For more information contact:
Amir Rosenthal
(203) 598-0397
Vice President, Chief Financial Officer,
General Counsel & Secretary

KATY INDUSTRIES, INC. ANNOUNCES RESULTS FOR FOURTH QUARTER AND YEAR 2000 AND DEFINITIVE AGREEMENT FOR RECAPITALIZATION

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ENGLEWOOD, CO - March 30, 2001 -- Katy Industries, Inc. (NYSE: KT) today
reported a net loss for the fourth quarter of 2000 of ($2,275,000) or ($.28)
per diluted share, compared to net income of $4,459,000, or $.49 per diluted
share, in the fourth quarter of 1999. Fourth quarter results of 2000 include
unusual charges totaling ($706,000) after-tax, or ($.08) per share, while the
same period results of 1999 include unusual income of $2,238,000 after-tax, or
$.22 per diluted share. Unusual items are detailed on a schedule accompanying
this release.

For the full year 2000, the Company reported a net loss of ($5,458,000) or
($.65) per diluted share, compared to net income of $10,455,000, or $1.21 per
diluted share, in 1999. The year 2000 results include unusual charges totaling
($3,237,000) after-tax, or ($.39) per share, while 1999's results include
unusual income of $1,848,000 after-tax, or $.18 per diluted share.

Katy indicated that it expects a loss for the first quarter of 2001 from its
continuing segments which is estimated to be in the range of ($.20) to ($.30)
per share, excluding unusual charges.

Katy also announced that the Board had determined to suspend payments of
quarterly dividends and that the Company has obtained waivers from its existing
bank lenders for compliance with certain financial covenants through June 30, 2001.

Katy further announced that it has entered into a definitive agreement with an
affiliate of Kohlberg Investors IV, L.P. an affiliate of Kohlberg & Co. L.L.C.
("Kohlberg") for a recapitalization of Katy. Under the agreement, the Kohlberg
affiliate would commence a tender offer for up to 2,500,000 shares of Katy
common stock at a price of $8.00 per share and would purchase at least 400,000
shares of newly issued convertible preferred stock at $100 per share for not
less than $40,000,000. Proceeds from the newly issued convertible preferred
stock would principally be used to reduce Katy's existing debt and would also
be used to partially redeem a third party’s preferred interest in a Katy subsidiary.

Each preferred share would be convertible into 12.5 shares of common stock.
The common stock underlying the preferred, together with the common stock to be
purchased in the tender offer, would represent a majority of the outstanding
common stock after giving effect to the conversion of the preferred.

The Kohlberg affiliate has obtained a commitment letter from Deutsche Banc
Alex. Brown to provide Katy up to $150 million of senior secured term and
revolving loans to refinance the balance of the Company’s existing debt.

Completion of the transaction is subject to a number of conditions, including
affirmative vote of Katy’s shareholders to authorize the convertible preferred
stock and to elect six Kohlberg designees as directors of the Company, who will
then represent a majority of the Board, and completion of the sale of an
operating subsidiary pursuant to an existing letter of intent.

Shareholder approval of the transaction will be the subject of a proxy
statement expected to be mailed to Katy shareholders in April for a
shareholders' meeting to be held in May, 2001. The tender offer will not be
commenced until the proxy statement is mailed.

Mr. Robert M. Baratta, Katy's Chief Executive Officer, commented: "This
transaction will increase Katy’s financial strength. Shareholders will have
the opportunity to tender shares in the tender offer at a substantial premium
over our recent market price. Through the shares they keep, they will also be
able to participate in the future of a financially stronger Katy."

Katy Industries, Inc. is a diversified corporation with interests primarily in
Electrical/Electronics and Maintenance Products.

Kohlberg is a private merchant banking firm with offices in New York and
California. Founded in 1987, Kohlberg has completed more than 70 acquisitions
and recapitalization transactions in a variety of industries.
Company contact:
Stephen Nicholson, Vice President of Finance, in Englewood at (303) 290-9300,
or at www.katyindustries.com

Where You Can Find Additional Information:

Katy strongly advises all Katy shareholders to read Katy's proxy statement,
which will be filed with the Securities and Exchange Commission (the "SEC").
Katy's proxy statement will contain important information that you should
consider before making any decision about the proposals to be voted on at
Katy's shareholder meeting. When completed, Katy's proxy statement will be
mailed to all Katy shareholders and will be available, together with the annual
report, quarterly reports, current reports and other documents filed by Katy,
at no charge at the SEC's web site at http://www.sec.gov or from Katy by
contacting Stephen Nicholson at (303) 290-9300.

Katy and certain other persons named below may be deemed to be participants in
the solicitation of proxies under the rules of the SEC. Participants may
include (1) the current directors of Katy: William F. Andrews, Robert M.
Baratta, Amelia M. Carroll, Daniel B. Carroll, Wallace E. Carroll, Jr., Arthur
R. Miller, Charles W. Sahlman, Jacob Saliba and Glenn W. Turcotte, (2) the
nominees to the board who are not currently directors: C. Michael Jacobi,
Christopher Anderson, Samuel P. Frieder, James A. Kohlberg and Christopher
Lacovara and (3) the executive officers of Katy who are not directors: Roger G.
Engle, Larry D. Hudson, Michael H. Kane, Stephen P. Nicholson and William J.
Wagner. A description of any interests that these persons have in proposals to
be voted on at Katy's shareholder meeting will be available in the proxy statement.

This announcement is neither an offer to purchase nor a solicitation of an
offer to sell shares of Katy. At the time the tender offer is commenced, the
acquiring entity will file a tender offer statement and Katy will file a
solicitation/recommendation statement with the SEC with respect to the tender
offer. The tender offer statement (including the offer to purchase, the
related letter of transmittal and the other offer documents attached as
exhibits thereto) and the solicitation/recommendation statement will contain
important information which should be read carefully before any decision is
made with respect to the tender offer. The offer to purchase, the related
letter of transmittal and certain other offer documents, as well as the
solicitation/recommendation statement, will be made available to all Katy
shareholders at no expense to them. The tender offer statement (including the
offer to purchase, the related letter of transmittal and all other offer
documents filed with the SEC) and the solicitation/recommendation statement
will also be available at no charge at the SEC’s website at http://www.sec.gov.

Some of the foregoing communications constitute "forward-looking statements".
Such forward-looking statements are subject to various risks and uncertainties
and Katy claims the protection afforded by the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
These statements include all statements regarding the timing, completion and
effect of the proposed recapitalization of Katy. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors,
including risks of consummation of the sale of the subsidiary of the Company
referred to above, the ability to consummate the new financing with Bankers
Trust Company and the ability to obtain the needed shareholder approvals on a
timely basis, that, together with other risks and uncertainties detailed from
time to time in Katy's filings with the SEC, may cause the actual results,
performance or achievements of Katy to be materially different from any future
results, performance or achievements expressed or implied by the forward-
looking statements. The safe harbor is not applicable to the foregoing
communications to the extent that they constitute tender offer materials and
has not been judicially determined to be applicable to such communications to
the extent that they constitute soliciting materials in connection with the tender offer.


Click below for PDF financials:
Fourth Quarter 2000 Financials


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