8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

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

Date of Report (Date of earliest event reported): July 13, 2004

United Industries Corporation

(Exact name of registrant as specified in its charter)

333-76055(Commission File Number)

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

2150 Schuetz Road

St. Louis, Missouri 63146
(Address of principal executive offices, with zip code)

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

Not Applicable

(Former name or former address, if changed since last report)

Item 9.  Regulation FD Disclosure and Item 12. Results of Operations and Financial Condition.

On July 13, 2004, United Industries Corporation issued a press release announcing its financing plan for the acquisition of United Pet Group, Inc. and preliminary second quarter year-to-date operating results.  A copy of the press release is being furnished as Exhibit 99.1 and supplemental financial information is being furnished as Exhibit 99.2 to this report, both of which are incorporated herein by reference.

The information, including Exhibits 99.1 and 99.2, in this Form 8-K is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section.  The information in this Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, except as shall otherwise be expressly set forth by specific reference in such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, United Industries Corporation has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.

	UNITED INDUSTRIES CORPORATION
	Registrant
Dated: July 13, 2004	By:	/s/ Daniel J. Johnston
	Name:	Daniel J. Johnston
	Title:	Executive Vice President, Chief Financial Officer and Director (Principal Financial Officer and Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release dated July 13, 2004
99.2	Other information concerning United Industries Corporation.

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EX-99.1

Exhibit 99.1

NEWS

FOR IMMEDIATE RELEASE

UNITED INDUSTRIES ANNOUNCES FINANCING PLAN FOR
THE ACQUISITION OF UNITED PET GROUP

Also Announces Preliminary Second Quarter Year-to-Date Operating Results

ST. LOUIS, July 13, 2004 – United Industries Corporation (the Company), which goes to market as Spectrum Brands and is the leading manufacturer and marketer of value-oriented products for the consumer lawn and garden care and insect control markets in North America, today announced its financing plan for the acquisition of United Pet Group, Inc. (UPG) along with preliminary second quarter year-to-date operating results.

The $360 million acquisition of UPG is expected to close in mid-August and be financed through a combination of debt, equity and cash.  The Company’s existing senior credit facility is expected to be amended and increased by $235 million, including a $75 million second lien facility, and affiliates of Thomas H. Lee Partners, the Company’s largest shareholder, have committed $85 million in new common equity.  The balance of the purchase price and all related transaction costs will be funded with the Company’s cash.

In connection with the amendment of its existing senior credit facility, the Company provided certain preliminary financial information to financial institutions late yesterday.  The preliminary financial information was based on actual and, in the case of the second quarter, forecasted operating results.  The Company’s final operating results for the second quarter are expected to be released in early August.  The preliminary 2004 year-to-date financial information included net sales of $423.3 million, gross profit of $158.5 million, operating income of $71.8 million, earnings before interest, income taxes, depreciation and amortization, or EBITDA, of $84.2 million and capital expenditures of $7.6 million.  The Company also provided to these institutions year-to-date information, on a pro forma basis giving effect to the Company’s acquisition of The Nu-Gro Corporation (Nu-Gro) in April 2004, which included net sales of $490.5 million, gross profit of $174.3 million, operating income of $80.2 million, EBITDA of $94.0 million and capital expenditures of $9.1 million.  Other information concerning the Company is included as an exhibit to Form 8-K filed by the Company today with the U.S. Securities and Exchange Commission.

Comparing the Company’s actual preliminary results for the six months ended June 30, 2004 with the six months ended June 30, 2003, net sales increased 10.0% to $423.3 million in 2004 from $384.8 million in 2003.  The increase is due to the acquisition of Nu-Gro and the growth in the Company’s Household segment, partially offset by the cessation of sales of certain non-core products and the previously announced de-listing of certain products at one key retailer.  Excluding the impact of its acquisition of Nu-Gro, the Company’s sales growth was just over $4.8 million.  Operating income decreased 4.8% to $71.8 million in 2004 from $75.4 million in 2003.  Factors contributing to the changes in operating income included continued increases in certain raw materials costs, freight and additional costs incurred in connection with the implementation of certain key modules of the Company’s enterprise resource planning, or ERP, system.

From a liquidity perspective, the Company’s actual preliminary year-to-date 2004 earnings before interest, income taxes, depreciation and amortization, or EBITDA, improved 3.6% to $84.2 million in 2004 compared to $81.3 million in 2003.  A reconciliation of EBITDA to GAAP measures, namely operating income, requires the inclusion of depreciation and amortization expense of $12.4 million for the six months ended June 30, 2004.  A reconciliation of the aforementioned EBITDA figure to operating income for Nu-Gro requires the inclusion of depreciation and amortization expense of $2.1 million.

EBITDA information has been included as the Company believes certain investors use it as one measure of historical ability to fund operations and meet financial obligations.  However, EBITDA is not presented to represent cash flows from operating activities as defined by accounting principles generally accepted in the United States (GAAP), nor does management recommend that it be used as an alternative to, or superior measure of, operating income as an indicator of operating performance or cash flow as a measure of liquidity or the ability to meet financial obligations. EBITDA, as used by the Company, may not be comparable to other similarly titled measures reported by other companies.

About United Industries Corporation

United Industries Corporation, which goes to market as Spectrum Brands(www.spectrumbrands.com), is the leading manufacturer and marketer of value-oriented products for the consumer lawn and garden care and household insect control markets in North America.  The Company’s lawn and garden brands include Spectracide^Ò, SpectracideTriazicide^Ò, Spectracide Terminate^Ò, Garden Safe^Ò and Real-Kill^Ò in the controls category as well as Sta-Green^Ò, Vigoro^Ò, Schultz^™, Peters^Ò, Bandini^Ò and Best^Ò brands in the lawn and garden fertilizer and organic growing media categories.  The Company’s household brands include Hot Shot^Ò, Cutter^Òand Repel^Ò.  Through Nu-Gro, the Company manufactures and markets such consumer brand names as CIL^Ò, Wilson^Ò, Vigoro^Ò, Pickseed^Ò, So-Green^Ò, Plant-Prod^Ò, Greenleaf^Ò and Green Earth^Ò in the Canadian market.  Nu-Gro also produces and distributes controlled release nitrogen and other fertilizer technologies under the brand names IB Nitrogen^Ò, Nitroform^Ò, Nutralene^Ò, Organiform^Ò and SCU^Ò to the consumer, professional and golf industries worldwide.  Founded in 1969, the Company is headquartered in St. Louis, Missouri.  (Bloomberg Symbol: 14496Z)

About United Pet Group, Inc.

Based in Cincinnati, Ohio, United Pet Group (www.unitedpetgroup.com) is a leading manufacturer and marketer of premium pet supplies products for dogs, cats, fish, birds and small animals.  UPG’s products are sold under a number of brand names, including Eight in One^®, Nature’s Miracle^®, Dingo^®, Lazy Pet^®, Marineland^®, Perfecto^®, Aquarium Systems^® and Jungle Talk^®.  Since 1997, UPG has acquired eight companies in the pet food and supplies industry.

UPG’s Aquatics division, based in Moorpark, California, markets the broadest line in the industry, including integrated aquarium kits, stand-alone tanks, filters and filter media, sea salt, and other aquarium supplies and accessories. The Aquatics division also markets equipment for use by retailers in the sale of live fish and lobsters. The company’s aquatics brands, which include Marineland^®, Perfecto^®, and Instant Ocean^®, are leading brands in their market segments.

UPG’s Specialty Pet division, based in Hauppauge, New York, markets pet treats and supplies for dogs, cats, birds and small animals under the Eight in One^®, Nature’s Miracle^®, Dingo^®, Lazy Pet^®, St. Aubrey^®, Wild Harvest^® and One Earth^™ brand names.

Certain statements in this press release regarding the Company’s business, with the exception of historical facts, may be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21G of the Securities Exchange Act of 1934, as amended, which involve risks and uncertainties, many of which are beyond the Company’s control.  When, and if, used herein, the words “will,” “should,” “believe,” “plan,” “preliminary,” “may,” “strategies,” “goals,” “anticipate,” “indicate,” “intend,” “determine,” “estimate,” “expect,” “project” and similar expressions, are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.  All forward-looking statements apply only as of the date they are disclosed and are based on the Company’s expectations at that time.  Actual results could differ materially from these statements as a result of weather conditions, retailer line item reviews, the loss of customers or product listings, changes in external competitive market factors, unanticipated changes in the financial performance of the Company, its customers, its industry or the economy in general, unexpected accounting charges, public perception regarding the safety of its products, as well as various other factors described in the Company’s filings with the U.S. Securities and Exchange Commission.  The Company does not undertake any obligation to update or revise publicly any forward-looking statements made by the Company or on its behalf, whether as a result of new information, future events or otherwise. Although the Company believes that its plans, intentions and expectations reflected in or suggested by any forward-looking statements made herein are reasonable, it can give no assurance that such plans, intentions or expectations will be achieved.

Media Contact:	Daniel J. Johnston
	United Industries Corporation	(314) 427-0780
	ir@spectrumbrands.com

# # #

EX-99.2

Exhibit 99.2

Other Information Concerning United Industries Corporation

Historical Financial Information

The following table outlines the financial results of United Industries and Nu-Gro, as adjusted, for fiscal years 2001, 2002 and 2003, as well as estimated and historical six months and last twelve months (LTM) 6/30/04 results.  United historical financial results exclude the financial results of Nu-Gro.  The Company’s fiscal year end coincides with the calendar year end.

($ in Millions)
	Historical						6 Months Ended June 30,				LTM
	2001		2002		2003		2003		2004E		6/30/2004E
United Net Sales(1)	$	273.3	$	556.5	$	536.1	$	384.8	$	389.5	$	540.8
Nu-Gro Net Sales(2)	126.8		127.9		158.6		111.6		100.9		147.9
United Gross Profit	$	132.8	$	197.8	$	208.2	$	152.5	$	150.5	$	206.3
Nu-Gro Gross Profit	30.4		33.9		40.1		27.6		23.7		36.2
United Operating Income	$	44.8	$	71.6	$	71.4	$	75.4	$	67.3	$	63.3
Nu-Gro Operating Income	11.3		14.2		16.2		14.5		12.8		14.5
United Adjusted EBITDA	$	58.2	$	83.3	$	86.8	$	82.5	$	79.1	$	83.4
Nu-Gro Adjusted EBITDA	14.6		18.4		20.2		16.5		14.9		18.6
Nu-Gro Cost Savings(3)	0.0		0.0		0.0		0.0		4.4		4.4
United Capital Expenditures	$	7.9	$	10.5	$	11.7	$	3.4	$	7.6	$	15.9
Nu-Gro Capital Expenditures	13.5		2.8		2.9		0.9		1.5		3.5

(1)United historical financial results in 2002 are pro forma for the Schultz and WPC Brands acquisitions.

(2)Nu-Gro historical financial results in 2003 are pro forma for the Greenleaf acquisition.

(3)Annualized benefit of implemented cost savings initiatives not yet realized.

The following table presents a reconciliation of adjusted EBITDA, as presented in the table above, to operating income:

($ in Millions)

	Historical								Six Months Ended June 30,				Pro Forma
	2001				2002		2003		2003		2004E		6/30/2004E
United Adjusted EBITDA	$			58.2	$	83.3	$	86.8	$	82.5	$	79.1	$	83.4
Rationalization charges	8.5				—		—		—		—		—
Inventory write-up	—				—		1.2		1.2		—		—
EBITDA	49.7				83.3		85.6		81.3		79.1		83.4
Depreciation and amortization	4.9				11.7		14.2		5.9		11.8		20.1
Operating income	$			44.8	$	71.6	$	71.4	$	75.4	$	67.3	$	63.3
Nu-Gro Adjusted EBITDA	$		14.6		$	18.4	$	20.2	$	16.5	$	14.9	$	18.6
Depreciation and amortization	3.3				4.2		4.0		2.0		2.1		4.1
Operating income	$	11.3			$	14.2	$	16.2	$	14.5	$	12.8	$	14.5

UNITED (excluding Nu-Gro)

Six Months Ended June 30, 2004 Pro Forma Compared to Six Months Ended June 30, 2003 Pro Forma

Net Sales.  Net sales represent gross sales less any applicable customer discounts from list price, customer returns and promotion expense through cooperative programs with retailers.  Net sales increased $4.7 million, or 1.2%, to $389.5 million for the six months ended June 30, 2004 from $384.8 million for the six months ended June 30,

2003.  The increase, primarily related to United’s Household segment, was due mainly to stronger sales of certain indoor insecticide and outdoor insecticide and repellent products compared to 2003.  The increase was also due to higher sales of various lawn & garden products which were partially offset by a decrease in sales of certain herbicide products at one key retailer and declines in the Contract segment related to the cessation of non-core product sales.

Net sales in the Lawn & Garden segment decreased $4.2 million, or 1.5%, to $281.3 million for the six months ended June 30, 2004 from $285.5 million for the six months ended June 30, 2003.  Net sales of certain lawn & garden products were higher than in 2003 but were offset by a decline in sales of certain herbicides at one key retailer.  Net sales in the Household segment increased $14.4 million, or 15.7%, to $106.0 million for the six months ended June 30, 2004 from $91.6 million for the six months ended June 30, 2003.  Net sales of this segment increased due to higher sales of indoor insecticide and outdoor insect repellent products.  Net sales in the Contract segment decreased $5.5 million to $2.2 million for the six months ended June 30, 2004 from $7.7 million for the six months ended June 30, 2003.  Net sales of this segment decreased primarily due to the cessation of non-core product sales described above.

Gross Profit and SG&A.  Gross profit as a percentage of sales decreased slightly to 38.6% for the six months ended June 30, 2004 from 39.6% for the six months ended June 30, 2003 due primarily to unfavorable costs of granular urea used to produce fertilizer and an increase in freight costs. This decrease was partially offset by United’s ability to achieve operational efficiencies from the strategic transactions consummated in 2002 and the discontinuation of non-core product sales which had lower margins than United’s other products.

SG&A expenses increased slightly as a percentage of net sales to 21.4% for the six months ended June 30, 2004 from 20.7% for the six months ended June 30, 2003.  This increase was primarily due to an increase in depreciation of capitalized ERP costs and costs associated with certain distribution activities, partially offset by a decline in sales costs related to various sales activities.

EBITDA.  As a result of the factors described above, EBITDA decreased $3.4 million, or 4.1%, to $79.1 million for the six months ended June 30, 2004 from adjusted EBITDA of $82.5 million for the six months ended June 30, 2003.  EBITDA margin decreased slightly from 21.5% to 20.3%.

2003 Compared to 2002 Pro Forma

Net Sales.  Net sales decreased $20.4 million, or 3.7%, to $536.1 million for the year ended December 31, 2003 from $556.5 million for the year ended December 31, 2002. The decrease resulted from an especially wet and cool first half of 2003, as retailers maintained lower inventory levels and experienced weakened sales of certain lawn & garden products.  Also contributing to the sales decline was a decline in charcoal sales related to United’s cessation of charcoal distribution, the sale of certain non-core product lines acquired in the WPC Brands acquisition and an increase in promotional expenses (which are recorded as an offset to revenue).  Sales of discontinued non-core product lines were $5.7 million in 2003, compared to $32.8 million in 2002.

Net sales in the Lawn & Garden segment decreased slightly to $393.3 million for the year ended December 31, 2003 from $395.6 million for the pro forma year ended December 31, 2002. Net sales gains were limited by retailers maintaining lower inventory levels and lower sales of certain other products in the Lawn & Garden segment resulting from cooler and wetter weather conditions the first half of 2003 compared to 2002. Net sales in the Household segment increased $7.9 million, to $132.3 million for the year ended December 31, 2003 from $124.4 million for the pro forma year ended December 31, 2002. Net sales of this segment increased primarily due to higher repellent sales, partially offset by a decline in sales of certain insecticide products. Net sales in the Contract segment decreased $25.6 million, to $10.6 million for the year ended December 31, 2003 from $36.2 million for the year ended December 31, 2002. Net sales of this segment decreased due to the decline in and cessation of charcoal sales.

Gross Profit and SG&A.  Gross profit as a percentage of sales increased from 35.5% to 39.0% due to: (i) favorable fertilizer manufacturing costs reductions related to the purchase of certain fertilizer production assets in October 2002, (ii) increased sales of higher margin products in the Lawn & Garden and Household segments and

(iii) United’s ability to achieve operational efficiencies from the strategic transactions consummated in 2002.  Also contributing to the margin expansion was the discontinuation of charcoal distribution and the sale of non-core product lines which had lower margins than the Lawn & Garden and Household segments. The improvement in margin was partially offset by unfavorable costs of granular urea used to produce fertilizer.

SG&A expenses increased as a percentage of sales to 22.8% in 2003 compared to 20.6% for pro forma 2002. This increase was primarily due to increased media and advertising spending and additional non-manufacturing costs associated with fertilizer being produced internally rather than being purchased.  Throughout most of 2002, United purchased fertilizer from a third party and recorded the purchases in costs of goods sold, whereas subsequent to its purchase of certain fertilizer production assets, much of these costs became non-manufacturing costs within SG&A expense.

EBITDA.  As a result of the factors described above, EBITDA increased by 4.2% from $83.3 million in 2002 to $86.8 million in 2003.  EBITDA margin increased from 15.0% to 16.2%.

2002 Pro Forma Compared to 2001

Net Sales.  Net sales increased $283.2 million, or 103.6%, to $556.5 million on a pro forma basis as if the Schultz merger and WPC Brands acquisition had occurred at the beginning of 2002, from $273.3 million for the year ended December 31, 2001. The increase, primarily in the Lawn & Garden segment, as well as the change in sales mix by segment, was due mainly to expanded product lines resulting from the acquisition of various fertilizer brands and the merger with Schultz in May 2002, coupled with an increase in sales of specific product lines described further below. This increase was partially offset by an increase in promotion expense and retailers maintaining lower inventory levels.

Net sales in the Lawn & Garden segment increased $226.3 million, or 133.7%, to $395.6 million for the pro forma year ended December 31, 2002 from $169.3 million for the year ended December 31, 2001. Net sales of this segment increased as a result of the acquisition of various fertilizer brands and the merger with Schultz. These increases were partially offset by lower sales volume of various other products in the Lawn & Garden segment. Net sales in the Household segment increased $23.2 million or 22.9%, to $124.4 million for the pro forma year ended December 31, 2002 from $101.2 million for the year ended December 31, 2001. Net sales of this segment increased primarily due to increases in sales of repellents and insecticides and in private label products.  Net sales in the Contract segment increased $33.3 million to $36.2 million for the pro forma year ended December 31, 2002 from $2.9 million for the year ended December 31, 2001. Net sales of this segment increased primarily due to the merger with Schultz.

Gross Profit and SG&A.  Gross profit as a percentage of sales decreased, as expected, from 48.6% in 2001 to 35.5% in 2002, primarily due to the effect of the fertilizer and Schultz volume in 2002.  In 2002, the United base business had a gross margin of approximately 43%, whereas the fertilizer brands and Schultz business had gross margins of approximately 19% and 25%, respectively. The different margins are due to product mix, as fertilizers and premium growing media carry lower margins than control products.

SG&A expenses decreased as a percentage of sales to 20.6% for pro forma 2002 compared to 27.3% in 2001.  The decrease was primarily due to the additional sales gained from the Pursell and Schultz transactions, with a lesser corresponding increase in SG&A.

EBITDA.As a result of the drivers mentioned above, EBITDA increased by 43.1% from $58.2 million in 2001 to $83.3 million in 2002. However, the EBITDA margin decreased from 21.3% to 15.0% as a result of the shift in product mix toward fertilizer and Schultz products, which generally carry lower margins than control products. In 2002, the United base business had an EBITDA margin of approximately 19%, whereas the fertilizer brands and Schultz business had EBITDA margins of approximately 7% and 1%, respectively.

NU-GRO

Six Months Ended June 30, 2004 Compared to Six Months Ended June 30, 2003 (including Greenleaf and converted to US$ at the average period FX rate)

Net Sales.  Net sales decreased $10.7 million, or 9.6%, to $100.9 million for the six months ended June 30, 2004 from $111.6 million for the six months ended June 30, 2003.  The sales decrease resulted primarily from lower sales in the Professional Products segment and a decrease in the Fertilizer Technology segment, these declines were partially offset by a net increase in the Consumer Products segment, especially from companies acquired during the period.

Net sales in the Consumer Products segment increased $5.5 million, or 10.1%, to $60.0 million for the six months ended June 30, 2004 from $54.5 million for the six months ended June 30, 2003.  Net sales increased primarily as a result of an increase in various grass seed products of $1.5 million and higher sales in other products of $1.5 million.  This increase was partially offset by a net decline in pesticide sales of $1.1 million.

Net sales in the Professional Products segment decreased $4.6 million, or 26.6%, to $12.7 million for the six months ended June 30, 2004 from $17.3 million for the six months ended June 30, 2003.  Net sales of this segment decreased in part to a decrease in sales of certain professional ice melt products of $1.5 million.

Net sales in the Fertilizer Technology segment declined to $28.2 million for the six months ended June 30, 2004 from $39.8 million for the six months ended June 30, 2003.  Net sales of this segment decreased due to a significant fluctuation in the US exchange rate and lower sales of Nutralene product.

Gross Profit and Sales, Administration and Marketing Expense.  Gross profit as a percentage of sales decreased slightly to 23.5% for the six months ended June 30, 2004 from 24.8% for the six months ended June 30, 2003 due primarily to sales mix, driven by higher sales of certain products with lower margins, an increase in freight costs and an increase in certain raw materials without a corresponding increase in prices charged to customers.  The margin decline was partially offset by an increase in sales of various higher margin products.

Sales, administration and marketing expense decreased $2.5 million, or 19.2%, to $10.5 million for the six months ended June 30, 2004 from $13.0 million for the six months ended June 30, 2003, primarily due to decreased sales and distribution costs.  As a percentage of net sales, these costs decreased to 10.4% for the six months ended June 30, 2004 from 11.7% for the six months ended June 30, 2003, primarily due to the factors previously described.

EBITDA.  As a result of the factors described above, EBITDA decreased $1.6 million, or 9.7%, to $14.9 million for the six months ended June 30, 2004 from $16.5 million for the six months ended June 30, 2003.

Pro Forma Twelve Months Ended December 31, 2003 Compared to Fiscal Year Ended September 30, 2002

Net Sales.  Net sales increased $30.7 million on a pro forma basis, or 24.0%, to $158.6 million for the twelve months ended December 31, 2003 compared to $127.9 million for the fiscal year ended September 30, 2002.  (These 2003 pro forma results reflect the full year contribution of Greenleaf Products, Inc., which was acquired by Nu-Gro on November 3, 2003.)  The sales increase resulted primarily from a net increase in the Consumer Products segment, especially from companies acquired during the period, higher sales in the Professional Products segment of $1.9 million and a slight decrease in the Fertilizer Technology segment of $0.8 million.

Pro forma net sales in the Consumer Products segment increased $29.8 million, or 62.6%, to $77.4 million for the twelve months ended December 31, 2003 from $47.6 million for the fiscal year ended September 30, 2002.  Pro forma net sales increased primarily as a result of the Plant Products acquisition in October 2002, which contributed $4.0 million to the increase in net sales, the Pickseed acquisition in July 2002, which contributed $3.2 million to the increase in net sales, an increase in various pesticide products of $2.1 million and higher sales in other products of $2.1 million.  This increase was partially offset by higher sales discounts and rebates of $1.4

million and a net decline in fertilizer sales of $0.8 million.  The Greenleaf acquisition would have contributed pro forma net sales of approximately $20 million, if the acquisition had been completed as of January 1, 2003.

Pro forma net sales in the Professional Products segment increased $1.9 million, or 7.6%, to $27.6 million for the twelve months ended December 31, 2003 from $25.9 million for the year ended September 30, 2002.  Pro forma net sales of this segment increased primarily due to an increase in sales of certain professional insecticides of $1.8 million, an increase in ice melt products of $0.9 million and an increase in Diazinon sales of $0.8 million.

Pro forma net sales in the Fertilizer Technology segment declined slightly to $54.0 million for the twelve months ended December 31, 2003 from $54.7 million for the fiscal year ended September 30, 2002.  Pro forma net sales of this segment increased primarily due to higher sales of Polymer Sulfur Coated Urea, Nutralene and other products, offset by a decline in sales of IBDU, Sulphur Coated Urea and other urea products.

Gross Profit and Sales, Administration and Marketing Expense.  Pro forma gross profit as a percentage of sales dipped slightly from 26.5% for the fiscal year ended September 30, 2002 to 24.2% for the twelve months ended December 31, 2003 due primarily to sales mix, driven by higher sales of certain products with lower margins, an increase in various sales discounts and rebates and an increase in certain raw materials without a corresponding increase in prices charged to customers.  The margin decline was partially offset by an increase in sales of various higher margin products.

Pro forma sales, administration and marketing expense increased $3.0 million, or 19.7%, primarily due to higher sales expense and higher compensation expense.  However, pro forma sales, administration and marketing expense decreased as a percentage of sales to 11.5% for the twelve months ended December 31, 2003 from 11.8% for the fiscal year ended September 30, 2002, primarily due to net sales increasing at a greater rate than sales, administration and marketing expense.

EBITDA.  As a result of the factors described above, pro forma EBITDA increased by $1.8 million, or 9.8%, to $20.2 million for the twelve months ended December 31, 2003 from $18.4 million for the fiscal year ended September 30, 2002.

Year Ended September 30, 2002 Compared to Year Ended September 30, 2001

Net Sales.  Net sales increased $1.1 million, or nearly 1%, to $127.9 million for the year ended September 30, 2002 from $126.8 million for the year ended September 30, 2001.  The increase resulted primarily from a net increase in sales in the Consumer Products and Fertilizer Technology segments of $2.1 million, partially offset by a decline in the Professional Products segment of $1.0 million.

Net sales in the Consumer Products segment increased primarily due to the increase in sales of grass seed, due to the acquisition of a 70% equity interest in EroGreen Seeds in July 2001.  This increase was partially offset by a decline in sales of other product lines due to poor spring weather conditions which negatively impacted fertilizer sales.  Fertilizer sales were further adversely impacted due to elimination of several lower margin products.  Net sales in the Professional Products segment decreased primarily due to lower sales of ice melt products as a result of mild winter weather conditions.  Net sales in the Fertilizer Technology segment increased primarily due to higher sales volume, particularly in the sulphur coated urea line due to the withdrawal of a major U.S. competitor, partially offset by an average decrease in selling prices.

Gross Profit.  Gross profit as a percentage of sales increased from 24.0% for the year ended September 30, 2001 to 26.5% for the year ended September 30, 2002 due primarily to improved profits on certain products within the Consumer Products segment and an insurance recovery related to business interruption within the Fertilizer Technology segment.  The margin improvement was partially offset by lower sales volume within the Professional Products segment.

Sales, Administration and Marketing Expense.  Sales, administration and marketing expense decreased 3.8% on increased sales of nearly 1%.  Sales, administration and marketing expense decreased as a percentage of net sales to 11.8% for the year ended September 30, 2002 from 12.5% for the year ended September 30, 2001, primarily due to net sales increasing at a greater rate than sales, administration and marketing expense.

EBITDA.  As a result of the factors described above, EBITDA increased $3.8 million, or 26.0%, to $18.4 million for the year ended September 30, 2002 from $14.6 million for the year ended September 30, 2001.