An independent auditor questioned U.S. Industries' ability to survive after the company reported a net loss for fiscal year 2001 of $524.6 million on sales of $1.1 billion. The loss included about $233 million in write-offs.

The company was seeking to refinance debt and sell off assets in order to survive, but stated "while the company believes it should be possible to implement such a further restructuring, there can be no assurance at this time that it will be able to do so." This reflects the conclusion drawn by the company's auditor.

U.S. Industries has been getting rid of various businesses in order to focus on principal bath and plumbing brands Jacuzzi, Zurn, Sundance Spas and Eljer, along with Rainbow vacuum cleaners. It recently sold its Ames True Temper garden tools business to Wind Point Partners for $165 million, and has agreed to sell the 12.5 percent senior notes of Strategic Industries LLC, which it acquired in March 2000, back to Strategic for $107 million in cash.

U.S. Industries attributed its decline in sales to the weaker economy, inventory reduction programs by major customers, inclement weather and an unfavorable currency exchange rate.