<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of The Securities
-------- Exchange Act of 1934 (Fee Required)
For the fiscal year ended January 2, 1994
Transition Report Pursuant to Section 13 or 15(d) of The
-------- Securities Exchange Act of 1934 (No Fee Required)
For the transition period from _____ to _____
Commission File Number 1-6832
BIC CORPORATION
(Exact name of registrant as specified in its charter)
New York 06-0735597
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
500 BIC Drive, Milford, Connecticut 06460
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 783-2000
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ---------------------------------------- ------------------------------------
Common shares, New York Stock Exchange
$1.00 par value
Securities registered pursuant to Section 12(g) of the Act:
None
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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K X .
----
At February 3, 1994, there were 23,559,244 common shares of the
registrant outstanding, and the aggregate market value of the common shares
held by non-affiliates of the registrant was $153,016,214.
Documents Incorporated by Reference:
Registrant incorporates by reference in Part III of this Annual Report
the definitive proxy statement to be issued in connection with the 1994 Annual
Meeting of Shareholders.
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BIC CORPORATION AND SUBSIDIARIES
PART I
Item 1 - Business
The term "Corporation" refers to BIC Corporation, a New York corporation which
was incorporated in 1958, and its subsidiaries, unless the context indicates
otherwise.
The Corporation's primary focus is the manufacture and sale of high-quality,
low-cost consumer products. These products include stationery products,
lighters and shavers. The Corporation also distributes sailboards which are
purchased from a foreign affiliate. While most of the Corporation's operations
are conducted in the United States, operations are also conducted at other
locations in North and Central America. Societe BIC, S.A. is the Corporation's
majority shareholder.
The following table sets forth the net sales and income (loss) before income
taxes, extraordinary credit and cumulative effect of change in accounting
principle for each of the Corporation's principal products for the periods
indicated:
<TABLE>
<CAPTION>
(In millions) 1993 1992 1991
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<S> <C> <C> <C>
Net Sales
Stationery Products $233.3 $216.2 $184.7
Lighters 102.3 101.0 96.1
Shavers 98.6 94.6 82.1
Sport 5.1 5.6 6.3
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$439.3 $417.4 $369.2
=============================
Income (Loss) Before Income Taxes,
Extraordinary Credit and Cumulative
Effect of Change in Accounting Principle
Stationery Products $ 37.2 $ 34.4 $ 27.3
Lighters 11.4 8.5 3.3
Shavers 23.8 24.2 17.0
Sport 1.6 .2 (1.0)
-----------------------------
$ 74.0 $ 67.3 $ 46.6
=============================
</TABLE>
Products
The principal products of the Corporation are as follows:
Stationery Products
The Corporation is the largest manufacturer and distributor of ball pen
writing instruments in North America. Based on market research studies and
other public information, the number of ball pens sold by the Corporation in
1993 represents approximately 40% of the office products market in the United
States and close to 60% of the over-the-counter market. These pens, which are
marketed under trademarks owned by the Corporation, are available in both non-
retractable, non-refillable models and retractable, refillable models. The pens
are available in various ink and barrel colors and point sizes. In addition to
ball pens, the Corporation manufactures highlighting markers, roller pens and
correction fluids and distributes mechanical pencils.
1
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Stationery Products (Continued)
In 1992, the Corporation acquired Wite-Out Products, Inc., the second largest
manufacturer of correction fluid in the United States. During the fourth
quarter of 1993, the Corporation introduced four performance-based correction
fluids formulated to meet the specific needs of individual consumers: For
Everything(R) Quick Dry, For Everything Extra Coverage, For Everything Super
Smooth and Water Base. This line contains no chemicals known to deplete the
ozone layer. With this introduction, BIC(R) Wite-Out(R) Formula 109(R), BIC
Wite-Out For Copies, and BIC Wite-Out for Pen & Ink have been discontinued. The
new Wite-Out line will be supported with special consumer and trade promotions
during 1994.
During 1993, the Corporation expanded its line of Soft Feel(R) pens to
include Soft Feel Stic. Soft Feel pens have rubberized barrels for greater
writing comfort. The Corporation also introduced six new BIC Wavelengths(R)
designs in 1993, which include Clear Clics(TM), clear clic pens with fashion
tinted bodies; and Hot-Lites(TM), highlighters with heat sensitive barrels
that change color when held. The other new designs are Art Attacks(TM),
Flats(TM), Spaz(TM) and Glow Stics(TM). BIC Wavelengths is a line of fashionable
pens and mechanical pencils featuring a variety of colorful designs, images
and ink colors. The Corporation will continue to expand its BIC Wavelengths
line in 1994.
Lighters
The Corporation is the leading manufacturer and distributor of disposable
butane lighters in North America. Based on market research studies and other
public information, BIC lighters continue to maintain their market leadership
position despite the importation of low-quality, inexpensive lighters from the
Far East.
During the second quarter of 1992, the Corporation introduced to the market
its BIC Lighter with Child Guard(R). This new model, which has a lever that
makes it even more difficult for children to light, exceeds the United States
Consumer Product Safety Commission standard that will go into effect on July 12,
1994.
The Corporation continues to expand its Limited Edition line to include new
fashions and designs. During the first quarter of 1993, BIC introduced Country
Western and Flowers. The Country Western series offers five full-color
illustrations of scenes from the American West; the Flowers series consists of
five floral designs in a variety of rich colors.
Shavers
One-piece shavers, the only type sold by the Corporation, account for over 60%
of the wet-shave market. In the one-piece shaver market, which consists of over
1.2 billion units annually, the Corporation continues to share the number one
position. These statistics are based on market research studies and other
public information.
In 1992, the Corporation introduced a new line of twin-blade shavers: BIC
Twin Select(R) Normal Skin, BIC Twin Select(R) Sensitive Skin and BIC Twin
Pastel(TM) for women. The BIC twin-blade shaver features precise twin-blade
orientation for different skin types, a slimmer shaver head, a long and tapered
handle and a reusable guard. During 1993, the Corporation supported this line
with special promotions and television advertising, and will continue to do so
in 1994. The promotions will primarily be account specific in 1994, whereas in
1993, the promotions were directed towards the mass market.
2
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Sport
The principal sport product distributed by the Corporation is the BIC Sailboard.
These sailboards are purchased from a foreign affiliate.
Sales/Marketing
The Corporation's principal products are sold through the Corporation's sales
force and manufacturer representative groups to approximately 18,500 accounts,
which include food, drug, wholesale club, superstore, variety and retail
outlets, as well as tobacco, drug and stationery wholesalers, who in turn
distribute the products to retail outlets. Sales to commercial customers are
generated both by the Corporation's own sales force and by selected manufacturer
representative groups who sell to office supply distributors and retailers.
Stationery products, lighters and shavers carrying the purchaser's name,
trademark, corporate symbol or other imprint are sold to customers for
advertising specialty or premium purposes by the Corporation's Special Markets
Division.
The Corporation relies upon advertising on national television networks, in
national publications with broad circulation and in publications for specialized
audiences. In addition, the Corporation maintains a cooperative advertising
program pursuant to which it shares the cost of certain advertising with
retailers. The Corporation also provides a wide variety of product displays,
seasonal sales promotion materials and other advertising and merchandising aids
to retail outlets.
International Operations
The Corporation's international operations consist of the operations of its
subsidiaries in Canada, Mexico, Guatemala and Puerto Rico. Sales by foreign
subsidiaries were approximately 15% of consolidated net sales in 1993 and 16% in
1992 and 1991.
International operations are subject to certain risks, including changes in
currency exchange rates and imposition of foreign exchange controls. During
1992, the Corporation's Mexican subsidiaries' economy ceased to be considered
highly inflationary, and the Mexican peso became the subsidiaries' functional
currency. The operations in Guatemala and Mexico showed slight improvements in
sales for 1993.
Competition
Although the Corporation is the leading domestic manufacturer of ball pen
writing instruments and disposable butane lighters, it is subject to intense
competition in all areas of its business. Competitors include both smaller
specialized firms and larger diversified companies, some of which have broader
product lines and substantially greater financial resources than the
Corporation. The Corporation's major competitor in stationery products is
Gillette Company. Major competitors in lighters are Scripto Tokai Corporation,
Swedish Match Corporation and importers of low-quality, inexpensive lighters
from the Far East. In shavers, major competitors are Gillette Company and the
Schick Division of Warner Lambert Company.
Trademarks
The Corporation owns a number of trademarks relating to its products which are
the subject of intensive advertising and marketing programs. The principal
registered trademarks, which the Corporation believes are important to its
business, are BIC, (Logo of BIC), "Flick My BIC", (Logo of BIC Wavelengths), and
(Logo of BIC Wite-Out).
3
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Employee Relations
At January 2, 1994, the Corporation had approximately 2,500 employees, of whom
approximately 590 were unionized personnel at the Corporation's facility in
Milford, Connecticut. These unionized personnel are represented under a
collective bargaining agreement which expires on November 29, 1997. The
Corporation considers its employee relations to be good.
Item 2 - Properties
At January 26, 1994, the Corporation owned and operated manufacturing plants
in the United States, Mexico, Canada and Guatemala. Manufacturing areas,
including related office and service areas of the Corporation, are as follows:
<TABLE>
<CAPTION>
Square
Feet
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<S> <C>
Milford, Connecticut 800,000
Fountain Inn, South Carolina 157,000
Duncan, South Carolina 144,000
Gaffney, South Carolina 113,000
Clearwater, Florida 89,000
Cuautitlan, Mexico 151,000
Toronto, Ontario, Canada 81,000
Guatemala City, Guatemala 15,000
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</TABLE>
In January 1993, the Corporation's Special Markets Division began leasing a
30,500 square foot building in Clearwater, Florida for additional office and
warehouse space. During 1993, the Corporation expanded its Duncan (formerly
Spartanburg), South Carolina; Fountain Inn, South Carolina; Clearwater,
Florida and Cuautitlan, Mexico facilities. The Corporation recently relocated
its Wite-Out operation from a leased facility in Beltsville, Maryland to its
Fountain Inn, South Carolina facility.
The Corporation leases sales offices and warehouse space at various other
locations and owns or leases such machinery and equipment as is necessary for
the operation of its business. In general, the machinery and plants are in good
condition, adequately meet the Corporation's needs and operate at reasonable
levels of production capacity.
Item 3 - Legal Proceedings
The Corporation has significant contingent liabilities with respect to pending
litigation, claims and disputes, principally relating to its lighters, which
arise in the ordinary course of its business.
In 1985, the United States District Court, Southern District of New York
(the "District Court"), in connection with pending patent actions between BIC
Sport U.S.A. Inc. and Windsurfing International, ruled that Windsurfing's
sailboard patent was valid and was infringed by BIC boards. The patent in
question expired in January 1987. By decision dated April 8, 1991, the
District Court awarded damages of lost profits to Windsurfing International
based upon a market share theory. BIC appealed the decision and on August 4,
1993, the United States Court of Appeal for the Federal Circuit reversed the
District Court's award based on lost profits and remanded the case to the
District Court for a determination of damages based upon a reasonable royalty.
As of January 2, 1994, BIC has provided for this liability in its consolidated
financial statements.
4
<PAGE>
Item 3 - Legal Proceedings (Continued)
In November 1992, a state court jury in Creek County, Oklahoma, in a 9 to 3
verdict, awarded $11,000,000 in actual damages and $11,000,000 in punitive
damages against the Corporation in connection with a product liability action.
Management is vigorously appealing the verdict on a number of grounds. It is
the opinion of management, based on advice of legal counsel, that it is probable
that the verdict will be overturned on appeal.
BIC has been named a Potentially Responsible Party at a superfund site. Refer
to Part II, Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations for further discussion.
While the ultimate liability with respect to the above matters, including any
additional liability not provided for, is not presently determinable, it is the
opinion of management, after consultation with counsel to the Corporation, that
any liabilities resulting therefrom will not have a material adverse effect on
the Corporation's consolidated financial position or on its results of
operations if such operations continue at the present level.
Item 4 - Submission of Matters to a Vote of Security Holders
No matters were submitted during the fourth quarter of fiscal year 1993 to a
vote of security holders through solicitation of proxies or otherwise.
PART II
Item 5 - Market for Registrant's Common Shares and Related Shareholder Matters
On October 6, 1992, the Corporation began trading its common shares on the New
York Stock Exchange. The shares previously traded on the American Stock
Exchange.
Set forth below is the range of sales prices of the Corporation's common
shares for each quarter during 1993 and 1992.
<TABLE>
<CAPTION>
1993 1992/1/
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High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C> <C>
First $41 $30 7/8 First $19 7/8 $14 3/4
Second 33 7/8 26 Second 21 7/8 17 3/4
Third 31 3/8 27 Third 25 1/2 19
Fourth 33 5/8 27 Fourth 36 3/4 21 1/4
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</TABLE>
/1/ Per share amounts have been retroactively restated to reflect the 1992 share
split effected in the form of a 100% share dividend.
The Corporation paid quarterly cash dividends which totaled $0.72 in 1993
and $1.06 in 1992. The 1992 cash dividends included a special cash dividend of
$0.50 per share. During the first quarter of 1994, the Board of Directors
voted an increase in the regular quarterly dividend from $0.18 per share to
$0.20 per share, effective with the dividend paid on January 31, 1994, to
shareholders of record on January 17, 1994.
In 1993, the Corporation amended its Certificate of Incorporation to increase
the number of authorized common shares, $1 par value, from 25,000,000 to
50,000,000.
5
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Item 5 - Market for Registrant's Common Shares and Related Shareholder Matters
(Continued)
As of January 26, 1994, there were approximately 1,400 shareholders of record
of the Corporation's Common Shares.
Item 6 - Selected Financial Data
The following selected consolidated financial data for the five fiscal years
ended January 2, 1994, insofar as it relates to the 1993, 1992 and 1991 fiscal
years, should be read in conjunction with the Corporation's consolidated
financial statements included herein.
<TABLE>
<CAPTION>
FISCAL YEAR
(Thousands except for
per share data) 1993 1992 1991 1990 1989
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<S> <C> <C> <C> <C> <C>
Net sales $439,311 $417,377 $369,171 $329,246 $330,262
Income before income taxes,
extraordinary credit and
cumulative effect of change in
accounting principle 73,986 67,278 46,616 41,067 39,558
Net income 34,964 39,935 28,059 24,055 23,022
Total assets 336,216 308,466 280,205 257,107 244,171
Long-term debt 1,169
Per share:
Income before extraordinary
credit and cumulative effect
of change in accounting principle $1.90 $1.70 $1.12 $0.92 $0.95
Net income 1.48 1.70 1.16 0.99 0.95
Cash dividends/1/ 0.72 1.06 0.56 1.06 0.52
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</TABLE>
/1/ Cash dividends per share represent the total dividends paid each year. Per
share amounts have been retroactively restated to reflect the 1992 share
split effected in the form of a 100% share dividend.
Item 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
The cash required by the Corporation for working capital, capital expenditures
and dividend payments was generated from operations and, to a lesser extent,
short-term borrowings. The Corporation expects to continue to satisfy most of
its cash requirements through internally generated funds. The Corporation's
current ratio was 1.87 in 1993 and 1.79 in 1992, reflecting the Corporation's
highly liquid position and ability to finance its current operations without
significant short-term borrowings.
Allowance for doubtful accounts decreased by $1.0 million to $4.1 million in
1993 and increased by $2.7 million to $5.1 million in 1992. These fluctuations
are related to an increase in bad debt expense in 1992 and an increase in
amounts written-off in 1993. Both of these increases are related to Phar Mor
Stores Inc. filing for bankruptcy during the third quarter of 1992.
Inventories increased by $1.3 million in 1993 and by $10.9 million in 1992.
These increases were associated with higher production levels to support sales
increases. Average inventory turnover was 4.0 times in 1993 and 4.3 times in
1992.
6
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Liquidity and Capital Resources (Continued)
Bank borrowings were $6.7 million at January 2, 1994 and $7.7 million at
January 3, 1993 which primarily reflect borrowings by the Corporation's United
States operations. Information concerning the Corporation's bank borrowings is
contained in Note 6 of Notes to Consolidated Financial Statements.
Accounts payable and accrued expenses decreased by $2.8 million in 1993 and
increased by $5.5 million in 1992. The 1993 decrease is primarily due to the
timing of income tax payments by the Corporation's Canadian subsidiary. The
1992 fluctuation primarily reflected a $7.7 million increase in the provision
for insurance associated with general liability and workers' compensation,
partially offset by a $2.9 million decrease in the payroll liability mainly due
to the timing of bonus payments.
Capital spending decreased in 1993 and increased in 1992. Purchases of
property, plant and equipment were $41.2 million in 1993 and $44.9 million in
1992. Spending in 1993 included purchases of machinery and equipment for
productivity increases and quality improvements in stationery products and
lighters; capacity increases in stationery products and new stationery products;
expansions of the Duncan, South Carolina; Fountain Inn, South Carolina;
Clearwater, Florida and Cuautitlan, Mexico facilities and building improvements
for the Gaffney, South Carolina facility. Spending in 1992 was principally for
productivity increases and quality improvements in stationery products, lighters
and shavers, which included the purchase of approximately 60 new molding
machines; capacity increases in stationery products and the purchase of two
facilities in South Carolina. 1994 capital spending for all of the
Corporation's locations is expected to be lower than the 1993 level.
In July 1993, the U.S. Environmental Protection Agency ("EPA") issued its
final volumetric ranking of Potentially Responsible Parties ("PRPs") for the
Solvents Recovery Service of New England ("SRSNE") Superfund Site in
Southington, Connecticut. The Corporation has been notified that it is a PRP at
the Site and has been ranked, by the EPA, number 192 of a total of 1,659 PRPs
named. This ranking represents less than 1% of the total volume of waste
disposed at the SRSNE Site with the first 191 PRPs representing 90% of the total
volume.
The Corporation cannot predict with certainty the total costs of cleanup, the
Corporation's share of the total costs or the extent to which contributions will
be available from other parties, the amount of time necessary to complete the
cleanup, or the availability of insurance coverage. Based on currently
available information, the Corporation believes that its share of the ultimate
cleanup costs at this Site will not have a material adverse impact on the
Corporation's financial position or on its results of operations if such
operations continue at the present level.
At January 2, 1994 and January 3, 1993, the Corporation carried no long-term
debt. At January 2, 1994, unused lines of credit were $99.7 million and stand-by
letters of credit were $35.5 million, which management believes is more than
adequate to meet the Corporation's current or future requirements.
During the first quarter of 1994, the Board of Directors voted an 11.1%
increase in the regular quarterly cash dividend from $0.18 per share to a new
rate of $0.20 per share, effective with the dividend paid on January 31, 1994 to
shareholders of record on January 17, 1994.
7
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Liquidity and Capital Resources (Continued)
In 1993, the Corporation amended its Certificate of Incorporation to increase
the number of authorized common shares, $1 par value, from 25,000,000 to
50,000,000.
During the first quarter of 1992, the Corporation paid a special cash dividend
of $0.50 per share, which was in addition to the regular quarterly cash dividend
of $0.14 per share.
In January 1994, the Corporation concluded negotiations with its unionized
employees, local utilities and local taxing authorities. Concessions received
through these negotiations will result in a modest, but important, reduction in
future operating costs at its Milford, Connecticut facility. In addition, the
State of Connecticut has offered the Corporation a $9 million grant and loan
package to offset capital spending for its Milford, Connecticut facility.
Consistent with common practice, the Corporation self-insures to a degree
against certain types of risk. The Corporation also has in place risk
management programs other than insurance to minimize exposure to loss. The
programs remained relatively unchanged from the prior year. Management believes
its overall risk management and insurance programs are adequate to protect its
assets and earnings against significant loss.
Results of Operations
In 1993, the Corporation's net sales increased by $21.9 million to $439.3
million due to increased sales of stationery products of $17.1 million, lighters
of $1.3 million and shavers of $4.0 million, partially offset by a decline in
sport products of $0.5 million. The increase in stationery products primarily
represents an increase in average selling prices of approximately 9% by its
North American operations. The increase in lighters primarily reflects an
increase in units sold of approximately 3% by its United States operations. The
shaver increase is attributable to higher average selling prices of
approximately 10% in North America. This shaver increase is partially offset by
a slight decline in units sold.
In 1992, the Corporation's net sales increased by $48.2 million to $417.4
million due to increased sales of stationery products of $31.5 million, lighters
of $4.9 million and shavers of $12.5 million, partially offset by a decline in
sport products of $0.7 million. The increase in stationery products, which
included the incremental sales of Wite-Out products, reflected increased units
sold of approximately 11% and higher average selling prices in the United
States. One of the Corporation's Mexican subsidiaries also showed improvements
in units sold and higher average selling prices. The increase in lighters was
primarily attributable to increased units sold of approximately 4% in North
America. The shaver increase was largely the result of the incremental sales of
twin-blade shavers.
Net sales of sport products decreased by $0.5 million in 1993 and by $0.7
million in 1992. These reductions reflect a decrease in the number of units sold
of approximately 11% in 1993 and 5% in 1992, and lower average selling prices.
Income before income taxes, extraordinary credit and cumulative effect of change
in accounting principle was $1.6 million in 1993 and $0.2 million in 1992 for
sport products. The increase in 1993 is related to a reduction in the provision
related to sailboard litigation which is discussed further in Part I, Item 3 -
Legal Proceedings.
Foreign sales remained relatively flat in 1993, while increasing by
approximately 13% in 1992. The increase in 1992 primarily reflected increased
sales of stationery products by one of the Corporation's Mexican subsidiaries.
8
<PAGE>
Results of Operations (Continued)
The Corporation's purchases from Societe BIC, S.A., the Corporation's majority
shareholder, and from other affiliated companies, decreased by $1.8 million to
$42.2 million in 1993 and increased by $2.4 million to $44.0 million in 1992.
The 1993 decrease primarily represents lower inventory purchases from Societe
BIC, S.A. The 1992 increase reflects higher inventory purchases from Societe
BIC, S.A., partially offset by favorable foreign exchange rates. The Corporation
purchases from Societe BIC, S.A. and other affiliated companies, products that
it does not presently manufacture, certain component parts and machinery and
equipment. Information concerning the Corporation's transactions and balances
with Societe BIC, S.A. and other related parties is contained in Note 15 of
Notes to Consolidated Financial Statements.
Gross profit, as a percentage of net sales, increased by 0.4% in 1993 and by
2.7% in 1992. The 1992 increase primarily reflected improvements in the United
States and Canadian operations. The improvements in the United States were
principally due to favorable foreign exchange rates associated with imports, and
higher average selling prices in shavers resulting from the incremental sales of
twin-blade shavers. The improvements in the Canadian operations reflected higher
average selling prices in shavers and BIC Wavelengths, and favorable foreign
exchange rates associated with imports.
Advertising, selling, general and administrative, marketing and research and
development expenses increased by $7.3 million to $133.7 million in 1993 and by
$12.2 million to $126.4 million in 1992. The 1993 increase reflects higher
selling expenses and an 18% increase in marketing expenses. These increases are
partially offset by an 8% decrease in general and administrative expenses. The
increase in selling expense is attributable to higher sales levels. The
increase in marketing is related to the costs associated with the promotion of
the Corporation's line of twin-blade shavers. The decrease in general and
administrative expenses reflects a decrease in the provision for general
liability and workers' compensation insurance, relocation costs and bad debt
expense. These decreases are partially offset by an increase in the
amortization of intangibles associated with the purchase of Wite-Out Products,
Inc. The 1992 increase included a 23% increase in general and administrative
expenses and a 20% increase in marketing and advertising. The general and
administrative expense reflected the increase in the provision for general
liability and workers' compensation insurance, relocation costs attributable to
the relocation of the marker division, higher bad debt expense and the
amortization of the intangible assets acquired in the purchase of Wite-Out
Products, Inc. The increase in marketing and advertising included the
promotional costs associated with the introduction of the Corporation's line of
twin-blade shavers. One of the Corporation's Mexican subsidiaries incurred
higher advertising costs, in order to mitigate the effects of increased
competition resulting from the removal of price controls and the easing of
restrictions on foreign imports.
Other income - net increased by $2.0 million to $4.2 million in 1993 and by
$0.8 million to $2.2 million in 1992. The 1993 fluctuation is due to an increase
in net foreign currency gains and to a reduction in the provision related to the
sailboard litigation which is discussed further in Part I, Item 3- Legal
Proceedings. These fluctuations are partially offset by lower interest income
and higher interest expense. The 1992 fluctuation was primarily due to decreases
in several miscellaneous expense items, none of which was individually
significant. These decreases were partially offset by lower interest income in
the United States.
9
<PAGE>
Results of Operations (Continued)
The effective tax rate has varied each year as follows: 39.5% in 1993, 40.6%
in 1992 and 42.1% in 1991. During 1991, the Corporation utilized the tax
benefit of a foreign net tax operating loss carryforward of $1.1 million which
was shown as an extraordinary credit in the Statement of Consolidated Income.
Income before extraordinary credit and cumulative effect of change in
accounting principle increased by $4.8 million and by $12.9 million in 1993 and
1992, respectively. These increases were primarily due to improvements in core
operations (stationery products, lighters and shavers) in the United States.
In 1993, net income included a $9.8 million cumulative effect of a change in
accounting principle which was entirely related to the adoption of Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." Refer to New Accounting Standards
below for further discussion.
New Accounting Standards
Effective January 4, 1993, the Corporation adopted Statement of Financial
Accounting Standards No. 106 ("SFAS 106"), "Employers' Accounting for
Postretirement Benefits Other Than Pensions." The Corporation elected to
recognize the cumulative effects of this obligation on the immediate recognition
basis. The cumulative effects as of January 4, 1993 of adopting SFAS 106 were
an increase in accrued postretirement costs of $16.2 million and a decrease in
net earnings of $9.8 million, or $0.42 per share. The adoption of SFAS 106 had
no effect on the Corporation's cash flow.
Effective January 4, 1993, the Corporation adopted Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." Under
SFAS 109, the deferred tax provision is determined under the liability method.
Under this method, deferred tax assets and liabilities are recognized based on
differences between financial statement and tax bases of assets and liabilities
using presently enacted tax rates. There was no material cumulative effect on
the Corporation's financial position or on its results of operations by adopting
SFAS 109.
The Corporation is required to adopt Statement of Financial Accounting
Standards No. 112 ("SFAS 112"), "Employers' Accounting for Postemployment
Benefits," by fiscal 1994. The adoption of SFAS 112 will not have a significant
effect on the Corporation's consolidated financial position or on its results of
operations if such operations continue at the present level.
Item 8 - Financial Statements and Supplementary Data
The consolidated financial statements and supplementary data are set forth
beginning on page 13 of this Annual Report.
Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There were no changes in accountants, or disagreements with accountants on
accounting principles or practices, or financial statement disclosure.
10
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PART III
Item 10 - Directors and Executive Officers of the Registrant*
Item 11 - Executive Compensation*
Item 12 - Security Ownership of Certain Beneficial Owners and Management*
Item 13 - Certain Relationships and Related Transactions*
*Responses to Items 10 through 13 are omitted since the Corporation will, no
later than 120 days after January 2, 1994, the close of its most recent fiscal
year, file a definitive proxy statement pursuant to Regulation 14(a) of the
General Rules and Regulations under the Securities Exchange Act of 1934.
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements:
See the attached Index to Consolidated Financial Statements and
Financial Statement Schedules.
2. Financial Statement Schedules:
See the attached Index to Consolidated Financial Statements and
Financial Statement Schedules.
3. Exhibits:
3. a. Restated Certificate of Incorporation, as filed May 5, 1993.
b. By-Laws, as amended./1/
4. Instruments relating to long-term debt are not filed, but the
Registrant agrees to file a copy of such instruments, upon the
request of the Securities and Exchange Commission.
9. a. Voting Trust Agreement, dated February 5, 1991, by and among
Societe BIC, S.A., Marcel L. Bich, Neil A. Polio, Bruno Bich,
Francois Bich and BIC Corporation, as amended February 3, 1992,
for the purpose of naming Alexander Alexiades as successor
voting trustee./2/
b. Amendment to Voting Trust Agreement, dated July 5, 1993.
10. a. Selected Executive Retirement Plan, as amended.
b. Agreement, dated July 1, 1971, including amendments, between
Societe BIC, S.A. and BIC Pen Corporation./2/
21. Subsidiaries of the Registrant.
23. Consent of Independent Auditors.
- -------------------------
/1/ Incorporated by reference to the Corporation's Annual Report on Form 10-K
for its fiscal year ended January 3, 1993.
/2/ Incorporated by reference to the Corporation's Annual Report on Form 10-K
for its fiscal year ended December 30, 1990.
Shareholders may obtain a copy of any exhibit not contained herein by
writing to the Secretary, BIC Corporation, 500 BIC Drive, Milford, CT 06460.
A charge of $.50 per page to cover the cost of copying and handling will be
imposed.
(b) No reports on Form 8-K were filed by the Corporation during the last
quarter of its fiscal year ended January 2, 1994.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BIC CORPORATION
By: BRUNO BICH
Bruno Bich, Chairman and Chief Executive Officer
Date: March 9, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE AND TITLE DATE
- -------------------------------------------------------------------------------
BRUNO BICH March 9, 1994
- ------------------------------------------------------------
(Bruno Bich)
Chairman and Chief Executive Officer and Director
(Chief Executive Officer)
RAYMOND WINTER March 9, 1994
- ------------------------------------------------------------
(Raymond Winter)
President and Chief Operating Officer and Director
(Chief Operating Officer)
ROBERT L. MACDONALD March 9, 1994
- ------------------------------------------------------------
(Robert L. Macdonald)
Vice President-Finance and Treasurer
(Principal Financial and Accounting Officer)
ALEXANDER ALEXIADES March 9, 1994
- ------------------------------------------------------------
(Alexander Alexiades)
Director
ROBERT E. ALLEN March 9, 1994
- ------------------------------------------------------------
(Robert E. Allen)
Director
DAVID W. HELENIAK March 9, 1994
- ------------------------------------------------------------
(David W. Heleniak)
Director
ANTOINE G. TREUILLE March 9, 1994
- ------------------------------------------------------------
(Antoine G. Treuille)
Director
- -------------------------------------------------------------------------------
12
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Report of Independent Auditors 14
Consolidated Financial Statements:
Consolidated Balance Sheets, January 2, 1994 and January 3, 1993 15
Statements of Consolidated Income for the 1993, 1992 and 1991 Fiscal Years 16
Statements of Consolidated Retained Earnings for the 1993, 1992 and 1991 Fiscal Years 16
Statements of Consolidated Cash Flows for the 1993, 1992 and 1991 Fiscal Years 17
Notes to Consolidated Financial Statements 18
Consolidated Financial Statement Schedules for the Years Ended
January 2, 1994, January 3, 1993 and December 29, 1991:
II - Schedule of Amounts Receivable from Employees 33
V - Consolidated Property, Plant and Equipment 34
VI - Consolidated Accumulated Depreciation of Property, Plant and Equipment 35
VIII - Consolidated Valuation Accounts 36
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
All other financial statement schedules have been omitted because the
conditions requiring the filing thereof do not exist or because the required
information is shown in the consolidated financial statements or notes thereto.
13
<PAGE>
(Logo of Deloitte & Touche)
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of BIC Corporation:
We have audited the accompanying consolidated financial statements and related
financial statement schedules of BIC Corporation and its subsidiaries (the
"Corporation") listed in the preceding Index to Consolidated Financial
Statements and Financial Statement Schedules of the Annual Report on Form 10-K
of the Corporation for the year ended January 2, 1994. These consolidated
financial statements and financial statement schedules are the responsibility of
the Corporation's management. Our responsibility is to express an opinion on
the consolidated financial statements and financial statement schedules based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of BIC Corporation and its
subsidiaries at January 2, 1994 and January 3, 1993 and the consolidated results
of their operations and their cash flows for each of the three fiscal years in
the period ended January 2, 1994 in conformity with generally accepted
accounting principles. Also, in our opinion, such consolidated financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
As described in Note 1 to the consolidated financial statements, in 1993, the
Corporation changed its methods of accounting for income taxes and
postretirement benefits other than pensions.
DELOITTE & TOUCHE
New Haven, Connecticut
January 28, 1994
14
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 2, 1994 and JANUARY 3, 1993
<TABLE>
<CAPTION>
January 2, January 3,
(Dollars in thousands except for share data) 1994 1993
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and Cash Equivalents $ 24,094 $ 25,234
Receivables - Trade and Other (Net of Allowance for Doubtful
Accounts 1993 - $4,084 and 1992 - $5,076) 52,019 50,817
Inventories 59,426 58,492
Deferred Income Taxes 16,809 14,437
Other 13,637 13,079
- --------------------------------------------------------------------------------------------------------------------------
Total Current Assets 165,985 162,059
Property, Plant and Equipment - Net 140,317 119,132
Other Assets 29,914 27,275
- --------------------------------------------------------------------------------------------------------------------------
Total $336,216 $308,466
===========================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Bank Borrowings $ 6,731 $ 7,677
Accounts Payable - Trade and Other 21,179 21,739
Accrued Expenses:
Federal and State Income Taxes 8,085 11,752
Insurance 22,739 21,164
Payroll and Payroll Taxes 6,108 6,025
Other 23,911 22,233
- --------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 88,753 90,590
- --------------------------------------------------------------------------------------------------------------------------
Non-Current Liabilities:
Income Taxes 5,923
Postretirement Benefits 20,775 2,587
- --------------------------------------------------------------------------------------------------------------------------
Total Non-Current Liabilities 20,775 8,510
- --------------------------------------------------------------------------------------------------------------------------
Contingencies and Commitments (See Note 14)
Shareholders' Equity:
Preferred Shares ($1 Par Value; Authorized - 1,000,000;
No Shares Issued or Outstanding)
Common Shares ($1 Par Value; Authorized: 1993 - 50,000,000 and
1992 - 25,000,000; Outstanding - 23,559,244) 23,559 23,559
Retained Earnings 205,902 187,900
Foreign Currency Translation Adjustment (2,773) (2,093)
- --------------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 226,688 209,366
- --------------------------------------------------------------------------------------------------------------------------
Total $336,216 $308,466
===========================================
</TABLE>
See Notes to Consolidated Financial Statements.
15
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
FOR THE 1993, 1992 AND 1991 FISCAL YEARS
<TABLE>
<CAPTION>
(In thousands except for per share data) 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $439,311 $417,377 $369,171
Cost of Goods Sold 235,820 225,806 209,763
- --------------------------------------------------------------------------------------------------------------------------
Gross Profit 203,491 191,571 159,408
Advertising, Selling, General and
Administrative, Marketing and Research
& Development Expenses 133,732 126,445 114,197
- --------------------------------------------------------------------------------------------------------------------------
Income from Operations 69,759 65,126 45,211
Other Income - Net 4,227 2,152 1,405
- --------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes, Extraordinary Credit
and Cumulative Effect of Change in Accounting Principle 73,986 67,278 46,616
Provision for Income Taxes 29,206 27,343 19,607
- --------------------------------------------------------------------------------------------------------------------------
Income Before Extraordinary Credit and Cumulative Effect
of Change in Accounting Principle 44,780 39,935 27,009
Extraordinary Credit - Utilization of Net
Operating Loss Carryforward 1,050
Cumulative Effect of Change in Accounting for Postretirement
Benefits Other Than Pensions, Net of Taxes of $6,384 (9,816)
- --------------------------------------------------------------------------------------------------------------------------
Net Income $ 34,964 $ 39,935 $ 28,059
===========================================
Earnings Per Common Share:
Income Before Extraordinary Credit and Cumulative Effect of
Change in Accounting Principle $ 1.90 $1.70 $1.12
Extraordinary Credit 0.04
Cumulative Effect of Change in Accounting Principle (0.42)
- --------------------------------------------------------------------------------------------------------------------------
Net Income $ 1.48 $1.70 $1.16
===========================================
</TABLE>
STATEMENTS OF CONSOLIDATED RETAINED EARNINGS
FOR THE 1993, 1992 AND 1991 FISCAL YEARS
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance - Beginning of Year $187,900 $183,416 $168,837
Net Income 34,964 39,935 28,059
Dividends - Cash (16,962) (24,973) (13,480)
- Common Share Split Effected in
the Form of a 100% Share Dividend
(10,478)
- --------------------------------------------------------------------------------------------------------------------------
Balance - End of Year $205,902 $187,900 $183,416
===========================================
</TABLE>
See Notes to Consolidated Financial Statements.
16
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE 1993, 1992 AND 1991 FISCAL YEARS
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 34,964 $ 39,935 $ 28,059
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 20,881 15,703 13,502
Provision for Losses on Receivables - Trade and Other 85 2,286 1,430
Effects of Foreign Currency Transactions 753 (264) 565
Deferred Income Taxes (1,177) 369 (1,404)
Cumulative Effect of Change in Accounting Principle 9,816
Other 1,810 (147) 576
Changes in Operating Assets and Liabilities:
Increase in Receivables - Trade and Other (1,915) (4,308) (6,839)
Increase in Inventories (1,266) (10,945) (3,986)
Increase in Other Assets (778) (477) (3,910)
Increase (Decrease) in Accounts Payable and Accrued Expenses (2,790) 5,520 17,190
- --------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 60,383 47,672 45,183
- --------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Property, Plant and Equipment (41,181) (44,908) (26,106)
Proceeds from Sale of Property, Plant and Equipment 672 965 1,686
Purchases of Trademarks and Patents (724) (775) (483)
Purchase of Wite-Out Products, Inc., Net of Cash Acquired (19,307)
Deferred Charges, Deposits and Other (1,861) (2,041) 191
- --------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (43,094) (66,066) (24,712)
- --------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase (Decrease) in Bank Borrowings (878) 7,687
Dividends Paid (16,962) (24,973) (13,480)
Purchase of Treasury Stock (9,218)
- --------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities (17,840) (17,286) (22,698)
- --------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash (589) (627) (206)
- --------------------------------------------------------------------------------------------------------------------------
Decrease in Cash and Cash Equivalents (1,140) (36,307) (2,433)
Cash and Cash Equivalents, Beginning of Year 25,234 61,541 63,974
- --------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Year $ 24,094 $ 25,234 $ 61,541
=======================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash Paid during the Year for:
Interest $ 635 $ 443 $ 49
=======================================
Income Taxes $ 34,245 $ 26,339 $ 16,061
=======================================
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
In 1992, the Corporation purchased all the capital stock of
Wite-Out Products, Inc. for $19,848.
Fair Value of Assets Acquired $ 20,875
Cash Paid (19,848)
- --------------------------------------------------------------------------------------------------------------------------
Liabilities Assumed $ 1,027
=======================================
</TABLE>
See Notes to Consolidated Financial Statements.
17
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A summary of significant accounting policies for BIC Corporation and its
subsidiaries (the "Corporation"), manufacturers and distributors of high-
quality, low-cost consumer products, is as follows:
Consolidation
The consolidated financial statements include the accounts of BIC Corporation
and its subsidiaries. An investment in an affiliated company is accounted for on
the equity method. All significant intercompany balances and transactions have
been eliminated.
Inventories
Inventories are valued at the lower of cost (determined on the first-in,
first-out basis) or market.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost. Depreciation, principally
on the declining balance method, is provided over the estimated useful lives of
the assets as follows:
Buildings and improvements 10-50 years
Machinery and equipment 3-12 years
Expenditures for maintenance and repairs are charged to operations as
incurred. Expenditures for betterments and major renewals are capitalized.
Costs of assets sold or retired and the related amounts of accumulated
depreciation are eliminated from the accounts in the year of disposal and any
resulting gains or losses are included in income.
Intangibles
Costs pertaining to goodwill and patents are amortized on the straight-line
method over five to seventeen years. Trademarks are amortized over five to
forty years.
Accrued Expenses - Insurance
Accrued expenses - insurance represents the estimated costs of known and
anticipated claims under the Corporation's product liability (principally
relating to its lighters) and workers' compensation insurance policies. For
each claim, the Corporation maintains self-insurance up to the estimated amount
of the probable claim or the amount of the deductible, whichever is lower. At
each financial reporting date, probable claim amounts, individually or in
aggregate, were not expected to materially exceed the deductible. Claims are
generally settled within five years of origination.
18
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Employee Benefit Plans
Substantially all employees in the United States and Canada are covered by
defined benefit pension plans. The plans are noncontributory and provide for
pension benefits based on average pay and years of service to the Corporation.
Funding for the pension plans is based on a review of the specific requirements
and an evaluation of the assets and liabilities of each plan.
The Corporation has a share purchase plan for substantially all full-time
United States unionized employees who elect to participate. Effective July
1992, a 401(k) Savings and Investment Plan was established, which constitutes a
replacement of the BIC Corporation Employees Share Purchase Plan for non-
unionized employees. The plans provide that the Corporation match a portion of
participant contributions.
The Corporation provides certain postretirement medical and life insurance
benefits for qualifying retired and active unionized and non-unionized employees
in the United States. Most retirees outside the United States are covered by
government sponsored and administered programs.
In 1993, the Corporation adopted Statement of Financial Accounting Standards
No. 106 ("SFAS 106"), "Employers' Accounting for Postretirement Benefits Other
Than Pensions." The Corporation elected to recognize the cumulative effects of
this obligation on the immediate recognition basis. The cumulative effects as
of January 4, 1993 of adopting SFAS 106 were an increase in accrued
postretirement costs of $16.2 million and a decrease in net earnings of $9.8
million, or $0.42 per share. Aside from the one-time effect of the cumulative
adjustments, adoption of SFAS 106 was not material to the Corporation's 1993,
1992 and 1991 consolidated results of operations.
The Corporation is required to adopt Statement of Financial Accounting
Standards No. 112 ("SFAS 112"), "Employers' Accounting for Postemployment
Benefits," by fiscal year 1994. The adoption of SFAS 112 will not have a
significant effect on the Corporation's consolidated financial position or its
results of operations if such operations continue at the present level.
Foreign Currency
Assets and liabilities of certain foreign subsidiaries, whose local currency
is the functional currency, are translated at exchange rates in effect at the
balance sheet date. During 1992, the Corporation's Mexican subsidiaries' economy
ceased to be considered highly inflationary and the Mexican peso became the
subsidiaries' functional currency. Translation gains and losses are not included
in the Statements of Consolidated Income, but are accumulated in a separate
component of shareholders' equity. Gains and losses from foreign currency
transactions are included in the Statements of Consolidated Income.
The Corporation enters into forward exchange contracts denominated in foreign
currencies providing protection from currency fluctuations affecting certain
inventory and equipment purchase commitments denominated in foreign currencies.
Gains and losses associated with these transactions are deferred and included in
the determination of the cost of the assets acquired.
19
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Income Taxes
Effective January 4, 1993, the Corporation adopted Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." Under
SFAS 109, the deferred tax provision is determined under the liability method.
Under this method, deferred tax assets and liabilities are recognized based on
differences between financial statement and tax bases of assets and liabilities
using presently enacted tax rates. There was no material effect on the
Corporation's financial position or results of operations by adopting SFAS 109.
The Corporation does not provide for Federal or state income taxes on the
accumulated earnings and profits of its foreign subsidiaries to the extent that
the current intention of the Corporation is to allow its foreign subsidiaries to
reinvest these earnings or to the extent that any Federal or state taxes
attributable to the repatriation of such earnings would be substantially offset
by foreign tax credits.
Earnings Per Common Share
Earnings per common share are based on the weighted average number of shares
outstanding in each year. The weighted average number of shares outstanding was
23,559,244 during 1993 and 1992, and 24,082,368 during 1991 after giving
retroactive effect to the 1992 share split effected in the form of a 100% share
dividend.
Fiscal Year
The Corporation's fiscal year is the 52 or 53 weeks ending on the Sunday
closest to December 31.
Reclassifications
The consolidated financial statements for years prior to 1993 have been
reclassified to conform with the 1993 financial statement presentation.
2. CASH AND CASH EQUIVALENTS:
Cash and cash equivalents consist of the following:
<TABLE>
<CAPTION>
January 2, January 3,
(In thousands) 1994 1993
- -------------------------------------------------
<S> <C> <C>
Cash $17,668 $15,987
Certificates of deposit 6,426 9,247
------------------------
Total $24,094 $25,234
========================
</TABLE>
The Corporation's cash management policy is to invest in highly liquid, short-
term financial instruments. The interest-bearing certificates of deposit have
maturity dates of less than three months when purchased and, accordingly, have
been classified as cash and cash equivalents.
20
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
January 2, January 3,
(In thousands) 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C>
Work in process, finished $ 49,363 $ 49,650
stock and packaging
materials
Raw materials 10,063 8,842
- --------------------------------------------------------------------------------
Total $ 59,426 $ 58,492
=========================
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT - NET:
Property, plant and equipment - net consists of the following:
<TABLE>
<CAPTION>
January 2, January 3,
(In thousands) 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C>
Land $ 2,841 $ 2,887
Buildings and improvements 57,428 44,524
Machinery and equipment 193,234 161,800
Construction in progress 24,742 31,983
- --------------------------------------------------------------------------------
Total 278,245 241,194
Less accumulated depreciation 137,928 122,062
- --------------------------------------------------------------------------------
Total $140,317 $119,132
=========================
</TABLE>
5. OTHER ASSETS:
Other assets consist of the following:
<TABLE>
<CAPTION>
January 2, January 3,
(In thousands) 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C>
Intangibles (net of accumulated amortization $ 17,192 $ 18,651
1993 - $4,716 and 1992 - $2,533)
Other 12,722 8,624
- --------------------------------------------------------------------------------
Total $ 29,914 $ 27,275
=========================
</TABLE>
In 1992, the Corporation acquired Wite-Out Products, Inc. for $19,848,000,
which was accounted for by the purchase method of accounting. Accordingly, the
excess of cost over the fair value of net tangible assets acquired,
approximately $16,900,000, was allocated to intangibles.
21
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. BANK BORROWINGS:
Information with respect to the Corporation's bank borrowings is as follows:
<TABLE>
<CAPTION>
January 2, January 3,
(In thousands) 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C>
Weighted average interest rate at balance sheet date 6.1% 4.6%
Maximum month-end balance during the year $36,454 $20,637
Average daily outstanding balance 13,998 8,968
Weighted average interest rate (actual interest expense
on bank borrowings divided by average daily outstanding
balance) 4.3% 4.4%
Unused lines of credit $99,711 $53,572
Stand-by letters of credit 35,488 39,615
- --------------------------------------------------------------------------------
</TABLE>
7. OTHER CURRENT LIABILITIES:
Other current liabilities consist of the following:
<TABLE>
<CAPTION>
January 2, January 3,
(In thousands) 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C>
Accrued advertising and promotion $14,242 $ 11,024
Other 9,669 11,209
- --------------------------------------------------------------------------------
Total $23,911 $ 22,233
=========================
</TABLE>
8. EMPLOYEE BENEFIT PLANS:
The Corporation's net periodic pension cost for 1993, 1992 and 1991 is
summarized as follows:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $(1,797) $(1,608) $(1,584)
Interest cost on projected benefit obligation (3,988) (3,641) (3,488)
Actual return on plan assets 5,151 6,060 9,684
Net amortization and deferral 107 (1,152) (4,888)
- --------------------------------------------------------------------------------
Net periodic pension cost $ (527) $ (341) $ (276)
===================================
</TABLE>
22
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. EMPLOYEE BENEFIT PLANS (Continued):
The following table sets forth the funded status at January 2, 1994 and
January 3, 1993 of the Corporation's defined benefit pension plans:
<TABLE>
<CAPTION>
January 2, 1994 January 3, 1993
Funded Unfunded Funded Unfunded
(In thousands) Plans Plans Plans Plans
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fair value of plan assets $ 60,916 $ 57,830
Projected benefit obligation
for services rendered to date (56,375) $(3,948) (44,035) $(2,956)
- --------------------------------------------------------------------------------
Excess of plan assets over
projected benefit obligation
(excess of projected benefit
obligation over plan assets) 4,541 (3,948) 13,795 (2,956)
Unrecognized net (gain) loss 1,330 1,013 (7,802) 233
Prior service costs not yet
recognized in net periodic
pension cost 682 20 1,193 25
Unrecognized net obligation (net
asset) (3,423) 91 (3,997) 111
- --------------------------------------------------------------------------------
Prepaid pension (pension
liability) $ 3,130 $(2,824) $ 3,189 $(2,587)
=================================================
Actuarial present value of
benefit obligations:
Vested benefit obligation $ 49,962 $ 3,768 $ 38,130 $ 2,702
=================================================
Accumulated benefit
obligation $ 50,887 $ 3,768 $ 38,649 $ 2,702
=================================================
</TABLE>
Prior service costs primarily relate to plan amendments which retroactively
increase benefits to plan participants. These costs are recognized in net
periodic pension cost over appropriate periods.
The following assumptions were used in developing the above benefit obligation
amounts:
<TABLE>
<CAPTION>
January 2, January 3,
1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C>
Assumed discount rate 7.0% 8.5%
Assumed rate of compensation increase 4.0% 6.0%
Expected rate of return on plan assets 10.0% 10.0%
- --------------------------------------------------------------------------------
The plan assets were invested as follows:
<CAPTION>
January 2, January 3,
1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C>
Equity securities 65.0% 62.4%
United States Government securities 13.7% 17.8%
Cash equivalents and debt securities 21.3% 19.8%
- --------------------------------------------------------------------------------
Total 100.0% 100.0%
==========================
</TABLE>
Contributions under the employees share purchase plans and the 401(k)
Savings and Investment Plan were approximately $728,000, $406,000 and $123,000
in 1993,1992 and 1991, respectively.
23
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
The Corporation provides certain postretirement medical and life insurance
benefits for qualifying retired and active unionized and non-unionized employees
in the United States. Most retirees outside the United States are covered by
government sponsored and administered programs. Postretirement benefits are non
pre-funded and are paid by the Corporation as incurred.
The Corporation's net periodic postretirement benefit cost included the
following components:
<TABLE>
<CAPTION>
(In thousands) 1993
- --------------------------------------------------------------------------------
<S> <C>
Service cost - benefits attributed to employee service during the
period $ 1,144
Interest cost on accumulated postretirement benefit obligation 1,338
- --------------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 2,482
=============
</TABLE>
The following table sets forth the status of postretirement benefits:
<TABLE>
<CAPTION>
January 2,
(In thousands) 1994
- --------------------------------------------------------------------------------
<S> <C>
Accumulated postretirement benefit obligation:
Retirees $ 9,590
Fully eligible active plan participants 3,507
Other active plan participants 8,568
- --------------------------------------------------------------------------------
21,665
Unamortized net loss (3,811)
- --------------------------------------------------------------------------------
Total $17,854
=============
</TABLE>
For measurement purposes, a 14.0% annual rate of increase in the per capita
cost was assumed for 1993. The rate was assumed to decrease gradually to 5.5%
through the year 2009 and remain at that level thereafter. The discount rate
used in determining the accumulated postretirement benefit obligation was 8.5%
at January 4, 1993, and 7.0% at January 2, 1994. The unamortized net loss
represents a change in actuarial assumptions (discount rate) that will be
amortized over future periods.
A 1% increase in the assumed health care cost trend rate for each year would
increase the accumulated postretirement benefit obligation as of January 2, 1994
by $2.6 million and the net periodic postretirement benefit cost by $368,000.
24
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. SHAREHOLDERS' EQUITY:
On November 18, 1992, the Corporation's Board of Directors canceled the
Corporation's 745,506 shares of common stock held as treasury shares. These
shares were restored to the status of authorized but unissued shares in
accordance with Section 515(e) of the New York Business Corporation Law. The
excess of cost over par value ($13,687,381) was allocated to additional paid-in
capital.
On November 18, 1992, the Corporation's Board of Directors declared a two-
for-one share split effected in the form of a 100% share dividend of
11,779,622 authorized common shares, $1 par value, distributed on December 15,
1992, to shareholders of record on December 1, 1992. In connection therewith,
approximately $1,302,000 and $10,478,000 was transferred from additional paid-
in capital and retained earnings, respectively, to common shares. 1992 and
1991 per share data has been restated to reflect the share split.
The following represents a summary of the above transactions, other than the
reduction in retained earnings shown in the Statements of Consolidated Retained
Earnings:
<TABLE>
<CAPTION>
Common Additional Treasury
(In thousands) Shares Paid-in Capital Shares
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, December 29, 1991 $12,525 $ 14,989 $ 14,433
Retirement of Treasury Shares (746) (13,687) (14,433)
100% Share Dividend 11,780 (1,302)
- --------------------------------------------------------------------------------
Balance, January 2, 1994 and
January 3, 1993 $23,559 $ $
======================================
</TABLE>
The Corporation declared and paid cash dividends of $0.72 per share in 1993
and $1.06 per share in 1992. The 1992 amount included a special dividend of
$0.50 per share. The Corporation increased its regular quarterly dividend from
$0.18 per share to $0.20 per share effective with the dividend payable on
January 31, 1994 to shareholders of record on January 17, 1994.
In 1993, the Corporation amended its Certificate of Incorporation to increase
the number of authorized common shares, $1 par value, from 25,000,000 to
50,000,000 shares.
Foreign currency translation adjustments included in shareholders' equity
were $(680,000), $(1,111,000) and $(33,000) for the fiscal years 1993, 1992
and 1991, respectively.
11. OTHER INCOME - NET:
Other income - net consists of the following:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Income (Expense):
Interest expense $(1,185) $ (447) $ (29)
Interest income 810 1,480 3,348
Net foreign currency gains 1,431 689 696
Miscellaneous - net 3,171 430 (2,610)
- --------------------------------------------------------------------------------
Total $ 4,227 $2,152 $ 1,405
==================================
</TABLE>
25
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. SUPPLEMENTARY INCOME STATEMENT INFORMATION:
The following items were charged to expenses in the Statements of
Consolidated Income:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Maintenance and repairs $15,288 $13,408 $11,802
Depreciation of property, plant and equipment 18,697 14,442 13,162
Taxes, other than income taxes:
Payroll 7,447 6,969 5,720
Other 2,233 2,862 2,588
Advertising and promotion 28,562 28,898 25,407
Research and development 3,251 3,186 4,639
- ------------------------------------------------------------------------------
</TABLE>
13. INCOME TAXES:
The provision (credit) for income taxes consists of the following:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal:
Current $20,896 $18,365 $15,816
Deferred 227 (1,198) (3,073)
- ------------------------------------------------------------------------------
Total Federal 21,123 17,167 12,743
- ------------------------------------------------------------------------------
Foreign:
Current 4,016 4,334 2,051
Deferred (1,137) 1,567 1,669
- ------------------------------------------------------------------------------
Total Foreign 2,879 5,901 3,720
- ------------------------------------------------------------------------------
State 5,204 4,275 3,144
- ------------------------------------------------------------------------------
Total $29,206 $27,343 $19,607
=============================
</TABLE>
The total income tax provision shown in the Statements of Consolidated
Income differed from the total income tax expense as computed by applying the
statutory United States Federal ("Federal") income tax rate to income before
income taxes, extraordinary credit and cumulative effect of change in
accounting principle as follows:
<TABLE>
<CAPTION>
1993 1992 1991
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory Federal income tax rate 35.0% 34.0% 34.0%
Increase due to:
Effect of foreign subsidiaries' income tax rates
in excess of the statutory Federal tax rate 1.0 1.6
State income taxes, net of Federal tax benefit 4.6 4.2 4.5
Other - net (0.1) 1.4 2.0
- --------------------------------------------------------------------------------
Effective income tax rate 39.5% 40.6% 42.1%
=============================
</TABLE>
Federal income taxes have not been provided for on cumulative unremitted
earnings of foreign subsidiaries of approximately $16,076,000 at January 2,
1994, $14,051,000 at January 3, 1993 and $11,955,000 at December 29, 1991.
26
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. INCOME TAXES (Continued):
The provision for deferred Federal income taxes consists of the following:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax effect of temporary differences arising from:
Depreciation $ (94) $ 387 $ 199
Insurance 16 (2,757) (534)
Accrued compensation (50) 1,073 (533)
Postretirement benefits (527) 15 133
Inventory valuation (598) 1,071 (495)
Advertising and promotion (512) 168 (663)
Provision for doubtful accounts 405 (1,073) 276
Other 1,587 (82) (1,456)
- --------------------------------------------------------------------------------
Total $ 227 $(1, 198) $(3,073)
=============================
</TABLE>
During 1991, the Corporation utilized the tax benefit of a foreign net tax
operating loss carryforward of $1,050,000 which was shown as an extraordinary
credit in the Statement of Consolidated Income.
The provision for deferred foreign income taxes consists primarily of
temporary differences related to inventory.
Deferred income taxes at January 2, 1994 and January 3, 1993 consist of the
following:
<TABLE>
<CAPTION>
January 2, January 3,
(In thousands) 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Insurance $ 9,342 $ 9,358
Accrued compensation 923 873
Postretirement benefits 7,445 224
Advertising and promotion 1,885 1,373
Provision for doubtful accounts 1,563 1,933
Other 830 2,344
- --------------------------------------------------------------------------------
Total 21,988 16,105
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Depreciation 5,720 6,022
Inventory valuation 194 1,569
- --------------------------------------------------------------------------------
Total 5,914 7,591
- --------------------------------------------------------------------------------
Net deferred tax asset $16,074 $ 8,514
============================
</TABLE>
27
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. INCOME TAXES (Continued):
At January 2, 1994, current deferred tax assets of $16.8 million and
current deferred tax liabilities of $2.1 million were included in Deferred
Income Taxes and Accrued Expenses - Other, respectively. In addition, non-
current deferred tax assets of $1.4 million were included in Other Assets.
14. CONTINGENCIES AND COMMITMENTS:
The Corporation has significant contingent liabilities with respect to
pending litigation, claims and disputes, principally relating to its lighters,
which arise in the ordinary course of its business.
In July 1993, the U.S. Environmental Protection Agency ("EPA") issued its
final volumetric ranking of Potentially Responsible Parties ("PRPs") for the
Solvents Recovery Service of New England ("SRSNE") Superfund Site in
Southington, Connecticut. The Corporation has been notified that it is a PRP at
the Site and has been ranked, by the EPA, number 192 of a total of 1,659 PRPs
named. This ranking represents less than 1% of the total volume of waste
disposed at the SRSNE Site with the first 191 PRPs representing 90% of the total
volume.
The Corporation cannot predict with certainty the total costs of cleanup,
the Corporation's share of the total costs or the extent to which contributions
will be available from other parties, the amount of time necessary to complete
the cleanup, or the availability of insurance coverage. Based on currently
available information, the Corporation believes that its share of the ultimate
cleanup costs at this Site will not have a material adverse impact on the
Corporation's financial position or on its results of operations if such
operations continue at the present level.
In November 1992, a state court jury in Creek County, Oklahoma, in a 9 to 3
verdict, awarded $11,000,000 in actual damages and $11,000,000 in punitive
damages against the Corporation in connection with a product liability action.
Management is vigorously appealing the verdict on a number of grounds. It is
the opinion of management, based on advice of legal counsel, that it is probable
that the verdict will be overturned on appeal.
While the ultimate liability with respect to the above matters, including
any additional liability not provided for, is not presently determinable, it is
the opinion of management, after consultation with counsel to the Corporation,
that any liabilities resulting therefrom will not have a material adverse effect
on the Corporation's consolidated financial position or on its results of
operations if such operations continue at the present level.
At January 2, 1994, the Corporation had outstanding approximately
$23,165,000 of forward exchange contracts, under which the Corporation is
required to purchase French francs at an average contract rate of approximately
6.04 French francs to the dollar during 1994. See Note 1 - Foreign Currency.
28
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS (Continued)
15. RELATED PARTY TRANSACTIONS AND BALANCES:
Material transactions and balances with the Corporation's majority
shareholder, Societe BIC, S.A. and with other related parties are as follows:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Transactions
Sales to:
Societe BIC, S.A. $ 1,389 $ 807 $ 690
Other affiliated companies 10,017 9,717 7,945
Purchases from:
Societe BIC, S.A. 25,237 27,151 24,390
Other affiliated companies 16,966 16,820 17,205
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
January 2, January 3,
(In thousands) 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C>
Balances
Included in receivables:
Societe BIC, S.A. $ 233 $ 257
Other affiliated companies 2,787 3,446
Employees 51 48
Included in payables:
Societe BIC, S.A. 6,153 5,225
Other affiliated companies 3,237 1,804
- --------------------------------------------------------------------------------
</TABLE>
16. FINANCIAL INSTRUMENTS:
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of Statement of
Financial Accounting Standards No. 107, "Disclosure about Fair Value of
Financial Instruments." The estimated fair value amounts have been determined by
the Corporation, using available market information and appropriate valuation
methodologies. However, considerable judgment is necessarily required in
interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Corporation could realize in a current market exchange.
<TABLE>
<CAPTION>
January 2, 1994 January 3, 1993
- --------------------------------------------------------------------------------
Carrying Estimated Carrying Estimated
or Contract Fair or Contract Fair
(In thousands) Amount Value Amount Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents $24,094 $24,094 $25,234 $25,234
Liabilities:
Bank borrowings 6,731 6,731 7,677 7,677
Off-balance sheet
financial instruments:
Forward foreign currency
contracts 23,165 23,384 32,685 31,624
Unused lines of credit 99,711 See Below 53,572 See Below
Stand-by letters of credit 35,488 See Below 39,615 See Below
- --------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued):
16. FINANCIAL INSTRUMENTS (Continued):
Cash and Cash Equivalents
The Corporation compared the certificates of deposit interest rates at the
contract dates to the prevailing interest rates at January 2, 1994 and January
3, 1993 and determined that there were no significant differences. Therefore,
the carrying amounts of these items are a reasonable estimate of their fair
value.
Bank Borrowings
Due to the relatively short period of time between the origination of the
bank borrowings and their repayments, the carrying amounts approximate their
estimated fair value.
Forward Foreign Currency Contracts
The fair value of foreign currency contracts is the amount as of January 2,
1994 and January 3, 1993 at which contracts with the same date of maturity as
existing contracts could be purchased, based on estimates obtained from dealers.
Unused Lines of Credit and Stand-By Letters of Credit
There is no annual cost of maintaining the unused lines of credit. The
annual cost of maintaining stand-by letters of credit is estimated based on fees
of 1/4% to 3/4% of the amount of the letter of credit, which would be currently
charged for similar arrangements.
30
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. FOREIGN OPERATIONS:
A summary of information about the Corporation's operations in different
geographic areas is as follows (see Note 15 for sales to affiliated companies):
<TABLE>
<CAPTION>
United Other
(In thousands) States Canada Mexico Areas Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1993:
Net sales $372,459 $28,625 $32,677 $5,550 $439,311
Transfers between geographic
areas /1/ 16,234 61 11,493 21 $(27,809)
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues $388,693 $28,686 $44,170 $5,571 $(27,809) $439,311
=====================================================================
Income before income taxes and
cumulative effect of change
in accounting principle $ 64,716 $ 4,643 $ 4,438 $ 508 $ (319) $ 73,986
=====================================================================
Identifiable assets $285,661 $10,172 $34,269 $6,114 $336,216
=====================================================================
1992:
Net sales $351,803 $28,947 $32,165 $4,462 $417,377
Transfers between geographic
areas /1/ 16,742 3 13,888 225 $(30,858)
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues $368,545 $28,950 $46,053 $4,687 $(30 858) $417,377
=====================================================================
Income before income taxes $ 53,307 $ 6,742 $ 6,730 $ 929 $ (430) $ 67,278
=====================================================================
Identifiable assets $261,605 $15,733 $25,807 $5,321 $308,466
=====================================================================
1991:
Net sales $311,203 $29,296 $25,320 $3,352 $369,171
Transfers between geographic
areas /1/ 17,213 1,829 9,678 $(28,720)
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues $328,416 $31,125 $34,998 $3,352 $(28,720) $369,171
=====================================================================
Income before income taxes
and extraordinary credit $ 38,694 $ 2,830 $ 4,677 $ 619 $ (204) $ 46,616
=====================================================================
Identifiable assets $244,642 $11,530 $19,747 $4,286 $280,205
=====================================================================
</TABLE>
/1/ Transfers between geographic areas are generally accounted for at a range of
cost to cost plus 10%.
31
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued):
18. SELECTED QUARTERLY FINANCIAL DATA (Unaudited):
<TABLE>
<CAPTION>
Net Income
Net (Loss)
Income Per Common
(In thousands except Net Gross (Loss) Share
for per share data) Sales Profit /1/ /1//2/
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Quarter ended:
April 4, 1993 $101,199 $46,173 $ (730) $(0.03)
July 4, 1993 124,437 56,356 13,518 0.57
October 3, 1993 123,056 56,999 13,228 0.56
January 2, 1994 90,619 43,963 8,948 0.38
- --------------------------------------------------------------------------------
Quarter ended:
March 29, 1992 $ 88,141 $39,710 $ 7,883 $ 0.34
June 28, 1992 116,296 53,680 12,047 0.51
September 27, 1992 116,835 56,858 11,840 0.50
January 3, 1993 96,105 41,323 8,165 0.35
- --------------------------------------------------------------------------------
</TABLE>
/1/ The quarter ended April 4, 1993 includes a decrease in net earnings for the
cumulative effect of a change in accounting for postretirement benefits
other than pensions of $9,816 or $0.42 per share.
/2/ 1992 quarterly per share amounts have been retroactively restated to
reflect the share split effected in the form of a 100% share dividend.
32
<PAGE>
SCHEDULE II
BIC CORPORATION AND SUBSIDIARIES
SCHEDULE OF AMOUNTS RECEIVABLE FROM EMPLOYEES
FOR THE FISCAL YEARS ENDED
JANUARY 2, 1994, JANUARY 3, 1993 AND DECEMBER 29, 1991
<TABLE>
<CAPTION>
Employee Balance Additions- Deductions-
at Beginning Amounts Amounts Balance at End of Year
(In thousands) of Year Advanced Collected Current Non-Current
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993:
None
- ------------------------------------------------------------------------------------
1992:
Bruno Bich $100 $ 70 $170
Roger Gray 120 120
Raymond Winter 583 583
- ------------------------------------------------------------------------------------
1991:
Bruno Bich $300 $200 $100
Roger Gray 120 120
Raymond Winter 583 583
- ------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
SCHEDULE V
BIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED PROPERTY, PLANT AND EQUIPMENT
FOR THE FISCAL YEARS ENDED JANUARY 2, 1994,
JANUARY 3, 1993 AND DECEMBER 29, 1991
<TABLE>
<CAPTION>
Foreign
Classification Balance Currency Balance
at Beginning Additions Retirements Translation at End
(In thousands) of Year at Cost or Sales Adjustment of Year
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993:
Land $ 2,887 $ 25 $ (21) $ 2,841
Buildings and improvements 44,524 $13,077 (173) 57,428
Machinery and equipment 161,800 35,271 2,930 (907) 193,234
Construction in progress 31,983 31,895 39,136/1/ 24,742
- -----------------------------------------------------------------------------------------------------------------------------
Total $241,194 $80,243 $42,091 $(1,101) $278,245
========================================================================================
1992:
Land $ 2,205 $ 687 $ (5) $ 2,887
Buildings and improvements 37,851 7,122 $ 281 (168) 44,524
Machinery and equipment 152,051 19,313 9,351 (213) 161,800
Construction in progress 13,402 35,805 17,224/1/ 31,983
- -----------------------------------------------------------------------------------------------------------------------------
Total $205,509 $62,927 $ 26,856 $ (386) $241,194
========================================================================================
1991:
Land $ 2,380 $ 175 $ 2,205
Buildings and improvements 34,312 $ 3,632 92 $ (1) 37,851
Machinery and equipment 133,452 24,479 5,878 (2) 152,051
Construction in progress 15,507 23,737 25,842/1/ 13,402
- -----------------------------------------------------------------------------------------------------------------------------
Total $185,651 $51,848 $31,987 $ (3) $205,509
========================================================================================
</TABLE>
/1/ Transferred to appropriate classification upon completion of construction.
34
<PAGE>
SCHEDULE VI
BIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED ACCUMULATED DEPRECIATION OF
PROPERTY, PLANT AND EQUIPMENT
FOR THE FISCAL YEARS ENDED JANUARY 2, 1994,
JANUARY 3, 1993 AND DECEMBER 29, 1991
<TABLE>
<CAPTION>
Additions- Foreign
Classification Balance Provision Deductions- Currency Balance
at Beginning Charged Retirements Translation at End
(In thousands) of Year to Income or Sales Adjustment of Year
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993:
Buildings and improvements $ 19,047 $ 2,589 $(161) $ 21,475
Machinery and equipment 103,015 16,108 $2,219 (451) 116,453
- -------------------------------------------------------------------------------------------
Total $122,062 $18,697 $2,219 $(612) $137,928
===============================================================
1992:
Buildings and improvements $ 17,679 $ 1,731 $ 272 $ (91) $ 19,047
Machinery and equipment 98,836 12,711 8,381 (151) 103,015
- -------------------------------------------------------------------------------------------
Total $116,515 $14,442 $8,653 $(242) $122,062
===============================================================
1991:
Buildings and improvements $ 16,478 $ 1,291 $ 89 $ (1) $ 17,679
Machinery and equipment 91,010 11,871 4,044 (1) 98,836
- -------------------------------------------------------------------------------------------
Total $107,488 $13,162 $4,133 $ (2) $116,515
===============================================================
</TABLE>
35
<PAGE>
SCHEDULE VIII
BIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED VALUATION ACCOUNTS
FOR THE FISCAL YEARS ENDED JANUARY 2, 1994,
JANUARY 3, 1993 AND DECEMBER 29, 1991
<TABLE>
<CAPTION>
Additions (Additions)
Classification Balance Charged Deductions Balance
at Beginning to Profit from at End
(In thousands) of Year and Loss Reserves/1/ of Year
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allowance for Doubtful Accounts:
1993 $5,076 $ 85 $1,077 $4,084
1992 2,420 2,286 (370) 5,076
1991 1,645 1,430 655 2,420
- --------------------------------------------------------------------------------
</TABLE>
/1/ Principally accounts written-off, less recoveries.
36
<PAGE>
FORM 10K
For the fiscal year ended Commission File No. 1-6832
January 2, 1994
BIC CORPORATION
EXHIBIT INDEX
-------------
Exhibit No.
- -----------
3. a. Restated Certificate of Incorporation, as filed May 5, 1993.
b. By-Laws, as amended./1/
4. Instruments relating to long-term debt are not filed, but
the Registrant agrees to file a copy of such instruments,
upon request of the Securities and Exchange Commission.
9. a. Voting Trust Agreement, dated February 5, 1991, by and
among Societe BIC, S.A., Marcel L. Bich, Neil A. Pollio,
Bruno Bich, Francois Bich and BIC Corporation, as amended
February 3, 1992, for the purpose of naming Alexander
Alexiades as successor voting trustee./2/
b. Amendment to Voting Trust Agreement, dated July 5, 1993.
10. a. Selected Executive Retirement Plan, as amended.
b. Agreement, dated July 1, 1971, including amendments, between
Societe BIC, S.A. and BIC Pen Corporation./2/
21. Subsidiaries of the Registrant.
23. Consent of Independent Auditors.
- --------------------------
/1/ Incorporated by reference to the Corporation's Annual Report on Form
10-K for its fiscal year ended January 3, 1993.
/2/ Incorporated by reference to the Corporation's Annual Report on Form
10-K for its fiscal year ended December 30, 1990.
<PAGE>
EXHIBIT 3.a
RESTATED CERTIFICATE OF INCORPORATION
OF
BIC CORPORATION
(Under Section 807 of the Business Corporation Law)
FIRST: The name of the corporation is BIC CORPORATION (hereinafter the
"Corporation"). The name under which the Corporation was formed is BIC PEN
CORPORATION.
SECOND: The Certificate of Incorporation of the Corporation was filed by
the Department of State on November 14, 1958. A Restated Certificate of
Incorporation was filed by the Department of State on April 29, 1971 and on June
1, 1992.
THIRD: The Certificate of Incorporation, as heretofore amended and
restated, is hereby further amended or changed to effect one or more of the
amendments or changes authorized by the Business Corporation Law, to wit:
1. To authorize the Corporation to issue 25,000,000 additional Common
Shares, $1.00 par value.
2. To eliminate the personal liability of directors to the Corporation or
to its shareholders for damages for any breach of duty as a director to the full
extent permitted by Section 402(b) of the New York Business Corporation Law.
FOURTH: To accomplish the foregoing amendments, Article FOURTH, which sets
forth the number of shares of Common Stock which the Corporation is authorized
to issue, is hereby amended to read as set forth in Article FOURTH of the
Certificate of Incorporation of the Corporation as hereinafter restated and
Article NINTH, which eliminates the personal liability of directors, is hereby
added to read as set forth in Article NINTH of the Certificate of Incorporation
of the Corporation as hereinafter restated.
FIFTH: The amendment and restatement of the Certificate
of Incorporation of the Corporation herein provided for was authorized by the
vote of a majority of the Board of Directors of the Corporation on February 11,
1993.
SIXTH: The amendment and restatement of the Certificate of Incorporation
of the Corporation herein provided for was authorized by the vote of a majority
of the shareholders of the Corporation at the Annual Meeting of Shareholders
held on April 27, 1993.
SEVENTH: The text of the Certificate of Incorporation of the Corporation,
as heretofore amended, is hereby restated as further amended or changed herein
to read as follows:
<PAGE>
CERTIFICATE OF INCORPORATION
OF
BIC CORPORATION
(Under Section 402 of the Business Corporation Law)
-----------------------------
FIRST: The name of the Corporation is BIC CORPORATION.
SECOND: The Corporation is formed for the purpose of engaging in any
lawful act or activity for which corporations may be organized under the New
York Business Corporation Law. The Corporation is not formed to engage in any
act or activity requiring the consent or approval of any state official,
department, board, agency or other body without such consent or approval first
being obtained.
THIRD: The city, incorporated village or town, and the county within the
State of New York in which the office of the Corporation is to be located are
the City of New York and County of New York.
FOURTH: The aggregate number of shares which the Corporation shall be
authorized to issue is Fifty One Million (51,000,000), consisting of One Million
(1,000,000) Preferred Shares of the par value of One Dollar ($1.00) per share
(hereinafter sometimes referred to as the "Preferred Shares") and Fifty Million
(50,000,000) Common Shares of the par value of One Dollar ($1.00) per share
(hereinafter sometimes referred to as the "Common Shares").
FIFTH: The Secretary of State is designated as the agent of the
Corporation upon whom process against the Corporation may be served. The post
office address within or without the State of New York to which the Secretary of
State shall mail a copy of any process against the Corporation served upon him
is:
CT Corporation System
1633 Broadway
New York, New York 10019
2
<PAGE>
SIXTH: Except as may otherwise be specifically provided in this
Certificate of Incorporation, no provision of this Certificate of Incorporation
is intended by the Corporation to be construed as limiting, prohibiting, denying
or abrogating any of the general or specific powers or rights conferred under
the Business Corporation Law upon the Corporation, upon its shareholders,
bondholders and security holders, and upon its directors, officers, and other
Corporation personnel, including, in particular, the power of the Corporation to
furnish indemnification to directors and officers in the capacities defined and
prescribed by the Business Corporation Law and the defined and prescribed rights
of said persons to indemnification as the same are conferred by the Business
Corporation Law.
SEVENTH: No holder of any of the shares of any class of the Corporation
shall be entitled as of right to subscribe for, purchase or otherwise acquire,
any shares of any class of the Corporation which the Corporation proposes to
issue, or any right or option which the Corporation proposes to grant for the
purchase of shares of any class of the Corporation or for the purchase of any
shares, bonds, securities, or obligations of the Corporation which are
convertible into, or exchangeable for, or which carry any rights to subscribe
for, purchase, or otherwise acquire shares of any class of the Corporation; and
any and all of such shares, bonds, securities or obligations of the Corporation,
whether now or hereafter authorized or created, may be issued, or may be
reissued or transferred if the same have been required and have treasury status,
and any and all of such rights and options may be granted by the Board of
Directors to such persons, firms, corporations and associations, and for such
lawful consideration, and on such terms as the Board of Directors in its
discretion may determine, without first offering the same, or any portion
thereof, to any said holder. Without limiting the generality of the foregoing
stated denial of any and all preemptive rights, no holder of shares of any class
of the Corporation shall have any preemptive rights in respect of the matters,
proceedings, or transactions specified in subparagraphs (1) to (6), inclusive,
of paragraph (e) of Section 622 of the Business Corporation Law.
EIGHTH: The registered agent of the Corporation is CT Corporation System
whose address within the State of New York is 1633 Broadway, New York, New York
10019. The registered agent is the agent of the Corporation upon whom process
against it may be served.
NINTH: No director of the Corporation shall be liable to the Corporation
or to its shareholders for damages for any breach of duty in such capacity
except as provided by Section 402(b)(1) and (2) of the New York Business
Corporation Law.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned do hereunto sign their names and affirm
that the statements made herein are true under the penalties of perjury, on this
27th day of April, 1993.
BIC CORPORATION
/s/ Bruno Bich
-----------------------------------
Bruno Bich
Chairman
/s/ Thomas M. Kelleher
-----------------------------------
Thomas M. Kelleher
Secretary
4
<PAGE>
AMENDMENT #2 TO VOTING TRUST AGREEMENT
THIS AMENDMENT, dated as of the 5th day of July, 1993, by and among SOCIETE BIC,
S.A., a corporation organized and existing under the laws of France, having its
principal place of business at 8 Impasse des Cailloux, Clichy (France); MARCEL
L. BICH, an individual residing at 5 Square de Chezy, 92200 Neuilly s/Seine
(France); BRUNO BICH, an individual residing at 100 Clapboard Ridge Road,
Greenwich, Connecticut; ALEXANDER ALEXIADES, an individual residing at 14
Seymour Road, Woodbridge, Connecticut; BERMUDA TRUST COMPANY LIMITED, a
corporation organized and existing under the laws of Bermuda, having its
principal place of business at 6 Front Street, Hamilton, Bermuda; and BIC
CORPORATION, a New York corporation, having its principal place of business at
500 BIC Drive, Milford, Connecticut.
W I T N E S S E T H:
WHEREAS, Societe BIC, Marcel L. Bich and Francois Bich as shareholders of
BIC Corporation have previously entered into a Voting Trust Agreement, dated
February 5, 1991, to secure the continuity and stability of policy and
management of BIC Corporation and Marcel L. Bich and Bruno Bich as Voting
Trustees and Alexander Alexiades as successor Voting Trustee have previously
consented to act thereunder; and
WHEREAS, pursuant to the request of Marcel L. Bich, Bruno Bich as a
shareholder of BIC Corporation now desires to deposit certain
<PAGE>
of his shares of BIC Corporation with the Voting Trustees pursuant to the terms
of the Voting Trust Agreement dated February 5, 1991, as previously amended.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained, it is agreed as follows:
The Voting Trust Agreement, dated February 5, 1991, as amended, is hereby
further amended as follows:
1. Share amounts have been adjusted to reflect the two-for-one stock split
paid on December 15, 1992.
2. Paragraph 1) is hereby amended to add the following:
1) Bruno Bich agrees to deposit with the Voting Trustees the
certificates for shares of BIC Corporation owned by him, to wit:
Bruno Bich. . . . . . . . . . .1,400,000
of BIC Corporation duly endorsed for transfer to the Voting Trustees or with
stock powers duly executed, with all transfer tax stamps affixed, if required.
Said certificates of shares shall be surrendered by the Voting Trustees to BIC
Corporation and canceled and new certificates therefor shall be issued to and
held by the Voting Trustees in their names as such voting trustees, subject to
the terms of this Agreement.
<PAGE>
3. To the extent not amended or revised by this Amendment #2, the terms of
the Voting Trust Agreement as previously amended shall remain in full force and
effect. If any of the terms of this Amendment #2 and the Voting Trust
Agreement as previously amended are inconsistent, the terms of this Amendment #2
shall govern.
4. This Amendment #2 shall be governed, in all respects, by the laws of
the State of New York and shall be construed and interpreted in accordance with
said laws.
3 IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
affixed their seal on the day and year first-above written.
SOCIETE, BIC S.A.
/s/ Marcel L. Bich By: /s/ Marcel L. Bich
- ---------------------------- ----------------------------
Marcel L. Bich Marcel L. Bich
/s/ Francois Bich BIC CORPORATION
- ----------------------------
Francois Bich
By: /s/ Bruno Bich
----------------------------
Bruno Bich
/s/ Bruno Bich
- ----------------------------
Bruno Bich BERMUDA TRUST COMPANY LTD.
/s/ Alexander Alexiades By: /s/ Kay McCulloch
- ---------------------------- ---------------------------
Alexander Alexiades Kay McCulloch
Private Banking Officer
3
<PAGE>
THE BIC CORPORATION
-------------------
SELECTED EXECUTIVE RETIREMENT PLAN
----------------------------------
(As Amended to December 9, 1993)
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE NO.
-------
ARTICLE I - DEFINITIONS 1
- -----------------------
1.01 Terms and Definitions
ARTICLE II - PARTICIPATION 5
- --------------------------
2.01 Designation of Participants
2.02 Termination of Participation
2.03 Periods of Absence
ARTICLE III - RETIREMENT DATES AND BENEFITS 7
- -------------------------------------------
3.01 Retirement Dates
3.02 Normal Retirement Benefit
3.03 Deferred Retirement Benefit
3.04 Early Retirement Benefit
3.05 Integration with Other Plans
ARTICLE IV - OPTIONAL FORM OF RETIREMENT BENEFITS 13
- -------------------------------------------------
4.01 Standard Retirement Benefit
4.02 Optional Retirement Benefits
4.03 Method of Election
4.04 Binding Effect of Election
4.05 Designation of Beneficiaries or Provisional Payees
ARTICLE V - DEATH BENEFITS AND DISABILITY INSURANCE 15
- ----------------------------------------------------
5.01 Provision for Death Benefit
5.02 Purchase of Life Insurance and Annuity Contract
5.03 Adjustment of Contracts
5.04 Waiver of Premium
5.05 Total and Permanent Disability
5.06 Effect of Other Plans
ARTICLE VI - TERMINATION OF EMPLOYMENT OR PARTICIPATION 18
- -------------------------------------------------------
6.01 Circumstances of Termination
6.02 Events Constituting Cause
6.03 Determination by Board
ARTICLE VII - DISCONTINUANCE OF BENEFITS FOR IMPROPER CONDUCT 22
- -------------------------------------------------------------
7.01 Causes for Discontinuance
7.02 Determination by the Board
<PAGE>
PAGE NO.
-------
ARTICLE VIII - FUNDING 24
- ----------------------
8.01 Debt Obligation
8.02 Election to Create Trust Fund
8.03 Actuarial Liability
ARTICLE IX - COMMITTEE 25
- ----------------------
9.01 Appointment Committee
9.02 Construction of Plan
9.03 Rules and Regulations
9.04 Supervision of Administration
9.05 Appointment of Agent or Counsel
9.06 Action by Meeting or Consent
9.07 Non-Liability for Acts of Others
9.08 Resignations and Appointments
ARTICLE X - RIGHT OF THE COMPANY TO ALTER, AMEND OR TERMINATE 27
- --------------------------------------------------------------
10.01 Amendment to Plan
10.02 Termination of Plan
ARTICLE XI - MISCELLANEOUS 29
- --------------------------
11.01 Plan Not an Employment Agent
11.02 Plan Not Tax Qualified
11.03 Disability Incompetency of Payee
11.04 Restriction on Transferability of Benefits
11.05 Absence of Payee
11.06 Effect of Titles
11.07 Payments as Satisfaction
11.08 Construction of Gender and Number
11.09 Connecticut Law to Apply
11.10 Effect on Successors and Assigns
<PAGE>
BIC CORPORATION
SELECTED EXECUTIVE RETIREMENT PLAN
----------------------------------
BIC CORPORATION, a corporation organized under the laws of the State of New
York and having its offices and principal place of business at Wiley Street,
Milford, Connecticut, hereby establishes this Plan effective as of July 1, 1970,
to provide supplemental retirement benefits for the limited number of employees
designated as participants in this Plan. This Plan as herein adopted and as
amended from time to time may be referred to as the BIC CORPORATION SELECTED
EXECUTIVE RETIREMENT PLAN. This Plan is adopted by the Corporation as a means
of providing supplemental retirement pensions and death benefits to assure the
financial security of persons for whom the Board of Directors deems it advisable
to provide this additional compensation benefit. No person other than
participants so designated by the Board of Directors of the Company and
beneficiaries of such participants shall be entitled to any benefit by reason of
adoption and maintenance of this Plan.
ARTICLE I
---------
DEFINITIONS
-----------
1.01 Terms and Definitions. The following terms, when used herein, shall
---------------------
have the designated meaning unless a different meaning is plainly required by
the context:
1
<PAGE>
(a) Company or The Company: BIC Corporation and any successor thereof.
----------------------
(b) Plan: The Pension Plan of the Company as herein set forth and as
----
amended from time to time. The Plan may be referred to as the BIC Corporation
Selected Executive Retirement Plan, previously referred to as The Waterman-BIC
Pen Corporation Selected Executive Retirement Plan.
(c) Committee: The Committee appointed under Article IX hereof to
---------
administer the Plan.
(d) Board: The Board of Directors of the Company.
-----
(e) Plan Year: The Plan Year shall be the calendar year.
---------
(f) Participating Employee or Participant: An eligible employee who
-------------------------------------
becomes a Participant under the Plan as provided in Article II hereof.
(g) Monthly Compensation: Monthly Compensation shall mean one-twelfth of
--------------------
the monies paid to or accrued for an employee by the Company for a Plan Year,
including any cash bonuses paid during such Plan Year even if such bonus is in
recognition for services performed in the prior year, but exclusive of any
amount paid by the Company to any pension, profit sharing, group insurance,
2
<PAGE>
deferred compensation or any other employee's welfare plan now or hereafter
adopted.
(h) Average Monthly Compensation: Average Monthly Compensation for any
----------------------------
participant shall mean the average of his Monthly Compensation for the three
plan years immediately prior to his Normal Retirement Date or Early Retirement
Date or termination of employment or termination of participation as pertains in
his case.
(i) Credited Service: The number of full and fractional years of credited
----------------
service shall be calculated, for purposes of this Plan, in the same manner as
Benefit Accrual Service is calculated pursuant to Section 2.03 of the BIC
Corporation Salaried Employee Pension Plan (the "Salaried Plan"); provided,
however, that for purposes of determining the effect of periods of absence on
the determination of whole and fractional years of credited service the rules of
Section 2.03 of this Plan and not Section 2.06 of the Salaried Plan shall
govern.
(j) Total and Permanent Disability: Incapacity, physical or mental,
------------------------------
permanent in nature, resulting from bodily injury or disease, which results in
an employee being unable to perform the requirements of such employee's job or
position provided, however, the term shall not include any disability which:
3
<PAGE>
1. Results from or consists of habitual drunkenness or addiction to
narcotics, or
2. Was treated, suffered or occurred while the employee was engaged in, or
resulted from his having engaged in felonious enterprise, or
3. Was intentionally self-inflicted.
Whether an employee is totally and permanently disabled shall be
established by medical proof satisfactory to a doctor or physician appointed by
the Committee and its decision as to the competence of such medical proof shall
be binding upon the employee, the Company and all interested parties.
(k) Provisional Payee: Means any person designated an employee to receive
-----------------
benefits under Option A of Section 4.02 hereof.
(l) Beneficiary: Means any person or persons designated to receive
-----------
benefits under Option B of Section 4.02 hereof, or to receive death benefits
provided in Article V hereof.
4
<PAGE>
ARTICLE II
----------
PARTICIPATION
-------------
2.01 Designation of Participants: Participation in this Plan shall be
---------------------------
limited to those employees of the Company as are designated Participants in this
Plan by the Board of Directors of the Company. The Board of Directors shall
notify the President of the Company, the Plan Committee and the Participant of
its determination to designate an employee a Participant hereunder. No
Participant in the Plan shall be entitled to any Retirement Benefits under
Sections 3.02, 3.03 or 3.04 unless and until he has been a Participant in the
Plan for 5 years on his Normal, Deferred or early Retirement Date.
2.02 Termination of Participation: An employee shall cease to be a
----------------------------
Participant hereunder upon his death, retirement pursuant to this Plan, total
and permanent disability, or other termination of his employment with the
Company, or if the Directors make a determination to terminate his participation
in this Plan, which determination by the Directors shall be communicated in the
same manner as provided in Section 2.01 above.
2.03 Periods of Absence: Periods of absence to the extent provided for
------------------
and as defined in this Section shall not constitute the termination of
employment of the Participant and shall not
5
<PAGE>
constitute an interruption in Credited Service of such Participant. Periods of
absence with the meaning of this Section are:
(a) Authorized vacation.
(b) Temporary illness or temporary disability.
(c) Voluntary or involuntary active service (but not periods of re-
enlistment) in the armed forces of the United States while any law
requiring military service is in effect.
(d) Leave for the purpose of employment with a subsidiary or affiliated
company.
Any other approved leave of absence shall not terminate the employment of
the Participant, but shall constitute an interruption in Credited Service of
such Participant during his leave of absence without depriving such Participant
of the benefit of Credited Service accrued prior to such leave of absence; after
the resumption of the work of such Participant, his services commencing with the
date of the resumption of his work shall be added to his Credited Service
accrued prior to his leave of absence.
If any employee fails to return to work on the date fixed by the Company
with respect to any leave whether listed under (a), (b), (c) and (d) of this
paragraph or any other leave of absence
6
<PAGE>
(or within 90 days following military service or such required period as may be
directed by law for the protection of his employment rights following military
service) his Credited Service shall be deemed to have ended on the date next
preceding such absences.
ARTICLE III
-----------
RETIREMENT DATES AND BENEFITS
-----------------------------
3.01 Retirement Dates: A Participant shall be entitled to retirement
----------------
benefits under this Plan upon his retirement at Normal Retirement Date, Deferred
Retirement Date or Early Retirement Date.
(a) Normal Retirement Date: Each Participant shall be retired on his
----------------------
Normal Retirement Date which shall be the 1st day of the calendar month
following his 60th birthday.
(b) Deferred Retirement Date: Upon written request by the Company, agreed
------------------------
to by the Participant or upon application of the Participant approved in writing
by the Company, a Participant may remain in the active service of the Company
after his Normal Retirement Date for whatever period or periods as may be agreed
to from time to time by the Participant and the Company. The first day of the
calendar month following such Participant's termination of active service in the
Company shall constitute his Deferred Retirement Date.
7
<PAGE>
(c) Early Retirement Date: A Participant, by filing a written application
---------------------
with the Company at least sixty (60) days in advance, may retire prior to his
Normal Retirement Date provided that the date of such early retirement does not
precede his 55th birthday and further provided that at such date the Participant
has completed fifteen (15) years of Credited Service with the Company. The
first day of the calendar month following such early retirement shall be such
Participant's Early Retirement Date.
3.02 Normal Retirement Benefit: Each Participant who retires at his
-------------------------
Normal Retirement Date and has been a Participant in the Plan for 5 years on
his Normal Retirement Date shall be entitled to receive a retirement annuity
payable in monthly installments commencing on his Normal Retirement Date and
continuing for life in an amount equal to two and one-half percent (2-1/2%) of
the Participant's Average Monthly Compensation multiplied by his years of
Credited Service prior to retirement but not to exceed twenty (20) years.
3.03 Deferred Retirement Benefit: Each Participant who retires at a
---------------------------
Deferred Retirement Date and has been a Participant in the Plan for 5 years on
his Deferred Retirement Date shall be entitled to receive an annuity payable in
monthly installments commencing at his Deferred Retirement Date and continuing
for life in an amount determined as follows:
8
<PAGE>
(i) The purchase value of the Normal Retirement Benefit to which such
Participant would have been entitled, had he been retired at Normal Retirement
Date, shall be actuarially determined at such Normal Retirement Date.
(ii) The amount determined in (i) above shall be increased by an amount
equal to interest at the prime rate of interest in effect at the time of such
determination on such amount from Normal Retirement Date until the Deferred
Retirement Date.
(iii) The amount determined in (ii) above shall be actuarially applied to
provide an annuity for the Participant on the basis of his actual age at the
Deferred Retirement Date.
3.04 Early Retirement Benefit: Each Participant who retires on an Early
------------------------
Retirement Date and has been a participant in the Plan for 5 years on his Early
Retirement Date shall be entitled to receive a retirement annuity payable in
monthly installments commencing at his Normal Retirement Date, if then living,
and continuing for life in an amount equal to the benefit computed in accordance
with Section 3.02 above based upon his Credited Service to his Early Retirement
Date.
If such Participant does not live until the commencement of such annuity,
the Company shall pay benefits to his Provisional Payee or his Beneficiary if
such Participant has elected either of
9
<PAGE>
the options described in Section 4.02 hereof. If such Participant has not
elected either option or, if at the time of his death his Provisional Payee is
not then living, a benefit equal to the commuted value of the guaranteed
payments which would have been made under Option B of Section 4.02 shall be paid
in a lump sum to the Executor or Administrator of the estate of the Participant.
Upon application by a Participant who retires at an Early Retirement Date,
the Committee may consent to a commencement of his retirement annuity prior to
his Normal Retirement Date, provided, however, that the amount thereof shall be
his normal retirement benefit less the percentage thereof computed by
multiplying 4/12ths of 1% by the number of months elapsing from the date of
commencement of such annuity to his attainment of age 57. If the participant
has attained age 57 at the commencement of his retirement annuity, there shall
be no reduction applied to his normal retirement benefit. The determination to
pay retirement benefits at a date earlier than the Participant's Normal
Retirement Date shall be made by the Committee in a uniform and non-
discriminatory manner. The Committee shall not withhold consent to early
commencement of the retirement annuity in the following instances:
(a) When the Participant notifies the Company and the Committee of his
intention to retire and requests early
10
<PAGE>
commencement of the retirement annuity at least twenty-four months in advance of
the Participant's intended Early Retirement Date.
(b) When the Participant's Early Retirement is due to his total and
permanent disability.
3.05 Integration With Other Plans: The monthly installment of any benefit
----------------------------
otherwise payable pursuant to this Article III, or Article VI, shall be reduced
dollar-for-dollar by the monthly installment of any benefit payable to a
Participant for that month by the Salaried Plan. The failure of a Participant
who is scheduled to receive benefits pursuant to this Article III, or Article IV
prior to his sixty-fifth (65th) birthday to apply for a coincident commencement
of his benefits under the Salaried Plan shall cause the suspension of the
payment of benefits under the Plan until the month for which benefits under the
Salaried Plan are first paid.
In the event benefit payments under this Plan are suspended pursuant to the
previous paragraph:
(i) the monthly benefit payable to a Participant at such time as benefits
become payable shall be:
(A) calculated based upon the same number of years of Credited
Service used to determine such Participant's benefit
11
<PAGE>
on his Early Retirement Date (as provided in Section 3.04), Normal
Retirement Date (as provided in Section 3.02) or date his employment
terminated (as provided in 6.01) as the case may be;
(B) adjusted for commencement prior to age 57 (in accordance with
Section 3.04) or after age 60 (in accordance with Section 3.03) as if such
deferred payment date were the Participant's actual date of retirement or
termination of employment as the case may be;
(ii) if the Participant dies prior to the date his benefits commence his
death benefit shall be determined solely in accordance with this subparagraph;
the terms of Article V having no effect. The contingent annuitant or
beneficiary designated by such Participant shall be entitled to a monthly
benefit equal to the benefit which would have been payable to such annuitant or
beneficiary in accordance with subparagraph (i)(A) had such Participant retired
during the month prior to his death, and his benefit payments commenced during
that month under the form of annuity selected by such Participant. If such
Participant has made no designation of form of annuity and is survived by a
spouse, the Administrator shall make the payments to the surviving spouse under
the above assumptions as if the joint and survivor annuity provision set forth
in Section 8.02 of the Salaried Plan was in effect for the Participant and such
spouse. If no such election
12
<PAGE>
has been made and the Participant is not survived by any spouse, the
Administrator shall make payments to his designated beneficiaries as provided
under the above assumptions and as if the one hundred and twenty payment certain
annuity was in effect.
ARTICLE IV
----------
OPTIONAL FORM OF RETIREMENT BENEFITS
------------------------------------
4.01 Forms of Benefits: The standard and optional forms of benefits
-----------------
provided in Articles III and VI shall be identical to those provided in Article
VIII of the Salaried Plan.
4.02 Integration With Other Plans: Each Participant shall be deemed to
----------------------------
have elected the same form of benefit under this Plan as he has elected under
the Salaried Plan under Article VIII of such plan.
4.03 Method of Election: Election to have benefits payable under any of
------------------
the options described herein shall be made in writing on a form prescribed by
the Committee and delivered to the Committee. Such elections shall be made at
least ninety (90) days prior to the Participant's retirement date.
4.04 Binding Effect of Election: The election by a Participant of any of
--------------------------
the options hereunder shall be binding upon him and not subject to revocation
after the date as of which it
13
<PAGE>
must be filed pursuant to Section 4.03 above. Any such elections filed prior to
the time set forth in Section 4.03 above may be rescinded by the Participant
prior to such time.
4.05 Designation of Beneficiaries or Provisional Payee:
-------------------------------------------------
(a) Each Participant, in electing to retire under Option A hereunder shall
designate a Provisional Payee. The designation of a Provisional Payee may be
changed by the Participant at any time that the election of the option would be
revocable pursuant to Section 4.04 hereof. The death of a Provisional Payee
before the retirement of a Participant who has elected Option A shall
automatically effect a revocation of such election and such Participant's
retirement benefit shall be payable as if such election had not been made.
(b) Each Participant electing to retire under Option B shall designate in
writing a Beneficiary and Contingent Beneficiaries to receive the retirement
benefit payable under Option B in the event of the Participant's death after his
retirement but before he has received one hundred twenty (120) months of benefit
payments. Such Beneficiary designations may be changed by the Participant.
Original designation and changes shall be made in writing on a form approved by
the Committee for such purpose. In the event of the death of the Participant
and his Beneficiary or Beneficiaries before one hundred twenty (120) monthly
payments have been made,
14
<PAGE>
the commuted value of the balance of such payments shall be paid in a lump sum
to the Executor or Administrator of the estate of the Participant.
ARTICLE V
---------
DEATH BENEFITS AND DISABILITY INSURANCE
---------------------------------------
5.01 Provision for Death Benefit: Each Participant shall be entitled to a
---------------------------
death benefit, payable in the event of his death while a Participant in the Plan
and prior to his retirement date in the amount of the face death benefit of the
contract or contracts issued for such Participant at the date of his death.
Each Participant shall designate in writing a Beneficiary or Beneficiaries and
Contingent Beneficiaries to receive the death benefit payable under this Article
in the event of his death prior to retirement. Original designations and
changes shall be made in writing in a form approved by the Committee for such
purposes. In the event the Beneficiary or Beneficiaries does not survive the
Participant or does not survive the time of payments of the benefits, or if no
Beneficiary has been designated, the benefit to be paid hereunder shall be paid
to the Executor or Administrator of the estate of the Participant. The death
benefit provided hereunder shall be paid in one hundred twenty (120) equal
monthly installments commencing within ninety (90) days after the death of the
Participant. The Committee shall have the right in its discretion to accelerate
payment to any Beneficiary or
15
<PAGE>
Beneficiaries at any time the unpaid balance of the benefit is $10,000 or less.
5.02 Purchase of Life Insurance and Annuity Contract: The Company as part
-----------------------------------------------
of this Plan shall purchase contract or contracts on the life of each
Participant as follows:
(a) As to each Participant insurable at standard rates or rates up to 150%
mortality, the Company shall purchase an ordinary life policy having a face
death benefit equal to sixty (60) times the monthly retirement benefit to be
provided at Normal Retirement Date for the Participant.
(b) As to each Participant hereunder who is insurable only at sub-standard
premium rates (rates in excess of 150% mortality) or is uninsurable, the Company
shall purchase an annuity in an amount determined by payment of premiums
equivalent to premium charges under the ordinary life policy which would have
been purchased if such Participant had been insurable as a standard risk. Such
annuity shall provide a benefit in the event of death prior to his Normal
Retirement Date at least equal to the cash value of such annuity or the sum of
the premiums paid, whichever is greater.
The contracts shall provide for level annual premiums payable to Normal
Retirement Date. The contracts shall be agreements between the Company and the
insurer and the Company shall be
16
<PAGE>
designated as beneficiary under each of the contracts. In the event of the
retirement of the Participant or termination of his employment under
circumstances other than his total and permanent disability, the Company shall
have the option to discontinue the payment of premiums on such contracts and to
surrender the same or to continue to maintain such contracts in effect.
5.03 Adjustment of Contracts: The Company shall purchase contracts
-----------------------
required under this Plan and shall adjust the amount of the contracts maintained
in effect with respect to any Participant on or about July 1 of each year for
which the Plan is in effect. The Company shall purchase additional contracts or
cause decreases to be made with respect to contracts for existing Participants
because of salary adjustments which result in adjustments in the anticipated
monthly retirement benefit only if the increase or decrease in a Participant's
monthly retirement benefit is $100.00 or more. Upon a initial determination to
include an employee as a Participant in the Plan, contracts for such employee
shall be purchased by the Company within 90 days after such determination.
Additional contracts shall not be purchased to compensate for salary adjustments
occurring in or after the Plan Year in which the Participant reaches fifty (50)
years of age.
5.04 Waiver of Premium: To the extent practical under the policies of the
-----------------
insurer with whom the Company is acquiring
17
<PAGE>
contracts under this Plan, the contracts shall provide for waiver of premium
coverage in the event of disability of a Participant.
5.05 Total and Permanent Disability: In the event of total and permanent
------------------------------
disability of a Participant while an employee of the Company, the Company shall
endorse and transfer to such Participant the contract or contracts then in
effect on his life, and such employee shall cease to be a Participant in the
Plan. The benefit provided under this Section 5.05 shall be in addition to any
benefit which a Participant may become entitled to under Article III or Article
IV hereof.
5.06 Effect of Other Plans: The benefits provided in Article V shall be
---------------------
maintained in effect by the Company as part of this Plan, and the said benefits
in the event of death, or in the event of disability, are not to be considered
as set off or discharged in whole or in part by the provisions of the Company's
Salaried Employees Retirement Plan or any other life insurance or disability
plan maintained in effect by the Company with respect to the employees who are
Participants under this Plan.
ARTICLE VI
----------
TERMINATION OF EMPLOYMENT OR PARTICIPATION
------------------------------------------
6.01 Circumstances of Termination: In the event of a termination of a
----------------------------
Participant's employment otherwise than by death or
18
<PAGE>
retirement on the retirement dates herein provided or in the event of the
Company's elimination of a Participant from participation in this plan, the
Board shall determine whether such termination of employment or participation
was for cause as provided in Section 6.02 hereof.
If such termination was other than for cause then the Participant shall be
entitled to a retirement benefit commencing with the first day of the calendar
month after which he attains age fifty-five (55) or the first day of the
calendar month in which he terminates his employment participation, whichever is
later, in an amount equal to the early retirement benefit to which he would be
entitled under this Plan, provided, however, that in determining such benefit
his Credited Service shall be measured to the date of his termination of
employment or his termination of participation, as the case may be. Until such
time as he attains such age he shall be considered a Participant for purposes of
Article VI.
If such termination was for cause, the Participant will obtain no benefits
under this Plan.
6.02 Events Constituting Cause: Termination of employment shall be deemed
-------------------------
to be for cause within the meaning of this Plan if effected under the following
circumstances:
19
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(a) A voluntary resignation by a Participant prior to his reaching fifty-
two (52) years of age.
(b) A voluntary resignation by a Participant after he has reached fifty-
two (52) years of age if at the time of such resignation he has not completed
fifteen (15) years of continuous service with the Company.
(c) Discharge of the Participant by the Company prior to the Participant
completing fifteen (15) years of continuous service with the Company.
(d) Discharge of the Participant by the Company after the Participant's
completing fifteen (15) years of continuous service with the Company if such
discharge is due to:
(i) The Participant being convicted of a felony or misdemeanor
detrimental to or affecting the Company's interest, or
(ii) The Participant taking a position in any capacity with a
competitor of the Company or engaging or participating as owner, partner,
limited partner, backer, officer, director, agent, consultant, employee or
in any other capacity in any business competitive in any degree with the
business of the Company, or
20
<PAGE>
(iii) The Participant's divulging any manufacturing or trade secrets
of the Company, or
(iv) The Participant causing or attempting to cause employees of the
Company to terminate their employment with the Company, or
(v) Gross neglect on the part of the Participant in attending to his
duties, or
(vi) Malfeasance on the part of the Participant in attending to his
duties, or
(vii) The Participant engaging in activities which substantially and
adversely affect the Company's interest.
A termination of participation shall be deemed to be for cause if such
termination is by reason of circumstances set forth in subparagraph (d) above.
6.03 Determination by Board: All determinations as to existence of cause
----------------------
pursuant to Section 6.02 hereof and all determinations as to any issue relevant
under such Section shall be made by the Board. The Board shall not make any
such determination without giving notice of its intent to so act to the
Participant and advising the Participant of the date and time for a hearing on
21
<PAGE>
such matter. The Board shall hold such hearing at the time and date specified
at which the Participant may attend, and shall have the right to have counsel
attend in his behalf, and at such hearing the Participant or his counsel may
submit evidence on behalf of the Participant. The Board shall apply Section
6.02 to all Participants in a non-discriminatory manner. The determination by
the Board shall be final and conclusive upon the Company and the Participant.
ARTICLE VII
-----------
DISCONTINUANCE OF BENEFITS FOR IMPROPER CONDUCT
-----------------------------------------------
7.01 Causes for Discontinuance: The payment of benefits to a Participant
-------------------------
who has otherwise met the requirements for a retirement benefit under this Plan
shall be subject to the further condition that the Participant has not and will
not engage in improper conduct as said term is hereinafter defined.
Improper conduct within the meaning of this provision shall be any of the
following:
(i) The Participant being convicted of a felony or misdemeanor detrimental
to or affecting the Company's interest, or
(ii) The Participant taking a position in any capacity with a competitor of
the Company or engaging or participating as owner,
22
<PAGE>
partner, limited partner, backer, officer, director, agent, consultant, employee
or in any other capacity in the business competitive in any degree with the
business of the Company, or
(iii) The Participant's divulging any manufacturing or
trade secrets of the Company, or
(iv) The Participant engaging in activities which substantially and
adversely affect the Company's interest, or
(v) The Participant causing or attempting to cause employees of the
Company to terminate their employment with the Company.
7.02 Determination by the Board: All determination as to existence of
--------------------------
cause pursuant to Section 7.01 hereof and all determinations as to any issue
relevant under such Section shall be made by the Board. The Board shall not
make any such determination without giving notice of its intent to so act to the
Participant and advising the Participant of the date and time for a hearing on
such matter. The Board shall hold such hearing at the time and date specified
at which the Participant may attend and shall have the right to have counsel
attend in his behalf, and at such hearing the Participant or his counsel may
submit evidence on behalf of the Participant. The Board shall apply Section
7.01 to all Participants in a non-discriminatory manner. The determination by
23
<PAGE>
the Board shall be final and conclusive upon the Company and the Participant.
ARTICLE VIII
------------
FUNDING
-------
8.01 Debt Obligation: The obligation of the Company to pay the benefits
---------------
herein provided for shall be a contract debt obligation between the Company and
Participant or his beneficiary. The Company shall not be required to maintain
any trust or sinking fund or segregation of assets with respect to its
obligations under this Plan.
8.02 Election to Create Trust Fund: In the event the Company desires to
-----------------------------
provide a separate fund with respect to its obligation under the Plan, it shall
establish such a fund with a trustee or trustees, it being provided that such
fund shall be created only for the purpose of collateral security for the
Company's obligation hereunder and no payments to such fund shall be deemed
payment to the Participant or his beneficiary hereunder.
8.03 Actuarial Liability: The Company shall, during the continuation of
-------------------
this Plan, secure from its actuarial advisor, an estimate of the costs of this
Plan including amortization of the
24
<PAGE>
past service liability hereunder, and the Company shall accrue such cost and
resulting liability on its books and records.
ARTICLE IX
----------
COMMITTEE
---------
9.01 Appointment of Committee: The Board shall appoint a Committee to act
------------------------
hereunder which shall consist of three members who shall serve at the pleasure
of the Board. The members of the Committee shall be individuals and may, but
need not be, directors or officers of the Company. The members of the Committee
shall serve without compensation for acting as such. The Committee may appoint
a secretary who may, but need not be, one of its own members.
9.02 Construction of Plan: The Committee may construe this Plan. It may
--------------------
correct any defect or supply any omission or reconcile any inconsistency in such
manner and to such extent as it shall deem expedient to carry the same into
effect. Any decision of the Committee with respect to the construction of this
Plan, the correction of any defects, the supplying of any omission or
reconciling any inconsistency in the Plan shall be subject to review and
approval by the Board whose decision shall be final and conclusive.
25
<PAGE>
9.03 Rules and Regulations: The Committee shall provide rules and
---------------------
regulations not inconsistent with the terms and provisions hereof for the
administration of the Plan and from time to time may amend or supplement such
rules and regulations. The rules and regulations enacted by the Committee shall
be subject to review by the Board and shall become effective upon the approval
thereof by the Board.
9.04 Supervision of Administration: The Committee shall supervise and
-----------------------------
control the operation of the Plan in accordance with the terms hereof and shall
have the powers necessary to accomplish that purpose.
9.05 Appointment of Agent or Counsel: The Committee may appoint agents
-------------------------------
and may employ legal counsel who may, but need not be, counsel for the
Company. The Company shall pay all expenses authorized and incurred by the
Committee in the administration of the Plan.
9.06 Action by Meeting or Consent: The Committee shall act by majority
----------------------------
vote of its members at a meeting or in writing without a meeting. The Committee
may authorize each or any one of its members or its secretary to perform routine
acts and to sign documents in its behalf. No member, however, shall vote or act
upon or sign any documents relating to his own participation.
26
<PAGE>
9.07 Non-Liability for Acts of Others: The Committee shall be liable
--------------------------------
only for its own willful misconduct. No members of the Committee shall be
liable for the acts or omissions of any other member.
9.08 Resignations and Appointments: Any member of the Committee may
-----------------------------
resign by giving written notice addressed to the chief executive officer of
the Company. Vacancies shall be filled by the Board but interim appointment
may be made by the chief executive officer of the Company.
ARTICLE X
---------
RIGHT OF THE COMPANY TO ALTER, AMEND OR TERMINATE
-------------------------------------------------
10.01 Amendments to Plan: The Company expressly reserves the right at any
------------------
time and from time to time by action of the Board to alter or amend this Plan in
whole or in part, (excepting, however, this Section and provisions relating to
liability continuation in Section 10.02 below) by delivering to the Committee an
instrument in writing executed by the Company stating any such alteration or
amendment; and provided, however, that no such alteration or amendment shall
reduce the interest of any Participant to deprive him of the benefit which would
be paid such Participant under Section 6.01 hereof had his employment been
terminated for reasons not constituting cause at the time of such amendment.
27
<PAGE>
10.02 Termination of Plan: The Company reserves the right by action of
-------------------
the Board to terminate this Plan by delivering to the Committee an instrument in
writing executed by the Company stating such termination. Notwithstanding any
such termination, the Company shall continue to be liable under the provisions
of this Plan to the following extent:
(a) To maintain and continue to pay benefits to Participants in this Plan
and their beneficiaries who had retired prior to the date of such termination.
(b) To pay benefits to Participants in the Plan who at the time of
termination thereof are eligible for retirement either on Normal Retirement Date
or Early Retirement Date as provided under the terms of this plan.
(c) To pay benefits to Participants in the Plan who are not eligible for
retirement on the date of termination of the Plan in the manner and to the
extent benefits would have been paid to such Participants under Section 6.01
hereof, had their employment with the Company been terminated for reasons not
constituting cause as of the date of termination of the Plan. Such retirement
benefits shall be paid commencing on the first day of the calendar month after
such Participant reaches fifty-five (55) years of age or on the first day of the
calendar month after the termination of the Plan, whichever is the later.
28
<PAGE>
ARTICLE XI
----------
MISCELLANEOUS
-------------
11.01 Plan not an Employment Agreement: This Plan shall not be
--------------------------------
deemed to constitute a contract between the Company and any Employee or to be a
consideration for, or a condition of, the employment of any Employee. Nothing
contained in this Plan shall be deemed to give any Employee the right to be
retained in the service of the Company or to interfere with the right of the
Company to discharge or retire any employee at any time. Participation under
the Plan will not give any Employee any right or claim to a retirement benefit,
except upon reaching a retirement date, and no Employee or Provisional Payee or
Beneficiary shall be entitled to any right or claim to any retirement benefit,
except to the extent such right is specifically fixed under the terms of the
Plan.
11.02 Plan not Tax Qualified: The Company does not intend that this
----------------------
Plan constitute a qualified plan for the payment of employment benefits pursuant
to Section 401(a) of the Internal Revenue Code. The Company intends that
payments made under this Plan be deductible by it in the year in which amounts
attributable to such contributions are includable in the gross income of
employees participating in the Plan as provided in Section 401(a)(5) of the
Internal Revenue Code.
29
<PAGE>
11.03 Disability or Incompetency of Payee: If the Committee
-----------------------------------
determines that any person entitled to payments under the Plan is incompetent or
is unable to care for his affairs by reason of physical or mental disability, it
may cause all payments thereafter becoming due to such person to be made to any
other person for his benefit, without responsibility to follow the application
of amounts so paid. Payments made pursuant to this provision shall completely
discharge the Company and the Committee with respect thereto.
11.04 Restriction on Transferability of Benefits: No distribution or
------------------------------------------
payment under the Plan to any Participant or his Beneficiary under the Plan
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, whether voluntary or involuntary, and
no attempt so to anticipate, alienate, sell, transfer, pledge, encumber or
charge the same shall be valid or recognized by the Company, nor shall any such
distribution or payment be in any way liable for or subject to the debts,
contracts, liabilities, engagement, or torts of any person entitled to such
distribution or payment except to such extent as may be required by law. If any
such person shall attempt to, or anticipate, alienate, sell, transfer, pledge,
encumber or charge his benefits under the Plan or any part thereof, or if by
reason of his bankruptcy or other event happening at any such time, such
benefits would devolve upon anyone else or would not be enjoyed by him, then the
Committee in its
30
<PAGE>
discretion may terminate his interest in any such benefit and hold or apply it
to or for the benefit of such person, his spouse, children, or other dependents,
or any of them in such manner as the Committee may deem proper.
11.05 Absence of Payee: If the Committee is unable within three (3)
----------------
years after the date on which any benefit becomes payable to make or direct
payment of such benefit to the person entitled thereto because the identity or
whereabouts of such person cannot be ascertained, notwithstanding the mailing of
due notice to such person at his last known address as shown by the records of
either the Committee or the Company, then such benefit and any other benefits of
such person shall be forfeited and all liabilities of the Company therefor shall
thereupon terminate.
11.06 Effect of Titles: The titles of Articles of this Plan and the
----------------
outline thereof are descriptive only, and are not to be construed as part of the
Plan.
11.07 Payments as Satisfaction: Any payment or distribution to any
------------------------
Participant, or his legal representative or beneficiary, in accordance with this
Plan shall be in full satisfaction of all claims against the Committee and the
Company.
31
<PAGE>
11.08 Construction of Gender and Number: Whenever any words are used
---------------------------------
herein in the masculine, they shall be construed as though they were used in the
feminine in all cases where they would so apply and whenever any words herein
are used herein in the singular or in the plural, they shall be construed as
though they were used in the plural, or the singular as the case may be, in all
cases where they would so apply.
11.09 Connecticut Law to Apply: This Plan and every provision
------------------------
thereof shall be construed and its validity determined according to the laws of
the State of Connecticut.
11.10 Effect on Successors and Assigns: This Plan shall be binding
--------------------------------
upon the inure to the benefit of the Company and its successors and assigns, the
Trustees and their heirs, legal representatives, beneficiaries and assigns.
IN WITNESS WHEREOF, the Company has caused these presents to be signed
by its duly authorized officers and its corporate seal to be hereunto affixed,
effective as of the day and year first above written.
ATTEST: BIC CORPORATION
By: /s/ Alex Alexiades By: /s/ Bruno Bich
------------------------ -------------------------
Its President
32
<PAGE>
EXHIBIT 21
SUBSIDIARIES
- ------------
Set forth below are the names of BIC Corporation's subsidiaries as of March 1,
1994.
Name Place of Incorporation
---- ----------------------
BIC Sport U.S.A. Inc. Connecticut
BIC Inc. Canada
Industrial de Cuautitlan, S.A. de C.V. Mexico
No Sabe Fallar, S.A. de C.V. Mexico
BIC de Guatemala S.A. Guatemala
BIC Puerto Rico Inc. Puerto Rico
Xenia Insurance Company Ltd. Bermuda
Wite-Out Products, Inc. Delaware
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
- -----------------------------
We consent to the incorporation by reference in Post-Effective Amendment No. 1
to Registration Statement No. 2-83363 and in Registration Statements No. 33-
57738 and No. 33-22204 of BIC Corporation on Form S-8 of our report dated
January 28, 1994, appearing in this Annual Report on Form 10-K of BIC
Corporation for the year ended January 2, 1994.
/s/ Deloitte & Touche
Deloitte & Touche
New Haven, Connecticut
March 21, 1994
