of the Loan Agreement shall include
(in addition to the Loan Documents described in the Loan Agreement) this
Amendment and any other agreements, instruments or other documents executed
in connection herewith.

2. LIMITED WAIVER. Agent and each of the Lenders hereby waives, effective
as of the date of this Amendment, the failure of Borrower to comply with the
following covenants for the calendar quarter ending September 30, 1999: (i) Net
Worth (Section 6.1.13), and (ii) Senior Debt Service Coverage Ratio (Section
6.1.13). This Waiver is expressly limited to the quarterly period ended
September 30, 1999 and shall not affect any breach of these covenants for any
other period.

3. TIME OF ESSENCE. Time is of the essence with respect to each and every
provision of this Amendment.

4. SEVERABILITY. Wherever possible, each provision of this Amendment, the
Loan Agreement, the Agency Agreement and related documents shall be interpreted
in such a manner so as to be effective and valid under applicable law, but if
any provision of any such document is held to be prohibited by or invalid under
applicable law, such provision or provisions shall be ineffective only to the
extent of such provision or invalidity, without invalidating the remainder of
such document.

5. SUCCESSORS AND ASSIGNS. All covenants and agreements contained in this
Amendment by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether or not so expressed.

6. EXPENSES. Borrower shall pay all of Agent's fees and expenses
(including, without limitation, fees and expenses and attorneys' fees and
expenses) incurred in connection with this Amendment and the transactions and
Loan Documents contemplated hereby.

7. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become effective
(the "EFFECTIVE DATE") unless and until:

a. Amendment. This Amendment shall have been duly executed by the
Borrower, the Lenders and the Agent (with six (6) original counterpart
signature pages);

b. Fee. Borrower shall have paid to Agent, for the pro rata benefit of
the Lenders, an Amendment Fee in respect of this Amendment in the amount of
$100,000, which shall be fully earned as of the date hereof and shall be
non-refundable.

7
<PAGE>

8. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. Borrower hereby jointly
and severally represents and warrants as of the Effective Date as follows:

a. The execution and delivery of this Amendment and the performance by
Borrower of its obligations hereunder are within the Borrower's powers and
authority, have been duly authorized by all necessary corporate action and
do not and will not contravene or conflict with the Articles of
Incorporation or By-laws of Borrower;

b. The Loan Agreement (as amended by this Amendment) and the other Loan
Documents constitute legal, valid and binding obligations of Borrower
enforceable in accordance with their terms by Agent and the other Lenders
against Borrower, and Borrower expressly reaffirms its Obligations under
the Loan Agreement (as amended by this Amendment) and each of the other
Loan Documents. Borrower further expressly acknowledges and agrees that
Agent, for the ratable benefit of the Lenders has a valid, duly perfected,
first priority and fully enforceable security interest in and lien against
each item of Collateral to the extent set forth in the Loan Agreement.
Borrower agrees that it shall not dispute the validity or enforceability of
the Loan Agreement (as stated before and after this Amendment) or any of
the other Loan Documents or any of its respective Obligations thereunder,
or the validity, priority, enforceability or extent of Agent's security
interest in or lien against any item of Collateral, in any judicial,
administrative or other proceeding;

c. No consent, order, qualification, validation, license, approval or
authorization of, or filing, recording, registration or declaration with,
or other action in respect of, any governmental body, authority, bureau or
agency or other Person is required in connection with the execution,
delivery or performance of, or the legality, validity, binding effect or
enforceability of, this Amendment or the Loan Documents contemplated
hereby;

d. The execution, delivery and performance of this Amendment and the
Loan Documents contemplated hereby does not and will not violate any law,
governmental regulation, judgment, order or decree applicable to Borrower
and does not and will not violate the provisions of, or constitute a
default or any event of default under, or result in the creation of any
security interest or lien upon any property of Borrower pursuant to, any
indenture, mortgage, instrument, contract, agreement or other undertaking
to which Borrower is a party or is subject or by which Borrower or any of
its real or personal property may be bound, except as contemplated hereby;

e. No Event of Default or events which, with the passage of time or
notice would constitute an Event of Default, exists under the Loan
Agreement or the other Loan Documents; and

f. Upon the Effective Date of this Amendment, Borrower hereby reaffirms
all covenants, representations and warranties made in the Loan Agreement
and the other Loan Documents to the extent the same are not amended hereby,
and agrees that all such

8
<PAGE>

covenants, representations and warranties shall be deemed to have been
remade as of the Effective Date of this Amendment.

9. REFERENCE TO THE EFFECT ON THE LOAN AGREEMENT.

a. References. Upon the Effective Date of this Amendment each reference
in the Loan Agreement to "this Loan Agreement," "hereunder," "hereof,"
"herein" or words of like import shall mean and be a reference to the Loan
Agreement, as amended hereby.

b. Ratification. Except as specifically modified above, the Loan
Agreement, and all other documents, instruments and agreements executed
and/or delivered in connection therewith shall remain in full force and
effect, and are hereby ratified and confirmed.

c. No Waiver. Agent's and/or the Lenders' failure, at any time or times
heretofore or hereafter, to require strict performance by Borrower of any
provision or term of the Loan Agreement, this Amendment or the other Loan
Documents shall not waive, affect or diminish any right of Agent and/or the
Lenders thereafter to demand strict compliance and performance therewith.
Any suspension or waiver by Agent and/or the Lenders of a breach of this
Amendment or any Event of Default under the Loan Agreement shall not
suspend, waive or affect any other breach of this Amendment or any Event of
Default under the Loan Agreement, whether the same is prior or subsequent
thereto and whether of the same or of a different kind or character. None
of the undertakings, agreements, warranties, covenants and representations
of Borrower contained in this Amendment, the Loan Agreement or in any of
the other Loan Documents, and no breach of this Amendment, or Event of
Default under the Loan Agreement shall be deemed to have been suspended or
waived by Agent and/or the Lenders unless such suspension or waiver is (a)
in writing and signed by Agent and the Lenders, and (b) delivered to
Borrower. In no event shall Agent's and the Lenders' execution and delivery
of this Amendment establish a course of dealing among Agent, the Lenders,
the Borrower or any other Loan Party or obligor or in any other way
obligate Agent and the Lenders to hereafter provide any amendments or
waivers with respect to the Loan Agreement or any other Loan Documents.

10. MISCELLANEOUS. Section 9 of the Loan Agreement is incorporated herein
as if repeated herein, including, without limitation, the waivers contained in
Section 9.25 (GOVERNING LAW; WAIVERS) and Section 9.26 thereof (MUTUAL WAIVER OF
RIGHT TO JURY TRIAL).

11. COUNTERPARTS. This Amendment may be executed by one or more of the
parties to the Amendment on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile shall also deliver a manually executed
counterpart of this Amendment, but the

9
<PAGE>

failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment.

[SIGNATURE PAGE FOLLOWS]

10
<PAGE>

SIGNATURE PAGE TO AMENDMENT NO. 1 TO AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT

BORROWER: USA DETERGENTS, INC., a Delaware corporation
BIG CLOUD POWDER CORPORATION, a Delaware
corporation;

CHICAGO MANAGEMENT POWDER CORP., a Delaware
corporation

CHICAGO CONTRACT POWDER CORPORATION, an
Illinois corporation

By: /s/ Uri Evan
---------------------------------------------
Uri Evan, President and Chief Executive
Officer of, and intending to legally bind,
each of the above corporations.

[Notary certification for Borrower attached]

11
<PAGE>

STATE OF NEW JERSEY )
) SS
COUNTY OF MONMOUTH )

The foregoing Amendment No. 1 to Loan and Security Agreement and Agency
Agreement was executed and acknowledged before me this __ day of November, 1999,
by Uri Evan, personally known to me to be the President and Chief Executive
Officer of USA Detergents, Inc., a Delaware corporation, Big Cloud Powder
Corporation, a Delaware corporation, Chicago Management Powder Corp., a Delaware
corporation, and Chicago Contract Powder Corporation, an Illinois corporation,
on behalf of each such corporation.

SUSAN BECKERMAN
NOTARY PUBLIC OF NEW JERSEY
COMMISSION EXPIRES 4/14/2004

(SEAL)

Notary Public /s/ Susan Beckerman
---------------------------------

My commission expires 4/14/2004
-------------------------

12
<PAGE>

SIGNATURE PAGE TO AMENDMENT NO. 1 TO AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT

AGENT:

FINOVA CAPITAL CORPORATION, a Delaware
corporation

By /s/ Ilene M. Gerber
----------------------------------
Vice President

LENDER:

FINOVA CAPITAL CORPORATION, a Delaware
corporation

By /s/ Ilene M. Gerber
----------------------------------
Vice President

Notice Address: 1000 First Avenue--1st Floor
King of Prussia, PA 19406
Attn: Mr. Francis Monzo
Tel. No.: (610) 491-8462
Fax No.: (610) 491-8476

with a copy to: FINOVA Capital Corporation
Attn: Group Counsel - Corporate
Finance
1850 North Central Avenue
Mail Station 1141
Phoenix, Arizona 85002-2209
Fax No.: (602) 262-1553

13
<PAGE>

SIGNATURE PAGE TO AMENDMENT NO. 1 TO AMENDED
AND RESTATED LOAN AND SECURITY AGREEMENT

LENDER: First Source Financial LLP
By: First Source Financial, Inc.
Its: Agent/Manager

By /s/ John P. Thacker
--------------------------------------------
Its: Senior Vice President
------------------------------------------

Notice Address: 2850 West Golf Road, 5th Floor
Rolling Meadows, IL 60008
Attn:
Tel. No.: (847) 734-2056
Fax No.: (847) 734-7912

with a copy to: Edward Szarkowicz, Esq.
Senior Counsel
First Source Financial LLP
2850 W. Golf Road, 5th Floor
Rolling Meadows, IL 60008

14
<PAGE>

SIGNATURE PAGE TO AMENDMENT NO. 1 TO AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT

LENDER: LaSalle Business Credit, Inc.

By /s/ Daniel Maresca
--------------------------------------
First Vice President

Notice Address: Mr. Daniel Maresca
LaSalle Business Credit, Inc.
477 Madison Avenue, 25th Floor
New York, New York 10022
Tel: (212) 832-6650
Fax: (212) 371-2966

<PAGE>

EXHIBIT 23

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement Nos.
33-98988 and 33-98986 of USA Detergents, Inc. on Form S-8 of our report dated
March 3, 2000, appearing in this Annual Report on Form 10-K of USA Detergents,
Inc. for the year ended December 31, 1999.

/s/ Deloitte & Touche LLP

New York, New York
March 28, 2000

<PAGE>

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 10-K for the twelve months ended December 31, 1999, and is
qualified in its entirety by reference to such financial statements
</LEGEND>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 254
<SECURITIES> 0
<RECEIVABLES> 24,659
<ALLOWANCES> 997
<INVENTORY> 14,504
<CURRENT-ASSETS> 46,146
<PP&E> 63,606
<DEPRECIATION> 20,189
<TOTAL-ASSETS> 94,686
<CURRENT-LIABILITIES> 38,143
<BONDS> 0
0
0
<COMMON> 138
<OTHER-SE> 18,762
<TOTAL-LIABILITY-AND-EQUITY> 94,686
<SALES> 242,726
<TOTAL-REVENUES> 242,726
<CGS> 163,964
<TOTAL-COSTS> 72,667
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,370
<INCOME-PRETAX> 1,725
<INCOME-TAX> 75
<INCOME-CONTINUING> 1,650
<DISCONTINUED> 0
<EXTRAORDINARY> 64
<CHANGES> 0
<NET-INCOME> 1,586
<EPS-BASIC> .12
<EPS-DILUTED> .11

</TABLE>