JOHNSONDIVERSEY INC - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10–Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED APRIL 4, 2003

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 333-97427

JOHNSONDIVERSEY, INC.

(Exact name of registrant as specified in its charter)

Delaware		39-1877511
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

8310 16^th Street

Sturtevant, Wisconsin 53177-0902

(Address of Principal Executive Offices, Including Zip Code)

(262) 631-4001

(Registrant’s Telephone Number, Including Area Code)

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 x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x

There is no public trading market for the registrant’s common stock. As of March 31, 2003, there were 24,422 outstanding shares of the registrant’s common stock, $1.00 par value.

INDEX

Section	Topic	Page

	Forward-Looking Statements	ii

PART I

Item 1	Financial Statements

	Consolidated Balance Sheets as of April 4, 2003 and January 3, 2003	1

	Consolidated Statements of Income for the three months ended April 4, 2003 and March 29, 2002	2

	Consolidated Statements of Cash Flows for the three months ended April 4, 2003 and March 29, 2002	3

	Notes to Consolidated Financial Statements for the three months ended April 4, 2003 and March 29, 2002	4

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3	Quantitative and Qualitative Disclosure about Market Risk	21

Item 4	Controls and Procedures	22

PART II

Item 6	Exhibits and Reports on Form 8–K	24

FORWARD-LOOKING STATEMENTS

We make statements in this Form 10–Q that are not historical facts. These “forward-looking statements” can be identified by the use of terms such as “may,” “intend,” “might,” “will,” “should,” “could,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “project,” “potential,” or the negative of these terms, and similar expressions. You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time that may cause our business not to develop as we expect, and it is not possible for us to predict all of them. Factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following:

•

our ability to successfully integrate and operate our new organizational structure, including achievement of cost and tax savings;

•

our ability to execute any of our business strategies;

•

changes in general economic and political conditions, interest rates and currency movements, including, in particular, exposure to foreign currency risks;

•

the vitality of the institutional and industrial cleaning and sanitation market, particularly those sectors adversely affected by the current economic downturn, and the printing and packaging, coatings and plastics markets;

•

restraints on pricing flexibility due to competitive conditions in the professional and polymer markets;

•

the loss or insolvency of a significant supplier or customer;

•

effectiveness in managing our manufacturing processes, including our inventory and fixed assets;

•

changes in energy costs, the costs of raw materials and other operating expenses;

•

our ability and the ability of our competitors to introduce new products and technical innovations;

•

the costs and effects of complying with laws and regulations relating to the environment and to the manufacture, storage, distribution and labeling of our products;

•

the occurrence of litigation or claims;

•

changes in tax, fiscal, governmental and other regulatory policies;

•

the effect of future acquisitions or divestitures or other corporate transactions;

•

adverse or unfavorable publicity regarding us or our services;

•

the loss of, or changes in, executive management or other key personnel;

•

natural and manmade disasters, including acts of terrorism, hostilities or war that impact our markets; and

•

severe weather conditions affecting the food and lodging industry.

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

JOHNSONDIVERSEY, INC.

CONSOLIDATED BALANCE SHEETS

	April 4, 2003			January 3, 2003
	(unaudited)
	(dollars in thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	42,004		$	59,272
Accounts receivable less allowance of $32,382 and $30,424, respectively		492,486			457,191
Accounts receivable—related parties		68,350			80,922
Inventories		277,883			260,983
Deferred income taxes—current		44,511			43,682
Other current assets		85,457			83,742

Total current assets		1,010,691			985,792
Property, plant and equipment, net		569,423			561,835
Capitalized software, net		77,303			79,343
Goodwill, net		1,168,199			1,132,329
Other intangibles, net		385,320			387,953
Deferred income taxes—non-current		38,022			37,653
Long-term receivables—related parties		74,038			72,475
Other assets		117,770			119,453

Total assets	$	3,440,766		$	3,376,833

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	63,993		$	68,119
Current portion of long-term debt		57,180			57,906
Accounts payable		217,514			218,147
Accounts payable—related parties		96,608			110,414
Accrued expenses		394,883			368,618
Accrued profit-sharing		10,599			7,563

Total current liabilities		840,777			830,767
Pension and other post-retirement benefits		272,711			268,962
Long-term borrowings		1,364,568			1,348,270
Long-term payables—related parties		11,750			11,750
Other liabilities		92,544			84,051

Total liabilities		2,582,350			2,543,800
Stockholders’ equity:
Common stock—$1.00 par value; 200,000 shares authorized; 24,422 shares issued and outstanding		24			24
Capital in excess of par value		734,568			734,568
Retained earnings		101,232			100,672
Accumulated other comprehensive income		25,887			1,262
Notes receivable from officers		(3,295	)		(3,493	)

Total stockholders’ equity		858,416			833,033

Total liabilities and stockholders’ equity	$	3,440,766		$	3,376,833

The accompanying notes are an integral part of the consolidated financial statements.

JOHNSONDIVERSEY, INC.

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended
	April 4, 2003			March 29, 2002
	(unaudited)
	(dollars in thousands)
Net sales:
Net product and service sales	$	676,256		$	267,379
Sales agency fee income		21,248			—

		697,504			267,379
Cost of sales		382,247			153,824

Gross profit		315,257			113,555
Marketing, administrative and general expenses		257,418			89,203
Research and development expenses		17,736			9,885
Restructuring expense		6,509			—

Operating profit		33,594			14,467
Other expense (income):
Interest expense		32,727			2,913
Interest income		(1,194	)		(91	)
Other expense (income), net		(2,911	)		4,078

Income before taxes		4,972			7,567
Provision for income taxes		1,791			2,428

Income before minority interests		3,181			5,139
Minority interests in net (loss) of subsidiaries		(1	)		(27	)

Net income	$	3,182		$	5,166

The accompanying notes are an integral part of the consolidated financial statements.

JOHNSONDIVERSEY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	April 4, 2003			March 29, 2002
	(unaudited)
	(dollars in thousands)
Cash flows from operating activities:
Net income	$	3,182		$	5,166
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation		26,230			7,761
Amortization of intangibles		9,788			2,153
Amortization of debt issuance costs		2,153			—
Deferred income taxes		(414	)		(190	)
Gain from divestitures		(1,295	)		—
Loss on property disposals		565			—
Other		814			488
Changes in operating assets and liabilities, net of effects from acquisitions and divestitures of businesses—
Accounts receivable		(21,658	)		(7,156	)
Inventories		(13,081	)		233
Other current assets		6,892			1,182
Other assets		(2,946	)		(5,409	)
Accounts payable and accrued expenses		(2,151	)		2,238
Other liabilities		3,126			(1,800	)

Net cash provided by operating activities		11,205			4,666
Cash flows from investing activities:
Capital expenditures		(25,417	)		(7,968	)
Expenditures for capitalized computer software		(868	)		(6,107	)
Cash from property disposals		906			1,643
Acquisitions of businesses		(878	)		—
Proceeds from divestitures		835			—

Net cash used in investing activities		(25,422	)		(12,432	)
Cash flows from financing activities:
Proceeds from (repayments of) short-term borrowings		(4,774	)		15,473
Proceeds from (repayments of) long-term borrowings		(3,150	)		—
Decrease in notes receivable from officers		197			—
Dividends paid		—			(4,286	)

Net cash provided by (used in) financing activities		(7,727	)		11,187

Effect of exchange rate changes on cash and cash equivalents		4,676			135

Change in cash and cash equivalents		(17,268	)		3,556
Beginning balance		59,272			8,093

Ending balance	$	42,004		$	11,649

Supplemental cash flows information
Cash paid during the period:
Interest	$	10,377		$	2,892
Income taxes		4,955			1,172

The accompanying notes are an integral part of the consolidated financial statements.

JOHNSONDIVERSEY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Description of the Company

The accompanying consolidated financial statements include all of the operations, assets and liabilities of JohnsonDiversey, Inc. (formerly S. C. Johnson Commercial Markets, Inc.) (the “Company”). The Company is comprised of a Professional Business and a Polymer Business. The Professional Business is a global manufacturer of commercial, industrial and institutional building maintenance and sanitation products. The Polymer Business is a global manufacturer of polymer intermediates marketed to the printing and packaging, coatings, adhesives and related industries.

Prior to November 5, 1999, the Company was a wholly owned subsidiary of S.C. Johnson & Son, Inc. (“SCJ”). On November 5, 1999, ownership of the Company, including all of its assets and liabilities, was spun-off in a tax-free reorganization. In connection with the spin-off, Commercial Markets Holdco, Inc. (“Holdco”) obtained substantially all of the shares of the Company from SCJ.

Prior to May 3, 2002, Holdco contributed its shares in the Company to Johnson Professional Holdings, Inc., a wholly owned subsidiary of Holdco.

On May 3, 2002, the Company acquired the DiverseyLever business from Conopco, Inc., a subsidiary of Unilever N.V. and Unilever PLC (together, “Unilever”) (see Note 8). At the closing of the acquisition, the Company changed its name to JohnsonDiversey, Inc., and Johnson Professional Holdings, Inc. changed its name to JohnsonDiversey Holdings, Inc. (“Holdings”). In connection with the acquisition, Unilever acquired a 33 1/3% interest in Holdings, with the remaining 66 2/3% continuing to be held by Holdco.

2. Basis of Presentation

In the opinion of management, the unaudited consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position of the Company as of April 4, 2003 and its results of operations and cash flows for the three months ended April 4, 2003. These statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2003. The results of operations for the three months ended April 4, 2003 are not necessarily indicative of the results to be expected for the full fiscal year.

In order to achieve alignment with its actual business management practices, beginning with fiscal year 2003, the Company reclassified distribution costs from marketing, distribution, administrative and general expenses to cost of sales. Prior year amounts have been reclassified for consistency. Distribution costs were $67,557 and $21,080 for the three months ended April 4, 2003 and March 29, 2002, respectively.

Certain other prior period amounts have been reclassified to conform with current period presentation.

All monetary amounts, excluding share data, are stated in thousands.

3. New Accounting Standards

In July 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Disposal Activities (“SFAS 146”). Under SFAS 146, liabilities for costs associated with a plan to dispose of an asset or to exit a business activity must generally be recognized in the period in which the costs are incurred. The pronouncement supercedes Emerging Issues Task Force No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (“EITF 94-3”). Under EITF 94-3, a liability is recognized solely upon an entity’s commitment to a plan. SFAS 146 is effective for disposal activities initiated after December 31, 2002. The Company adopted SFAS 146 effective January 4, 2003 and does not expect that the pronouncement will have significant impact on its consolidated financial position or results of operations (see Note 11).

JOHNSONDIVERSEY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

In November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“Interpretation 45”), which expands on the guidance for the accounting and disclosure of guarantees. Each guarantee meeting the characteristics described in Interpretation 45 is to be recognized and initially measured at fair value. In addition, guarantors will be required to make significant new disclosures, even if the likelihood of the guarantor making payments under the guarantee is remote. Interpretation 45’s disclosure requirements are effective for financial statements for annual periods ending after December 15, 2002, while the initial recognition and initial measurement provisions are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The Company adopted Interpretation 45 effective January 4, 2003 and does not expect that the pronouncement will have significant impact on its consolidated financial position or results of operations.

In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure (“SFAS 148”). SFAS 148 amends Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), and provides alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation. SFAS 148 also amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS 148 is effective for financial statements for annual periods ending after December 15, 2002, and interim periods beginning after December 31, 2002. The Company adopted the amendments to the SFAS 123 disclosure provisions required under SFAS 148 effective January 4, 2003, but will continue to use the intrinsic value method under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, to account for stock-based compensation (see Note 6).

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (“Interpretation 46”). Interpretation 46 defines a “variable interest entity” and requires a company to consolidate such an entity if the company is subject to a majority of the risk of loss from the variable interest entity’s activities or is entitled to receive a majority of the entity’s residual returns. The interpretation also requires disclosure of variable interest entities that the company is not required to consolidate but in which it has a significant variable interest. Interpretation 46 is immediately effective for variable interest entities created after January 31, 2003 and effective June 15, 2003 for variable interest entities created on or prior to January 31, 2003. The Company’s adoption of Interpretation 46 is not expected to have a significant impact on its consolidated financial position or results of operations.

4. Income Taxes

The provision for income taxes includes deferred taxes and is based upon estimates of annual effective tax rates in the tax jurisdictions in which the Company operates.

5. Inventories

Inventories are summarized as follows:

	April 4, 2003			January 3, 2003
Raw materials and containers	$	76,659		$	72,551
Finished goods		207,969			195,177
Last-in, first-out inventory reserves		(6,745	)		(6,745	)

Total inventories	$	277,883		$	260,983

Inventories are net of allowance for excess and obsolete inventory of $22,934 and $22,671 at April 4, 2003 and January 3, 2003, respectively.

JOHNSONDIVERSEY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

6. Stock-based Compensation

The Company has a Long-Term Incentive Plan (the “Plan”) that provides for the right to purchase stock of Holdco for certain senior management of the Company. Prior to July 1, 2001, the Plan provided for the award of one share of restricted stock and one stock option for every four shares purchased. Shares are acquired at a formula value, which is an estimation of fair value by the Company based on overall Holdco performance. All restricted shares vest over a three-to-four year period from the grant date and have an exercise period of ten years from the date of grant. Stock options have an exercise term of ten years from the date of grant. Also, employees that remain with the Company for four years after spin-off are granted debt forgiveness of at least 50% of the purchase price of the stock.

Subsequent to June 29, 2001, the Plan was modified so that all awards granted under the Plan were stock option grants. Newly issued stock options vest over four years and have an exercise period of seven years from the date of grant.

The Company recorded compensation expense of $201 and $1,312 related to restricted stock and debt forgiveness during the three months ended April 4, 2003 and March 29, 2002, respectively.

A summary of stock option activity and average exercise price follows:

	Shares		Weighted Average Exercise Price
Shares under option at January 3, 2003	124,742		113.16
Options granted	92,242		106.93
Options lapsed or surrendered	(805	)	136.05
Options exercised	(470	)	82.63

Shares under option at April 4, 2003	215,709		110.48

The pro forma impact of compensation expense if the Company had used the fair-value method of accounting to measure compensation expense would have reduced net income by approximately $792 and $2,011 for the three months ended April 4, 2003 and March 29, 2002, respectively.

7. Comprehensive Income

Comprehensive income for the respective periods consists of the following:

	Three Months Ended
	April 4, 2003			March 29, 2002
Net income	$	3,182		$	5,166
Translation adjustment		27,632			(2,711	)
Unrealized losses on derivatives, net of tax		(1,745	)		(48	)

Total comprehensive income	$	29,069		$	2,407

8. Acquisition of the DiverseyLever Business

On May 3, 2002, the Company acquired the DiverseyLever business—the institutional and industrial cleaning and sanitation business of Unilever. In addition, with specified exceptions, the Company and its parent, Holdings, assumed liabilities to the extent relating to, or arising out of, the DiverseyLever business. The acquisition was accounted for under the purchase method of accounting.

JOHNSONDIVERSEY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company continues the process of settlement and conclusion on purchase price allocation and adjustments associated with the acquisition of the DiverseyLever business. The following represents a reconciliation of the preliminary allocation of purchase price from January 3, 2003 through April 4, 2003:

	As of January 3, 2003			Three Months Ended April 4, 2003 Adjustments			As of April 4, 2003
Cash purchase price	$	1,029,836		$	—		$	1,029,836
Senior discount notes of Holdings		201,900			—			201,900
Equity in Holdings issued to Unilever		352,059			—			352,059
Transaction-related costs		39,564			333	(a)		39,897
Net debt adjustment payable in cash		15,320			—			15,320
Net debt adjustment to subscription price		11,750			—			11,750
Working capital adjustment payable in cash		33,568			—			33,568
Working capital adjustment to subscription price		(36,540	)		—			(36,540	)
Pension adjustment—EBITDA		2,580			—			2,580
Pension adjustment—fully funded		(108,017	)		(400	)(b)		(108,417	)

Total purchase price		1,542,020			(67	)		1,541,953
Fair value of net tangible assets acquired		(389,603	)		6,488	(c)		(383,115	)

Excess purchase price		1,152,417			6,421			1,158,838
Allocation to intellectual property		(122,941	)		—			(122,941	)
Allocation to other identified intangible assets		(235,394	)		—			(235,394	)

Goodwill	$	794,082		$	6,421		$	800,503

(a)

The Company recorded additional transaction-related costs of $333 during the three months ended April 4, 2003, which were accounted for as an increase to acquisition goodwill. The Company does not expect further adjustment to goodwill as it relates to transaction-related costs.

(b)

In March 2003, the Company received approximately $2,000 in partial and preliminary settlement of pension full-funding adjustments agreed with Unilever. Approximately $1,600 represents collections on previously estimated receivables from Unilever. The remaining $400 represents cash received on certain pension plans for which receivables from Unilever were not previously recorded. Further adjustments are expected to be finalized and agreed with Unilever by December 2003 and are, accordingly, subject to change.

(c)

See Note 11, Restructuring Liabilities.

Pro Forma Results

The following reflects the unaudited pro forma results for the Company giving effect to the acquisition of the DiverseyLever business and the related financings as if they had occurred at the beginning of the three months ended March 29, 2002.

	Three Months Ended March 29, 2002
Net sales	$	593,779
Net (loss)		(3,868	)

9. Divestitures

In March 2003, the Company disposed of a non-strategic logistical service business in Japan for approximately $835 and the assumption of net liabilities by the purchaser of approximately $460. The net gain of $1,295 was included as a component of other (income) expense in the consolidated statement of income for the three months ended April 4, 2003. The disposed business was part of a larger cash-flow-generating group and was therefore not reported as a discontinued operation.

JOHNSONDIVERSEY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

10. Accounts Receivable Securitization

The Company and certain of its U.S. subsidiaries entered into an agreement (the “Receivables Facility”) in March 2001 whereby they sell on a continuous basis certain domestic trade receivables to a wholly owned, consolidated special purpose, bankruptcy-remote subsidiary (“JWPRC”) of the Company. JWPRC was formed for the sole purpose of buying and selling receivables generated by the Company and the U.S. subsidiaries party to the agreement. JWPRC in turn sells an undivided interest in the total domestic accounts receivable to a nonconsolidated financial institution (the “Conduit”) for an amount equal to the percentage of total domestic receivables deemed eligible. The amounts of the beneficial interest of accounts receivable sold under these arrangements are excluded from accounts receivable in the Company’s consolidated balance sheets. As of April 4, 2003, and January 3, 2003, the Conduit held $34,400 and $35,900, respectively, of accounts receivable that are not included in the accounts receivable balance reflected in the Company’s consolidated balance sheets.

The Company had a retained interest of $31,440 and $20,701 in the receivables of JWPRC as of April 4, 2003, and January 3, 2003, respectively. The retained interest is included in the accounts receivable balance reflected in the consolidated balance sheet at estimated fair value.

11. Restructuring Liabilities

During fiscal year 2002, in connection with the acquisition of the DiverseyLever business, the Company recorded liabilities for the involuntary termination of former DiverseyLever employees and other exit costs associated with former DiverseyLever facilities (“exit plans”). During the three months ended April 4, 2003, the Company recognized liabilities of $5,495 for the involuntary termination of 85 additional former DiverseyLever employees and $993 for additional other exit costs, which were recorded as an adjustment to purchase accounting. The Company continues to finalize its exit plans and expects to record similar adjustments to purchase accounting in the second quarter of fiscal year 2003.

The Company’s exit plans provide for the planned termination of 1,085 employees, of which 718 and 471 were actually terminated as of April 4, 2003 and January 3, 2003, respectively.

Additionally, the Company developed plans to restructure certain facilities that it owned prior to the acquisition of the DiverseyLever business (“restructuring plans”), primarily for the purpose of eliminating redundancies resulting from the acquisition of the DiverseyLever business. During fiscal year 2002, in connection with these restructuring plans, the Company recorded liabilities for the involuntary termination of pre-acquisition employees and other restructuring costs associated with pre-acquisition facilities. During the three months ended April 4, 2003, the Company recognized liabilities of $4,761 for the involuntary termination of 37 additional pre-acquisition employees and $1,748 for additional other restructuring costs, which were recorded as restructuring expenses in accordance with SFAS 146 (see Note 3).

The Company’s restructuring plans provide for the planned termination of 277 pre-acquisition employees, of which 235 and 151 were actually terminated as of April 4, 2003 and January 3, 2003, respectively.

	Exit Plans									Restructuring Plans
	Employee- Related			Other			Total			Employee- Related			Other			Total
Liability balances as of January 3, 2003	$	51,963		$	6,079		$	58,042		$	5,724		$	5,092		$	10,816
Liability established in purchase accounting		5,495			993			6,488			—			—			—
Liability recorded as restructuring expense		—			—			—			4,761			1,748			6,509
Cash paid¹		(8,231	)		(595	)		(8,826	)		(5,550	)		(1,573	)		(7,123	)

Liability balances as of April 4, 2003	$	49,227		$	6,477		$	55,704		$	4,935		$	5,267		$	10,202

Cash paid includes the effects of foreign exchange

JOHNSONDIVERSEY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

12. Segment Information

The sales and results of operations of the Company’s segments are summarized as follows:

	Three Months Ended or As Of March 29, 2002
	Professional		Polymer		Eliminations/ Other			Total Company
Net sales	$	210,161	$	61,860	$	(4,642	)	$	267,379
Operating profit		6,124		15,804		(7,461	)		14,467
Depreciation and amortization		7,263		1,900		751			9,914
Interest expense		5,352		198		(2,637	)		2,913
Interest income		70		187		(166	)		91
Total assets		772,710		157,261		2,364			932,335
Goodwill, net		266,034		193		—			266,227
Capital expenditures		6,831		1,137		—			7,968

	Three Months Ended or As Of April 4, 2003
	Professional		Polymer		Eliminations/ Other			Total Company
Net sales	$	630,534	$	72,084	$	(5,114	)	$	697,504
Operating profit		22,299		11,295		—			33,594
Depreciation and amortization		33,806		2,212		—			36,018
Interest expense		32,802		128		(203	)		32,727
Interest income		1,223		174		(203	)		1,194
Total assets		3,306,753		189,306		(55,293	)		3,440,766
Goodwill, net		1,167,644		555		—			1,168,199
Capital expenditures		24,169		1,248		—			25,417

JOHNSONDIVERSEY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

13. Subsidiary Guarantors of Senior Subordinated Notes

The Company’s $542,573 senior subordinated notes (based on exchange rates applied at April 4, 2003), which bear interest at 9.625% and are due in 2012, are guaranteed by certain of its wholly owned subsidiaries. Such guarantees are full and unconditional, to the extent allowed by law, and joint and several. The following supplemental information sets forth, on an unconsolidated basis, statement of income, balance sheet and statement of cash flows information for the Company, for the guarantor subsidiaries and for the Company’s non-guarantor subsidiaries, each of which were determined on a combined basis with the exception of eliminating investments in combined subsidiaries and certain reclassifications, which are eliminated at the consolidated level.

Consolidating condensed statements of operations for the three months ended March 29, 2002:

	Parent Company			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	59,424		$	87,111		$	127,872		$	(7,028	)	$	267,379
Cost of sales		32,175			53,722			74,955			(7,028	)		153,824

Gross profit		27,249			33,389			52,917			—			113,555
Marketing, distribution, administrative and general expenses		26,314			19,880			43,009			—			89,203
Research and development		3,571			4,315			1,999			—			9,885

Operating profit (loss)		(2,636	)		9,194			7,909			—			14,467

Other expense (income):
Interest expense		2,884			1,517			1,338			(2,826	)		2,913
Interest income		4			(2,785	)		(136	)		2,826			(91	)
Other (income) expense, net		(7,982	)		(2,285	)		3,436			10,909			4,078

Income before taxes		2,458			12,747			3,271			(10,909	)		7,567

Provision (benefit) for income taxes		(2,681	)		4,066			1,043			—			2,428

Net income (loss) before minority interests		5,139			8,681			2,228			(10,909	)		5,139
Minority interests		—			—			(27	)		—			(27	)

Net income (loss)	$	5,139		$	8,681		$	2,255		$	(10,909	)	$	5,166

Consolidating condensed statements of operations for the three months ended April 4, 2003:

	Parent Company			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	155,659		$	87,804		$	470,648		$	(37,855	)	$	676,256
Sales agency fee income		1,442			29			19,777			—			21,248
Cost of sales		90,345			58,249			271,508			(37,855	)		382,247

Gross profit		66,756			29,584			218,917			—			315,257
Marketing, distribution, administrative and general expenses		70,543			16,494			171,594			(1,213	)		257,418
Research and development		6,125			2,963			8,648			—			17,736
Restructuring expense		—			—			6,509			—			6,509

Operating profit (loss)		(9,912	)		10,127			32,166			1,213			33,594

Other expense (income):
Interest expense		27,577			100			23,945			(18,895	)		32,727
Interest income		(4,793	)		(14,749	)		(547	)		18,895			(1,194	)
Other (income) expense, net		(23,374	)		(226	)		(2,643	)		23,332			(2,911	)

Income before taxes		(9,322	)		25,002			11,411			(22,119	)		4,972

Provision (benefit) for income taxes		(12,503	)		5,596			8,698			—			1,791

Net income (loss) before minority interests		3,181			19,406			2,713			(22,119	)		3,181
Minority interests		—			—			(1	)		—			(1	)

Net income (loss)	$	3,181		$	19,406		$	2,714		$	(22,119	)	$	3,182

JOHNSONDIVERSEY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Consolidating condensed balance sheets at January 3, 2003:

	Parent Company			Guarantor Subsidiaries		Non-guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	4,301		$	6,282	$	48,689	$	—		$	59,272
Accounts receivable		43,705			17,856		476,552		—			538,113
Intercompany receivables		175,866			164,877		12,713		(353,456	)		—
Inventories		38,350			36,848		187,279		(1,494	)		260,983
Other current assets		28,925			10,838		87,661		—			127,424

Total current assets		291,147			236,701		812,894		(354,950	)		985,792
Property, plant and equipment, net		170,044			61,687		330,104		0			561,835
Capitalized software, net		56,290			4,831		18,222		0			79,343
Goodwill and other intangible assets, net		152,247			207,973		1,149,306		10,756			1,520,282
Deferred income taxes		23,261			1,125		13,267		0			37,653
Intercompany advances		243,817			562,487		—		(806,304	)		—
Other assets		120,441			6,123		66,462		(1,098	)		191,928
Investments in subsidiaries		1,442,427			88,496		9,672		(1,540,595	)		—

Total assets	$	2,499,674		$	1,169,423	$	2,399,927	$	(2,692,191	)	$	3,376,833

Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings	$	32,700		$	—	$	35,419	$	—		$	68,119
Current portion of long-term debt		48,005			—		9,901		—			57,906
Accounts payable		62,158			18,110		248,293		—			328,561
Intercompany payables		182,767			10,162		163,605		(356,534	)		—
Accrued expenses		122,636			38,223		203,637		933			365,429
Accrued profit sharing		2,941			1,581		3,041		—			7,563
Accrued income taxes		(18,309	)		12,960		9,537		(999	)		3,189

Total current liabilities		432,898			81,036		673,433		(356,600	)		830,767
Intercompany note payable		—			2,868		806,687		(809,555	)		—
Long-term borrowings		1,100,193			—		248,077		0			1,348,270
Other liabilities		133,550			26,969		204,207		37			364,763

Total liabilities		1,666,641			110,873		1,932,404		(1,166,118	)		2,543,800
Stockholders’ equity		833,033			1,058,550		467,523		(1,526,073	)		833,033

Total liabilities and stockholders’ equity	$	2,499,674		$	1,169,423	$	2,399,927	$	(2,692,191	)	$	3,376,833

Consolidating condensed balance sheets at April 4, 2003:

	Parent Company		Guarantor Subsidiaries		Non-guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	2,816	$	4,994	$	34,194	$	—		$	42,004
Accounts receivable		43,912		19,588		497,336		—			560,836
Intercompany receivables		148,165		165,708		37,114		(350,987	)		—
Inventories		39,966		40,614		198,756		(1,453	)		277,883
Other current assets		59,268		8,972		92,681		(30,953	)		129,968

Total current assets		294,127		239,876		860,081		(383,393	)		1,010,691
Property, plant and equipment, net		174,317		60,346		334,760		—			569,423
Capitalized software, net		61,341		4,546		11,416		—			77,303
Goodwill and other intangible assets, net		150,210		208,638		1,180,923		13,748			1,553,519
Deferred income taxes		24,043		1,125		12,854		—			38,022
Intercompany advances		256,274		578,800		—		(835,074	)		—
Other assets		120,517		6,127		61,290		3,874			191,808
Investments in subsidiaries		1,485,462		94,073		10,266		(1,589,801	)		—

Total assets	$	2,566,291	$	1,193,531	$	2,471,590	$	(2,790,646	)	$	3,440,766

Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings	$	15,000	$	—	$	48,993	$	—		$	63,993
Current portion of long-term debt		47,307		—		9,873		—			57,180
Accounts payable		48,453		17,369		248,300		—			314,122
Intercompany payables		187,549		6,069		161,539		(355,157	)		—
Accrued expenses		163,247		34,353		193,149		3,345			394,094
Accrued profit sharing		3,984		2,681		3,934		—			10,599
Accrued income taxes		—		16,464		16,260		(31,935	)		789

Total current liabilities		465,540		76,936		682,048		(383,747	)		840,777
Intercompany note payable		—		3,006		833,105		(836,111	)		—
Long-term borrowings		1,107,659		—		256,909		—			1,364,568
Other liabilities		134,676		28,351		214,145		(167	)		377,005

Total liabilities		1,707,875		108,293		1,986,207		(1,220,025	)		2,582,350
Stockholders’ equity		858,416		1,085,238		485,383		(1,570,621	)		858,416

Total liabilities and stockholders’ equity	$	2,566,291	$	1,193,531	$	2,471,590	$	(2,790,646	)	$	3,440,766

JOHNSONDIVERSEY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Consolidating condensed statements of cash flows for the three months ended March 29, 2002:

	Parent Company			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net cash provided by (used in) operating activities	$	112		$	7,073		$	23,587		$	(26,106	)	$	4,666
Cash flows from investing activities:
Capital expenditures, net		(3,254	)		(429	)		(8,749	)		—			(12,432	)

Net cash provided by (used in) investing activities		(3,254	)		(429	)		(8,749	)		—			(12,432	)
Cash flows from financing activities:														—
Increase in short-term debt		15,171			—			300			—			15,471
Increase (decrease) in intercompany payables/receivables		(7,304	)		7,099			205			—			—
Dividends paid		(4,284	)		(13,670	)		(12,436	)		26,106			(4,284	)

Net cash provided by (used in) financing activities		3,583			(6,571	)		(11,931	)		26,106			11,187

Effect of exchange rate changes on cash and cash equivalents		—			—			135			—			135

Change in cash and cash equivalents		441			73			3,042			—			3,556
Beginning balance		735			953			6,405			—			8,093

Ending balance	$	1,176		$	1,026		$	9,447		$	—		$	11,649

Consolidating condensed statements of cash flows for the three months ended April 4, 2003:

	Parent Company			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net cash provided by (used in) operating activities	$	29,683		$	29		$	(42,894	)	$	24,387		$	11,205
Cash flows from investing activities:
Capital expenditures, net		(11,922	)		(836	)		(11,786	)		—			(24,544	)
Acquisitions of businesses		(8,966	)		(6,313	)		(47	)		14,448			(878	)

Net cash provided by (used in) investing activities		(20,888	)		(7,149	)		(11,833	)		14,448			(25,422	)
Cash flows from financing activities:														—
(Decrease) increase in short-term debt		(14,302	)		(1,862	)		27,368			(15,978	)		(4,774	)
(Decrease) increase in long-term debt		(4,947	)		138			24,841			(23,182	)		(3,150	)
Increase in additional paid in capital		197			4,853			10,684			(15,537	)		197
Dividends paid		—			(12,662	)		(1,996	)		14,658			—

Net cash provided by (used in) financing activities		(19,052	)		(9,533	)		60,897			(40,039	)		(7,727	)

Effect of exchange rate changes on cash and cash equivalents		8,772			15,365			(20,665	)		1,204			4,676

Change in cash and cash equivalents		(1,485	)		(1,288	)		(14,495	)		—			(17,268	)
Beginning balance		4,301			6,282			48,689			—			59,272

Ending balance	$	2,816		$	4,994		$	34,194		$	—		$	42,004

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis includes a review of our results for the three months ended April 4, 2003. On May 3, 2002, we acquired DiverseyLever, an institutional and industrial cleaning and sanitation business, from Conopco, Inc., a subsidiary of Unilever PLC and Unilever N.V. As a result of the acquisition, our results for the three months ended April 4, 2003 include the results of the DiverseyLever business, which due to the date of the acquisition, are not included in the results for the three months ended March 29, 2002. Due to the timing of the acquisition, the transition of the institutional and industrial Unilever consumer brands business to a sales agency relationship with us after closing and the manner in which the DiverseyLever business was operated as a division of Unilever and not as a stand-alone business, comparative information for the acquired DiverseyLever business does not exist. Because of these factors and the extent to which integration of the businesses has occurred, historical comparisons are of limited relevance.

The acquisition significantly increased the size and scope of our operations and is the primary driver of the changes in each financial category discussed below for the three months ended April 4, 2003 as compared to the three months ended March 29, 2002. Except as noted, changes detailed below describe significant events that are unrelated to the acquisition.

Critical Accounting Policies

The preparation of our financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results may differ from these estimates under different assumptions or conditions. We believe the accounting policies that are most critical to our financial condition and results of operations and involve management’s judgment and/or evaluation of inherent uncertain factors are as follows:

Revenue Recognition. We recognize revenue on product sales at the time title transfers to the customer. We record an estimated reduction to revenue for customer discount programs and incentive offerings, including allowances and other volume-based incentives. If market conditions were to decline, we may take actions to increase customer incentive offerings, possibly resulting in a reduction of gross profit margins in the period during which the incentive is offered.

In arriving at net sales, we estimate the amounts of sales deductions likely to be earned by customers in conjunction with incentive programs such as volume rebates and other discounts. Such estimates are based on written agreements and historical trends and are reviewed periodically for possible revision based on changes in facts and estimates.

Estimating Reserves and Allowances. Management estimates inventory reserves based on periodical reviews of our inventory balances to identify slow-moving or obsolete items. This determination is based on a number of factors, including new product introductions, changes in customer demand patterns, and historic usage trends. Further, management estimates the allowance for doubtful accounts by analyzing accounts receivable balances by age, applying historical trend rates, analyzing market conditions and specifically reserving for identified customer balances, based on known facts, that are deemed probable as uncollectible.

Management’s current estimated ranges of liabilities relating to litigation and environmental claims are based on management’s best estimate of future costs. We record those costs based on what management believes is the most probable amount of the liability within the ranges or, where no amount within the range is a better estimate of the potential liability, at the minimum amount.

Pension and Post-Retirement Benefits. We sponsor pension and post-retirement plans in various countries, including the United States, which are separately funded. Several statistical and judgmental factors, which attempt to anticipate future events, are used in calculating the expense and liability related to the plans. These factors include assumptions about the discount rate, expected return on plan assets, rate of future compensation increases and healthcare cost trends, as determined by us and our actuaries. In addition, our actuarial consultants also use subjective factors, such as withdrawal and mortality rates, to estimate these factors. The actuarial assumptions used by us may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates, longer or shorter life spans of participants and changes in actual costs of healthcare. Actual results may significantly affect the amount of pension and other post-retirement benefit expenses recorded by us.

Goodwill and Long-Lived Assets. Effective July 1, 2001, we adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangibles” (“SFAS No. 142”). SFAS No. 142 addresses financial accounting and reporting for goodwill and other intangible assets subsequent to their acquisition. Upon adoption of SFAS No. 142, goodwill is no longer subject to amortization over its estimated useful life. Rather, goodwill is subject to at least an annual assessment for impairment by applying a fair-value-based test. Other intangible assets are required to be separately recognized if the benefit of the intangible asset can be sold, transferred, licensed, rented or exchanged. Amortization of these intangibles over their useful lives is required. Effective July 1, 2001, we also adopted SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”).

In accordance with SFAS No. 142 and SFAS No. 144, management periodically reviews its long-lived assets, including intangible assets and goodwill, for impairment and assesses whether significant events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. An impairment loss is recognized when the carrying amount of an asset exceeds the anticipated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded, if any, is calculated by the excess of the asset’s carrying value over its estimated fair value. Management also periodically reassesses the estimated remaining useful lives of its long-lived assets. Changes to estimated useful lives would impact the amount of depreciation and amortization expense recorded in our financial statements. As of January 3, 2003, we completed a fair value impairment analysis as required by SFAS No. 142 and anticipated future undiscounted cash flows analysis as required by SFAS No. 144. Based on these assessments no indicators of impairments were identified during the three months ended April 4, 2003.

For an additional discussion of new accounting standards, see note 3 to our unaudited consolidated financial statements included in Part I, Item 1 of this report.

Three Months Ended April 4, 2003 Compared to Three Months Ended March 29, 2002

Net Sales. Net sales increased by $430.1 million, or 160.8%, to $697.5 million for the three months ended April 4, 2003 from $267.4 million for the three months ended March 29, 2002. The primary reason for the increase was net sales attributable to the DiverseyLever business, which we acquired on May 3, 2002. Included in the net sales attributable to the acquisition is $21.2 million of sales agency fee income for the three months ended April 4, 2003, which we earned under a sales agency agreement we entered into with Unilever on May 3, 2002 in connection with the acquisition.

Net sales for the professional segment increased by $420.4 million, or 200.1%, to $630.5 million for the three months ended April 4, 2003 from $210.1 million for the three months ended March 29, 2002 due primarily to net sales attributable to the DiverseyLever acquisition. The strengthening of the euro, yen and other foreign currencies against the dollar positively impacted net sales by $8.5 million. Excluding this positive currency impact, net sales of the professional segment for the three months ended April 4, 2003 grew by $411.9 million, or 196.0%, from net sales for the three months ended March 29, 2002.

Net sales for the polymer segment of $72.1 million for the three months ended April 4, 2003, including intercompany sales to the professional segment of $5.1 million, increased by $10.2 million, or 16.5%, from $61.9 million for the three months ended March 29, 2002. The strengthening of the euro and yen against the dollar positively impacted net sales by $4.1 million. The increase in the segment’s net sales, excluding the positive impact from currency translation, was attributable primarily to volume growth of 13.1% and was partially offset by a decline in average selling prices. Sales volume increased in Europe by 12.4%, Asia Pacific by 24.2% and North America by 11.8%, due primarily to new business in the printing and packaging industry and the global coatings market. Average selling prices declined primarily due to an unfavorable product and geographical mix reflecting faster growth in Europe and the Asia Pacific region, which have lower average selling prices than North America.

Gross Profit. Gross profit increased by $201.7 million, or 177.6%, to $315.3 million for the three months ended April 4, 2003 from $113.6 million for the three months ended March 29, 2002, while gross profit margin increased to 45.2% for the three months ended April 4, 2003 from 42.5% for the three months ended March 29, 2002. The primary reason for the increase in gross profit and gross profit margin was the acquisition of the DiverseyLever business. The gross profit margin on the acquired DiverseyLever business was higher due to a greater mix of higher-margin direct sales than the pre-acquisition business, which was focused more on lower-margin distributor sales.

The polymer segment’s gross profit increased by $2.4 million, or 10.9%, to $24.4 million for the three months ended April 4, 2003 from $22.0 million for the three months ended March 29, 2002. The increase in the segment’s gross profit resulted primarily from the sales volume increase discussed above, partially offset by higher raw material costs and a decline in global average selling prices. In relation to gross profit margin, lower manufacturing costs were more than offset by the negative impact of the decline in global average selling prices, resulting in a decrease to 36.4% for the three months ended April 4, 2003 from 38.5% for the three months ended March 29, 2002.

Marketing, Administrative and General Expenses. Marketing, administrative and general expenses increased by $168.2 million, or 188.6%, to $257.4 million for the three months ended April 4, 2003 from $89.2 million for the three months ended March 29, 2002. The primary reason for this increase was incremental expenses attributable to the DiverseyLever business. One-time integration-related costs of $8.5 million were incurred during the three months ended April 4, 2003, consisting of non-severance employee and facility-related costs.

Research and Development Expenses. Research and development expenses increased by $7.8 million, or 78.8%, to $17.7 million for the three months ended April 4, 2003 from $9.9 million for the three months ended March 29, 2002. The primary reason for the increase was the incremental expenses attributable to the DiverseyLever business.

Restructuring and Integration. We have initiated an extensive restructuring and integration program in connection with the acquisition of the DiverseyLever business. Under this program, specified costs associated with the closure of former DiverseyLever operations and the involuntary termination of former DiverseyLever employees (“exit costs”) are recorded as purchase accounting adjustments. Costs under the program associated with the closure of specified pre-acquisition operations and the involuntary terminations of pre-acquisition employees of the Company (“restructuring costs”) are recorded as restructuring expenses in the consolidated statement of income. Also incurred under the program are costs related to the acquisition which do not meet the definition of exit costs or restructuring costs. Those costs are included in marketing, administrative and general expenses in the consolidated statement of income (“period costs”).

During the three months ended April 4, 2003, we recorded $6.5 million of exit costs as purchase accounting adjustments, $6.5 million of restructuring costs and $8.5 million of period costs in our consolidated statement of income. These costs consisted of involuntary termination and other costs associated with the consolidation of operations in the United Kingdom (“UK”) and the restructuring of the UK sales force, the consolidation of back-office operations in Japan, the implementation of an early retirement program in Japan and IT projects in Western Europe, Japan and our corporate headquarters.

A summary of all costs associated with the restructuring and integration program is outlined below. The reserve balance shown below reflects the aggregate reserves for restructuring costs.

	Three Months Ended April 4, 2003			Total Project to Date through April 4, 2003
	(unaudited)
	(dollars in thousands)
Reserve balance at beginning of period	$	68,858		$	—
Exit costs recorded as purchase accounting adjustments		6,488			76,582
Restructuring costs charged to income		6,509			26,155
Payments of accrued costs		(15,949	)		(36,832	)

Reserve balance at end of period	$	65,905		$	65,905

Period costs classified as cost of sales or marketing, administrative and general expenses	$	8,450		$	42,439

Capital expenditures	$	12,249		$	27,927

Interest Expense, Net. Net interest expense increased by $28.7 million to $31.5 million for the three months ended April 4, 2003 from $2.8 million for the three months ended March 29, 2002. An increase of $1.4 billion in the average debt balance, as a result of our borrowings under the senior secured credit facilities and the issuance of senior subordinated notes to fund the acquisition of the DiverseyLever business, resulted in an increase in net interest expense of about $9.6 million, at the average interest rate in effect during the three months ended March 29, 2002. The increase in interest expense attributable to the higher average debt balance was further impacted by an increase in the weighted average interest rate to 7.65% during the three months ended April 4, 2003 from the rate of 2.77% in effect during the three months ended March 29, 2002.

Other Income/Expense. Other income/expense increased by $7.0 million to $2.9 million of income for the three months ended April 4, 2003 from $4.1 million of expense for the three months ended March 29, 2002. Other income for the three months ended April 4, 2003 consisted primarily of a $1.3 million gain on the sale of a non-strategic logistics subsidiary in Japan in March 2003, and a $1.6 million gain on other foreign currency exchange related items.

Provision for Income Taxes. The provision declined by $0.6 million to $1.8 million for the three months ended April 4, 2003 from $2.4 million for the three months ended March 29, 2002. However, the effective tax rate was 36.0% for the three months ended April 4, 2003 compared to 32.1% for the three months ended March 29, 2002. The higher effective tax rate was primarily due to increased foreign tax liability as a result of the acquisition of the DiverseyLever business, for which an offsetting U.S. foreign tax credit is not recognizable.

Net Income. Net income decreased by $2.0 million, or 38.5%, to $3.2 million for the three months ended April 4, 2003 from $5.2 million for the three months ended March 29, 2002. This decrease in net income was due primarily to a $168.2 million increase in marketing, administrative and general expenses, a $7.8 million increase in research and development costs, a $6.5 million restructuring expense and a $28.7 million increase in net interest expense, offset partially by a $201.7 million increase in gross profit driven by the incremental DiverseyLever net sales, a $7.0 million increase in other income, and a $0.6 million reduction in the provision for income taxes, all as previously discussed. In addition to the $6.5 million restructuring expense, expenses of $8.5 million of integration-related costs are included in the marketing, administrative and general expenses discussed above.

EBITDA. We define EBITDA as net income before minority interests, plus the provision for income taxes, net interest expense and depreciation and amortization expense. EBITDA is a non-GAAP financial measure, and you should not consider EBITDA as an alternative to (a) operating profit (loss) or net income (loss) as a measure of our operating performance or (b) cash flows provided by operating, investing and financing activities (as determined in accordance with GAAP) as a measure of our ability to meet cash needs.

EBITDA increased by $52.2 million to $72.5 million for the three months ended April 4, 2003 from $20.3 million for the three months ended March 29, 2002. The increase in EBITDA resulted primarily from a $201.7 million increase in gross profit resulting from the increased net sales and a $7.0 million increase in other income,

offset partially by a $168.2 million increase in marketing, administrative and general expenses, a $7.8 million increase in research and development expense, and the $6.5 million restructuring expense, all as previously discussed.

Our management considers EBITDA to be a useful tool for managing the operations of our business. In addition, various financial covenants contained in our senior secured credit facilities are based on EBITDA, as adjusted pursuant to the provisions of the facilities, and various financial covenants contained in the indentures for our senior subordinated notes are based on consolidated cash flows, which is a non-GAAP financial measure calculated similarly to EBITDA. Our management also considers EBITDA to be useful in assessing our debt servicing ability.

We also believe that EBITDA is a measure commonly reported and widely used by investors and other interested parties as a measure of a company’s operating performance and debt servicing ability because it assists in comparing performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon accounting methods or non-operating factors (such as historical cost). Accordingly, we believe that the inclusion of EBITDA in our quarterly report permits a more comprehensive analysis of our operating performance relative to other companies and of our debt servicing ability. Because all companies do not calculate EBITDA identically, the presentation of EBITDA in this quarterly report may not be comparable to similarly titled measures of other companies.

We believe that net income is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA. The following table reconciles net income to EBITDA for each of the periods for which EBITDA is presented in this quarterly report.

	Three Months Ended April 4, 2003			Three Months Ended March 29, 2002
	(unaudited)
	(dollars in thousands)
Net income	$	3,182		$	5,166
Minority interests		(1	)		(27	)
Provision for income taxes		1,791			2,428
Interest expenses, net		31,533			2,822
Depreciation and amortization expense		36,018			9,914

EBITDA	$	72,523		$	20,303

Liquidity and Capital Resources

Comparison of Three Months Ended April 4, 2003 and Three Months Ended March 29, 2002. Cash flows provided by operating activities were $11.2 million for the three months ended April 4, 2003, compared to $4.7 million for the three months ended March 29, 2002. The increase in cash from operations of $6.5 million during the three months ended April 4, 2003 was due primarily to the impact of the acquisition of the DiverseyLever business.

Cash flows used in investing activities increased to $25.4 million for the three months ended April 4, 2003, compared to $12.4 million for the three months ended March 29, 2002. This increase is attributable to increased capital expenditures and capitalized computer software requirements in connection with the acquisition of the DiverseyLever business.

Cash flows used in financing activities were $7.7 million for the three months ended April 4, 2003, compared to cash flows provided by financing activities of $11.2 million for the three months ended March 29, 2002. This change in cash flows from financing activities resulted from the ability of the business to reduce its cash on hand requirements by nearly 30%.

Overview. As a result of the acquisition, we have a significant amount of indebtedness. On May 3, 2002, in connection with the acquisition of the DiverseyLever business, we issued senior subordinated notes and entered into a $1.2 billion senior secured credit facility. We used the proceeds of the sale of the senior subordinated notes and initial borrowings under the senior secured credit facilities, together with other available funds, to finance the cash portion of the purchase price for the DiverseyLever business and the related fees and expenses and to refinance existing indebtedness. As of April 4, 2003, we had total indebtedness of about $1.590 billion, consisting of $543 million of notes, $879 million of borrowings under the senior secured credit facilities, $104 million in operating lease commitments and $64 million in short-term debt.

We have the capacity to borrow additional funds under the senior secured credit facilities, subject to compliance with the financial covenants set forth in the facilities. As of April 4, 2003, we had $15 million of indebtedness outstanding under the revolving portion of the senior secured credit facilities and the ability to incur an additional $291 million of indebtedness under those revolving facilities, all of which we believe we would have been able to borrow at that time in compliance with the financial covenants set forth in the senior secured credit facilities, the indentures for the senior subordinated notes and the indenture for the senior discount notes of JohnsonDiversey Holdings, Inc.

Since March 2001, we have funded a portion of our short-term liquidity needs through the securitization of some of our trade accounts receivable. We and some of our U.S. subsidiaries are parties to an agreement whereby we and each participating subsidiary sell, on a continuous basis, all trade receivables to JWPR Corporation (“JWPR”), a wholly owned, special purpose, bankruptcy-remote subsidiary formed for the sole purpose of buying and selling receivables. Under the receivables facility, we and some of our subsidiaries, irrevocably and without recourse, transfer all trade receivables to JWPR. JWPR, in turn, sells an undivided interest in these receivables to Falcon Asset Management Corporation for an amount equal to the value of all eligible receivables (as defined under the receivables sale agreement) less the applicable reserve. As of April 4, 2003, about $ 34.4 million of eligible receivables have been sold under our securitization facility. JWPR’s funding costs under the receivables facility have accrued interest at a weighted average rate of about 1.5% per annum.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities,” effective June 15, 2003, which requires a company to consolidate a variable interest entity if the company is subject to a majority of the risk of loss from the variable interest entity’s activities or is entitled to receive a majority of the entity’s residual returns. We do not believe that the adoption of this interpretation will have a significant impact on our consolidated financial position or results of operations.

Under the terms of the senior secured credit facilities, we must use any future net proceeds from the securitization facility first to pay any outstanding portion of the $39 million aggregate installment of principal due on the term loan portion of the senior secured credit facilities on May 3, 2003, the first anniversary of the closing date, and thereafter to prepay loans outstanding under the senior secured credit facilities. In addition, the net amount of trade receivables at any time outstanding under this and any other securitization facility that we may enter into may not exceed $150 million in the aggregate.

During the first quarter of the fiscal year 2003, we repaid $3.2 million of the principal amount outstanding under the term loan portion of the senior secured credit facilities. In addition, we are considering the divestiture of certain non-strategic businesses, including the previously disclosed sale of the Whitmire Micro-Gen pest control business, which could generate an additional $140 to $175 million available for debt reduction over the next four quarters. As of April 4, 2003, we had the following long-term debt agreements and operating leases with

non-cancelable terms in excess of one year, excluding the indebtedness associated with the receivables securitization.

			*Payment due within:*
	*Total*		*1 Year*		*2 Years*		*3 Years*		Due after 3 Years
			*(dollars in thousands)*
Senior secured credit facilities	$	879,175	$	57,180	$	33,970	$	37,838	$	750,187
Senior subordinated notes		542,573		—		—		—		542,573
Operating leases		103,917		29,377		22,197		15,147		37,196

Total long-term indebtedness	$	1,525,665	$	86,557	$	56,167	$	52,985	$	1,329,956

The characteristics of our business do not generally require us to make significant ongoing capital expenditures. We made capital expenditures of about $26.3 million in the three months ended April 4, 2003. We may make significant cash expenditures in the next few years in an effort to capitalize on anticipated revenue growth and cost savings opportunities associated with the acquisition of the DiverseyLever business, and to continue and, in some cases, expand on certain DiverseyLever pre-acquisition restructuring initiatives.

We believe that the cash flows from operations that we anticipate as a result of cost savings and operating improvements associated with the acquisition of the DiverseyLever business and restructuring initiatives, together with available cash, our available borrowings under the senior secured credit facilities and the proceeds from our securitization facility will be sufficient to meet our liquidity needs for the foreseeable future. There can be no assurance, however, that we will be able to achieve the anticipated cost savings or that our substantial indebtedness will not adversely affect our financial condition.

Under the terms of the senior secured credit facilities, we are subject to certain financial covenants. The most restrictive covenants under the senior secured credit facilities require us to meet the following targets and ratios:

Maximum Leverage Ratio. We are required to maintain a leverage ratio for each financial covenant period of no more than the maximum ratio specified in the senior secured credit facilities for that financial covenant period. The maximum leverage ratio is the ratio of (1) our consolidated indebtedness (excluding up to $55 million of indebtedness incurred under our securitization facility and indebtedness relating to specified interest rate hedge agreements) as of the last day of a financial covenant period to (2) our consolidated EBITDA, as defined in the senior secured credit facilities, for that same financial covenant period.

For the financial covenant period under our senior secured credit facilities that began on May 3, 2002 and ended on April 4, 2003, we were required to maintain a leverage ratio of no more than 5.25 to 1 for that period. Thereafter, the four fiscal quarters preceding the end of each of our fiscal quarters will constitute a financial covenant period. Commencing with the financial covenant period ending June 27, 2003, the senior secured credit facilities require that we maintain a leverage ratio of no more than the ratio set forth below for each of the financial covenant periods ending nearest the corresponding date set forth below:

		Maximum Leverage Ratio
June 30, 2003		5.00 to 1
September 30, 2003		4.75 to 1
December 31, 2003		4.25 to 1
March 31, 2004		4.00 to 1
June 30, 2004		3.75 to 1
September 30, 2004		3.50 to 1
December 31, 2004		3.25 to 1
March 31, 2005 to December 31, 2005		2.75 to 1
March 31, 2006 and thereafter		2.50 to 1

Minimum Interest Coverage Ratio. We are required to maintain an interest coverage ratio for each financial covenant period of no less than the minimum ratio specified in the senior secured credit facilities for that financial covenant period. The minimum interest coverage ratio is the ratio of (1) our consolidated EBITDA, as defined in the senior secured credit facilities, for a financial covenant period to (2) our cash interest expense for the same financial covenant period.

The senior secured credit facilities require that we maintain an interest coverage ratio of no less than the ratio set forth below for each of the financial covenant periods ending nearest the corresponding date set forth below:

		Minimum Interest Coverage Ratio
June 30, 2003		2.25 to 1
September 30, 2003		2.25 to 1
December 31, 2003		2.75 to 1
March 31, 2004		2.75 to 1
June 30, 2004		3.00 to 1
September 30, 2004		3.50 to 1
December 31, 2004		3.75 to 1
March 31, 2005 and thereafter		4.50 to 1

Compliance with Maximum Leverage Ratio and Minimum Interest Coverage Ratio. For our financial covenant period that began on May 3, 2002 and ended on April 4, 2003, we were in compliance with the maximum leverage ratio and minimum interest coverage ratio covenants contained in the senior secured credit facilities.

Capital Expenditures. The senior secured credit facilities prohibit us from making capital expenditures during any calendar year nearest the corresponding date set forth below in an amount exceeding the following:

Year	Maximum Capital Expenditures (dollars in thousands)
December 31, 2003	$	161,200
December 31, 2004	$	122,600
December 31, 2005	$	107,000
December 31, 2006	$	110,000
December 31, 2007	$	113,200

Beginning in calendar year 2003, however, we can exceed in a year the maximum capital expenditures limitation set forth above for that year by the amount, if any, by which the limitation set forth above for the previous year exceeded actual capital expenditures made in that previous year. As of April 4, 2003, we were in compliance with the limitation on capital expenditures for calendar year 2003.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

As a result of our acquisition of the DiverseyLever business, we have a significant amount of indebtedness. On May 3, 2002, in connection with the acquisition, we issued senior subordinated notes and entered into $1.2 billion senior secured credit facilities. Market risk exposure as it relates to interest and currency rates, as discussed below, has changed materially when compared to the first quarter of the fiscal year 2002.

Interest Rate Risk

As of April 4, 2003, we had about $1,590 million of debt outstanding under all our credit facilities. After giving effect to the interest rate swap transactions that we have entered into with respect to some of the borrowings under our credit facilities, $514 million of the $1,526 million of long-term debt remained subject to variable rates. Accordingly, our earnings and cash flows are affected by changes in interest rates. At the above level of variable rate borrowings, we do not anticipate a significant impact on earnings in the event of a reasonable change in interest rates. In the event of an adverse change in interest rates, management would likely take actions that would mitigate our exposure to interest rate risk; however, due to the uncertainty of the actions and their possible effects, this analysis assumes no such action. Further, this analysis does not consider the effects of the change in the level of the overall economic activity that could exist in such an environment.

Foreign Currency Risk

We conduct our business in various regions of the world and export and import products to and from many countries. Our operations may, therefore, be subject to volatility because of currency fluctuations, inflation changes and changes in political and economic conditions in these countries. Sales and expenses are frequently denominated in local currencies, and results of operations may be affected adversely as currency fluctuations affect product prices and operating costs. We engage in hedging operations, including forward foreign exchange contracts, to reduce the exposure of our cash flows to fluctuations in foreign currency rates. All hedging instruments are designated and effective as hedges, in accordance with GAAP. Other instruments that do not qualify for hedge accounting are marked to market with changes recognized in current earnings. We do not engage in hedging for speculative investment reasons. There can be no assurance that our hedging operations will eliminate or substantially reduce risks associated with fluctuating currencies.

Based on our overall foreign exchange exposure, we estimate that a 10% change in the exchange rates would not materially affect our financial position and liquidity. The effect on our results of operations would be substantially offset by the impact of the hedged items.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of JohnsonDiversey’s Disclosure Controls and Internal Controls. Within the 90 days prior to the date of this quarterly report on Form 10-Q, we evaluated the effectiveness of the design and operation of our “disclosure controls and procedures” (“Disclosure Controls”) and our “internal controls and procedures for financial reporting” (“Internal Controls”). This evaluation (“Controls Evaluation”) was done under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Rules adopted by the Securities and Exchange Commission (the “SEC”) require that in this section of the quarterly report we present the conclusions of the CEO and the CFO about the effectiveness of our Disclosure Controls and Internal Controls based on and as of the date of the Controls Evaluation.

CEO & CFO Certifications. Appearing immediately following the signature section of this quarterly report, there are two separate forms of certifications of the CEO and the CFO. The first form of certification is required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (“Section 302 Certification”). This section of the quarterly report which you are currently reading is the information concerning the Controls Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

Disclosure Controls and Internal Controls. Disclosure Controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 (“Exchange Act”), such as this quarterly report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure Controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Internal Controls are procedures which are designed with the objective of providing reasonable assurance that (1) our transactions are properly authorized; (2) our assets are safeguarded against unauthorized or improper use; and (3) our transactions are properly recorded and reported, all to permit the preparation of our financial statements in conformity with generally accepted accounting principles.

Limitations on the Effectiveness of Controls. Our management, including the CEO and CFO, does not expect that our Disclosure Controls or our Internal Controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Scope of the Controls Evaluation. The CEO/CFO evaluation of our Disclosure Controls and our Internal Controls included a review of the controls’ objectives and design, our implementation of the controls and the effect of the controls on the information generated for use in this quarterly report. In the course of the Controls Evaluation, we sought to identify data errors, control problems or acts of fraud and to confirm that appropriate corrective action, including process improvements, were undertaken. This type of evaluation will be done on a quarterly basis so that the conclusions concerning the effectiveness of the controls can be reported in our quarterly reports on Form 10-Q and annual reports on Form 10-K. Our Internal Controls are also evaluated on an ongoing basis by our Internal Audit Department, by other personnel in our Finance organization and by our independent auditors in connection with their audit and review activities. The overall goals of these various evaluation activities are to monitor our Disclosure Controls and our Internal Controls and to make modifications as necessary; our intent in this regard is that the Disclosure Controls and the Internal Controls will be maintained as dynamic systems that change (including with improvements and corrections) as conditions warrant.

Among other matters, we sought in our evaluation to determine whether there were any “significant deficiencies” or “material weaknesses” in our Internal Controls, or whether we had identified any acts of fraud involving personnel who have a significant role in our Internal Controls. This information was important both for the Controls Evaluation generally and because items 5 and 6 in the Section 302 Certifications of the CEO and CFO require that the CEO and CFO disclose that information to our board of directors’ audit committee and to our independent auditors and report on related matters in this section of the quarterly report. In the professional auditing literature, “significant deficiencies” are referred to as “reportable conditions”; these are control issues that could have a significant adverse effect on the ability to record, process, summarize and report financial data in the financial statements. A “material weakness” is defined in the auditing literature as a particularly serious reportable condition where the internal control does not reduce to a relatively low level the risk that misstatements caused by error or fraud may occur in amounts that would be material in relation to the financial statements and not be detected within a timely period by employees in the normal course of performing their assigned functions. We also sought to deal with other controls matters in the Controls Evaluation, and in each case if a problem was identified, we considered what revision, improvement and/or correction to make in accordance with our on-going procedures.

During the Controls Evaluation performed prior to the filing of the Form 10-K for our fiscal year ended January 3, 2003, a material weakness in our Internal Controls in the former DiverseyLever North America operations was discovered to the effect that cash reconciliations were not being performed in a timely manner and the processing of vendor invoices had been delayed, resulting in a requirement for increased accruals for third party services. These weaknesses resulted from the transfer, in December of 2002, of accounting operations from the former DiverseyLever operation based in Southfield, Michigan to our headquarters in Sturtevant, Wisconsin. In addition, we discovered that certain intercompany accounts were not being reconciled in a timely manner.

In the three months ended April 4, 2003, we have acted to correct the identified weaknesses by utilizing additional resources to clear the vendor invoice processing backlog and by completing cash and intercompany reconciliations. We have implemented process improvements to facilitate timely intercompany reconciliations. Management will further strengthen Internal Controls in these areas in the remainder of fiscal year 2003 and will continue to evaluate and implement corrective action to improve the effectiveness of our Disclosure Controls. The actions being taken, and to be taken, by us to correct the weaknesses identified constitute, and will constitute, significant changes in Internal Controls or in other factors that could significantly affect Internal Controls subsequent to the date of the Controls Evaluation.

Conclusions. Based upon the Controls Evaluation, our CEO and CFO have concluded that our Disclosure Controls, including the additional procedures performed and controls instituted by us (the “Additional Procedures”) to supplement our Internal Controls in order to mitigate the effect of the weaknesses identified in this report, are effective to ensure that material information relating to JohnsonDiversey, Inc. and its consolidated subsidiaries is made known to management, including the CEO and CFO, particularly during the period when our periodic reports are being prepared, and that our Internal Controls, including the Additional Procedures, are effective to provide reasonable assurance that our financial statements are fairly presented in conformity with generally accepted accounting principles.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)

Exhibits

99.1

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 during the three months ended April 4, 2003.

On March 25, 2003, we filed a current report on Form 8-K dated March 24, 2003, reporting that, on March 24, 2003, we issued a news release announcing our financial results for the fourth quarter of and the year ended January 3, 2003.

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.

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER OF

JOHNSONDIVERSEY, INC.

I, Gregory E. Lawton, certify that:

I have reviewed this quarterly report on Form 10-Q of JohnsonDiversey, Inc.;

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 19, 2003				/s/ GREGORY E. LAWTON
				Gregory E. Lawton President and Chief Executive Officer

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER OF

JOHNSONDIVERSEY, INC.

I, Michael J. Bailey, certify that:

I have reviewed this quarterly report on Form 10-Q of JohnsonDiversey, Inc.;

evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

Date: May 19, 2003				/s/ MICHAEL J. BAILEY
				Michael J. Bailey Executive Vice President and Chief Financial Officer

JOHNSONDIVERSEY, INC.

EXHIBIT INDEX

Exhibit Number		Description of Exhibit

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

JOHNSONDIVERSEY, INC.

Date: May 19, 2003

/s/ MICHAEL J. BAILEY

Michael J. Bailey
Executive Vice President and Chief Financial Officer
Duly Authorized Officer and Principal Financial
Officer