6-K 1 grohe_6-k7.txt GROHE HOLDING GMBH FORM 6-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 333-83166 For the month of June 2003 Grohe Holding GmbH Hauptstrasse 137, 58675 Hemer, Germany Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F Form 20-F |X| Form 40-F |_| Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes |_| No |X| SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Grohe Holding GmbH (Registrant) 02 June 2003 By: /s/ Michael Grimm -------------------------------- Name: Michael Grimm Title: Chief Financial Officer 02 June 2003 By: /s/ Heiner Henke -------------------------------- Name: Heiner Henke Title: Principal Accounting Officer GROHE HOLDING GMBH - 1ST QUARTER 2003 RESULTS FINANCIAL KEY FIGURES FOR THE 1ST QUARTER 2003: o Sales 237.8 million Euro (1Q2002: 239.7 million Euro) o Operating Income 35.7 million Euro (1Q2002: 39.5 million Euro) o Net Income 7.9 million Euro (1Q2002: 13.9 million Euro) o Adjusted EBITDA* 55.2 million Euro (1Q2002: 58.6 million Euro) Sales in the 1st quarter 2003 amounted to 237.8 million Euro, down 0.8 percent compared to the 1st quarter of prior year. The sales decrease is primarily due to the weak US dollar. Sales growth after currency adjustments was 3.3 percent compared to 1st quarter 2002. In Germany the economic situation remained weak in the 1st quarter. Sales decreased by 6.6 percent to 58.9 million Euro. In the European markets, without Germany, economic growth continued to slow down. Nevertheless, sales growth of 9.2 percent to 130.0 million Euro was realised. This increase was mainly supported by two-digit sales growth rates in Eastern Europe (+24.5 percent), France (+12.1 percent) and the United Kingdom (+14.0 percent). Sales in overseas markets decreased in the 1st quarter 2003 by 15.1 percent to 48.8 million Euro compared to the 1st quarter of prior year. This decrease is mainly attributable to the weak US dollar and the crisis in Iraq. Sales by strategic product groups were as follows: Sales of designer faucets and accessories amounted to 20.4 million Euro in the 1st quarter 2003, an increase of 5.0 percent compared to the 1st quarter of prior year. Sales in the product group bathroom and special faucets, which currently accounts for almost 45 percent of total sales, rose by 1.8 percent to 106.7 million Euro. The product group showers and shower systems saw a slight decline in sales by 1.6 percent to 37.9 million Euro. Sales in the product group kitchen faucets decreased by 3.6 percent to 27.9 million Euro. Affected by the weak German market sales in the product group sanitary systems were down by 5.2 percent amounting to 23.3 million Euro in the 1st quarter 2003. The gross margin of 43.9 percent was slightly below the 1st quarter 2002 (44.4 percent). The unfavourable currency impacts were not completely compensated for by cost saving rationalisation measures and savings in material procurement. Accordingly, 1st quarter 2003 operating income came to 35.7 million Euro (1st quarter 2002: 39.5 million Euro). In March and April Grohe refinanced bank loans and shareholder loans of a total volume of 600 million Euro. Unamortized debt issuance cost of 6.3 million Euro related to the refinanced bank loans impacted as one-time effect the interest result in the 1st quarter 2003. Net income after taxes amounted to 7.9 million Euro in the 1st quarter 2003 and was 6.0 million Euro below the 1st quarter of prior year (13.9 million Euro). The adjusted EBITDA* came to 55.2 million Euro and was 3.4 million Euro below the 1st quarter 2002. * Please see attachment for the definition of EBITDA OUTLOOK Despite the continuous difficult market environment we still expect for fiscal year 2003 an EBITDA result on the level of prior year. NOTE We prepare our quarterly results in accordance with US-GAAP. ATTACHMENTS Statements of Operations, Balance Sheets, Statements of Cash Flows, Reconciliation of adjusted EBITDA The text contains statements reflecting our views about our future performance and constitutes "forward-looking statements". These views may involve risks and uncertainties that are difficult to predict and may cause our actual results to differ materially from the results discussed in such forward-looking statements. Readers should consider that various factors, including changes in general economic conditions, nature of competition, developments in distribution, industry trends, influence of currency fluctuations and inflation, and other factors discussed, may affect our projected performance. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. GROHE HOLDING GMBH UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (EURO IN THOUSANDS)

~~TABLE~~Three OFmonths ~~CONTENTS~~ended ~~Forward~~March ~~looking~~31, ~~statements..................................................................................iii~~------------------------------------ ~~Unaudited~~2003 ~~Interim~~2002 ~~Consolidated~~------- ~~Financial~~----------------- ~~Statements...........................................................1~~------------------ ~~Unaudited~~Sales ~~Consolidated~~237,812 ~~Statements~~239,702 Cost of ~~Operations......................................................2~~sales ~~Consolidated~~(133,499) ~~Balance~~(133,335) ~~Sheets..........................................................................3~~----------------- ~~Unaudited~~------------------ ~~Consolidated~~Gross ~~Statements~~profit of104,313 ~~Changes~~106,367 in----------------- ~~Shareholders'~~------------------ ~~Equity.................................5~~Selling, ~~Unaudited~~general ~~Consolidated~~and ~~Statements~~administrative ofexpenses ~~Cash~~(57,440) ~~Flows......................................................~~(56,531) Research and development (6,334) ~~Notes~~(5,501) toAmortization ~~the~~of ~~Unaudited~~tradename ~~Interim~~(4,838) ~~Financial~~(4,836) ~~Statements..................................................7~~----------------- ------------------ (68,612) (66,868) ----------------- ------------------ Operating ~~and~~income 35,701 39,499 Interest income 693 519 Interest expense (22,666) (18,038) Income (loss) from equity method investees 44 (9) Financial ~~Review~~income (loss) from derivatives (984) 1,310 Other income and ~~Prospects.................................................................25~~expense, ~~Quantitative~~net 204 822 ----------------- ------------------ Income before income taxes and ~~Qualitative~~minority ~~Disclosure~~interests ~~about~~12,992 ~~Market~~24,103 ~~Risk....................................................39~~Income ~~Calculations~~tax ofexpense ~~EBITDA~~(4,934) as(10,042) ~~defined~~----------------- in------------------ ~~the~~Income ~~Indenture...........................................................48~~before minority interests 8,058 14,061 Minority interests (206) (187) ----------------- ------------------ Net income 7,852 13,874 ================= ==================

GROHE HOLDING GMBH CONSOLIDATED BALANCE SHEETS (EURO IN THOUSANDS)

~~Three months ended~~ March 31, ~~------------------------------------~~December ~~NOTE~~31, 2003 2002 ~~----~~(unaudited) ----------------- ------------------ ~~Sales~~Assets ~~237~~Current assets Cash and cash equivalents 45,~~812~~918 ~~239~~71,~~702~~299 ~~Cost~~Restricted ofcash ~~sales~~24,655 ~~(133~~31,~~499)~~274 ~~(133~~Accounts receivable Trade accounts receivable 175,~~335)~~972 143,203 Due from equity method investees 2,079 1,810 ----------------- ------------------ ~~Gross profit 104~~178,~~313~~051 ~~106~~145,~~367~~013 ----------------- ------------------ ~~Selling~~Inventories 102,239 ~~general~~108,195 ~~and~~Deferred ~~administrative~~income ~~expenses~~taxes ~~(57~~4,~~440)~~012 ~~(56~~5,~~531)~~146 ~~Research~~Prepaid ~~and~~expenses ~~development (6~~1,~~334)~~992 (51,~~501)~~498 ~~Amortization~~Other ofcurrent ~~tradename~~assets (433,~~838)~~840 (433,~~836)~~050 ----------------- ------------------ Total ~~operating~~current ~~expenses~~assets ~~(68~~390,~~612)~~707 ~~(66~~395,~~868)~~475 ----------------- ------------------ ~~Operating~~Investments ~~income~~in ~~35,701~~equity 39method investees 998 1,~~499~~510 ~~Interest~~Deferred income ~~693~~taxes ~~519~~1,740 ~~Interest~~1,329 ~~expense~~Other (noncurrent assets 23,627 22,~~666)~~321 ~~(18~~Property,~~038)~~ ~~Income~~plant ~~(loss)~~and ~~from~~equipment ~~equity~~Land, ~~method~~buildings ~~investees~~and 44improvements, ~~(9)~~net ~~Financial~~128,553 ~~income~~129,162 ~~(loss)~~Equipment ~~from~~and ~~derivatives~~machinery, 3net ~~(984)~~25,877 128,~~310~~309 Other ~~income~~factory and ~~expense~~office equipment, net 446,005 ~~204~~48,274 ~~822~~Advances and construction in process 13,307 13,261 ----------------- ----------------- 213,742 219,006 ----------------- ~~Income~~----------------- ~~before~~Intangible ~~income~~assets ~~taxes~~Tradename, net 221,979 226,817 Software and ~~minority~~other ~~interests~~intangible assets, net 12,~~992~~811 2411,~~103~~226 ~~Income~~Intangible ~~tax~~pension ~~expense~~asset ~~(4,934)~~194 ~~(10,042)~~202 ----------------- ------------------ ~~Income~~234,984 ~~before~~238,245 ~~minority~~----------------- ~~interests~~----------------- 8Goodwill,~~058~~ 14net 444,~~061~~852 ~~Minority~~445,011 ~~interests (206) (187)~~ ----------------- ------------------ ~~Net~~Total ~~income~~assets 71,~~852~~310,650 131,~~874~~322,897 ================= ==================

GROHE HOLDING GMBH CONSOLIDATED BALANCE SHEETS (CONTINUED) (EURO IN THOUSANDS)

March 31, December 31, 2003 2002 ~~NOTE~~ (unaudited) -------- ---------~~--------~~ ------------------ ~~Assets~~Liabilities ~~Current assets Cash~~ and ~~cash~~Shareholders' ~~equivalents~~Equity ~~45,918~~Current ~~71,299~~liabilities ~~Restricted~~Current ~~cash~~maturities ~~24,655 31,274 Accounts receivable Trade accounts receivable less allowance for doubtful accounts~~ of ~~EUR7,393~~long-term ~~and~~debt ~~EUR6,455~~to atbanks ~~March 31~~24,759 ~~2003 and December 31~~73,184 ~~2002,~~Current ~~respectively~~maturities ~~175,972~~of ~~143,203~~capital ~~Due~~leases ~~from~~576 ~~equity~~656 ~~method~~Short-term ~~investees~~debt ~~2,079~~to ~~1,810~~banks ~~----------------- ----------------- 178~~3,~~051~~900 ~~145~~4,~~013~~054 ~~-----------------~~Trade ~~-----------------~~accounts ~~Inventories~~payable ~~5 102~~20,~~239~~228 ~~108~~34,~~195~~599 ~~Deferred~~Current ~~income~~tax ~~taxes~~liabilities 418,~~012~~415 516,~~146~~780 ~~Prepaid~~Other accrued expenses ~~1,992~~and ~~1,498 Other~~ current ~~assets~~liabilities 33138,~~840~~083 33142,~~050~~910 ----------------- ------------------ Total current ~~assets~~liabilities ~~390~~205,~~707~~961 ~~395~~272,~~475~~183 ----------------- ------------------ ~~Investments~~Noncurrent inliabilities ~~equity~~Long-term ~~method~~debt ~~investees~~to ~~998~~banks 1322,~~510~~291 ~~Deferred~~279,954 ~~income~~Long-term ~~taxes~~debt 1to related parties 136,~~740~~976 1133,~~329~~148 ~~Other~~Long-term ~~noncurrent~~debt ~~assets~~to ~~23,627~~shareholders 2240,~~321~~662 ~~Property~~39,526 ~~plant~~Bonds ~~and~~payable ~~equipment Land~~200,000 ~~buildings and improvements~~200,000 ~~net~~Capital ~~128,553~~leases ~~129,162~~404 ~~Equipment~~518 Pension and ~~machinery,~~similar ~~net~~obligations 25154,~~877~~645 28152,~~309~~400 Other ~~factory~~accrued expenses and ~~office~~noncurrent ~~equipment,~~liabilities ~~net 46~~16,~~005~~600 4816,~~274~~435 ~~Advances~~Deferred ~~and~~income ~~construction~~taxes ~~in process 13~~72,~~307~~557 1375,~~261~~297 ----------------- ------------------ ~~213~~Total noncurrent liabilities 944,~~742~~135 ~~219~~897,~~006~~278 ----------------- ------------------ ~~Intangible~~Minority ~~assets~~interests 6in ~~Tradename~~consolidated subsidiaries 1,613 ~~net~~2,068 ~~221~~Shareholders' equity Share capital 51,~~979~~374 ~~226~~51,~~817~~374 ~~Software~~Additional ~~and~~paid ~~other~~in ~~intangible~~capital ~~assets~~163,204 ~~net~~163,204 12Deferred compensation (1,~~811~~511) 11(1,~~226~~788) ~~Intangible~~Accumulated ~~pension~~deficit ~~asset~~(49,658) ~~194~~(57,510) ~~202~~Accumulated ~~-----------------~~other ~~-----------------~~comprehensive ~~234~~loss (4,~~984~~468) ~~238~~(3,~~245~~912) ----------------- ------------------ ~~Goodwill,~~Total ~~net~~shareholders' 7equity ~~444~~158,~~852~~941 ~~445~~151,~~011~~368 ----------------- ------------------ Total ~~assets~~liabilities and shareholders' equity 1,310,650 1,322,897 ================= ==================

GROHE HOLDING GMBH UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (EURO IN THOUSANDS)

~~March~~Three ~~31,~~months ~~December~~ended March 31, ~~2003 2002 NOTE (unaudited)~~ --------- -------------------- 2003 2002 -------------- ------------- ~~Liabilities~~CASH ~~and~~FLOWS ~~Shareholders'~~FROM ~~Equity~~OPERATING ~~Current~~ACTIVITIES: ~~liabilities~~Net ~~Current~~income ~~maturities~~7,852 13,874 Minority interests in income of ~~long-term~~subsidiaries ~~debt~~206 187 Adjustments to ~~banks~~reconcile net income to net cash provided by operating activities Depreciation of fixed assets 8,808 2412,~~759~~891 73Amortization of tradename 4,~~184~~838 ~~Current~~4,836 ~~maturities~~Amortization of ~~capital~~software ~~leases~~and ~~576~~other ~~656~~intangibles ~~Short~~990 957 Deferred income taxes (4,169) (114) (Income) loss from equity method investees (45) 9 Noncash compensation 277 0 Gain from disposal of long-lived assets, net (71) (1) Changes in operating assets and liabilities Accrued interest on long-term debt to ~~banks~~shareholders 3and related parties 4,~~900~~964 4,~~054~~452 ~~Trade~~Derivative ~~accounts~~financial ~~payable~~instruments 204,~~228~~536 (2,005) Accounts receivable (34,~~599~~148) ~~Current~~(33,014) ~~tax~~Inventories ~~liabilities~~4,846 182,~~415~~677 16Prepaid expenses and other assets 6,~~780~~192 3,091 Accounts payable (14,371) (5,939) Pension and similar obligations 2,344 2,357 Other accrued expenses and ~~current~~ liabilities ~~9 138~~(3,~~083~~652) ~~142~~5,~~910~~897 --------------~~---~~ -------------~~-----~~ ~~Total~~NET ~~current~~CASH ~~liabilities~~PROVIDED ~~205~~BY (USED FOR) OPERATING ACTIVITIES (10,~~961~~603) ~~272~~10,~~183~~155 --------------~~---~~ -------------~~-----~~ ~~Noncurrent~~CASH ~~liabilities~~FLOWS ~~Long-term~~USED ~~debt~~FOR toINVESTING ~~banks~~ACTIVITIES: 8Purchases ~~322,291~~of ~~279~~property,~~954~~ ~~Long-term~~plant ~~debt~~and toequipment ~~related parties 136~~(3,~~976~~597) ~~133~~(3,~~148~~223) ~~Long-term~~Proceeds ~~debt~~from tosale ~~shareholders~~of 40property,~~662~~ ~~39,526~~plant ~~Bonds~~and ~~payable~~equipment ~~200,000~~251 ~~200,000~~63 ~~Capital~~Purchases ~~leases~~of ~~404~~intangible ~~518~~assets ~~Pension~~(3,017) ~~and~~(966) ~~similar~~Purchases ~~obligations~~of ~~154,645~~shares ~~152,400~~from ~~Other~~minorities ~~accrued~~(2,208) ~~expenses~~0 ~~and~~Dividends ~~noncurrent~~received ~~liabilities~~from ~~16,600~~equity ~~16,435~~method ~~Deferred~~investees ~~income~~556 ~~taxes~~0 ~~72,557 75,297~~ --------------~~---~~ -------------~~-----~~ ~~Total~~NET ~~noncurrent~~CASH ~~liabilities~~USED ~~944~~FOR INVESTING ACTIVITIES (8,~~135~~015) ~~897~~(4,~~278~~126) --------------~~---~~ -------------~~-----~~ ~~Commitments~~CASH ~~and~~FLOWS ~~contingencies~~FROM 10FINANCING ~~Minority~~ACTIVITIES: ~~interests~~Decrease in ~~consolidated~~restricted ~~subsidiaries~~cash 16,~~613~~619 2,~~068~~800 ~~Shareholders'~~Proceeds ~~equity~~from ~~Share~~issuance ~~capital 51,374 51,374 Additional paid in capital, net~~ of ~~subscription~~long-term ~~receivable~~debt ofto ~~EUR283~~banks ~~at March 31~~330,000 ~~2003~~0 ~~and~~Principal ~~December~~payments ~~31,~~on ~~2002,~~long-term ~~respectively~~debt ~~163,204~~to ~~163,204~~banks ~~Deferred compensation~~ (1336,~~511~~126) (~~1,788~~319) ~~Accumulated~~Refinancing ~~deficit~~charges (497,~~658~~059) ~~(57,510)~~0 ~~Accumulated~~-------------- ~~other~~------------- ~~comprehensive~~NET ~~loss~~CASH PROVIDED BY (~~4,468~~USED FOR) FINANCING ACTIVITIES (36,~~912~~566) 2,481 -------------- ------------- Effect of foreign exchange rate changes on cash and cash equivalents (197) 192 -------------- ------------- ~~Total~~NET ~~shareholders'~~INCREASE ~~equity~~(DECREASE) ~~158~~IN CASH AND CASH EQUIVALENTS (25,~~941~~381) ~~151~~8,~~368~~702 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 71,299 50,277 --------------~~---~~ -------------~~-----~~ ~~Total~~AT ~~liabilities~~END ~~and~~OF ~~shareholders'~~PERIOD ~~equity 1~~45,~~310,650~~918 158,~~322,897~~979 ==============~~===~~ =============~~=====~~

GROHE HOLDING GMBH ADJUSTED CONSOLIDATED EBITDA (EURO IN THOUSANDS) A reconciliation between adjusted consolidated EBITDA and net income as reported in the unaudited interim consolidated financial statements is as follows:

~~Accumulated~~THREE ~~other~~MONTHS ~~Comprehensive~~ENDED ~~income~~MARCH 31, ---------------------------- 2003 2002 ---- ---- ~~Foreign~~Net ~~Deferred~~income ~~Additional~~as ~~Deferred~~reported ~~currency gain Minimum Share paid~~ in ~~compen-~~the ~~Accumulated~~consolidated ~~translation~~statements onof ~~hedge~~operations............. ~~pension~~7,852 ~~capital~~13,874 ~~capital~~Income ~~sation~~tax ~~deficit~~expense.............................................................. ~~adjustment~~4,934 ~~contracts~~10,042 ~~liability~~Interest ~~-------~~expense ~~-------~~as ~~------~~reported ~~-------~~in ~~----------~~the ~~---------~~consolidated ~~---------~~statements ~~Balance~~of atoperations....... ~~December 31~~22,666 ~~2002 51~~18,~~374~~038 ~~163,204~~Depreciation ~~(1,788)~~expense............................................................ ~~(57~~8,~~510)~~808 (312,~~429)~~891 0Amortization ~~(483)~~of ~~--------~~software........................................................ ~~----------~~990 ~~---------~~957 ~~-----------~~Amortization ~~-----------~~of ~~----------~~tradename....................................................... ~~-----------~~4,838 ~~Amortization~~4,836 ofNoncash ~~deferred~~charges................................................................. ~~compensation~~ 277 ~~Comprehensive~~0 ~~income~~Adjustment ~~(loss):~~related ~~Net~~to ~~income~~derivatives*.............................................. 74,~~852~~536 ~~Foreign currency translation adjustment~~ (42,~~045~~005) ~~Cash~~Costs ~~flow~~related ~~hedges~~to ~~3,481~~the ~~Minimum~~refinancing ~~pension~~of ~~liability~~shareholder ~~adjustment~~loans........................... 8345 ~~Total~~0 ~~comprehensive income~~ -------- ---------- --------- -------~~----~~ ~~-----------~~Adjusted ~~----------~~EBITDA................................................................. ~~----------- Balance at March 31~~55,246 ~~2003 51~~58,~~374~~633 ~~163,204 (1,511) (49,658) (7,474) 3,481 (475)~~ ======== ========== ========= =======~~==== =========== ========== ===========~~

*We adjust consolidated EBITDA to consider income resulting from our derivative financial instruments in EBITDA when realized.

Three months ended March 31, ----------------------------- 2003 2002 -------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income 7,852 13,874 Minority interests in income of subsidiaries 206 187 Adjustments to reconcile net income to net cash provided by operating activities Depreciation of fixed assets 8,808 12,891 Amortization of tradename 4,838 4,836 Amortization of software and other intangibles 990 957 Deferred income taxes (4,169) (114) (Income) loss from equity method investees (45) 9 Noncash compensation 277 0 Gain from disposal of long-lived assets, net (71) (1) Changes in operating assets and liabilities Accrued interest on long-term debt to shareholders and related parties 4,964 4,452 Derivative financial instruments 4,536 (2,005) Accounts receivable (34,148) (33,014) Inventories 4,846 2,677 Prepaid expenses and other assets 6,192 3,091 Accounts payable (14,371) (5,939) Pension and similar obligations 2,344 2,357 Other accrued expenses and liabilities (3,652) 5,897 -------------- ------------- NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (10,603) 10,155 -------------- ------------- CASH FLOWS USED FOR INVESTING ACTIVITIES: Purchases of property, plant and equipment (3,597) (3,223) Proceeds from sale of property, plant and equipment 251 63 Purchases of intangible assets (3,017) (966) Purchases of shares from minorities (2,208) 0 Dividends received from equity method investees 556 0 -------------- ------------- NET CASH USED FOR INVESTING ACTIVITIES (8,015) (4,126) -------------- ------------- CASH FLOWS USED FOR FINANCING ACTIVITIES: Decrease in restricted cash 6,619 2,800 Proceeds from issuance of long-term debt to banks 330,000 0 Principal payments on long-term debt to banks (336,126) (319) Refinancing charges (7,059) 0 -------------- ------------- NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (6,566) 2,481 -------------- ------------- Effect of foreign exchange rate changes on cash and cash equivalents (197) 192 -------------- ------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (25,381) 8,702 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 71,299 50,277 -------------- ------------- AT END OF PERIOD 45,918 58,979 ============== ============= Supplemental disclosure of cash flow information Interest paid 11,086 9,485 Income taxes paid (benefits received), net 6,909 3,210 Other payments to related parties 164 259

Three months ended March 31, ----------------------------------- 2003 2002 ----------------- ----------------- Professional services (345) 0 Foreign currency gains (losses), net 623 777 Miscellaneous (74) 45 ------------------------------------------------------------------------------------- 204 822 -------------------------------------------------------------------------------------

March 31, December 31, 2003 2002 ----------------------------------- Raw materials and supplies 22,211 27,581 Work in process 28,471 24,439 Finished goods and goods purchased for resale 51,557 56,175 -------------------------------------------------------------------------------------- 102,239 108,195 --------------------------------------------------------------------------------------

March 31, December 31, 2003 2002 ---------------- ------------------- INTANGIBLE ASSETS SUBJECT TO AMORTIZATION COST Tradename 290,269 290,269 Software 20,482 18,501 ---------------------------------------------------------------------------------------------------- 310,751 308,770 ---------------------------------------------------------------------------------------------------- ACCUMULATED AMORTIZATION Tradename 68,290 63,452 Software 7,671 7,275 ---------------------------------------------------------------------------------------------------- 75,961 70,727 ---------------------------------------------------------------------------------------------------- CARRYING AMOUNT Tradename 221,979 226,817 Software 12,811 11,226 ---------------------------------------------------------------------------------------------------- 234,790 238,043 ---------------------------------------------------------------------------------------------------- INTANGIBLE ASSETS NOT SUBJECT TO AMORTIZATION Intangible pension asset 194 202 ---------------------------------------------------------------------------------------------------- TOTAL CARRYING AMOUNT OF INTANGIBLE ASSETS 234,984 238,245 ----------------------------------------------------------------------------------------------------

Germany and European Overseas direct exports subsidiaries subsidiaries Total ------------------------------------------------------------------------------------------------------------------- Balance as of December 31, 2002 338,833 57,667 48,511 445,011 ------------------------------------------------------------------------------------------------------------------- Effects of foreign currency exchange rate changes 0 (38) (1,699) (1,737) Acquisitions 1,578 1,578 ------------------------------------------------------------------------------------------------------------------- Balance as of March 31, 2003 340,411 57,629 46,806 444,852 -------------------------------------------------------------------------------------------------------------------

Three months ending March 31, -------------------------------- 2003 2002 --------------------------------------------------------------------------------------- Net income, as reported 7,852 13,874 --------------------------------------------------------------------------------------- Add: Share-based compensation expense included in reported net income 277 0 Deduct: Total share-based compensation expense determined under fair value method (302) 0 --------------------------------------------------------------------------------------- Pro forma net income 7,827 13,874 ---------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------ Elimination Germany of inter- Three months ended and European Overseas Holding segment US GAAP GROHE March 31, 2003 direct exports subsidiaries subsidiaries Level transactions adjustments Group million euro million euro million euro million euro million euro million euro million euro ------------------------------------------------------------------------------------------------------------------------------------ Sales To third parties 89.0 112.0 38.1 0.0 0.0 (1.3) 237.8 To other segments 113.5 14.8 1.1 0.0 (129.4) 0.0 0.0 EBIT 34.4 12.6 5.9 (27.3) (9.8) 19.2 35.0 ------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------ Elimination Germany of inter- Three months ended and European Overseas Holding segment US GAAP GROHE March 31, 2002 direct exports subsidiaries subsidiaries level transactions adjustments Group million euro million euro million euro million euro million euro million euro million euro ------------------------------------------------------------------------------------------------------------------------------------ Sales To third parties 88.9 104.6 45.8 0.0 0.0 0.4 239.7 To other segments 108.1 9.3 1.0 0.0 (118.4) 0.0 0.0 EBIT 40.1 7.6 7.1 (21.7) (6.2) 14.7 41.6 ------------------------------------------------------------------------------------------------------------------------------------

Three months ended March 31, ---------------------------------------- 2003 2002 -------------------- ------------------- Sales 237,812 239,702 Cost of sales (133,499) (133,335) -------------------- ------------------- Gross profit 104,313 106,367 -------------------- ------------------- Selling, general and administrative expenses (57,440) (56,531) Research and development expenses (6,334) (5,501) Amortization of tradename (4,838) (4,836) -------------------- ------------------- Operating income 35,701 39,499 -------------------- ------------------- Interest expense, net (21,973) (17,519) Income (loss) from equity method investees 44 (9) Financial income (loss) from derivatives (984) 1,310 Other income (expense), net 204 822 -------------------- ------------------- Income before income taxes and minority interests 12,992 24,103 Income tax expense (4,934) (10,042) Income before minority interests 8,058 14,061 Minority interests (206) (187) -------------------- ------------------- Net income 7,852 13,874 ==================== ===================

Three months ended March 31, ---------------------------------------- 2003 2002 ------------------- -------------------- Sales 100.0% 100.0% Cost of sales (56.1%) (55.6%) ------------------- -------------------- Gross profit 43.9% 44.4% ------------------- -------------------- Selling, general and administrative expenses (24.2%) (23.6%) Research and development expenses (2.7%) (2.3%) Amortization of tradename (2.0%) (2.0%) ------------------- -------------------- Operating income 15.0% 16.5% ------------------- -------------------- Interest expense, net (9.2%) (7.3%) Income (loss) from equity method investees (0.0%) (0.0%) Financial income (loss) from derivatives (0.4%) 0.5% Other income (expense), net 0.1% 0.4% ------------------- -------------------- Income before income taxes and minority interests 5.5% 10.1% Income tax expense (2.1%) (4.2%) Income before minority interests 3.4% 5.9% Minority interests (0.1%) (0.1%) ------------------- -------------------- Net income 3.3% 5.8% =================== ====================

THREE MONTHS ENDED MARCH 31, ---------------------------------- 2003 2002 ----------------- ---------------- Net income as reported in the consolidated statements of operations............. 7,852 13,874 Income tax expense.............................................................. 4,934 10,042 Interest expense as reported in the consolidated statements of operations....... 22,666 18,038 Depreciation expense............................................................ 8,808 12,891 Amortization of software........................................................ 990 957 Amortization of tradename....................................................... 4,838 4,836 Noncash charges................................................................. 277 0 Adjustment related to derivatives*.............................................. 4,536 (2,005) Costs related to the refinancing of shareholder loans........................... 345 0 ----------------- ---------------- Adjusted EBITDA................................................................. 55,246 58,633 ================= ================

Three months ended March 31, ------------------------------------ 2003 2002 ----------------- ----------------- Net cash provided by (used for) operating activities (10,603) 10,155 Net cash used for investing activities (8,015) (4,126) Net cash provided by (used for) financing activities (6,566) 2,481 Effect of foreign exchange rate changes on cash and cash equivalents (197) 192 ----------------- ----------------- Net increase (decrease) in cash and cash equivalents (25,381) 8,702 ----------------- ----------------- Cash and cash equivalents At beginning of period 71,299 50,277 At end of period 45,918 58,979

PAYMENTS DUE BY PERIOD ------------------------------------------------------------------ Remainder 2004 to 2005 2006 to 2007 Thereafter Total of 2003 ----------- -------------- ------------- ------------ ------------ Long-term debt to banks 25,039 106,369 147,141 68,501 347,050 Bonds 0 0 0 200,000 200,000 Long-term debt to related parties and shareholders 0 0 0 177,638 177,638 Unconditional purchase obligations 129,293 10,320 0 0 139,613

INTEREST RATE SENSITIVITY AS OF MARCH 31, 2003 PRINCIPAL (NOTIONAL) AMOUNT BY EXPECTED MATURITY AVERAGE INTEREST SWAP, CAP AND FLOOR RATES Fair Value There- March 31, 2003 2004 2005 2006 2007 after Total 2003 -------------------------------------------------------------------------------------------------- Short-term debt to banks denominated in Japanese Yen; average fixed rate at 0.92% 3,860 0 0 0 0 0 3,860 3,860 Long-term debt to banks; variable rate at 2.25% above EURIBOR 20,000 50,000 50,000 65,000 80,000 65,000 330,000 330,000 Long-term debt to banks; fixed rates at 4.95% to 7.25% 5,039 4,523 1,846 1,440 701 3,501 17,050 17,592 Long-term debt to shareholders and related parties; fixed rate at 5.0% 0 0 0 0 0 307,917 307,917 177,638 Notes; fixed rate at 11.5% 0 0 0 0 0 200,000 200,000 226,000 Interest rate derivative financial instruments: ---------------------------------------------- Combined interest rate swap and cap agreements; Notional amount 46,528 53,941 0 0 0 0 100,469 (1,428) Pay rate is 5-year swap rate for 6-months EURIBOR with a cap at 5.07%; receive rate is 3-months EURIBOR Combined interest rate swap and cap agreements; Notional amount 0 63,912 0 0 0 0 63,912 (1,173) Pay rate is 5-year swap rate for 3-months EUROLIBOR with a cap at 4.99%; receive rate is 3-months LIBOR Interest Rate Collar; Notional Amount 17,895 164,892 0 0 0 0 182,787 (5,164) Basis rate is 6-months EURIBOR; cap rate is 5,20% (8.00% in case 6-months EURIBOR is higher than 8.00%); floor rate is 3.00%

Three months ended March 31, -------------------------------- 2003 2002 ---------------- --------------- Fair value of contracts outstanding at the beginning of period................ (7,144) (5,140) Amounts paid under the contracts.......................................... 363 340 Other changes in fair market value ....................................... (984) 2,560 Fair value of contracts outstanding at end of period.......................... (7,765) (2,240)

FOREIGN CURRENCY SENSITIVITY AS OF MARCH 31, 2003 PRINCIPAL (NOTIONAL) AMOUNT BY EXPECTED MATURITY AVERAGE SETTLEMENT RATES Fair value There- March 31, 2003 2004 2005 2006 2007 after Total 2003 -------------------------------------------------------------------------------- Short-term debt to banks denominated in Japanese yen; average fixed rate at 0.92% 3,860 0 0 0 0 0 3,860 3,860 Long-term debt to banks denominated in Thailand baht; fixed rate at 7.25% 1,153 1,153 1,153 743 0 0 4,202 4,202 ------------ Total debt denominated in foreign currencies 8,062 ============ EXCHANGE RATE DERIVATIVE FINANCIAL INSTRUMENTS: ---------------------------------------------- Pay US dollar / receive euro forwards 15,161 ------------------------------------- ------------ Number of individual contracts 40 17 0 0 0 0 57 Average notional amount 2,194 2,449 0 0 0 0 2,270 Total notional amount of USD contracts 87,740 41,629 0 0 0 0 129,369 Average settlement rate (euro/USD) 1.0502 0.9988 0 0 0 0 1.0337 For information purposes: Exchange rate at March 31, 2003 (euro/USD) 0.9149 Pay Japanese yen / receive euro forwards 624 ---------------------------------------- Number of individual contracts 9 1 0 0 0 0 10 Average notional amount 772 772 0 0 0 0 772 Total notional amount of Yen contracts 6,948 772 0 0 0 0 7,720 Average settlement rate (euro/100 yen) 0.8490 0.8040 0 0 0 0 0.8445 For information purposes: Exchange rate at March 31, 2003 (euro/100 yen) 0.7720 Pay British pound / receive euro forwards 1,076 ----------------------------------------- Number of individual contracts 8 5 0 0 0 0 13 Average notional amount 1,156 1,214 0 0 0 0 1,178 Total notional amount of GBP contracts 9,250 6,070 0 0 0 0 15,320 Average settlement rate (euro/GBP) 1.5464 1.5431 0 0 0 0 1.5451 For information purposes: Exchange rate at March 31, 2003 (euro/GBP) 1.4453 Pay Canadian dollar / receive euro forwards 342 ------------------------------------------- Number of individual contracts 18 20 0 0 0 0 38 Average notional amount 275 271 0 0 0 0 273 Total notional amount of CAD contracts 4,953 5,421 0 0 0 0 10,374 Average settlement rate (euro/CAD) 0.6604 0.6255 0 0 0 0 0.6422 For information purposes: Exchange rate at March 31, 2003 (euro/CAD) 0.6231 ------------ Subtotal Japanese yen, British pound and Canadian dollar exchange rate derivative financial instruments 2,042 ------------ Total exchange rate derivative financial instruments 17,203 ============

Three months ended March 31, -------------------------------- 2003 2002 ---------------- --------------- US DOLLAR FORWARD CONTRACTS: Fair value of contracts outstanding at the beginning of period................ 13,975 (3,497) Realized contracts during the period...................................... (5,036) 839 Changes in fair value of contracts included in other comprehensive income for contracts designated as accounting hedges.......................... 5,262 0 Other changes in fair market value ....................................... 960 (1,247) Fair value of contracts outstanding at end of period.......................... 15,161 (3,905) FORWARD CONTRACTS DENOMINATED IN OTHER CURRENCIES: Fair value of contracts outstanding at the beginning of period................ 1,510 536 Realized contracts during the period...................................... (457) (212) Changes in fair value of contracts included in other comprehensive income for contracts designated as accounting hedges.......................... 1,100 0 Other changes in fair market value........................................ (111) (3) Fair value of contracts outstanding at end of period.......................... 2,042 321 TOTAL AMOUNTS FOR ALL CURRENCIES: Fair value of contracts outstanding at the beginning of period................ 15,485 (2,961) Realized contracts during the period...................................... (5,493) 627 Changes in fair value of contracts included in other comprehensive income for contracts designated as accounting hedges.......................... 6,362 0 Other changes in fair market value........................................ 849 (1,250) Fair value of contracts outstanding at end of period.......................... 17,203 (3,584)

Notional amount by expected maturity ---------------------------------------------------------- Fair value 2003 2004 Total ------------------- ------------------ ------------------ ---------------------------- Brass 23,396 8,675 32,071 34,631 Zinc 2,205 530 2,735 2,783 Copper 5,338 1,115 6,453 6,363

Three months ended Three months ended March 31, 2003 March 31, 2002 ----------------------- ------------------------ Consolidated net income (loss) as defined in the Indenture: Net income (loss) as reported in the consolidated statements of operations 7,852 13,874 Income from equity method investees not received as a cash distribution 0 0 ------------ ----------- Consolidated net income (loss) as defined in the Indenture 7,852 13,874 Additions to / deductions from consolidated net income: Income tax expense 4,934 10,042 Consolidated interest expense Interest expense as reported in the consolidated statements of operations 22,666 18,038 Net payments pursuant to interest rate swaps 363 340 ------------ ----------- Total consolidated interest expense 23,029 18,378 Depreciation expense 8,808 12,891 Amortization of software 990 957 Amortization of tradename 4,838 4,836 Noncash charges 277 0 -------------------------------------------------------------------------------------------------------------------- EBITDA 50,728 60,978 --------------------------------------------------------------------------------------------------------------------

Three months ended Three months ended March 31, 2003 March 31, 2002 -------------------------- --------------------------- Consolidated net income (loss) as defined in the Indenture: Net income as reported in the consolidated statements of operations (5,138) 3,433 Profit attributable to minority interests (207) (187) Income from equity method investees not received as a cash distribution 0 0 ------------ ------------- Consolidated net income (loss) as defined in the Indenture (5,345) 3,246 Additions to / deductions from consolidated net income: Income tax expense 6,933 7,572 Consolidated interest expense Interest expense as reported in the consolidated statements of operations 14,704 16,431 Depreciation expense 8,622 12,532 Amortization of software 810 763 Amortization of goodwill and tradename from acquisitions 16,777 16,751 Noncash charges 8,637 0 --------------------------------------------------------------------------------------------------------------------- EBITDA 51,138 57,295 ---------------------------------------------------------------------------------------------------------------------

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