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Press Releases
November 13, 2007
FOR IMMEDIATE RELEASE
For more information contact:
Amir Rosenthal
(703) 236-4300
Vice President, Chief Financial Officer,
General Counsel & Secretary

KATY INDUSTRIES, INC.
REPORTS 2007 THIRD QUARTER RESULTS


ARLINGTON, VA – November 13, 2007 – Katy Industries, Inc. (OTC BB: KATY) today reported a net loss in the third quarter of 2007 of ($1.5) million [($0.18) per share], versus a net loss of ($0.9) million [($0.11) per share], in the third quarter of 2006, as adjusted to exclude restructuring and other non-recurring or unusual items, which are discussed below.  Including these items, Katy reported a net loss in the third quarter of 2007 of ($0.8) million [($0.10) per share], versus a net loss of ($2.0) million [($0.25) per share], in the same period of 2006.  Operating loss, as adjusted to exclude all restructuring and other non-recurring or unusual items, was ($1.1) million [(2.2%) of net sales] in the third quarter of 2007, compared to an operating loss, as adjusted, of ($0.2) million [(0.5%) of net sales] in the same period in 2006.  Net income (loss), as adjusted, and operating income (loss), as adjusted, are non-GAAP financial measures and are further discussed below.

Katy also reported a net loss for the nine months ended September 30, 2007 of ($4.0) million [($0.51) per share], versus a net loss of ($4.9) million [($0.62) per share], for the nine months ended September 30, 2006, as adjusted to exclude restructuring and other non-recurring or unusual items, which are discussed below.  Including these items, Katy reported a net loss for the nine months ended September 30, 2007 of ($2.8) million [($0.35) per share], versus a net loss of ($9.7) million [($1.22) per share], in the same period of 2006.  The operating loss, as adjusted to exclude all restructuring and other non-recurring or unusual items, was ($3.2) million [(2.2%) of net sales] for the nine months ended September 30, 2007, compared to an operating loss, as adjusted, of ($4.5) million [(3.0%) of net sales] in the same period in 2006.  Net income (loss), as adjusted, and operating income (loss), as adjusted, are non-GAAP financial measures and are further discussed below.

During the third quarter of 2007, Katy reported restructuring and other non-recurring or unusual items of $1.6 million pre-tax [$0.20 per share] which represents operating activities of the discontinued businesses as discussed further below.  During the third quarter of 2006, Katy reported restructuring and other non-recurring or unusual items of ($1.3) million pre-tax [($0.17) per share], primarily consisting of severance, restructuring and related costs as well as operating activities of the discontinued businesses.  Details regarding these items are provided in the “Reconciliations of GAAP Results to Results Excluding Certain Unusual Items” accompanying this press release.

For the nine months ended September 30, 2007, Katy reported restructuring and other non-recurring or unusual items of $4.4 million pre-tax [$0.55 per share], including a gain on the sale and operating activities of discontinued businesses of $8.6 million offset by severance, restructuring and related costs of ($2.7) million and loss on sale of assets of ($1.5) million.  For the nine months ended September 30, 2006, Katy reported restructuring and other non-recurring or unusual items of ($2.5) million pre-tax [($0.32) per share], including severance, restructuring and related costs of ($1.6) million, loss from discontinued businesses of ($0.7) million and costs of ($0.8) million related to the cumulative effect of a change in accounting principle for the implementation of SFAS No. 123R, Accounting for Stock-Based Compensation offset by gain on SESCO joint venture transaction of $0.6 million.  Details regarding these items are provided in the “Reconciliations of GAAP Results to Results Excluding Certain Unusual Items” accompanying this press release.

Financial highlights for the third quarter of 2007, as compared to the same period in the prior year, included:

·        On November 1, 2007, the Company entered into a definitive agreement to sell the Woods U.S. and Woods Canada businesses which comprises our Electrical Products Group.  The sale is expected to close by November 30, 2007.  As of September 30, 2007, the Company determined these businesses met the criteria as an Asset Held for Sale which results in all operating activities being classified as discontinued operations for all periods presented.  Besides the Woods U.S. and Woods Canada businesses, the discontinued operations also includes the Metal Truck Box business, Consumer United Kingdom business and Contico Manufacturing, Ltd. business, all of which were sold in either 2006 or 2007.   .

·        Net sales in the third quarter of 2007 were $49.2 million, a decrease of $2.7 million compared to the same period in 2006 primarily due to lower