KATY INDUSTRIES, INC. STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands)
Three Months Ended March 31,
2008 2007
Cash flows from operating activities:
Net loss  $               (3,434)  $               (3,779)
(Income) loss from discontinued operations                      (291)                       461
Loss from continuing operations                   (3,725)                   (3,318)
Depreciation and amortization                    1,823                    1,865
Write-off and amortization of debt issuance costs                         96                       619
Stock option expense                         37                         94
Loss (gain) on sale of assets                       533                      (120)
Deferred income taxes                            -                        (94)
                  (1,236)                      (954)
Changes in operating assets and liabilities:
Accounts receivable                   (1,833)                   (2,075)
Inventories                       928                      (807)
Other assets                       134                         77
Accounts payable                   (1,489)                       261
Accrued expenses                   (1,017)                   (1,995)
Other, net                      (363)                       843
                  (3,640)                   (3,696)
Net cash used in continuing operations                   (4,876)                   (4,650)
Net cash used in discontinued operations                      (320)                      (195)
Net cash used in operating activities                   (5,196)                   (4,845)
Cash flows from investing activities:
Capital expenditures                   (1,037)                      (979)
Proceeds from sale of assets, net                         35                       120
Net cash used in continuing operations                   (1,002)                      (859)
Net cash provided by discontinued operations                    4,424                    5,995
Net cash provided by investing activities                    3,422                    5,136
Cash flows from financing activities:
Net borrowings (repayments) on revolving loans                    2,940                   (2,388)
Decrease in book overdraft                   (2,110)                   (2,123)
Repayments of term loans                      (399)                        (24)
Direct costs associated with debt facilities                            -                      (125)
Repurchases of common stock                            -                          (3)
Net cash provided by (used in) continuing operations                       431                   (4,663)
Net cash used in discontinued operations                            -                        (97)
Net cash provided by (used in) financing activities                       431                   (4,760)
Effect of exchange rate changes on cash and cash equivalents                        (54)                          (4)
Net decrease in cash and cash equivalents                   (1,397)                   (4,473)
Cash and cash equivalents, beginning of period                    2,015                    7,392
Cash and cash equivalents, end of period  $                   618  $                2,919
Reconciliation of free cash flow to GAAP Results:
Net cash used in operating activities  $               (5,196)  $               (4,845)
Capital expenditures                   (1,037)                      (979)
Free cash flow  $               (6,233)  $               (5,824)
Ending cash minus beginning cash                   (1,397)              (4,473.00)
Change in cash per cash flow                   (1,397)              (4,473.00)
  Difference                          -                            -