UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
		For the quarterly period ended December 31, 2004
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-15297

WATER PIK TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware		25-1843384
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

23 Corporate Plaza, Suite 246 Newport Beach, CA 92660
(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (949) 719-3700

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 ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2): Yes ý No o

The number of shares of Common Stock outstanding on ~~August~~January 426, ~~2004~~2005 was 12,~~281~~134,~~977~~ 562 shares.

WATER PIK TECHNOLOGIES, INC.

INDEX

Page Number
Part I — Financial Information				3
Part I – Financial Information
	Item 1.	Financial Statements		3
	Item 1.	Financial Statements
		Consolidated Balance Sheets — December 31, 2004 (unaudited) and September 30, 2004		3
		Consolidated Balance Sheets – June 30, 2004 (unaudited) and December 31, 2003	3
		Consolidated Statements of Operations - Three months ended December 31, 2004 and 2003 (unaudited)		4
		Consolidated Statements of Operations - Three months and six months ended June 30, 2004 and 2003 (unaudited)	4
		Consolidated Statements of Cash Flows — Three months ended December 31, 2004 and 2003 (unaudited)		5
		Consolidated Statements of Cash Flows – Six months ended June 30, 2004 and 2003 (unaudited)	5
		Notes to Consolidated Financial Statements (unaudited)		6
		Notes to Consolidated Financial Statements (unaudited)	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		18
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
	Item 4.	Controls and Procedures		18
	Item 4.	Controls and Procedures	20
Part II — Other Information				19
Part II – Other Information
	Item 6.	Exhibits		19
	Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	21
	Signatures			20
	Item 4.	Submission of Matters to a Vote of Security Holders	21
	Item 6.	Exhibits and Reports on Form 8-K	22
Signatures			24

PART I—FINANCIAL INFORMATION

ITEM 1—FINANCIAL STATEMENTS

Water Pik Technologies, Inc.

Consolidated Balance Sheets

(In thousands, except for share and per -share amounts)

	June 30, 2004			December 31, 2003
	December 31, 2004					September 30, 2004
	(Unaudited)
Assets
Current assets:
Cash	$	~~3,272~~	1,493	$	~~970~~	$		11,036
Accounts receivable, less allowances of $2,496 at June 30, 2004 and $1,952 at December 31, 2003	61,256			85,527
Accounts receivable, less allowances of $2,312 at December 31, 2004 and $2,371 at September 30, 2004	83,341					58,418
Inventories	4048,~~132~~028			~~41,772~~		45,387
Deferred income taxes	78,~~453~~715			~~7,321~~		8,736
Prepaid expenses and other current assets	23,~~759~~575			~~4,320~~		2,803
Total current assets	~~114~~145,~~872~~152			~~139,910~~		126,380
Property, plant and equipment, net	4544,~~939~~251			~~48,637~~		45,553
Goodwill, net	3435,~~928~~850			~~26,020~~		35,149
Deferred income taxes	~~909~~—			~~657~~		225
Other assets	34,~~794~~170			~~3,352~~		3,893
Total assets	$	~~200,442~~		$229,423	~~218,576~~	$	211,200
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2325,~~632~~709		$	~~25,169~~	$		26,069
Accrued income taxes	~~766~~2,291			~~1,559~~		27
Accrued liabilities	2535,~~741~~303			~~28,797~~		32,529
Current portion of long-term debt	3,~~874~~835			~~3,879~~		3,838
Total current liabilities	5467,~~013~~138			~~59,404~~		62,463
Long-term debt, less current portion	2425,~~827~~829			~~42,589~~		20,839
Other accrued liabilities	5,~~139~~753			~~5,242~~		5,358
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value: 5,000,000 shares authorized; none issued	—			—		—
Common stock, $0.01 par value: 50,000,000 shares authorized; 12,274,210 and 12,365,036 shares issued and outstanding at June 30, 2004 and December 31, 2003, respectively	128			125
Common stock, $0.01 par value: 50,000,000 shares authorized; 12,125,599 and 12,282,527 shares issued and outstanding at December 31, 2004 and September 30, 2004, respectively	127					128
Additional paid-in capital	8281,~~481~~438			~~79,481~~		82,625
Equity adjustments due to stock plans	~~(1,202~~448		)	~~(6,369~~		)(996			)
Retained earnings	40,917			37,980
Treasury stock at cost, 704,211 and 541,343 shares at December 31, 2004 and September 30, 2004, respectively	(7,291				)	(7,130			)
Accumulated comprehensive income	1,269			2,123
Retained earnings	51,449					45,474
Treasury stock at cost, 541,343 and 178,482 shares at June 30, 2004 and December 31, 2003, respectively	(7,130		)	(1,999		)
Accumulated comprehensive income	4,532					2,439
Total stockholders’ equity	~~116~~130,~~463~~703			~~111,341~~		122,540
Total liabilities and stockholders’ equity	$	~~200~~229,~~442~~423		$	~~218,576~~	$		211,200

See accompanying notes

Water Pik Technologies, Inc.

Consolidated Statements of Operations

(In thousands, except for share and per -share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	Three Months Ended December 31,
	2004			~~2003~~	2003		~~2004~~			~~2003~~
Sales	$	9089,~~272~~898		$	~~76,496~~$	97,111	$	~~157,933~~		$	~~131,885~~
Cost and expenses:
Cost of sales	6562,~~162~~254			~~52,345~~	67,211		~~115,487~~			~~92,440~~
Selling expenses	1110,~~592~~540			~~10,998~~	12,334		~~22,768~~			~~21,924~~
General and administrative expenses	5,~~618~~843			~~4,920~~	6,049		~~10,917~~			~~9,518~~
Research and development expenses	1,~~694~~385			~~1,689~~	1,845		~~3,396~~			~~3,876~~
	84,066			69,952			152,568			127,758
	80,022				87,439
Operating income	69,~~206~~876			~~6,544~~	9,672		~~5,365~~			~~4,127~~
Interest expense	~~348~~365			~~560~~	458		~~894~~			~~1,099~~
Other income	(90208		)	~~(84~~)	(58	)	~~(160~~)		)	~~(208~~		)
Income from continuing operations before income taxes	59,~~948~~719			~~6,068~~	9,272		~~4,631~~			~~3,236~~
Income tax provision	23,~~167~~744			~~2,214~~	3,303		~~1,699~~			~~1,179~~
Income from continuing operations	35,~~781~~975			~~3,854~~	5,969		~~2,932~~			~~2,057~~
Discontinued operations:
Income (loss) from operations of discontinued product line	7			(9		)	7			(72		)
Loss from operations of discontinued product line	—				(45		)
Income tax provision (benefit)	2			(2		)	2			(25		)
Income tax benefit	—				(15		)
Income (loss) on discontinued operations	5			(7		)	5			(47		)
Loss on discontinued operations	—				(30		)
Net income	$	~~3,786~~	5,975	$	~~3,847~~$	5,939	$	~~2,937~~		$	~~2,010~~
Basic net income per common share
Continuing operations	$	~~0.32~~	0.50	$	~~0.32~~$	0.50	$	~~0.25~~		$	~~0.17~~
Discontinued operations	—			—	—		—			—
Net income	$	~~0.32~~	0.50	$	~~0.32~~$	0.49	$	~~0.25~~		$	~~0.17~~
Diluted net income per common share
Continuing operations	$	~~0.30~~	0.48	$	~~0.31~~$	0.47	$	~~0.23~~		$	~~0.16~~
Discontinued operations	—			—	—		—			—
Net income	$	~~0.30~~	0.48	$	~~0.31~~$	0.47	$	~~0.23~~		$	~~0.16~~
Shares used in per share calculation – basic	11,851,000			12,082,000			11,896,000			12,078,000
Shares used in per share calculation — basic	11,943,000				11,999,000
Shares used in per share calculation – diluted	12,592,000			12,282,000			12,590,000			12,274,000
Shares used in per share calculation — diluted	12,551,000				12,571,000

See accompanying notes

Water Pik Technologies, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	Three Months Ended December 31,
	2004			2003
Operating activities:
Net income	$	25,~~937~~975		$	25,~~010~~939
Loss (income) from discontinued product line	(5		)	47
Loss from discontinued product line	—			30
Income from continuing operations	25,~~932~~975			25,~~057~~969
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	42,~~924~~438			42,~~818~~656
Deferred income taxes	~~(366~~660		)	~~662~~285
Tax benefit from exercise of stock option	547			—
Tax benefit of pre-spin-off foreign tax losses	—			18
Compensation expense arising from stock awards	~~417~~180			~~362~~265
Interest income from stockholders note	(64		)	(223		)
Tax benefit from restricted stock awards	15			—
Interest income from stockholder notes	—			(78		)
Loss on sale of property, plant and equipment	2			40
Change in operating assets and liabilities, net of effects of business acquisitions:
Accounts receivable	23(24,~~992~~188		)	27(37,~~379~~275		)
Inventories	2(1,~~686~~834		)	(4,~~199~~409		)
Accounts payable	(~~1,689~~411		)	(32,~~326~~967		)
Accrued liabilities	(32,~~257~~619		)	~~(10~~6,~~633~~651		)
Accrued income taxes	~~(793~~2,325		)	~~(51~~120		)
Other assets and liabilities	~~989~~(1,412		)	(~~940~~2,736		)
Cash provided by operating activities	30,318			15,906
Cash used in operating activities	(13,631		)	(16,709		)
Investing activities:
Purchase of business	(10,128		)	(7,703		)
Purchase of property, plant and equipment	(870		)	(2,341		)
Purchase of property, plant and equipment	(2,234		)	(2,569		)
Disposal of property, plant and equipment	5			(16		)
Disposals of property, plant and equipment	27			32
Cash used in investing activities	(865		)	(2,357		)
Cash used in investing activities	(12,335		)	(10,240		)
Financing activities:
Net borrowings under revolving credit facilities	(15,862		)	(3,884		)
Net borrowings on revolving credit facilities	5,199			17,105
Payments on promissory notes	(~~1,905~~206		)	(~~1,912~~945		)
Proceeds from exercise of options	2,120			56
Proceeds from exercise of stock options	61			153
Cash used in financing activities	(15,647		)	(5,740		)
Acquisition of treasury stock	(161		)	—
Effect of exchange rate changes on cash	(39		)	(58		)
Principal payment on capital leases	(6		)	(10		)
Cash provided by (used in) discontinued operations	5			(47		)
Cash provided by financing activities	4,887			16,303
Increase (decrease) in cash	2,302			(179		)
Effect of exchange rate changes on cash	66			(125		)
Cash at beginning of period	970			1,038
Cash used in discontinued operations	—			(30		)
Cash at end of period	$	3,272		$	859
Decrease in cash	(9,543		)	(2,918		)
Cash at beginning of period	11,036			3,888
Cash at end of period	$	1,493		$	970

See accompanying notes

Water Pik Technologies, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

DESCRIPTION OF BUSINESS

~~Water~~In ~~Pik~~accordance ~~Technologies, Inc.~~with ~~(“Water Pik Technologies” or~~ the ~~“Company”) is a leader in designing,~~Securities ~~manufacturing~~ and ~~marketing~~Exchange ~~a broad range of well-recognized personal health care products and pool products and water-heating systems. The Company~~Commission’s ~~products~~“Plain ~~include:~~English” ~~showerheads; consumer~~guidelines, ~~and~~this ~~professional~~Quarterly ~~oral~~Report ~~health products; water filtration products;~~on ~~personal~~Form 10-Q ~~stress~~has ~~relief~~been ~~products;~~written ~~swimming~~in ~~pool~~the ~~and~~first ~~spa~~person. ~~heaters,~~In ~~heat~~this ~~pumps~~document, the ~~electronic~~words ~~controls~~“we”, ~~valves~~“our”, ~~pumps, filters, automatic salt chlorine generators~~ and ~~water~~“us” ~~features;~~refer ~~and~~to ~~residential and commercial water-heating systems.~~ Water Pik Technologies, Inc. ~~operates in two business segments – the Personal Health Care segment~~ and ~~the Pool Products and~~not ~~Heating~~any ~~Systems~~other ~~segment~~person.

InWe ~~July~~are ~~2004,~~a ~~the~~leader ~~Company~~in ~~announced~~designing, manufacturing and marketing a ~~decision~~broad torange ~~pursue~~of anwell-recognized personal ~~orderly~~healthcare ~~exit~~products ofand ~~its~~pool ~~Personal~~products ~~Stress~~and ~~Relief~~water-heating systems. Our products ~~line,~~include: ashowerheads; ~~category~~consumer ofand ~~the~~professional ~~Personal~~oral ~~Health~~health products; ~~Care~~water ~~segment. The~~filtration ~~Personal~~products; ~~Stress~~swimming ~~Relief~~pool ~~product~~and ~~line~~spa heaters, ~~introduced~~ inheat ~~2002~~pumps, heat ~~includes~~exchangers, ~~foot~~electronic ~~spas~~controls, ~~and~~valves, ~~personal~~pumps, ~~massagers. The~~filters, ~~decision~~automatic issalt chlorine ~~intended~~generators, towater ~~focus~~features ~~the Company’s~~and ~~product~~accessories; ~~development,~~and ~~marketing~~residential and commercial ~~selling~~water-heating ~~resources~~systems. onWe ~~its~~operate ~~core personal~~in ~~health~~two ~~care~~business segments - ~~product~~the ~~lines~~Personal ~~toward~~Health ~~the~~Care ~~goal~~segment ofand ~~improving~~the ~~its~~Pool ~~operating margin~~Products and Heating ~~return~~Systems ~~on capital~~segment.

InCHANGE ~~December~~IN ~~2002,~~FISCAL the Company formalized a plan to dispose of its Ozone product line, a component of the Personal Health Care segment. The Ozone product line includes the Aquia® home sanitizing product introduced in September 2001. The operating results of the discontinued product line have been reported separately as discontinued operations in the consolidated statements of operations and the assets and liabilities have been reclassified to other assets and other liabilities in the consolidated balance sheets for all periods presented.YEAR

~~FISCAL~~In ~~YEAR~~January 2004, we changed our fiscal year end from the Sunday nearest December 31 to the Sunday nearest September 30. As a result of this change, we reported a nine-month transition period ended September 30, 2004. The fiscal quarter and year-to-date periods presented in our consolidated financial statements are presented as of the last day of the calendar quarter for convenience.

The Company operates on a 52- or 53- week fiscal year ending on the Sunday nearest to its fiscal year-end with fiscal quarters ending on the Sunday nearest to the end of the applicable thirteen-week period. In January 2004, the Company changed its fiscal year-end from December to September. To accommodate the transition, the Company will report its results for the nine-month period ending on the Sunday nearest to September 30, 2004 on Form 10-K, with full twelve-month fiscal year reporting beginning with fiscal year 2005 and thereafter. The fiscal quarter and year-to-date periods identified in the Company’s consolidated financial statements are identified as of the last day of the calendar quarter for convenience.SEASONALITY

Our business is highly seasonal, with operating results varying from quarter to quarter. The Personal Health Care segment has generally experienced higher sales in the quarter ending in December of each fiscal year due to stronger retail demand during the holiday season. The Pool Products and Heating Systems segment has historically experienced higher sales in the quarters ending in June and December of each fiscal year as customers purchase such products in preparation for the cooler weather and in anticipation of the warm spring and summer months. In addition, as a result of the seasonality of sales, the Pool Products and Heating Systems segment offers incentive programs and extended payment terms to encourage pool product customers to purchase products from September through December, as is consistent with industry practice. The extended payment term receivables are collected during the spring and summer months which creates a seasonal peak in working capital and borrowing levels during the winter months. Seasonal variations in operating results can also occur due to short-term trends such as changes in the economic environment, consumer spending and weather patterns.

UNAUDITED INTERIM FINANCIAL INFORMATION

~~The~~Our ~~accompanying~~ consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not ~~include~~ include all of the information and footnotes required by accounting principles ~~generally~~ generally accepted in the United States for complete financial statements. In ~~the opinion of~~ management’s opinion, all adjustments, consisting primarily of normal recurring accruals, considered necessary for a fair presentation have been included. Certain prior year amounts ~~reported in previous years~~ have been reclassified to conform to the ~~2004~~current year financial statement presentation. These reclassifications had no effect on reported results of operations or stockholders’ equity. ~~These~~ ~~financial~~The information included in this ~~statements~~Form 10-Q should be read in conjunction with ~~the~~our ~~Company’s~~Transition ~~Annual~~ Report on ~~Form~~ Form 10-KKT for the ~~year~~transition ~~ended~~period ~~December~~from 31January 1, ~~2003.~~ 2004 through September 30, 2004, including information regarding our critical accounting policies and estimates. Operating results for the interim periods presented are not necessarily indicative of the results to be expected for the ~~nine-month~~twelve ~~transition~~months ~~period~~ ending September 30, ~~2004~~2005.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board (“FASB”) finalized Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Payment,” which requires companies to measure compensation costs for all share-based payments (including employee stock options) at fair value, effective for interim or annual periods beginning after June 15, 2005. SFAS No. 123R provides two tentative adoption methods. The first method is a modified prospective transition method whereby a company would recognize share-based employee costs from the beginning of the fiscal period in which the recognition provisions are first applied as if the fair-value-based accounting method had been used to account for all employee awards granted, modified, or settled after the effective date and to any awards that were not fully vested as of the effective date. Measurement and attribution of compensation cost for awards that are non-vested as of the effective date of SFAS No. 123R would be based on the same estimate of the grant-date fair value and the same attribution method used previously under SFAS No. 123. The second adoption method is a modified retrospective transition method whereby a company would recognize employee compensation cost for periods presented prior to the adoption of SFAS No. 123R in accordance with the original provisions of SFAS No. 123; that is, an entity would recognize employee compensation costs in the amounts reported in the pro forma disclosures provided in accordance with SFAS No. 123. A company would not be permitted to make any changes to those amounts upon adoption of SFAS No. 123R unless those changes represent a correction of an error. For periods after the date of adoption of SFAS No. 123R, the modified prospective transition method described above would be applied.

We currently expect to adopt SFAS No. 123R in the quarter ending September 30, 2005. We are currently reviewing our alternatives for adoption under this new pronouncement. The impact of adoption of SFAS No. 123R cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had we adopted SFAS No. 123R in prior periods, the impact of that standard would have an effect on our results of operations similar to the amounts reported historically in our footnotes under the pro forma disclosure provisions of SFAS No. 123, “Accounting for Stock Issued to Employees.”

In December 2004, the FASB issued FASB Staff Position No. 109-1, “Application of FASB Statement No. 109 (SFAS 109), Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004” (“FSP 109-1”). FSP 109-1 clarifies that the manufacturer’s deduction provided for under the American Jobs Creation Act of 2004 (the “Act”) should be accounted for as a special deduction in accordance with SFAS 109 and not as a tax rate reduction. The adoption of FSP 109-1 will have no impact on our results of operations or financial position for fiscal year 2005, as the manufacturer’s deduction is not available to us until fiscal year 2006. We are currently evaluating the effect that the manufacturer’s deduction will have in subsequent years.

In December 2004, the FASB also issued FASB Staff Position No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (“FSP 109-2”). The Act introduces a special one-time dividends received deduction on the repatriation of certain foreign earnings to a U.S. taxpayer (repatriation provision), provided certain criteria are met. FSP 109-2, which was effective for the quarter ended December 2004, provides accounting and disclosure guidance for the repatriation provision. We are currently evaluating our alternatives under the provision of the Act, which had no impact on our consolidated results of operations or financial position for the periods presented.

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4.” SFAS 151 clarifies that abnormal inventory costs such as costs of idle facilities, excess freight and handling costs, and wasted materials (spoilage) are required to be recognized as current period charges. The provisions of SFAS 151 are effective for the fiscal year beginning after June 15, 2005. We are currently evaluating the impact that this statement will have on our financial statements.

2. Inventories

~~Inventories~~We ~~are~~value ~~stated~~our inventory at the lower of its cost to purchase or manufacture (last-in, first-out (“LIFO”) and first-in, first-out (“FIFO”) cost methods) or its current estimated market value. Inventories consist of the following:

	June 30, 2004			December 31, 2003
	December 31, 2004			September 30, 2004
	(In thousands)
Raw materials and supplies	$	1819,~~697~~192		$	1916,~~860~~906
Work-in-process	3,~~641~~622			43,~~418~~154
Finished goods	2129,~~910~~631			2130,~~446~~093
Total inventories at current cost	4452,~~248~~445			4550,~~724~~153
Less: Allowances to reduce current cost values to LIFO basis	(4,~~116~~417		)	(34,~~952~~766		)
Total inventories	$	4048,~~132~~028		$	4145,~~772~~387

Inventories determined using the LIFO cost method were $3339,~~678~~725,000 at ~~June~~December 3031, 2004 and $3437,~~922~~091,000 at ~~December~~ ~~31,~~September ~~2003~~30, 2004, net of ~~the respective~~ LIFO reserves. The remainder of ~~inventory~~our ~~was~~inventories were determined using the FIFO cost method.

3. ~~Acquisitions~~Acquisition

On January 20, 2004, as part of ~~its~~our strategic objective to accelerate sales and profit growth in ~~its~~ our pool business through development of a more comprehensive package of ~~pool~~ pool equipment and accessories, ~~the~~we ~~Company~~ acquired substantially all of the assets of of Huron Tech Systems, a Jacksonville, Florida manufacturer of salt chlorine generators, used for swimming pool and spa water sanitation, and titanium heat exchangers, a component used in premium heat pumps. The ~~estimated~~ purchase price at ~~June~~December 3031, 2004 totaled $10,128,000 (consisting of $10,000,000 in cash and $128,000 in direct acquisition costs). The ~~preliminary~~ allocation of the purchase price resulted in $89,~~884~~127,000 of in goodwill, $100,000 in of identifiable intangible assets with estimated three-to to five-year lives, $1,494,000 of current assets (primarily accounts receivable and inventory), $120,000 in property, plant and equipment and $~~470~~713,000 in assumed liabilities. During the three months ended December 31, 2004, the allocation of the purchase price was adjusted to reflect additional information regarding the value of liabilities assumed and estimated contingent payments, which resulted in additional goodwill of $243,000. The goodwill was assigned to to the Pool Product and Heating Systems segment and is expected to be ~~deductible~~ deductible for tax purposes. In connection with the acquisition, ~~the~~we ~~Company~~ entered into ~~two~~ a component supply ~~agreements~~ ~~with~~agreement ~~the~~for ~~durations~~a period of ~~one and~~ five years, ~~respectively,~~ with Finnchem USA, Inc. The results of operations of Huron Tech Systems are included in our ~~the Company’s~~ consolidated results of operations beginning January 20, 2004.

On June 2, 2003, as part of its strategic objective to accelerate sales and profit growth in its pool business through development of a more comprehensive package of pool equipment and accessories, the Company acquired substantially all of the assets of Air Energy Heat Pumps, Inc. and affiliates (“Air Energy”), a Ft. Lauderdale, Florida manufacturer of premium branded heat pumps for swimming pools and spas. On January 22, 2004, the Company executed an amendment to the asset purchase agreement that revised the additional contingent future payments resulting in a $278,000 reduction of the purchase price and goodwill. The final purchase price totaled $8,438,000 (including direct acquisition costs) with payment consisting of $7,703,000 in cash. The final purchase price as of June 30, 2004 has been adjusted to reflect additional information regarding assets acquired, liabilities assumed and estimated contingent payments. The allocation of the purchase price to acquired net assets resulted in $7,188,000 in goodwill, $110,000 in identifiable intangible assets with estimated three-year lives, $2,797,000 of current assets (primarily accounts receivable and inventory), $819,000 in property, plant and equipment and $2,476,000 in assumed liabilities. The goodwill was assigned to the Pool Product and Heating Systems segment and is expected to be deductible for tax purposes. The results of operations of Air Energy are included in the Company’s consolidated results of operations beginning June 2, 2003.

4. Long-Term Debt

Long-term debt is comprised of the following:

	June 30, 2004			December 31, 2003
	December 31, 2004			September 30, 2004
	(In thousands)
Revolving credit facility	$	15,~~435~~259		$	~~17,297~~60
Mortgage notes payable	1817,~~394~~913			18,~~806~~119
Promissory notes payable – equipment financing facility	8,809			10,288
Promissory notes payable — equipment financing agreement	6,443			6,443
Other	6349			7755
	28,701			46,468
	29,664			24,677
Less: Current portion	(3,~~874~~835		)	(3,~~879~~838		)
Long-term debt	$	2425,~~827~~829		$	4220,~~589~~839

~~The Company~~We ~~utilizes~~utilize interest rate swap agreements as cash flow hedges to lock in the interest rate on borrowings and therefore achieve a desired proportion of variable versus fixed-rate debt. At ~~June~~At 30December 31, 2004 and ~~December~~September 3130, ~~2003~~2004, ~~the~~we ~~Company~~ had outstanding two interest rate swap agreements related to borrowings under the equipment financing ~~facility~~agreement with an aggregate notional ~~amounts~~amount of $54,~~660~~630,000; ~~and~~these ~~$6,689,000,~~interest ~~respectively,~~rate ~~expiring~~swap agreements expire on January 1, 2007. ~~The~~ ~~changes~~On ina ~~their~~pre-tax ~~fair values resulted in gains of $119~~basis,~~000~~ ~~and $133,000 for~~ the ~~three~~changes ~~months~~in ~~and six months ended June~~their ~~30,~~fair ~~2004,~~values ~~respectively,~~resulted ~~and~~in a loss of $589,000 and a gain of $1561,000 for the ~~three~~ three months ~~and six months~~ ended inDecember ~~June 30~~31, 2004 and 2003, respectively, which have ~~been~~ been recognized in accumulated comprehensive ~~loss~~income within stockholders’ equity. The counterparty to these interest rate swap agreements is a major financial institution. ~~The~~ ~~Company~~We continually ~~monitors~~monitor the credit quality of the financial institution and ~~anticipates~~anticipate full performance by the counterparty.

~~The~~ Our revolving credit facility and ~~the~~our ~~Company’s~~ real estate loan agreement and related mortgage notes require us ~~the Company~~ to be in compliance with specific financial and non-financial covenants and restrictions relating to indebtedness, liens, investments, dividends, fixed charge coverage, capital expenditures and the relationship of our total consolidated indebtedness to EBITDA (earnings before interest, taxes, depreciation and amortization). ~~The~~ ~~Company~~We ~~was~~were in compliance with these covenants at December ~~June 30~~31, 2004.

5. Stock Based Compensation ~~Plans~~

~~In the~~We ~~quarter~~account ~~ended~~for ~~June~~stock-based employee ~~2004,~~compensation ~~pursuant~~arrangements toin ~~the~~accordance ~~Stock~~with ~~Acquisition~~the ~~and~~provisions ~~Retention~~of ~~Program~~Accounting Principles Board (“~~SARP~~APB”) ~~under~~No. ~~the~~25, ~~Company’s~~“Accounting ~~Employee~~ for Stock ~~Purchase~~Issued ~~Plan~~to Employees,” ~~certain~~and comply with disclosure ~~officers~~provisions of ~~the~~SFAS ~~Company~~No. ~~tendered~~123. ~~back~~If towe ~~the~~had ~~Company~~elected ato ~~total~~recognize ofcompensation ~~182,410 shares~~cost offor ~~the~~stock ~~Company’s~~options ~~Common~~based ~~Stock,~~on ~~which~~their ~~they~~fair ~~had~~value ~~originally~~at ~~purchased~~the ~~pursuant~~grant todates, consistent with the ~~SARP,~~method asprescribed ~~repayment~~by ofSFAS ~~principal~~No. ~~and~~123, ~~accrued~~net ~~interest~~income onand ~~notes~~net ~~owed~~income byper ~~the~~share, for ~~officers~~the tothree ~~the~~months ~~Company~~ended ~~totaling~~December $231,~~829,000.~~ 2004 and 2003 would have been as follows:

During the quarter ended March 2004, certain officers of the Company tendered back to the Company a total of 180,451 shares of the Company’s Common Stock, which they had originally purchased pursuant to the SARP, as repayment of principal and accrued interest on notes owed by the officers to the Company totaling $2,302,000.

	Three Months Ended December 31,
	2004			2003
	(In thousands, except per share amounts)

Net income, as reported	$	5,975		$	5,939
Stock-based compensation expense included in reported net income, net of tax	109			204
Total stock-based compensation expense determined under the fair value based method for all awards, net of tax	(402		)	(385		)
Pro forma net income	$	5,682		$	5,758

Basic net income per common share:
As reported	$	0.50		$	0.50
Pro forma	$	0.48		$	0.48

Diluted net income per common share:
As reported	$	0.48		$	0.47
Pro forma	$	0.45		$	0.46

~~Pursuant~~For purposes of pro forma todisclosure, the ~~terms~~estimated fair value of the ~~SARP,~~options is amortized ratably over the ~~tendered~~options’ ~~shares~~vesting ~~were~~period. ~~valued~~Under atSFAS No. 123, the ~~average~~fair value of ~~the~~each option ~~high~~grant ~~and~~was ~~low~~estimated ~~market price~~ on the ~~day~~date ~~preceding~~of ~~the~~grant ~~date~~using the ~~shares~~Black-Scholes option-valuation model. The following weighted average assumptions were ~~tendered~~ toused in estimating the ~~Company. The~~fair ~~terms~~value of option grants: an expected dividend yield of zero ~~the~~percent, ~~SARP~~an ~~permit~~average ~~repayment~~expected life of the ~~loans~~options ~~and~~of ~~interest~~six ~~using~~years, ~~shares~~an expected volatility of ~~Common Stock~~40.2 ~~originally~~percent ~~purchased~~and ~~under~~a ~~the~~risk-free ~~SARP.~~interest

As a result of the transactions in March and April 2004, the number of outstanding shares of the Company’s Common Stock was reduced by 362,861. As of June 30, 2004, there were no outstanding loans by the Company to any officers or directors of the Company.

rate of 3.8 percent. There were 5,000 options granted during the three months ended December 31, 2004. The weighted average fair value of options granted during the December 2004 quarter was $6. ~~Stock~~77. ~~Option~~There ~~Fair~~were no options granted during the three months ended December ~~Value~~31, ~~Disclosure~~2003.

~~The Company has adopted the disclosure-only provisions of SFAS No~~6. Employee ~~123, “Accounting for~~ Stock~~-Based~~ Compensation,” as amended by SFAS No. 148, but applies Accounting Principles Board (“APB”) No. 25 and related interpretations in accounting for its plans. If the Company had elected to recognize compensation cost for its stock option plans based on the fair value at the grant dates, consistent with the method prescribed by SFAS No. 123, net income and net income per common share would have been as follows:Plans

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
	(In thousands, except per share amounts)
Net income, as reported	$	3,786		$	3,847		$	2,937		$	2,010
Stock based compensation expense included in reported net income, net of tax	132			113			264			230
Total stock-based compensation expense determined under the fair value based method for all awards, net of tax	(374		)	(341		)	(635		)	(693		)
Pro forma net income	$	3,544		$	3,619		$	2,566		$	1,547
Basic net income per common share – as reported	$	0.32		$	0.32		$	0.25		$	0.17
Basic net income per common share – pro forma	$	0.30		$	0.30		$	0.22		$	0.13
Diluted net income per common share – as reported	$	0.30		$	0.31		$	0.23		$	0.16
Diluted net income per common share – pro forma	$	0.28		$	0.29		$	0.20		$	0.13

On March 9, 2004, our Board of Directors approved, and on May 13, 2004, our stockholders approved, an amendment to the Water Pik Technologies, Inc. 1999 Incentive Plan (“Incentive Plan”), to limit the number of shares of common stock authorized to be issued, eliminate adjustments to authorized shares under the Incentive Plan as a percentage of our outstanding shares, prohibit the repricing of outstanding stock options and other awards and re-approve the terms of cash awards and performance goals. The amendment also created a deferred compensation feature to allow designated Incentive Plan participants to defer the receipt of stock option gains, shares of restricted stock and any stock appreciation rights or other compensation awards payable in shares of common stock. Pursuant to the amendment, on November 26, 2004, certain executive officers deferred receipt of 153,690 shares of restricted stock. Under the terms of the Incentive Plan, the deferral resulted in cancellation of 153,690 shares of restricted stock and the addition of 153,690 shares to the Incentive Plan, which shares have been reserved for reissuance to the officers in accordance with their individual distribution elections. There are currently 2,053,690 authorized shares under the Incentive Plan, including the shares added as a result of the deferral. The deferred shares were included in treasury stock and equity adjustments due to stock plan components of equity as of December 31, 2004. The deferral had no impact on total stockholders’ equity as of December 31, 2004.

~~For~~As ~~purposes~~ of ~~pro~~December ~~forma~~31, ~~disclosure~~2004, ~~the~~there ~~estimated~~were ~~fair~~425,433 ~~value~~shares ofavailable ~~the~~for ~~options~~issuance isunder ~~amortized ratably over~~ the ~~options’~~Incentive ~~vesting~~Plan, ~~period. The fair value~~ of ~~each~~which ~~option~~153,690 ~~grant~~were ~~was estimated~~committed onto the ~~date~~restricted ~~of grant using the Black-Scholes option-pricing~~stock ~~model. During~~deferral ~~the~~participants ~~quarter~~and ~~ended June 30~~195, ~~2004,~~453 ~~the~~were ~~Company~~committed ~~granted~~in ~~241,000~~the ~~stock~~event ~~options. The~~of ~~following weighted average assumptions~~maximum ~~were~~achievement ~~used~~of ~~for~~performance ~~grants~~goals inunder the 2004: anthrough ~~expected~~2006 ~~dividend~~Performance ~~yield of zero percent, an~~Share ~~average~~Plan. ~~expected~~As ~~life~~ of ~~the~~December ~~options~~31, of2004, 6there ~~years~~were 34,307 anshares ~~expected~~available ~~volatility~~for ~~of 40.2~~issuance ~~percent~~under ~~and~~the a1999 ~~risk~~Broad-~~free~~Based ~~interest~~Stock ~~rate~~Option ofPlan ~~3.8~~and ~~percent. The~~84,558 ~~weighted-average~~shares ~~fair~~available ~~value of options~~for ~~granted~~issuance ~~during~~under ~~2004 was $6.62. There were no options granted during~~ the ~~three months~~Stock Acquisition and ~~six~~Retention ~~months~~Program, ~~ended~~of ~~June~~which ~~30,~~none ~~2003~~were committed.

7. Comprehensive Income

The components of comprehensive income were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	Three Months Ended December 31,
	2004			2003			~~2004~~			~~2003~~
	(In thousands)
Net income	$	35,~~786~~975		$	35,~~847~~939		$	~~2,937~~		$	~~2,010~~
Foreign currency translation gains (losses)	(486		)	1,462			(987		)	2,211
Foreign currency translation gains	2,148			1,459
Change in fair value of cash flow hedge	~~119~~(55		)	(561		)	~~133~~			15
Comprehensive income	$	38,~~419~~068		$	57,~~304~~459		$	~~2,083~~		$	~~4,236~~

8. Income Taxes

The provision for income taxes for the 2004 and 2003 interim periods was computed in accordance with FASB Interpretation No. 18, “Accounting for Income Taxes in Interim Periods,” “ and was based on projections of total year pretax income in accordance with SFAS No. 109, “Accounting for Income Taxes.” The effective income tax rate attributable to continuing operations was 36 38.45 percent and 3635.76 percent for the three months ~~and six months~~ ended ~~June~~ 30December 31, 2004, ~~respectively, compared to 36.5 percent~~ and ~~36.4 percent for the three months and six months ended June 30,~~ 2003, respectively.

9. Commitments and Contingencies

WARRANTIES

~~The Company~~We ~~provides~~provide for the estimated cost of product warranties at the time revenue is recognized. ~~The~~ ~~Company~~We generally ~~warrants~~ ~~its~~warrant ~~products~~our products for a period ~~ranging~~of ~~from~~ one to five years. Factors considered in determining ~~appropriate~~ appropriate accruals for product warranty obligations include the size of the installed base of products subject to warranty protection, historical warranty claim rates, historical ~~cost-~~costs per claim, and the knowledge of specific product failures that are outside ~~the~~our ~~Company’s~~ typical experience. ~~The~~ ~~Company~~We ~~assesses~~assess the adequacy of ~~its~~our pre-existing ~~preexisting~~ warranty liabilities and ~~adjusts~~adjust the amounts as necessary based on actual experience and changes in future expectations. During the three months ended December 31, 2004, the allocation of the purchase price of Huron Tech Systems was adjusted to reflect an additional warranty liability of $172,000.

~~Information on changes in the Company’s accrued warranties and related costs are as follows:~~9

	Six Months Ended June 30,
	2004			2003
	(In thousands)
Beginning warranty reserves	$	5,909		$	4,820
Cost of warranty claims	(5,523		)	(3,815		)
Product warranties acquired	922			134
Accruals for product warranties	5,514			3,952
Ending warranty reserves	$	6,822		$	5,091

Information on changes in our accrued warranty liability and related costs are as follows:

	Three Months Ended December 31,
	2004			2003
	(In thousands)
Beginning accrued warranty liability	$	7,137		$	5,174
Cost of warranty claims	(2,362		)	(2,527		)
Accruals for product warranties	2,319			3,262
Product warranties acquired	172			—
Ending accrued warranty liability	$	7,266		$	5,909

INSURANCE RESERVES AND LEGAL CONTINGENCIES

A number of lawsuits, claims and proceedings have been or may be asserted against ~~the~~us ~~Company~~ relating to the conduct of ~~its~~our business, including those pertaining to product liability, personal injury, patent infringement, commercial, employment and ~~employee~~ employee benefits. While the outcome of litigation cannot be predicted with certainty , and some of these lawsuits, claims or proceedings may be determined adversely to ~~the Company~~us, ~~management does~~we do not believe that the disposition of any such pending matters is likely to have a material adverse effect on ~~the~~our ~~Company’s~~ financial condition or liquidity, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on ~~the~~our ~~Company’s~~ results of ~~operations~~ operations for that period and ultimately could affect the ~~Company’s~~cost of our insurance ~~premiums~~ premiums or ~~its~~our ability to obtain insurance coverage.

~~As a~~There ~~consumer~~has ~~goods~~been ~~manufacturer~~an increase ~~and~~in ~~distributor,~~asbestos-related ~~the~~lawsuits ~~Company~~against ismultiple ~~subject to~~defendant ~~continuing~~companies, ~~risk~~some of ~~product~~which ~~liability~~historically ~~and~~may ~~related~~have ~~lawsuits~~manufactured ~~involving~~or ~~claims~~sold ~~for~~products ~~substantial~~that ~~monetary~~had ~~damages~~asbestos-containing components. ~~The Company~~ isMany ~~party~~of tothese ~~various~~companies ~~personal~~have ~~injury and property damage lawsuits and~~not ~~claims~~been ~~relating~~historically toassociated ~~its~~with ~~products~~having ~~and~~asbestos ~~other litigation incidental to its business~~risks. ~~The~~ ~~Company~~We ~~has~~have ~~general~~been ~~liability,~~named ~~product~~in ~~liability~~a ~~and~~number ~~workers’~~of ~~compensation~~such ~~insurance coverage~~suits. ~~The~~ ~~Company’s~~In ~~insurance~~many ~~coverage~~of ~~provides that~~these suits the ~~Company~~alleged isties ~~responsible~~to ~~for~~our ~~policy~~products are ~~deductibles~~either ~~and~~unclear ~~legal~~or ~~costs~~we ~~and expenses. Loss accruals~~ have been ~~recorded~~ inable ~~accordance~~to ~~with~~demonstrate ~~SFAS~~that ~~No.~~the 5,identified product ~~“Accounting~~did ~~for~~not ~~Contingencies” to~~contain ~~cover~~asbestos. ~~the~~We ~~portion~~do ofnot ~~general~~expect ~~liability,~~to ~~product~~incur ~~liability~~any ~~and workers’~~material ~~compensation~~liabilities ~~claims,~~in ~~both~~connection ~~asserted~~with ~~claims~~these ~~and~~lawsuits. ~~incurred~~However, ~~but~~there ~~not~~is ~~reported~~no ~~claims,~~assurance that ~~are~~we ~~not~~will ~~covered~~continue byto ~~insurance~~be ~~policies. Such~~successful ~~accruals~~in ~~are~~defending ~~based~~asbestos onclaims. ~~estimates which include information provided~~In byaddition, ~~the~~our ~~Company’s~~historic insurance ~~company~~coverage, ~~claims~~including ~~adjusters~~that ~~and~~of ~~insurance~~our ~~broker~~predecessors, ~~taking~~may ~~into~~not ~~account~~cover ~~prior~~asbestos ~~experience, numbers of~~ claims, ~~discussions~~or ~~with~~the ~~legal counsel~~defense ~~and other relevant factors. The methods~~ of ~~making~~ such ~~estimates~~matters, ~~and~~as ~~establishing~~coverage ~~the resulting accrual are~~depends ~~reviewed~~ on athe ~~regular~~year ~~basis~~of ~~and~~purported ~~any~~exposure ~~adjustments~~and ~~are~~other ~~reflected in current operating results~~factors.

~~Effective~~As ~~January~~a 1,consumer ~~2004~~goods manufacturer and distributor, ~~the~~we ~~Company~~are ~~changed~~subject ~~its~~to ~~employee~~continuing ~~medical~~risk of product ~~coverage~~liability ~~from~~and arelated ~~fully~~lawsuits ~~insured~~involving ~~plan~~claims for substantial monetary damages. We are party to avarious ~~self-insured~~personal ~~plan. The~~injury ~~plan~~and isproperty ~~partially~~damage ~~funded~~lawsuits and byclaims ~~payroll~~relating to our products and other litigation incidental to our ~~deductions~~business. ~~from~~We ~~participating~~have ~~employees~~general liability, product liability and workers’ compensation insurance coverage. Our insurance coverage provides that we are ~~The~~responsible ~~Company~~for ~~has~~policy adeductibles ~~maximum~~and ~~liability~~most ~~per~~legal ~~participant~~costs ~~per~~and ~~year~~expenses. Loss accruals have been recorded in ~~addition~~accordance with SFAS No. 5, “Accounting for Contingencies” to ancover ~~aggregate~~the ~~maximum~~portion of general liability, ~~for~~product ~~all~~liability and workers’ compensation claims~~. Amounts~~, inboth ~~excess~~asserted ofclaims ~~the~~and ~~stated~~incurred ~~maximums~~but ~~are~~not reported claims, that are not covered ~~under~~by ainsurance ~~separate~~policies. ~~policy~~The accruals are based on estimates which include information provided by anour insurance carriers, ~~company. The~~claims ~~Company~~adjusters ~~provides~~and ~~for~~insurance ~~both~~brokers, ~~reported~~taking into account our prior experience, numbers of claims, discussions with legal counsel and other ~~incurred~~relevant ~~but~~factors. ~~not~~Our ~~reported~~methods ~~medical~~of ~~costs~~estimating losses and ~~pays~~establishing ~~claims~~the resulting accruals are reviewed on a regular basis and ~~administrative~~any ~~expenses~~adjustments are reflected asin ~~they~~current ~~become~~operating ~~due~~results.

~~The~~Effective ~~Company~~January 1, ~~has~~2004, ~~recorded~~we ~~loss~~changed ~~accruals~~our ~~covering~~employee ~~the~~medical ~~portion~~coverage offrom ~~lawsuits~~a ~~and claims~~fully ~~not~~insured ~~covered~~plan byto ~~insurance~~a ~~policies~~self-insured ofplan. ~~$4,406,000~~The ~~and~~plan ~~$3,702,000~~is aspartially offunded ~~June~~by ~~30,~~payroll ~~2004~~deductions ~~and~~from ~~December~~participating ~~31, 2003, respectively~~employees. ~~The~~ ~~amount~~We ~~related~~have toa ~~product~~maximum ~~and general~~ liability ~~lawsuits, asserted~~per ~~claims~~participant ~~and~~per ~~incurred~~calendar ~~but~~year ~~not~~in ~~reported~~addition ~~claims~~to ~~was~~an ~~$2,004,000~~aggregate ~~and~~maximum ~~$2,382,000~~liability ~~as of~~for ~~June~~all ~~30,~~claims. ~~2004~~Amounts ~~and~~in ~~December~~excess ~~31,~~of ~~2003,~~the ~~respectively. The~~stated ~~amount~~maximums ~~related~~are tocovered ~~workers’~~under ~~compensation~~a ~~asserted~~separate ~~claims~~policy ~~and~~provided ~~incurred~~by ~~but~~an ~~not~~insurance ~~reported~~company. ~~claims~~We ~~was~~provide ~~$1,323,000~~for ~~and~~both ~~$1,320,000~~reported ~~as of June 30, 2004~~ and ~~December~~incurred ~~31,~~but ~~2003,~~not ~~respectively. The~~reported ~~amount related to~~ medical costs and ~~dental self-insured~~pay ~~reserves including the asserted~~ claims and ~~incurred but not~~administrative ~~reported~~expenses ~~claims was $1,079,000~~ as ofthey ~~June~~become ~~30, 2004~~due.

10We have recorded loss accruals covering the portion of lawsuits and claims not covered by insurance policies of $3,808,000 and $4,772,000 as of December 31, 2004 and September 30, 2004, respectively. The amount related to product and general liability lawsuits, asserted claims and incurred but not reported claims was $1,570,000 and $2,037,000 as of December 31, 2004 and September 30, 2004, respectively. The amount related to workers’ compensation asserted claims and incurred but not reported claims was $1,418,000 and $1,505,000 as of December 31, 2004 and September 30, 2004, respectively. The amount related to medical and dental self-insured reserves including the asserted claims and incurred but not reported claims was $820,000 and $1,230,000 as of December 31, 2004 and September 30, 2004, respectively.

10. Net Income Per Common Share

Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share is calculated by dividing net income by the sum of the weighted average number of common shares outstanding plus the dilutive effect of unvested restricted shares and outstanding stock options using the “treasury stock” method.

	Three Months Ended June 30,		Six Months Ended June 30,
	Three Months Ended December 31,
	2004	2003	~~2004~~	~~2003~~
	(In thousands)
Weighted average common shares outstanding - basic	11,851	12,082	11,896	12,078
Weighted average common shares outstanding — basic	11,943	11,999
Diluted effect of employee stock options and restricted shares	~~741~~608	~~200~~572	~~694~~	~~196~~
Weighted average common shares outstanding - diluted	12,592	12,282	12,590	12,274
Weighted average commons shares outstanding — diluted	12,551	12,571

11. Business Segments

~~The~~We ~~Company~~operate ~~operates~~ in two business segments organized around ~~its~~our products: the Personal Health Care segment and the Pool Products and Heating Systems segment. The Personal Health Care segment designs, ~~manufactures~~ manufactures and markets personal health care products including showerheads, consumer and professional oral health products, and water filtration products ~~and personal stress relief products~~. The ~~Pool~~ Pool Products and Heating Systems segment designs, manufactures and markets ~~swimming~~ swimming pool and spa heaters, heat pumps, electronic controls, valves, pumps, filters, automatic salt chlorine generators, titanium heat exchangers, water features, accessories and residential and commercial water-heating systems.

Information on ~~the Company’s~~our business segments is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	Three Months Ended December 31,
	2004			2003			~~2004~~			~~2003~~
	(In thousands)
Sales:
Personal Health Care	$	25,259		$	29,793		$	53,963		$	57,571
Pool Products and Heating Systems	$	60,328		$	60,592
Pool Products and Heating Systems	65,013			46,703			103,970			74,314
Personal Health Care	29,570			36,519
Total sales	$	9089,~~272~~898		$	7697,~~496~~111		$	~~157,933~~		$	~~131,885~~
Operating income (loss):
Operating income:
Personal Health Care	$	(905	)	$	2,278		$	725		$	3,671
Pool Products and Heating Systems	$	6,998		$	7,503
Pool Products and Heating Systems	7,111			4,266			4,640			456
Personal Health Care	2,878			2,169
Total operating income	69,~~206~~876			69,~~544~~672			~~5,365~~			~~4,127~~
Interest expense	~~348~~365			~~560~~458			~~894~~			~~1,099~~
Other income	(90208		)	(8458		)	~~(160~~		)	~~(208~~		)
Income from continuing operations before income taxes	$	59,~~948~~719		$	69,~~068~~272		$	~~4,631~~		$	~~3,236~~

	June 30, 2004		December 31, 2003
	December 31, 2004		September 30, 2004
	(In thousands)
Identifiable assets:
Personal Health Care	$	58,619	$	67,331
Pool Products and Heating Systems	$	153,412	$	130,413
Pool Products and Heating Systems	129,595		137,579
Personal Health Care	61,624		66,528
Corporate	1214,~~228~~387		1314,~~666~~259
Total identifiable assets	$	~~200~~229,~~442~~423	$	~~218~~211,~~576~~200

12. Recent Developments

In January 2005, we announced that our Board of Directors is considering various strategic alternatives to enhance stockholder value, including pursuing a potential sale of a portion or all of the business. We have engaged J.P. Morgan Securities Inc. to assist us in our strategic review. No assurance can be given that any strategic alternative involving a transaction will be pursued or, if a transaction is pursued, that it will be consummated.

ITEM 2—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking statements regarding future events or ~~the~~our future financial performance ~~of the Company~~ that involve certain risks and uncertainties. Any statements contained in this report, which are not historical fact, may be considered forward-looking statements, and ~~the~~ ~~Company~~we ~~relies~~rely upon the “safe harbor” for forward-looking statements provided by Private Securities Litigation Reform Act of 1995. Actual results could differ materially from these forward-looking statements as a result of the risk factors described in ~~the~~our ~~Company’s~~Transition ~~Annual~~ Report on Form 10-KKT for the ~~year~~transition ~~ended~~period ~~December~~from 31January 1, ~~2003~~2004 through September 30, 2004, including, among others, ~~its~~our ability to develop new products and execute ~~its~~ our growth strategy, the uncertainty of new product testing and regulatory approvals, the uncertainty that ~~its~~our marketing efforts will achieve the desired results with respect to existing or new products, ~~its~~our dependence on key customers, the seasonal nature of ~~its~~ our businesses, the impact on consumer confidence and consumer spending, the effect of product liability claims, the impact of rising commodity costs such as steel, copper, ~~and~~titanium, resin and oil, risks associated with using foreign suppliers including ~~increased~~ increased transportation costs and potential supply chain disruption due to delays at West Coast ports, failure to protect ~~its~~our intellectual properties and ~~its~~ our ability to integrate acquisitions and realize expected synergies. All forward-looking statements in this report and subsequent written or oral statements attributable to ~~the~~us ~~Company~~ are expressly qualified in their entirety by the foregoing factors.

Overview of Business

Water Pik Technologies, Inc. is a leader in designing, manufacturing and marketing a broad range of well-recognized personal ~~health~~healthcare ~~care~~ products, swimming pool products and water-heating systems. We operate in two business segments: the Personal Health Care segment and the Pool Products and Heating Systems segment. The Personal Health Care segment designs, manufactures and markets personal ~~health~~healthcare ~~care~~ products including showerheads, consumer and professional oral health products~~, water~~ ~~filtration products~~ and ~~personal~~water filtration ~~stress relief~~ products. Our personal health care products are sold through a variety of channels, including home centers, mass-merchandisers, drug ~~chains~~ chains and specialty retailers. The Pool Products and Heating Systems segment designs, manufactures and markets swimming pool and spa heaters, heat pumps, electronic controls, valves, pumps, filters, automatic salt chlorine generators, titanium heat exchangers, water features, accessories and residential and ~~commercial~~ commercial water-heating systems. Our pool products and water-heating systems are sold through contractors and wholesale distributors.

In July 2004, we ~~announced~~began ~~a decision~~ to pursue an orderly exit of ~~our~~personal ~~Personal~~stress ~~Stress~~relief ~~Relief~~ products ~~line,~~within ~~a category of the~~ our Personal Health Care segment. The Personal Stress Relief product line, introduced in ~~2002~~2001, includes foot spas and personal massagers. The ~~decision~~orderly exit, which may extend over a period greater than 12 months, is intended to focus our product development, marketing and selling resources on our core personal health care product lines toward the goal of improving ~~operating~~our operating margin and return on capital.

OnIn January ~~20,~~ 2004, we acquired substantially ~~completed~~all of the ~~acquisition~~assets of Huron Tech Systems, a manufacturer of automatic salt chlorine generators used for swimming pool and spa water sanitation. ~~The~~ The addition of the ClorMatic™ salt chlorine generator product line ~~will~~has ~~integrate~~ integrated a high-growth pool equipment category into the Jandy® system. In addition, Huron Tech Systems manufactures titanium heat exchangers, which are aused ~~key component~~ in our heat pump product line. The vertical integration isof ~~expected~~titanium toheat ~~result~~exchangers contributed into margin improvement in the product line.

OnIn ~~June 2~~December 2002, ~~2003, we~~ ~~acquired~~we ~~substantially~~formalized ~~all~~a ofplan ~~the~~to ~~assets~~dispose of ~~Air~~our ~~Energy~~Ozone ~~Heat~~product ~~Pumps~~line, ~~Inc~~a component of the Personal Health Care segment. ~~and~~The Ozone product line included the Aquia® home ~~affiliates~~sanitizing ~~(“Air~~product ~~Energy”)~~introduced in September 2001. ~~Air~~ ~~Energy~~We decided the ~~manufactures~~promotional ~~premium~~investment ~~heat~~necessary ~~pumps~~to create the market for ~~swimming~~consumer ~~pools~~products based ~~and~~on ~~spas~~this technology was significantly greater than our available resources. ~~The~~ ~~addition~~Disposition of ~~heat~~the ~~pumps~~Ozone toproduct ~~our~~line was completed during the nine months ended September 30, 2004. Operating results for the discontinued product line ~~gives~~have usbeen areported ~~significant~~separately ~~market~~as ~~position~~discontinued operations in ~~regions~~the consolidated statements of ~~the~~income ~~country~~for ~~where~~all periods presented in accordance with ~~heat~~Statement ~~pumps~~of ~~are~~Financial ~~the~~Accounting ~~preferred~~Standards ~~technology~~(“SFAS”) toNo. 144, ~~heat~~“Accounting for ~~pools~~the ~~and~~Impairment ~~spas~~or Disposal of Long-Lived Assets.”

~~In December~~All ~~2002,~~discussions ~~we formalized a plan to dispose of our Ozone product line, a~~and ~~component~~amounts ofherein ~~the~~for ~~Personal~~all ~~Health~~years ~~Care~~presented ~~segment,~~relate ~~which~~to wecontinuing ~~have~~operations ~~classified in our~~only ~~financial~~unless ~~statements~~otherwise ~~as discontinued~~noted. ~~The Ozone product line includes the Aquia® home sanitizing product introduced in September 2001. We expect that disposition will be completed in fiscal year 2004.~~

All discussions and amounts herein for all periods presented relate to continuing operations only unless otherwise noted.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations ~~discusses~~ ~~Water~~discusses ~~Pik~~our ~~Technologies’~~ consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. ~~The~~ ~~preparation~~In order ofto prepare these financial statements, we make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements ~~requires~~as well ~~management~~as the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and judgments based on our historical experience and on various other factors believed to ~~make~~be reasonable under the circumstances, which form the basis for our judgments about the carrying values of assets and liabilities not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

~~estimates and~~In ~~assumptions~~“Management’s ~~that~~Discussion ~~affect the reported amounts of assets~~ and ~~liabilities and~~ ~~the~~Analysis ~~disclosure~~ of ~~contingent~~Financial ~~assets~~Condition and ~~liabilities~~Results ~~at the date~~ of ~~the financial~~Operations” ~~statements~~in ~~and~~our ~~the~~Transition ~~reported~~Report ~~amounts~~on ofForm ~~revenues~~10-KT ~~and~~for ~~expenses during~~ the ~~reporting~~ transition period~~. On~~ anfrom ~~on-going basis~~January 1, ~~management~~2004 ~~evaluates~~through ~~its~~September ~~estimates~~30, ~~and~~2004, ~~judgments. Management~~we ~~bases its estimates and judgments~~discussed onthose ~~historical~~policies ~~experience~~that ~~and~~we onbelieve ~~various other factors that~~ are ~~believed to be reasonable under the circumstances~~critical, ~~the~~some ~~results~~ of which ~~form~~require the ~~basis~~use ~~for~~of ~~making~~complex ~~judgments~~judgment ~~about~~in ~~the~~their ~~carrying~~application. ~~values~~Since ofthe ~~assets~~date ~~and~~of ~~liabilities~~ that ~~are~~Transition ~~not~~Report, ~~readily~~there ~~apparent~~have ~~from~~been ~~other~~no ~~sources. Actual~~material ~~results~~changes ~~may~~to ~~differ~~our ~~from~~critical ~~these~~accounting ~~estimates~~policies or ~~under~~the ~~different~~methodologies or assumptions ~~and~~ ~~conditions~~applied under them.

~~In “Management’s Discussion~~Consolidated ~~and Analysis of Financial Condition and~~ Results of Operations” in our Annual Report of Form 10-K for the year ended December 31, 2003, we discussed those policies that we believed were critical and required the use of complex judgment in their application. Since the date of that Form 10-K, there have been no material changes to our critical accounting policies or the methodologies or assumptions applied under them.

Consolidated Results of Operations

(Unaudited)	Three Months Ended December 31,
	2004		2003					% Change
	(Dollars in thousands)
Sales:
Pool Products and Heating Systems	$	60,328	$		60,592			(0.4)%
Personal Health Care	29,570		36,519					(19.0)%
Total sales	$	89,898	$			97,111		(7.4)%
Gross profit	$	27,644	$	29,900				(7.5)%
Operating income	$	9,876	$	9,672				2.1%
Income from continuing operations	$	5,975	$	5,969
Loss on discontinued operations	—		(30				)
Net income	$	5,975	$	5,939

Gross profit as a percent of sales	30.8%		30.8%

Operating income as a percent of sales	11.0%		10.0%

	Three Months Ended June 30,								Six Months Ended June 30,
	2004			2003			% Change		2004			2003			% Change
	(Dollars in thousands)
Sales:
Personal Health Care	$	25,259		$	29,793		(15.2	)%	$	53,963		$	57,571		(6.3	)%
Pool Products and Heating Systems	65,013			46,703			39.2	%	103,970			74,314			39.9	%
Total sales	$	90,272		$	76,496		18.0	%	$	157,933		$	131,885		19.8	%
Gross profit	$	25,110		$	24,151		4.0	%	$	42,446		$	39,445		7.6	%
Operating income	$	6,206		$	6,544		(5.2	)%	$	5,365		$	4,127		30.0	%
Income from continuing operations	$	3,781		$	3,854				$	2,932		$	2,057
Income (loss) on discontinued operations	5			(7		)			5			(47		)
Net income	$	3,786		$	3,847				$	2,937		$	2,010
Gross profit as a percent of sales	27.8		%	31.6		%			26.9		%	29.9		%
Operating income as a percent of sales	6.9		%	8.6		%			3.4		%	3.1		%

The results of operations classified as discontinued are excluded from the following discussions of our consolidated and Personal Health Care segment operating results.

~~The~~Three ~~results~~months ofended ~~operations classified~~December as31, ~~discontinued~~2004 ~~are~~compared ~~excluded from~~ to the ~~following~~three ~~discussions~~months ofended ~~our consolidated~~December ~~and~~31, ~~Personal Health Care segment operating results.~~2003

~~Three~~Sales for the three months ended ~~June~~December 3031, 2004 ~~compared~~were $89,898,000, representing a decrease of $7,213,000 or 7.4 percent compared to the three months ended ~~June~~December 3031, 2003 due to a decrease of $264,000 in our Pool Products and Heating Systems segment and a decrease of $6,949,000 in our Personal Health Care segment. Sales for both business segments were impacted by the timing of the end of the September 2004 quarter, as that quarter included an extra week of sales during the peak selling season. Pool Products and Heating Systems sales for the quarter ended December 2004 were also impacted by the timing of incentive programs partially offset by $2,145,000 in incremental chlorinator and heat exchanger sales from the acquired Huron Tech Systems business and higher sales of water-heating systems. Sales in the Personal Health Care segment for the quarter ended December 2004 were also impacted by the timing of promotional activities and competitive pressures.

~~Sales~~Gross ~~for~~profit ~~the~~(sales ~~three months~~less ~~ended~~cost ~~June~~of ~~30,~~sales) decreased ~~2004 were~~ $902,~~272~~256,000, ~~representing~~to ~~an increase of~~ $1327,~~776~~644,000 or 1830.08 percent ~~over~~of ~~the~~sales ~~comparable~~for ~~period~~the inthree ~~2003~~months ended ~~due~~December to31, ~~an increase~~2004 ofcompared to $1829,~~310~~900,000 inor ~~Pool~~30.8 ~~Products~~percent ~~and~~of ~~Heating Systems segment~~ sales for ~~partially~~the ~~offset~~same byperiod ~~a decrease of $4,534,000~~ in ~~Personal Health Care segment sales~~2003. The ~~increase~~decrease in ~~Pool~~gross ~~Product~~profit ~~and Heating System segment sales~~ was due toprimarily ~~general increases across most product~~to ~~lines,~~lower ~~and~~sales ~~includes~~combined ~~$5,187,000~~with inhigher ~~heat~~sales ~~pump~~incentives ~~and~~partially ~~chlorinator~~offset ~~sales~~by ~~related to~~favorable ~~the~~warranty ~~acquisitions of Air Energy~~ and ~~Huron~~freight ~~Tech Systems~~costs.

~~Gross~~Operating ~~profit~~income (~~sales~~gross profit less selling, ~~cost~~general ofand ~~sales~~administrative, and research and development expenses) increased $204,000 or 2.1 percent to $259,~~110~~876,000 for the three months ended ~~June~~December 3031, 2004 compared to $249,~~151~~672,000 in the same three months of the prior year. Operating income increased for the December 2004 quarter as a result of lower operating expenses, which more than offset lower sales and gross profit. Selling expenses decreased $1,794,000 or 14.5 percent to $10,540,000 for the three months ended December 31, 2004 from $12,334,000 for the same period in 2003 due primarily to lower levels of promotional and marketing expenses in the ~~higher~~ ~~sales~~Personal ~~volume~~Health Care segment. ~~Gross~~Selling ~~profit~~expense as a ~~percent~~percentage of sales ~~for~~decreased to 11.7 percent for the three months ended ~~June~~December 3031, 2004 from 12.7 percent for the same period in 2003. General and administrative expenses decreased $206,000 to 27$5,843,000 or 6.85 percent ~~compared~~of ~~with~~sales for the three months ended December 31., 2004 from $6,049,000 or 6.2 percent of sales for the same period in 2003 due primarily to decreases anin ~~overall~~employee-related ~~product~~costs, ~~mix~~partially ~~shift~~offset toby ~~the~~increased professional ~~lower~~fees ~~margin~~and ~~Pool~~pension-related ~~Products~~costs. Research and ~~Heating~~development ~~Systems~~expenses ~~segment~~decreased $460,000 or 24.9 percent to ~~increased~~$1,385,000 ~~sales~~for the three months ended December 31, ~~incentives~~2004 infrom ~~both~~$1,845,000 ~~operating~~for ~~segments~~the ~~and~~same period in 2003 due to lower ~~margins~~levels of product testing and certification services in the Personal Health Care segment.

~~Operating~~Interest ~~income~~expense, ~~(gross profit~~which ~~less~~relates ~~selling,~~to ~~general~~borrowings ~~and~~under credit ~~administrative,~~facilities and ~~research~~to promissory and ~~development expenses)~~mortgage ~~decreased~~notes payable, was $~~338~~365,000 for the three months ended December 31, 2004 compared to $6458,~~206,~~000 orfor 6the three months ended December 31, 2003.9 ~~percent~~The ofdecrease ~~sales~~was ~~for~~due ~~the~~to lower average debt levels during the three months ended ~~June~~December 3031, 2004 ~~from~~as ~~$6,544,000~~compared to the same period in 2003.

orIncome ~~8.6~~tax ~~percent~~expense ofwas ~~sales for the three months ended June 30~~$3, ~~2003. The increase in gross profit~~744,000 asor ~~discussed~~38.5 ~~above,~~percent ~~was more than offset~~of byincome ~~increased~~from ~~selling,~~continuing ~~general~~operations ~~and~~before ~~administrative~~income ~~expenses. Selling~~taxes ~~expenses increased $594,000 to $11,592,000~~ for the three months ended ~~June~~December 3031, 2004 ~~from~~as ~~$10,998,000~~compared ~~for the same period in 2003 due primarily~~ to ~~increased~~income ~~commissions,~~tax advertising and other selling expenses in the Pool Products and Heating Systems segment related to higher sales volume and to the Air Energy and Huron Tech Systems acquisitions partially offset by decreased advertising expense ~~in the Personal Health Care segment. Selling expenses as a percent~~ of ~~sales decreased to 12.8 percent for the three months ended June 30, 2004 from 14.4 percent for the same period in 2003. General and administrative expenses increased~~ $~~698~~3,~~000 to $5~~303,~~618,~~000 or 635.2 6 percent of ~~sales~~income ~~for the three months ended June 30, 2004~~ from ~~$4,920,000~~continuing oroperations ~~6.4~~before ~~percent~~income oftaxes ~~sales~~ for the same period in 2003 ~~due~~. ~~primarily~~The tohigher ~~increased~~tax ~~legal~~rate ~~and~~reflects ~~consulting~~a ~~costs~~mix ~~including~~shift ~~$445,000~~to ~~in proxy~~higher ~~solicitation,~~state ~~settlement~~taxing jurisdictions ~~and~~combined ~~related~~with ~~costs~~the inDecember ~~connection~~2003 ~~with~~impacts ~~our annual meeting~~ of ~~stockholders,~~adjustments ~~increased employee-related costs, higher amortization~~to ~~expense~~estimates ~~related~~based toupon ~~information~~the ~~system~~completion ~~upgrades~~of ~~completed~~prior inyear ~~2003~~tax ~~and to incremental administrative expenses related to newly acquired businesses~~returns.

~~Interest expense, which~~Pool ~~relates~~Products ~~to borrowings under credit facilities~~ and toHeating promissory and mortgage notes payable decreased to $348,000 for the three months ended June 30, 2004 compared to $560,000 for the three months ended June 30, 2003. The decrease is due to a lower weighted average interest rate on borrowings during the three months ended June 30, 2004 as compared to the same period in 2003.Systems

Six months ended June 30, 2004 compared to the six months ended June 30, 2003

(Unaudited)	Three Months Ended December 31,
	2004		2003			% Change
	(Dollars in thousands)
Sales:
Pool products	$	48,054	$	49,062		(2.1)%
Water-heating systems	12,274		11,530			6.5%
Total sales	$	60,328	$	60,592		(0.4)%
Gross profit	$	15,483	$		15,887	(2.5)%
Operating income	$	6,998	$		7,503	(6.7)%

Gross profit as a percent of sales	25.7%		26.2%
Operating income as a percent of sales	11.6%		12.4%

~~Sales for~~Three ~~the six~~ months ended ~~June~~December 3031, 2004 ~~were~~compared ~~$157,933,000,~~to ~~representing an increase of $26,048,000 or 19.8 percent over~~ the ~~comparable~~three ~~period~~months inended ~~2003,~~December ~~due to an increase of $29~~31,~~656,000~~ in Pool Products and Heating Systems segment sales partially offset by a decrease of $3,608,000 in Personal Health Care segment sales. The increase in Pool Product and Heating System segment sales was due to increases across most product lines, and includes $9,907,000 in heat pump and chlorinator sales related to the acquisitions of Air Energy and Huron Tech Systems.2003

~~Gross~~Sales ~~profit~~in ~~increased $3,001,000~~the toPool ~~$42,446,000~~Products and Heating Systems segment for the ~~six~~three months ended ~~June~~December 3031, 2004 ~~from~~ were $3960,~~445~~328,000, ~~for~~representing a decrease of $264,000 compared to the ~~six~~three months ended ~~June~~December 3031, 2003. ~~due~~Pool Product toand ~~higher~~Heating Systems sales ~~volume. Gross~~ ~~profit~~were asimpacted aby ~~percentage~~the extra week of sales ~~for~~in the September 2004 quarter during the peak selling season combined with the ~~six~~timing ~~months~~and ~~ended~~amount ~~June~~of ~~30,~~calendar ~~2004~~year ~~decreased~~sales incentives to 26pool customers.9 ~~percent~~Pool Products ~~from~~and ~~29.9~~Heating ~~percent~~Systems sales for the ~~same~~December ~~period~~2004 inquarter ~~2003~~included $2,145,000 ~~due~~in ~~primarily~~incremental tochlorinator anand ~~overall~~heat ~~product~~exchanger ~~mix~~sales ~~shift~~from to the acquired ~~lower~~Huron ~~margin~~Tech ~~Pool~~Systems ~~Products~~business. ~~and~~Water-heating ~~Heating~~systems ~~Systems~~sales ~~segment~~increased $744,000 or 6.5 percent to ~~increased~~$12,274,000 ~~sales~~for the three months ended December 31, ~~incentives~~2004 from the same period in ~~both~~2003 ~~operating~~due ~~segments~~primarily to continued success of our Laars® Rheos® and toPennant® ~~lower~~commercial ~~margins~~boilers inas ~~the~~well ~~Personal Health~~as ~~Care~~higher ~~segment~~sales of residential products.

~~Operating~~Gross ~~income increased~~profit decreased $1404,~~238,~~000 to $515,~~365~~483,000 or 325.4 7 percent of sales for the ~~six~~three months ended ~~June~~December 3031, 2004 ~~from~~compared to $415,~~127~~887,000 or 326.12 percent of sales for the ~~six~~three months ended ~~June~~December 3031, 2003. The ~~increase~~decrease in ~~operating~~ ~~income is due to the increase in~~ gross profit aswas ~~discussed~~primarily above and decreased research and development expenses partially offset by increased selling and general and administrative expenses. Selling expenses increased $844,000 to $22,768,000 for the six months ended June 30, 2004 from $21,924,000 for the same period in 2003 due ~~primarily~~ to ~~increased~~lower ~~advertising, commission and other selling expenses in the Pool Products and Heating Systems segment related to higher~~ sales ~~volume~~ and ~~to the Air Energy and Huron Tech Systems~~higher ~~acquisitions~~calendar ~~partially~~year-based ~~offset by decreased advertising expense in the Personal Health Care segment. Selling expense as a percent of~~ sales ~~decreased~~incentives to ~~14.4~~pool ~~percent for the six months ended June 30, 2004 from 16~~customers.6 ~~percent~~Gross ~~for~~profit ~~the~~as ~~same period in 2003. General and administrative expenses increased~~a ~~$1,399,000 to $10,917,000 or 6.9~~ percent of sales ~~for~~decreased ~~the six months ended June 30, 2004 from 9,518,000 or 7.2 percent of sales for the same period in 2003~~ due primarily to ~~increased~~sales ~~legal~~incentives and ~~consulting~~product ~~costs, including $645,000 in proxy~~mix ~~solicitation,~~offset ~~settlement~~by ~~and~~favorable ~~related~~warranty ~~costs in connection with our annual meeting of stockholders, increased employee-related costs, higher amortization expense related to information system upgrades completed in 2003~~ and ~~to incremental~~freight ~~administrative expenses related to newly acquired businesses~~costs.

~~Interest~~Operating ~~expense~~income decreased $~~205~~505,000 to $~~894~~6,998,000 for the ~~six~~three months ended ~~June~~December 3031, 2004 from $17,~~099~~503,000 ~~for the~~compared ~~six~~to the three months ended ~~June~~December 3031, 2003~~. This decrease~~ ~~was~~primarily due to lower ~~weighted~~sales ~~average~~and ~~interest~~gross ~~rate~~profit onas discussed ~~borrowings~~above. ~~during~~Selling expenses increased $210,000 or 4.0 percent primarily due to the ~~six~~timing of trade show expenses. Selling expense as a percent of sales increased to 9.1 percent for the three months ended ~~June~~December 3031, 2004 asfrom ~~compared~~8.7 percent ~~with~~for the same period in 2003. General and administrative expenses decreased $51,000 to $2,577,000 or 4.3 percent of sales for the three months ended December 31, 2004 from $2,628,000 or 4.3 percent of sales for the same period in 2003. Research and development expenses decreased $58,000 to $398,000 or 0.7 percent of sales for the quarter ended December 2004 from $456,000 or 0.8 percent of sales for the quarter ended December 2003.

14Personal Health Care

Personal Health Care

(Unaudited)	Three Months Ended December 31,
	2004		2003		% Change
	(Dollars in thousands)
Sales:
Oral health products	$	13,442	$	14,322	(6.1)%
Shower products	13,852		18,632		(25.7)%
Other products	2,276		3,565		(36.2)%
Total sales	$	29,570	$	36,519	(19.0)%
Gross profit	$	12,161	$	14,013	(13.2)%
Operating income	$	2,878	$	2,169	32.7%

Gross profit as a percent of sales	41.1%		38.4%
Operating income as a percent of sales	9.7%		5.9%

	Three Months Ended June 30,								Six Months Ended June 30,
	2004			2003			% Change		2004			2003			% Change
	(Dollars in thousands)
Sales:
Oral health products	$	12,338		$	12,609		(2.1	)%	$	23,316		$	23,526		(0.9	)%
Shower products	11,169			14,316			(22.0	)%	28,033			29,723			(5.7	)%
Other products	1,752			2,868			(38.9	)%	2,614			4,322			(39.5	)%
Total sales	$	25,259		$	29,793		(15.2	)%	$	53,963		$	57,571		(6.3	)%
Gross profit	$	8,523		$	12,280		(30.6	)%	$	19,911		$	23,429		(15.0	)%
Operating income	$	(905	)	$	2,278		(139.7	)%	$	725		$	3,671		(80.3	)%
Gross profit as a percent of sales	33.7		%	41.2		%			36.9		%	40.7		%
Operating income (loss) as a percent of sales	(3.6		%)	7.6		%			1.3		%	6.4		%

Three months ended ~~June~~December 3031, 2004 compared to the three months ended ~~June~~December 3031, 2003

Sales in the Personal Health Care segment for the three months ended ~~June~~December 3031, 2004 were $2529,~~259~~570,000, a decrease of $46,~~534~~949,000 or 1519.20 percent ~~over~~compared to the ~~comparable~~three ~~period~~months ended December 31, 2003 primarily driven by the extra week of sales in the September 2004 quarter during the peak ~~2003~~selling season combined with the timing of promotional activities and competitive pressures. Sales of Oral health products decreased $~~271~~880,000 to $1213,~~338~~442,000 for the three months ended ~~June~~December 3031, 2004 ~~from~~compared to $1214,~~609~~322,000 for the same period in 2003. ~~Consumer~~ ~~oral~~Oral health sales, ~~which~~decreased ~~were~~due primarily ~~impacted~~to bycompetition ~~temporary~~in ~~product~~the power flosser category and the timing of a ~~availability~~promotional ~~issues,~~program ~~decreased~~for ~~$505~~professional products,~~000~~ ~~partially~~which offset byhigher ansales ~~increase~~of inthe ~~professional~~Waterpikâ ~~oral~~dental ~~health~~water ~~sales~~jet of(oral ~~$234,000~~irrigator). Sales of Shower products ~~sales~~ decreased $34,~~147~~780,000 to $1113,~~169~~852,000 for the three ~~months~~ months ended ~~June~~December 3031, 2004 from $1418,~~316~~632,000 for the same period in 2003 due primarily to a ~~soft~~lower level of retail ~~climate~~customer ~~together~~promotional ~~with~~activity ~~delayed~~and higher than anticipated inventory levels at a key retail customer, ~~rollouts~~partially offset by sales of the Elementsä and Dual Massageä showerheads launched in 2004. Promotional activity, continuing customer rollouts of product sets and anew ~~lower~~product ~~level~~launches ofare ~~promotional~~expected ~~activity~~to byhave ~~some~~an increasing ~~retailers~~positive asimpact ~~compared to~~on Shower product sales over the ~~prior~~remainder of the year. Sales for the Other products category decreased $1,~~116~~289,000 to $12,~~752~~276,000 for the three months ended ~~June~~ 30December 31, 2004 from $23,~~868~~565,000 for the same period in 2003 due primarily to ~~decreased~~ lower sales of ~~water~~personal ~~filtration~~stress relief and water filtration products. Sales of personal stress relief products were lower due to our previously announced orderly exit of these products. Sales of water filtration products were lower due to the timing of the initial stocking order for the new Instapureâ water filter in the quarter ended September 2004 for a December 2004 quarter retail promotion combined with lower international sales of some lower-margin products to be discontinued in the near term.

Gross profit decreased to $81,~~523~~852,000 orto ~~33.7~~$12,161,000 ~~percent of sales~~ for the three months ended ~~June~~December 3031, 2004 ~~from~~ compared to $1214,~~280~~013,000 ~~or 41.2 percent of sales~~ for the same period in 2003~~. The~~ ~~decrease~~due into lower sales. However, gross profit asincreased ato 41.1 percent of sales ~~was~~for ~~due~~the ~~primarily~~three tomonths ~~increased~~ended ~~sales~~December ~~allowances~~31, ~~due~~2004 tofrom ~~customer~~38.4 ~~mix and~~percent ~~increased~~of ~~redemption~~sales ~~rates~~for onthe ~~certain~~same ~~rebate~~period ~~programs,~~in to2003 adue ~~less~~primarily ~~profitable~~ to product mix, to lower product ~~sales volume resulting in fixed manufacturing~~ costs ~~increasing~~ asand afavorable ~~percentage~~warranty ~~of sales~~ and tofreight ~~increased inventory reserves for slow-moving stress relief products~~costs.

Operating income ~~decreased~~ increased $3709,~~183,~~000 toor a32.7 ~~loss~~percent of to $~~905~~2,878,000 for the three months ended ~~June~~December 3031, 2004 from ~~operating income of~~ $2,~~278~~169,000 compared ~~for~~to the same three ~~months~~month ~~ended~~period ~~June~~of ~~30,~~ 2003~~. The~~, ~~decrease~~as inshort-term operating ~~income~~ ~~was~~expense ~~due~~controls tomore ~~lower~~than ~~gross~~offset ~~profit~~the asdecrease ~~discussed~~in ~~above~~gross ~~and~~profit ~~increased~~discussed ~~general and~~above. ~~administrative~~Selling expenses ~~partially offset by~~ decreased ~~selling~~$2,004,000 ~~expense. General~~to ~~and~~$5,030,000 ~~administrative~~or ~~expenses increased to 10~~17.60 percent of sales for the three months ended ~~June~~December 3031, 2004 ~~from~~compared 8to $7,034,000 or 19.23 percent of sales for the same period in 2003 due ~~primarily~~ to ~~decreased~~lower ~~sales,~~promotional and ~~proxy~~marketing ~~solicitation,~~expenses ~~settlement~~partially impacted by program timing. General and administrative ~~related~~expenses ~~costs~~decreased in$155,000 ~~connection~~to ~~with~~$3,266,000 ~~our~~or ~~annual meeting~~11.1 percent of sales ~~stockholders,~~for ~~increased~~the ~~employee-related~~three ~~costs~~months ~~and~~ended ~~higher~~December ~~amortization expense~~31, ~~related~~2004 tofrom a$3,421,000 ~~computer~~or ~~system~~9.4 percent ~~upgrade~~of ~~completed~~sales infor ~~June~~the same period in 2003~~. Selling~~ primarily due to short-term operating expense controls in effect. Research and development expenses decreased $~~971~~402,000 ~~from~~for the three months ended ~~June~~December 3031, 2004 tofrom $1,389,000 for the same period in 2003 ~~but~~primarily ~~increased~~due to ~~22.4~~ ~~percent~~the oftiming ~~sales from 22.2 percent~~ of ~~sales. The~~costs ~~decrease~~incurred in the ~~selling~~December ~~expense~~2003 ~~was~~quarter, ~~due~~which ~~to lower~~reflected ~~advertising~~ costs ~~and~~related ~~reflects~~to the ~~overall~~testing ~~decrease~~and certification inof ~~advertising spending~~new ~~planned~~consumer ~~for~~products introduced in 2004.

Six months ended June 30, 2004 compared to the six months ended June 30, 2003Seasonality

~~Sales~~Our inbusiness ~~the~~is ~~Personal~~highly seasonal, with operating results varying from quarter to quarter. The Personal Health Care segment ~~for~~has ~~the~~generally ~~six~~experienced ~~months~~higher ~~ended~~sales ~~June~~in ~~30,~~the ~~2004~~quarter ~~were~~ending ~~$53,963,000, a~~in ~~decrease~~December of ~~$3,608,000~~each orfiscal 6year due to stronger retail demand during the holiday season.3 ~~percent~~The ~~over~~Pool Products and Heating Systems segment has historically experienced higher sales in the ~~comparable~~quarters ~~period~~ending in ~~2003. Shower~~June and December of each fiscal year as customers purchase such products ~~sales~~in ~~decreased~~preparation ~~$1,690,000~~for tothe cooler ~~$28,033,000~~weather ~~for~~and in anticipation of the ~~six~~warm spring and summer months. ~~ended~~In ~~June~~addition, as 30a result of the seasonality of sales, ~~2004~~the ~~compared~~Pool Products and Heating Systems segment offers incentive programs and extended payment terms to ~~$29~~encourage pool product customers to purchase products from September through December,~~723,000~~ ~~for~~as is consistent with industry practice. The extended payment term receivables are collected during the ~~same~~spring ~~period~~and ~~2003~~summer ~~due~~months towhich creates a ~~soft~~seasonal ~~retail~~peak ~~climate~~in working ~~together~~capital ~~with~~and ~~delayed~~borrowing levels during the winter months. Seasonal ~~customer~~variations ~~rollouts~~in ofoperating ~~product~~results ~~sets~~can ~~and~~also aoccur ~~lower~~due ~~level~~to ofshort-term ~~promotional~~trends ~~activity~~such as changes in the economic environment, consumer spending and weather patterns.

15Financial Condition and Liquidity

byOur ~~some~~principal ~~retailers~~capital ~~as compared~~requirements are to fund ~~the~~working ~~prior~~capital ~~year. Sales~~needs ~~of Oral~~and ~~health~~capital ~~products~~expenditures ~~decreased~~and ~~$210,000~~ to ~~$23,316,000~~meet ~~for~~required ~~the~~debt payments. ~~six~~We ~~months~~anticipate ~~ended June~~that ~~30,~~our ~~2004~~operating ~~from~~cash ~~$23~~flow,~~526,000~~ ~~for~~together ~~the~~with ~~same~~available borrowings ~~period~~under inthe ~~2003~~credit ~~due~~facilities todescribed ~~lower sales of consumer oral health products~~below, ~~which~~will ~~were~~be ~~impacted~~sufficient ~~by temporary product~~to ~~availability~~meet ~~issues,~~our ~~partially~~working ~~offset~~capital byrequirements, ~~increased~~fund ~~sales~~capital ofexpenditures ~~professional~~and ~~dental~~make ~~health~~scheduled ~~products. Sales~~principal ~~for~~and ~~the~~interest ~~Other products~~payments ~~category~~on ~~decreased~~our ~~$1,708,000~~debt toobligations ~~$2,614,000~~ for ~~the~~at ~~six months ended~~least ~~June~~the ~~30,~~next ~~2004~~12 ~~from~~months. $4However,~~322,000~~ ~~for~~a ~~the~~decrease ~~same~~in ~~period~~demand infor ~~2003~~our ~~due~~products ~~primarily~~or todeterioration ~~decreased~~in ~~sales~~our offinancial ~~water~~ratios ~~filtration~~under ~~products~~our ~~and~~credit ~~decreased~~facilities ~~sales~~could ofadversely ~~foot~~affect ~~spas~~our liquidity.

~~Gross~~Cash ~~profit~~used ~~decreased~~in tooperating ~~$19,911,000~~activities ~~or 36.9 percent of sales~~ for the ~~six~~three months ended ~~June~~December 3031, 2004 ~~from~~ was $2313,~~429~~631,000, compared orto ~~40.7~~$16,709,000 ~~percent~~for ofthe ~~sales~~three ~~for~~months ~~the~~ended ~~same~~December ~~period~~31, 2003. ~~The~~ ~~decrease~~Our primary insource ~~gross~~of ~~profit~~operating ascash aflow ~~percent~~for ~~of sales~~the isquarter ~~due~~was ~~primarily~~net toincome ~~increased~~of $5,975,000 ~~sales~~adjusted ~~allowances~~for ~~due~~non-cash toitems ~~customer~~including ~~mix~~depreciation and amortization ~~increased~~expense ~~redemption~~combined ~~rates~~with onincreases ~~certain~~in ~~rebate~~accrued ~~programs,~~liabilities toand aaccrued ~~less profitable~~income ~~product~~taxes. ~~mix,~~The toincrease ~~lower~~in ~~sales~~accrued ~~volume~~income ~~resulting~~taxes inis ~~fixed~~due ~~manufacturing~~to ~~costs increasing~~the asaccrual ~~a percentage~~ of ~~sales~~estimated taxes, ~~and~~which towill ~~increased~~be ~~inventory~~paid ~~reserves~~during ~~for slow-moving~~the ~~stress relief products.~~

Operating income decreased $2,946,000 to $725,000 for the six months ended June 30, 2004 from $3,671,000 for the six months ended June 30, 2003. The decrease in operating income is due to lower gross profit and increased general and administrative expenses offset by decreased selling expenses. General and administrative expenses increased to 10.1 percent of sales for the six months ended June 30, 2004 from 8.2 percent of sales for the same period in 2003 due primarily to decreased sales, proxy solicitation, settlement and related costs in connection with our annual meeting of stockholders, increased employee-related costs and higher amortization expense related to a computer system upgrade completed in June 2003. Selling expense decreased $1,348,000 from the six months ended June 30, 2004 to the same period in 2003 and decreased to 21.4 percent of sales from 22.4 percent of sales. The decrease in selling expense was due to lower advertising costs and reflects the overall decrease in advertising spending planned for 2004.15

March 2005 quarter. This was partially offset by seasonal increases in accounts receivable and inventory (see Seasonality discussion above). For the quarter ended December 31, 2004, the increase in accounts receivable was less than the increase during the quarter ended December 31, 2003 due to lower sales. The increase in inventory is due primarily to additional product inventory in the Pool Products and Heating Systems segment related to newly developed and acquired products.

	Three Months Ended June 30,								Six Months Ended June 30,
	2004			2003			% Change		2004			2003			% Change
	(Dollars in thousands)
Sales:
Pool products	$	55,693		$	39,528		40.9	%	$	85,923		$	58,992		45.7	%
Water-heating systems	9,320			7,175			29.9	%	18,047			15,322			17.8	%
Total sales	$	65,013		$	46,703		39.2	%	$	103,970		$	74,314		39.9	%
Gross profit	$	16,587		$	11,871		39.7	%	$	22,535		$	16,016		40.7	%
Operating income	$	7,111		$	4,266		66.7	%	$	4,640		$	456		917.5	%
Gross profit as a percent of sales	25.5		%	25.4		%			21.7		%	21.6		%
Operating income as a percent of sales	10.9		%	9.1		%			4.5		%	0.6		%

Working capital increased to $78,014,000 at December 31, 2004 as compared to $63,917,000 at September 30, 2004. The current ratio increased to 2.2 at December 31, 2004 from 2.0 at September 30, 2004. The increase in working capital was due to the seasonal increase in accounts receivable and inventory.

~~Three~~We ~~months~~have ~~ended~~general liability, ~~June~~product ~~30,~~liability ~~2004~~and workers’ compensation insurance programs with ~~compared~~policy deductibles for which we are at risk for losses. We also have a self-insured program for employee medical costs for which we are at risk for losses up to a maximum liability per participant per calendar year and an aggregate maximum liability for all claims per calendar year. We have provided accruals for probable losses that can be reasonably estimated under these programs. The actual settlements or other resolution of claims may differ from estimated accruals, but the ~~three~~possible ~~months~~range ~~ended~~of ~~June~~loss 30in excess of those accrued cannot be reasonably estimated. Based upon currently available information, ~~2003~~we do not believe that resolution of any pending insurance claim will have a material adverse effect on our financial condition, results of operations or liquidity, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on our results of operations for that period and ultimately could affect the cost of our insurance premiums or ability to obtain insurance coverage.

~~Sales~~On inAugust 27, ~~the Pool~~2003, ~~Products~~we entered into an amended and ~~Heating~~restated ~~Systems~~credit ~~segment~~agreement with a group of banks for ~~the~~a ~~three~~revolving ~~months~~bank ~~ended~~credit ~~June~~facility ~~30,~~of ~~2004 were~~up to $6580,~~013~~000,000, ~~an increase of~~ including $1810,~~310~~000,000 orrevolving ~~39.2~~credit ~~percent~~availability ~~over~~for ~~the comparable~~our ~~period~~Canadian ~~in 2003~~subsidiary. ~~Sales~~ ~~for~~Borrowings under the ~~pool~~ ~~product~~facility ~~category~~are ~~increased~~limited ~~$16,165,000~~ to ~~$55,693,000~~borrowing ~~for~~base ~~the~~calculations ~~three~~based ~~months~~on eligible ~~ended~~accounts ~~June~~receivable ~~30,~~and ~~2004~~inventory ~~due~~balances. toThe credit facility also provides for the ~~success~~issuance of ~~our~~letters ~~pool~~of ~~builder~~credit ~~conversion~~up ~~program, increased~~to ~~sales~~the ofborrowing ~~electronic~~base ~~controls,~~less ~~pumps,~~the outstanding ~~filters,~~line ~~pool~~of ~~heaters~~credit, ~~and~~not to exceed $510,~~187~~000,000. inThe ~~heat~~credit ~~pump~~facility expires ~~and~~on ~~chlorinator~~December 1, ~~sales~~2007. ~~from~~At ~~recent~~December ~~acquisitions. Water-heating~~31, ~~systems~~2004, ~~sales~~there ~~increased~~ were $25,~~145~~259,000 in toborrowings and $96,~~320~~054,000 ~~for~~in ~~the~~letters ~~three~~of ~~months~~credit ~~ended~~outstanding ~~June~~under ~~30, 2004 from~~ the ~~same~~credit ~~period~~facility inwith ~~2003~~$40,984,000 ~~due~~in ~~primarily~~borrowing toavailability ~~increased~~remaining ~~sales~~under ~~of commercial heating systems~~borrowing ~~driven~~base bylimitations of the ~~Laars®~~credit ~~Rheos® and Pennant® boilers~~facility.

~~Gross~~On ~~profit~~October 22, 2001, ~~increased~~we entered into a real estate financing agreement with a bank and mortgaged four of our U.S. manufacturing facilities to secure four promissory notes totaling $420,~~716~~590,000. toThe notes require monthly payments of approximately $1669,~~587,~~000 ~~for~~plus ~~the~~accrued ~~three~~interest ~~months~~through ~~ended~~August 2008 ~~June~~with ~~30,~~a ~~2004~~final ~~from~~principal payment of $1114,~~871~~893,000 ~~for~~and ~~the~~accrued ~~same~~interest ~~period~~due inon ~~2003.~~September 30, 2008. In ~~The~~August 2003, ~~increase~~we involuntarily ~~gross~~amended ~~profit~~the ~~was~~real ~~due~~estate ~~primarily~~financing agreement to conform ~~increased~~some ~~sales~~financial covenants to those in the amended and restated revolving credit facility. ~~Gross~~ ~~profit~~The asbalance aoutstanding ~~percent~~at December 31, 2004 was $17,913,000.

16On December 21, 2001, we entered into a $15,000,000 equipment financing agreement with a bank. Initial borrowings under the agreement of $10,290,000 were funded on December 28, 2001 evidenced by two term notes secured by specific machinery and equipment located at our manufacturing facilities. The notes require quarterly payments of $514,500 plus accrued interest which began on April 1, 2002 with all unpaid principal balances and accrued interest due on January 1, 2007. In January 2002, we entered into interest rate swap agreements that effectively convert the variable rate interest on the $10,290,000 promissory notes payable to a fixed rate of 6.73 percent. The interest rate swap agreements expire on January 1, 2007. Interest differentials to be paid or received because of the swap agreements are reflected as an adjustment to interest expense over the related period the debt is outstanding. On September 30, 2002, we borrowed an additional $4,500,000 under the equipment financing agreement evidenced by two variable rate term notes secured by specific machinery and equipment located at our manufacturing facilities and at certain vendors’ facilities. The notes require quarterly payments of $225,000 beginning on December 29, 2002 with all unpaid principal balances and accrued interest due on September 30, 2007. In September 2004, we paid $887,000 of outstanding principal on the notes in connection with the final disposition of our discontinued Ozone product line. The balance outstanding under this agreement at December 31, 2004 was $6,443,000. No additional amounts can be borrowed under this agreement.

ofOur ~~sales~~revolving ~~was~~credit facility ~~essentially~~and mortgage notes require us to comply with various financial ~~the~~covenants ~~same~~and atrestrictions, ~~25.5~~including ~~percent~~covenants ~~for~~and restrictions relating to indebtedness, liens, investments, dividends, fixed charge coverage, capital expenditures and the ~~three~~relationship ~~months~~of ~~ended~~our ~~June~~total 30consolidated indebtedness to our earnings before interest, ~~2004~~taxes, asdepreciation ~~compared~~and amortization. A security interest in substantially all of our assets was granted as collateral to 25the lenders under the credit agreements.4 ~~percent~~To ~~for~~the extent we are not able to comply with the ~~same~~financial ~~period~~covenants, inwe ~~2003~~may be unable to borrow additional amounts and outstanding amounts may become due on an accelerated basis, which would adversely affect our liquidity.

~~Operating~~We ~~income~~currently anticipate ~~increased~~that ~~$2,845,000~~no tocash ~~$7,111,000~~dividends ~~for~~will ~~the~~be ~~three~~paid ~~months~~on ~~ended~~our ~~June~~common ~~30,~~stock ~~2004 from $4,266,000 for the comparable period of 2003. The increase~~ in ~~operating~~order ~~income was due primarily~~ to ~~the higher gross profit partially offset by higher selling,~~conserve ~~general~~cash and administrative expenses. Selling expenses increased due primarily to increased commissions, advertising and other selling expenses related to higher sales volume and to the Air Energy and Huron Tech Systems acquisitions. Selling expense as a percent of sales decreased to 9.1 percent for ~~the three~~use ~~months ended June 30, 2004 from 9.4 percent for the same period~~ in ~~2003. General~~ ~~and~~our ~~administrative expenses~~business ~~increased~~including ~~$460,000~~funding ~~due primarily to proxy solicitation, settlement and related costs in connection with~~ our ~~annual~~future ~~meeting~~operations ~~of stockholders, increased employee-related costs~~ and ~~to incremental administrative expenses related to~~ ~~newly acquired businesses~~growth. ~~General~~ ~~and administrative~~In ~~expense~~addition, asthe aterms ~~percent~~ of ~~sales~~our ~~decreased~~credit tofacility ~~4.5~~limit ~~percent for~~ the ~~three~~ ~~months~~amount ~~ended~~of ~~June 30, 2004 from 5.3 percent for the same period in 2003~~cash ~~due~~dividends tothat ~~leveraging~~we ~~costs~~may ~~over a higher sales volume~~pay.

~~Six~~Our ~~months~~debt, ~~ended~~including ~~June~~borrowings under 30the revolving credit facility and notes payable, ~~2004~~has increased by ~~compared~~$4,987,000 to ~~the~~$29,664,000 ~~six~~at ~~months~~December ~~ended~~31, ~~June~~2004 compared to $24,677,000 at September 30, ~~2003~~2004 primarily due to seasonal working capital requirements, as discussed above. Additionally, our long-term non-cancelable raw material purchase obligations decreased $502,000 to $3,626,000 at

Sales in the Pool Products and Heating Systems segment were $103,970,000 for the six months ended June 30, 2004, an increase of $29,656,000 or 39.9 percent over the comparable period of 2003. Sales for the pool product category increased $26,931,000 to $85,923,000 for the six months ended June 30, 2004 due primarily to the success of our pool builder conversion program, increased sales of electronic controls, pumps, filters, pool heaters, including $9,907,000 in heat pump and chlorinator sales from the acquisition of Air Energy and Huron Tech Systems. Water-heating system sales increased $2,725,000 to $18,047,000 for the six months ended June 30, 2004 from the same period in 2003 due to increased commercial heating systems driven by the Laars® Rheos® and Pennant® boilers.16

~~Gross~~December ~~profit increased $6~~31,~~519,000~~ to2004 from $224,~~535~~128,000 orat 21September 30, 2004.7 ~~percent~~There ofwere ~~sales~~no ~~for~~other ~~the~~significant ~~six~~changes ~~months~~in ~~ended~~our contractual cash ~~June~~obligations ~~30,~~and ~~2004~~other commercial commitments from ~~$16,016,000~~those ordisclosed ~~21.6~~in ~~percent~~our Transition ofReport ~~sales~~on Form 10-KT for the ~~same~~transition period ~~in 2003~~from ~~due~~January ~~primarily~~1, to2004 through ~~increased~~September ~~sales~~30, 2004.

~~Operating~~Other income increased $4,184,000 to $4,640,000 for the six months ended June 30, 2004 from $456,000 for the comparable period of 2003. The increase in operating income was due primarily to increased gross profit and reduced research and development expenses partially offset by increased selling and general and administrative expenses. Research and development expenses decreased to 1.2 percent of sales for the six months ended June 30, 2004 from 2.3 percent of sales for the same period in 2003 due to leveraging costs over a higher sales volume and to the completion of some new product development activity. Selling expenses increased due primarily to increased commissions, advertising and other selling expenses related to higher sales volume and to the Air Energy and Huron Tech Systems acquisitions. Selling expense as a percent of sales decreased to 10.8 percent for the six months ended June 30, 2004 from 12.1 percent for the same period in 2003. General and administrative expenses increased $662,000 due primarily to proxy solicitation, settlement and related costs in connection with our annual meeting of stockholders, increased employee-related costs and to incremental administrative expenses related to newly acquired businesses. General and administrative expense as a percent of sales decreased to 5.3 percent for the six months ended June 30, 2004 from 6.5 percent for the same period in 2003 due to leveraging costs over a higher sales volume. Matters

~~Seasonality~~Accounting Pronouncements

~~Our~~See ~~business~~Note is1 ~~highly seasonal, with operating results varying from quarter~~ to ~~quarter. The Personal Health Care segment has historically experienced higher sales in~~ the ~~quarter~~Unaudited ~~ending~~Consolidated ~~in December of each~~Financial ~~fiscal~~Statements ~~year~~included ~~due to stronger retail demand during the holiday season. The Pool Products and Heating Systems segment has historically experienced higher sales~~ in ~~the~~this ~~quarters~~Form ~~ending~~10-Q ~~in June and December of each fiscal year as customers purchase such products in preparation~~ for ~~the~~information ~~cooler~~related weather and in anticipation of the warm spring and summer months. In addition, as a result of the seasonality of product demand, the Pool Products and Heating Systems segment offers incentive programs and extended payment terms to ~~encourage pool product~~recent ~~customers~~accounting ~~to purchase products from September through December, as is consistent with industry practice~~pronouncements. ~~Seasonal variations in operating results can also occur due to short-term trends such as changes in the economic environment and weather patterns.~~

~~Financial~~Strategic Alternatives ~~Condition and Liquidity~~Review

~~Our~~In ~~principal~~January ~~capital~~2005, we ~~requirements~~announced ~~are~~that toour ~~fund~~Board ~~working~~of ~~capital~~Directors ~~needs~~is ~~and~~considering ~~capital~~various ~~expenditures~~strategic alternatives ~~and~~ to enhance stockholder value, including pursuing a potential sale ~~meet~~of ~~required~~a ~~debt~~portion ~~payments~~or all of the business. We have engaged J.P. Morgan Securities ~~anticipate~~Inc. ~~that~~to assist us in our ~~operating~~strategic ~~cash~~review. ~~flow,~~No ~~together~~assurance ~~with~~can ~~available~~be ~~borrowings under~~given ~~the~~that ~~credit~~any strategic ~~facilities~~alternative ~~described~~involving ~~below,~~a transaction will be ~~sufficient~~pursued toor, ~~meet~~if ~~our~~a ~~working~~transaction ~~capital~~is ~~requirements~~pursued, ~~fund~~that ~~capital~~it ~~expenditures~~will ~~and~~be consummated.

~~make scheduled principal~~ITEM ~~and~~3—QUANTITATIVE ~~interest~~AND ~~payments~~QUALITATIVE onDISCLOSURES ~~our~~ABOUT ~~debt~~MARKET ~~obligations for at least the next 12 months. However, a decrease in demand for our products or deterioration in our financial ratios under our credit facilities could adversely affect our liquidity.~~RISK

~~Cash provided~~Reference byis ~~operating~~made ~~activities~~to ~~for~~Part ~~the six months ended June 30~~II, ~~2004~~Item ~~of $30~~7A,~~318,000~~ Quantitative and ~~$2,120,000~~Qualitative inDisclosures ~~proceeds~~About ~~from~~Market ~~stock~~Risk, ~~option~~in ~~exercises~~the ~~were used~~Registrant’s ~~for~~Transition ~~the~~Report ~~acquisition~~on ofForm ~~Huron Tech Systems totaling $~~10~~,128,000,~~-KT for ~~capital expenditures~~the ~~totaling~~transition ~~$2,234,000,~~period tofrom ~~repay~~January ~~borrowings~~1, ~~under the revolving~~2004 ~~credit~~through ~~facilities~~September ~~of $15~~30,~~862,000~~ ~~and~~2004. toThere ~~make~~has ~~scheduled~~been ~~payments~~no onsignificant ~~promissory notes~~change ofin ~~$1,905,000. Cash~~the ~~increased~~nature ~~$2,302,000~~or ~~from~~amount ~~$970,000~~of atmarket ~~December~~risk ~~31,~~since ~~2003 to $3,272,000 at June 30, 2004~~year-end.

~~Net~~ITEM ~~cash~~4—CONTROLS ~~provided by~~AND operations for the six months ended June 30, 2004 increased by $14,412,000 to $30,318,000 as compared to $15,906,000 for the comparable period in 2003. The increase resulted primarily from higher net income adjusted for non-cash items including depreciation and amortization expense and changes to comparable inventory and accrued liability balances. Inventory decreased on a net basis during the six months ended June 30, 2004 primarily as a result of stronger than expected 2004 sales in the Pool Products and Heating Systems segment. Inventory increased in the comparable period of 2003 primarily due to the production of additional inventory to support new product introductions in the Pool Products and Heating Systems segment. Net payments of accrued liabilities for the six months ended June 30, 2004 were lower than those of the comparable period of 2003 due to the timing of sales incentive payments in the Pool Products and Heating Systems segment.PROCEDURES

~~For~~As required by Rule ~~the~~13a-15(b), ~~six~~Water ~~months~~Pik ~~ended~~Technologies, ~~June~~Inc. 30management, ~~2003~~including the Chief Executive Officer and Chief Financial Officer, ~~cash~~conducted ~~provided~~an byevaluation ~~operating~~as ~~activities~~of ~~related~~the toend ~~continuing~~of ~~operations~~the period covered by this report, of $the effectiveness of the Company’s disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based on that evaluation,~~906,000~~ ~~was~~the ~~used~~Chief toExecutive ~~fund~~Officer ~~$7,703,000~~and ~~for~~Chief Financial Officer concluded that the ~~purchase~~Company’s disclosure controls and procedures were effective as of ~~Air~~the ~~Energy,~~end ~~repay~~of ~~borrowings~~the ~~under~~period ~~revolving~~covered ~~credit~~by ~~facilities~~this report. During ofthe ~~$3,884,000,~~period tocovered ~~make~~by ~~scheduled~~this ~~payments~~report, onthere ~~promissory~~has ~~notes~~been ~~and~~no ~~capital~~change in the Company’s ~~leases~~internal ofcontrol $1over financial reporting,~~912~~ that has materially affected,~~000~~ ~~and~~or is reasonably likely to ~~fund~~materially ~~capital~~affect, ~~expenditures~~the ofCompany’s ~~$2,569,000~~internal control over financial reporting.

Our working capital was $60,859,000 at June 30, 2004 as compared to $80,506,000 at December 31, 2003. The decrease in working capital was due to a decrease in accounts receivable partially offset by the decreases in accrued liabilities, accounts payable and accrued income taxes. These fluctuations are reflective of the seasonality of our business. The current ratio decreased to 2.1 at June 30, 2004 from 2.4 at December 31, 2003.18

~~We have~~PART ~~general~~II—OTHER liability, product liability, employee medical and workers’ compensation insurance programs. Insurance coverage under these programs is subject to policy deductibles for which we are at risk for losses. Beginning in January 2004 we have provided reserves for our self-insured program for employee medical costs that includes third-party administration and individual and aggregate stop-loss insurance premiums. The actual settlements or other resolution of claims under these insurance programs may differ from estimated reserves, however, the possible range of loss in excess of those accrued is not reasonably estimable. Based upon currently available information, we do not believe that resolution of any pending insurance claims will have a material adverse effect on our financial condition, results of operations or liquidity although the resolution in any reporting period of one or more of these matters could have a material adverse effect on our results of operations for that period and ultimately could affect the cost of our future insurance premiums or our ability to obtain insurance coverage.INFORMATION

~~On August~~ITEM 27, 2003, we entered into an amended and restated credit agreement with a group of banks for a revolving bank credit facility of up to $80,000,000, including $10,000,000 revolving credit availability for our Canadian subsidiary6. ~~Borrowings~~ under the facility are limited to borrowing base calculations based on eligible accounts receivable and inventory balances. The credit facility also provides for the issuance of letters of credit up to the borrowing base less the outstanding line of credit, not to exceed $10,000,000. The credit facility expires on December 1, 2007 and replaced our previous $60,000,000 revolving credit facility, which was due to expire in November 2004, and our CAD$11,000,000 Canadian revolving credit facility. At June 30, 2004, there were $1,435,000 in borrowings and $5,904,000 in letters of credit outstanding under the credit facility with $40,488,000 of borrowing availability remaining under borrowing base limitations of the credit facility.EXHIBITS

On October 22, 2001, we entered into a real estate financing agreement with a bank and mortgaged our four U.S. manufacturing facilities to secure four promissory notes totaling $20,590,000. The notes require monthly payments of approximately $69,000 plus accrued interest through August 2008 with a final principal payment of $14,893,000 and accrued interest due on September 30, 2008. In August 2003, we voluntarily amended the real estate financing

31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

1819

~~agreement to conform certain financial covenants to those in the amended and restated revolving credit facility. The balance outstanding at June 30, 2004 was $18,394,000.~~SIGNATURES

~~On December~~Pursuant ~~21,~~to ~~2001, we entered into a $15,000,000 equipment financing agreement with a bank. Initial borrowings under~~ the ~~agreement~~requirements of ~~$10,290,000 were funded on December 28, 2001 and are evidenced~~the bySecurities ~~two~~Exchange ~~term~~Act ~~notes secured by specific machinery and equipment located at our manufacturing facilities. The notes require quarterly payments~~ of ~~$514~~1934,~~500~~ plus accrued interest beginning on April 1, 2002 with all unpaid principal balances and accrued interest due on January 1, 2007. In January 2002, we entered into interest rate swap agreements that effectively convert the ~~variable~~registrant ~~rate interest~~has onduly ~~the~~caused ~~$10,290,000~~this ~~promissory~~report ~~notes payable~~ to ~~a fixed rate of 6.73~~ ~~percent. The~~be ~~interest~~signed ~~rate swap expires~~ on ~~January~~its 1,behalf ~~2007. Interest differentials~~by ~~to be paid or received because of~~ the ~~swap agreements are reflected as an adjustment to interest expense over the related period that the debt is outstanding. On September 30~~undersigned, ~~2002,~~ wethereunto ~~borrowed~~duly an additional $4,500,000 under the equipment financing agreement evidenced by two term notes secured by specific machinery and equipment located at our manufacturing facilities and at certain vendors’ facilitiesauthorized. The notes require quarterly payments of $225,000 beginning on December 29, 2002 with all unpaid principal balances and accrued interest due on September 30, 2007. The aggregate balance outstanding under this agreement at June 30, 2004 was $8,809,000. No additional amounts can be borrowed under this agreement.

Our revolving credit facility and mortgage notes require us to comply with various financial covenants and restrictions relating to indebtedness, liens, investments, dividends, fixed charge coverage, capital expenditures and the relationship of our total consolidated indebtedness to our earnings before interest, taxes, depreciation and amortization. A security interest in substantially all of our assets was granted as collateral to the lenders under the credit agreements. To the extent that we are not able to comply with the financial covenants, we may be unable to borrow additional amounts and outstanding amounts may become due on an accelerated basis, which would adversely affect our liquidity.

	WATER PIK TECHNOLOGIES, INC.

Date: February 4, 2005	By:	/s/ MICHAEL P. HOOPIS
		Michael P. Hoopis
		President and Chief Executive Officer (Principal Executive Officer)

Date: February 4, 2005	By:	/s/ VICTOR C. STREUFERT
		Victor C. Streufert
		Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer)

Due to the seasonality of our pool products business, the extended payment term receivables offered during the fall and winter months are collected during the spring and summer. This creates a seasonal peak in borrowing levels during the spring months.20

Our debt, including borrowings under the revolving credit facility and notes payable, has decreased by $17,767,000 to $28,701,000 at June 30, 2004 compared to $46,468,000 at December 31, 2003 primarily due to increased operating cash flow offset by the acquisition of Huron Tech Systems. There were no other significant changes in our contractual cash obligations and other commercial commitments from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2003. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations, Financial Condition and Liquidity” in our Annual Report on Form 10-K for the year ended December 31, 2003.

We currently anticipate that no cash dividends will be paid on our Common Stock in order to conserve cash to fund our future operations and growth. In addition, the terms of our credit facility limit the amount of cash dividends that we may pay.

Other Matters

Recent Accounting Pronouncements

None.

ITEM 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Reference is made to Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003. There has been no significant change in the nature or amount of market risk since year-end.

ITEM 4—CONTROLS AND PROCEDURES

As required by Rule 13a-15(b), Water Pik Technologies management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation as of the end of the period covered by this report, of the effectiveness of the Company’s disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report. During the period covered by this report, there has been no change in the Company’s internal control over financial reporting, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a) On June 11, 2004, the Company and Mellon Investor Services LLC as the Rights Agent amended the Company’s Rights Agreement dated November 12, 1999 to add a “chewable pill” feature providing for stockholder action to redeem all rights to purchase preferred stock under the Rights Agreement and terminate the Rights Agreement upon consummation of a tender offer for the Company’s outstanding shares of stock that meets certain predetermined criteria. This Amendment will become effective immediately following the Company’s 2005 Annual Meeting of Stockholders.

(b)

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
March 29 to May 2, 2004	182,410	$	15.509	—	—
May 3 to May 30, 2004	0	—		—	—
May 31 to June 27, 2004	0	—		—	—
Total	182,410	$	15.509	—	—

(1) The above schedule sets forth the monthly repurchases of equity securities related to the Stock Acquisition and Retention Program (“SARP”) under the Company’s Employee Stock Purchase Plan for the quarter ended June 2004. During the quarter ended June 2004, pursuant to the SARP, certain officers of the Company tendered back to the Company a total of 182,410 shares of the Company’s Common Stock, which they had originally purchased pursuant to the SARP, as repayment of principal and accrued interest on notes owed by the officers to the Company totaling $2,829,000. Pursuant to the terms of the SARP, the tendered shares were valued at the average of the high and low market price on the day preceding the date the shares were tendered to the Company. The terms of the SARP permit repayment of loans and interest using shares of Common Stock originally purchased under the SARP. Such repayments of loans under the SARP are a form of stock repurchase by the Company, and are not part of a publicly announced stock repurchase plan. As a result of the transactions in March and April 2004, the number of outstanding shares of the Company’s Common Stock was reduced by 362,861. As of June 30, 2004, there were no outstanding loans by the Company to any officers or directors of the Company.

(2) The Company has not had any publicly announced stock purchase plans or programs.

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

The Annual Meeting of Stockholders of Water Pik Technologies, Inc. was held on May 13, 2004. Proxies for the meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934 and Regulation 14A thereunder for the purpose of:

(i)	Electing a class of two directors for a three-year term expiring in 2007;
(ii)	Amending the Company’s 1999 Incentive Plan;

(iii)	Ratifying the appointment of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending September 30, 2004; and
(iv)	Considering and voting upon a stockholder proposal concerning Board declassification.

A stockholder commenced a proxy contest involving the election of directors. The Company entered into a settlement agreement with the stockholder to resolve this matter prior to the Annual Meeting of Stockholders. The terms of the settlement, including the costs to the Company, are contained in the Settlement Agreement dated April 30, 2004, which was filed as an exhibit to the Company’s Form 8-K filed with the SEC on May 3, 2004.

At the meeting, Michael P. Hoopis and William G. Ouchi, the Company’s proposed directors, were elected as directors for three-year terms expiring in 2007, the Company’s Amendment to the 1999 Incentive Plan was approved, the appointment of Ernst & Young LLP as independent auditors was ratified, and the stockholder proposal regarding Board declassification was approved. In addition, the following persons’ terms of office as a director continued after the Annual Meeting of Stockholders: Robert P. Bozzone, W. Craig McClelland, F. Peter Cuneo, Charles J. Queenan, Jr. and Babette E. Heimbuch.

The tables below summarize the results of the stockholders' vote:

	Number	Percentage
Shares outstanding and entitled to vote	12,283,322	100.0	%
Shares represented in person or by proxy at meeting	9,526,899	77.6	%
Shares not voted at meeting	2,756,423	22.4	%

Proposal one (Election of Directors)

Breakdown of votes cast for each nominee

	Votes For	Votes Withheld
Michael P. Hoopis	9,509,744	17,155
William G. Ouchi	9,510,221	16,678

Proposal two (Amendment of 1999 Incentive Plan)

Breakdown of votes cast

		Votes For		Votes Against		Abstain		Broker Non-Votes
		9,002,861		229,120		37,877		257,041

Proposal three (Ratification of Auditor Appointment)

Breakdown of votes cast

		Votes For		Votes Against		Abstain
		9,461,998		50,591		14,310

Proposal four (Board Declassification)

Breakdown of votes cast

		Votes For		Votes Against		Abstain
		8,811,309		670,808		44,782

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits -

10.1 Water Pik Technologies, Inc. 1999 Incentive Plan (As Amended and Restated as of May 13, 2004).

31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

The Company filed a current report on Form 8-K on April 6, 2004, (a) under Item 7, providing the Company’s news release related to its anticipated operating results for the quarter ended March 2004; and (b) under Item 12, furnishing information regarding its news release for its anticipated quarter ended March 2004 operating results.

The Company filed a current report on Form 8-K on April 16, 2004, (a) under Item 7, providing the Company’s news release related to its quarter ended March 2004 operating results; and (b) under Item 12, furnishing information regarding its news release for its quarter ended March 2004 operating results.

The Company filed a current report on Form 8-K on April 23, 2004, (a) under Item 5, announcing, among other items, that it would be amending its stockholder rights plan 30 days after certification of the results of its 2004 Annual Meeting and would be submitting and recommending for stockholder approval at the 2005 Annual Meeting a charter amendment to eliminate supermajority voting for removal of directors and approval of a merger or sale of the Company; and (b) under Item 7, providing the Company’s news release related to the foregoing.

The Company filed a current report on Form 8-K on May 3, 2004, (a) under Item 5, announcing that it had entered into a Settlement Agreement with Tennenbaum Capital Partners, LLC (“TCP”) and related parties regarding the end of the proxy contest between the Company and TCP; and (b) under Item 7, providing the Settlement Agreement, and the Company’s and TCP’s jointly issued news release announcing among other things, that (i) the proxy contest with TCP has ended, (ii) TCP will not vote any of TCP’s blue proxy cards it has received or may receive from Company stockholders, and (iii) Company stockholders are encouraged to vote only on the Company’s white proxy cards for the upcoming Annual Meeting of Stockholders on May 13, 2004.

The Company filed a current report on Form 8-K on May 14, 2004, (a) under Item 5, announcing that its stockholders elected two directors to three-year terms expiring in 2007, approved an amendment to the Company’s 1999 Incentive Plan, ratified the appointment of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending September 30, 2004, and approved a stockholder proposal regarding Board declassification; and (b) under Item 7, providing the Company’s news release regarding the voting results.

The Company filed a current report on Form 8-K on June 14, 2004, (a) under Item 5, announcing that the Company and Mellon Investor Services LLC, as the Rights Agent, entered into an Amendment No. 2 (the “Amendment”) to the Rights Agreement dated as of November 12, 1999, as amended by Amendment No. 1 dated as of December 28, 2000, which adds a “chewable pill” feature to the Rights Agreement providing for stockholder action to redeem all rights to purchase preferred stock under the Rights Agreement and terminate the Rights Agreement upon consummation of a tender offer for the Company’s outstanding shares of stock that meets certain predetermined criteria; and (b) under Item 7, providing the Amendment.

The Company filed a current report on Form 8-K on June 15, 2004, (a) under Item 5, announcing that two executive officers of the Company entered into stock trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Rule 10b5-1 Plans”); and (b) under Item 7 providing the form of Rule 10b5-1 Plan.

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.

	WATER PIK TECHNOLOGIES, INC.
Date: August 10, 2004	By:	/s/ MICHAEL P. HOOPIS
		Michael P. Hoopis President and Chief Executive Officer (Principal Executive Officer)
Date: August 10, 2004	By:	/s/ VICTOR C. STREUFERT
		Victor C. Streufert Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer)

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