<PAGE> 1
As filed with the Securities and Exchange Commission on July 3, 1996
Registration No. 333-2649
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EKCO GROUP, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 3460 11-2167167
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
98 SPIT BROOK ROAD
NASHUA, NEW HAMPSHIRE 03062
(603) 888-1212
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
----------------
JEFFREY A. WEINSTEIN, ESQ.
EXECUTIVE VICE PRESIDENT
EKCO GROUP, INC.
98 SPIT BROOK ROAD
NASHUA, NEW HAMPSHIRE 03062
(603) 888-1212
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
LEWIS J. GEFFEN, ESQ.
MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.
ONE FINANCIAL CENTER
BOSTON, MASSACHUSETTS 02111
(617) 542-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO
THE PUBLIC: As soon as practicable after the effective
date of this Registration Statement.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box: / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
EKCO GROUP, INC.
CROSS REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS OF
INFORMATION REQUIRED BY ITEMS ON FORM S-1 REGISTRATION STATEMENT
<TABLE>
<CAPTION>
Form S-1 Number and Heading Location or Caption in Prospectus
--------------------------- ---------------------------------
<S> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus....................... Cover Page of the Registration Statement; Cross Reference
Sheet; and Outside Front Cover Page of the Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus........................................... Inside Front and Outside Back Cover Pages of Prospectus
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges......................... Prospectus Summary; The Company; Risk Factors; and
Selected Historical Financial Data
4. Use of Proceeds........................................ Use of Proceeds
5. Determination of Offering Price........................ Not Applicable
6. Dilution............................................... Not Applicable
7. Selling Security Holders............................... Not Applicable
8. Plan of Distribution................................... Outside Front Cover Page of Prospectus; Prospectus
Summary; The Exchange Offer; Description of the Senior
Notes; and Plan of Distribution
9. Description of Securities to be Registered............. Outside Front Cover Page of Prospectus; Prospectus
Summary; Description of the Senior Notes; and Certain
Federal Income Tax Considerations
10. Interest of Named Experts and Counsel.................. Legal Matters
11. Information with Respect to the Registrant............. Cover Page of the Registration Statement; Prospectus
Summary; Risk Factors; The Company; Use of Proceeds;
Capitalization; Selected Historical Financial Data;
Management's Discussion and Analysis of Financial
Condition and Results of Operations; Business;
Management; Security Ownership of Certain Beneficial
Owners and Management; Description of Senior Notes;
Certain Relationships and Related Transactions;
Description of Certain Indebtedness; and Financial
Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.......................................... Not Applicable
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 3, 1996
Prospectus
LOGO $125,000,000
EKCO GROUP, INC.
Offer to Exchange up to $125,000,000 of its
9 1/4% Series B Senior Notes due 2006
for any and all of its outstanding
9 1/4% Senior Notes due 2006
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
AUGUST 7, 1996, UNLESS EXTENDED.
Ekco Group, Inc. ("Ekco" and, together with its subsidiaries, the
"Company") hereby offers, upon the terms and subject to the conditions set forth
in this Prospectus and accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange $1,000 face amount of 9 1/4%
Series B Senior Notes due 2006 (the "New Senior Notes") of the Company for each
$1,000 face amount of the issued and outstanding 9 1/4% Senior Notes due 2006
(the "Old Senior Notes" and, together with the New Senior Notes, the "Senior
Notes") of the Company from the holders (the "Holders") thereof. As of the date
of this Prospectus, there was $125,000,000 aggregate face amount of the Old
Senior Notes outstanding. The terms of the New Senior Notes are identical in all
material respects to the Old Senior Notes, except that the New Senior Notes have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), and, therefore, will not bear legends restricting their transfer and will
not contain certain provisions relating to an increase in the interest rate
which were included in the Old Senior Notes under certain circumstances relating
to the timing of the Exchange Offer.
The New Senior Notes will be senior unsecured obligations of Ekco and
will rank pari passu in right of payment with all of Ekco's existing and future
Senior Indebtedness (as defined) and senior in right of payment to all of Ekco's
existing and future Subordinated Indebtedness (as defined). Ekco is a holding
company and has no material assets or operations other than its investment in
its subsidiaries. The New Senior Notes will be fully and unconditionally
guaranteed on a joint and several basis (the "Guarantees") by substantially all
of Ekco's existing and future domestic subsidiaries (collectively, the
"Guarantors"). The Guarantees will be senior unsecured obligations of the
Guarantors and will rank pari passu in right of payment with all existing and
future Senior Indebtedness of the Guarantors and senior in right of payment to
all existing and future Subordinated Indebtedness of the Guarantors. The
Company's $75 million Revolving Credit Facility (as defined) is secured by
substantially all of the assets of the Company and is guaranteed by the
Guarantors. At March 31, 1996, the Company had no indebtedness outstanding
under the Revolving Credit Facility. However, any indebtedness which may be
incurred by the Company under the Revolving Credit Facility will in effect be
senior to the Senior Notes. See "Description of Senior Notes -- General" and
"Risk Factors -- Holding Company Structure; Ranking; Effective Subordination
of the Senior Notes." At March 31, 1996, the Company's only outstanding
indebtedness was its $124.1 million of Old Senior Notes, and therefore there was
no Subordinated Indebtedness outstanding. The Company is subject to certain
restrictions on the amount of additional indebtedness it may incur. See
"Description of Senior Notes -- Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock" and "Description of Certain
Indebtedness -- Revolving Credit Facility"
(continued on next page)
SEE "RISK FACTORS" FOR A DESCRIPTION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR OLD SENIOR NOTES IN THE EXCHANGE
OFFER.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is ________, 1996
<PAGE> 4
(continued from previous page)
The New Senior Notes are being offered hereunder in order to satisfy
certain obligations of the Company contained in the Registration Rights
Agreement (as defined). Based on interpretations by the staff of the Securities
and Exchange Commission (the "Commission") set forth in no-action letters issued
to third parties, the Company believes that the New Senior Notes issued pursuant
to the Exchange Offer in exchange for Old Senior Notes may be offered for
resale, resold and otherwise transferred by any Holder thereof (other than any
such Holder which is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act), without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Senior Notes are acquired in the ordinary course of such Holder's business and
such Holder has no arrangement with any person to participate in the
distribution of such New Senior Notes. Each Holder will be required to
acknowledge in the Letter of Transmittal that it is not engaging in, and does
not intend to engage in, a distribution of the New Senior Notes. Notwithstanding
the foregoing, each broker-dealer that receives New Senior Notes for its own
account pursuant to the Exchange Offer will also be required to acknowledge in
the Letter of Transmittal that (i) Old Senior Notes tendered by it in the
Exchange Offer were acquired in the ordinary course of its business as a result
of market-making or other trading activities and (ii) it will deliver a
prospectus in connection with any resale of New Senior Notes received in the
Exchange Offer. The Letter of Transmittal will also state that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by such broker-dealer in connection with any resale of the New Senior Notes
received in exchange for Old Senior Notes where such Old Senior Notes were
acquired by such broker-dealer as a result of market-making or other trading
activities (other than Old Senior Notes acquired directly from the Company). The
Company has agreed that, for a period of 180 days after the Expiration Date (as
defined), it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution." Based on the
above-mentioned interpretations by the staff of the Commission, the Company
believes that broker-dealers who acquired the Old Senior Notes directly from the
Company and not as a result of market-marking activities or other trading
activities cannot rely on such interpretations by the staff of the Commission
and must, in the absence of an exemption, comply with the registration and
prospectus delivery requirements of the Securities Act in connection with
secondary resales of the New Senior Notes. Such broker-dealers may not use this
Prospectus, as it may be amended or supplemented from time to time, in
connection with any resales of the New Senior Notes.
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the costs incident to the Exchange Offer (which shall not
include the costs of any Holder in connection with resales of New Senior Notes).
Tenders of Old Senior Notes pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Date. The Company can, under certain
circumstances, file a shelf registration statement with respect to the Old
Senior Notes. See "The Exchange Offer."
Prior to the Exchange Offer, there has been no public market for the
Old Senior Notes. The Old Senior Notes are eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") Market.
There can be no assurance as to the development or liquidity of any public
market for the New Senior Notes.
- 2 -
<PAGE> 5
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-1 (the "Exchange Offer Registration Statement") under the Securities Act
with respect to the New Senior Notes being offered by this Prospectus. This
Prospectus does not contain all of the information set forth in the Exchange
Offer Registration Statement and the exhibits and schedules thereto, certain
portions of which have been omitted pursuant to the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document are not necessarily complete. With respect
to each such contract, agreement or other document filed or incorporated by
reference as an exhibit to the Exchange Offer Registration Statement, reference
is made to such exhibit for a more complete description of the matter involved,
and each such statement is qualified in its entirety by such reference.
Ekco is currently subject to the periodic reporting and other
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith is required to file reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at its offices at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and at Northwestern Atrium Center, 500 West Madison Street, 14th Floor,
Chicago, Illinois 60661. Copies of such materials can be obtained by mail from
the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
The common stock, par value $.01 per share of Ekco (the "Common
Stock"), is listed on the New York Stock Exchange (the "NYSE") under the symbol
"EKO" and reports, proxy statements and other information concerning the Company
may also be inspected at the NYSE.
- 3 -
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety and should be read
in conjunction with the more detailed information and financial statements,
including the notes thereto, included elsewhere in this Prospectus. As used in
this Prospectus, unless the context requires otherwise, "Ekco" refers to Ekco
Group, Inc. and "Company" refers to Ekco and its subsidiaries. References to
"fiscal years" refer to the Company's fiscal years ended on the Sunday closest
to December 31 of the referenced year.
THE COMPANY
The Company is a leading U.S. manufacturer and marketer of multiple
categories of branded houseware products for everyday home use. The Company
believes it is the leading U.S. supplier of metal bakeware, kitchen tools and
gadgets and non-toxic pest control products. In addition, the Company believes
it is a leading U.S. supplier of plastic storage products (including crates,
containers, baskets and office organizers), cleaning products (primarily
brushes, brooms and mops) and small animal care and control products. The
Ekco(R) brand ranked eighth in a recent survey of the 300 most widely recognized
brand names in home furnishings. The Company markets its products primarily in
the U.S. through substantially all distribution channels that sell houseware
products for everyday home use, including mass merchandisers, supermarkets, and
hardware, drug and specialty stores. The Company has a significant presence
among mass merchandisers, selling to each of the 30 largest discount department
store chains, and in supermarkets where it occupies space in over 90% of the
approximately 38,000 U.S. supermarkets.
The Company's sales have increased in each of the last five years as a
result of internal growth and acquisitions. The Company's net revenues increased
from $166.7 million in Fiscal 1991 to $278.0 million in Fiscal 1995, a compound
annual growth rate of 13.6%. The Company's EBITDA (as defined) increased from
$31.0 million in Fiscal 1991 to $50.1 million in Fiscal 1995, a compound annual
growth rate of 12.7%. The following table summarizes the Company's principal
product lines, brand names and net revenues by product category for Fiscal 1995
(in millions):
<TABLE>
<CAPTION>
FISCAL 1995
NET
PRODUCT CATEGORY PRINCIPAL PRODUCT LINES PRINCIPAL BRAND NAMES REVENUES
---------------- ----------------------- --------------------- --------
<S> <C> <C> <C>
Bakeware Non-stick and uncoated cookie Ekco(R), Baker's Secret(R) $ 81.3
sheets, muffin tins, brownie
pans and loaf pans
Kitchenware Tools including spoons, spatulas, Ekco(R), Ekco Pro(TM) 73.0
serving forks, ladles and specialty
cooking accessories Gadgets
including peelers, corkscrews,
whisks and can and bottle openers
Cleaning products Brushes, brooms and mops Ekco(R), Wright-Bernet(TM) 55.2
Pest control and Spring action rodent traps, glue-based Victor(R), Havahart(R) 34.0
small animal care rodent and insect traps and live animal
and control traps
products
Molded plastic Crates, bins, baskets, organizers, carts Ekco(R) 31.0
products and caddies for storage, laundry and the
office
VIA! Upscale bakeware, kitchen tools and VIA!(TM) 3.5
gadgets, and tea kettles
$278.0
======
</TABLE>
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<PAGE> 7
THE EKCO INTEGRATION
Since the fourth quarter of Fiscal 1993, Ekco has taken a series of
actions to position the Company for long-term growth (the "Ekco Integration").
The Ekco Integration included (i) the combination of four of the Company's
principal business units into a single operating division and (ii) the
introduction of a new branding strategy to capitalize on the strength of the
Ekco(R) brand name.
The Ekco Integration combined the management and operations of the
Company's bakeware, kitchenware, cleaning products and molded plastic products
businesses, which sell through common channels of distribution and accounted for
over 75% of the Company's net revenues in Fiscal 1995. The newly created single
organization combines and coordinates the sales, marketing, manufacturing,
distribution, administrative and financial activities for the four product
categories. The Company also consolidated a large portion of the distribution of
bakeware and kitchenware products as well as certain cleaning products into its
new distribution facility in Bolingbrook, Illinois from four separate
warehousing and distribution locations. These steps have improved customer
service, created more effective sales and marketing programs, reduced costs and
resulted in distribution efficiencies. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and Notes to the Consolidated
Financial Statements included elsewhere in this Prospectus.
As part of the Ekco Integration, in January 1996 the Company introduced
its new branding strategy in which the Ekco(R) brand name is used to market most
of the products in these four categories. The new strategy enables the Company
to capitalize on the strength of the Ekco(R) brand name by improving the brand
identification of these products by consumers and increasing promotional
opportunities for retailers. In addition, management believes that the new
branding strategy enhances the effectiveness of the Company's newly combined
sales and marketing effort by facilitating cross-marketing of the Company's
products to retail customers under Ekco(R), one of the strongest brand names in
the housewares industry.
COMPETITIVE STRENGTHS
The Company believes its competitive strengths include:
- LEADING MARKET POSITIONS. More than 50% of the Company's sales are
from metal bakeware and kitchen tools and gadgets, categories in
which the Company believes it is the industry leader. The Company
has achieved primary vendor status with many of its retail
customers in certain product categories, including bakeware,
kitchenware, cleaning products and non-toxic pest control products.
- WIDELY RECOGNIZED BRAND NAMES. In 1995, the Ekco(R) brand ranked
eighth in Home Furnishing News' survey of the 300 most widely
recognized brand names in home furnishings. Ekco(R) and the
Company's other brand names, including Baker's Secret(R) bakeware,
Wright-Bernet(TM) cleaning products, Victor(R) pest control
products and Havahart(R) small animal care and control products,
are recognized by consumers and retailers for quality, value,
design and functionality.
- BROAD MARKET PENETRATION. Management believes that the Company has
one of the broadest distribution networks of any company in the
housewares industry. The Company has a significant presence in mass
merchandisers (including Wal-Mart, Kmart and Target) and
supermarkets (including Winn-Dixie, Kroger and Albertson's).
- MULTIPLE CATEGORY SUPPLIER. The Company serves as a single source
for a wide range of products at a variety of price points in
several categories, enabling the Company to be a more efficient and
attractive vendor to the retail industry, which is consolidating
its supply base.
- EFFICIENT DISTRIBUTION SYSTEM. The Company's distribution
facilities and processes enable the Company to effectively pick,
pack and deliver customer orders from its inventory, resulting in
greater on-time deliveries, higher order fill rates, optimal use of
full-truckload shipments and short purchase order lead times.
- CUSTOMER SERVICE. The Company offers retailers an integrated
program of productivity enhancing services which are designed to
reduce their operating costs and working capital and to increase
their sales volume of the Company's products.
- 5 -
<PAGE> 8
BUSINESS STRATEGY
The Company's business strategy has four primary components: (i)
leverage Ekco's brand names, (ii) focus on customer sales and service, (iii)
increase market and customer penetration and (iv) pursue growth through
acquisitions.
- LEVERAGE EKCO'S BRAND NAMES: The Company intends to leverage the
Ekco(R) brand name to (i) further increase brand recognition and
reputation among both retailers and consumers, (ii) expand sales
through cross-marketing of the Company's product lines to existing
customers and (iii) become the sole or primary vendor to existing
and future customers across multiple product categories. As part of
the Ekco Integration, in January 1996 the Company introduced its
new branding strategy in which the Ekco(R) brand name is used to
market most of the Company's bakeware, kitchenware, cleaning
products and molded plastic products. The Company continues to
promote its Baker's Secret(R), Wright-Bernet(TM), Victor(R) and
Havahart(R) brand names and to enhance them with the
Ekco(R)signature.
- FOCUS ON CUSTOMER SALES AND SERVICE: The Ekco Integration has
enabled the Company to shift the focus of its sales and marketing
strategy from individual product categories to the broader needs of
each of its customers. Each of the Company's customers now has one
Ekco sales person responsible for selling and marketing most of the
Company's products. The combined marketing staff now coordinates
most of the Company's market research, advertising and other
marketing related functions. This coordination augments the
Company's efforts to leverage the Ekco(R) brand name, to increase
market and customer penetration and to provide superior service to
its customers.
- INCREASE MARKET AND CUSTOMER PENETRATION: The Company strives to
expand its retail space at existing customers and to gain new
customers by (i) offering differentiated product lines, (ii)
developing new and proprietary products, (iii) cross-marketing
existing product lines to existing customers who do not currently
purchase such product lines and (iv) cross-merchandising
combinations of products from different product categories with a
uniform Ekco(R) message. The Company offers products which are
differentiated by price, quality, value, color, design, packaging
and functionality. The Company strives to be a full-line supplier
and to be the first to market with new product introductions to
increase sales of each of its product lines.
- PURSUE GROWTH THROUGH ACQUISITIONS: The Company's growth has been
enhanced by acquisitions. The Company's acquisition strategy is
focused on long life-cycle consumer products related to the
Company's current product portfolio which can benefit from (i)
integration into the Company's existing manufacturing, warehousing
and distribution systems, (ii) if appropriate, inclusion under the
Ekco(R) brand name and (iii) the Company's broad distribution
network. Management believes that there are and will continue to be
opportunities to acquire additional consumer product lines and
businesses due to, among other things, the large number of consumer
product companies and the increased pressure on such companies from
retailers to provide greater and more costly levels of service and
support.
The Company's principal executive offices are located at 98 Spit Brook
Road, Nashua, New Hampshire 03062 and its telephone number is (603) 888-1212.
THE EXCHANGE OFFER
Registration Rights Agreement.............. The Old Senior Notes were sold by
the Company on March 25, 1996, to
Bear, Stearns & Co. Inc. and
Smith Barney Inc. (the "Initial
Purchasers"), who placed the Old
Senior Notes with institutional
investors. In connection
therewith, the Company and the
Guarantors executed and delivered
for the benefit of the Holders of
the Old Senior Notes a
registration rights agreement
(the "Registration Rights
Agreement") providing, among
other things, for the Exchange
Offer.
- 6 -
<PAGE> 9
The Exchange Offer......................... New Senior Notes are being
offered in exchange for a like
face amount of Old Senior Notes.
As of the date hereof,
$125,000,000 aggregate face
amount of Old Senior Notes are
outstanding. The Company will
issue the New Senior Notes to
Holders promptly following the
Expiration Date. See "Risk
Factors - Consequences of Failure
to Exchange."
Expiration Date............................ 5:00 p.m., New York City time, on
August 7, 1996, unless the
Exchange Offer is extended, in
which case the term "Expiration
Date" means the latest date and
time to which the Exchange Offer
is extended.
Accrued Interest on the New Senior Notes
and the Old Senior Notes................. Each New Senior Note will bear
interest from its issuance date.
Holders of Old Senior Notes that
are accepted for exchange will
receive, in cash, accrued
interest thereon to, but not
including, the issuance date of
the New Senior Notes. Such
interest will be paid with the
first interest payment on the New
Senior Notes. Interest on the Old
Senior Notes accepted for
exchange will cease to accrue
upon issuance of the New Senior
Notes.
Conditions to the Exchange Offer........... The Exchange Offer is subject to
certain customary conditions,
which may be waived by the
Company. See "The Exchange
Offer - Conditions."
Procedures for Tendering Old Senior
Notes.................................... Each Holder of Old Senior Notes
wishing to accept the Exchange
Offer must complete, sign and
date the Letter of Transmittal,
or a facsimile thereof, in
accordance with the instructions
contained herein and therein, and
mail or otherwise deliver such
Letter of Transmittal, or such
facsimile, together with the Old
Senior Notes and any other
required documentation to the
exchange agent (the "Exchange
Agent") at the address set forth
herein. By executing the Letter
of Transmittal, each Holder will
represent to the Company, among
other things, that (i) the New
Senior Notes acquired pursuant to
the Exchange Offer by the Holder
and any beneficial owners of Old
Senior Notes are being obtained
in the ordinary course of
business of the person receiving
such New Senior Notes, (ii)
neither the Holder nor such
beneficial owner is participating
in, intends to participate in or
has an arrangement or
understanding with any person to
participate in the distribution
of such New Senior Notes and
(iii) neither the Holder nor such
beneficial owner is an
"affiliate," as defined under
Rule 405 of the Securities Act,
of the Company. Each
broker-dealer that receives New
Senior Notes for its own account
in exchange for Old Senior Notes,
where such Old Senior Notes were
acquired by such broker or dealer
as a result of market-making
activities or other trading
activities (other than Old Senior
Notes acquired directly from the
Company), may participate in the
Exchange Offer but may be deemed
an "underwriter" under the
Securities Act and, therefore,
must acknowledge in the Letter of
Transmittal that it will deliver
a prospectus in connection with
any resale of such New Senior
Notes. The Letter of Transmittal
states that by so acknowledging
and by delivering a prospectus, a
broker or dealer will not be
deemed to admit that it is an
"underwriter" within the meaning
of the Securities Act. See "The
Exchange Offer - Procedures for
Tendering" and "Plan of
Description."
- 7 -
<PAGE> 10
Special Procedures for
Beneficial Owners........................ Any beneficial owner whose Old
Senior Notes are registered in
the name of a broker, dealer,
commercial bank, trust company or
other nominee and who wishes to
tender should contact such
registered Holder promptly and
instruct such registered Holder
to tender on such beneficial
owner's behalf. If such
beneficial owner wishes to tender
on such owner's own behalf, such
owner must, prior to completing
and executing the Letter of
Transmittal and delivering its
Old Senior Notes, either make
appropriate arrangements to
register ownership of the Old
Senior Notes in such owner's name
or obtain a properly completed
bond power from the registered
Holder. The transfer of
registered ownership may take
considerable time. See "The
Exchange Offer - Procedures for
Tendering."
Guaranteed Delivery Procedures............. Holders of Old Senior Notes who
wish to tender their Old Senior
Notes and whose Old Senior Notes
are not immediately available or
who cannot deliver their Old
Senior Notes, the Letter of
Transmittal or any other
documents required by the Letter
of Transmittal to the Exchange
Agent prior to the Expiration
Date must tender their Old Senior
Notes according to the guaranteed
delivery procedures set forth in
"The Exchange Offer - Guaranteed
Delivery Procedures."
Withdrawal Rights.......................... Tenders may be withdrawn at any
time prior to 5:00 p.m., New York
City time, on the Expiration
Date. See "The Exchange Offer -
Withdrawal of Tenders."
Acceptance of Old Senior Notes and
Delivery of New Senior Notes............. The Company will accept for
exchange any and all Old Senior
Notes which are properly tendered
in the Exchange Offer prior to
5:00 p.m., New York City time, on
the Expiration Date. The New
Senior Notes issued pursuant to
the Exchange Offer will be
delivered promptly following the
Expiration Date. See "The
Exchange Offer - Terms of the
Exchange Offer."
Exchange Agent............................. Fleet National Bank is serving as
Exchange Agent in connection with
the Exchange Offer. See "The
Exchange Offer - Exchange Agent."
SUMMARY DESCRIPTION OF THE NEW SENIOR NOTES
The Exchange Offer applies to $125,000,000 aggregate face amount of Old
Senior Notes. The terms of the New Senior Notes are identical in all material
respects to the Old Senior Notes, except that the New Senior Notes have been
registered under the Securities Act and, therefore, will not bear legends
restricting their transfer and will not contain certain provisions providing for
an increase in the interest rate on the Old Senior Notes under certain
circumstances relating to the timing of the Exchange Offer, which rights will
terminate when the Exchange Offer is consummated. The New Senior Notes will
evidence the same debt as the Old Senior Notes and will be entitled to the
benefits of the Indenture, under which both the Old Senior Notes were, and the
New Senior Notes will be, issued. See "Description of the Notes."
The New Senior Notes....................... $125,000,000 principal amount of
9 1/4% New Senior Notes due 2006.
Maturity Date.............................. April 1, 2006.
Interest Payment Dates..................... April 1 and October 1, commencing
October 1, 1996.
Guarantees................................. The New Senior Notes will be
fully and unconditionally
guaranteed, jointly and
severally, on a senior unsecured
basis by substantially all of
Ekco's existing and future
domestic
- 8 -
<PAGE> 11
subsidiaries (collectively, the
"Guarantors"). See "Description
of Senior Notes--General."
Ranking.................................... The New Senior Notes will be
senior unsecured obligations of
Ekco and will rank pari passu in
right of payment with all
existing and future Senior
Indebtedness of Ekco and senior
in right of payment to all
existing and future Subordinated
Indebtedness of Ekco. The
Guarantees will be senior
unsecured obligations of the
Guarantors and will rank pari
passu in right of payment with
all existing and future Senior
Indebtedness of the Guarantors
and senior in right of payment to
all existing and future
Subordinated Indebtedness of the
Guarantors. The indebtedness
under the Revolving Credit
Facility is secured by
substantially all of the assets
of the Company. As a result, the
Senior Notes will effectively be
subordinated to the Revolving
Credit Facility. At March 31,
1996 the Company's only
outstanding indebtedness was its
$124.1 million of Senior Notes.
The Company had no outstanding
Subordinated Indebtedness or
indebtedness under the Revolving
Credit Facility as of such date.
Mandatory Redemption....................... None.
Optional Redemption........................ The New Senior Notes will be
redeemable for cash at the option
of Ekco, in whole or in part, on
or after April 1, 2001, at the
redemption prices set forth
herein, together with accrued and
unpaid interest and Liquidated
Damages, if any, to the
redemption date. See "Description
of Senior Notes-- Redemption."
Change of Control.......................... Upon the occurrence of a Change
of Control, each holder of New
Senior Notes will have the option
to require Ekco to repurchase
such holder's New Senior Notes,
in whole or in part, at a
purchase price equal to 101% of
the principal amount thereof,
plus accrued and unpaid interest,
to the date of repurchase. Ekco's
ability to repurchase the New
Senior Notes following a Change
of Control will be dependent upon
it having sufficient cash
therefor and the terms of its
then outstanding Senior
Indebtedness, including the
Revolving Credit Facility. See
"Description of Senior
Notes--Certain
Covenants--Repurchase of Senior
Notes at the Option of the Holder
Upon a Change of Control."
Certain Covenants.......................... The indenture under which the New
Senior Notes will be issued (the
"Indenture") contains certain
restrictive covenants that, among
other things, limit the ability
of Ekco and its Subsidiaries to
incur additional Indebtedness (as
defined) and issue preferred
stock, create liens, pay
dividends, repurchase capital
stock and make certain other
Restricted Payments (as defined),
sell assets, engage in
transactions with affiliates,
enter into sale and leaseback
transactions, conduct unrelated
lines of business and consummate
mergers or consolidations. The
term "Subsidiaries" is defined in
the Indenture to exclude
"Unrestricted Subsidiaries." See
"Description of Senior Notes-
-Certain Covenants."
- 9 -
<PAGE> 12
Use of Proceeds............................ The Exchange Offer is intended to
satisfy certain of Ekco and the
Guarantors' obligations under the
Registration Rights Agreement.
Ekco will not receive any cash
proceeds from the issuance of the
New Senior Notes in the Exchange
Offer. The net proceeds from the
issuance of the Old Senior Notes
were used by the Company to (i)
repurchase all of the outstanding
12.70% Senior Subordinated Notes
due 1998 (the "12.70% Notes") of
Ekco Housewares, Inc., (ii)
repurchase its outstanding 7.0%
Subordinated Convertible Note due
2002 (the "7.0% Note") and (iii)
repay amounts outstanding under
the Revolving Credit Facility.
See "Use of Proceeds."
RISK FACTORS
See "Risk Factors", for a discussion of certain risk factors that
should be considered by Holders prior to tendering their Old Senior Notes in the
Exchange Offer.
- 10 -
<PAGE> 13
SUMMARY CONSOLIDATED FINANCIAL DATA
<TABLE>
Set forth below are summary consolidated historical and pro forma financial data of the Company. The summary
financial data for each of the fiscal years in the period ended December 31, 1995 have been derived from the audited
Consolidated Financial Statements of the Company. The summary financial data for the quarters ended April 2, 1995 and
March 31, 1996 are derived from the unaudited Consolidated Condensed Financial Statements of the Company. The data
presented below are qualified by, and should be read in conjunction with, the Consolidated Financial Statements of the
Company and related notes thereto, "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this Prospectus.
<CAPTION>
THREE MONTHS ENDED
FISCAL ---------------------------------
------------------------------------------------------------------ MARCH 31,
1995 PRO APRIL 2, MARCH 31, 1996 PRO
1991 1992(a) 1993(b) 1994 1995 FORMA(c) 1995 1996 FORMA(c)
-------- -------- -------- -------- -------- -------- -------- --------- -----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of
Operations Data:
Net revenues......... $166,717 $206,628 $246,428 $267,048 $277,995 $277,995 $ 58,732 $ 56,961 $ 56,961
Gross profit......... 67,587 77,543 85,079 91,597 86,652 86,652 18,007 15,872 15,872
Operating profit..... 21,597 27,405 30,043(d) 33,726 29,432 29,432 3,613 1,404 1,404
Net interest
expense............ 9,594 10,680 12,206 12,491 13,493 13,158(e) 3,358 2,936 2,998(e)
Income (loss) before
income taxes and
extraordinary
charge............. 12,003 16,725 17,837(d) 21,235 15,939 16,274 255 (1,532) (1,594)
Income (loss) before
extraordinary
charge and
cumulative effect
of accounting
changes............ 5,894 8,647 8,859(d)(f) 11,423 8,045 8,250 134 (799) (830)
Other Data:
EBITDA(g)............ $ 31,008 $ 39,627 $ 46,753(d) $ 52,261 $ 50,062 $ 50,062 $ 8,850 $ 6,588 6,588
Depreciation and
amortization....... 9,411 12,222 16,710 18,535 20,630 20,630 5,237 5,184 5,184
Capital
expenditures....... 7,946 12,649 15,111 11,106 12,652 12,652 3,009 2,099 2,099
Prepaid marketing
expenditures....... 0 411 5,490 4,127 4,877 4,877 1,045 600 600
Ratio of EBITDA to
interest
expense(g)......... 2.97x 3.54x 3.67x(d) 4.08x 3.68x 3.78x(e) 2.58x 2.18x 2.13x(e)
Ratio of earnings to
fixed charges(h)... 2.11 2.44 2.33(d) 2.56 2.08 2.13 (e) 1.07 .54 .53(e)
Balance Sheet Data:
Working capital...... $ 19,635 $ 38,566 $ 25,769 $ 60,509 $ 44,675 $ 67,753 (i)(j) $ 3,358 $ 2,936 $ 2,936
Total assets......... 211,484 255,081 307,961 317,783 304,375 308,449 (i)(j) 310,333 305,537 305,537
Long-term
obligations, less
current portion.... 71,644 93,264 111,982 124,580 96,700 124,121 (i) 120,181 124,122 124,122
Stockholders'
equity(k).......... 86,841 110,567 116,864 129,116 135,925 133,138 (j) 129,111 132,091 132,091
<FN>
(a) Includes operations of the molded plastic products business acquired by the Company on January 8, 1992.
(b) Includes operations of the cleaning products business acquired by the Company on April 1, 1993.
(c) Pro forma to give effect to the issuance of the Senior Notes for purposes of the Statement of Operations Data and Other
Data as if the issuance had occurred on January 2, 1995 for 1995 Pro Forma and January 1, 1996 for March 31, 1996 Pro
Forma and for purposes of the Balance Sheet Data as if the issuance had occurred at December 31, 1995.
(d) Before giving effect to an $11.0 million restructuring/reorganization and excess facilities charge ($6.6 million after
income taxes) recorded in the fourth quarter of Fiscal 1993 as part of the Ekco Integration.
(e) Adjusted to give effect to: (i) the impact on interest expense resulting from (a) the issuance of the Senior Notes at an
interest rate of 9 1/4%, (b) the repurchase of the 12.70% Notes for $66.5 million (including an estimated $6.5 million
make-whole premium) and the 7.0% Note for $18.8 million, and (c) the repayment of $35.2 million in borrowings under the
Revolving Credit Facility; and (ii) a $0.4 million charge for the amortization of $4.3 million in estimated costs
associated with the issuance of the Old Senior Notes (including issuance at 99.291% of face value) and the Revolving
Credit Facility over the ten year term of the Senior Notes.
(f) During Fiscal 1993, the Company recorded a charge of $3.2 million (net of income taxes of $2.0 million) to reflect the
cumulative effect of changes in method of accounting for post-retirement and post-employment benefits.
</TABLE>
- 11 -
<PAGE> 14
(g) EBITDA is defined as earnings from operations before interest, taxes,
depreciation and amortization. EBITDA is presented here to provide
additional information about the Company's ability to meet its future debt
service, capital expenditure and working capital requirements. EBITDA is
not a measure of financial performance under generally accepted accounting
principles ("GAAP") and should not be considered as an alternative either
to net income as an indicator of the Company's operating performance, or to
cash flows as a measure of the Company's liquidity.
(h) Ratio of earnings to fixed charges is calculated as earnings from
continuing operations before income taxes and cumulative effects of changes
in accounting principles, adjusted to add back fixed charges and divided by
fixed charges. Fixed charges consist of interest expense, capitalized
interest and that portion of rental expense deemed to be representative of
interest expense.
(i) Adjusted to reflect the issuance of $125.0 million aggregate principal
amount of Old Senior Notes at an issue price of 99.291% and related debt
issuance costs of $3.4 million attributable to the Old Senior Notes and the
Revolving Credit Facility.
(j) Adjusted by $2.8 million to reflect the extraordinary net loss on early
extinguishment of debt and the associated write-off of deferred financing
costs.
(k) The Company declared dividends aggregating $.08 per share on its Common
Stock and its Series B ESOP Convertible Preferred Stock, par value $.01 per
share (the "ESOP Preferred Stock"), in Fiscal 1995.
- 12 -
<PAGE> 15
RISK FACTORS
In addition to the other information set forth in this Prospectus,
prospective purchasers should consider carefully the information set forth below
before making a decision to tender their Old Senior Notes in the Exchange Offer.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Senior Notes who do not exchange their Old Senior Notes
for New Senior Notes pursuant to the Exchange Offer will continue to be subject
to the restrictions on transfer of such Old Senior Notes as set forth in the
legend thereon as a consequence of the issuance of the Old Senior Notes pursuant
to exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Old Senior Notes may not be offered or sold, unless registered
under the Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
laws. The Company does not currently anticipate that it will register the Old
Senior Notes under the Securities Act. Based on interpretations by the staff of
the Commission set forth in no-action letters issued to third parties, the
Company believes that the New Senior Notes issued pursuant to the Exchange Offer
in exchange for Old Senior Notes may be offered for resale, resold or otherwise
transferred by any Holder thereof (other than any such Holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act provided that such New Senior Notes are acquired in the
ordinary course of such Holder's business and such Holder has no arrangement
with any person to participate in the distribution of such New Senior Notes.
Notwithstanding the foregoing, each broker-dealer that receives New Senior Notes
for its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Senior Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with any resale of New Senior Notes received in exchange for Old
Senior Notes where such Old Senior Notes were acquired by such broker-dealer as
a result of market-making activities or other trading activities (other than Old
Senior Notes acquired directly from the Company). The Company has agreed that,
for a period of 180 days from the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution." However, the ability of any Holder to resell the New
Senior Notes is subject to applicable state securities laws as described in
"Blue Sky Restrictions on Resale of New Senior Notes" below.
COMPLIANCE WITH EXCHANGE OFFER PROCEDURES
To participate in the Exchange Offer and avoid the restrictions on
transfer of the Old Senior Notes, Holders of Old Senior Notes must transmit a
properly completed Letter of Transmittal, including all other documents required
by such Letter of Transmittal, to the Exchange Agent at one of the addresses set
forth below under "Exchange Agent" on or prior to the Expiration Date. In
addition, either (i) certificates for such Old Senior Notes must be received by
the Exchange Agent along with the Letter of Transmittal or (ii) a timely
confirmation of a book-entry transfer of such Old Senior Notes, if such
procedure is available, into the Exchange Agent's account at The Depository
Trust Company pursuant to the procedure for book-entry transfer described
herein, must be received by the Exchange Agent prior to the Expiration Date, or
(iii) the Holder must comply with the guaranteed delivery procedures described
herein. See "The Exchange Offer."
- 13 -
<PAGE> 16
BLUE SKY RESTRICTIONS ON RESALE OF NEW SENIOR NOTES
In order to comply with the securities laws of certain jurisdictions,
the New Senior Notes may not be offered or resold by any Holder unless they have
been registered or qualified for sale in such jurisdictions or an exemption from
registration or qualification is available and the requirements of such
exemption have been satisfied. The Company does not currently intend to register
or qualify the resale of the New Senior Notes in any such jurisdictions.
However, an exemption is generally available for sales to registered
broker-dealers and certain institutional buyers. Other exemptions under
applicable state securities laws may also be available.
LEVERAGE
At March 31, 1996, the Company's total Senior Indebtedness was
approximately $124.1 million. Subject to compliance with various financial and
other covenants imposed by Ekco's $75 million Revolving Credit Facility and
the Indenture, the Company may incur additional indebtedness from time to
time. The Company's degree of leverage will have important consequences to
holders of the Senior Notes. In particular, (i) the ability of the Company to
obtain additional financing in the future for working capital, acquisitions,
capital expenditures, repayment of debt or other purposes may be impaired;
(ii) a substantial portion of the Company's anticipated cash flow from
operations will be required for the payment of interest and principal on the
Company's indebtedness; and (iii) the Company may be placed at a competitive
disadvantage and made more vulnerable to downturns in general economic
conditions or in its business.
To date, the Company has been able to generate sufficient cash flow
from operations, borrowings and refinancings to meet interest and principal
payments on its indebtedness. Its ability to continue to do so will depend
largely on the Company's future performance and its level of indebtedness from
time to time. Many factors, some of which will be beyond the Company's control,
may affect its performance. Consequently, there can be no assurance that the
Company will in the future be able to generate sufficient cash flow from
operations to cover the interest and principal payments on its indebtedness,
including the Senior Notes, or be able to refinance maturing indebtedness.
Although the Senior Notes will bear interest at a fixed rate, the Revolving
Credit Facility bears, and future indebtedness may bear, interest at rates that
fluctuate with prevailing interest rates.
RESTRICTIONS IMPOSED BY CERTAIN INDEBTEDNESS
The Revolving Credit Facility and the Indenture contain numerous
restrictive covenants which, among other things, restrict the ability of the
Company to dispose of assets, incur or repay debt, pay dividends, make capital
expenditures, engage in sale and leaseback transactions and make certain
investments or acquisitions and which otherwise restrict corporate activities.
In addition, pursuant to the Revolving Credit Facility, the Company is required
to meet and maintain specified financial ratios. The ability of the Company to
comply with such provisions will depend on its future performance, which will be
subject to then prevailing economic, financial and business conditions and to
other factors beyond the Company's control. The failure of the Company to comply
with such provisions could result in a default or an event of default under the
Revolving Credit Facility. From time to time, the Company has entered into
amendments waiving compliance with or revising certain covenants contained in
the Revolving Credit Facility or predecessor revolving credit facilities. The
Company may be required to seek additional amendments in the future under the
Revolving Credit Facility. Although the Company anticipates that it would be
able to obtain such amendments, there can be no assurance that the Company will
be able to do so. See "Description of Certain Indebtedness--Revolving Credit
Facility."
- 14 -
<PAGE> 17
HOLDING COMPANY STRUCTURE; RANKING; EFFECTIVE SUBORDINATION OF THE SENIOR NOTES
Ekco has no business operations other than those incidental to the
ownership of its subsidiaries and depends on the earnings and cash flows of, and
distributions from, such subsidiaries to pay its obligations, including payments
of principal and interest on the Senior Notes. The ability of Ekco's
subsidiaries to make such distributions will be subject to, among other things,
applicable state law. The Company's obligations under the Revolving Credit
Facility are secured by a pledge of the capital stock of the Guarantors and by
substantially all of the Guarantors' assets. While the holders of the Senior
Notes will have a direct claim against the Guarantors pursuant to the
Guarantees, the Guarantees are unsecured obligations. As a result, the Senior
Notes will effectively be subordinated to the Revolving Credit Facility. In the
event of the bankruptcy, liquidation, reorganization or other dissolution of the
Company, there may not be sufficient assets remaining to satisfy the holders of
the Senior Notes after satisfying the claims of any holders of secured
indebtedness, such as the Revolving Credit Facility. The enforceability of the
Guarantees may be limited as described in "--Enforceability of Guarantees; Fair
Value Consideration."
ENFORCEABILITY OF GUARANTEES; FAIR VALUE CONSIDERATION
Under federal or state fraudulent transfer laws, the Guarantees could
be subject to the claim that, since the Guarantees were incurred for the benefit
of Ekco, and only indirectly for the benefit of the Guarantors, the obligations
of the Guarantors thereunder were incurred for less than reasonably equivalent
value or fair consideration. If a court in a lawsuit by any unpaid creditors or
representative of creditors of a Guarantor, such as a trustee in bankruptcy,
were to conclude that at the time the Guarantees were incurred, such Guarantor
(i) incurred the Guarantee with the intent to hinder, delay or defraud any
present or future creditor, or (ii) did not receive reasonably equivalent value
in exchange for issuing the Guarantee, and either (a) was insolvent, (b) was
rendered insolvent by the transaction, (c) was engaged or was about to engage in
a business transaction for which its remaining assets constituted unreasonably
small capital to carry on its business or (d) intended to incur, or believed
that it would incur, debts beyond its ability to pay as they matured, the court
could void any such Guarantee. To the extent the Guarantee of any Guarantor is
voided or is held unenforceable for any reason, holders of the Senior Notes will
cease to have any claim against such Guarantor and will be creditors solely of
Ekco and of any Guarantor whose Guarantee was not voided or held unenforceable.
In such event, there can be no assurance that, after providing for all claims,
there will be sufficient assets of Ekco and of any Guarantor whose Guarantee was
not voided or held unenforceable to satisfy the claims of the holders of the
Senior Notes relating to any voided Guarantee.
RETAIL INDUSTRY; ECONOMIC CONDITIONS
The Company sells its products through retailers, including mass
merchandisers, supermarkets, hardware stores, drug stores, specialty stores and
other retail channels. Retail sales depend, in part, on general economic
conditions. A significant decline in such conditions could have a negative
impact on sales by retailers of products sold by the Company and consequently
could have an adverse effect on the Company's sales, profitability and cash
flows. Retail environments which are poor or perceived to be poor, whether due
to economic or other conditions, may lead houseware manufacturers and marketers,
including the Company, to increase their discounting and promotional activities.
The Company may also not be able to fully offset the impact of inflation
through price increases due to the unfavorable retail environment. Such
activities could have an adverse effect on the Company's profit margins, as
was the case in Fiscal 1995. Management believes that the weak retail
environment experienced during the second half of Fiscal 1995 and the first
quarter of Fiscal 1996 is continuing in the second quarter of Fiscal 1996. As a
result, the Company's sales and profitability for the second quarter of Fiscal
1996 are expected to be lower than the Company's sales and profitability for
the second quarter of Fiscal 1995.
- 15 -
<PAGE> 18
CUSTOMER CONCENTRATION
Sales to Wal-Mart and Kmart represented 13.4% and 9.0%, respectively,
of the Company's Fiscal 1995 net revenues. No other customer represented more
than 5% of the Company's Fiscal 1995 net revenues. Although the Company believes
that its relationships with Wal-Mart, Kmart and other large customers are good,
it does not have long-term purchase agreements or other contractual assurances
as to future sales to these customers. If any of such customers substantially
reduces its level of purchases from the Company, the Company's financial
performance could be adversely affected. Moreover, continued consolidation
within the retail industry may result in an increasingly concentrated customer
base. To the extent such consolidation continues to occur, the Company's
revenues and profitability may be increasingly sensitive to a significant
deterioration in the financial condition of or other adverse developments in its
relationships with one or more customers. From time to time, the Company has
experienced credit losses due to customers seeking protection under bankruptcy
or similar laws. Although such credit losses have not had a material adverse
effect on the Company to date, there can be no assurance that future losses will
not have a material adverse effect on the Company.
FLUCTUATIONS IN RAW MATERIAL COSTS
The primary raw materials used by the Company are subject to price
fluctuations which may adversely affect profitability. The Company's molded
plastic products and components of its kitchenware and brush products are
manufactured from plastic resin, which is produced from petrochemical
intermediates. Plastic resin prices may fluctuate as a result of changes in
natural gas and crude oil prices and the capacity, supply and demand for resin
and the petrochemical intermediates from which it is produced. For example, the
average price of plastic resin in Fiscal 1995 was significantly greater than in
Fiscal 1994. Costs of other raw materials, notably wood (used in manufacturing
certain of the Company's kitchenware and pest control products), tin-plated
steel (used in manufacturing the Company's bakeware products) and corrugated
boxes and packaging (used in the display and distribution of the Company's
products) are also subject to market fluctuations. The Company purchases its raw
materials primarily on the spot market and does not maintain long-term contracts
with suppliers. To the extent the Company is unable to pass on increases in the
cost of its raw materials to its customers, such increases may have a
detrimental impact on the profitability of the Company, as they did in Fiscal
1995.
COMPETITION
The Company competes with established companies, several of which have
substantially greater resources than those of the Company. There are no
substantial regulatory or other barriers to entry of new competitors into the
housewares industry. However, a supplier that is able to maintain, or increase,
the amount of retail space allocated to its product may gain a competitive
advantage in that product market. The Company believes that the allocation of
space by retailers is influenced by many factors, including brand name
recognition by consumers and the quality and price of the supplier's products,
the level of service provided by the supplier and the supplier's ability to
support promotions.
The Company believes that its ability to compete successfully is based
on the wide recognition of its own brand names, its multiple category product
offerings, its ability to design, develop, acquire, manufacture and market
competitively priced products, its broad product coverage within most product
categories, its attention to retailer and consumer needs and its access to major
channels of distribution. There can be no assurance that the Company will be
able to compete successfully against current and future sources of competition
or that the current and future competitive pressures faced by the Company will
not adversely affect its profitability or financial performance.
- 16 -
<PAGE> 19
SEASONALITY
The Company's business is seasonal in nature. The Company's revenues
and net earnings have historically been concentrated in the second half of its
fiscal year. Any material adverse conditions occurring during such period may
disproportionately negatively affect the Company's sales, profitability and cash
flow. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations-- Overview--Seasonality."
ENVIRONMENTAL COMPLIANCE AND ASSOCIATED COSTS
The Company is subject to a broad range of federal, state and local
environmental requirements, including those governing effluent discharges into
the air and water, the handling and disposal of solid and/or hazardous wastes
and, potentially, the remediation of contamination associated with releases of
hazardous substances. The Company has spent substantial amounts to comply with
these requirements and expects to continue to do so in the future.
From time to time, the Company has had claims asserted against it by
regulatory agencies or private parties for environmental matters relating to the
generation or handling of hazardous substances by the Company or its
predecessors and has incurred obligations for investigations or remedial actions
with respect to certain such matters. While the Company does not believe that
any such claims asserted or obligations incurred to date will result in a
material adverse effect upon the Company's financial position, the Company is
aware that hazardous substances or oil have been detected and that additional
investigations will be, and remedial actions will or may be, required at its
past and present facilities in Massillon and Hamilton, Ohio; Easthampton,
Massachusetts; Chicago, Illinois; Hudson, New Hampshire; and Lititz,
Pennsylvania. Operations at these and other facilities currently or previously
owned or leased by the Company utilize, or in the past have utilized, hazardous
substances. There can be no assurance that activities at these or future
facilities may not result in additional environmental claims being asserted
against the Company or additional investigations or remedial actions being
required. In addition, there can be no assurance that environmental requirements
will not change in the future or that the Company will not incur significant
costs in the future to comply with such requirements. See
"Business--Environmental Regulation and Claims."
REPURCHASE OF THE SENIOR NOTES UPON A CHANGE OF CONTROL
Upon a Change of Control, Ekco will be required to offer to repurchase
the Senior Notes then outstanding at a purchase price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of repurchase.
There can be no assurance that Ekco will have adequate funds to
repurchase the Senior Notes in the event of a Change of Control. The failure of
Ekco following a Change of Control to make or consummate an offer to repurchase
the Senior Notes would constitute an Event of Default under the Indenture. In
such an event, the Trustee or the holders of at least 25% in aggregate principal
amount of the outstanding Senior Notes may accelerate the maturity of all of the
Senior Notes. A Change of Control will include any transaction which results in
any person beneficially owning or controlling more than 50% of the voting stock
of Ekco. See "Description of Senior Notes--Certain Covenants--Repurchase of
Senior Notes at the Option of the Holder Upon a Change of Control."
The occurrence of the events constituting a Change of Control with
respect to the Senior Notes would result in an event of default under the
Revolving Credit Facility and would give the lenders thereunder the right to
require payment in full of the borrowings thereunder. In addition, under the
Revolving Credit Facility, a change in control which would give the lenders a
right to require the payment of the outstanding borrowings
- 17 -
<PAGE> 20
thereunder in full would occur if any person were to own more than 35% of the
outstanding voting stock of Ekco. Accordingly, a change in control under the
Revolving Credit Facility may not constitute a Change of Control under the
Senior Notes. See "Description of Certain Indebtedness--Revolving Credit
Facility."
ABSENCE OF PUBLIC MARKET AND TRANSFER RESTRICTIONS
The Old Senior Notes are eligible for trading in the Private Offerings,
Resale and Trading through Automated Linkages ("PORTAL") Market by Qualified
Institutional Buyers ("QIBs"). The New Senior Notes will be new securities for
which there currently is no market. There can be no assurance as to the
liquidity of any markets that may develop for the New Senior Notes, the ability
of holders of the New Senior Notes to sell their New Senior Notes, or the price
at which Holders would be able to sell their New Senior Notes. Future trading
prices of the New Senior Notes will depend on many factors, including, among
other things, prevailing interest rates, the Company's operating results and the
market for similar securities. Each of the Initial Purchasers has advised the
Company that it currently intends to make a market in the New Senior Notes.
However, the Initial Purchasers are not obligated to do so and any market making
may be discontinued at any time without notice. Therefore, there can be no
assurance that any active market for the New Senior Notes will develop. The
Company does not intend to apply for listing of the New Senior Notes on any
securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System.
ORIGINAL ISSUE DISCOUNT CONSEQUENCES
The Old Senior Notes were issued at a discount from their principal
amount and the New Senior Notes will be treated as a continuation of the Old
Senior Notes for federal income tax purposes. Consequently, holders of New
Senior Notes generally will be required to include amounts in gross income for
federal income tax purposes in advance of receipt of the cash payments to which
the income is attributable. For a more detailed discussion of the federal income
tax consequences to the holders of the Old Senior Notes of the acquisition,
ownership and disposition of the New Senior Notes, see "Certain Federal Income
Tax Considerations." See "The Exchange Offer-Accounting Treatment" for
information regarding the accounting treatment of the Exchange Offer.
If a bankruptcy case is commenced by or against the Company under the
United States Bankruptcy Code (the "Bankruptcy Code") after the issuance of the
Notes, the claim of a holder of any of the Notes with respect to the principal
amount thereof may be limited to an amount equal to the sum of (i) the initial
offering price allocable to the Notes and (ii) that portion of the original
issue discount which is not deemed to constitute "unmatured interest" for
purposes of the Bankruptcy Code. Any original issue discount that was not
amortized as of any such bankruptcy filing would constitute "unmatured
interest."
THE EXCHANGE OFFER
The Old Senior Notes were sold by the Company on March 25, 1996 (the
"Issue Date") to the Initial Purchasers, who placed the Old Senior Notes with
institutional investors. Ekco, the Guarantors and the Initial Purchasers entered
into the Registration Rights Agreement. Pursuant to the Registration Rights
Agreement, Ekco and the Guarantors agreed to file with the Commission a
Registration Statement on Form S-1 or Form S-4, if the use of such form is then
available (the "Exchange Offer Registration Statement"), relating to a
registered exchange offer (the "Exchange Offer") for the New Senior Notes under
the Securities Act. As soon as practicable after the effectiveness of the
Exchange Offer Registration Statement, Ekco will offer to the Holders of
Transfer Restricted Securities (as defined below) who are not prohibited by any
law or policy
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of the Commission from participating in the Exchange Offer the opportunity to
exchange their Transfer Restricted Securities for the New Senior Notes,
identical in all material respects to the Old Senior Notes, that would be
registered under the Securities Act. In the event that applicable
interpretations of the staff of the Commission do not permit Ekco to effect the
Exchange Offer or do not permit any Holder of the Old Senior Notes, subject to
certain limitations, to participate in the Exchange Offer, Ekco and the
Guarantors will file with the Commission a shelf registration statement (the
"Shelf Registration Statement") to cover resales of Transfer Restricted
Securities by such Holders who satisfy certain conditions relating to the
provision of information in connection with the Shelf Registration Statement.
For purposes of the foregoing, "Transfer Restricted Securities" means each Old
Senior Note until the earliest to occur of (i) the date on which such Old Senior
Note has been exchanged for a New Senior Note in the Exchange Offer, (ii) the
date on which such Old Senior Note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (iii) the date on which such Old Senior Note is distributed to the
public pursuant to Rule 144 under the Securities Act or is salable pursuant to
Rule 144(k) under the Securities Act.
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that New Senior
Notes issued pursuant to the Exchange Offer in exchange for Old Senior Notes may
be offered for resale, resold and otherwise transferred by any holder of such
New Senior Notes (other than any such holder which is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Senior Notes are acquired in the ordinary
course of such holder's business and such holder has no arrangement or
understanding with any person to participate in the distribution of such New
Senior Notes. Each Holder will be required to acknowledge in the Letter of
Transmittal that it is not engaged in, and does not intend to engage in, a
distribution of the New Senior Notes. Any Holder who tenders in the Exchange
Offer for the purpose of participating in a distribution of the New Senior Notes
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction.
Each broker-dealer that receives New Senior Notes for its own account
pursuant to the Exchange Offer will also be required to acknowledge that (i) Old
Senior Notes tendered by it in the Exchange Offer were acquired in the ordinary
course of its business as a result of market-making or other trading activities
and (ii) it will deliver a prospectus in connection with any resale of New
Senior Notes received in the Exchange Offer. The Letter of Transmittal will also
state that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Senior Notes received in exchange for Old Senior Notes where such Old Senior
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities (other than Old Senior Notes acquired
directly from the Company). The Company and the Guarantors have agreed that, for
a period of 180 days after the Expiration Date, they will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution." Notwithstanding the foregoing, based on the
above-mentioned interpretations by the staff of the Commission, the Company
believes that broker-dealers who acquired the Old Senior Notes directly from the
Company and not as a result of market-making activities or other trading
activities cannot rely on such interpretations by the staff of the Commission
and must, in the absence of an exemption, comply with the registration and
prospectus delivery requirements of the Securities Act in connection with
secondary resales of the New Senior Notes. Such broker-dealers may not use this
Prospectus, as it may be amended or supplemented from time to time, in
connection with any such resales of the New Senior Notes.
The Registration Rights Agreement provides that (i) Ekco and the
Guarantors will file an Exchange Offer Registration Statement with the
Commission on or prior to 30 days after the Issue Date, (ii) Ekco and the
Guarantors will use their best efforts to have the Exchange Offer Registration
Statement declared effective by the Commission on or prior to 120 days after the
Issue Date, (iii) unless the Exchange Offer would not be permitted by applicable
law or Commission policy, Ekco and the Guarantors will commence the Exchange
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<PAGE> 22
Offer and use their best efforts to consummate the Exchange Offer on or prior to
45 days after the date on which the Exchange Offer Registration Statement was
declared effective by the Commission but in no event later than 150 days after
the Issue Date and (iv) if obligated to file the Shelf Registration Statement,
Ekco and the Guarantors will use their best efforts to file the Shelf
Registration Statement with the Commission on or prior to 30 days after such
filing obligation arises and cause the Shelf Registration Statement to be
declared effective by the Commission on or prior to 120 days after such
obligation arises. If applicable, Ekco and the Guarantors will use their best
efforts to keep the Shelf Registration Statement effective for a period of three
years after the Issue Date.
If (a) Ekco and the Guarantors fail to file any of the Registration
Statements on or prior to the date specified for such filing, (b) any of such
Registration Statements is not declared effective by the Commission on or prior
to the date specified for such effectiveness, (c) Ekco and the Guarantors fail
to consummate the Exchange Offer on or prior to the date specified for such
consummation or (d) the Shelf Registration Statement is filed and declared
effective but shall thereafter cease to be effective (at any time that Ekco is
obligated to maintain the effectiveness thereof) (each such event referred to in
clauses (a) through (d), a "Registration Default"), Ekco will be required to pay
liquidated damages ("Liquidated Damages") to each Holder of Transfer Restricted
Securities, during the first 90-day period of any portion thereof immediately
following the occurrence of such Registration Default, in an amount equal to
one-half of one percent (0.5%) per annum of the principal amount of the Old
Senior Notes constituting Transfer Restricted Securities held by such Holder,
increasing by an additional one-half of one percent (0.5%) per annum of the
principal amount of Old Senior Notes constituting Transfer Restricted Securities
for each subsequent 90-day period or any portion thereof, up to a maximum amount
of Liquidated Damages equal to two percent (2.0%) per annum of the principal
amount of such Old Senior Notes, which provision for Liquidated Damages will
continue until such Registration Default has been cured. All accrued Liquidated
Damages shall be paid to Holders in the same manner as interest payments on the
Old Senior Notes on semi-annual payment dates which correspond to the Interest
Payment Dates for the Old Senior Notes.
The Registration Rights Agreement also provides that Ekco (i) shall
make available for a period of 180 days after the consummation of the Exchange
Offer a prospectus meeting the requirements of the Securities Act to any
broker-dealer for use in connection with any resale of any such New Senior Notes
and (ii) shall pay all expenses incidental to the Exchange Offer (including the
expenses of one counsel to the Holders of the Old Senior Notes) and will
indemnify certain Holders of the Old Senior Notes (including any broker-dealer)
against certain liabilities, including liabilities under the Securities Act.
Holders of the Old Senior Notes will be required to make certain
representations to Ekco (as described in the Registration Rights Agreement) in
order to participate in the Exchange Offer and will be required to deliver
information to be used in connection with the Shelf Registration Statement and
to provide comments on the Shelf Registration Statement within the time periods
set forth in the Registration Rights Agreement in order to have their Old Senior
Notes included in the Shelf Registration Statement and benefit from the
provisions regarding Liquidated Damages set forth in the preceding paragraphs. A
Holder who sells Old Senior Notes pursuant to the Shelf Registration Statement
generally will be required to be named as a selling security holder in the
related prospectus and to deliver a prospectus to purchasers, will be subject to
certain of the civil liability provisions under the Securities Act in connection
with such sales and will be bound by the provisions of the Registration Rights
Agreement which are applicable to such a Holder (including certain
indemnification obligations).
For so long as the Old Senior Notes are outstanding, Ekco will continue
to provide to Holders of the Old Senior Notes and to prospective purchasers of
the Old Senior Notes the information required by Rule 144A(d)(4) under the
Securities Act ("Rule 144A") during any period in which Ekco is not subject to
Section 13 or 15(d) of the Exchange Act. Ekco will provide a copy of the
Registration Rights Agreement to prospective purchasers of Old Senior Notes
identified to Ekco by an Initial Purchaser upon request.
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<PAGE> 23
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which has been filed as an exhibit to the Exchange Offer Registration
Statement of which this Prospectus forms a part.
The Old Senior Notes were placed with a small number of institutional
investors on March 25, 1996 and there is no public market for them at present.
To the extent Old Senior Notes are tendered and accepted in the exchange, the
principal amount of outstanding Old Senior Notes will decrease with a resulting
decrease in the liquidity in the market therefor. Following the consummation of
the Exchange Offer, Holders of Old Senior Notes who were eligible to participate
in the Exchange Offer but who did not tender their Old Senior Notes will not
have any further registration rights and such Old Senior Notes will continue to
be subject to certain restrictions on transfer. Accordingly, the liquidity of
the market for the Old Senior Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal, the Company will accept any and all
Old Senior Notes validly tendered and not withdrawn prior to 5:00 pm., New York
City time, on the Expiration Date. The Company will issue $1,000 face amount of
New Senior Notes in exchange for each $1,000 face amount of outstanding Old
Senior Notes accepted in the Exchange Offer. Holders may tender some or all of
their Old Senior Notes pursuant to the Exchange Offer. However, Old Senior Notes
may be tendered only in integral multiples of $1,000.
The form and terms of the New Senior Notes will be identical in all
material respects to the form and terms of the Old Senior Notes, except that (i)
the New Senior Notes will have been registered under the Securities Act and
hence will not bear legends restricting the transfer thereof and (ii) the
holders of the New Senior Notes will not be entitled to certain rights under the
Registration Rights Agreement, including the provisions providing for an
increase in the interest rate on the Old Senior Notes under certain
circumstances relating to the timing of the Exchange Offer, all of which rights
will terminate when the Exchange Offer is terminated. The New Senior Notes will
evidence the same debt as the Old Senior Notes and will be entitled to the
benefits of the Indenture under which the Old Senior Notes were, and the New
Senior Notes will be, issued.
As of the date of this Prospectus, $125,000,000 aggregate face amount
of the Old Senior Notes were outstanding. The Company has fixed the close of
business on July 8, 1996 as the record date for the Exchange Offer for purposes
of determining the persons to whom this Prospectus, together with the Letter of
Transmittal, will initially be sent. As of such date there were two registered
Holders of the Old Senior Notes.
The Company shall be deemed to have accepted validly tendered Old
Senior Notes when, as and if the Company has given oral or written notice
thereof to the Exchange Agent. The Exchange Agent will act as agent for the
tendering Holders for the purpose of receiving the New Senior Notes from the
Company.
If any tendered Old Senior Notes are not accepted for exchange because
of an invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Senior Notes will be
returned, without expense, to the tendering Holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Old Senior Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of Old
Senior Notes pursuant to the Exchange Offer. The Company will pay all charges
and
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<PAGE> 24
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
August 7, 1996, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the
Exchange Agent of any extension by oral or written notice and will make a public
announcement thereof prior to 9:00 a.m., New York City time, on the next
business day after each previously scheduled expiration date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Senior Notes, to extend the Exchange Offer within the time
limits set forth in the Registration Rights Agreement or, if any of the
conditions set forth below under "-Conditions" shall not have been satisfied,
to terminate the Exchange Offer, by giving oral or written notice of such
delay, extension or termination to the Exchange Agent, or (ii) to amend the
terms of the Exchange Offer in any manner. Any such delay in acceptance or
extension or amendment will be followed as promptly as practicable by a public
announcement thereof. If the Exchange Offer is amended in a manner determined by
the Company to constitute a material change, the Company will promptly disclose
such amendment by means of a prospectus supplement that will be distributed to
the registered Holders, and the Company will extend the Exchange Offer for a
period of five to 10 business days, depending upon the significance of the
amendment and the manner of disclosure to the registered Holders, if the
Exchange Offer would otherwise expire during such five to 10 business day
period.
Without limiting the manner in which the Company may choose to make
public announcement of any delay, extension or amendment of the Exchange Offer,
the Company shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
INTEREST ON THE NEW SENIOR NOTES
The New Senior Notes will bear interest from their date of issuance.
Holders of Old Senior Notes that are accepted for exchange will receive, in
cash, accrued interest thereon to, but not including, the date of issuance of
the New Senior Notes. Such interest will be paid with the first interest payment
on the New Senior Notes on October 1, 1996. Interest on the Old Senior Notes
accepted for exchange will cease to accrue upon issuance of the New Senior
Notes.
PROCEDURES FOR TENDERING
Only a Holder of Old Senior Notes may tender such Old Senior Notes in
the Exchange Offer. A Holder who wishes to tender Old Senior Notes for exchange
pursuant to the Exchange Offer must transmit a properly completed and duly
executed Letter of Transmittal, or a facsimile thereof, including any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. In addition, either (i) certificates for such Old
Senior Notes must be received by the Exchange Agent along with the Letter of
Transmittal or (ii) the Holder must comply with the guaranteed delivery
procedures described below. To be tendered effectively, the Old Senior Notes,
Letter of Transmittal and other required documents must be received by the
Exchange Agent at the address set forth below under "Exchange Agent" prior to
5:00 pm., New York City time, on the Expiration Date.
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<PAGE> 25
The tender by a Holder will constitute an agreement between such Holder
and the Company in accordance with the terms and subject to the conditions set
forth herein and in the Letter of Transmittal.
The method of delivery of Old Senior Notes and the Letter of
Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the Holder. Instead of delivery by mail, it is recommended
that Holders use an overnight or hand delivery service. In all cases, sufficient
time should be allowed to assure delivery to the Exchange Agent before the
Expiration Date. No Letter of Transmittal or Old Senior Notes should be sent to
the Company. Holders may request their respective brokers, dealers, commercial
banks, trust companies or nominees to effect the above transactions for such
Holders.
Any beneficial owner whose Old Senior Notes are registered in the name
of a broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering such
owner's Old Senior Notes, either make appropriate arrangements to register
ownership of the Old Senior Notes in such owner's name or obtain a properly
completed bond power from the registered Holder. The transfer of registered
ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Senior Notes tendered pursuant thereto are tendered (i) by a
registered Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or a "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act (a "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered Holder of any Old Senior Notes listed therein, such Old Senior Notes
must be endorsed or accompanied by a properly completed bond power, signed by
such registered Holder as such registered Holder's name appears on such Old
Senior Notes.
If the Letter of Transmittal or any Old Senior Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must
be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Senior Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Old Senior Notes not properly tendered or any Old Senior Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Old Senior Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Senior Notes must be cured within such time as
the Company shall determine. Although the Company intends to notify Holders of
defects or irregularities with respect to tenders of Old Senior Notes, neither
the Company, the Exchange Agent nor any other person shall incur any liability
for failure to give such notification. Tenders of Old Senior Notes will not be
deemed to have been made until such defects or irregularities have been cured or
waived. Any Old Senior Notes received by the Exchange Agent that are not
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<PAGE> 26
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering Holders,
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
By tendering, each Holder will represent to the Company, among other
things, that (i) the New Senior Notes to be acquired by the Holder and any
beneficial owners of Old Senior Notes pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Senior Notes, (ii) the Holder and each such beneficial owner are not
participating, do not intend to participate and have no arrangement or
understanding with any person to participate in the distribution of such New
Senior Notes and (iii) neither the Holder nor any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of the Company.
Each broker or dealer that receives New Senior Notes for its own account in
exchange for Old Senior Notes, where such Old Senior Notes were acquired by such
broker or dealer as a result of market-making activities or other trading
activities (other than Old Senior Notes acquired directly from the Company),
must acknowledge that it will deliver a prospectus in connection with any resale
of such New Senior Notes. See "Plan of Distribution."
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Senior Notes and (i) whose Old
Senior Notes are not immediately available or (ii) who cannot deliver their Old
Senior Notes, the Letter of Transmittal or any other required documents to the
Exchange Agent prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives
from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand
delivery) setting forth the name and address of the Holder, the
certificate number(s) of such Old Senior Notes and the principal amount
of Old Senior Notes tendered, stating that the tender is being made
thereby and guaranteeing that, within five New York Stock Exchange
trading days after the Expiration Date, the Letter of Transmittal (or
facsimile thereof together with the certificate(s) representing the Old
Senior Notes and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal
(or facsimile thereof, as well as the certificate(s) representing all
tendered Old Senior Notes in proper form for transfer and all other
documents required by the Letter of Transmittal are received by the
Exchange Agent within five New York Stock Exchange trading days after
the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery
will be sent to Holders who wish to tender their Old Senior Notes according to
the guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Senior Notes may be
withdrawn at any time prior to 5:00 pm., New York City time, on the Expiration
Date.
To withdraw a tender of Old Senior Notes in the Exchange Offer, a
written or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Old Senior Notes to be withdrawn (the
"Depositor"), (ii) identify the Old
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<PAGE> 27
Senior Notes to be withdrawn (including the certificate number or numbers and
principal amount of such Old Senior Notes), (iii) be signed by the Holder in
the same manner as the original signature on the Letter of Transmittal by
which such Old Senior Notes were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee with respect to the Old Senior Notes register the transfer of such Old
Senior Notes into the name of the person withdrawing the tender and (iv)
specify the name in which any such Old Senior Notes are to be registered, if
different from that of the Depositor. If certificates for Old Senior Notes
have been delivered or otherwise identified to the Exchange Agent, then, prior
to the release of such certificates, the withdrawing Holder must also submit
the serial numbers of the particular certificates to be withdrawn and a signed
notice of withdrawal with signatures guaranteed by an Eligible Institution
unless such Holder is an Eligible Institution. All questions as to the
validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company in its sole discretion, which determination
shall be final and binding on all parties. Any Old Senior Notes so withdrawn
will be deemed not to have been validly tendered for purposes of the Exchange
Offer and no New Senior Notes will be issued with respect thereto unless the
Old Senior Notes so withdrawn are validly retendered. Properly withdrawn Old
Senior Notes may be retendered by following one of the procedures described
above under "-Procedures for Tendering" at any time prior to the Expiration
Date.
Any Old Senior Notes which have been tendered but which are not
accepted for payment due to withdrawal, rejection of tender or termination of
the Exchange Offer will be returned as soon as practicable to the Holder
thereof without cost to such Holder.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall
not be required to accept for exchange, or exchange New Senior Notes for, any
Old Senior Notes, and may terminate the Exchange Offer as provided herein
before the acceptance of such Old Senior Notes, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Company, or
any material adverse development has occurred in any existing action or
proceeding with respect to the Company or any of its subsidiaries; or
(b) any change, or any development involving a prospective change, in the
business or financial affairs of the Company or any of its subsidiaries
has occurred which, in the sole judgment of the Company, might materially
impair the ability of the Company to proceed with the Exchange Offer or
materially impair the contemplated benefits of the Exchange Offer to the
Company; or
(c) any law, statute, rule or regulation is proposed, adopted or enacted,
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Company; or
(d) any governmental approval has not been obtained, which approval the
Company shall, in its sole discretion, deem necessary for the consummation
of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Old
Senior Notes and return all tendered Old Senior Notes to the tendering Holders,
(ii) extend the Exchange Offer and retain all Old Senior Notes tendered prior
to the expiration of the Exchange Offer, subject, however, to the rights of
Holders to withdraw such Old Senior Notes (see "-Withdrawal of Tenders" above)
or (iii) waive such unsatisfied conditions with respect to the Exchange Offer
and accept all properly tendered Old Senior Notes which have not been
withdrawn. If such waiver constitutes a material change to the Exchange Offer,
the Company will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered Holders, and the Company
will extend the Exchange Offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of disclosure to
the registered Holders, if the Exchange Offer would otherwise expire during
such five to ten business day period.
EXCHANGE AGENT
Fleet National Bank has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notices of Guaranteed Delivery should be directed to the Exchange Agent
addressed as follows:
By Registered or Certified Mail: By Overnight Courier or by Hand:
Fleet National Bank Fleet National Bank
Corporate Trust Operations Corporate Trust Operations
777 Main Street, Lower Level 777 Main Street, Lower Level
CTMO0224 Hartford, Connecticut 06115
Hartford, Connecticut 06115 Attention: Patricia Williams
Attn: Patricia Williams
By Facsimile:
(860) 986-7908
Confirm by telephone:
(860) 986-2910
Attn: Patricia Williams
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraphy, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The
- 25 -
<PAGE> 28
Company, however, will pay the Exchange Agent reasonable and customary fees for
its services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer
will be paid by the Company. Such expenses include fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs, among
others.
The Company will pay all transfer taxes, if any, applicable to the
exchange of Old Senior Notes pursuant to the Exchange Offer. If, however,
certificates representing New Senior Notes or Old Senior Notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or are to
be issued in the name of, any person other than the registered Holder of the Old
Senior Notes tendered, or if tendered Old Senior Notes are registered in the
name of any person other than the person signing the Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of Old
Senior Notes pursuant to the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered Holder or any other persons)
will be payable by the tendering Holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering Holder.
ACCOUNTING TREATMENT
The New Senior Notes will be recorded at the same carrying value as the
Old Senior Notes, which is face value less accrued original issue discount, as
reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized. The
costs of the Exchange Offer and the unamortized costs related to the issuance of
the Old Senior Notes will be amortized over the term of the New Senior Notes.
- 26 -
<PAGE> 29
THE COMPANY
Ekco was incorporated in Delaware in 1968. The current business of the
Company was established in 1987 through Ekco's purchase of Ekco Housewares, Inc.
and through subsequent acquisitions and internal development. The Company has
acquired or developed the following businesses and product lines (net of
divestitures):
- October 1987--acquisition of Ekco Housewares, Inc.
("Housewares"), a manufacturer and marketer of bakeware and
kitchen tools and gadgets.
- January 1989--acquisition of Woodstream Corporation
("Woodstream"), a manufacturer and marketer of non-toxic pest
control and small animal control products.
- December 1989--acquisition of the non-toxic pest control
product line of McGill Metal Products Company.
- December 1991--acquisition of the small animal care product
line of Beacon Industries, Inc.
- January 1992--acquisition of Frem Corporation ("Frem"), a
manufacturer and marketer of molded plastic products.
- April 1993--acquisition of Kellogg Brush Manufacturing Co. and
subsidiaries ("Kellogg Brush"), a manufacturer and marketer of
brushes, brooms and mops.
- January 1995--introduction of an internally developed line of
upscale bakeware and kitchen tools, gadgets and other
houseware products by B.VIA International Housewares, Inc.
("VIA!"), a newly-formed subsidiary of Ekco.
The Ekco Integration combined the management and operations of the
Company's bakeware, kitchenware, cleaning products and molded plastic products
businesses, which sell through common channels of distribution and accounted for
over 75% of the Company's net revenues in Fiscal 1995. The newly created single
organization combines and coordinates the sales, marketing, manufacturing,
distribution, administrative and financial activities for the four product
categories. The Company also consolidated a large portion of the distribution of
bakeware and kitchenware products as well as certain cleaning products into its
new distribution facility in Bolingbrook, Illinois from four separate
warehousing and distribution locations. These steps have improved customer
service, created more effective sales and marketing programs, reduced costs and
resulted in distribution efficiencies. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and Notes to the Consolidated
Financial Statements included elsewhere in this Prospectus.
- 27 -
<PAGE> 30
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company and
the Guarantors' obligations under the Registration Rights Agreement. The Company
will not receive any cash proceeds from the issuance of the New Senior Notes.
The net proceeds received by Ekco from the issuance of the Old Senior Notes was
approximately $120.3 million, after deducting discounts and commissions and
estimated expenses of the issuance. The Company applied the net proceeds of the
Old Senior Notes (i) to repurchase all of the $60.0 million outstanding
principal amount of the 12.70% Notes due 1998 from the holders thereof (the
"12.70% Holders") at a price equal to par plus accrued and unpaid interest plus
a make-whole premium which the Company estimates to be approximately $6.5
million, (ii) to repurchase the $22.0 million outstanding principal amount of
the 7.0% Note due 2002 from the holder thereof (the "7.0% Holder") for a
repurchase price of approximately $18.8 million plus accrued and unpaid
interest, and (iii) with the remaining net proceeds, to repay amounts
outstanding under the Company's Revolving Credit Facility.
The Company's Revolving Credit Facility matures on December 1, 1998.
The interest rate for borrowings under the Revolving Credit Facility prior to
the consummation of the Offering was the Prime Rate (as defined in the Revolving
Credit Facility) or the Prime Rate plus 0.25% or LIBOR plus 1.50% or 1.75%.
- 28 -
<PAGE> 31
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of March 31, 1996, including the effect of the issuance of the Senior
Notes on March 25, 1996 and the application of the net proceeds therefrom as
described in "Use of Proceeds." This table should be read in conjunction with
the Consolidated Financial Statements of the Company and the notes thereto
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------
(AMOUNTS IN THOUSANDS)
<S> <C>
Current portion of long-term debt ..................................... $ 60
--------
Long-term debt:
Revolving Credit Facility ........................................... --
9 1/4% Senior Notes due 2006 (net of unamortized discount of
$885) ............................................................ 124,115
Other ............................................................... 67
--------
Total long-term debt ........................................ 124,182
Less current portion ................................................ 60
--------
Total long-term debt, net of current portion ................ 124,122
--------
Series B ESOP Convertible Preferred Stock, par value $.01 per share,
net, 1,490 shares outstanding, redeemable at $3.61 per share ........ 3,668
--------
Minority interest ..................................................... 498
--------
Stockholders' equity:
Common stock, $.01 par value, 60,000 shares authorized, 18,436
shares outstanding ............................................... 184
Capital in excess of par value ...................................... 107,030
Cumulative translation adjustment ................................... 882
Retained earnings ................................................... 29,630
Unearned compensation ............................................... (3,887)
Pension liability adjustment ........................................ (1,748)
--------
Total stockholders' equity .................................. 132,091
--------
Total capitalization ........................................ $260,439
========
</TABLE>
- 29 -
<PAGE> 32
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
The following table sets forth selected historical consolidated
financial data and operating data for the Company for the periods indicated. The
Company's selected historical consolidated financial data were derived from the
Consolidated Financial Statements of the Company. The information set forth in
this table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements of the Company and the notes thereto included elsewhere in
this Prospectus.
<CAPTION> THREE MONTHS ENDED
FISCAL ---------------------------------
---------------------------------------------------------------- MARCH 31,
1995 PRO APRIL 2, MARCH 31, 1996 PRO
1991 1992(a) 1993(b) 1994 1995 FORMA(c) 1995 1996 FORMA(c)
-------- -------- -------- -------- -------- -------- -------- --------- -----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net revenues ................ $166,717 $206,628 $246,428 $267,048 $277,995 $277,995 $ 58,732 $ 56,961 $ 56,961
Gross profit ................ 67,587 77,543 85,079 91,597 86,652 86,652 18,007 15,872 15,872
Operating profit ............ 21,597 27,405 30,043(d) 33,726 29,432 29,432 3,613 1,404 1,404
Net interest expense ........ 9,594 10,680 12,206 12,491 13,493 13,158(e) 3,358 2,936 2,998(e)
Income (loss) before income
taxes and extraordinary
charge .................... 12,003 16,725 17,837(d) 21,235 15,939 16,274 255 (1,532) (1,594)
Income (loss) before
extraordinary charge and
cumulative effect of
accounting changes ........ 5,894 8,647 8,859(d)(f) 11,423 8,045 8,250 134 (799) (830)
Earnings (loss) before
extraordinary charge and
cumulative effect of
accounting changes per
share ..................... 0.35 0.46 0.44(d)(f) 0.57 0.40 0.41 .01 (.04) (.05)
Weighted average number of
shares used in computation
of earnings per share ..... 17,012 18,785 19,999 20,115 20,318 20,318 20,224 18,410 18,410
Other Data:
EBITDA(g) ................... $ 31,008 $ 39,627 $ 46,753(d) $ 52,261 $ 50,062 $ 50,062 8,850 6,588 6,588
Depreciation ................ 5,412 7,287 9,545 9,227 9,234 9,234 2,466 2,471 2,471
Amortization of excess of
cost over fair value ...... 2,770 3,557 4,195 4,438 4,437 4,437 1,109 1,109 1,109
Other amortization .......... 1,229 1,378 2,970 4,870 6,959 6,959 1,662 1,604 1,604
Capital expenditures ........ 7,946 12,649 15,111 11,106 12,652 12,652 3,009 2,099 2,099
Prepaid marketing costs ..... 0 411 5,490 4,127 4,877 4,877 1,045 600 600
Ratio of EBITDA to interest
expense(g) ................ 2.97 3.54x 3.67x(d) 4.08x 3.68 3.78x(e) 2.58x 2.18x 2.13x(e)
Ratio of earnings to fixed
charges(h) ................ 2.11 2.44 2.33(d) 2.56 2.08 2.13(e) 1.07 .54 .53(e)
Balance Sheet Data:
Working capital ............. $ 19,635 $ 38,566 $ 25,769 $ 60,509 $ 44,675 $ 67,753(i)(j) 3,358 2,936 2,936
Total assets ................ 211,484 255,081 307,961 317,783 304,375 308,449(i)(j) 310,333 305,537 305,537
Long-term obligations, less
current portion ........... 71,644 93,264 111,982 124,580 96,700 124,121(i) 120,181 124,122 124,122
Stockholders' equity(k) ..... 86,841 110,567 116,864 129,116 132,720 133,138(j) 129,111 132,091 132,091
<FN>
- ----------
(a) Includes operations of the molded plastic products business acquired by
the Company on January 8, 1992.
(b) Includes operations of the cleaning products business acquired by the
Company on April 1, 1993.
(c) Pro forma to give effect to the issuance of the Senior Notes for purposes
of the Statement of Operations Data and Other Data as if the issuance had
occurred on January 2, 1995 for 1995 Pro Forma and January 1, 1996 for
March 31, 1996 Pro Forma and for purposes of the Balance Sheet Data as
if the issuance had occurred at December 31, 1995.
(d) Before giving effect to an $11.0 million restructuring/reorganization and
excess facilities charge ($6.6 million after income taxes) recorded in the
fourth quarter of Fiscal 1993 as part of the Ekco Integration.
</TABLE>
- 30 -
<PAGE> 33
(e) Adjusted to give effect to: (i) the impact on interest expense resulting
from (a) the issuance of the Senior Notes at an interest rate of 9 1/4%,
(b) the repurchase of the 12.70% Notes for $66.5 million (including an
estimated $6.5 million make- whole premium) and the 7.0% Note for $18.8
million, and (c) the repayment of $35.2 million in borrowings under the
Revolving Credit Facility; and (ii) a $0.4 million charge for the
amortization of $4.3 million in estimated costs associated with the
issuance of the Old Senior Notes (including issuance at 99.291% of face
value) and the Revolving Credit Facility over the ten year term of the
Senior Notes.
(f) During Fiscal 1993, the Company recorded a charge of $3.2 million (net of
income taxes of $2.0 million) to reflect the cumulative effect of changes
in method of accounting for post-retirement and post-employment benefits.
(g) EBITDA is defined as earnings from continuing operations before interest,
taxes, depreciation and amortization. EBITDA is presented here to provide
additional information about the Company's ability to meet its future debt
service, capital expenditure and working capital requirements. EBITDA is
not a measure of financial performance under GAAP and should not be
considered as an alternative either to net income as an indicator of the
Company's operating performance, or to cash flows as a measure of the
Company's liquidity.
(h) Ratio of earnings to fixed charges is calculated as earnings from
continuing operations before income taxes and cumulative effects of changes
in accounting principles, adjusted to add back fixed charges and divided by
fixed charges. Fixed charges consist of interest expense, capitalized
interest and that portion of rental expense deemed to be representative of
interest expense.
(i) Adjusted to reflect the issuance of $125.0 million aggregate principal
amount of Senior Notes at an issue price of 99.291% and related debt
issuance costs of $3.4 million attributable to the Senior Notes and the
Revolving Credit Facility.
(j) Adjusted by $2.8 million to reflect the extraordinary net loss on early
extinguishment of debt and the associated write-off of deferred financing
costs.
(k) The Company declared dividends aggregating $.08 per share on its Common
Stock and its ESOP Preferred Stock in Fiscal 1995.
- 31 -
<PAGE> 34
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with "Selected
Consolidated Financial Data" and the Consolidated Financial Statements of the
Company and the notes thereto included elsewhere in this Prospectus.
OVERVIEW
General. The Company is a leading U.S. manufacturer and marketer of
multiple categories of branded houseware products for everyday home use. The
Company operates in one industry segment, with revenues derived from sales in
five principal product categories: (i) bakeware, (ii) kitchenware, (iii)
cleaning products, (iv) pest control and small animal care and control products
and (v) molded plastic products. The following table summarizes the changes in
the components of the Company's net revenues by product category over the last
three Fiscal years:
NET REVENUE BY PRODUCT CATEGORY
(AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<CAPTION>
FISCAL 1993 FISCAL 1994 FISCAL 1995
----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Bakeware ................................. $ 67,104 27.2% $ 76,557 28.7% $ 81,261 29.2%
Kitchenware .............................. 68,114 27.6 72,022 27.0 73,006 26.3
Cleaning products(a) ..................... 36,922 15.0 53,003 19.8 55,191 19.9
Pest control and small animal care and
control products ....................... 29,693 12.1 31,943 12.0 34,034 12.2
Molded plastic products .................. 31,277 12.7 33,523 12.5 30,991 11.1
VIA!(b) .................................. -- -- -- -- 3,512 1.3
Other(c) ................................. 13,318 5.4 -- -- -- --
-------- ----- -------- ----- -------- -----
Total net revenues ............. $246,428 100.0% $267,048 100.0% $277,995 100.0%
======== ===== ======== ===== ======== =====
</TABLE>
- ----------
(a) The Company acquired its cleaning products business on April 1, 1993.
(b) The Company introduced its VIA!(TM) line of products in January 1995;
substantially all revenues from the sale of VIA!(TM) products occurred
in the second half of Fiscal 1995.
(c) The Company sold its plastic sporting goods business in January 1994.
The Company's sales have increased in each of the last five years as a
result of internal growth and acquisitions. The Company's net revenues increased
from $166.7 million in Fiscal 1991 to $278.0 million in Fiscal 1995, a compound
annual growth rate of 13.6%. The Company's gross margin declined in Fiscal 1995
from historical levels due primarily to the weak retail environment and
increases in the price of raw materials. The gross margin decline was partially
offset by a decline in selling, general and administrative expense as a
percentage of net revenues, resulting from, among other things, the Ekco
Integration. The Company's EBITDA increased from $31.0 million in Fiscal 1991 to
$50.1 million in Fiscal 1995, a compound annual growth rate of 12.7%.
Seasonality. Many of the Company's product categories are affected by
seasonal consumer purchasing patterns, including holiday cooking and baking,
back-to-school shopping and spring cleaning. Historically, the Company's
revenues in the last half of the Fiscal year have been greater than in the first
half.
- 32 -
<PAGE> 35
In Fiscal 1995, 56.7% and 62.2% of net revenues and EBITDA, respectively, were
generated in the second half of the year. The following table presents the
unaudited quarterly results of operations of the Company for the last two Fiscal
years:
<TABLE>
<CAPTION>
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- ----
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
FISCAL 1995
Net revenues $58,732 $61,691 $83,041 $74,531 $277,995
Gross profit 18,007 18,462 26,106 24,077 86,652
EBITDA...... 8,850 10,058 17,535 13,619 50,062
FISCAL 1994
Net revenues $54,354 $59,199 $78,623 $74,872 $267,048
Gross profit 17,746 19,542 27,112 27,197 91,597
EBITDA...... 9,405 9,531 15,955 17,370 52,261
</TABLE>
Promotional Programs. In order to stimulate sales, the Company markets
its products to its retail customers through a variety of promotional programs
throughout the year, including cooperative advertising, special packaging, floor
displays, discounting and "bundling" of its products. While promotional programs
are intended to increase the sales of the Company's products, expanded use of
promotions may result in reduced profits.
RESULTS OF OPERATIONS
The following table sets forth the percentages of net revenues of the
Company represented by certain components of income and expense for the last
three Fiscal years:
<TABLE>
<CAPTION>
FISCAL
-------------------------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Net revenues.................................................. 100.0% 100.0% 100.0%
Gross profit.................................................. 34.5 34.3 31.2
Selling, general and administrative expense................... 20.6 20.0 19.0
Operating profit.............................................. 12.2(a) 12.6 10.6
Net interest expense.......................................... 5.0 4.7 4.9
Income before income taxes.................................... 7.2(a) 8.0 5.7
Income before cumulative effect of accounting changes......... 3.6(a)(b) 4.3 2.9
</TABLE>
- -----------------
(a) Before giving effect to an $11.0 million restructuring/reorganization and
excess facilities charge ($6.6 million after income taxes) recorded in the
fourth quarter of Fiscal 1993 as part of the Ekco Integration.
- 33 -
<PAGE> 36
(b) During Fiscal 1993, the Company recorded a charge of $3.2 million (net of
income taxes of $2.0 million) to reflect the cumulative effect of changes
in method of accounting for post-retirement and post-employment benefits.
FIRST QUARTER OF FISCAL 1996 AS COMPARED TO FIRST QUARTER OF FISCAL 1995
NET REVENUES. Net revenues for the first quarter of Fiscal 1996
decreased approximately $1.8 million (3%) from the comparable prior year
period. The decline in net revenues was primarily due to lower net revenues
generated from sales of the Company's bakeware and kitchen tool and gadget
products, partially offset by $2.1 million in net revenues from the Company's
new line of VIA! products. Net revenues in the first quarter of Fiscal 1996
were affected by a number of factors: (i) the generally poor retail
environment that was experienced in the last quarter of Fiscal 1995 extended
into the first quarter of Fiscal 1996 as consumer purchasing was restrained;
(ii) poor weather across much of the nation, especially early in the
quarter, also contributed to the slow retail environment; and (iii) orders from
retailers were lower than usual because retailers ended 1995 with higher levels
of inventory which needed to be sold before replenishment.
GROSS PROFIT. The Company's gross profit margin declined from 31% in
the first quarter of Fiscal 1995 to 28% for the first quarter of Fiscal 1996.
The decline in gross profit margin was primarily due to lower net revenues from
the Company's bakeware and kitchenware products which have the highest margins
of the Company's products. Other factors contributing to this decline were (i)
continuation of increased promotional discounting, started in the fourth
quarter of Fiscal 1995 to help stimulate consumer demand, (ii) cost increases
including higher labor costs and material costs, particularly tin plate and
packaging materials, which were not recovered through price increases and (iii)
unabsorbed manufacturing costs due to shortfall in planned volumes.
NET INTEREST EXPENSE. Net interest expense decreased $422,000 from the
first quarter Fiscal 1995 level of $3.4 million. The decline in net interest
expense was primarily due to lower average borrowings.
EXTRAORDINARY CHARGE. The extraordinary charge was due to the early
extinguishment of the 12.70% Notes and 7.0% Note. See Note 11 of Notes to
Condensed Financial Statements for the three months ended March 31, 1996.
FISCAL 1995 AS COMPARED TO FISCAL 1994
NET REVENUES. Net revenues for Fiscal 1995 increased approximately
$10.9 million (4.1%) from the prior year. Sales increased for four of the
Company's five product categories in Fiscal 1995 despite a weak retail sales
environment. The increase in net revenues was principally due to increases in
revenues in the Company's bakeware, pest control and cleaning products
businesses, as well as from the introduction of the Company's new line of
VIA!(TM) products. The increase was partially offset by a decline in revenues
from molded plastic products. The increase in bakeware revenues was primarily
due to increased distribution, higher levels of promotions and the Company
placing the promotions with retailers earlier than in prior years. The increase
in sales of pest control products was principally due to new product
introductions, including the Roach Magnet(TM), and increased distribution.
Increased sales of cleaning products resulted from increased distribution and
the substantial growth of several hardware/home-center customers. Net revenues
from the Company's new line of VIA!(TM) products were approximately $3.5
million, substantially all of which were recognized in the second half of Fiscal
1995. Revenues from the sale of molded plastic products declined because
retailers reduced planned promotions in response to consumer resistance to
increased retail selling prices, resulting from significant increases in plastic
resin prices.
GROSS PROFIT. The Company's gross profit margin declined from
approximately 34.3% for Fiscal 1994 to approximately 31.2% for Fiscal 1995. The
primary factors contributing to this decline were (i) the significant
year-over-year increase in the prices of plastic resin and other raw materials,
(ii) increases in manufacturing and distribution costs incurred in anticipation
of a higher than realized volume of sales (iii) a shift in customer mix,
resulting from the substantial growth of several hardware/home-center customers,
and (iv) increased promotional discounting in the fourth quarter of Fiscal 1995.
These factors were partially offset by price increases initiated during the
beginning of Fiscal 1995.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense in Fiscal 1995 decreased approximately $0.7 million
(1.1%) from the prior year. Selling, general and administrative expense as a
percentage of net revenues declined from 20.0% in Fiscal 1994 to 19.0% in Fiscal
1995, as a result, in part, of efficiencies realized from the Ekco Integration.
The decrease included the collection of an amount due relating to a 1987 real
estate transaction ($1.1 million) which had previously been written off. The
increase in expenses of approximately $0.5 million excluding this transaction
reflects increased product placement and advertising costs as well as costs
associated with the growth of VIA!
OPERATING PROFIT. Operating profit for the Company for Fiscal 1995 was
$29.4 million as compared to $33.7 million for Fiscal 1994, a decline of $4.3
million (12.7%), principally as a result of the decline in gross profit margin.
Operating profit for the Company as a percentage of net sales for Fiscal 1995
was 10.6%, as compared to 12.6% for Fiscal 1994.
NET INTEREST EXPENSE. Net interest expense increased $1.0 million from
the Fiscal 1994 level of $12.5 million. The higher year-over-year expense was
principally attributable to higher average borrowings and higher interest rates.
INCOME TAXES. The effective income tax rate increased to 49.5% in
Fiscal 1995 from 46.2% in Fiscal 1994. The increase occurred primarily because
amortization of goodwill, which is not deductible for income taxes, represents a
higher percentage of income before income taxes.
- 34 -
<PAGE> 37
FISCAL 1994 AS COMPARED TO FISCAL 1993
NET REVENUES. Net revenues for Fiscal 1994 increased approximately
$20.6 million (8.4%) from the prior year. Net revenues for Fiscal 1994 included
first quarter revenues of $12.7 million from the Company's cleaning products
business, which was acquired by Ekco on April 1, 1993. Net revenues for Fiscal
1993 included $13.3 million associated with the Company's plastic sporting goods
business, the assets of which were sold in January 1994. Excluding the foregoing
acquisition and divestiture, net revenues for Fiscal 1994 increased
approximately $21.2 million (8.6%) over net revenues for Fiscal 1993. Each of
the Company's business units contributed to the growth in net revenues.
Retailers, while continuing to adhere to stringent inventory controls, remained
committed to maintaining high service levels for their customers. As a result,
retailers kept their shelves stocked, contributing to the Company's growth in
revenues. Approximately $9.5 million of the increase resulted from increased
sales of the Company's bakeware products, which benefitted from the introduction
of new products such as CrispIt(TM) pizza pans and Healthy Cooking broiler and
meat loaf pans, along with strong growth in Baker's Secret(R) bakeware products.
Approximately $4.0 million of the increase resulted from increased sales of the
Company's kitchen tool and gadget products, which benefitted from a store aisle
merchandising program introduced in the second half of Fiscal 1993. The
remaining increase of approximately $8.0 million was a result of increases in
the Company's other businesses, including molded plastic products, pest control
and small animal care and control products.
GROSS PROFIT. The Company's gross profit margin in Fiscal 1994 remained
essentially unchanged from 34.5% in Fiscal 1993. The Company was able to
maintain its gross profit margin despite increases in raw material costs and
warehousing and distribution costs through improved utilization of facilities,
primarily at the Company's cleaning product business, and changes in product
mix. Although the cost of raw materials increased in general, the majority of
the increase resulted from the approximate doubling of prices of plastic resin,
the primary raw material used in the Company's molded plastic products business.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense for Fiscal 1994 increased $2.6 million (5.0%) from the
prior year. Selling, general and administrative expense as a percentage of net
revenues declined from 20.6% for Fiscal 1993 to 20.0%, for Fiscal 1994. Selling,
general and administrative expense for Fiscal 1993 included $2.6 million
associated with the Company's plastic sporting goods business. Additionally,
selling, general and administrative expense for Fiscal 1994 included first
quarter expenses of $1.9 million from the Company's cleaning products business.
Excluding the above divestiture and acquisition, selling, general and
administrative expense for Fiscal 1994 increased approximately $3.3 million
(6.7%). The increase was primarily due to increased display and sales promotion
costs associated with the Company's 1994 bakeware media campaign and costs
associated with the start-up of VIA!. The increase was partially offset by
benefits associated with implementation of the Ekco Integration.
OPERATING PROFIT. Operating profit for the Company for Fiscal 1994 was
$33.7 million as compared to $30.0 million for Fiscal 1993, an increase of $3.7
million (1.2%). Operating profit for the Company as a percentage of net revenues
for Fiscal 1994 was 12.6% as compared to 12.2% for Fiscal 1993.
NET INTEREST EXPENSE. Net interest expense for the Company for Fiscal
1994 was $12.5 million as compared to $12.2 million for Fiscal 1993, an increase
of $0.3 million (2.3%). The increase was primarily due to the additional debt
associated with the acquisition of the Company's cleaning products business on
April 1, 1993.
INCOME TAXES. The effective income tax rate declined to 46.2% in Fiscal
1994 from 67.0% in Fiscal 1993. The decline occurred primarily because
amortization of goodwill for Fiscal 1994 represents a lower percentage of income
before income taxes.
- 35 -
<PAGE> 38
RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE
As part of the Ekco Integration, the Company recorded an $11.0 million
charge ($6.6 million after income taxes) for restructuring/reorganization and
excess facilities during the fourth quarter of Fiscal 1993. The restructuring
was the result of management's analysis of the Company's operations and future
strategy. The items covered by the charge were (i) severance and other costs
related to a reduction in personnel; (ii) costs arising from the consolidation
of different distribution and information systems (including the closing of
facilities and write-off of equipment no longer relevant to the Company's
operating strategy); and (iii) costs associated with excess facilities currently
classified as held for sale. Of this $11.0 million charge, approximately $2.7
million was non-cash, and $8.3 million was cash. Of the $8.3 million cash
portion of the charge, $5.0 million was expended in Fiscal 1994 and $3.3 million
was expended in Fiscal 1995. See Note 17 to the Consolidated Financial
Statements included elsewhere in this Prospectus.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of Fiscal 1996 the Company generated
$553,000 in cash from operations. This amount, together with net proceeds of
$2.5 million from the refinancing of debt, was used for capital expenditures of
approximately $2.1 million and dividend payments of approximately $400,000.
During Fiscal 1995, the Company generated approximately $21.7 million
in cash from operations. Such cash, together with proceeds of $3.3 million from
the sale of property and equipment and proceeds of $3.6 million from investments
previously pledged as collateral, was used for capital expenditures of
approximately $12.7 million, dividend payments of approximately $1.6 million,
the reduction of debt of approximately $13.4 million and net
repurchases/issuances of Common Stock of $0.9 million.
On March 25, 1996, the Company sold $125.0 million of its Old Senior
Notes at a price of 99.291% of face value in a private offering to
institutional investors. The Company used net proceeds of the offering to (i)
repurchase its outstanding 12.70% Notes due 1998 and 7.0% Note due 2002 and
(ii) to repay substantially all amounts outstanding under the Revolving Credit
Facility. Concurrently with closing the sale of the Old Senior Notes, the
Company entered into an amendment to its Revolving Credit Facility, which
amendment consolidated the outstanding debt and borrowing capacity of Ekco and
its wholly owned subsidiaries, Ekco Housewares, Inc. and Frem Corporation, and
revised certain financial covenants. Borrowings under the amended Revolving
Credit Facility bear interest at the bank's prime rate, or at LIBOR plus 1.25%
or 1.5%, depending on the Company's borrowing strategy and the ratio of total
debt to cash flow. The Revolving Credit Facility provides for a commitment fee
of three-eights of one percent on the unused portion of the commitment amount
and a $60,000 annual agency fee. Borrowings under the Revolving Credit
Facility mature in December 1998. The Senior Notes, as well as the Revolving
Credit Facility, contain certain financial covenants that will restrict the
sale of assets, the incurrence of additional indebtedness and certain
investments and acquisitions by the Company.
The Company believes that the net proceeds from the Old Senior Note
offering, together with borrowing capacity under the amended Revolving Credit
Facility, will provide sufficient borrowing capacity to finance its ongoing
operations for the foreseeable future. The Company may, however, require
additional funds to finance any future acquisitions.
A facility located in Hudson, New Hampshire classified as held for sale
was sold on October 5, 1995 for $2.8 million in cash. Proceeds from the sale
were used to repay borrowings under the Revolving Credit Facility. The Company's
remaining properties held for sale include a former manufacturing facility
located in Chicago, Illinois and a warehouse located in Lititz, Pennsylvania.
The Company is actively pursuing the sale or lease of these properties, and has
leased the Lititz warehouse facility. The Company plans to sell these properties
within the next two years. The aggregate carrying values of such properties,
$2.8 million at December 31, 1995, are periodically reviewed and are stated at
the lower of cost or market.
The Company has provided approximately $3.5 million for environmental
remediation and ongoing operation, maintenance and ground water monitoring costs
associated with facilities owned or occupied by the Company's cleaning products
business. The Company believes the provision is adequate, but will continue to
monitor and adjust the provision, as appropriate, should additional sites be
identified or further remediation measures be required or undertaken or
interpretation of current laws or regulations be modified.
RECENT ACCOUNTING PRONOUNCEMENTS
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In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 121 "Accounting For The
Impairment Of Long-Lived Assets And For Long-Lived Assets To Be Disposed Of"
("FAS 121"). The Company will adopt FAS 121 in Fiscal 1996 and does not expect
it to have a material impact on the financial statements.
The Company has not adopted the recently issued Statement of Financial
Accounting Standard No. 123 "Accounting for Stock-based Compensation" ("FAS
123") which is required to be adopted in fiscal 1996. The Company currently
intends to continue to record compensation based on the provisions of Accounting
Principles Board Opinion 25, "Accounting for Stock Issued to Employees," as
allowed by FAS 123. Although the Company has not determined the ultimate impact
of adopting FAS 123 on its present accounting disclosure, it does not believe,
based on the number of options previously granted, that adoption of FAS 123 will
have a material impact on its current accounting disclosure.
INFLATION
Inflation in general was not considered to be a significant factor in
the Company's operations during the periods discussed above.
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BUSINESS
GENERAL
The Company is a leading U.S. manufacturer and marketer of multiple
categories of branded houseware products for everyday home use. The Company
believes it is the leading U.S. supplier of metal bakeware, kitchen tools and
gadgets and non-toxic pest control products. In addition, the Company believes
it is a leading U.S. supplier of plastic storage products (including crates,
containers, baskets and office organizers), cleaning products (primarily
brushes, brooms and mops) and small animal care and control products. The
Company's Ekco(R) and Baker's Secret(R) trademarks are among the most
widely-recognized consumer brands in the U.S. In 1995, the Ekco(R) brand ranked
eighth in Home Furnishing News' survey of the 300 most widely recognized brand
names in home furnishings. In addition, the Company's Wright-Bernet(TM) cleaning
products, Victor(R) pest control products and Havahart(R) small animal care and
control products are widely-recognized brands within their respective
distribution channels. The Company markets its products primarily in the U.S.
through substantially all distribution channels that sell houseware products for
everyday home use, including mass merchandisers, supermarkets, hardware, drug
and specialty stores. The Company has a significant presence among mass
merchandisers, selling to each of the 30 largest discount department store
chains (as ranked by the July 3, 1995 Discount Industry Annual Report published
by Discount Store News), and in supermarkets, where it occupies space in over
90% of the approximately 38,000 U.S. supermarkets.
According to the National Housewares Manufacturers' Association
("NHMA"), the housewares market grew to $54.0 billion in sales in 1994 from
$45.0 billion in sales in 1990, a compound annual growth rate of approximately
5%. The housewares industry is highly fragmented: a 1995 NHMA report stated that
of its approximately 2,000 members, 75% had revenues of less than $17.5 million
in 1994. The Company believes that recent retail industry trends, including
vendor rationalization and increased customer demand for ancillary and more
costly vendor services, will foster consolidation in the housewares industry. As
the leading vendor in many of its product categories, with efficient
distribution and sophisticated information systems as well as a strong
commitment and ability to service its customers, the Company believes it is
well-positioned to benefit from such vendor consolidation.
The Company's sales have increased in each of the last five years as a
result of internal growth and acquisitions. The Company's net revenues increased
from $166.7 million in Fiscal 1991 to $278.0 million in Fiscal 1995, a compound
annual growth rate of 13.6%. The Company's EBITDA increased from $31.0 million
in Fiscal 1991 to $50.1 million in Fiscal 1995, a compound annual growth rate of
12.7%. The following table summarizes the changes in the components of the
Company's net revenues by product category over the last five Fiscal years:
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NET REVENUE BY PRODUCT CATEGORY
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL FISCAL FISCAL
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Bakeware ................................ $ 72,659 $ 74,551 $ 67,104 $ 76,557 $ 81,261
Kitchenware ............................. 57,078 58,571 68,114 72,022 73,006
Cleaning products(a) .................... -- -- 36,922 53,003 55,191
Pest control and small animal care and
control products ...................... 21,102 27,773 29,693 31,943 34,034
Molded plastic products(b) .............. -- 30,473 31,277 33,523 30,991
VIA!(c) ................................. -- -- -- -- 3,512
Other(d) ................................ 15,878 15,260 13,318 -- --
-------- -------- -------- -------- --------
TOTAL NET REVENUES ............ $166,717 $206,628 $246,428 $267,048 $277,995
======== ======== ======== ======== ========
EBITDA ........................ $ 31,008 $ 39,627 $ 46,753(E) $ 52,261 $ 50,062
======== ======== ======== ======== ========
</TABLE>
(a) The Company acquired its cleaning products business on April 1, 1993.
(b) The Company acquired its molded plastic products business on January 8,
1992.
(c) The Company introduced its VIA(TM) line of products in January 1995;
substantially all revenues from the sale of VIA(TM) products occurred
in the second half of Fiscal 1995.
(d) Revenues from the Company's plastic sporting goods business, sold in
January 1994.
(e) Before giving effect to an $11.0 million restructuring/reorganization
and excess facilities charge ($6.6 million after income taxes) recorded
in the fourth quarter of Fiscal 1993 as part of the Ekco Integration.
THE EKCO INTEGRATION
Since the fourth quarter of Fiscal 1993, Ekco has taken a series of
actions to position the Company for long-term growth. The Ekco Integration
included (i) the combination of four of the Company's principal business units
into a single operating division and (ii) the introduction of a new branding
strategy to capitalize on the strength of the Ekco(R) brand name.
The Ekco Integration combined the management and operations of the
Company's bakeware, kitchenware, cleaning products and molded plastic products
businesses, which sell through common channels of distribution and accounted for
over 75% of the Company's net revenues in Fiscal 1995. The newly created single
organization combines and coordinates the sales, marketing, manufacturing,
distribution, administrative and financial activities for the four product
categories. The Company also consolidated a large portion of the distribution of
bakeware and kitchenware products as well as certain cleaning products into its
new distribution facility in Bolingbrook, Illinois from four separate
warehousing and distribution locations. These steps have improved customer
service, created more effective sales and marketing programs, reduced costs and
resulted in distribution efficiencies. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and Notes to the Consolidated
Financial Statements included elsewhere in this Prospectus.
As part of the Ekco Integration, in January 1996 the Company introduced
its new branding strategy in which the Ekco(R) brand name is used to market most
of the products in these four categories. This enables
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the Company to capitalize on the strength of the Ekco(R) brand name by improving
the brand identification of these products by consumers and increasing
promotional opportunities for retailers. In addition, management believes that
the new branding strategy enhances the effectiveness of the Company's newly
consolidated sales and marketing effort by facilitating cross-marketing of the
Company's products to retail customers under Ekco(R), one of the strongest
brands in the housewares industry.
COMPETITIVE STRENGTHS
The Company believes its competitive strengths include:
- - LEADING MARKET POSITIONS. More than 50% of the Company's sales are from
metal bakeware and kitchen tools and gadgets, categories in which the
Company believes that it is the industry leader. The Company has
achieved primary vendor status with many of its retail customers in
certain product categories, including bakeware, kitchenware, cleaning
products and non-toxic pest control products.
- - WIDELY RECOGNIZED BRAND NAMES. In 1995, the Ekco(R) brand ranked eighth
in Home Furnishing News' survey of the 300 most widely recognized brand
names in home furnishings. Ekco(R) and the Company's other brand names,
including Baker's Secret(R) bakeware, Wright-Bernet(TM) cleaning
products and Victor(R) pest control products and Havahart(R) small
animal care and control products, are recognized by consumers and
retailers for quality, value, design and functionality.
- - BROAD MARKET PENETRATION. Management believes that the Company has one
of the broadest distribution networks of any company in the housewares
industry. The Company markets its products primarily in the U.S.
through substantially all distribution channels that sell housewares
products for everyday home use, including mass merchandisers,
supermarkets, and hardware, drug and specialty stores. The Company has
a significant presence in mass merchandisers (including Wal-Mart, Kmart
and Target) and in supermarkets (including Winn-Dixie, Kroger and
Albertson's).
- - MULTIPLE CATEGORY SUPPLIER. The Company serves as a single source for a
wide range of products at a variety of price points in several
categories, enabling the Company to be a more efficient and attractive
vendor to the retail industry, which is consolidating its supply base.
- - EFFICIENT DISTRIBUTION SYSTEM. The Company's distribution facilities
and processes enable the Company to effectively pick, pack and deliver
customer orders from its inventory, resulting in greater on-time
deliveries, higher order fill rates, optimal use of full-truckload
shipments and short purchase order lead times.
- - CUSTOMER SERVICE. The Company offers retailers an integrated program of
productivity enhancing services which are designed to reduce their
operating costs and working capital and to increase their sales volume
of the Company's products.
BUSINESS STRATEGY
The Company's business strategy has four primary components: (i)
leverage Ekco's brand names, (ii) focus on customer sales and service, (iii)
increase market and customer penetration and (iv) pursue growth through
acquisitions.
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- - LEVERAGE EKCO'S BRAND NAMES. The Company intends to leverage the
Ekco(R) brand name to (i) further increase brand recognition and
reputation among both retailers and consumers, (ii) expand sales
through cross-marketing of the Company's product lines to existing
customers and (iii) become the sole or primary vendor to existing and
future customers across multiple product categories. As part of the
Ekco Integration, in January 1996 the Company introduced its new
branding strategy in which the Ekco(R) brand name is used to market
most of the Company's bakeware, kitchenware, cleaning products and
molded plastic products. The Company has also developed "family" look
packaging and marketing materials that present consumers with a uniform
appearance and message of Ekco(R) product quality, value, design and
functionality. The Company continues to promote its Baker's Secret(R),
Wright- Bernet(TM), Victor(R) and Havahart(R) brand names, and to
enhance them with the Ekco(R) signature. The Company supports the
recognition and reputation of its brand names through national and/or
regional media advertising and frequent promotional campaigns.
- - FOCUS ON CUSTOMER SALES AND SERVICE. The Ekco Integration has enabled
the Company to shift the focus of its sales and marketing strategy from
individual product categories to the broader needs of each of its
customers. Each of the Company's customers now has one Ekco sales
person responsible for selling and marketing most of the Company's
products. The combined marketing staff now coordinates most of the
Company's market research, advertising and other marketing related
functions. This coordination augments the Company's efforts to leverage
the Ekco(R) brand name, to increase market and customer penetration and
to provide superior service to its customers. The Ekco Integration also
enables the Company to respond more effectively to promotional
opportunities or changes in customer demand and to offer retailers an
integrated program of productivity enhancing services. These services
are designed to reduce a retailer's operating and working capital costs
and to improve its sales volume of the Company's products, and include
electronic data interchange and quick response capabilities (which
assist in the efficient and timely delivery of retailers' orders),
advanced logistical support (such as vendor managed inventory) and
just-in-time and direct-to-store delivery.
- - INCREASE MARKET AND CUSTOMER PENETRATION. The Company strives to expand
the amount of retail space allocated to its products to gain increased
product penetration with both existing and new customers, and thereby
to gain a competitive advantage within its product categories. The
Company has a four-part strategy for increasing its market presence:
(i) differentiate product lines, (ii) develop new and proprietary
products, (iii) cross-market and (iv) cross-merchandise.
- Differentiate Product Lines. The Company offers multiple
product lines which are differentiated by price, quality and
value. By offering a product line at a range of price points
and in several styles, colors and packaging options, the
Company effectively allows retailers to customize their
offerings of the Company's products.
- Develop New and Proprietary Products. To increase sales of the
Company's entire product line, the Company (i) seeks to be the
first to market with new and proprietary products, (ii)
introduces new, differentiated products periodically
throughout the year, (iii) strives to become a full-line
supplier in each product category, (iv) updates its existing
products through design, packaging and functional changes and
(v) identifies and exploits new product niches.
- Cross-Market. The Ekco Integration facilitates the Company's
ability to cross-market the full range of its product lines to
its existing customers, many of which do not currently
purchase offerings from all of the Company's product
categories. The Company believes that its broad line of
products in a broad range of categories is attractive to
customers who prefer to buy from a single supplier rather than
from multiple sources.
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- Cross-Merchandise. Through a comprehensive range of
merchandising and promotional programs, which include the
"bundling" of Ekco(R) products and promotional advertising
centered around a line of Ekco(R) products, the Company offers
its retail customers the opportunity to reach consumers with
the uniform message of Ekco(R) quality, value, design and
functionality.
- - PURSUE GROWTH THROUGH ACQUISITIONS. The Company's growth has been
enhanced by acquisitions. Since 1987, the Company has made six
acquisitions, each of which has been integrated into the Company's
operations. The Company's acquisition strategy is focused on long
life-cycle consumer products related to the Company's current product
portfolio which can benefit from (i) integration into the Company's
existing manufacturing, warehousing and distribution systems, (ii) if
appropriate, inclusion under the Ekco(R) brand name and (iii) the
Company's broad distribution network. Management believes that there
are and will continue to be opportunities to acquire additional
consumer product lines and businesses due to, among other things, the
large number of companies in the consumer products and housewares
industries and the increased pressure on such companies from retailers
to provide greater and more costly levels of service and support.
PRODUCTS
BAKEWARE. The Company believes it is the leading U.S. supplier of metal
bakeware in the U.S. The Company manufactures and markets a broad line of metal
bakeware for home use, including non-stick coated bakeware marketed under a
group of Baker's Secret(R) trademarks and uncoated bakeware marketed under the
Ekco(R) trademark. Through Housewares, the Company has over 100 years of
experience in the metal bakeware market, and its bakeware products include
cookie sheets, muffin tins, brownie pans, loaf pans and similar metal bakeware
items. The Company emphasizes value, quality, functionality and, in the case of
coated products, ease of cleaning and release.
The Company regularly develops new bakeware products to capitalize on
its high consumer brand recognition and broad retail distribution. New product
development efforts are conducted by the Company's internal staff and by third
parties on a contract basis. In 1994, the Company introduced a pizza crisper
marketed under the CrispIt(TM) trademark and its line of Healthy Cooking broiler
and meat loaf pans. In 1995, the Company introduced specialty muffin pans
marketed under the Baker's Secret(R) trademark.
In January 1996, the Company expanded its insulated, non-stick coated
bakeware product line with the introduction of a variety of baking sheets and
baking pans marketed under the Baker's Secret Air Insulated(TM) trademark. The
Company also introduced its "Healthy Cooking Made Simple" non-stick coated
ovenware, including broiling pans featuring porcelain-coated racks which double
as grill tops, and non-stick roasters which hold poultry vertically during
cooking for self-basting. The Company also introduced two new merchandising
display systems for bakeware: a "cross bar" system which provides full-view
product presentation, and its Air- Pockets(TM) slanted-shelf peg-board system.
KITCHENWARE. The Company believes that it is the leading U.S. supplier
of kitchenware. The Company believes that it has obtained this position because
of its broad product lines, brand name recognition, quality and service.
The Company sells kitchen tools and gadgets under the Ekco(R) and Ekco
Pro(TM) trademarks. The Company markets more than 1,000 products in its kitchen
tools and gadgets line, including multiple colors of the same item and various
packaging combinations. Kitchen tools include metal, plastic and wooden spoons,
spatulas, serving forks, ladles and other cooking accessories. Gadgets include
peelers, corkscrews, whisks, can openers, bottle openers and similar items. The
Company also markets stainless steel and carbon
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steel cutlery and stainless steel flatware, mixing bowls and colanders. In
Fiscal 1995, the Company manufactured approximately 25% of its kitchenware
products (as measured by sales of such products).
The Company believes that the sale of kitchenware is more dependent on
impulse buying by the consumer than any other line of products the Company
offers. The Company regularly updates its kitchenware line and introduces new
items. For example, in 1994, the Company introduced a custom-designed pizza
cutter and a line of plastic cutting boards. The Company also implemented two
merchandising display programs designed to increase consumer impulse buying: Zip
Strips (folding plastics strips hung from store shelves to which products are
attached) and Power Pockets (a pre-assembled product display). In January 1996,
the Company introduced a line of upscale kitchen tool, gadget and cutlery
products under the Ekco Pro(TM) trademark. The Company also introduced a line of
boxed gadgets which include various kitchenware items and sets such as spice
racks, gadget organizers and canisters and updated the colors of its Nova(TM)
line of kitchen tools. In addition, the Company supplemented its merchandising
display program by adding a movable vertical "power tower" which utilizes only
one square foot of selling space.
CLEANING PRODUCTS. The Company manufactures and markets a broad line of
cleaning products, including brushes, brooms and mops for home use, indoor and
outdoor specialty cleaning and janitorial use. The Company believes that it is a
leading manufacturer of cleaning brushes for household, kitchen and personal
use.
In 1994, the Company introduced a dish scrubber with a detergent
reservoir, a multi-use hand-held squeegee and a washable feather duster. In
1995, the Company introduced a line of indoor and outdoor push brooms and a line
of professional-grade janitorial dust and wet mops. Consistent with its strategy
of leveraging the Ekco(R) brand name, in January 1996, the Company reintroduced
its cleaning products in new packaging utilizing the Ekco(R) trademark for
distribution in the mass merchandise and supermarket distribution channels. The
Company continues to market brooms and brushes under the Wright-Bernet(TM)
trademark to specialty hardware retailers, and mops to janitorial supply and
professional cleaning companies. The Company introduced its line of short-handle
and long-handle cleaning products with comfortable non-slip grips marketed under
the Clean Results(TM) trademark, and further expanded its long-handle product
line to include "better" and "best" dust mops and a ceiling fan brush. The
Company also expanded its cleaning product line to include lint traps, dust,
glass and quick wipes and scrub and scour mitts.
PEST CONTROL AND SMALL ANIMAL CARE AND CONTROL PRODUCTS. The Company
manufactures and markets non-toxic pest control and small animal care and
control products under the Victor(R) and Havahart(R) trademarks, respectively.
The Company believes it is the leading supplier of non-toxic pest control
products, rodent traps and live animal cage traps in the U.S. The Company's
products include spring-action rodent traps and glue- based rodent and insect
traps marketed under the Victor(R) trademark, pet cages marketed under the
Havahart(R) trademark and live animal cage traps marketed under the Havahart(R)
trademark, which are used to control garden pests and nuisance animals such as
raccoons. In 1994, the Company introduced a line of dog crates under the
Havahart(R) name and further expanded its offering of point-of-sale
merchandising displays. In 1995, the Company introduced a no-see, no-touch,
pre-set and pre-baited mouse trap, and the Roach Magnet(TM), a non-toxic roach
trap containing a pheromone attractant.
MOLDED PLASTIC PRODUCTS. The Company manufactures and markets injection
molded plastic houseware, office and juvenile products. The Company's houseware
products include a variety of storage crates and bins, laundry and storage
baskets, organizers, wastebaskets and utility caddies. Office products include
file crates, desk-top organizers, file caddies and carts. Juvenile products
include pocket trays, activity desks and organizing bins and baskets. The
Company's molded plastic products emphasize functionality as well as fashion and
color and currently consist of more than 60 products in a variety of distinctive
colors. The Company's strategy for this category is to create a full line of
products to command retail space throughout the year. For example, in January
1996, the Company introduced an expanded line of laundry products,
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including a divided laundry basket organizer, a three-handle "hip rider" laundry
basket and a wheeled hamper with a built-in handle.
The Company develops new products and works with retailers on design
concepts. In 1994, the Company introduced swivel-handled baskets and tubs,
heavy-duty stacking bins and a juvenile activity desk. In January 1995, the
Company introduced a storage locker with a lift out tray, a flip-top storage
crate for files and a smaller carry-all box. Consistent with its strategy of
leveraging the Ekco(R) brand name, in January 1996, the Company reintroduced its
molded plastic products with new packaging that utilizes the Ekco(R) brand name.
In January 1996, the Company expanded its plastic stacking bin product line to
include big and jumbo-sized storage bins for garage, pantry, closet and
children's use, and added a jumbo-sized cart to its line of plastic rolling
carts. The Company also introduced a multi-purpose bin with a folding handle
marketed under the Tag Along(TM) trademark.
VIA! In January 1995, the Company introduced its VIA!(TM) line of
houseware products designed for the upscale and specialty marketplace. Initial
products included VIA!'s kitchen tools and gadgets such as "Tutto Italiano"
pasta, garlic and pizza cooking and storage items, multi-function items, such as
a combination spoon rest/tea bag holder/utility dish, and bakeware products
including cookie sheets, loaf pans and muffin tins in heavy-gauge coated and
uncoated steel, tin steel pans, and heavy-gauge coated steel roasting pans,
racks, bakers and broilers. In January 1996, the VIA!(TM) product line was
expanded to include tea kettles marketed under the "House Blend" brand,
pantryware marketed under the "Classic Pantry" brand, a line of trivets and tool
jugs and additional multi-function gadgets marketed under the "2 Tools in 1"
brand.
CUSTOMERS AND DISTRIBUTION
Management believes that the Company has one of the broadest
distribution networks of any company in the housewares industry. The Company
markets its products primarily in the U.S. through substantially all
distribution channels that sell houseware products for everyday home use,
including mass merchandisers, supermarkets, hardware stores, drug stores,
specialty stores and other retail channels.
- Mass Merchandisers. The Company sells its products to each of
the 30 largest mass merchandisers, including Wal-Mart, Kmart
and Target.
- Supermarkets. The Company estimates that it sells its products
in over 90% of the approximately 38,000 U.S. supermarkets,
including Winn-Dixie, Kroger and Albertson's.
- Hardware Stores. The Company sells its products to many of the
largest hardware chains, including Ace Hardware, Home Depot,
True Value, ServiStar and Lowe's Home Centers.
Of these customers, Wal-Mart and Kmart accounted for 13.4% and 9.0%,
respectively, of the Company's net revenues in Fiscal 1995. No other customer
accounted for more than 5% of the Company's net revenues in Fiscal 1995.
The Company's products are distributed through the following retail
channels:
- Bakeware is distributed primarily through mass merchandisers
and supermarkets.
- Kitchenware is distributed primarily through supermarkets and
mass merchandisers, as well as hardware and drug stores.
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- Cleaning products are marketed under the Ekco(R) trademark
primarily to mass merchandisers and supermarkets. Broom and
brush products are marketed under the Wright-Bernet(TM)
trademark to hardware retailers and mops are marketed to
janitorial supply and professional cleaning companies.
- Pest control and small animal care and control products are
marketed to mass merchandisers, supermarkets, hardware, drug
and variety stores, agricultural centers and farm stores, home
centers and professional pest control companies.
- Molded plastic products are distributed primarily through mass
merchandisers, as well as large specialty retailers such as
office supply stores and drug stores.
- VIA!(TM) products are distributed through upscale and
specialty stores, including Crate & Barrel, Linens 'n Things,
Bed, Bath & Beyond and Lechter's.
The service level provided by vendors has become increasingly important
to retailers in their attempts to reduce the number of vendors and improve
efficiencies. In order to improve its services, in 1995 the Company opened its
new 260,000 square foot distribution facility in Bolingbrook, Illinois. This new
facility enables the Company to effectively pick, pack and deliver customer
orders from its inventory which results in greater on time deliveries, higher
order fill rates, the optimal use of full-truckload shipments and short purchase
order lead times. The Company also offers retailers an integrated program of
systems and capabilities designed to reduce the retailer's operating costs and
working capital as well as to improve its productivity. The Company's systems
include electronic data interchange (EDI), which is a direct computer link
between the retailer and the Company through which orders can be transmitted,
and quick response (QR), a system which integrates EDI information with the
Company's manufacturing and distribution functions to enable rapid filling of
customer orders. Both EDI and QR allow the Company to plan more efficient
production runs and increase retailer inventory turnover per year by more
precisely scheduling deliveries. The Company offers its customers advanced
logistical capabilities such as vendor managed inventory, in which the Company
assists the retailer in monitoring sales and restocking inventory. Management
believes the Company will continue to increase its distribution because it is
one of only a few competitors capable of providing such services.
SALES AND MARKETING
The Ekco Integration has enabled the Company to shift the focus of its
sales and marketing strategy from individual product categories to the broader
needs of each of its customers. Each of the Company's customers now has one Ekco
sales person responsible for selling and marketing most of the Company's
products. As part of the Ekco Integration, the Company has created a new Ekco(R)
logo and new "family" look packaging and marketing materials designed to present
consumers with a uniform message of Ekco(R) quality, value, design and
functionality.
The Company markets its product lines directly through its own sales
and marketing organization and through a network of representatives and brokers.
Outside the U.S., the Company's products are marketed through its Canadian and
U.K. subsidiaries and distributors and agents who provide marketing support to
supermarkets, mass merchandising stores, specialty stores and department stores.
The Company's agreements with its distributors and agents are generally
terminable upon 30 days notice and are not deemed to be material by the Company.
ADVERTISING AND PROMOTION
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<PAGE> 48
The Company has created an umbrella advertising program to cover its
bakeware, kitchenware, cleaning products and molded plastic products:
- NATIONAL ADVERTISING. The Company uses both media and print
advertising to create, communicate and enforce a uniform
message about the Ekco(R) brand name as an indicator of
quality, value, design and functionality across the broad
spectrum of Ekco(R) products.
- PROGRAMS FOR RETAILERS. The Company augments its sales with
regular, seasonal and thematic promotional programs for its
retail customers. For example, the Company provides incentives
for its customers to carry all of the Company's products,
promotes its products by use of "Dollar Days" and uses pallet
programs, in which it ships to customers prepackaged
assortments of the Company's products on a shipping pallet
ready for store display.
- CROSS-MERCHANDISING; CROSS-PROMOTIONS. In order to leverage
the Ekco(R) brand name, the Company advertises and promotes
across product categories. The Company also markets products
from various product lines in combination, such as plastic
buckets filled with cleaning products, or bakeware packaged
with kitchenware such as spatulas or whisks.
MANUFACTURING AND SOURCING
The Company manufactures most of its bakeware, cleaning, molded plastic
and pest control and small animal care and control products. High volume
kitchenware products (representing approximately 25% of kitchenware sales) are
generally manufactured and assembled by the Company and the remainder are
sourced from third parties. The Company utilizes a variety of standard
manufacturing processes, including metal stamping, injection molding, mesh
welding, wire forming, and automatic staple setting. The Company regularly
evaluates its manufacturing and third party sourcing options to maintain an
appropriate balance between quality and cost.
The Company has instituted a number of manufacturing process
improvements in the last four years, including (i) utilization of multiple
cavity molds for plastic products which has increased throughput and decreased
cycle time, (ii) reduced costs reflecting value engineering improvements, (iii)
reorganization of work flows, thereby increasing productivity, (iv) investments
in technologically advanced equipment and processes (including dual-injection
molding) and (v) relocation of the assembly of certain high volume kitchenware
products to a lower cost facility in Obregon, Mexico.
The Ekco Integration resulted in the creation of a single manufacturing
organization with responsibility for the four combined business units. This
consolidation facilitates the allocation of manufacturing resources to maximize
efficiency. For example, the Company anticipates that similar processes
performed at more than one facility may be shifted to a single location,
decreasing the cost associated with such processes.
RAW MATERIALS AND COMPONENTS
The Company purchases its primary raw materials, including plastic
resin, tin-plated steel, wood and corrugated boxes and packaging, from a number
of suppliers, including several major steel companies and a number of plastic
resin suppliers. All of these materials are subject to price fluctuations which
may adversely affect the Company's profitability. The Company purchases
primarily on the spot market and does not maintain long-term contracts with
suppliers. The Company also purchases components and complete
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<PAGE> 49
products, primarily for kitchen tools and gadgets, from several domestic and
foreign suppliers. The Company believes that raw materials, component items and
complete products are available from other suppliers, and that the loss of any
one of its suppliers would not have a material adverse effect on the Company.
TRADEMARKS AND PATENTS
The Company believes that its Ekco(R) trademark, as well as its Baker's
Secret(R), Havahart(R), Victor(R), Wright-Bernet(TM) and VIA!(TM) trademarks,
are significant to its competitive position. The Company holds a number of
patents, none of which is believed to be material to the Company's business.
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<PAGE> 50
PROPERTIES
As of May 15, 1996, the Company owned or leased for use in its
business the properties set forth in the table below:
<TABLE>
<CAPTION>
APPROXIMATE
SQUARE OWNED OR LEASE
DESCRIPTION OF PROPERTY(A)(B) LOCATION FOOTAGE LEASED EXPIRES
- ----------------------------- -------- ------- -------- -------
<S> <C> <C> <C> <C>
Executive offices Nashua, New Hampshire 8,000 Leased 11/06/97
Administrative offices for Franklin Park, Illinois 190,000 Leased 01/31/99
the housewares division and
warehousing and distribution
center for VIA!(TM) products
Manufacturing and warehousing Massillon, Ohio 244,000 Owned N/A
facility for bakeware
Warehousing and distribution Bolingbrook, Illinois 260,000 Leased 06/30/02
center for kitchen tools,
gadgets, bakeware and other
Company products
Manufacturing, warehousing Lititz, Pennsylvania 366,000 Owned N/A
distribution and office
facility for pest control
and small animal care and
control products
Manufacturing, warehousing, Easthampton, Massachusetts 326,000 Owned N/A
office and distribution
facility for brushes,
brooms and mops
Manufacturing, warehousing, Worcester, Massachusetts 170,000 Owned N/A
distribution and office
facility for molded plastic
products
Warehousing facility for Worcester, Massachusetts 135,000 Leased 01/31/00
molded plastic products
Manufacturing, warehousing Phoenix, Arizona 104,000 Owned N/A
and distribution for molded
plastic products
</TABLE>
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<PAGE> 51
<TABLE>
<S> <C> <C> <C> <C>
Manufacturing, warehousing, Hamilton, Ohio 100,000 Owned N/A
distribution and office
facility for brushes, brooms
and mops
Manufacturing and warehousing Obregon, Sonora, Mexico 27,000 Leased 12/23/96
facility for kitchen tools
and gadgets
Office and warehousing Niagara Falls, Ontario, 39,000 Owned N/A
facility for products for Canada
sale and distribution in
Canada
Manufacturing and Nashville, Tennessee 42,000 Leased 12/31/96
distribution facility for
institutional mop and broom
products
Office facility for VIA!(TM) Englewood Cliffs, New Jersey 3,000 Leased 07/31/96
products
Office facility for products Caldicot, Gwent, U.K. 2,000 Leased 09/01/98
for sale and distribution in
the U.K.
</TABLE>
- -------------------
(a) In addition to the properties listed in the table, as of May 15,
1996 the Company owned approximately 607,000 square feet of floor space
which is being held for sale or lease. Approximately 10% of this space
was under lease to a third party as of that date. The remaining space
is covered by purchase and sale agreements. The Company leases other
real properties not set forth above which in the aggregate are not
deemed material.
(b) Substantially all of the properties owned by the Company are subject to
mortgage liens granted in connection with the Revolving Credit
Facility. The Company believes that its properties are generally
suitable and adequate for its purposes for the foreseeable future.
COMPETITION
The Company believes that the markets for all of its product lines are
highly competitive and that competition for retail sales to consumers is based
on several factors, including brand name recognition, value, quality, price and
availability. Primary competitive factors with respect to selling such products
to retailers are brand reputation, number of product categories offered, broad
product coverage within each product category, support and service of the
retailer and price.
According to the NHMA, the housewares market grew to $54.0 billion in
sales in 1994 from $45.0 billion in 1990, a compound annual growth rate of
approximately 5%. The housewares industry is highly
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<PAGE> 52
fragmented: a 1995 NHMA report stated that of its approximately 2,000 members,
75% had revenues of less than $17.5 million in 1994.
The Company competes with established companies, several of which have
substantially greater resources than those of the Company. There are no
substantial regulatory or other barriers to entry of new competitors in the
housewares industry. However, suppliers that are able to maintain, or increase,
the amount of retail space allocated to a product may gain a competitive
advantage in that product market. The Company believes that the allocation of
space by retailers is influenced by many factors, including the brand name
recognition by consumers, quality and price of the supplier's products, the
level of service provided by the supplier and the supplier's ability to support
promotions.
The Company believes that its ability to compete successfully is based
on the wide recognition of its brand names, its multiple category product
offerings, its ability to design, develop, acquire, manufacture and market
competitively priced products, its broad product coverage within most product
categories, its attention to retailer and consumer needs and its access to major
channels of distribution. There can be no assurance that the Company will be
able to compete successfully against current and future sources of competition
or that the competitive pressures faced by the Company will not adversely affect
its profitability or financial performance.
ENVIRONMENTAL REGULATION AND CLAIMS
From time to time, the Company has had claims asserted against it by
regulatory agencies or private parties for environmental matters relating to the
generation or handling of hazardous substances by the Company or its
predecessors and has incurred obligations for investigations or remedial actions
with respect to certain of such matters. While the Company does not believe that
any such claims asserted or obligations incurred to date will result in a
material adverse effect upon the Company's financial position, results of
operations, or liquidity, the Company is aware that at its facilities at
Massillon and Hamilton, Ohio; Easthampton, Massachusetts; Chicago, Illinois and
Lititz, Pennsylvania and at its previously owned facility in Hudson, New
Hampshire hazardous substances and oil have been detected and that additional
investigations will be, and remedial actions will or may be, required at such
facilities. Operations at these and other facilities currently or previously
owned or leased by the Company utilize, or in the past have utilized, hazardous
substances. There can be no assurance that activities at these or future
facilities may not result in additional environmental claims being asserted
against the Company or additional investigations or remedial actions being
required.
Prior to the Company's acquisition of Housewares in 1987, Housewares'
Massillon, Ohio steel bakeware manufacturing facility was the subject of
administrative proceedings before the United States Environmental Protection
Agency by issuance of an administrative complaint alleging violations of the
Resource Conservation and Recovery Act resulting from operation of a wastewater
lagoon at the facility. American Home Products Corporation ("AHP"), a former
owner of Housewares, pursuant to an indemnity agreement (the "Indemnity
Agreement") with Housewares relating to acts occurring prior to September 7,
1984, assumed the costs of remediation measures in addition to the defense of
the administrative proceedings with federal and state environmental protection
agencies, as well as preparation of closure plans and other plans called for as
a result of these proceedings. While AHP has acknowledged its full
responsibility under the Indemnity Agreement with respect to the wastewater
lagoon, it has asserted that Housewares should contribute to the cost of a
remediation study and certain remediation measures to the extent that Housewares
exacerbated contamination at the facility since September 7, 1984. Housewares
has denied that it has exacerbated contamination at the facility since such
date. AHP and Housewares have agreed to allocate such costs in proportion to
their respective responsibilities based on the results of an engineering study
but in no event will Housewares' share with respect to the wastewater lagoon
exceed the lesser of 25% of the total cost
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<PAGE> 53
or $750,000. The Company is unable to determine to what extent, if any, it will
be responsible to contribute to such costs but the Company does not believe that
any such contribution that it may be required to make will have a material
adverse effect on its financial position, results of operations or liquidity.
In June 1992, the United States filed an action in the U.S. District
Court for the Northern District of Ohio against Housewares seeking penalties
and injunctive relief and alleging violations as a result of an alleged failure
to provide certain closure and post-closure financial assurances with respect
to the Massillon, Ohio site. Pursuant to the Indemnity Agreement and a
confirmatory letter from AHP to Housewares on December 19, 1988 (the "Indemnity
Documents"), AHP conducted and controlled all matters relating to such
financial assurances and the defense of the action filed in June 1992. In
January 1994, the court entered judgment against Housewares in the amount of
$4.6 million in the lawsuit. AHP filed a notice of appeal on behalf of
Housewares. In August 1995 the Court of Appeals affirmed in part and reversed
in part the penalty imposed on Housewares and remanded to the district court
the determination of civil penalties for certain periods of time. The penalty
affirmed by the Court of Appeals amounted to $2,858,000, and, pursuant to the
Indemnity Documents, AHP paid that amount, plus applicable interest, on
Housewares' behalf. With respect to the penalty reversed and remanded by the
Court of Appeals, the United States has agreed in principle to a stipulated
judgment that would resolve the remaining claims in the case for $400,000.
While such stipulated judgment has not yet been finalized and entered, AHP, by
letter dated May 6, 1995, notified Housewares that if such judgment is entered
AHP intends to pay that amount on Housewares' behalf and will not seek
reimbursement from the Company of the amounts AHP has paid or will pay on
Housewares' behalf in this litigation.
In connection with the acquisition of Kellogg Brush by the Company in
Fiscal 1993, the Company engaged environmental consultants ("Consultants") to
review potential environmental liabilities at all of Kellogg's properties. Such
investigation and testing resulted in the identification of likely environmental
remedial actions, operation, maintenance and ground water monitoring and the
estimated costs therefor. Based upon such engineering studies, management
originally estimated the total remediation and ongoing ground water monitoring
costs to be approximately $6.0 million, including the effects of inflation and
accordingly, at that time, recorded a liability of approximately $3.8 million,
representing the undiscounted costs of remediation and the net present value of
future costs discounted at 6%. Based upon the most recent cost estimates
provided by the Consultants, the Company believes the total remaining
remediation costs will be approximately $2.0 million and the expense for ongoing
operation, maintenance and ground water monitoring will be approximately $50,000
for Fiscal 1996 and approximately $25,000 for each of the thirty years
thereafter. As of March 31, 1996, the liability recorded by the Company was
approximately $3.5 million. The Company expects to pay approximately $325,000 of
remediation costs in Fiscal 1996 with the balance being paid out in Fiscal 1997
and Fiscal 1998. During 1995, the Company paid approximately $211,000 of such
remediation costs, and during the first quarter of Fiscal 1996 the Company paid
approximately $9,000 of such costs. The estimates may subsequently change
should additional sites be identified or further remediation measures be
required or undertaken or the interpretation of current laws or regulations
are modified. The Company has not anticipated any insurance proceeds or
third-party payments in arriving at the above estimates.
LITIGATION
In addition to the environmental claims discussed above, from time to
time the Company is a party to litigation and other legal proceedings, including
product liability claims. In many cases, claims are covered by insurance,
subject to standard deductibles. Although the outcome of such proceedings cannot
be determined with certainty, the Company believes that the expected final
outcome of such proceedings will not have a material adverse effect on the
Company. In April 1996, the U.S. District Court for the Northern District of
Ohio ruled that certain insulated bakeware products manufactured by the Company
infringed on a patent held by a third-party plaintiff. The Company ceased
manufacturing such products in December 1995. Monetary damages have not yet
been assessed by the Court. The Company and its counsel believe that the
Company has meritorious grounds for appeal. The Company will review the damage
assessment and will vigorously pursue an appeal as it deems appropriate.
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<PAGE> 54
SEASONALITY
Many of the Company's product categories are affected by seasonal
consumer purchasing patterns, including holiday cooking and baking,
back-to-school shopping and spring cleaning. Historically, the Company's
revenues in the last half of the Fiscal year have been greater than in the first
half. In Fiscal 1995, 56.7% and 62.2% of net revenues and EBITDA, respectively,
were generated in the second half of the year. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Overview --
Seasonality."
BACKLOG
Information as to backlog is not material to an understanding of the
Company's business because most of the Company's net revenues result from short
lead-time customer orders. The Company generally is able to fill orders from
inventory, and has generally been able to adjust production levels to meet
increases in customers' orders that cannot be filled from inventory.
EMPLOYEES
As of March 31, 1996, the Company employed 1,279 persons in the U.S. of
whom 692 were represented under collective bargaining agreements which expire
on dates ranging from February 1997 to February 2000. As of such date, the
Company also employed 31 persons in Canada, of whom 12 were represented under a
collective bargaining agreement which expires in July 1997, and three persons
in the U.K. The Company considers its employee relations to be satisfactory.
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<PAGE> 55
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following is a list of the directors and executive officers of
Ekco, their ages, and their principal positions with Ekco as of May 15, 1996:
<TABLE>
<CAPTION>
NAME Age Positions and Offices with Ekco
- -------------------- ------- ---------------------------------------------------------
<S> <C> <C>
Robert Stein.......... 57 President, Chief Executive Officer and Director
Jeffrey A. Weinstein 45 Executive Vice President, Secretary, General Counsel and
Director
Donato A. DeNovellis 51 Executive Vice President, Finance and Administration, and
Chief Financial Officer
Stuart W. Cohen....... 49 Vice President, Strategic Planning and Business
Development
John T. Haran......... 53 Vice President and Treasurer
Brian R. McQuesten.... 46 Vice President and Controller
Malcolm L. Sherman.... 64 Director
T. Michael Long....... 52 Director
Stuart B. Ross........ 59 Director
Bill W. Sorenson...... 65 Director
Herbert M. Stein...... 67 Director
</TABLE>
Mr. Robert Stein has served as President and Chief Executive Officer of
Ekco since February 1986 and served as Chief Financial Officer from July 1980 to
July 1993. Mr. Stein also serves as a director of the NHMA and the Cookware
Manufacturers Association. He has served as director of the Company since June
1982.
Mr. Weinstein has served as Executive Vice President of Ekco since
April 1985, Secretary since February 1988 and General Counsel since October
1978. He has served as a director of Ekco since March 1986.
Mr. DeNovellis has served as Executive Vice President, Finance and
Administration, of Ekco since October 1994, as Chief Financial Officer since
July 1993, and as Vice President from July 1993 to October 1994. Prior to
joining the Company, from 1980 to 1992 Mr. DeNovellis served Xerox Corporation
and its subsidiary companies in a number of capacities, including the following:
Managing Director from May 1992 to October 1992; Executive Vice President and
Chief Administrative Officer from April 1991 to May 1992 of Crum and Forster,
Inc. (a property/casualty insurance holding company); and Senior Vice President,
Operations and Analysis, from January 1990 to April 1991 of Xerox Financial
Services, Inc. (a financial services company).
Mr. Cohen has served as Vice President, Strategic Planning and Business
Development, of Ekco since June 1995. Prior to joining Ekco, from May 1991 to
December 1994, Mr. Cohen served as First Vice President of Van Kampen Merritt,
Inc. ("VKM") (an investment products and management firm), where he was
responsible for strategic planning and business development. From August 1986 to
April 1991, Mr. Cohen was an investment banker and Vice President, Mergers and
Acquisitions and Capital Markets Divisions of VKM.
Mr. Haran has served as Vice President and Treasurer of Ekco since
February 1996. From January 1994 to March 1995, Mr. Haran served as Chief
Financial Officer of Strategic Realty Advisors, Inc. (a
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<PAGE> 56
commercial real estate company) and from March 1990 to December 1993, he served
as Chief Financial Officer of VMS Realty Partners (a commercial real estate
partnership).
Mr. McQuesten has served as Controller of Ekco since May 1987 and as
Vice President since February 1996.
Mr. Sherman has served as a director of Ekco since May 1995. He has
served as Chairman of the Board of Advisors of Gordon Brothers, Inc. (a jewelry
distributor and financial services company) since February 1993. Mr. Sherman has
served as a consultant to the Company since February 1993, and currently
receives an annual retainer of $50,000 for such services. He served as Chairman
and a director of K.T. Scott, Ltd. (a chain of wallpaper and window stores) from
January 1991 to August 1995. He served as President and Chief Executive Officer
of Morse Shoe, Inc. (a manufacturer, importer and retailer of shoes) from
January 1992 until December 1993, and as Chairman and Chief Executive Officer of
Channel Home Centers, Inc. (a chain of do-it-yourself super stores) from March
1989 until December 1991. Mr. Sherman is a director of Maxwell Shoe Co. (a shoe
importer) and One Price Clothing, Inc. (a chain of sportswear stores).
Mr. Long has served as a director of Ekco since May 1993 and has been a
General Partner of Brown Brothers Harriman & Co. since 1984 and a co-manager of
the 1818 Fund, L.P. since 1989. He is a director of Columbia Healthcare Corp. (a
chain of acute care hospitals), Nuevo Energy Company (an oil and gas exploration
and production company) and Gulf Canada Resources, Limited (a Canadian oil and
gas exploration and production company). Mr. Long was elected a director of Ekco
pursuant to the terms of a Securities Purchase Agreement (the "Securities
Purchase Agreement") between Ekco and The 1818 Fund, L.P. See "Certain
Relationships and Related Transactions--Certain Business Relationships--The 1818
Fund, L.P. Share Purchase."
Mr. Ross has served as a director of Ekco since February 1989 and has
served as Executive Vice President of Xerox Corporation, and Chairman and Chief
Executive Officer of Xerox Financial Services, Inc. (a financial services
company) since May 1990.
Mr. Sorenson has served as a director of Ekco since October 1986 and
has been Chairman and a director of Management Resources of America Inc. (a
management consulting firm) since January 1986 and was its Chief Executive
Officer from January 1986 to May 1994. He has been Chairman and a director of
American Sports Products Group, Inc. (a holding company which owns sports
equipment manufacturing businesses) since May 1994.
Mr. Herbert Stein, who is not related to Mr. Robert Stein, has served
as a director of Ekco since September 1981. Mr. Stein has served as Chairman of
Organogenesis, Inc. (a biotechnology company) since February 1991 and Chief
Executive Officer and a director of Organogenesis, Inc. since January 1987. Mr.
Stein has also served as President of H.M. Stein & Co., Inc. (a financial
management firm) since 1970.
BOARD COMMITTEES
Audit Committee. The Audit Committee consists of three non-employee
directors: Malcolm L. Sherman, T. Michael Long, and Herbert M. Stein. The Audit
Committee reviews the engagement of Ekco's independent auditors. The Audit
Committee also reviews the audit fees of the independent auditors and the
adequacy of the Company's internal accounting procedures.
Compensation Committee. The Compensation Committee consists of three
non-employee directors: T. Michael Long, Stuart B. Ross and Bill W. Sorenson.
The Compensation Committee reviews, approves and makes recommendations regarding
Ekco's compensation policies, practices and procedures to ensure that the
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<PAGE> 57
legal and fiduciary responsibilities of the Board of Directors are carried out
and that such policies, practices and procedures contribute to the success of
the Company. The Compensation Committee administers Ekco's 1984 and 1985
Restricted Stock Plans and 1987 Stock Option Plan and has made or recommended
all grants and awards under such plans. The Compensation Committee also
administers Ekco's 1984 Employee Stock Purchase Plan.
Executive Committee. The Executive Committee consists of two employee
directors, Robert Stein and Jeffrey A. Weinstein. The Executive Committee has
the authority to take all actions that could be taken by the full Board of
Directors, with certain exceptions. The Executive Committee meets as necessary
between regularly scheduled meetings of the Board of Directors to take such
action as is advisable for the efficient operation of the Company.
ELECTION AND COMPENSATION OF DIRECTORS
Election of Directors. Ekco has seven directors, elected by the
stockholders at Ekco's annual meeting. Pursuant to the Securities Purchase
Agreement, upon the satisfaction of certain conditions The 1818 Fund, L.P. was
entitled to designate one director to be nominated to the Ekco's Board of
Directors. Mr. T. Michael Long has served as director of Ekco since May 1993
pursuant to the Securities Purchase Agreement. See "Certain Relationships and
Related Transactions--Certain Business Relationships--The 1818 Fund, L.P. Share
Purchase."
Each director holds office until the next annual meeting of
stockholders and until his successor is chosen and qualified, or until their
earlier resignation or removal.
Directors' Fees. Directors of Ekco who are not employees receive an
annual fee of $10,000, a fee of $1,000 for each Board of Directors' meeting
attended, and reimbursement of meeting travel expenses. Such directors also
receive a fee of $1,000 for attendance at each meeting of a committee of the
Board of Directors that is not held on the same day as a Board of Directors'
meeting. Employee directors do not receive additional compensation for serving
on the Board of Directors.
Directors' Stock Options. As of May 15, 1996, Ekco had 345,331 shares
of Common Stock available for future grants under its 1988 Directors' Stock
Option Plan, as amended (the "Directors' Plan"). The Directors' Plan provides
for the granting of non-qualified stock options (each, a "Director Option") to
purchase Common Stock to non-employee directors of Ekco. Under the terms of the
Directors' Plan, Director Options are automatically granted to Outside Directors
(as defined) at the time they so qualify. An "Outside Director" is a director
who is not an employee of Ekco or an Affiliate (as defined) of Ekco, who has not
been so employed within one year before the time of grant, and has been elected
as a director by the stockholders of Ekco. No Outside Director may be granted
more than one Director Option. The option exercise price for each share of
Common Stock covered by a Director Option is the fair market value (as defined)
of such share on the date the Director Option is granted. Each Director Option
covers that number of shares determined by dividing $100,000 by the fair market
value (as defined) of a share of Common Stock on the date of grant, but in no
event may the number of shares subject to such Director Option be greater than
50,000. Each Director Option has a term of ten years from the date of grant,
subject to earlier termination as provided in the Directors' Plan.
Each outstanding Director Option granted pursuant to the Directors' Plan is
exercisable at any time and from time to time in accordance with the terms of
the Directors' Plan. Shares purchased pursuant to the exercise of any Director
Option are subject to repurchase by Ekco within three years of the date of grant
of the Director Option at the exercise price upon termination of the Outside
Director's directorship with Ekco as follows: as to all shares so purchased if
termination occurs prior to the first anniversary of the date of grant
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of the Director Option; as to up to two-thirds of the shares purchased pursuant
to the Director Option if termination occurs prior to the second such
anniversary; and as to up to one-third of the shares purchased pursuant to the
Director Option if termination occurs prior to the third such anniversary. The
shares cease to be subject to the right of Ekco to repurchase them if
termination of the directorship is due to the death of the Outside Director or
if a change of control (as defined) of Ekco occurs at any time before the
Outside Director's directorship is terminated.
During Fiscal 1995, a Director Option was granted to Malcolm L. Sherman
to acquire 16,162 shares at an exercise price of $6.1875 per share (fair market
value as of the May 25, 1995 date of grant) and a Director Option to acquire
45,714 shares was exercised by Andrew D. Dunn, a former director.
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table includes individual
compensation information for Ekco's Chief Executive Officer, each of the four
other most highly compensated executive officers of Ekco in Fiscal 1995 who were
serving as executive officers of the Company at the end of Fiscal 1995 and two
additional individuals who were not serving as executive officers at the end of
Fiscal 1995 (collectively, the "Named Executive Officers") for services rendered
in all capacities to the Company during the last three fiscal years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION --------------------------
---------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION(S) YEAR ($)(1) ($)(1)(2) ($)(3) ($)(4)(5) (#)(4)(6) ($)(7)
- ------------------------------ ---- ---------- --------- ------------ --------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert Stein................. 1995 370,000 18,500 -- 578,570 66,359 62,780
President and Chief 1994 370,000 148,000 -- -- 75,000 78,486
Executive Officer 1993 370,000 -- -- -- 120,000 71,473
Jeffrey A. Weinstein......... 1995 219,600 7,320 -- 165,024 16,491 28,766
Executive Vice President, 1994 219,600 53,910 -- -- 22,000 30,245
Secretary and General 1993 219,600 -- -- -- 60,000 34,851
Counsel
Donato A. DeNovellis......... 1995 207,000 6,297 -- 212,821(8) 24,538 27,471
Executive Vice President, 1994 198,714 58,492 -- -- 20,000 18,463
Finance and Administration 1993 85,385 -- 14,328 200,625 30,000 15,155
and Chief Financial Officer
Brian R. McQuesten........... 1995 113,700 2,843 -- 78,642 6,992 20,645
Controller(9) 1994 113,700 25,842 -- -- 8,500 19,600
1993 113,700 -- -- -- 10,000 21,283
Neil R. Gordon............... 1995 114,900 5,746 -- 59,156 5,937 21,242
Treasurer(10) 1994 114,900 22,208 -- -- 8,500 20,770
1993 114,900 -- -- -- 9,000 22,762
Richard J. Corbin............ 1995 165,107 -- 22,991 284,765 29,288 95,363
Former Executive Vice 1994 152,875 40,000 -- -- 30,000 --
President, Marketing & 1993 -- -- -- -- -- --
Sales(10)
Ronald N. Fox................ 1995 135,192 -- -- -- -- 193,305
Former Corporate Director of 1994 188,871 33,400 19,040 -- 16,000 34,996
Manufacturing(10) 1993 184,000 -- -- -- 60,000 39,295
</TABLE>
- ----------------
-56-
<PAGE> 59
(1) The amounts shown include the individual's before-tax deferrals under
Ekco's 401(k) retirement plan.
(2) The amounts shown for Fiscal 1995 are bonuses paid pursuant to the
intermediate portion of Ekco's Incentive Compensation Plan for
Executive Employees, as amended (the "ICPEE"). Pursuant to the
severance arrangement with Mr. Gordon, more fully described below in
"--Employment, Termination of Employment and Change of Control
Arrangements," the payment to Mr. Gordon also includes $2,873 that
would otherwise have been payable in 1996 pursuant to the intermediate
portion of the ICPEE.
(3) Unless included in the table, non-cash benefits were less than the
lesser of 10% of each such person's respective cash compensation or
$50,000. The amount shown for Mr. Corbin is comprised of $14,513 of
relocation expenses and $8,478 attributed to his use of an Ekco-owned
automobile.
(4) Pursuant to Ekco's Series A Junior Participating Preferred Stock
Purchase Rights Plan, with each share of Common Stock issued, including
shares of Common Stock issued in connection with a compensation plan, a
right to purchase one-hundredth of a share of Ekco's Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Series A
Junior Participating Preferred Stock"), will be issued. Such rights are
not currently exercisable.
(5) The amounts shown for Fiscal 1995 for each of the following persons
include awards of restricted stock made pursuant to Ekco's 1984
Restricted Stock Plan and 1985 Restricted Stock Plan (collectively, the
"1984 and 1985 Plans") and individual restricted stock purchase
agreements in accordance with Ekco's 1995 Restatement of Incentive
Compensation Plan for Executive Employees of Ekco Group, Inc. and
Subsidiaries (the "1995 Incentive Plan") which are valued based upon
the $6.00 closing price of Ekco's Common Stock on the NYSE as reported
by The Wall Street Journal (net of the consideration paid) on the
January 3, 1995 grant date, as follows: Mr. Stein, 96,080 shares valued
at $566,872; Mr. Weinstein, 26,900 shares valued at $158,710; Mr.
DeNovellis, 35,080 shares valued at $206,972; Mr. McQuesten, 12,080
shares valued at $71,272; Mr. Gordon, 9,610 shares valued at $56,699;
and Mr. Corbin, 47,765 shares originally awarded valued at $281,813 (of
such number of shares, only 9,602 shares valued at $56,652 were
actually provided as part of Mr. Corbin's severance arrangement with
Ekco (see "Employment, Termination of Employment and Change of Control
Arrangements" below)). Under the 1995 Incentive Plan, the shares are
apportioned into five blocks ("Performance Blocks"), with each
Performance Block identified with a fiscal year of a 5-year period
beginning with Fiscal 1995 and ending with Fiscal 1999. Restrictions on
disposition of the shares in each Performance Block lapse either (i) if
the specified Target Return on Capital (as defined) for the performance
of the Company for the designated year for the Performance Block is
achieved, then at the rate of 20% per year on each of the first,
second, third, fourth and fifth anniversaries of the closing date (as
defined) for each full year of employment following the later to occur
of (a) January 1 of the year designated for the Performance Block, or
(b) the closing date (as defined) for the shares in such Performance
Block; (ii) upon the purchaser's death or disability (as defined);
(iii) upon a change of control (as defined); or (iv) upon specified
continued service with the Company.
The amounts shown for Fiscal 1995 for each of the following persons
also include restricted stock awards made pursuant to Ekco's 1985
Restricted Stock Purchase Plan (the "1985 Plan") and individual
restricted stock purchase agreements as a result of the election made
by such individuals to forego all or a portion of their increases in
salary for Fiscal 1995 in accordance with the terms of the 1995
Incentive Plan and valued based upon the following closing prices of
Ekco's Common Stock on the NYSE as reported by The Wall Street Journal
(net of the consideration paid) at the end of each fiscal quarter when
a portion of such shares were awarded (on March 31, 1995 at $6.25 per
share, June 30, 1995 at $6.00 per share, September 29, 1995 at $6.125
per share and December 29, 1995 at $5.875 per share), as follows: Mr.
Stein, 1,962 shares valued at $11,698; Mr. Weinstein, 1,059 shares
valued at $6,314; Mr. DeNovellis, 981 shares valued at $5,849; Mr.
McQuesten, 1,236
-57-
<PAGE> 60
shares valued at $7,370; Mr. Gordon, 412 shares valued at $2,457; and
Mr. Corbin, 490 shares valued at $2,952. Mr. Fox did not participate in
the 1995 Incentive Plan. Under the 1985 Plan, restrictions on
disposition lapse at the rate of 20% per year on each of the first,
second, third, fourth and fifth anniversaries of the closing date (as
defined), provided that the purchaser is at each such anniversary date
an employee or director of the Company, upon the purchaser's death or
disability (as defined) or upon a change of control (as defined).
Dividends are paid on restricted shares of Common Stock at the same
rate paid to all shareholders (for Fiscal 1995 at the quarterly rate of
$0.02 per share).
On December 31, 1995, the number of shares listed below were held in
escrow pursuant to the terms of the 1984 and 1985 Plans for each named
purchaser. The shares are valued as of December 29, 1995 at $5.875 per
share (net of consideration paid). Mr. Corbin and Mr. Fox did not hold
any restricted shares as of such date (see Note 10 below).
<TABLE>
<CAPTION>
NO. OF MARKET VALUE
SHARES AT 12/29/95
------ -----------
<S> <C> <C>
Robert Stein................................ 98,042 $566,193
Jeffrey A. Weinstein........................ 27,959 $161,463
Donato A. DeNovellis........................ 36,061 $208,252
Brian R. McQuesten.......................... 13,316 $76,900
Neil R. Gordon.............................. 10,022 $57,877
</TABLE>
(6) Options to purchase the number of shares of Common Stock shown were
granted pursuant to Ekco's 1987 Stock Option Plan, as amended (the
"1987 Stock Option Plan").
(7) The amounts shown for Fiscal 1995 consist of (i) the sum of the
economic benefit to each of the following persons for split dollar life
insurance coverage plus the difference between the premiums paid in
1995 and the present value of the recoverable premium as follows: Mr.
Stein, $48,258; Mr. Weinstein, $14,227; Mr. DeNovellis, $15,054; Mr.
McQuesten, $7,278; Mr. Gordon, $8,211; the $12,470 and $1,217 economic
benefit of the Fiscal 1994 premiums for Mr. Corbin and Mr. Fox,
respectively, whose policies terminated in Fiscal 1995 and had death
benefits through their respective dates of termination; (ii) the value
of shares of ESOP Preferred Stock and Common Stock allocated to the
account of each person for plan year 1995 pursuant to the Ekco Group,
Inc. Employee Stock Ownership Plan ("ESOP"), as follows: Mr. Stein,
$14,522; Mr. Weinstein, $14,539; Mr. DeNovellis, $12,417; Mr.
McQuesten, $13,367; and Mr.Gordon, $13,314 (Mr. Corbin was not eligible
to participate in the ESOP in Fiscal 1995 and Mr. Fox did not receive
an allocation for the 1995 plan year due to his termination of
employment); (iii) severance payments to Mr. Corbin of $82,893 and to
Mr. Fox of $150,000; and (iv) payments to Mr. Fox of $42,088 of accrued
vacation.
(8) The amount shown includes $90,000 relating to 15,000 shares issued in
exchange for 15,000 shares surrendered by Mr. DeNovellis from the award
made in Fiscal 1993.
(9) Mr. McQuesten currently serves as Vice President and Controller.
(10) The employment of Mr. Corbin and Mr. Fox terminated on August 31, 1995
and September 15, 1995, respectively. Mr. Gordon's employment
terminated on January 3, 1996.
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<PAGE> 61
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information as to option grants made by
Ekco during Fiscal 1995 to the Named Executive Officers pursuant to Ekco's 1987
Stock Option Plan (Mr. Fox did not receive an option grant in Fiscal 1995):
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE GRANT DATE
OPTIONS IN FISCAL PRICE EXPIRATION PRESENT
NAME (#)(1) YEAR ($/SH) DATE VALUE($)(2)
- ---------------------- ---------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Robert Stein.......... 66,359 20.0% 6.50 02-03-05 177,946
Jeffrey A. Weinstein.. 16,491 5.0% 6.50 02-03-05 44,221
Donato A. DeNovellis.. 24,538 7.4% 6.50 02-03-05 65,797
Brian R. McQuesten.... 6,992 2.1% 6.50 02-03-05 18,752
Neil R. Gordon........ 5,937 1.8% 6.50 02-03-05 15,920
Richard J. Corbin..... 29,288 8.8% 6.50 02-03-05 78,539
</TABLE>
- ----------------
(1) The options were granted pursuant to Ekco's 1987 Stock Option Plan and
individual option agreements. The exercise price of each option (which
is to be not less than 100% of the fair market value of the Common
Stock underlying such option on the date of grant) is subject to
adjustment for stock splits or dividends, combinations,
recapitalizations or similar transactions. Each option granted under
the 1987 Stock Option Plan is referred to as an "Employee Option." The
Employee Options are exercisable at any time and from time to time in
accordance with the terms of the individual option agreements between
Ekco and the optionees. Shares of Common Stock purchased pursuant to
the exercise of any Employee Option are subject to repurchase at the
option exercise price by Ekco within three years of the date of grant
of the option upon the termination of the employee's employment with
Ekco as follows: as to all shares so purchased if such termination
occurs prior to the first anniversary of the date of grant of the
option; as to up to two-thirds of the shares which may be purchased
pursuant to the option if termination occurs prior to the second such
anniversary; and as to up to one-third of the shares which may be
purchased pursuant to the option if termination occurs prior to the
third such anniversary. Shares of Common Stock purchased upon the
exercise of Employee Options cease to be subject to the right of Ekco
to purchase them if termination of employment is due to the death or
disability (as defined) of the employee, or if a change of control (as
defined) of Ekco occurs at any time before the employee's employment is
terminated or as otherwise provided in the executive's employment
agreement.
(2) Based on the Black-Scholes option pricing model adapted for use in
valuing executive stock options. The actual value, if any, an executive
may realize will depend on the excess of the stock price over the
exercise price on the date the option is exercised, so that there is no
assurance that the value realized by an executive will be at or near
the value estimated by the Black-Scholes model. The estimated values
under that model are based upon the following assumptions: stock price
volatility of 0.4091, future dividend yield of 1.33%, and interest
rates of 5.30%, 5.34%, and 5.41%, based on the 4, 5, and 6-year Strip
Treasury yield on actively traded issues adjusted to constant
maturities for the week ending December 31, 1995. It was also assumed
that one-third of each Employee Option has an expected life of six
years and nine months; one-third has an expected life of five years and
nine months; and one-third has an expected life of four years and nine
months, based on the effect of the repurchase provisions described in
Note 1 above and historical data with respect to exercises of Employee
Options.
-59-
<PAGE> 62
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information as to the number of shares
purchased upon exercise of Employee Options and the value realized upon such
exercise, as well as the number of securities underlying options and the value
of such securities at the end of Fiscal 1995 with respect to the Named Executive
Officers:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS AT OPTIONS AT
NAME EXERCISE(#) REALIZED($)(1) FY-END(#)(2) FY-END($)(3)
- ---------------------- ----------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Robert Stein.......... -- -- 731,359 1,131,063
Jeffrey A. Weinstein.. -- -- 317,991 569,730
Donato A. DeNovellis.. -- -- 74,538 --
Brian R. McQuesten.... -- -- 123,492 281,281
Neil R. Gordon........ -- -- 111,437 243,781
Richard J. Corbin..... -- -- 59,288 --
Ronald N. Fox......... 45,000 182,188 103,500 --
</TABLE>
- ---------------
(1) Based upon the following closing prices of Ekco's Common Stock on the
NYSE on the dates of exercise as reported by The Wall Street Journal as
of such date: $6.75 on September 15, 1995 as to 20,000 shares and $6.25
on September 21, 1995 as to 25,000 shares.
(2) Includes the following number of shares of Common Stock subject to
repurchase by Ekco under the 1987 Stock Option Plan as of December 31,
1995: Mr. Robert Stein, 156,359 shares; Mr. Weinstein, 51,157 shares;
Mr. DeNovellis, 57,871 shares; Mr. McQuesten, 15,991 shares; Mr.
Gordon, 14,603 shares; Mr. Corbin, no shares; and Mr. Fox, no shares.
All Employee Options are currently exercisable.
(3) Based upon the $5.875 closing price of Ekco's Common Stock on the NYSE
on December 29, 1995, as reported by The Wall Street Journal. Each of
the Employee Options had an exercise price equal to the fair market
value of Ekco's Common Stock on the dates the options were granted.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In July 1992, Ekco adopted the Supplemental Executive Retirement Plan
(the "SERP"). The SERP is a retirement plan which uses a defined benefit formula
to provide for lump sum payments to be made upon retirement, termination of
employment, death or disability, to certain officers designated by the Board of
Directors, as more fully described below. The SERP is not qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code").
Each lump sum payment to a participant in the SERP is calculated in
order to equal the actuarial equivalent of a lifetime pension. The amount of a
participant's payment under the SERP is generally determined by multiplying an
amount designated by the Compensation Committee with respect to such participant
by such participant's years of Credited Service (as defined). Certain additional
payments are payable to a participant under the SERP if his employment with the
Company terminates within three years
-60-
<PAGE> 63
of a Change in Control (as defined) and under certain other circumstances
specified in the SERP. A participant's benefits under the SERP vest at 20% per
year beginning upon the attainment of five years of Credited Service (as
defined), becoming fully vested upon the attainment of ten years of Credited
Service; notwithstanding the foregoing, upon a change in control (as defined) of
Ekco, all participants shall become 100% vested in their benefits in the SERP,
and if such participant's employment with Ekco terminates within three years
after such change in control, a lump sum payment of SERP benefits shall be made
to such participant.
The estimated lump sum payments payable under the SERP to the Named
Executive Officers upon each such Named Executive Officer's respective Normal
Retirement Date (as defined) will be the actuarial equivalent of an annual
payment of the following amounts: Mr. Stein, $132,000 per annum; Mr. Weinstein,
$47,151 per annum; Mr. DeNovellis, $41,782 per annum; and Mr. McQuesten, $25,075
per annum. In connection with their termination of employment in Fiscal 1995,
Mr. Fox received $145,046 as payment of his vested accrued benefit from the SERP
and Mr. Corbin, although a participant, did not have any vested benefits from
the SERP as of the date of his termination. Mr. Gordon will receive a lump sum
payment from the SERP of $77,609 in January 2003.
EMPLOYMENT, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
Ekco has employment agreements (collectively, "Employment Agreements")
with its Chief Executive Officer and Messrs. Weinstein, DeNovellis and
McQuesten, as well as with certain other management personnel. Employment
Agreements with Messrs. Stein, Weinstein, DeNovellis and McQuesten were amended
and restated effective May 25, 1995 and currently provide for base salaries
(inclusive of salary increases foregone at the election of the individual in
lieu of receipt of restricted stock pursuant to the 1995 Incentive Plan) of
$396,000, $234,400, $226,800, and $130,000, for Messrs. Stein, Weinstein,
DeNovellis, and McQuesten, respectively. The Employment Agreements also provide
for certain fringe benefits, including life insurance, participation in certain
benefit plans of Ekco, certain medical expenses, and (except in the case of Mr.
McQuesten) the use of an automobile provided by Ekco.
The Employment Agreements provide for increases as determined by the
Board of Directors or the Compensation Committee based on performance reviews
performed at least annually. The term of each of the Employment Agreements began
on May 25, 1995, and will continue until terminated by the executive or by Ekco.
In the event of the total and permanent disability (as defined) of the
executive, the Employment Agreements provide for salary and medical, dental and
life insurance coverage continuation (as defined) for 36 months (as to Messrs.
Stein and Weinstein), 24 months (as to Mr. DeNovellis) and 12 months (as to Mr.
McQuesten), and outplacement benefits. In the event of the executive's death,
the executive's estate shall receive lump sum payment of one year's salary in
addition to payment received under Ekco's group life insurance plan. In the
event of the executive's death or total and permanent disability, the
executive's estate in the case of death or the executive in the case of
disability shall immediately upon such death or disability have the
unconditional, unencumbered and free right, title and interest in all shares of
stock of Ekco which have been granted, sold or optioned (subject to the estate's
or his obligation to pay the option exercise price to the extent theretofore not
paid) to the executive by Ekco at any time prior to the executive's death or
disability.
The Employment Agreements provide that if employment of the executive is
terminated by Ekco without good cause (as defined) prior to a change of control
(as defined) of Ekco, Ekco is obligated to pay the executive a lump sum in cash
equal to (i) the executive's then current salary, plus (ii) the maximum payable
to him under all specified compensation bonus plans and arrangements for the
fiscal year in which the termination occurs (subject to certain adjustments),
plus (iii) an amount equal to the value of the securities, cash or other
property allocated to the executive's account in the ESOP for the fiscal year
preceding the fiscal year in which the termination occurs, in addition to any
distribution from the ESOP to which the executive
-61-
<PAGE> 64
may be entitled (the "Lump Sum Payment Amount"), multiplied, in the case of Mr.
Stein, by three, in the case of Messrs. Weinstein and DeNovellis, by two, and in
the case of Mr. McQuesten, by one. In addition, the executive shall be entitled
to benefit coverage continuation until the earlier of either his full time
employment by a third party or, as to Mr. Stein, three years, as to Messrs.
DeNovellis and Weinstein, two years, and as to Mr. McQuesten, one year,
following such termination, as well as outplacement benefits. Following such a
termination, certain automobile benefits are provided to Mr. Stein for a period
of three years and Messrs. Weinstein and DeNovellis for a period of two years.
In addition, the executive shall have unconditional, unencumbered and free
right, title and interest in all shares of stock of Ekco which have been
granted, sold or optioned (subject to his obligation to pay the option exercise
price to the extent theretofore not paid) to the executive by Ekco at any time
prior to such termination. In addition, the executive shall be entitled to
receive a gross-up payment (as defined) if any payments received by him (or his
estate) as a result of such termination are subject to the excise tax imposed by
Section 4999 of the Code. Mr. Weinstein is provided certain additional benefits
consisting of two times the Lump Sum Payment Amount, benefit coverage
continuation for a period of two years, and outplacement benefits and automobile
benefits for a period of two years, if he notifies Ekco of his termination of
employment within 90 days after Ekco proposes to relocate him without his
consent.
Immediately upon a change of control (as defined) while the executive
is employed by Ekco and without regard to whether or not the executive's
employment is terminated, whether a constructive termination occurs at such time
or thereafter or the manner of any subsequent termination of the executive's
employment, the executive shall immediately have the unconditional, unencumbered
and free right, title and interest in all shares of stock of Ekco which have
been granted, sold or optioned (subject to the estate's or his obligation to pay
the option exercise price to the extent theretofore not paid) to the executive
by Ekco at any time prior to the change of control. Following a change of
control and upon an event of constructive termination (as defined) or
termination of the executive's employment by Ekco without good cause, the
Employment Agreements of Messrs. Stein, Weinstein and DeNovellis require that
Ekco pay each such executive three times the Lump Sum Payment Amount (two times
as to Mr. McQuesten) as well as the rights to shares of Ekco's stock described
above immediately upon termination, and provide benefit coverage continuation
for a period of three years for Messrs. Stein, Weinstein and DeNovellis (two
years for Mr. McQuesten), outplacement benefits and automobile benefits for
Messrs. Stein, Weinstein and DeNovellis for a period of three years. In
addition, the executive shall be entitled to receive a gross-up payment (as
defined).
If the executive elects to terminate his Employment Agreement after six
months but within 24 months of the occurrence of a change of control of Ekco
(unless such change of control was approved by resolution of Ekco's board of
directors with at least two-thirds of the directors serving as of May 1995
voting in favor), Ekco is obligated to pay the executive three times the Lump
Sum Payment Amount (or as to Mr. McQuesten, two times such amount), and the
executive shall be entitled to the continuation of all fringe benefits,
including benefit coverage continuation, for a period of three years for Messrs.
Stein, Weinstein and DeNovellis (or two years for Mr. McQuesten), outplacement
benefits, and automobile benefits for a period of three years for Messrs. Stein,
Weinstein and DeNovellis. In addition, the executive shall be entitled to
receive a gross-up payment (as defined).
The Employment Agreements provide that in order to assure prompt
payment of amounts due upon termination and as necessary to secure Ekco's
obligations under any stock appreciation rights plan or other equity-linked plan
(excluding stock options, restricted stock subject to repurchase rights, or any
equity plan of which there is currently none), which gives the executive
ownership of shares. Ekco has agreed to keep in place irrevocable letters of
credit in amounts equal to at least four times the annual salary of Messrs.
Stein, Weinstein and DeNovellis (two and one-half times as to Mr. McQuesten).
The Employment Agreements include a covenant against competition with Ekco
extending for a period of 36 months as to Mr. Stein, 24 months as to Messrs.
Weinstein and DeNovellis, and 12 months as to Mr. McQuesten, after termination
for any reason.
-62-
<PAGE> 65
Ekco entered into the following three severance arrangements during
Fiscal 1995, each of which provides for payments and benefits in lieu of rights
pursuant to each employee's Employment Agreement with Ekco: under the severance
arrangement with Mr. Corbin, Ekco paid him $253,000 in salary, a $40,000 Fiscal
1995 bonus, a $1,100 cash payment and purchased a disability policy for him at a
cost to him of approximately $3,700. In addition, under Mr. Corbin's severance
agreement, Ekco repurchased 38,653 shares of restricted stock from Mr. Corbin at
their original $0.10 per share purchase price, and agreed to waive its right to
repurchase 9,602 shares of restricted stock under certain circumstances, and
amended his stock option agreements covering an aggregate of 59,288 shares of
Common Stock to extend the time for exercise through August 1996. Ekco's
severance arrangement with Mr. Fox provided for a lump sum cash payment of
$192,088, benefit coverage continuation through the earlier of September 1997 or
his reemployment date (as defined), waiver of restrictions on transfer of 2,540
shares of restricted stock owned by Mr. Fox, and amendment of a stock option
agreement covering 27,500 shares to extend the time for exercise. In January
1996, Ekco entered into a severance arrangement with Mr. Gordon pursuant to
which Ekco paid him $253,000, agreed to transfer title to an Ekco automobile to
Mr. Gordon or his designee, waived its right to repurchase 10,022 shares of
restricted stock, and amended Mr. Gordon's stock option agreements covering an
aggregate of 111,437 shares of Common Stock to extend the time for exercise to
January 1997. Mr. Gordon's severance arrangement also includes benefit coverage
continuation until the earlier of his reemployment with an employer providing at
least comparable benefits or January 1998. Ekco has entered into a consulting
arrangement with N.R. Gordon & Co., Inc., of which Mr. Gordon is president, for
an initial term ending in July 1997, which term may be extended by mutual
agreement. Each of the above severance arrangements includes a covenant against
competition with Ekco extending through August 1996 as to Mr. Corbin, September
1997 as to Mr. Fox and January 1998 as to Mr. Gordon.
401(K) RETIREMENT PLAN
Ekco sponsors a plan which permits employees to defer compensation to
the extent permitted by Section 401(k) of the Code (the "Retirement Plan"). The
Retirement Plan permits, but does not require, discretionary contributions by
Ekco. Other than the employee deferred compensation, Ekco made no contributions
to the Retirement Plan in Fiscal 1993, Fiscal 1994 or Fiscal 1995.
-63-
<PAGE> 66
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 9, 1996, the number of
shares of Common Stock and ESOP Preferred Stock beneficially owned by each
person known by Ekco to own more than 5% of either the outstanding Common Stock
or ESOP Preferred Stock, by each director, by each Named Executive Officer and
by all current executive officers and directors as a group, and the percentage
of the outstanding Common Stock and ESOP Preferred Stock which such shares
represent. Except as indicated in the accompanying notes and except in the case
of the ESOP which holds shares of ESOP Preferred Stock and Common Stock on
behalf of participants in the ESOP and the participants in the ESOP who have
voting power and investment power as set forth in the ESOP, the owners have sole
voting and investment power with respect to the shares. Attached to each share
of Common Stock is a Preferred Share Purchase Right to acquire one one-hundredth
of a share of the Ekco's Series A Junior Participating Preferred Stock, which
rights are not presently exercisable.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
AMOUNT AND NATURE PERCENT OF BENEFICIAL ESOP
BENEFICIAL OWNERSHIP COMMON OWNERSHIP OF PREFERRED
BENEFICIAL OWNERS OF COMMON STOCK STOCK(1) PREFFERED STOCK STOCK
- ----------------------------------- -------------------- -------- ------------------ ----------
<S> <C> <C> <C> <C>
Trust of the Ekco Group, Inc. ..... 2,415,420(2) 13.3% 1,466,451(2) 100%
Employees' Stock Ownership
Plan
c/o Ekco Group, Inc.
98 Spit Brook Road
Nashua, NH 03062
Sanford C. Bernstein & Co., Inc. .. 1,217,600(3) 6.6% -- --
767 Fifth Avenue
New York, NY 10153
First Manhattan Co. ............... 1,100,700(4) 6.0% -- --
437 Madison Avenue
New York, NY 10022
Tweedy, Browne Company, L.P. ...... 1,282,435(5) 7.0% -- --
TBK Partners, L.P. ................
Vanderbilt Partners, L.P. .........
52 Vanderbilt Avenue
New York, NY 10017
Smith Barney Holdings Inc. ........ 1,035,900(6) 7.0% -- --
Travelers Group Inc. ..............
388 Greenwich Street
New York, NY 10013
Robert Stein ...................... 1,084,537(7)(8)(9)(10) 5.6% 14,265 *
Jeffrey A. Weinstein .............. 525,860(7)(8)(9)(10) 2.8% 13,540 *
Donato A. DeNovellis .............. 170,255(7)(8)(9)(10)(11) * 1,682 *
Brian R. McQuesten ................ 202,251(8)(9)(10) 1.1% 9,748 *
Neil R. Gordon .................... 156,200(7)(9)(10) * 9,781 *
Richard J. Corbin ................. 79,677(9) * -- --
Ronald N. Fox ..................... 2,540 * -- --
Herbert M. Stein .................. 138,915(12) * -- --
Malcolm L. Sherman ................ 21,162(12) * -- --
Bill W. Sorenson .................. 45,714(12) * -- --
Stuart B. Ross .................... 34,373(12) * -- --
T. Michael Long.................... 890,582(12)(13) 4.8% -- --
All Current Directors and
Executive Officers as a
Group (12 Persons) .............. 3,185,322(7)(8)(9)(10) 16.0% 39,235 2.7%
(13)
<FN>
- --------------
* Represents holdings of less than one percent.
</TABLE>
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<PAGE> 67
(1) Computed on the basis of 18,459,672 shares of Common Stock outstanding,
plus, in the case of any person deemed to own shares of Common Stock as
a result of owning options or rights to purchase Common Stock
exercisable within 60 days or ESOP Preferred Stock which is presently
convertible into an equal number of shares of Common Stock by the
record owner, the additional shares of Common Stock which would be
outstanding upon such exercise, purchase or conversion by such person
or group.
(2) The Trust of the ESOP disclaims beneficial ownership of the shares held
by it for the participants in the ESOP.
(3) Based on a Schedule 13G filed in February 1996 by Sanford C. Bernstein
& Co., Inc. ("SCBC"), an investment advisor/broker dealer whose
discretionary clients are the legal owners of the shares who have the
right to receive dividends from, and the proceeds of, the sale of such
shares. SCBC has sole dispositive power with respect to all such
shares, sole voting authority with respect to 1,013,800 of such shares,
and shared voting authority with respect to the remaining 12,300
shares, as to which such clients have appointed an independent voting
agent with instruction to vote the shares in the same manner as SCBC.
(4) Based on a Schedule 13G filed in February 1996 by First Manhattan Co.
("FMC"), an investment advisor/broker dealer registered under Section
15 of the Exchange Act, and an investment advisor registered under the
Investment Advisers Act of 1940. FMC has sole voting authority and
dispositive power with respect to 240,850 of such shares, shared voting
authority with respect to 824,450 of such shares, and shared
dispositive power with respect to 859,850 of such shares. The number of
shares includes 26,850 shares owned by family members of general
partners of FMC; FMC disclaims dispositive power as to 20,850 of such
shares and beneficial ownership as to 6,000 of such shares.
(5) Based on a Schedule 13D jointly filed and amended in March 1996 by
Tweedy, Browne Company L.P. ("TBC"), TBK Partners, L.P. ("TBK") and
Vanderbilt Partners, L.P. ("Vanderbilt"). TBC, a registered
broker-dealer and investment adviser and a member of the National
Association of Securities Dealers, Inc., may be deemed to be the
beneficial owner of the 1,225,535 shares of Common Stock held in the
accounts of various customers (the "TBC Accounts"), with respect to
which it has sole voting authority as to 948,000 of such shares and
shared dispositive power as to all 1,225,535 of such shares. In
addition, TBK and Vanderbilt, each a private investment partnership,
beneficially own directly and have sole voting authority and investment
discretion with respect to 26,000 and 30,900 shares, respectively. The
aggregate number of shares of Common Stock with respect to which TBC,
TBK and Vanderbilt could be deemed to be the beneficial owner as of the
date of such Schedule 13D is 1,087,335 shares. The general partners of
TBC and Vanderbilt are Christopher H. Browne, William H. Browne and
John D. Spears (the "General Partners"). All of the General Partners
and Thomas P. Knapp are the general partners of TBK. The General
Partners may be deemed to control TBC and Vanderbilt and the General
Partners and Mr. Knapp may be deemed to control TBK. The aggregate
number of shares of Common Stock with respect to which each of the
General Partners may be deemed to be the beneficial owner by reason of
his being a general partner of TBC, TBK and Vanderbilt, respectively,
is 1,087,864 shares, with Mr. Knapp
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deemed to be the beneficial owner of 26,000 shares by reason of his
being a general partner of TBK. Each of TBC, TBK and Vanderbilt
disclaims beneficial ownership of Common Stock held by the other and
held in the TBC Accounts.
(6) Based on a Schedule 13G jointly filed in February 1996 by Smith Barney
Holdings Inc. ("SB Holdings") and Travelers Group Inc. ("TRV") as a
parent holding company (TRV is the sole stockholder of SB Holdings). SB
Holdings and TRV have shared voting authority and shared dispositive
power with respect to all shares, and they each disclaim beneficial
ownership of all such shares.
(7) Includes 164,088 shares owned jointly by Mr. Stein with his wife, Mrs.
Elaine R. Stein, 21,699 shares and 32,859 shares owned jointly by Mr.
DeNovellis and Mr. Gordon, respectively, with their wives, as to which
such persons may be deemed to share voting and investment power, but
excludes 200 shares owned by Mr. and Mrs. Stein's children, 6,000
shares owned by Mr. Weinstein's children and 1,500 shares owned by Mr.
Gordon's children, as to which Mr. and Mrs. Stein, Mr. Weinstein and
Mr. Gordon disclaim beneficial ownership. In addition, Mrs. Stein may
be deemed to beneficially own the remainder of Mr. Stein's shares.
(8) Includes the following number of shares purchased pursuant to Ekco's
1984 and 1985 Restricted Stock Purchase Plans which are held in escrow,
are presently subject to repurchase by Ekco and as to which certain
transfer restrictions apply: Mr. Robert Stein, 99,480 shares; Mr.
Weinstein, 28,777 shares; Mr. DeNovellis, 37,156 shares; Mr. McQuesten,
14,217 shares; and all current executive officers and directors as a
group, 209,000 shares.
(9) Includes 797,718, 334,482, 99,076, 131,754, 111,437, 59,288 and
1,392,333 shares of Common Stock currently issuable upon the exercise
of stock options held by Mr. Robert Stein, Mr. Weinstein, Mr.
DeNovellis, Mr. McQuesten, Mr. Gordon, Mr. Corbin and all current
executive officers and directors as a group, respectively, pursuant to
the Company's 1987 Stock Option Plan. Of the foregoing shares, the
following number are presently subject to repurchase by the Company:
Mr. Robert Stein, 135,599 shares; Mr. Weinstein, 34,818 shares; Mr.
DeNovellis, 57,564 shares; Mr. McQuesten, 15,756 shares; and all
current executive officers and directors as a group, 272,879 shares.
The options attributable to Messrs. Gordon and Corbin are subject to
cancellation if not exercised prior to January 3, 1997 and August 18,
1996, respectively.
(10) Includes the number of shares of ESOP Preferred Stock listed in the
table, and 2,884, 2,786, 432, 2,120, 2,123 and 8,222 shares of Common
Stock allocated to the ESOP accounts of Mr. Robert Stein, Mr.
Weinstein, Mr. DeNovellis, Mr. McQuesten, Mr. Gordon, and all current
executive officers and directors as a group, respectively. Mr. Donato
A. DeNovellis, an executive officer, is also the trustee of the ESOP,
but the 1,466,451 shares of ESOP Preferred Stock and the 948,969 shares
of Common Stock held by the ESOP and not allocated to the accounts of
executive officers are not included in calculating the number of shares
held by "All Current Directors and Executive Officers as a Group," and
Mr. DeNovellis disclaims beneficial ownership of shares of ESOP
Preferred Stock and Common Stock held by the ESOP.
(11) Includes 11,410 shares of Common Stock held by retirement plans of
subsidiary corporations of which Mr. DeNovellis is trustee and as to
which Mr. DeNovellis disclaims beneficial ownership.
(12) Includes 45,714 shares of Common Stock currently issuable upon the
exercise of stock options held by Mr. Herbert Stein, 35,714 shares
currently issuable upon exercise of a stock option held by Mr.
Sorenson, 31,373 shares currently issuable upon the exercise of a
stock option held by Mr. Ross, 16,162 shares currently issuable upon
the exercise of a stock option held by Mr. Sherman, of which 10,775
shares are subject to repurchase by the Company, and 9,040 shares
currently issuable upon the exercise of a stock option held by Mr.
Long.
(13) Mr. Long is a general partner of Brown Brothers Harriman & Co.,
which is in turn the general partner of The 1818 Fund, L.P. (the "1818
Fund"). Mr. Long has voting and investment power, through the 1818
Fund general partner, with respect to the 881,542 shares of Common
Stock owned by the 1818 Fund. The 1818 Fund acquired the Common Stock
pursuant to the terms of a Securities Purchase Agreement between
the Company and the 1818 Fund. See "Certain Relationships and Related
Transactions--Certain Business Relationships--The 1818 Fund."
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN BUSINESS RELATIONSHIPS
THE 1818 FUND, L.P. SHARE PURCHASE
Pursuant to the Securities Purchase Agreement, The 1818 Fund, L.P. (the
"1818 Fund") acquired from Ekco 881,542 shares of Common Stock and the 7.0%
Note, which could have been converted into an aggregate of 2,095,238 shares of
Common Stock, subject to adjustment, for an aggregate purchase price of
approximately $30 million.
On March 25, 1996, the Company used a portion of the net proceeds of
the Old Senior Notes to repurchase the $22.0 million outstanding principal
amount of the 7.0% Note for a purchase price of approximately $18.8 million plus
accrued and unpaid interest. As of March 25, 1996, the Fund beneficially owned
4.8% of the Company's outstanding shares of Common Stock.
The Securities Purchase Agreement provides that so long as the 1818
Fund held certain voting stock (or securities convertible into such voting
stock) that in the aggregate represented five percent or more of the outstanding
voting stock of Ekco, commencing with Ekco's 1993 annual meeting (or upon the
occurrence of certain specified events), at each annual meeting of stockholders
of Ekco the 1818 Fund would be entitled to designate one director to be
nominated to Ekco's Board of Directors. Mr. T. Michael Long has served as a
director of Ekco since May 1993 pursuant to the Securities Purchase Agreement.
ESOP LOANS
On February 23, 1989, Ekco's Board of Directors adopted the ESOP.
Simultaneously with the adoption of the ESOP, the Board of Directors authorized
1,800,000 million shares of ESOP Preferred Stock. On February 28, 1989, Ekco
sold 1,800,000 shares of ESOP Preferred Stock at a price of $3.61 per share to
the ESOP trust in exchange for an approximately $6.5 million 25-year
non-recourse note bearing interest at 11% per annum (the "1989 ESOP Note"). On
March 30, 1995, the trustee of the ESOP, a former executive officer of Ekco,
borrowed approximately $3.6 million from Ekco at a rate of 7.5% interest per
annum for a 20-year term (the "1995 ESOP Note"). The proceeds of the 1995 ESOP
Note were used to repay a bank loan pursuant to which the ESOP had borrowed
approximately $6.4 million in May 1989 and repaid the 1989 ESOP Note to Ekco.
As of March 31, 1996, $2,973,391 was outstanding under the 1995 ESOP Note.
On October 1, 1990, the Board of Directors of Ekco authorized Ekco to
lend funds to the trustee of the ESOP to make purchases of 1,000,000 shares of
Common Stock on the open market or from Ekco as he deemed appropriate, and as of
April 18, 1994, the trustee of the ESOP had acquired 1,000,000 shares of Common
Stock for the ESOP. Ekco and the trustee of the ESOP entered into a twenty-year
term loan effective October 1, 1990 (the "1990 ESOP Note") pursuant to which
Ekco has loaned approximately $3,300,000 to the ESOP at an interest rate of 10%
per annum. As of March 31, 1996, $3,039,266 was outstanding under the 1990
ESOP Note, and 266,219 of the aforementioned shares were allocated to employee
accounts.
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DESCRIPTION OF SENIOR NOTES
The Old Senior Notes were and the New Senior Notes will be issued
pursuant to an indenture (the "Indenture") dated as of March 25, 1996, by and
among Ekco, the Guarantors and Fleet National Bank, as trustee (the "Trustee").
The terms of the Senior Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). The following summaries of certain
provisions of the Indenture is a summary only, does not purport to be complete
and is qualified in its entirety by reference to all of the provisions of the
Indenture. A copy of the Indenture has been filed as an Exhibit to the Exchange
Offer Registration Statement of which this Prospectus is a part. Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
them in the Indenture.
GENERAL
The Senior Notes are senior unsecured, general obligations of Ekco,
limited in aggregate principal amount to $125.0 million. The Senior Notes rank
pari passu in right of payment with all existing and future Senior Indebtedness
of the Ekco and senior in right of payment to all existing and future
Subordinated Indebtedness of the Company. The Senior Notes are fully and
unconditionally guaranteed (the "Guarantees") on a joint and several basis by
substantially all of the Ekco's existing and future Subsidiaries (as defined)
(each, a "Guarantor," and collectively, the "Guarantors"). The non-Guarantor
Subsidiaries are not significant either individually or in the aggregate in
relation to the Company on a consolidated basis. The Guarantees are senior
unsecured obligations of the Guarantors and pari passu in right of payment with
all existing and future Senior Indebtedness and senior in right of payment to
all existing and future Subordinated Indebtedness of the Guarantors. The
obligations of Ekco and certain of its Subsidiaries under the Credit Agreement
(as defined) are secured by substantially all of the assets of Ekco and its
Subsidiaries. As a result, the Indebtedness under the Senior Notes will
effectively be subordinated to the Indebtedness under the Credit Agreement. At
December 31, 1995, after giving effect to the issuance of the Senior Notes and
the application of the net proceeds therefrom, the Company's total Senior
Indebtedness would have been approximately $124.2 million. See "Risk
Factors--Holding Company Structure; Ranking; Effective Subordination of the
Senior Notes."
The definition of "Subsidiary" in the Indenture does not include any
"Unrestricted Subsidiary" and, as a result, Unrestricted Subsidiaries generally
will not be bound by the restrictive provisions of the Indenture. The Board of
Directors will have the ability under certain circumstances to designate certain
Subsidiaries as Unrestricted Subsidiaries after the Issue Date. In addition,
subject to the provisions of the Indenture, the Board of Directors may designate
Unrestricted Subsidiaries as Subsidiaries.
The Senior Notes will mature on April 1, 2006. Interest on the Senior
Notes will accrue at the rate of 9 1/4% per annum from the date of issuance or
from the most recent Interest Payment Date to which interest has been paid or
provided for, payable semi-annually on April 1 and October 1 of each year,
commencing October 1, 1996, to the Persons in whose names such Senior Notes are
registered at the close of business on the March 15 or September 15 immediately
preceding such Interest Payment Date. Interest will be calculated on the basis
of a 360-day year consisting of twelve 30-day months.
Principal of, premium, if any, and interest on the Senior Notes and
Liquidated Damages, if any, will be payable, and the Senior Notes may be
presented for registration of transfer or exchange, at the office or agency of
Ekco maintained for such purpose, which office or agency shall be maintained in
the Borough of Manhattan, The City of New York. At the option of Ekco, payment
of interest and Liquidated Damages, if any, may be made by check mailed to the
Holders of the Senior Notes at the addresses set forth upon the registry books
of Ekco. No service charge will be made for any registration of transfer or
exchange of Senior Notes, but Ekco may require payment of a sum sufficient to
cover any tax or other governmental charge
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payable in connection therewith. Until otherwise designated by Ekco, Ekco's
office or agency will be the corporate trust office of the Trustee maintained
for such purpose. The Senior Notes will be issued only in fully registered form,
without coupons, in denominations of $1,000 and integral multiples thereof.
REDEMPTION
Optional Redemption
Ekco will not have the right to redeem any Senior Notes prior to April
1, 2001. The Senior Notes will be redeemable at the option of Ekco, in whole or
in part, at any time on or after April 1, 2001, upon not less than 30 nor more
than 60 days' notice to each Holder of Senior Notes, at the following redemption
prices (expressed as percentages of the principal amount) if redeemed during the
12-month period commencing April 1, of the years indicated below, in each case
(subject to the right of Holders of record on a Record Date to receive interest
due on an Interest Payment Date that is on or prior to such Redemption Date)
together with accrued and unpaid interest thereon to the Redemption Date:
<TABLE>
<CAPTION>
YEAR Percentage
------------------- ----------
<S> <C>
2001 104.6250%
2002 103.0834%
2003 101.5417%
2004 and thereafter 100.0000%
</TABLE>
In the case of a partial redemption, the Trustee shall select the
Senior Notes or portions thereof for redemption on a pro rata basis, by lot or
in such other manner it deems appropriate and fair. The Senior Notes may be
redeemed in part in multiples of $1,000 only.
Mandatory Redemption
Except as set forth below under "--Certain Covenants--Repurchase of
Senior Notes at the Option of the Holder Upon a Change of Control" and
"--Limitation on Asset Sales," Ekco is not required to make any mandatory
redemption or sinking fund payments with respect to the Senior Notes.
Selection and Notice
Notice of any redemption will be sent, by first class mail, at least 30
days and not more than 60 days prior to the date fixed for redemption to the
Holder of each Senior Note to be redeemed to such Holder's last address as then
shown upon the registry books of the Registrar. Any notice which relates to a
Senior Note to be redeemed in part only must state the portion of the principal
amount equal to the unredeemed portion thereof and must state, among other
things, that on and after the date of redemption, upon surrender of such Senior
Note, a new Senior Note or Notes in a principal amount equal to the unredeemed
portion thereof will be issued. On and after the date of redemption, interest
will cease to accrue on the Senior Notes or portions thereof called for
redemption.
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CERTAIN COVENANTS
Repurchase of Senior Notes at the Option of the Holder Upon a Change of Control
The Indenture provides that in the event that a Change of Control (as
defined below) has occurred, each Holder of Senior Notes will have the right, at
such Holder's option, pursuant to an irrevocable and unconditional offer by Ekco
(the "Change of Control Offer"), to require Ekco to repurchase all or any part
of such Holder's Senior Notes (provided, that the principal amount of such
Senior Notes must be $1,000 or an integral multiple thereof) on a date
determined by Ekco (the "Change of Control Purchase Date") that is no later than
45 Business Days after the occurrence of such Change of Control, at a cash price
(the "Change of Control Purchase Price") equal to 101% of the principal amount
thereof, together with accrued and unpaid interest and Liquidated Damages, if
any, to the Change of Control Purchase Date. The Change of Control Offer shall
be made within 15 Business Days following a Change of Control and shall remain
open for 20 Business Days (or such later date as may be required by applicable
law, rule or regulation) following the commencement (the "Change of Control
Offer Period") thereof. Upon expiration of the Change of Control Offer Period,
Ekco shall purchase all Senior Notes properly tendered in response to the Change
of Control Offer.
As used herein, a "Change of Control" means (i) any sale, merger or
consolidation with or into any Person or any transfer or other conveyance,
whether direct or indirect, of all or substantially all of the assets of Ekco,
on a consolidated basis, in one transaction or in a series of related
transactions, if, immediately after giving effect to such transaction, any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable) is or becomes the
"beneficial owner," directly or indirectly, of more than 50% of the total voting
power in the aggregate normally entitled to vote in the election of directors,
managers or trustees, as applicable, of the transferee or surviving entity, (ii)
any "person" or "group" (as such terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act, whether or not applicable) is or becomes the
"beneficial owner," directly or indirectly, of more than 50% of the total voting
power in the aggregate of all classes of Capital Stock of Ekco then outstanding
normally entitled to vote in elections of directors or (iii) during any period
of 12 consecutive months after the Issue Date, individuals who at the beginning
of any such 12-month period constituted the Board of Directors of Ekco (together
with any new directors whose election by such Board or whose nomination for
election by the shareholders of Ekco was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election, recommendation, or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of Ekco then in office.
On or before the Change of Control Purchase Date, Ekco will (i) accept
for payment Senior Notes or portions thereof properly tendered pursuant to the
Change of Control Offer and (ii) deposit with the Paying Agent Cash sufficient
to pay the Change of Control Purchase Price (together with accrued and unpaid
interest and Liquidated Damages, if any) of all Senior Notes so tendered.
Promptly following the Change of Control Purchase Date, Ekco will deliver to the
Trustee the Senior Notes so accepted, together with an Officers' Certificate
listing the Senior Notes or portions thereof being purchased by Ekco. The Paying
Agent will promptly mail to the Holders of Senior Notes so accepted payment in
an amount equal to the Change of Control Purchase Price (together with accrued
and unpaid interest and Liquidated Damages, if any), and the Trustee will
promptly authenticate and mail or deliver to such Holders a new Senior Note
equal in principal amount to any unpurchased portion of the Senior Note
surrendered. Any Senior Notes not so accepted will be promptly mailed or
delivered by Ekco to the Holder thereof. Ekco will publicly announce the results
of the Change of Control Offer on or as soon as practicable after the Change of
Control Purchase Date.
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The phrase "all or substantially all" of the assets of Ekco will likely
be interpreted under applicable state law and will be dependent upon particular
facts and circumstances. As a result, there may be a degree of uncertainty in
ascertaining whether a sale or transfer of "all or substantially all" of the
assets of Ekco has occurred, in which case a Holder's ability to obtain the
benefit of a Change of Control Offer may be impaired.
The Credit Agreement will contain, and other Indebtedness that may be
incurred in the future could contain, prohibitions of certain events that would
constitute a Change in Control. Moreover, the exercise by the Holders of their
right to require Ekco to repurchase the Senior Notes could cause a default under
such Indebtedness even if the Change of Control itself does not, due to the
financial effect of such repurchase on Ekco. The breach of any such prohibitions
or any such default could result in a default and subsequent acceleration of any
such Indebtedness and the enforcement of available remedies thereunder. In
addition, Ekco's ability to pay cash to the Holders of Senior Notes upon a
repurchase may be limited by Ekco's then existing financial resources.
Any Change of Control Offer will be made in compliance with all
applicable laws, rules and regulations, including, if applicable, Regulation 14E
under the Exchange Act and the rules thereunder and all other applicable federal
and state securities laws.
The Change of Control purchase feature of the Senior Notes may make
more difficult or discourage a takeover of Ekco, and, thus, the removal of
incumbent management. The Change of Control purchase feature resulted from
negotiations between Ekco and the Initial Purchasers.
Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock
The Indenture provides that, except as set forth below in this
covenant, Ekco and the Guarantors will not, and will not permit any of their
Subsidiaries to, directly or indirectly, issue, assume, guaranty, incur, become
directly or indirectly liable with respect to (including as a result of an
Acquisition), or otherwise become responsible for, contingently or otherwise
(individually and collectively, to "incur" or, as appropriate, an "incurrence"),
any Indebtedness or any Disqualified Capital Stock (including Acquired
Indebtedness). Notwithstanding the foregoing:
(a) if (i) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect on a pro forma
basis to, such incurrence of Indebtedness or Disqualified Capital Stock and the
application of proceeds therefrom and (ii) on the date of such incurrence (the
"Incurrence Date"), the Consolidated Interest Coverage Ratio of Ekco for the
Reference Period immediately preceding the Incurrence Date, after giving effect
on a pro forma basis to such incurrence of such Indebtedness or Disqualified
Capital Stock and, to the extent set forth in the definition of Consolidated
Interest Coverage Ratio, the use of proceeds therefrom, would be at least 2.5 to
1.0, Ekco and the Guarantors may incur such Indebtedness or Disqualified Capital
Stock;
(b) Ekco and the Guarantors may incur Indebtedness evidenced by the
Senior Notes and the Guarantees pursuant to the Indenture up to the amounts
specified therein as of the Issue Date;
(c) Ekco and the Guarantors may incur Indebtedness pursuant to the
Credit Agreement up to an aggregate amount outstanding (including any
Indebtedness issued to refinance, refund or replace such Indebtedness in whole
or in part) at any time not to exceed the greater of (A) $75.0 million, minus
the amount of any such Indebtedness retired with the Net Cash Proceeds from any
Asset Sale or assumed by a transferee in an Asset Sale; provided that this
reduction shall not apply to a reduction of any Indebtedness under a
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revolving credit or similar facility to the extent that such Net Cash Proceeds
are used to finance working capital requirements in the ordinary course of
business or (B) the Borrowing Base;
(d) Ekco and the Guarantors may incur Indebtedness (in addition to
Indebtedness permitted by any other clause of this paragraph) in an aggregate
amount outstanding at any time (including any Indebtedness issued to refinance,
replace or refund such Indebtedness in whole or in part) of up to $25.0 million,
less the aggregate amount of any Indebtedness incurred by the Foreign
Subsidiaries pursuant to clause (k) of this covenant and outstanding at such
time;
(e) Ekco and the Guarantors, as applicable, may incur Refinancing
Indebtedness with respect to any Indebtedness or Disqualified Capital Stock, as
applicable, described in clauses (a), (b) and (g) of this covenant;
(f) Ekco may incur Indebtedness to any Wholly-Owned Guarantor, and any
Guarantor may incur Indebtedness to any other Wholly-Owned Guarantor or to Ekco;
provided, that such obligations shall be unsecured and subordinated in all
respects to Ekco's or such Guarantor's obligations pursuant to the Senior Notes
or the Guarantees, respectively; and, provided, further, that if any
Wholly-Owned Guarantor ceases to be a Wholly-Owned Guarantor of Ekco or if Ekco
or any Wholly-Owned Guarantor transfers such Indebtedness to any Person (other
than to Ekco or another Wholly-Owned Guarantor), such events, in each case,
shall constitute the incurrence of such Indebtedness by Ekco or such
Wholly-Owned Guarantor, as the case may be, at the time of such event;
(g) Ekco and the Guarantors may incur Indebtedness existing on the
Issue Date;
(h) Ekco and its Guarantors may incur Indebtedness solely in respect of
bankers acceptances, letters of credit, surety bonds and performance bonds (in
each case to the extent that such incurrence does not result in the incurrence
of any obligation for the payment of borrowed money of others) issued in the
ordinary course of business consistent with past practice; provided, however,
that the aggregate principal amount outstanding of such Indebtedness (including
any Indebtedness issued to refinance, refund or replace such Indebtedness) shall
at no time exceed $5.0 million outstanding at any time; and
(i) Ekco and the Guarantors may incur Indebtedness represented by
Hedging and Interest Swap Obligations entered into in the ordinary course of
business related to Indebtedness of Ekco and the Guarantors otherwise permitted
to be incurred pursuant to the Indenture not exceeding the underlying
obligations;
(j) the Foreign Subsidiaries may incur Non-Recourse Indebtedness in an
aggregate amount outstanding at any time (including any Non-Recourse
Indebtedness issued to refinance, replace or refund such Non-Recourse
Indebtedness in whole or in part) of up to $20.0 million, less the aggregate
amount of any indebtedness incurred by the Foreign Subsidiaries pursuant to
clause (k) of this covenant and outstanding at such time;
(k) the Foreign Subsidiaries may incur Indebtedness in an aggregate
amount outstanding at any time (including any Indebtedness issued to refinance,
replace or refund such Indebtedness in whole or in part) of up to $5.0 million;
and
(l) any Foreign Subsidiary may incur Indebtedness up to an aggregate
amount outstanding (including any Indebtedness issued to refinance, replace or
refund such Indebtedness in whole or in part) at any time not to exceed the
Foreign Subsidiary Borrowing Base of such Foreign Subsidiary.
Indebtedness of any Person which is outstanding at the time such Person
becomes a Subsidiary of Ekco or is merged with or into or consolidated with Ekco
or a Subsidiary of Ekco shall be deemed to have
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been incurred at the time such Person becomes such a Subsidiary of Ekco or is
merged with or into or consolidated with Ekco or a Subsidiary of the Company, as
applicable.
Limitation on Restricted Payments
The Indenture provides that Ekco and the Guarantors will not, and will
not permit any of their Subsidiaries to, directly or indirectly, make any
Restricted Payment if, after giving effect to such Restricted Payment on a pro
forma basis, (1) a Default or an Event of Default shall have occurred and be
continuing, (2) Ekco is not permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Interest Coverage Ratio in paragraph
(a) of the covenant "Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock" or (3) the aggregate amount of all Restricted
Payments made by Ekco and its Subsidiaries, including after giving effect to
such proposed Restricted Payment, from and after the Issue Date, would exceed
the sum of (a) $4.0 million, plus (b) 50% of the aggregate Consolidated Net
Income of Ekco for the period (taken as one accounting period), commencing on
the first day of the first full fiscal quarter commencing after the Issue Date,
to and including the last day of the fiscal quarter ended immediately prior to
the date of each such calculation (or, in the event Consolidated Net Income for
such period is a deficit, then minus 100% of such deficit), plus (c) 100% of the
aggregate Net Cash Proceeds received by Ekco from the issue or sale after the
Issue Date of its Qualified Capital Stock or its debt securities that have been
converted into Qualified Capital Stock (other than (i) to a Subsidiary of Ekco
and (ii) to the extent applied in connection with a Qualified Exchange, but
including the Net Cash Proceeds received by Ekco upon the exercise, exchange or
conversion of securities into Qualified Capital Stock), plus (d) an amount equal
to the portion (proportionate to Ekco's or a Subsidiary's equity interest in
such Unrestricted Subsidiary) of the fair market value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a
Subsidiary; provided, however, that such amount shall not exceed, in the case of
any Unrestricted Subsidiary, the amount of any Restricted Payments previously
made by Ekco or any Subsidiary to such Unrestricted Subsidiary which were
permitted to be made pursuant to this "Limitation on Restricted Payments"
covenant, plus (e) the Net Cash Proceeds received by Ekco or any Guarantor from
its investment in, and the sale, disposition or other liquidation of, any
Restricted Investment.
The foregoing clauses (2) and (3) of the immediately preceding
paragraph, however, will not prohibit (v) a Qualified Exchange; (w) the payment
of any dividend on Qualified Capital Stock within 60 days after the date of its
declaration if such dividend could have been made on the date of such
declaration in compliance with the foregoing provisions; (x) any redemption or
repurchase or payment on account of Capital Stock of Ekco required to be made
under (i) the Restricted Stock Plans or (ii) the Stock Option Plans, in an
amount equal to the sum of the exercise prices paid to Ekco by the holder of
such Capital Stock upon the exercise of such stock options; (y) (i) any
redemption or repurchase by Ekco of its Capital Stock, (ii) any contribution or
dividend paid by Ekco to the ESOP or (iii) any loan made by Ekco to the ESOP, in
each case only to the extent made in connection with the distribution of
retirement, termination or diversification withdrawal benefits to ESOP
participants or beneficiaries pursuant to the terms of the ESOP and the
provisions of ERISA and the Code; and (z) any contribution or dividend paid by
the ESOP, in each case only to the extent used by the ESOP (i) to pay
administrative expenses of the ESOP in an amount not to exceed $200,000 per year
or (ii) to repay Indebtedness of the ESOP owed to the Company or its
Subsidiaries. The full amount of any Restricted Payment made pursuant to the
foregoing clauses (w), (x), (y) and (z) of the immediately preceding sentence,
however, will be deducted in the calculation of the aggregate amount of
Restricted Payments available to be made which is referred to in clause (3) of
the immediately preceding paragraph.
Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries
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The Indenture provides that Ekco and the Guarantors will not, and will
not permit any of their Subsidiaries to, directly or indirectly, create, assume
or suffer to exist any consensual restriction on the ability of any Subsidiary
of Ekco to pay dividends or make other distributions to or on behalf of, or to
pay any obligation (including in respect of a Guarantee) to or on behalf of, or
otherwise to transfer assets or property to, or make or pay loans or advances to
or on behalf of, Ekco or any Subsidiary of Ekco, except (a) restrictions imposed
by the Senior Notes or the Indenture, (b) restrictions imposed by applicable
law, (c) existing restrictions under specified Indebtedness outstanding on the
Issue Date or under any Acquired Indebtedness not incurred in violation of the
Indenture or any agreement relating to any property, asset, or business acquired
by Ekco or any of its Subsidiaries, which restrictions, in each case, existed at
the time of acquisition, were not put in place in connection with or in
anticipation of such acquisition and are not applicable to any Person, other
than to the Person acquired, or to any property, asset or business, other than
the property, assets and business so acquired, (d) any such restriction or
requirement imposed by Indebtedness incurred under paragraph (c) of the covenant
"Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock," provided such restriction or requirement is no more restrictive than
that imposed by the Credit Agreement in effect as of the Issue Date, (e)
restrictions with respect solely to a Subsidiary of Ekco imposed pursuant to a
binding agreement which has been entered into for the sale or disposition of all
or substantially all of the Capital Stock or assets of such Subsidiary, provided
such restrictions apply solely to the Capital Stock or assets of such Subsidiary
which are being sold, (f) in connection with and pursuant to permitted
Refinancings, replacements of restrictions imposed pursuant to clause (c) of
this paragraph that are not more restrictive than those being replaced and do
not apply to any other Person or assets than those that would have been covered
by the restrictions in the Indebtedness so refinanced, (g) customary provisions
restricting subletting or assignment of any lease entered into in the ordinary
course of business, consistent with industry practice and (h) any Lien permitted
by the covenant "Limitation on Liens."
Limitation on Liens
The Indenture provides that Ekco and the Guarantors will not, and will
not permit any of their Subsidiaries to, directly or indirectly, create, incur,
assume or suffer to exist any Lien (other than Permitted Liens) on any of their
respective assets or property, whether now owned or hereinafter acquired, or on
any income or profits therefrom or assign or convey any right to receive income
therefrom securing (i) any Indebtedness of Ekco unless the Senior Notes are
equally and ratably secured or (ii) any Indebtedness of a Guarantor unless the
Guarantees are equally and ratably secured; provided, however, that, if such
Indebtedness is by its terms expressly subordinate to the Senior Notes or the
Guarantees, the Lien securing such Indebtedness shall be subordinate and junior
to the Lien securing the Senior Notes or the Guarantees, with the same relative
priority as such Subordinated Indebtedness shall have with respect to the Senior
Notes or the Guarantees, as the case may be.
Limitation on Sale and Leaseback Transactions
The Indenture provides that Ekco and the Guarantors will not, and will
not permit any of their Subsidiaries to, enter into any Sale and Leaseback
Transaction unless either (i) at the time such transaction is entered into, Ekco
or such Guarantor, as the case may be, would be able to incur Indebtedness in an
amount equal to the Attributable Indebtedness, and Liens, if any, with respect
to such Sale and Leaseback Transaction pursuant to the covenants "Limitation on
Incurrence of Additional Indebtedness and Disqualified Capital Stock" and
"Limitation on Liens" or (ii) Ekco or such Guarantor, or any of their
Subsidiaries, as the case may be, receives proceeds from such Sale and Leaseback
Transaction at least equal to the fair market value thereof (as determined in
good faith by Ekco's Board of Directors, whose determination in good faith,
evidenced by a resolution of such Board, shall be conclusive) and such proceeds
are applied in the same manner and to the same extent as the Net Cash Proceeds
and Excess Proceeds from an Asset Sale pursuant to the covenant "Limitation on
Asset Sales."
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Limitation on Asset Sales
The Indenture provides that Ekco and the Guarantors will not, and will
not permit any of their Subsidiaries to, directly or indirectly, consummate an
Asset Sale to any Person other than Ekco or a Wholly- Owned Guarantor unless (i)
Ekco (or the Subsidiary, as the case may be) receives consideration at the time
of such Asset Sale which is at least equal to the fair market value (as
determined in good faith by the Board of Directors of Ekco, whose determination
shall be conclusive and evidenced by a Board resolution set forth in an
Officers' Certificate delivered to the Trustee) of the assets sold or otherwise
subject to disposition and (ii) at least 80% of the consideration therefor
received by Ekco or such Subsidiary is in the form of Cash or Cash Equivalents;
provided that the amount of (x) any liabilities (as shown on Ekco's or such
Subsidiary's most recent balance sheet or in the notes thereto) of Ekco or any
Subsidiary (other than liabilities that are by their terms subordinated to the
Senior Notes) that are assumed by the transferee of any such assets, and (y) any
notes or other obligations received by Ekco or any such Subsidiary from such
transferee that are immediately converted by Ekco or such Subsidiary into Cash
or Cash Equivalents (to the extent of the Cash or Cash Equivalents received)
will be deemed to be Cash for purposes of this provision. Within 270 days after
the date of any Asset Sale, Ekco may apply the Net Cash Proceeds from such Asset
Sale to either (a) permanently reduce outstanding Indebtedness, other than
Subordinated Indebtedness, of Ekco or the Subsidiary whose assets were sold in
such Asset Sale, provided that any such reduction of Indebtedness of such
Subsidiary shall not exceed the amount of Net Cash Proceeds received from the
sale of assets of such Subsidiary or (b) acquire property or assets to be used
in any Related Business; provided that when any proceeds not in the form of Cash
or Cash Equivalents become Net Cash Proceeds, the requirements contained in this
paragraph shall apply thereto. Pending the final application of any such Net
Cash Proceeds, Ekco may temporarily invest such Net Cash Proceeds in Cash
Equivalents or reduce outstanding Indebtedness under the Credit Agreement. Any
Net Cash Proceeds from an Asset Sale that are not applied or invested as
provided in the second sentence of this paragraph will be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0
million, Ekco shall, within 30 days of the occurrence of such event, make an
offer to all Holders of Senior Notes (an "Asset Sale Offer") to purchase the
maximum principal amount of Senior Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash (the "Asset Sale Offer Price") in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages, if any, to the date fixed for the closing of such Asset
Sale Offer (which shall be 20 Business Days (or such later date as may be
required by applicable law, rule or regulation) following the commencement of
such Asset Sale Offer (the "Asset Sale Offer Period")), in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Senior Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, Ekco may use the excess of such Excess Proceeds for general corporate
purposes. If the aggregate principal amount of Senior Notes tendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Senior Notes or portions thereof to be purchased on a pro rata basis. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset to zero.
Notwithstanding the foregoing, the first $2.0 million of Net Cash
Proceeds received from Asset Sales in any fiscal year shall not constitute
Excess Proceeds and thus shall not be subject to the restrictions contained in
this covenant.
The Indenture provides that Ekco and the Guarantors will not, and will
not permit any of their Subsidiaries to, directly or indirectly, make any Asset
Sale of any of the Capital Stock of any Subsidiary of Ekco except pursuant to an
Asset Sale of all of the Capital Stock of such Subsidiary.
The Credit Agreement prohibits, and any agreement governing Senior
Indebtedness incurred after the Issue Date may prohibit, the purchase of Senior
Notes with the proceeds of any Asset Sale unless all Senior Indebtedness
thereunder has been paid in full.
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Any Asset Sale Offer shall be made in compliance with all applicable
laws, rules, and regulations, including, if applicable, Regulation 14E of the
Exchange Act and the rules and regulations thereunder and all other applicable
federal and state securities laws.
Limitation on Transactions with Affiliates
The Indenture provides that Ekco and the Guarantors will not, and will
not permit any of their Subsidiaries to, enter into any contract, agreement,
arrangement or transaction with any Affiliate (an "Affiliate Transaction") or
any series of related Affiliate Transactions (other than Exempted Affiliate
Transactions), unless such Affiliate Transaction is made in good faith, the
terms of such Affiliate Transaction are fair and reasonable to Ekco, such
Guarantor or such Subsidiary, as the case may be, and are on terms at least as
favorable as the terms which could be obtained by Ekco, such Guarantor or such
Subsidiary, as the case may be, in a comparable transaction made on an
arm's-length basis with Persons who are not Affiliates.
Without limiting the foregoing, any Affiliate Transaction or series of
related Affiliate Transactions (other than Exempted Affiliate Transactions) (i)
involving consideration to either party in excess of $3.0 million, must be
evidenced by a resolution of a committee of non-employee directors of Ekco who
are disinterested with respect to such transaction (an "Independent Committee"),
set forth in an Officers' Certificate addressed and delivered to the Trustee,
certifying that (a) the terms of such Affiliate Transaction are fair and
reasonable to Ekco, such Guarantor or such Subsidiary, as the case may be, and
no less favorable to Ekco, such Guarantor or such Subsidiary, as the case may
be, than could have been obtained in an arm's-length transaction with a non-
Affiliate and (b) such Affiliate Transaction has been approved by a majority of
the members of an Independent Committee, and (ii) involving consideration to
either party in excess of $10.0 million must be evidenced by a resolution of an
Independent Committee in accordance with the foregoing clause (i) and, prior to
the consummation thereof, a written favorable opinion as to the fairness of such
transaction to Ekco, such Guarantor or such Subsidiary, as the case may be, from
a financial point of view from an independent investment banking firm of
national reputation having assets in excess of $1.0 billion.
Limitation on Merger, Sale or Consolidation
The Indenture provides that Ekco will not, directly or indirectly,
consolidate with or merge with or into another Person or sell, lease, convey or
transfer all or substantially all of its assets (computed on a consolidated
basis), whether in a single transaction or a series of related transactions, to
another Person or group of affiliated Persons, unless (i) either (a) Ekco is the
continuing entity or (b) the resulting, surviving or transferee entity is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of Ekco in connection with the Senior Notes and the Indenture;
(ii) no Default or Event of Default shall exist or shall occur immediately after
giving effect on a pro forma basis to such transaction; (iii) immediately after
giving effect to such transaction on a pro forma basis, the Consolidated Net
Worth of the consolidated resulting, surviving or transferee entity is at least
equal to the Consolidated Net Worth of Ekco immediately prior to such
transaction; and (iv) immediately after giving effect to such transaction on a
pro forma basis, the consolidated resulting, surviving or transferee entity
would immediately thereafter be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Interest Coverage Ratio set forth in
paragraph (a) of the covenant "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock."
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of Ekco in accordance with the foregoing, the
successor corporation formed by such consolidation or into which Ekco is merged
or to which such transfer is made, shall succeed to, and be substituted for, and
may exercise every right and power of, Ekco under the Indenture with the same
effect as if such successor corporation had been named therein as Ekco, and when
a successor corporation duly assumes all of the obligations of Ekco pursuant
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to the Indenture and the Senior Notes, Ekco shall be released from the
obligations under the Senior Notes and the Indenture except with respect to any
obligations that arise from, or are related to, such transaction.
Limitation on Lines of Business
The Indenture provides that neither Ekco nor any of its Subsidiaries
shall directly or indirectly engage to any substantial extent in any line or
lines of business activity other than that which, in the reasonable good faith
judgment of the Board of Directors of Ekco, is a Related Business.
Future Subsidiary Guarantors
The Indenture provides that substantially all present (as specified in
the Indenture) and future Subsidiaries of Ekco, other than any Foreign
Subsidiary, jointly and severally will guarantee irrevocably and unconditionally
all principal, premium, if any, and interest and Liquidated Damages, if any, on
the Senior Notes on a senior basis. The term Subsidiary does not include
Unrestricted Subsidiaries.
Limitation on Status as Investment Company
The Indenture prohibits Ekco and its Subsidiaries from being required
to register as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or from otherwise becoming subject
to regulation as an investment company.
REPORTS
The Indenture provides that whether or not Ekco is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, Ekco shall
deliver to the Trustee and each Holder of Senior Notes, and to prospective
purchasers of Senior Notes identified to Ekco by the Initial Purchasers within
ten days after it is or would have been required to file such with the
Commission, annual and quarterly financial statements substantially equivalent
to financial statements that would have been included in reports filed with the
Commission, if Ekco were subject to the requirements of Section 13 or 15(d) of
the Exchange Act, including, with respect to annual information only, a report
thereon by Ekco's certified independent public accountants as such would be
required in such reports to the Commission, and, in each case, together with
management's discussion and analysis of financial condition and results of
operations which would be so required. In addition, whether or not required by
the rules and regulations of the Commission, Ekco will file a copy of all such
information and reports with the Commission for public availability (unless the
Commission will not accept such a filing).
EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as (i) the failure by Ekco or
any Guarantor to pay any installment of interest or Liquidated Damages, if any,
on the Senior Notes as and when the same becomes due and payable and the
continuance of any such failure for 30 days, (ii) the failure by Ekco or any
Guarantor to pay all or any part of the principal of, or premium, if any, on the
Senior Notes when and as the same becomes due and payable at maturity, upon
redemption, by acceleration or otherwise, including, without limitation, payment
of the Change of Control Purchase Price or the Asset Sale Offer Price, (iii) the
failure by Ekco to comply with the provisions described under the covenant
"Limitation on Merger, Sale or Consolidation," (iv) the failure by Ekco or any
Guarantor to comply with the provisions described under the covenants
"Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock," "Repurchase of Senior Notes at the Option of the Holder Upon a Change of
Control (other than a failure to repurchase
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Senior Notes when required)," "Limitation on Restricted Payments" or "Limitation
on Asset Sales" (other than a failure to repurchase Senior Notes when required),
and the continuance of such failure for a period of 10 days after written notice
is given to Ekco by the Trustee or to Ekco and the Trustee by the Holders of at
least 25% in aggregate principal amount of the Senior Notes outstanding, (v) the
failure by Ekco or any Guarantor to observe or perform any other covenant or
agreement contained in the Senior Notes or the Indenture and, subject to certain
exceptions, the continuance of such failure for a period of 30 days after
written notice is given to Ekco by the Trustee or to Ekco and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Senior Notes
outstanding, (vi) certain events of bankruptcy, insolvency or reorganization in
respect of Ekco or any of its Significant Subsidiaries, (vii) a default in any
Indebtedness of Ekco or any of its Subsidiaries with an aggregate principal
amount in excess of $5.0 million (a) resulting from the failure to pay principal
of, premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness or (b) as a result of which the
maturity of such Indebtedness has been accelerated prior to its stated maturity,
or (viii) the failure by Ekco or any of its Subsidiaries to pay final judgments
aggregating in excess of $5.0 million if (A) any creditor has commenced an
enforcement proceeding with respect to such final judgements or (B) such final
judgments remain undischarged for a period (during which execution shall not be
effectively stayed) of 45 days after their entry.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (vi) above relating to Ekco or any Significant
Subsidiary), then in every such case, unless the principal of all of the Senior
Notes shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of the Senior Notes then
outstanding, by notice in writing to Ekco (and to the Trustee if given by
Holders), may declare all principal and accrued interest and Liquidated Damages,
if any, thereon to be due and payable immediately. If an Event of Default
specified in clause (vi) above relating to Ekco or any Significant Subsidiary
occurs, all principal and accrued interest and Liquidated Damages, if any,
thereon will be immediately due and payable on all outstanding Senior Notes
without any declaration or other act on the part of Trustee or the Holders.
Holders of a majority in aggregate principal amount of Senior Notes generally
are authorized to rescind such acceleration if all existing Events of Default
(other than the non-payment of the principal of, premium, if any, and interest
and Liquidated Damages, if any, on the Senior Notes which have become due solely
by such acceleration) have been cured or waived, except a default with respect
to any provision which cannot be modified or amended by majority approval.
Prior to the declaration of acceleration of the maturity of the Senior
Notes, the Holders of a majority in aggregate principal amount of the Senior
Notes at the time outstanding may waive on behalf of all the Holders any
default, except a default in the payment of principal of, premium on, or
interest or Liquidated Damages, if any, on any Senior Note not yet cured or a
default with respect to any covenant or provision which cannot be modified or
amended without the consent of the Holder of each outstanding Senior Note
affected. Subject to the provisions of the Indenture relating to the duties of
the Trustee, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of any
of the Holders, unless such Holders have offered to the Trustee reasonable
security or indemnity. Subject to all provisions of the Indenture and applicable
law, the Holders of a majority in aggregate principal amount of the Senior Notes
at the time outstanding will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that Ekco may, at its option and at any time,
elect to have its obligations and the obligations of the Guarantors discharged
with respect to the outstanding Senior Notes ("Legal Defeasance"). Such Legal
Defeasance means that Ekco shall be deemed to have paid and discharged the
entire Indebtedness represented, and the Indenture shall cease to be of further
effect as to all outstanding Senior Notes and Guarantees, except as to (i)
rights of Holders to receive payments in respect of the principal of,
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premium, if any, and interest and Liquidated Damages, if any, on such Senior
Notes when such payments are due from the trust funds described in the following
paragraph; (ii) Ekco's obligations with respect to such Senior Notes concerning
issuing temporary Senior Notes, registration of Senior Notes, mutilated,
destroyed, lost or stolen Senior Notes, and the maintenance of an office or
agency for payment and money for security payments held in trust; (iii) the
rights, powers, trust, duties, and immunities of the Trustee, and Ekco's and the
Guarantor's obligations in connection therewith; and (iv) the Legal Defeasance
and Covenant Defeasance (as defined) provisions of the Indenture. In addition,
Ekco may, at its option and at any time, elect to have the obligations of Ekco
and the Guarantors released with respect to certain covenants that are described
in the Indenture ("Covenant Defeasance") and thereafter any omission to comply
with such obligations shall not constitute a Default or Event of Default with
respect to the Senior Notes. In the event Covenant Defeasance occurs, certain
events (not including non-payment, bankruptcy, receivership, rehabilitation and
insolvency events) described in the Indenture under "Events of Default" will no
longer constitute an Event of Default with respect to the Senior Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance,
(i) Ekco must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Senior Notes, U.S. legal tender, noncallable government
securities or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, interest and, if applicable,
Liquidated Damages, on such Senior Notes on the stated date for payment thereof
or on the redemption date of such principal or installment of principal of,
premium, if any, or interest and, if applicable, Liquidated Damages, on such
Senior Notes, and the Holders of Senior Notes must have a valid, perfected,
first priority security interest in such trust; (ii) in the case of Legal
Defeasance, Ekco shall have delivered to the Trustee an opinion of counsel in
the U.S. reasonably acceptable to the Trustee confirming that (A) Ekco has
received from, or there has been published by the Internal Revenue Service, a
ruling or (B) since the date of the Indenture, there has been a change in the
applicable Federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Holders of such Senior
Notes will not recognize income, gain or loss for Federal income tax purposes as
a result of such Legal Defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred; (iii) in the case of
Covenant Defeasance, Ekco shall have delivered to the Trustee an opinion of
counsel in the U.S. reasonably acceptable to such Trustee confirming that the
Holders of such Senior Notes will not recognize income, gain or loss for Federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be continuing on the
date of such deposit or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under the
Indenture or any other material agreement or instrument to which Ekco, the
Guarantors or any of their Subsidiaries is a party or by which any of them is
bound; (vi) Ekco shall have delivered to the Trustee an Officers' Certificate
stating that the deposit was not made by Ekco with the intent of preferring the
Holders of such Senior Notes over any other creditors of Ekco or with the intent
of defeating, hindering, delaying or defrauding any other creditors of Ekco or
others; and (vii) Ekco shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that the conditions
precedent provided for in, in the case of the Officers' Certificate, (i) through
(vi) and, in the case of the opinion of counsel, clauses (i) (with respect to
the validity and perfection of the security interest), (ii) (if applicable),
(iii) and (v) of this paragraph have been complied with.
AMENDMENTS AND SUPPLEMENTS
The Indenture contains provisions permitting Ekco, the Guarantors and
the Trustee to enter into a supplemental indenture for certain limited purposes
without the consent of
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the Holders. With the consent of the Holders of not less than a majority in
aggregate principal amount of the Senior Notes at the time outstanding, Ekco,
the Guarantors and the Trustee are permitted to amend or supplement the
Indenture or any supplemental indenture or modify the rights of the Holders;
provided that no such modification may, without the consent of each Holder
affected thereby: (i) change the Stated Maturity of or the Change of Control
Purchase Date or the Asset Sale Offer Period on any Senior Note, or reduce the
principal amount thereof or the rate (or extend the time for payment) of
interest thereon or any premium payable upon the redemption thereof, or change
the place of payment where, or the coin or currency in which, any Senior Note or
any premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date), or
reduce the Change of Control Purchase Price or the Asset Sale Offer Price or
alter the redemption provisions or the provisions under the covenants
"Repurchase of Senior Notes at the Option of the Holder Upon a Change of
Control" or "Limitation on Asset Sales" in a manner adverse to the Holders, (ii)
make a change that would adversely affect the contractual ranking of the Senior
Notes, (iii) reduce the percentage in principal amount of the outstanding Senior
Notes, the consent of whose Holders is required for any such amendment,
supplemental indenture or waiver provided for in the Indenture or (iv) modify
any of the waiver provisions, except to increase any required percentage or to
provide that certain other provisions of the Indenture cannot be modified or
waived without the consent of the Holder of each outstanding Senior Note
affected thereby.
PAYMENTS FOR CONSENT
The Indenture prohibits Ekco, the Guarantors and any of their
Subsidiaries from, directly or indirectly, paying or causing to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Senior Notes for or as an inducement to any consent, waiver or amendment of
any terms or provisions of the Senior Notes unless such consideration is offered
to be paid or agreed to be paid to all Holders of the Senior Notes which so
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS
The Indenture provides that no direct or indirect stockholder,
employee, officer or director, as such, past, present or future of Ekco, the
Guarantors or any successor entity shall have any personal liability in respect
of the obligations of Ekco or the Guarantors under the Indenture or the Senior
Notes by reason of his, her or its status as such stockholder, employee, officer
or director.
GOVERNING LAW
The Indenture provides that it and the Senior Notes and the Guarantees
will be governed by and construed in accordance with the laws of the State of
New York, as applied to contracts made and performed within the State of New
York.
CONCERNING THE TRUSTEE
Fleet National Bank is the Trustee under the Indenture. Fleet National
Bank of Massachusetts, N.A. is the agent and a lender under the Credit
Agreement.
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The Indenture contains certain limitations on the right of the Trustee,
should it be or become a creditor of Ekco, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee is permitted to engage in other
transactions with Ekco; however, if it acquires any conflicting interest (as
defined), it must eliminate such conflict or resign.
The Holders of a majority in principal amount of the then outstanding
Senior Notes will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee. However, the
Trustee may refuse to follow any direction that conflicts with applicable laws
or the Indenture, is unduly prejudicial to the rights of other Holders of the
Senior Notes or would involve the Trustee in personal liability. The Indenture
will provide that in case an Event of Default shall occur (which shall not be
cured), the Trustee will be required, in the exercise of its powers, to use the
degree of care of a prudent person in the conduct of his or her own affairs.
Subject to such provisions, the Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request of any of the
Holders, unless they shall have offered to the Trustee satisfactory indemnity.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness or Disqualified Capital
Stock of any Person existing at the time such Person becomes a Subsidiary of
Ekco or is merged or consolidated into or with Ekco or one of its Subsidiaries.
"Acquisition" means the purchase or other acquisition of any Person or
substantially all the assets of any Person by any other Person, whether by
purchase, merger, consolidation or other transfer, and whether or not for
consideration.
"Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with Ekco. For purposes
of this definition, the term "control" means the power to direct the management
and policies of a Person, directly or through one or more intermediaries,
whether through the ownership of voting securities, by contract or otherwise,
provided that a beneficial owner of 10% or more of the total voting power
normally entitled to vote in the election of directors, managers or trustees, as
applicable, shall for such purposes be deemed to constitute control.
"Asset Sale" means, with respect to any Person, the sale, lease,
disposition or other transfer by such Person of any of its property or assets
(including a Sale and Leaseback Transaction or the sale or other transfer of any
Capital Stock of any Subsidiary) other than (i) the sale, lease, disposition or
other transfer of obsolete, damaged, materially worn or unusable equipment in
the ordinary course of business consistent with past practice, (ii) the sale,
lease, disposition or other transfer of inventory acquired and held for resale
in the ordinary course of business consistent with past practice, (iii) the
issuance by Ekco of its Capital Stock, (iv) Investments in compliance with the
covenant "Limitation on Restricted Payments," (v) the sale, lease, disposition
or other transfer of all or substantially all of the assets of Ekco governed by
the provisions of the Indenture described under the covenant "Limitation on
Merger, Sale or Consolidation," (vi) Sale and Leaseback Transactions in
compliance with clause (i) under the covenant "Limitation on Sale and Leaseback
Transactions," (vii) the sale, lease, disposition or other transfer of any
property or assets by a Subsidiary to Ekco or by Ekco or a Subsidiary to a
Wholly Owned Guarantor, (viii) the sale, lease, disposition or other transfer of
the property classified as "Property held for sale or lease" in Ekco's audited
Consolidated Financial Statements for the fiscal year ended December 31, 1995,
and without giving effect to any events that may occur subsequent to the date of
such Consolidated Financial Statements and (ix) the sale of the Capital Stock of
an Unrestricted Subsidiary.
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"Attributable Indebtedness" means, with respect to any particular lease
under which any Person is at the time liable and at any date as of which the
amount thereof is to be determined, the present value of the total net amount of
rent required to be paid by such Person under the lease during the primary term
thereof, without giving effect to any renewals at the option of the lessee,
discounted from the respective due dates thereof to such date at the rate of
interest per annum implicit in the terms of the lease. As used in the preceding
sentence, the net amount of rent under any lease for any such period shall mean
the sum of rental and other payments required to be paid with respect to such
period by the lessee thereunder excluding any amounts required to be paid by
such lessee on account of maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges. In the case of any lease which is
terminable by the lessee upon payment of a penalty, such net amount of rent
shall also include the amount of such penalty, but no rent shall be considered
as required to be paid under such lease subsequent to the first date upon which
it may be so terminated.
"Average Life" means, as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (i) the sum of the
product of (a) the number of years from the date of determination to the date or
dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"Beneficial Owner" for purposes of the definition of Change of Control
has the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act
(as in effect on the Issue Date), whether or not applicable, except that a
"person" shall be deemed to have "beneficial ownership" of all shares that any
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time.
"Borrowing Base" means, as of any date, an amount equal to (a) the
"Borrowing Base" as defined in the Credit Agreement or, if not so defined in the
Credit Agreement, (b) any amount equal to the sum of (i) 85% of all eligible
accounts receivable owned by Ekco or any of its Subsidiaries as of such date
that are not more than 90 days past due, plus (ii) 60% of the book value of all
inventory owned by Ekco or any of its Subsidiaries as of such date, all as
calculated on a consolidated basis and in accordance with GAAP.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
"Capitalized Lease Obligation" means rental obligations under a lease
that are required to be capitalized for financial reporting purposes in
accordance with GAAP, and the amount of Indebtedness represented by such
obligations shall be the capitalized amount of such obligations, as determined
in accordance with GAAP.
"Capital Stock" means, (i) with respect to any Person formed as a
corporation, any and all shares, interests, rights to purchase (other than
convertible or exchangeable Indebtedness), warrants, options, participations or
other equivalents of or interests (however designated) in stock issued by that
corporation and (ii) with respect to any Person formed other than as a
corporation, any and all partnership or other equity interests of such Person.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) maturing within one year after
the date of acquisition, (ii) time deposits, certificates of deposit, bankers'
acceptances and commercial paper issued by the parent corporation of any
domestic commercial bank of recognized standing having capital and surplus
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in excess of $500 million, in each case maturing within one year after the date
of acquisition, (iii) commercial paper issued by any other issuer which is rated
(A) in the case of commercial paper which matures one year or more after the
date of acquisition, at least A-1 or the equivalent thereof by Standard & Poor's
Corporation ("S&P") or at least P-1 or the equivalent thereof by Moody's
Investors Service, Inc. ("Moody's"), or (B) in the case of commercial paper
which matures within one year after the date of acquisition, at least A-2 or the
equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's,
(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (i) and (ii) above
entered into with any commercial bank meeting the qualifications specified in
clause (ii) above and (v) shares of any money market fund, or similar fund, in
each case having assets in excess of $500 million, which invests predominantly
in investments of the type described in clauses (i), (ii), (iii) or (iv) above.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the Consolidated Net Income of such Person for such period adjusted to
add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (i) consolidated
income tax expense for such period, (ii) consolidated depreciation and
amortization expense for such period, (iii) non-cash charges of such Person and
its Consolidated Subsidiaries during such period less the amount of all cash
payments made during such period to the extent such payments relate to non-cash
charges that were added back in determining Consolidated EBITDA for such period,
(iv) Consolidated Interest Expense for such period and (v) to the extent not
excluded from the Consolidated Net Income of such Person for such period, losses
(determined on a consolidated basis in accordance with GAAP) (1) which are
either extraordinary (as determined in accordance with GAAP) or are unusual or
nonrecurring or (2) from Asset Sales or other dispositions of assets not in the
ordinary course of business, up to an aggregate of $6.0 million for such period.
"Consolidated Interest Coverage Ratio" of any Person on any date of
determination (the "Transaction Date") means the ratio, on a pro forma basis, of
(a) the aggregate amount of Consolidated EBITDA of such Person attributable to
continuing operations and businesses (exclusive of amounts, whether positive or
negative, attributable to operations and businesses permanently discontinued or
disposed of) for the Reference Period to (b) the aggregate Consolidated Interest
Expense of such Person (exclusive of amounts attributable to operations and
businesses permanently discontinued or disposed of, but only to the extent that
the obligations giving rise to such Consolidated Interest Expense would no
longer be obligations contributing to such Person's Consolidated Interest
Expense subsequent to the Transaction Date) during the Reference Period;
provided, that for purposes of such calculation, (i) Acquisitions which occurred
during the Reference Period or subsequent to the Reference Period and on or
prior to the Transaction Date (including any Consolidated EBITDA associated with
such Acquisition) shall be assumed to have occurred on the first day of the
Reference Period, (ii) transactions giving rise to the need to calculate the
Consolidated Interest Coverage Ratio shall be assumed to have occurred on the
first day of the Reference Period, (iii) the incurrence or repayment of any
Indebtedness or issuance of any Disqualified Capital Stock during the Reference
Period or subsequent to the Reference Period and on or prior to the Transaction
Date (and the application of the proceeds therefrom to the extent used to
refinance or retire other Indebtedness), other than under a revolving credit or
similar facility to the extent that the proceeds were used to finance working
capital requirements in the ordinary course of business, shall be assumed to
have occurred on the first day of such Reference Period and (iv) the
Consolidated Interest Expense of such Person attributable to interest on any
Indebtedness or dividends on any Disqualified Capital Stock bearing a floating
interest (or dividend) rate shall be computed on a pro forma basis as if the
rate in effect on the Transaction Date had been the applicable rate for the
entire period, unless such Person or any of its Subsidiaries is a party to a
Hedging and Interest Swap Obligation (which shall remain in effect for the
12-month period immediately following the Transaction Date) that has the effect
of fixing the interest rate on the date of computation, in which case such rate
(whether higher or lower) shall be used.
"Consolidated Interest Expense" of any Person means, for any period,
the aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (a) interest expensed or capitalized,
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paid, accrued, or scheduled to be paid or accrued (including, in accordance with
the following sentence, interest attributable to Capitalized Lease Obligations)
of such Person and its Consolidated Subsidiaries during such period, including
(i) original issue discount and noncash interest payments or accruals on any
Indebtedness, (ii) the interest portion of all deferred payment obligations and
(iii) all commissions, discounts and other fees and charges owed with respect to
bankers' acceptances and letters of credit financing and currency and Hedging
and Interest Swap Obligations, in each case to the extent attributable to such
period and (b) the amount of dividends accrued or payable (other than in
additional shares of such Preferred Stock) by such Person or any of its
Consolidated Subsidiaries in respect of Preferred Stock (other than by
Subsidiaries of such Person to such Person or such Person's Consolidated
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by Ekco to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with GAAP, (y) interest expense attributable to any
Indebtedness represented by the guaranty of such Person or a Subsidiary of such
Person of an obligation of another Person shall be deemed to be the interest
expense attributable to the Indebtedness guaranteed, and (z) dividends in
respect of Preferred Stock shall be deemed to be an amount equal to the actual
dividends paid divided by one minus the applicable actual combined Federal,
state, local and foreign income tax rate of Ekco and its Consolidated
Subsidiaries (expressed as a decimal).
"Consolidated Net Income" means, with respect to any Person for any
period, the net income (or loss) of such Person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period, (i) adjusted to exclude (only to the extent included in computing
such net income (or loss) and without duplication): (a) net gains (but not net
losses) from Asset Sales and other dispositions of assets not in the ordinary
course of business; (b) net gains (but not net losses) which are either
extraordinary (as determined in accordance with GAAP) or are either unusual or
nonrecurring, (c) the net income, if positive, of any other Person accounted for
by the equity method of accounting, except to the extent of the amount of any
dividends or distributions actually paid in cash to such Person or a
Consolidated Subsidiary of such Person during such period, but in any case not
in excess of such Person's pro rata share of such Person's net income for such
period, (d) the net income, if positive, of any Person acquired in a
pooling-of-interests transaction for any period prior to the date of such
acquisition, (e) the net income, if positive, of any of such Person's
Consolidated Subsidiaries in the event and solely to the extent that the
declaration or payment of dividends or similar distributions is not at the time
permitted by operation of the terms of its charter or bylaws or any other
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Consolidated Subsidiary, (f) all gains (but not
losses) from currency exchange transactions not in the ordinary course of
business consistent with past practice, (g) any non-cash expense determined in
accordance with GAAP in connection with a transaction between the Company and
the ESOP and (h) Refinancing Expenses; and (ii) adjusted to include the amount
of any dividends or distributions actually paid in cash to such Person or a
Consolidated Subsidiary of such Person by an Unrestricted Subsidiary in an
amount not to exceed such Persons' pro rata share of such Unrestricted
Subsidiary's net income.
"Consolidated Net Worth" of any Person at any date means the aggregate
consolidated stockholders' equity of such Person (plus amounts of equity
attributable to Preferred Stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such Person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such Person and its Consolidated
Subsidiaries, (b) all upward revaluations and other write-ups in the book value
of any asset of such Person or a Consolidated Subsidiary of such Person
subsequent to the Issue Date and (c) all investments in Subsidiaries that are
not Consolidated Subsidiaries and in Persons that are not Subsidiaries.
"Consolidated Subsidiary" means, for any Person, each Subsidiary of
such Person (whether now existing or hereafter created or acquired) the
financial statements of which are consolidated for financial statement reporting
purposes with the financial statements of such Person in accordance with GAAP.
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"Credit Agreement" means the credit agreement dated as of April 11,
1995, as amended on the Issue Date, by and among Ekco, the Guarantors, certain
financial institutions, and Fleet Bank of Massachusetts, N.A., as agent,
providing for an aggregate $75.0 million revolving credit facility, including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, as such credit agreement and/or related
documents may be amended, restated, supplemented, renewed, replaced or otherwise
modified from time to time whether or not with the same agent, trustee,
representative lenders or holders, and, subject to the proviso to the next
succeeding sentence, irrespective of any changes in the terms and conditions
thereof. Without limiting the generality of the foregoing, the term "Credit
Agreement" shall include any amendment, amendment and restatement, renewal,
extension, restructuring, supplement or modification to any Credit Agreement and
all refundings, refinancings and replacements of any such Credit Agreement,
including any agreement (i) extending the maturity of any Indebtedness incurred
thereunder or contemplated thereby, (ii) adding or deleting borrowers or
guarantors thereunder, so long as borrowers and issuers include one or more of
Ekco and its Subsidiaries and their respective successors and assigns, (iii)
increasing the amount of Indebtedness incurred thereunder or available to be
borrowed thereunder, provided that on the date such Indebtedness is incurred it
would not be prohibited by paragraph (c) of the covenant "Limitation on
Incurrence of Additional Indebtedness and Disqualified Capital Stock" or (iv)
otherwise altering the terms and conditions thereof in a manner not prohibited
by the terms hereof.
"Disqualified Capital Stock" means (a) except as set forth in (b), with
respect to any Person, Capital Stock of such Person that, by its terms or by the
terms of any security into which it is then convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such Person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Senior Notes and (b) with respect to
any Subsidiary of such Person (including with respect to any Subsidiary of
Ekco), any Capital Stock other than any common stock with no preference,
privileges, or redemption or repayment provisions.
"ESOP" means the Ekco Group, Inc. Employee Stock Ownership Plan or any
successor employee stock ownership plan having terms similar to the foregoing,
as amended from time to time by a resolution of the Board of Directors of Ekco
or a duly authorized committee thereof.
"Exempted Affiliate Transaction" means (a) transactions solely between
Ekco and any of its wholly owned Subsidiaries or solely among wholly owned
Subsidiaries of Ekco, (b) transactions permitted under the terms of the covenant
"Limitation on Restricted Payments", (c) customary employee compensation
arrangements approved by a majority of independent (as to such transactions)
members of the Board of Directors of Ekco and (d) reasonable fees and
compensation paid to, and indemnities to, and directors and officers and
ERISA-based fiduciary liability insurance provided on behalf of, officers,
directors, agents or employees of Ekco or any of its Subsidiaries or the ESOP or
any trustee thereof, in each case in the ordinary course of business and as
determined in good faith by the Board of Directors of Ekco.
"Foreign Subsidiary" means any Subsidiary of Ekco that (a) is not
organized under the laws of the United States, any state thereof or the District
of Columbia, (b) conducts its principal operations outside the United States and
(c) has not, directly or indirectly, secured the payment of, guaranteed, assumed
or in any manner become liable with respect to any Indebtedness of Ekco or any
Guarantor or any other Person organized under the laws of the United States.
"Foreign Subsidiary Borrowing Base" means, with respect to any Foreign
Subsidiary, as of any date, an amount equal to the sum of (i) 80% of all
eligible accounts receivable owned by such Foreign Subsidiary or any of its
Subsidiaries as of such date that are not more than 90 days past due, plus (ii)
50% of the book value of all inventory owned by such Foreign Subsidiary or any
of its Subsidiaries as of such date, all as calculated on a consolidated basis
and in accordance with GAAP.
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"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect on the Issue Date.
"Hedging and Interest Swap Obligations" means, with respect to any
Person, the obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Indebtedness" of any Person means, without duplication; (a) all
liabilities and obligations, contingent or otherwise, of any such Person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except (other than accounts payable or other obligations to trade creditors
which have remained unpaid for greater than 90 days past their original due
date, unless contested in good faith) those incurred in the ordinary course of
its business that would constitute ordinarily a trade payable to trade
creditors, (iv) evidenced by bankers' acceptances or similar instruments issued
or accepted by banks, (v) for the payment of money relating to a Capitalized
Lease Obligation, or (vi) evidenced by a letter of credit or a reimbursement
obligation of such Person with respect to any letter of credit; (b) all net
obligations of such Person under Hedging and Interest Swap Obligations; (c) all
liabilities and obligations of others of the kind described in the preceding
clauses (a) or (b) that such Person has guaranteed or that is otherwise its
legal liability or which are secured by any assets or property of such Person;
and (d) all immediately enforceable obligations to purchase, redeem or acquire
any Capital Stock of such Person (other than, in the case of Ekco or any of its
subsidiaries, obligations under the Restricted Stock Plans or the Stock Option
Plans).
"Investment" by any Person in any other Person means (without
duplication); (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of Capital Stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other Person or any agreement to make any such acquisition; (b) the making
by such Person of any deposit with, or advance, loan or other extension of
credit to, such other Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such property to such other Person) or any commitment to make any such
advance, loan or extension (but excluding accounts receivable or deposits
arising in the ordinary course of business); (c) other than guarantees of
Indebtedness of Ekco or any Guarantor to the extent permitted by the covenant
"Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock," the entering into by such Person of any guarantee of, or other credit
support or contingent obligation with respect to, Indebtedness or other
liability of such other Person; (d) the making of any capital contribution by
such Person to such other Person; and (e) the designation by the Board of
Directors of Ekco of any Person to be an Unrestricted Subsidiary. Ekco shall be
deemed to make an Investment in an amount equal to the fair market value of the
net assets of any subsidiary (or, if neither Ekco nor any of its Subsidiaries
has theretofore made an Investment in such subsidiary, in an amount equal to the
Investments being made), at the time that such subsidiary is designated an
Unrestricted Subsidiary, and any assets or property transferred to an
Unrestricted Subsidiary from Ekco or a Subsidiary shall be deemed an Investment
valued at its fair market value at the time of such transfer.
"Issue Date" means the date of first issuance of the Senior Notes under
the Indenture.
"Net Cash Proceeds" means the aggregate amount of Cash and Cash
Equivalents received by Ekco in the case of a sale of Qualified Capital Stock
and by the Company and its Subsidiaries in respect of an Asset Sale plus, in the
case of an issuance of Qualified Capital Stock upon any exercise, exchange or
conversion
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of securities (including options, warrants, rights and convertible or
exchangeable debt) of Ekco that were issued for cash on or after the Issue Date,
the amount of cash originally received by Ekco upon the issuance of such
securities (including options, warrants, rights and convertible or exchangeable
debt) less, in each case, the sum of all payments, fees, commissions and (in the
case of Asset Sales, reasonable and customary) expenses (including, without
limitation, the fees and expenses of legal counsel and investment banking fees
and expenses) incurred in connection with such Asset Sale or sale of Qualified
Capital Stock, and, in the case of an Asset Sale only, less the amount
(estimated reasonably and in good faith by Ekco) of income, franchise, sales and
other applicable taxes required to be paid by Ekco or any of its respective
Subsidiaries in connection with such Asset Sale.
"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness (i) as to which neither Ekco nor any of its Subsidiaries (a)
provide credit support (including any undertaking, agreement or instrument which
would constitute Indebtedness), (b) is directly or indirectly liable or (c)
constitutes the lender and (ii) with respect to which no default would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness of
Ekco or any Subsidiary to declare a default on such other Indebtedness or cause
the payment therefor to be accelerated or payable prior to its stated maturity.
"Permitted Lien" means any of the following:
(a) Liens existing on the Issue Date;
(b) Liens imposed by governmental authorities for taxes, assessments or
other charges not yet subject to penalty or which are being contested in good
faith and by appropriate proceedings, if adequate reserves with respect thereto
are maintained on the books of Ekco in accordance with GAAP;
(c) statutory Liens of carriers, warehousemen, mechanics, materialmen,
landlords, repairmen or other like Liens arising by operation of law in the
ordinary course of business provided that (i) the underlying obligations are not
overdue for a period of more than 30 days or (ii) such Liens are being contested
in good faith and by appropriate proceedings and adequate reserves with respect
thereto are maintained on the books of Ekco in accordance with GAAP;
(d) Liens securing the performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other
similar encumbrances or title defects which, singly or in the aggregate, do not
in any case materially detract from the value of the property, subject thereto
(as such property is used by Ekco or any of its Subsidiaries) or interfere with
the ordinary conduct of the business of Ekco or any of its Subsidiaries;
(f) Liens arising by operation of law in connection with judgments,
only to the extent, for an amount and for a period not resulting in an Event of
Default with respect thereto;
(g) pledges or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security legislation;
(h) Liens on the property or assets of a Person existing at the time
such Person becomes a Subsidiary or is merged with or into Ekco or a Subsidiary,
provided in each case that such Liens were in existence prior to the date of
such acquisition, merger or consolidation, were not incurred in anticipation
thereof and do not extend to any other assets;
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(i) Liens on property or assets existing at the time of the acquisition
thereof by Ekco or any of its Subsidiaries, provided that such Liens were in
existence prior to the date of such acquisition and were not incurred in
anticipation thereof;
(j) Liens securing Refinancing Indebtedness incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to the
Holders of the Senior Notes than the terms of the Liens securing such refinanced
Indebtedness;
(k) Liens securing Indebtedness permitted to be incurred under clauses
(c), (i), (j) and (l) under the covenant "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock;"
(l) Liens securing Purchase Money Indebtedness or Capitalized Lease
Obligations permitted to be incurred under clause (d) or (k) under the covenant
"Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock;"
(m) Liens in favor of Ekco or any Guarantor; and
(n) Liens securing the Senior Notes or the Guarantees.
"Purchase Money Indebtedness" means Indebtedness of Ekco, the
Guarantors or the Foreign Subsidiaries to the extent that (i) such Indebtedness
is incurred in connection with the acquisition of specified assets and property
(the "Subject Assets") for the business of Ekco, the Guarantors or the Foreign
Subsidiaries, including Indebtedness which existed at the time of the
acquisition of such Subject Asset and was assumed in connection therewith, and
(ii) the Liens securing such Indebtedness are limited to the Subject Asset.
"Qualified Capital Stock" means any Capital Stock of Ekco that is not
Disqualified Capital Stock.
"Qualified Exchange" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Capital Stock or Subordinated
Indebtedness of Ekco issued on or after the Issue Date with the Net Cash
Proceeds received by Ekco from the substantially concurrent (i.e., within 60
days) sale (other than to a Subsidiary of Ekco or the ESOP) of Qualified Capital
Stock or any issuance of Qualified Capital Stock in exchange for any Capital
Stock or Subordinated Indebtedness issued on or after the Issue Date.
"Reference Period" with regard to any Person means the four full fiscal
quarters (or such lesser period during which such Person has been in existence)
ended immediately preceding any date upon which any determination is to be made
pursuant to the terms of the Senior Notes or the Indenture.
"Refinancing Expenses" means any premiums paid in connection with any
repayment, repurchase, redemption or defeasance of the 12.70% Notes or the 7.0%
Note.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of (each of (a) and (b) above is a "Refinancing"), any Indebtedness or
Disqualified Capital Stock in a principal amount or, in the case of Disqualified
Capital Stock, liquidation preference, not to exceed (after deduction of
reasonable and customary fees and expenses incurred in connection with the
Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so refinanced and (ii) if such Indebtedness being
refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing;
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provided, that (A) such Refinancing Indebtedness of any Subsidiary of Ekco shall
only be used to refinance outstanding Indebtedness or Disqualified Capital Stock
of such Subsidiary, (B) Refinancing Indebtedness shall (x) not have an Average
Life shorter than the Indebtedness or Disqualified Capital Stock to be so
refinanced at the time of such Refinancing and (y) in all respects, be no less
subordinated or junior, if applicable, to the rights of Holders of the Senior
Notes than was the Indebtedness or Disqualified Capital Stock to be refinanced
and (C) such Refinancing Indebtedness shall have no installment of principal (or
redemption payment) scheduled to come due earlier than the scheduled maturity of
any installment of principal of the Indebtedness or Disqualified Capital Stock
to be so refinanced which was scheduled to come due prior to the Stated
Maturity.
"Related Business" means the business conducted (or proposed to be
conducted) by Ekco and its Subsidiaries as of the Issue Date and any and all
businesses that in the good faith judgment of the Board of Directors of Ekco are
materially related businesses.
"Restricted Investment" means, in one or a series of related
transactions, any Investment, other than (i) Investments in Cash Equivalents,
(ii) Investments in Ekco or a Wholly-Owned Guarantor, (iii) Investments in any
Person engaged in a Related Business if, as a consequence of such Investment,
(a) such Person becomes a Wholly-Owned Guarantor or (b) such Person is merged,
consolidated or amalgamated with or into, or conveys substantially all of its
assets to Ekco or a Wholly-Owned Guarantor; (iv) loans or advances made in the
ordinary course of business to officers, directors, employees or agents of Ekco
or any of its Subsidiaries not exceeding $2.0 million outstanding in the
aggregate at any one time; (v) Investments existing on the Issue Date or (vi)
Investments made as a result of the receipt of non-cash consideration from an
Asset Sale made pursuant to the covenant "Limitation on Asset Sales."
"Restricted Payment" means, with respect to any Person, (a) the
declaration or payment of any dividend or other distribution in respect of any
Capital Stock of such Person or any Subsidiary of such Person, (b) any payment
on account of the purchase, redemption or other acquisition or retirement for
value of Capital Stock of such Person or any Subsidiary of such Person, (c)
other than with the proceeds from the substantially concurrent (i.e., within 60
days) sale of, or in exchange for, Refinancing Indebtedness, any purchase,
redemption or other acquisition or retirement for value of, any payment in
respect of any amendment of the terms of or any defeasance of, any Subordinated
Indebtedness of such Person or any Affiliate or Subsidiary of such Person,
directly or indirectly, by such Person or any Subsidiary of such Person prior to
the scheduled maturity, any scheduled repayment of principal, or any scheduled
sinking fund payment, as the case may be, of such Subordinated Indebtedness and
(d) any Restricted Investment by such Person; provided, however, that the term
"Restricted Payment" does not include (i) any dividend, distribution or other
payment on or with respect to, or on account of the purchase, redemption or
other acquisition or retirement for value of, Capital Stock of an issuer to the
extent payable solely in shares of Qualified Capital Stock of such issuer or
(ii) any dividend, distribution or other payment to Ekco or to any of its
Wholly-Owned Guarantors by Ekco or any of its Subsidiaries.
"Restricted Stock Plans" shall mean collectively, (i) the 1984 Ekco
Group, Inc. Restricted Stock Plan, (ii) the 1985 Ekco Group, Inc. Restricted
Stock Plan, (iii) Ekco's 1984 Employee Stock Purchase Plan, (iv) the Incentive
Compensation Plan for Executive Employees of Ekco Group, Inc. and its
Subsidiaries and (v) comparable plans providing for the issuance of Capital
Stock of Ekco to officers, directors and employees of Ekco and its Subsidiaries
having terms similar to the foregoing, each as amended from time to time by a
resolution of the Board of Directors of Ekco or a duly authorized committee
thereof.
"Sale and Leaseback Transaction" means any arrangement relating to any
property owned on the date of the Indenture or acquired thereafter whereby Ekco,
a Guarantor or one of their Subsidiaries transfers such property to a Person and
leases such property back from such Person.
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"Senior Indebtedness" of Ekco or any Guarantor means any Indebtedness
of Ekco or such Guarantor, whether outstanding on the Issue Date or thereafter
created, incurred, assumed or guaranteed by Ekco or such Guarantor, other than
Indebtedness as to which the instrument creating or evidencing the same or the
assumption or guarantee thereof expressly provides that such Indebtedness is
subordinated or junior to the Senior Notes. Notwithstanding the foregoing,
however, in no event shall Senior Indebtedness include (a) Indebtedness to any
Subsidiary of Ekco or any officer, director or employee of Ekco or any
Subsidiary of Ekco or (b) Indebtedness incurred in violation of the terms of the
Indenture.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article I, Rule 1-02-w of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the Issue Date.
"Stated Maturity," when used with respect to any Senior Note, means
April 1, 2006.
"Stock Option Plans" shall mean collectively, (i) Ekco's 1987 Stock
Option Plan, (ii) the Ekco Group, Inc. 1988 Director's Stock Option Plan, and
(iii) comparable plans providing for the issuance of options to purchase Capital
Stock of Ekco to officers, directors and/or employees of Ekco and its
Subsidiaries having terms similar to the foregoing, each as amended from time to
time by a resolution of the Board of Directors of Ekco or a duly authorized
committee thereof.
"Subordinated Indebtedness" means Indebtedness of Ekco or a Guarantor
that is (i) subordinated in right of payment to the Senior Notes or such
Guarantor's Guarantee, as applicable, in any respect or (ii) any Indebtedness
which is expressly subordinate to Senior Indebtedness and has a stated maturity
on or after the Stated Maturity.
"Subsidiary," with respect to any Person, means (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by such Person and one or more Subsidiaries of such Person or by one or more
Subsidiaries of such Person, or (ii) any other Person (other than a corporation)
in which such Person, one or more Subsidiaries of such Person, or such Person
and one or more Subsidiaries of such Person, directly or indirectly, at the date
of determination thereof has at least majority ownership interest.
Notwithstanding the foregoing, an Unrestricted Subsidiary shall not constitute a
Subsidiary of Ekco or any of Ekco's Subsidiaries.
"Wholly-Owned Guarantor" means (i) a Subsidiary of Ekco (other than a
Foreign Subsidiary) of which all of the outstanding Capital Stock or other
ownership interests (other than directors' qualifying shares) shall at the time
be owned by Ekco or by one or more Wholly-Owned Guarantors of Ekco or by Ekco
and one or more Wholly-Owned Guarantors of Ekco and (ii) Woodstream Corporation,
a Pennsylvania corporation, for so long as Woodstream Corporation meets the
ownership test in clause (i), except for the shares of preferred stock of
Woodstream Corporation not owned by Ekco on the Issue Date.
"Unrestricted Subsidiary" means any subsidiary of Ekco that does not
own any Capital Stock of, or own or hold any Lien on any property of, Ekco or
any other Subsidiary of Ekco and that, at the time of determination, shall be an
Unrestricted Subsidiary (as designated by the Board of Directors of Ekco);
provided, that (i) such subsidiary shall not engage, to any substantial extent,
in any line or lines of business activity other than a Related Business, (ii)
neither immediately prior thereto nor after giving pro forma effect to such
designation would there exist a Default or Event of Default and (iii)
immediately after giving pro forma effect thereto, Ekco could incur at least
$1.00 of Indebtedness pursuant to the Consolidated Interest Coverage Ratio in
paragraph (a) of the covenant "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock." The Board of Directors of Ekco may
designate any Unrestricted Subsidiary to be a Subsidiary, provided, that (i) no
Default or Event of Default is existing or will occur as a consequence
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thereof and (ii) immediately after giving effect to such designation, on a pro
forma basis, Ekco could incur at least $1.00 of Indebtedness pursuant to the
Consolidated Interest Coverage Ratio in paragraph (a) of the covenant
"Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock." Each such designation shall be evidenced by filing with the Trustee a
certified copy of the resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions.
BOOK-ENTRY, DELIVERY AND FORM; CERTIFICATED NOTES
The Senior Notes will initially be issued in the form of one or more
registered notes in global form (the "Global Notes"). Each Global Note will be
deposited on the Issue Date with, or on behalf of, The Depository Trust Company
("DTC" or the "Depository") and registered in the name of Cede & Co., as nominee
of the Depository.
DTC has advised Ekco that it is (i) a limited purpose trust company
organized under the laws of the State of New York, (ii) a member of the Federal
Reserve System, (iii) a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended, and (iv) a "Clearing Agency" registered pursuant to
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants (collectively, the "Participants") and facilitates the clearance
and settlement of securities transactions between Participants through
electronic book-entry changes to the accounts of its Participants, thereby
eliminating the need for physical transfer and delivery of certificates. The
Depository's Participants include securities brokers and dealers (including the
Initial Purchasers), banks and trust companies (collectively, the "Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Beneficial owners may elect to hold
Senior Notes purchased by them through the Depository. Persons who are not
Participants may beneficially own securities held by or on behalf of the
Depository only through Participants or Indirect Participants.
Ekco expects that pursuant to procedures established by the Depository
(i) upon deposit of the Global Notes, the Depository will credit the accounts of
Participants designated by the Initial Purchasers with an interest in the Global
Notes and (ii) ownership of the Senior Notes evidenced by the Global Notes will
be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by the Depository (with respect to the interests of
Participants), the Participants and the Indirect Participants. The laws of some
states require that certain persons take physical delivery in definitive form of
securities that they own and that security interests in negotiable instruments
can only be perfected by delivery of certificates representing the instruments.
Consequently, the ability to transfer Senior Notes or to pledge the Senior Notes
as collateral will be limited to such extent. For certain other restrictions on
the transferability of the Senior Notes, see "Notice to Investors."
So long as the Depository or its nominee is the registered owner of a Global
Note, the Depository or such nominee, as the case may be, will be considered the
sole owner or Holder of the Senior Notes represented by the Global Note for all
purposes under the Indenture. Except as provided below, owners of beneficial
interests in a Global Note will not be entitled to have Senior Notes represented
by such Global Note registered in their names, will not receive or be entitled
to receive physical delivery of Certificated Notes, and will not be considered
the owners or holders thereof under the Indenture for any purpose, including
with respect to the giving of any directions, instructions or approvals to the
Trustee thereunder. As a result, the ability of a person having a beneficial
interest in Senior Notes represented by a Global Note to pledge such interest to
persons or entities that do not participate in the Depository's system or to
otherwise take actions with respect to such interest, may be affected by the
lack of a physical certificate evidencing such interest.
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Accordingly, each person owning a beneficial interest in a Global Note
must rely on the procedures of the Depository and, if such beneficial owner is
not a Participant or an Indirect Participant, on the procedures of the
Participant through which such beneficial owner owns its interest, to exercise
any rights of a Holder under the Indenture or such Global Note. Ekco understands
that under existing industry practice, in the event Ekco requests any action of
Holders or a person that is an owner of a beneficial interest in a Global Note
desires to take any action that the Depository, as the Holder of such Global
Note, is entitled to take, the Depository would authorize the Participants to
take such action and the Participants would authorize beneficial owners owning
through such Participants to take such action or would otherwise act upon the
instructions of such beneficial owners. Neither Ekco nor the Trustee will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of Senior Notes by the Depository, or for maintaining,
supervising or reviewing any records of the Depository relating to such Senior
Notes.
Payments with respect to the principal of, premium, if any, interest
and Liquidated Damages, if any, on any Senior Notes represented by a Global Note
registered in the name of the Depository or its nominee on the applicable record
date will be payable by the Trustee to or at the direction of the Depository or
its nominee in its capacity as the registered Holder of the Global Note
representing such Senior Notes under the Indenture. Under the terms of the
Indenture, Ekco and the Trustee may treat the persons in whose names the Senior
Notes, including the Global Notes, are registered as the owners thereof for the
purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, neither Ekco nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of the Senior Notes (including principal, premium, if any, and interest), or to
immediately credit the accounts of the relevant Participants with such payment,
in amounts proportionate to their respective holdings in principal amount of
beneficial interest in the Global Note as shown on the records of the
Depository. Payments by the Participants and the Indirect Participants to the
beneficial owners of the Senior Notes will be governed by standing instructions
and customary practice and will be the responsibility of the participants or the
Indirect Participants.
Certificated Notes
If (i) Ekco notifies the Trustee in writing that the Depository is no
longer willing or able to act as a depository and Ekco is unable to locate a
qualified successor within 90 days or (ii) Ekco, at its option, notifies the
Trustee in writing that it elects to cause the issuance of Senior Notes in
definitive form under the Indenture, then, upon surrender by the Depository of
its Global Note, Certificated Notes will be issued to each person that the
Depository identifies as the beneficial owner of the Senior Notes represented by
the Global Note. In addition, subject to certain conditions, any person having a
beneficial interest in a Global Note may, upon request to the Trustee, exchange
such beneficial interest for Certificated Notes. Upon any such issuance, the
Trustee is required to register such Certificated Notes in the name of such
person or persons (or the nominee of any thereof), and cause the same to be
delivered thereto.
Neither Ekco nor the Trustee shall be liable for any delay by the
Depository or any participant or Indirect Participant in identifying the
beneficial owners of the related Senior Notes and each such person may
conclusively rely on, and shall be protected in relying on, instructions from
the Depository for all purposes (including with respect to the registration and
delivery, and the respective principal amounts, of the Senior Notes to be
issued).
Same-Day Settlement and Payment
The Indenture will require that payments in respect of the Senior Notes
represented by the Global Note (including principal, premium, if any, interest
and Liquidated Damages, if any) be made by wire transfer of immediately
available funds to the accounts specified by the Depositary or its nominee. With
respect to Senior Notes represented by Certificated Notes, however, Ekco will
make all payments of principal, premium, if any, interest and Liquidated
Damages, if any, by mailing a check to each such Holder's registered address.
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Secondary trading in long-term notes and debentures of corporate
issuers is generally settled in clearing-house or next-day funds. In contrast,
the Senior Notes represented by the Global Note are eligible to trade in the
PORTAL Market and to trade in the Same-Day Funds Settlement System of the
Depository, and any permitted secondary market trading activity in such Senior
Notes will, therefore, be required by the Depository to be settled in
immediately available funds. Ekco expects that secondary trading in any
Certificated Notes will also be settled in immediately available funds.
DESCRIPTION OF CERTAIN INDEBTEDNESS
REVOLVING CREDIT FACILITY
Concurrently with the issuance of the Old Senior Notes on March 25,
1996, the Company amended its existing $75 million revolving credit facility
dated as of April 11, 1995 by consolidating the outstanding debt and borrowing
capacity at Ekco and by revising certain financial covenants (as so amended, the
"Revolving Credit Facility"). The Revolving Credit Facility establishes a $75
million revolving credit facility for Ekco, including capacity for letters of
credit up to $12,000,000 in the aggregate. The Revolving Credit Facility matures
on December 1, 1998. Amounts outstanding under the Revolving Credit Facility
bear interest at the Bank's prime rate ("Prime"), or the LIBOR rate plus 1.25%
or 1.50%, depending upon the Company's borrowing strategy and the ratio of total
debt to cash flow as defined in the Revolving Credit Facility. Under the
Revolving Credit Facility, the Company pays a commitment fee of three-eighths of
one percent per annum on the unused portion of the commitment amount and a
$60,000 annual agency fee.
Ekco's obligations under the Revolving Credit Facility are guaranteed
by substantially all of its subsidiaries. Substantially all of the assets of the
Company, including real estate, existing and future inventory, accounts
receivable, and the capital stock of Ekco's subsidiaries, are pledged as
security for the obligations of the Company under the Revolving Credit Facility
and related guarantees.
The Revolving Credit Facility contains numerous restrictive covenants,
including, but not limited to, limitations on the ability of the Company to
incur or guarantee additional indebtedness, to create liens and other
encumbrances, to make certain payments and investments, to sell or otherwise
dispose of assets or to merge, consolidate with or acquire another entity. In
addition, the Revolving Credit Facility requires that the Company comply with
certain financial covenants, including but not limited to, a minimum
Consolidated EBITDA test, a minimum ratio of Consolidated EBITDA to Consolidated
Interest Expense, a minimum Consolidated Fixed Charge Coverage Ratio and a
maximum ratio respecting Consolidated Senior Funded Indebtedness to Consolidated
EBITDA, all as defined in and as more particularly described in the Revolving
Credit Facility.
The Revolving Credit Facility includes various events of defaults
customary for secured revolving credit facilities of similar size and nature,
including, without limitation, failure to pay any amounts under the Revolving
Credit Facility (with certain grace periods), failure to comply with certain
covenants, conditions or provisions under the Revolving Credit Facility (with
certain grace periods), the making of materially false or misleading
representations or warranties, a Change in Control (as defined in the Revolving
Credit Facility), certain defaults with respect to other agreements for borrowed
funds in excess of a certain amount, a final, unstayed judgement in excess of a
certain amount and the commencement of reorganization, bankruptcy, insolvency or
similar proceedings.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The federal income tax discussion set forth below is a summary of
certain federal income tax consequences relevant to the ownership of the Senior
Notes by holders acquiring Senior Notes on their original issue date. This
discussion does not purport to address all tax considerations that may be
relevant to holders of the Senior Notes, and is not intended to address tax
considerations relevant to all categories of investors, some of which may be
subject to special rules, such as life insurance companies, tax-exempt
organizations or dealers in securities or currencies. In addition, this
discussion only pertains to a holder of a Senior Note that is (a) a citizen of
the United States or a resident of the United States for U.S. federal income tax
purposes, (ii) an estate or trust subject to U.S. federal income taxation
without regard to the source of its income, or (iii) a corporation or
partnership created or organized in or under the laws of the United States.
Furthermore, this discussion is limited to purchasers of the Senior Notes that
hold the Senior Notes as "capital assets" within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"). This summary is
based on current federal income tax law.
EXCHANGE OF NOTES
Because the New Senior Notes will be identical in all material respects
to the Old Senior Notes, an exchange of the securities as described under "The
Exchange Offer" should be treated, for federal income tax purposes, as a
non-event and, therefore, should be without income tax consequences. The New
Senior Notes should be treated, for federal income tax purposes, as a mere
continuation of the exchanged Old Senior Notes. Thus, each holder will have an
adjusted tax basis and a holding period for the New Senior Notes equal to such
holder's adjusted tax basis and holding period for the exchanged Old Senior
Notes.
TAX TREATMENT OF HOLDERS OF THE SENIOR NOTES
Stated Interest. Subject to the discussion of the Constant Yield
Election (see below), holders of the Senior Notes must generally treat stated
interest on the Senior Notes as ordinary income for federal income tax purposes
includable as income in accordance with their respective methods of tax
accounting.
Original Issue Discount. The Senior Notes will be issued with original
issue discount for federal income tax purposes. The amount of such discount with
respect to any Senior Note generally will be equal to the excess of (i) its
"stated redemption price at maturity" (which in the case of a Senior Note,
generally will be its stated principal amount) over (ii) its "issue price."
Under applicable Treasury regulations, the "issue price" of all of the Old
Senior Notes, which is the same as the issue price for the New Senior Notes,
equals the first price at which a substantial amount of the Old Senior Notes
were sold to the public.
A holder of a Senior Note generally will be required to include in
gross income for federal income tax purposes the amount of original issue
discount accrued during any applicable period, determined in accordance with the
constant yield method and the debt instrument's yield to maturity. Accordingly,
such discount must be included in gross income in advance of the receipt of the
cash attributable to such discount.
Under the constant yield method, the amount of original issue discount
includable in income for a taxable year by the holder of a Senior Note will
generally equal the sum of the "daily portions" of the total original issue
discount on the Senior Note for each day during the taxable year on which such
holder held the Senior Note ("accrued original issue discount"). Generally, the
daily portion of the original issue discount is determined by allocation to each
day in any "accrual period" a ratable portion of the original issue discount
allocable to such accrual period. The term "accrual period" means an interval of
time of one year or less; provided that each scheduled payment of principal or
interest either occurs on the final day of an accrual
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period or the first day of an accrual period. The amount of original issue
discount allocable to an accrual period will be the excess of (a) the product of
the "adjusted issue price" of the Senior Note at the beginning of such accrual
period and its "yield to maturity" over (b) the amount of any qualified stated
interest allocable to the accrual period. The "adjusted issue price" of a Senior
Note at the beginning of an accrual period will generally equal the issue price
plus the amount of original issue discount previously includable in the gross
income of the holder. The "yield to maturity" of the Senior Note will be
computed on the basis of a constant annual interest rate and compounded at the
end of each accrual period. Under the foregoing rules, holders of Senior Notes
will generally be required to include in income increasingly greater amounts of
original issue discount in successive accrual periods. Special rules apply for
calculating original issue discount for initial short or final accrual periods.
Constant Yield Election. Under Treasury Regulations, holders are
permitted to elect to include all interest on a note issued after April 2, 1994
(such as a Senior Note) using the constant yield method. For this purpose,
interest includes stated interest, acquisition discount, original issue
discount, de minimis original issue discount, market discount, de minimis market
discount, and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium. Special rules apply to elections made with respect to notes
with amortizable bond premium or market discount. Holders considering such an
election should consult their tax advisor. The election cannot be revoked
without the approval of the Service.
A holder that acquires a Senior Note with market discount (as described
below) may elect to include market discount in income currently as it accrues,
in which case the amount of original issue discount included in income will be
increased.
A holder that acquires a Senior Note at an "acquisition premium" (that
is, at a purchase price greater than the excess of (i) the Senior Note's stated
redemption price at maturity over (ii) the original issue discount remaining to
be amortized on the Senior Note as of the date of purchase) may be permitted to
reduce the amount of original issue discount required to be included in gross
income. The amount and timing of such reduction will depend on the amount of
such "acquisition premium" relative to the amount of unamortized original issue
discount.
A holder generally will be entitled to increase its adjusted tax basis
in a Senior Note by the amount of original issue discount included in such
holder's income.
Ekco will furnish annually to the Internal Revenue Service (the
"Service") and to record holders of Senior Notes (to whom it is required to
furnish such information), information relating to original issue discount
accruing during the calendar year. Holders will be required to determine for
themselves whether, by reason of the rules described above, they are eligible to
report a reduced amount of original issue discount for federal income tax
purposes.
Sale, Exchange or Retirement of Senior Notes. Generally, a holder will
recognize gain or loss upon the sale, retirement or other disposition of a
Senior Note in an amount equal to the difference between the amount realized
(less the portion of such proceeds which represents accrued interest, which will
be taxable as such) from such sale, retirement, or other disposition and the
holder's adjusted tax basis for such Senior Note. Assuming that no intention
exists at the time of the original issuance to redeem the Senior Notes prior to
maturity, such gain or loss to an initial purchaser generally will constitute
capital gain or loss, except to the extent of any "accrued market discount," and
will be long-term capital gain or loss if such purchaser's holding period for
the Senior Notes is more than one year.
If a holder purchases a Senior Note for an amount that is less than the
Senior Note's stated redemption price at maturity (which in the case of the
Senior Note, generally will be its principal amount) the amount of this
difference in excess of any unamortized original issue discount will be treated
as "market
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discount" for federal income tax purposes. Market discount generally will be de
minimis and hence disregarded, however, if it is less than the product of 0.25
percent of the stated redemption price at maturity of the Senior Note and the
number of remaining complete years to maturity of the Senior Note. Under the
market discount rules, a holder is required to treat any principal payment on,
or any gain on the sale, exchange, retirement or other disposition of a Senior
Note as ordinary income to the extent of any accrued market discount which has
not previously been included in income.
Market discount is considered to accrue ratably during the period from
the date of acquisition to the maturity of a Senior Note, unless the holder
elects to accrue on a constant yield basis. If a holder of a Senior Note elects
to include market discount in income currently as it accrues (on either a
ratable or constant interest basis), in which case such holder will not be
required to treat any gain as ordinary income under these rules. Holders of
Senior Notes should consult their tax advisors as to the portion of any gain
that would be taxable as ordinary income under these provisions.
Under current law, net capital gains of noncorporate taxpayers are
taxable at lower maximum rates than the maximum rates imposed upon ordinary
income. However, legislation is currently pending before Congress which, if
enacted in its proposed form, would substantially reduce the tax rate applicable
to net capital gain of many taxpayers (including corporate taxpayers). It is
uncertain whether this or any other tax legislation regarding capital gains tax
rates will be enacted this year or in any subsequent year.
OTHER TAX CONSIDERATIONS
Amortizable Bond Premium. A holder that acquires a Senior Note at an
"amortizable bond premium" may elect to deduct a portion of such premium with
respect to the Senior Note in each taxable year in which he holds the Senior
Notes. Amortizable bond premium is generally defined as the excess of the
holder's tax basis in a bond over the stated redemption price at maturity of the
bond. The election to amortize bond premium applies to all taxable bonds held by
the holder at the beginning of the first taxable year to which the election
applies and to all taxable bonds that the holder acquires thereafter, and is
binding for all subsequent taxable years for all taxable bonds of the holder
unless the Service consents to a revocation of the election. A holder who elects
to amortize bond premium must reduce his tax basis in the related obligation by
the amount of the aggregate deduction allowable for amortizable bond premium.
Effect of Change of Control. Upon a Change of Control, Ekco is required
to offer to redeem all outstanding Senior Notes for a price equal to 101% of the
principal amount thereof plus accrued and unpaid interest. Under applicable
regulations, such Change of Control redemption requirement will not affect the
yield or maturity date of the Senior Notes unless, based on all the facts and
circumstances as of the issue date of the Senior Notes, it is more likely than
not that a Change of Control giving rise to the redemption will occur. Ekco does
not believe a change in control is more likely then not to occur, and thus will
not treat the Change of Control redemption provisions of the Senior Notes as
affecting the calculation of the yield or maturity of any Senior Note.
Payment of Liquidated Damages. In the event of a Registration Default,
Ekco will be required to pay additional amounts to the holders of Old Senior
Notes as Liquidated Damages. Such amounts are to be determined in a manner
similar to the calculation of interest. Ekco currently believes that the
likelihood of a material Registration Default is remote. Thus, any right to
receive payment of Liquidated Damages is likely to be taxable to the holders of
the Old Senior Notes as interest income in accordance with their respective
methods of tax accounting. There can be no assurance that the Service will agree
with Ekco's determination that the likelihood of a Registration Default is
remote or the treatment of the liquidated damages as interest for tax purposes.
- 96 -
<PAGE> 99
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER OF SENIOR NOTES IN LIGHT OF
SUCH HOLDER'S PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATION. EACH HOLDER OF
SENIOR NOTES SHOULD CONSULT SUCH HOLDER'S TAX ADVISOR AS TO THE SPECIFIC TAX
CONSEQUENCES TO SUCH HOLDER OF THE OWNERSHIP AND DISPOSITION OF THE SENIOR
NOTES, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS.
PLAN OF DISTRIBUTION
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that the New
Senior Notes issued pursuant to the Exchange Offer in exchange for Old Senior
Notes may be offered for resale, resold and otherwise transferred by any Holder
thereof (other than any such Holder with is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Senior Notes are acquired in the ordinary course of such Holder's
business and such Holder has no arrangement with any person to participate in
the distribution of such New Senior Notes. Each Holder will be required to
acknowledge in the Letter of Transmittal that it is not engaged in, and does not
intend to engage in, a distribution of the New Senior Notes. Accordingly, any
Holder using the Exchange Offer to participate in a distribution of the New
Senior Notes will not be able to rely on such no-action letters. Notwithstanding
the foregoing, each broker-dealer that receives New Senior Notes for its own
account pursuant to the Exchange Offer will be required to acknowledge in the
Letter of Transmittal that it will deliver a prospectus in connection with any
resale of such New Senior Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used in by a broker-dealer in connection
with any resale of New Senior Notes received in exchange for Old Senior Notes
where such Old Senior Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that for a period
of 180 days from the Expiration Date, it will make this Prospectus, as amended
or supplemented, available to any broker-dealer for use in connection with any
such resale. However, based on the above-mentioned interpretations by the staff
of the Commission, the Company believes that broker-dealers who acquired the Old
Senior Notes directly from the Company and not as a result of market-making
activities or other trading activities cannot rely on such interpretations by
the staff of the Commission and must, in the absence of an exemption, comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with secondary resales of the New Senior Notes. Such
broker-dealers may not use this Prospectus, as it may be amended or supplemented
from time to time, in connection with any such resales of the New Senior Notes.
In addition, until October 6, 1996 (90 days from the date of this Prospectus),
all dealers effecting transactions in the New Senior Notes may be required to
deliver a prospectus.
The Company will not receive any proceeds from any sale of New Senior
Notes by broker-dealers. New Senior Notes received by broker-dealers for their
own account pursuant to the Exchange Offer may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Senior Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Senior Notes. Any
broker-dealer that resells New Senior Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Senior Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Senior Notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of
- 97 -
<PAGE> 100
Transmittal states by acknowledging that it will deliver, and by delivering, a
prospectus as required, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
For a period of 180 days from the Expiration Date the Company will send
a reasonable number of additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company will pay all the expenses incident to
the Exchange Offer (which shall not include the expenses of any Holder in
connection with resales of the New Senior Notes). The Company has agreed to
indemnify the Initial Purchasers and any broker-dealers participating in the
Exchange Offer against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
The validity of the New Senior Notes offered hereby and the Guarantees
will be passed upon for Ekco and the Guarantors by Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., One Financial Center, Boston, Massachusetts 02111.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of the Company as of January 2,
1994, January 1, 1995, and December 31, 1995 and for the years then-ended, and
the related consolidated financial statement schedules of the Company included
herein, have been included in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and given
upon the authority of said firm as experts in auditing and accounting.
- 98 -
<PAGE> 101
EKCO GROUP, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Auditors ...................................................... F-2
Consolidated Balance Sheets as of January 1, 1995 and December 31, 1995 ............. F-3
Consolidated Statements of Operations for the Fiscal Years ended January 2, 1994,
January 1, 1995 and December 31, 1995 ............................................. F-4
Consolidated Statements of Stockholders' Equity for the Fiscal Years ended January 2,
1994, January 1, 1995 and December 31, 1995 ....................................... F-5
Consolidated Statements of Cash Flows for the Fiscal Years ended January 2, 1994,
January 1, 1995 and December 31, 1995 ............................................. F-6
Notes to Consolidated Financial Statements .......................................... F-7
Consolidated Condensed Balance Sheets as of December 31, 1995 and
March 31, 1996 (unaudited) ........................................................ F-26
Consolidated Condensed Statements of Operations for the Three Months Ended
March 31, 1996 and April 2, 1995 (unaudited) ...................................... F-27
Consolidated Condensed Statements of Cash Flows for the Three Months Ended
March 31, 1996 and April 2, 1995 (unaudited) ...................................... F-28
Notes to Consolidated Condensed Financial Statements (unaudited) .................... F-29
</TABLE>
F-1
<PAGE> 102
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Ekco Group, Inc.
We have audited the accompanying consolidated balance sheets of Ekco
Group, Inc. and subsidiaries as of January 1, 1995 and December 31, 1995, and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the fiscal years in the three-year period ended December 31,
1995. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements 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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Ekco Group,
Inc. and subsidiaries as of January 1, 1995 and December 31, 1995, and the
results of their operations and their cash flows for each of the fiscal years in
the three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles.
In 1993, the Company changed its method of accounting for income taxes,
post-retirement benefits other than pensions and post-employment benefits.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
February 5, 1996
F-2
<PAGE> 103
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
--------- ------------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents ................................................ $ 129 $ 142
Accounts receivable, net of allowance for doubtful accounts of
$1,739 and $1,048, respectively ....................................... 46,030 43,823
Inventories .............................................................. 48,242 47,565
Prepaid expenses and other current assets ................................ 6,296 6,719
Deferred income taxes .................................................... 7,330 4,361
Investments pledged as collateral ........................................ 3,600 --
--------- ---------
Total current assets ............................................. 111,627 102,610
Property and equipment, net ................................................ 52,361 56,380
Property held for sale or lease, net of accumulated depreciation of
$8,323 and $2,830, respectively .......................................... 7,373 2,830
Other assets ............................................................... 5,440 5,955
Excess of cost over fair value of net assets acquired, net of
accumulated amortization of $23,290 and $27,727, respectively ............ 140,982 136,600
--------- ---------
Total assets ..................................................... $ 317,783 $ 304,375
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable ............................................................. $ 3,643 $ --
Current portion of long-term obligations ................................. 36 18,079
Accounts payable ......................................................... 15,652 15,607
Accrued expenses ......................................................... 27,843 23,711
Income taxes ............................................................. 3,944 538
--------- ---------
Total current liabilities ........................................ 51,118 57,935
--------- ---------
Long-term obligations, less current portion ................................ 102,580 74,700
--------- ---------
Other long-term liabilities ................................................ 9,375 9,859
--------- ---------
7.0% Subordinated Convertible Note ......................................... 22,000 22,000
--------- ---------
Series B ESOP Convertible Preferred Stock, net; outstanding 1,568 shares and
1,488 shares, respectively redeemable at $3.61 per
share .................................................................... 3,096 3,458
--------- ---------
Commitments and contingencies .............................................. -- --
Minority interest .......................................................... 498 498
--------- ---------
Stockholders' equity
Common stock, $.01 par value; outstanding 18,069 shares and 18,414
shares, respectively .................................................. 181 184
Capital in excess of par value ........................................... 105,448 106,916
Cumulative translation adjustment ........................................ 771 929
Retained earnings ........................................................ 27,172 33,614
Unearned compensation .................................................... (2,968) (3,970)
Pension liability adjustment ............................................. (1,488) (1,748)
--------- ---------
129,116 135,925
--------- ---------
Total liabilities and stockholders' equity ....................... $ 317,783 $ 304,375
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 104
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------------------
JANUARY 2, JANUARY 1, DECEMBER 31,
1994 1995 1995
--------- --------- ---------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net revenues ........................................... $ 246,428 $ 267,048 $ 277,995
--------- --------- ---------
Costs and expenses
Cost of sales ........................................ 161,349 175,451 191,343
Selling, general and administrative .................. 50,841 53,433 52,783
Restructuring/reorganization and excess facilities
charge ............................................ 11,000 -- --
Amortization of excess of cost over fair value ....... 4,195 4,438 4,437
--------- --------- ---------
227,385 233,322 248,563
--------- --------- ---------
Income before interest and income taxes ................ 19,043 33,726 29,432
--------- --------- ---------
Net interest expense
Interest expense ..................................... 12,755 12,824 13,590
Investment income .................................... (549) (333) (97)
--------- --------- ---------
12,206 12,491 13,493
Income before income taxes and cumulative effect of
accounting changes ................................... 6,837 21,235 15,939
Income taxes ........................................... 4,578 9,812 7,894
--------- --------- ---------
Income before cumulative effect of accounting changes .. 2,259 11,423 8,045
Cumulative effect of changes in method of accounting for
post-retirement and post-employment benefits (net of
income taxes of $1,954) .............................. (3,247) -- --
--------- --------- ---------
Net income (loss) ...................................... $ (988) $ 11,423 $ 8,045
========= ========= =========
Per share data
Earnings before cumulative effect of accounting
changes ........................................... $ .11 $ .57 $ .40
Cumulative effect of accounting changes .............. (.19) -- --
--------- --------- ---------
Net income (loss) .................................... $ (.08) $ .57 $ .40
========= ========= =========
Weighted average number of shares used in computation of
per share data
Earnings before cumulative
effect of accounting changes ....................... 19,999 20,115 20,318
Cumulative effect of accounting changes .............. 17,148 -- --
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 105
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON CAPITAL IN CUMULATIVE PENSION
STOCK, PAR EXCESS OF TRANSLATION RETAINED UNEARNED LIABILITY
SHARES VALUE $.01 PAR VALUE ADJUSTMENT EARNINGS COMPENSATION ADJUSTMENT
------ ---------- --------- ---------- -------- ------------ ----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 3, 1993 ............ 17,148 $ 171 $ 96,651 $ 1,094 $ 16,737 $ (2,883) $ (1,203)
Shares issued under employee common
stock purchase and option plans ... 89 1 594 -- -- -- --
Net shares issued under restricted
common stock purchase plans ....... 11 -- 13 -- -- (12) --
Shares issued upon preferred stock
conversions ....................... 31 -- 110 -- -- -- --
Treasury shares issued for
acquisition ....................... 565 6 6,516 -- -- -- --
Income tax reductions relating to
stock plans ....................... -- -- 318 -- -- -- --
Net loss for the year ............... -- -- -- -- (988) -- --
Foreign currency translation
adjustment ........................ -- -- -- (3) -- -- --
Amortization of unearned
compensation ...................... -- -- -- -- -- 443 --
Pension liability adjustment ........ -- -- -- -- -- -- (701)
-------- -------- -------- -------- -------- -------- --------
Balance, January 2, 1994 ............ 17,844 178 104,202 1,091 15,749 (2,452) (1,904)
Shares issued under employee common
stock purchase and option plans ... 148 2 643 -- -- -- --
Income tax reductions relating to
stock plans ....................... -- -- 327 -- -- -- --
Treasury shares issued upon preferred
stock conversions ................. 77 1 276 -- -- -- --
Net income for the year ............. -- -- -- -- 11,423 -- --
Foreign currency translation
adjustment ........................ -- -- -- (320) -- -- --
Unearned compensation relating to
common stock purchases by employee
stock ownership plan .............. -- -- -- -- -- (950) --
Amortization of unearned
compensation ...................... -- -- -- -- -- 434 --
Pension liability adjustment ........ -- -- -- -- -- -- 416
-------- -------- -------- -------- -------- -------- --------
Balance, January 1, 1995 ............ 18,069 181 105,448 771 27,172 (2,968) (1,488)
Shares issued under common stock
purchase and option plans and
dividend re-investment ............ 226 2 769 -- -- -- --
Net shares issued under restricted
common stock purchase plans ....... 243 2 1,515 -- -- (1,437) --
Income tax reductions relating to
stock plans ....................... -- -- 74 -- -- -- --
Shares issued upon preferred
stock conversion .................. 80 1 288 -- -- -- --
Purchase of treasury stock .......... (204) (2) (1,178) -- -- -- --
Net income for the year ............. -- -- -- -- 8,045 -- --
Dividends paid ...................... -- -- -- -- (1,603) -- --
Foreign currency translation
adjustment ........................ -- -- -- 158 -- -- --
Amortization of unearned
compensation .................... -- -- -- -- -- 435 --
Pension liability adjustment......... -- -- -- -- -- -- (260)
-------- -------- --------- -------- --------- --------- ----------
Balance, December 31, 1995........... 18,414 $ 184 $ 106,916 $ 929 $ 33,614 $ (3,970) $ (1,748)
======== ======== ========= ======== ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 106
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
----------------------------------------
JANUARY 2, JANUARY 1, DECEMBER 31,
1994 1995 1995
---------- ---------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss) ............................................. $ (988) $ 11,423 $ 8,045
Adjustments to reconcile net income (loss) to net cash provided
by operations
Depreciation ................................................ 9,545 9,227 9,234
Restructuring/reorganization and excess facilities charge ... 2,677 -- --
Amortization of excess of cost over fair value .............. 4,195 4,438 4,437
Amortization of deferred finance costs ...................... 467 499 590
Other amortization .......................................... 2,970 4,870 6,959
Deferred income taxes ....................................... (554) 1,679 3,388
Cumulative effect of accounting change ...................... 3,247 -- --
Other ....................................................... 586 (102) (353)
Change in certain assets and liabilities, net of effects from
acquisition and dispositions of businesses, affecting cash
provided by operations
Accounts and note receivable ................................ (4,431) (10,313) 2,666
Inventories ................................................. (6,622) (15,231) 719
Prepaid marketing costs ..................................... (5,490) (4,127) (4,877)
Other assets ................................................ (2,453) 4,319 (951)
Accounts payable and accrued expenses ....................... 6,885 (3,348) (4,742)
Income taxes payable ........................................ (361) (931) (3,395)
-------- -------- --------
Net cash provided by operations ........................... 9,673 2,403 21,720
-------- -------- --------
Cash flows from investing activities
Proceeds from sale of property and equipment .................. 194 5,219 3,300
Capital expenditures .......................................... (15,111) (11,106) (12,652)
Acquisition of business ....................................... (26,428) -- --
-------- -------- --------
Net cash used in investing activities ..................... (41,345) (5,887) (9,352)
-------- -------- --------
Cash flows from financing activities
Proceeds from issuance of note payable and long-term
obligations ................................................. 30,274 32,118 35,183
Proceeds from sale of investment held as collateral ........... -- -- 3,600
Payments of dividends ......................................... -- -- (1,603)
Purchases of treasury stock ................................... -- -- (1,180)
Purchase of common stock for Employee Stock Ownership Plan .... -- (950) --
Payments of note and long-term obligations .................... (17,049) (29,417) (48,627)
Other ......................................................... 1,663 1,484 259
-------- -------- --------
Net cash provided by financing activities ................. 14,888 3,235 (12,368)
Effect of exchange rate changes on cash ......................... 113 51 13
-------- -------- --------
Net increase (decrease) in cash and cash equivalents ...... (16,671) (198) 13
Cash and cash equivalents at beginning of year .................. 16,998 327 129
-------- -------- --------
Cash and cash equivalents at end of year ........................ $ 327 $ 129 $ 142
======== ======== ========
Cash paid during the year for
Interest ...................................................... $ 12,181 $ 12,050 $ 12,557
Income taxes .................................................. 4,753 9,061 7,912
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 107
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its subsidiaries (the "Company"). The Company's principal operating
subsidiaries are wholly-owned Ekco Housewares, Inc. ("Housewares"), Frem
Corporation ("Frem"), Kellogg Brush Manufacturing Co. and subsidiaries
("Kellogg"), and majority-owned Woodstream Corporation ("Woodstream") (see Note
10). All significant intercompany accounts and transactions have been
eliminated.
BASIS OF PRESENTATION
The Company uses a fiscal year ending on the Sunday nearest December
31. Accordingly, the accompanying consolidated financial statements include the
fiscal years ended January 2, 1994 ("Fiscal 1993"), January 1, 1995 ("Fiscal
1994") and December 31, 1995 ("Fiscal 1995").
CASH AND CASH EQUIVALENTS
The Company considers all short-term investments which have an original
maturity of 90 days or less to be cash equivalents.
MARKET EXPANSION PROGRAMS AND ADVERTISING COSTS
The Company incurs certain costs in connection with expanding its
market position at retail. These costs are deferred and amortized using the
straight-line method over the lesser of the period of benefit or the program
period. Program periods currently range from one to three years. It is the
Company's policy to periodically review and evaluate whether the benefits
associated with these costs are expected to be realized and that continued
deferral and amortization is justified. Approximately $4.4 million and $3.5
million of these costs are included in prepaid expenses at January 1, 1995 and
December 31, 1995, respectively.
The Company expenses all advertising costs as incurred.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined on a first-in, first-out ("FIFO") basis for all subsidiaries except
for Kellogg, whose cost is determined on a last-in, first-out ("LIFO") basis.
INVESTMENTS
Investments are carried at cost which approximates market.
F-7
<PAGE> 108
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Assets acquired through
business combinations accounted for under the purchase method are recorded at
appraised value determined as of the acquisition date. The Company provides for
depreciation and amortization over the estimated useful lives of assets or terms
of capital leases on the straight-line method. Improvements are capitalized,
while repair and maintenance costs are charged to operations. When assets are
retired or disposed of, the cost and accumulated depreciation thereon are
removed from the accounts, and gains or losses, if any, are included in
operations.
PROPERTY HELD FOR SALE OR LEASE
It is the Company's policy to make available for sale or lease property
considered no longer necessary for the operations of the Company. The aggregate
carrying values of such property are periodically reviewed and are stated at the
lower of cost or market.
INTANGIBLE ASSETS
The excess of cost over fair value of net assets acquired ("goodwill")
is being amortized over 12 to 40 year periods. It is the Company's policy to
periodically review and evaluate the recoverability of goodwill by assessing
long-term trends of profitability and cash flows and to determine whether the
amortization of goodwill over its remaining life can be recovered through
expected future results of operations and cash flows.
Favorable lease rights included in other assets are being amortized
over the life of the lease. Deferred financing costs included in other assets
are debt issuance costs which have been deferred and are being amortized over
the terms of the respective financing arrangements.
INCOME RECOGNITION
Revenues from product sales are recognized at the time the product is
shipped. Investment income is accrued as earned.
TRANSLATION OF FOREIGN CURRENCY
The assets and liabilities of the Company's Canadian and United Kingdom
subsidiaries are translated at year-end exchange rates. Income and expenses are
translated at exchange rates prevailing during the year. The resulting net
translation adjustment for each year is included as a separate component of
stockholders' equity.
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect, if any, on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Provision for U.S. income taxes on the undistributed earnings of
foreign subsidiaries is made only on those amounts in excess of the funds
considered to be permanently reinvested.
F-8
<PAGE> 109
USE OF ESTIMATES
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued two Statements of
Financial Accounting Standards, "Accounting For The Impairment Of Long-Lived
Assets And For Long-Lived Assets To Be Disposed Of" No. 121 ("FAS 121") and
"Accounting for Stock-based Compensation" No. 123 ("FAS 123"). The Company will
adopt both these standards in fiscal 1996; it does not expect the adoption of
either FAS 121 or FAS 123 to have a material effect on the financial statements.
(2) INVENTORIES
The components of inventory were as follows:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
---------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Raw materials . $15,229 $11,489
Work in process 4,047 3,097
Finished goods 28,966 32,979
------- -------
$48,242 $47,565
======= =======
</TABLE>
At January 1, 1995, and December 31, 1995, inventories carried under
the LIFO method represented approximately 17.4% and 16.9%, respectively, of
total year-end inventories. The effect of using LIFO for these inventories for
Fiscal 1994 and Fiscal 1995 was immaterial to the assets and gross profit of the
Company. During Fiscal 1994 and Fiscal 1995, there was no effect on net income
from liquidation of LIFO layers.
(3) PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
---------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Property and equipment at cost
Land, buildings and improvements ........... $22,261 $22,856
Equipment, furniture and fixtures .......... 59,839 71,922
------- -------
82,100 94,778
Less accumulated depreciation and amortization 29,739 38,398
------- -------
$52,361 $56,380
======= =======
</TABLE>
(4) NOTE PAYABLE
The note payable, which represented borrowings of the Company's
Employee Stock Ownership Plan (the "ESOP") guaranteed by the Company (the "ESOP
Loan") was paid on March 30, 1995. Interest expense charged
F-9
<PAGE> 110
to operations for Fiscal 1993, Fiscal 1994 and Fiscal 1995 relating to the ESOP
Loan was $148,000, $131,000 and $52,000, respectively.
(5) LONG-TERM OBLIGATIONS AND OTHER LONG-TERM LIABILITIES
Long-term obligations consisted of the following:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
---------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Revolving Credit Facility ............................. $ 42,424 $ 32,693
12.70% Notes, due 1998 ................................ 60,000 60,000
Other ................................................. 192 86
-------- --------
102,616 92,779
Less current portion .................................. 36 18,079
-------- --------
$102,580 $ 74,700
======== ========
7.0% Subordinated Convertible Note, due 2002 .......... $ 22,000 $ 22,000
======== ========
Other long-term liabilities consisted of the following:
Accrued pension cost (see note 8) ................... $ 1,408 $ 1,950
Deferred income taxes ............................... 948 1,369
Other long-term liabilities ......................... 7,019 6,540
-------- --------
$ 9,375 $ 9,859
======== ========
</TABLE>
During Fiscal 1995, the Company entered into a bank credit agreement
(the "Revolving Credit Facility") which provides a total line of credit of $75
million allocated among the Company ($30.0 million), Housewares ($35.0 million)
and Frem ($10.0 million). The proceeds from the Revolving Credit Facility were
used to retire certain loans under previous agreements. As of December 31, 1995
$34.4 million was available for general corporate purposes under the Revolving
Credit Facility, net of approximately $6.9 million in outstanding letters of
credit. The facility matures on December 1, 1998.
Loans under the Revolving Credit Facility bear interest at the Bank's
prime rate or the prime rate plus 0.25% or the LIBOR rate plus 1.25%, 1.50% or
1.75%, depending on the Company's borrowing strategy and the ratio of total debt
to cash flow, as defined. The Revolving Credit Facility provides for a
commitment fee of three- eighths of one percent on the unused portion of the
commitment amount and a $60,000 annual agency fee.
Borrowings under the Revolving Credit Facility are collateralized by
substantially all of the assets of the Company. The Revolving Credit Facility
contains certain financial and operating covenants. The most restrictive
covenant requires the Company to maintain a minimum level of cash flow.
Certain information with respect to credit agreements follows:
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1993 1994 1995
---------- ---------- ----------
(AMOUNTS IN THOUSANDS,
EXCEPT PERCENTAGES)
<S> <C> <C> <C>
Average interest rate of borrowings outstanding at end
of year ............................................ 6.13% 8.20% 7.48%
Maximum amount of borrowings outstanding at any
month-end .......................................... $ 47,239 $ 42,434 $ 56,533
Average aggregate borrowings during the year ......... $ 30,898 $ 38,391 $ 43,392
Weighted average interest rate during the year ....... 6.12% 6.51% 8.08%
</TABLE>
F-10
<PAGE> 111
The 12.70% Notes are obligations of Housewares and its subsidiaries,
Ekco Canada, Inc. and Frem ("Ekco Housewares"). The principal is payable as
follows: $18 million on each of December 15, 1996 and 1997, and $24 million on
December 15, 1998. In the event of a Change in Control (as defined), each
Noteholder may require Ekco Housewares to prepay the Notes held by such
Noteholder. In addition, if, after a Change in Control, Ekco Housewares fails to
perform or observe any Triggering Covenant (as defined) in stated time periods
and specified circumstances, then each Noteholder may require Ekco Housewares to
prepay the Notes held by such Noteholder and to pay a premium (approximately
$7.9 million at December 31, 1995).
The 12.70% Notes restrict the payments Ekco Housewares can make to the
Company, and contain certain financial and operating covenants which limit or
restrict the sale of assets, additional indebtedness, and certain investments
and acquisitions. Under the most restrictive financial covenant, Ekco Housewares
must maintain a current ratio of 1.25 to 1.00. At December 31, 1995, the total
amount that could be paid to the Company by Ekco Housewares was approximately
$800,000. Total net assets (total assets less total liabilities) of Ekco
Housewares excluding intercompany items were approximately $83 million at
December 31, 1995.
The 7.0% Subordinated Convertible Note is due November 30, 2002, and is
convertible into common stock at a conversion price of $10.50 per share subject
to certain adjustments. It is callable until December 1996 if the price of the
common stock averages $18 or more for 45 consecutive days immediately preceding
the call notice date. After four years, the Note is callable at an initial
premium of 3.5%, which declines to zero in the final year of maturity. The Note
requires the Company to maintain a minimum net worth of $84 million subject to
adjustment under certain circumstances.
The total of long-term obligations, with the exception of the 7.0%
Subordinated Convertible Note, mature over the three years ending December 1998
as follows (amounts in thousands): 1996--$18,079; 1997--$18,007; 1998--$56,693.
(6) ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
---------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Payroll ..................................................... $ 2,145 $ 2,456
Compensated absences ........................................ 1,933 1,831
Sales and promotional allowances ............................ 6,131 6,417
Provisions related to restructuring/reorganization and excess
facilities costs .......................................... 3,305 --
Interest and non-income taxes ............................... 3,944 3,745
Insurance ................................................... 2,509 2,562
Professional fees ........................................... 1,605 956
Provision for environmental matters ......................... 2,080 2,099
Other ....................................................... 4,191 3,645
------- -------
$27,843 $23,711
======= =======
</TABLE>
F-11
<PAGE> 112
(7) INCOME TAXES
Total income tax expense for Fiscal 1993, Fiscal 1994 and Fiscal 1995, was
allocated as follows:
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1993 1994 1995
------- ------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Income from operations ................................. $ 4,578 $ 9,812 $ 7,894
Stockholders' equity, for compensation expense for tax
purposes in excess of amounts recognized for financial
reporting purposes ................................... (318) (327) (74)
------- ------- -------
$ 4,260 $ 9,485 $ 7,820
======= ======= =======
</TABLE>
A reconciliation of the provision for income taxes to the statutory income tax
rate applied to combined domestic and foreign income before income taxes for
Fiscal 1993, Fiscal 1994 and Fiscal 1995 was as follows:
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1993 1994 1995
-------- -------- --------
(AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C>
Income (loss) before income taxes
Domestic ..................................... $ 7,573 $ 21,543 $ 16,319
Foreign ...................................... (736) (308) (380)
-------- -------- --------
$ 6,837 $ 21,235 $ 15,939
======== ======== ========
Federal income tax at normal rates ............. 35% 35% 35%
State income taxes, net of federal benefit ..... 11% 4% 4%
Change in federal rate ......................... (3)% -- --
Difference between foreign and federal effective
rates ........................................ 2% -- 1%
Amortization of excess of cost over fair value . 22% 7% 10%
-------- -------- --------
67% 46% 50%
======== ======== ========
</TABLE>
The components of the provision for income taxes were as follows:
<TABLE>
<CAPTION>
FEDERAL STATE FOREIGN TOTAL
------- ------- ------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
Fiscal 1993
Current ... $ 3,640 $ 1,484 $ 8 $ 5,132
Deferred .. (38) (372) (144) (554)
------- ------- ------- -------
$ 3,602 $ 1,112 $ (136) $ 4,578
======= ======= ======= =======
Fiscal 1994
Current ... $ 7,119 $ 1,098 $ (84) $ 8,133
Deferred .. 1,324 310 45 1,679
------- ------- ------- -------
$ 8,443 $ 1,408 $ (39) $ 9,812
======= ======= ======= =======
Fiscal 1995
Current ... $ 3,894 $ 641 $ (29) $ 4,506
Deferred .. 2,968 404 16 3,388
------- ------- ------- -------
$ 6,862 $ 1,045 $ (13) $ 7,894
======= ======= ======= =======
</TABLE>
The significant components of deferred income tax expense attributable to income
from operations for Fiscal 1993, Fiscal 1994 and Fiscal 1995 were as follows:
F-12
<PAGE> 113
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1993 1994 1995
------- ------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Utilization of net operating loss and tax credits $ 2,303 $ -- $ --
Depreciation ..................................... (1,438) (969) 2,008
Inventory ........................................ (173) (527) 106
Benefit plans .................................... 1,815 (258) (63)
Restructuring/reorganization and excess facilities
charge ......................................... (4,400) -- --
Accruals, provisions and other liabilities ....... 1,453 3,623 1,928
Other ............................................ (114) (190) (591)
------- ------- -------
$ (554) $ 1,679 $ 3,388
======= ======= =======
</TABLE>
The tax effects of temporary differences and carryforwards that give rise to
significant portions of net deferred tax asset (liability) consisted of the
following:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
---------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Receivables .............................. $ 518 $ 341
Inventory ................................ 1,428 1,322
Benefit plans ............................ 3,342 3,405
Accruals, provisions and other liabilities 5,313 3,385
Depreciation ............................. (3,655) (5,663)
Other .................................... (564) 202
------- -------
$ 6,382 $ 2,992
======= =======
</TABLE>
The Company's federal income tax returns for all years subsequent to December
1987 are subject to review by the Internal Revenue Service.
(8) RETIREMENT PLANS, POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS
The Company and certain of its subsidiaries have various pension plans
which cover certain of their employees and provide for periodic payments to
eligible employees upon retirement. Benefits for non-union employees are
generally based upon earnings and years of service prior to 1989 and certain
non-union employees receive benefits from allocated accounts under a defined
contribution plan. Benefits for certain union employees are based upon dollar
amounts attributed to each year of credited service; certain other union
employees receive benefits from allocated accounts under a defined contribution
plan and from prior contributions to a multi-employer plan. The Company's policy
is to make contributions to these plans sufficient to meet the minimum funding
requirements of applicable laws and regulations, plus such amounts, if any, as
the Company's actuarial consultants determine to be appropriate. The Company
also provides supplemental retirement benefits for certain management personnel
based on earnings and years of service.
At January 1, 1995 and December 31, 1995, the Company reported, as a
separate component of stockholders' equity, the amount of the additional
liability in excess of the unrecognized prior service costs of its pension
plans.
F-13
<PAGE> 114
Net pension expense consisted of the following:
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1993 1994 1995
------ ------ ------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
U.S. defined benefit plans
Service cost-benefits earned during the period .... $ 229 $ 257 $ 211
----- ----- -----
Interest accrued on projected benefit obligation .. 528 559 597
----- ----- -----
Expected return on assets
Actual return .................................. (373) (196) (582)
Unrecognized gain (loss) ....................... (183) (368) 69
----- ----- -----
(556) (564) (513)
Amortization of prior service cost and unrecognized
loss ........................................... 54 120 110
Settlement loss ................................... 38 138 89
----- ----- -----
U.S. defined benefit plans, net ................ 293 510 494
Canadian defined benefit plan ....................... (2) (7) (2)
U.S. defined contribution plans ..................... 129 127 113
----- ----- -----
Total net pension expense ................. $ 420 $ 630 $ 605
===== ===== =====
</TABLE>
The following sets forth the funded status of the Company's defined benefit
pension plans and amounts recognized in the consolidated balance sheets:
<TABLE>
<CAPTION>
JANUARY 1, 1995 DECEMBER 31, 1995
--------------------------- -----------------------------
PLANS WITH PLANS WITH PLANS WITH PLANS WITH
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEEDING BENEFITS EXCEEDING BENEFITS
ACCUMULATED EXCEEDING ACCUMULATED EXCEEDING
BENEFITS ASSETS BENEFITS ASSETS
------------ ---------- -----------------------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
Accumulated benefit obligation
Vested ..................................... $(1,342) $(6,592) $(1,595) $(6,938)
Nonvested .................................. (40) (44) (38) (65)
------- ------- ------- -------
Total .............................. (1,382) (6,636) (1,633) (7,003)
Effect of projected compensation increases ... (233) -- (260) --
------- -------
Projected benefit obligation ................. (1,615) (6,636) (1,893) (7,003)
Plan assets .................................. 2,338 4,864 2,534 4,844
------- ------- ------- -------
Plan assets in excess of (less than) projected
benefit obligations ........................ 723 (1,772) 641 (2,159)
Unrecognized actuarial net gain (losses) ..... (263) 1,852 (211) 1,957
Unrecognized prior service cost .............. 115 47 107 42
Additional liability ......................... -- (1,535) -- (1,790)
------- ------- ------- -------
Prepaid (accrued) pension cost included in
consolidated balance sheet ................. $ 575 $(1,408) $ 537 $(1,950)
======= ======= ======= =======
</TABLE>
Plan assets are invested primarily in pooled funds maintained by insurance
companies. The projected benefit obligation was determined using an assumed
discount rate of 8.0% for January 1, 1995 and 7.5% for December 31, 1995. The
nature of the domestic pension plans is such that an estimate of future
compensation increases is not required. The assumed long-term rate of return on
plan assets was 9% for Fiscal 1993, Fiscal 1994 and Fiscal 1995. At December 31,
1995, the various plans held an aggregate of 8,900 shares of the Company's
common stock.
F-14
<PAGE> 115
The Company sponsors defined benefit post-retirement health and life
insurance plans that cover certain retired and active employees. The Company
expects to continue these benefits indefinitely, but reserves the right to amend
or discontinue all or any part of the plans at any time.
Effective January 4, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Post-retirement
Benefits Other Than Pensions" ("FAS 106") and recognized immediately the
cumulative effect of the change in accounting for post-retirement benefits of
$2.9 million ($1.8 million after income taxes), which represents the accumulated
post-retirement benefit obligation existing at January 1, 1993. FAS 106 requires
that the cost of these benefits be recognized in the financial statements during
the employees' active working lives. Previously, costs were recognized as claims
were incurred. The Company's funding policy for these plans remains on a
pay-as-you-go basis.
The following sets forth the amounts recognized in the consolidated
balance sheets for the Company's post-retirement benefit plans:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
---------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Accumulated post-retirement benefit obligation
Fully eligible active employees ............ $ 649 $ 778
Retirees ................................... 1,518 1,103
Other active employees ..................... 547 658
------- -------
2,714 2,539
Plan assets .................................. -- --
Unrecognized net (gain) loss ................. 55 (29)
------- -------
Accrued post-retirement benefit cost ......... $ 2,769 $ 2,510
======= =======
</TABLE>
Post-retirement benefit expense consisted of the following:
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1993 1994 1995
------ ------ ------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Service costs (benefits attributed to employee services during
the year) .................................................. $ 44 $ 46 $ 43
Interest expense on the accumulated post-retirement benefit
obligation ................................................. 206 199 182
---- ---- ----
Net periodic post-retirement benefit expense ................. $250 $245 $225
==== ==== ====
</TABLE>
The discount rates used in determining the accumulated post-retirement
benefit obligation as of January 1, 1995 and December 31, 1995 were 8.0% and
7.5%, respectively. The Company subsidy is a defined dollar amount and will not
increase in the future; therefore, no medical trend rate has been assumed and
the results of the calculation of the plan liabilities will not be affected by
future medical cost trends. The pay-as-you-go expenditures for post-retirement
benefits were $170,000, $415,000 and $484,000 for Fiscal 1993, Fiscal 1994 and
Fiscal 1995, respectively.
The Company also adopted Statement of Financial Accounting Standards
No. 112, "Employers' Accounting for Post-employment Benefits" ("FAS 112")
effective January 4, 1993, resulting in an after-tax charge of $1.4 million (net
of income taxes of $900,000). The Company accrues benefits provided to former or
inactive employees after employment but before retirement. The ongoing impact of
FAS 112 is not expected to have a material effect on earnings in future years.
F-15
<PAGE> 116
There was no cash flow impact associated with either the adoption of FAS 106 or
FAS 112.
(9) EMPLOYEE STOCK OWNERSHIP PLAN
On February 23, 1989, the Company's Board of Directors adopted the Ekco
Group, Inc. Employees' Stock Ownership Plan (the "ESOP") for non-union United
States employees of the Company and subsidiaries designated by the Company's
Board of Directors as participants in the ESOP. The ESOP holds Company preferred
and common stock.
SERIES B ESOP CONVERTIBLE PREFERRED STOCK
The Company sold 1.8 million shares of the Series B ESOP Convertible
Preferred Stock at a price of $3.61 per share to the ESOP trust in 1989. At
December 31, 1995, approximately 1.5 million shares of the Company's common
stock were reserved for conversion of Series B ESOP Convertible Preferred Stock.
An unearned ESOP compensation amount is reported as an offset to the
Series B ESOP Convertible Preferred Stock amount in the consolidated balance
sheets. The unearned compensation is being amortized as shares in the Series B
ESOP Convertible Preferred Stock are allocated to employees. Shares are
allocated ratably over the life of the ESOP Loan or, if less, the actual period
of time over which the indebtedness is repaid. The allocation of shares is based
upon a formula equal to a percentage of the Company's payroll costs. The
percentage is determined by the Company's Board of Directors annually and may
require principal prepayments. The Company's Board of Directors has approved
principal prepayments of $439,000, $477,000 and $480,000 for Fiscal 1993, Fiscal
1994 and Fiscal 1995 to be paid in 1994, 1995 and 1996, respectively. For Fiscal
1993, Fiscal 1994 and Fiscal 1995, $686,000, $687,000 and $652,000,
respectively, has been charged to operations. The actual cash contributions,
excluding the above mentioned prepayments, to the ESOP by the Company during
Fiscal 1993, Fiscal 1994 and Fiscal 1995 were $390,000, $390,000 and $302,000,
respectively.
Upon retirement or termination from the Company, each employee has the
option to either convert the vested Series B ESOP Convertible Preferred Stock
into Common Stock of the Company or redeem the Series B ESOP Convertible
Preferred Stock for cash at a price of $3.61 per share. The change in the
principal amount of the Series B ESOP Convertible Preferred Stock from year to
year is solely due to redemptions and conversions by vested employees retiring
or leaving the Company. The Series B ESOP Convertible Preferred Stock pays a
dividend equal to the dividend on the Company's common stock.
Series B ESOP Convertible Preferred Stock, net, consisted of the following:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
---------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Series B ESOP Convertible Preferred Stock, par value $.01 $5,662 $5,372
Unearned compensation ..................................... (2,566) (1,914)
------ ------
$3,096 $3,458
====== ======
</TABLE>
ESOP COMMON STOCK
In October 1990, the Company's Board of Directors authorized the
Trustee of the ESOP to purchase up to 1.0 million shares of the Company's common
stock. The Company agreed to finance the purchase through a 20-year 10% loan
from the Company to the ESOP. During Fiscal 1994, the Company provided the ESOP
with approximately $950,000 to purchase approximately 137,000 shares of the
Company's common stock in the public market. As of January 1, 1995, the ESOP had
purchased, in open market transactions, a total of 1.0 million shares of the
Company's common stock at a total cost of approximately $3.3 million. Unearned
compensation equal to such
F-16
<PAGE> 117
cost (included as a component of stockholders' equity) is being amortized as
shares of the Company's common stock are allocated to employee accounts. Shares
are allocated ratably over the life of the loan or, if less, the actual period
of time over which the indebtedness is repaid, subject to the minimum allocation
of 50,000 shares in any one year. For each of Fiscal 1993, Fiscal 1994 and
Fiscal 1995, 50,000 shares were allocated to employees' accounts. For Fiscal
1993, Fiscal 1994 and Fiscal 1995, $136,000, $155,000 and $165,000,
respectively, have been charged to operations.
(10) MINORITY INTEREST
Minority interest consists of 5.0% cumulative preferred stock of
Woodstream Corporation, $50 par value (redeemable at Woodstream's option at $52
per share). Dividends on the 5.0% cumulative preferred stock are included in
interest expense.
(11) STOCKHOLDERS' EQUITY
PREFERRED STOCK, $.01 PAR VALUE
On February 12, 1987, the Company's stockholders authorized a class of
20 million shares of preferred stock which may be divided and issued in one or
more series having such relative rights and preferences as may be determined by
the Company's Board of Directors.
PREFERRED STOCK RIGHTS
In 1987, the Board of Directors of the Company declared a dividend
payable to stockholders of record as of April 9, 1987, of one preferred share
purchase right ("Right") for each outstanding share of common stock. In 1988,
1989 and 1992, the Company's Board of Directors amended the preferred share
purchase rights plan. The amended plan provides that each Right, when
exercisable, will entitle the holder thereof until April 9, 1997, to purchase
one one-hundredth of a share of Series A Junior Participating Preferred Stock,
par value $.01 per share, at an exercise price of $20, subject to certain
anti-dilution adjustments. The Rights will not be exercisable or transferable
apart from shares of common stock until the earlier of (i) the tenth day after a
public announcement that a person or group has acquired beneficial ownership of
15% or more of the outstanding shares of common stock, other than, so long as
certain conditions are met, as a result of the beneficial ownership of certain
common stock or securities convertible into common stock held by The 1818 Fund,
L.P., a Delaware limited partnership (an "Acquiring Person") or (ii) the tenth
day after a person commences, or announces an intention to commence, a tender or
exchange offer for 15% or more of the outstanding shares of common stock. The
Rights are redeemable by the Company at $.02 per Right at any time prior to the
time that a person or group becomes an Acquiring Person.
In the event that the Company is a party to a merger or other business
combination transaction in which the Company is not the surviving entity, each
Right will entitle the holder to purchase, at the exercise price of the Right,
that number of shares of the common stock of the acquiring company which, at the
time of such transaction would have a market value of two times the exercise
price of the Right. In addition, if a person or group becomes an Acquiring
Person, each Right not owned by such person or group would become exercisable
for the number of shares of common stock which, at that time, would have a
market value of two times the exercise price of the Right.
COMMON STOCK, PAR VALUE $.01 PER SHARE
Share information regarding common stock consisted of the following:
F-17
<PAGE> 118
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
---------- ----------
<S> <C> <C>
Authorized shares ..... 60,000,000 60,000,000
========== ==========
Shares issued ......... 27,292,641 27,854,441
Shares held in treasury 9,223,600 9,440,577
---------- ----------
Shares outstanding .... 18,069,041 18,413,864
========== ==========
</TABLE>
TREASURY STOCK
During Fiscal 1993, the Company issued 564,651 shares of treasury stock in
connection with the acquisition of Kellogg. During Fiscal 1995, the Company
purchased approximately 205,000 shares of its common stock in open-market
transactions at a cost of approximately $1.2 million.
STOCK OPTION PLANS
At December 31, 1995, approximately 1.5 million shares of the Company's common
stock were available for grants of options to employees and directors under the
Company's stock option plans. Options granted under the plans are granted at
prices not less than 100% of the fair market value (as defined) on the dates the
options are granted and, accordingly, there have been no charges to income in
connection with the options other than incidental expenses. Options must be
exercised within the period prescribed by the respective stock option plan
agreements, but not later than 10 years for certain options and 11 years for
others.
Changes in options and option shares under the plans during the respective
fiscal years were as follows:
<TABLE>
<CAPTION>
FISCAL 1993 FISCAL 1994 FISCAL 1995
--------------------------- --------------------------- ----------------------------
OPTION PRICE NUMBER OF OPTION PRICE NUMBER OF OPTION PRICE NUMBER OF
PER SHARE SHARES PER SHARE SHARES PER SHARE SHARES
-------------- ----------- -------------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
beginning of year...... $2.13 - $10.06 1,857,248 $2.13 - $11.31 2,484,721 $2.13 - $11.31 2,593,093
Options granted.......... $7.44 - $11.31 746,773 $6.81 - $ 7.56 424,584 $6.06 - $ 6.56 340,895
Options exercised........ $2.25 - $ 5.19 (15,100) $2.25 - $ 2.63 (59,600) $2.19 - $ 3.38 (150,814)
Options cancelled........ $2.56 - $11.31 (104,200) $2.56 - $11.31 (256,612) $2.63 - $11.31 (231,738)
---------- --------- ---------
Options outstanding, end of
year................... $2.13 - $11.31 2,484,721 $2.13 - $11.31 2,593,093 $2.13 - $11.31 2,551,436
========= ========= =========
Options exercisable, end of
year................... $2.13 - $11.31 1,723,292 $2.13 - $11.31 1,946,153 $2.13 - $11.31 2,047,779
========= ========= =========
Shares reserved for future
grants................. 1,756,360 1,588,388 1,479,231
========= ========= =========
</TABLE>
OPTION PRICE AND MARKET VALUE AT DATE OF GRANT
Options outstanding at December 31, 1995, which were granted during
fiscal years:
<TABLE>
<CAPTION>
NUMBER
OF SHARES PER SHARE AMOUNT
----------- -------------- ----------
<S> <C> <C> <C>
1987 380,000 $3.69 $1,401,250
1988 430,428 $2.13 - $ 2.25 924,749
1989 31,373 $3.38 100,001
1990 159,100 $2.56 407,694
1991 44,600 $2.63 117,075
1992 334,950 $7.25 - $10.06 3,331,372
1993 497,540 $7.44 - $11.31 5,266,261
1994 351,550 $6.81 - $ 7.56 2,625,284
1995 321,895 $6.06 - $ 6.56 2,057,119
--------- -----------
2,551,436 $16,230,805
========= ===========
</TABLE>
F-18
<PAGE> 119
Of the options outstanding at December 31, 1995, options to acquire
1,688,069 shares at a weighted average exercise price of $5.82 per share became
exercisable on the grant date. Under certain circumstances, a portion of shares
purchased pursuant to the exercise of such options are subject to repurchase by
the Company within three years of the date of grant of the option at the option
exercise price. At December 31, 1995, 377,825 of such shares were subject to
such repurchase.
The remaining options outstanding at December 31, 1995, which cover the
acquisition of 863,367 shares at a weighted average exercise price of $7.43 per
share are exercisable from the date of grant through the date of exercise up to
one-fifth of the number of shares covered by such options on or after each of
the first five anniversaries of the date of grant. All such options will be
fully exercisable on and after the fifth such anniversary.
RESTRICTED STOCK PURCHASE PLANS
Under the Company's restricted stock purchase plans, the Company may
offer to sell shares of common stock to employees of the Company and its
subsidiaries at a price per share of not less than par value ($.01) and not more
than 10% of market value on the date the offer is approved, and on such other
terms as deemed appropriate. Shares are awarded in the name of the employee, who
has all rights of a stockholder, subject to certain repurchase provisions.
Restrictions on the disposition of shares for the shares purchased expire
annually, over a period not to exceed five years, if certain performance targets
are achieved, otherwise they lapse on the tenth anniversary. Common stock
reserved for future grants aggregated 838,520 shares at December 31, 1995. The
following table summarizes the activity of the restricted stock purchase plans
during the respective fiscal years (fair market value determined at date of
purchase).
<TABLE>
<CAPTION>
FISCAL 1993 FISCAL 1994 FISCAL 1995
------------------ ------------------- --------------------
NUMBER FAIR NUMBER FAIR NUMBER FAIR
OF MARKET OF MARKET OF MARKET
SHARES VALUE SHARES VALUE SHARES VALUE
------- ------- ------- ------- ------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Unvested shares outstanding, beginning
of year ......................... 291 $ 988 177 $ 654 51 $ 312
Shares issued ..................... 25 184 -- -- 288 1,824
Shares repurchased ................ (14) (171) -- -- (45) (297)
Shares vested ..................... (125) (347) (126) (342) (27) (118)
------- ------- ------- ------- ------- -------
Unvested shares outstanding, end of
year ............................ 177 $ 654 51 $ 312 267 $ 1,721
======= ======= ======= ======= ======= =======
</TABLE>
The difference between the issue price and the fair market value of the
shares at the date of issuance is accounted for as unearned compensation and
amortized to expense over the lapsing of restrictions. During Fiscal 1993,
Fiscal 1994 and Fiscal 1995, unearned compensation charged to operations was
$307,000, $279,000 and $270,000, respectively. To the extent the amount
deductible for income taxes exceeds the amount charged to operations for
financial statement purposes, the related tax benefits are credited to
additional paid-in-capital when realized.
EMPLOYEE STOCK PURCHASE PLAN
The Company has an employee stock purchase plan (the "Plan") that
permits employees to purchase up to a maximum of 500 shares per quarter of the
Company's common stock at a 15% discount from market value. During Fiscal 1993,
Fiscal 1994 and Fiscal 1995, employees purchased 73,880 shares, 88,938 shares
and 72,844 shares, respectively, for a total of approximately $545,000, $503,000
and $376,000, respectively. At December 31, 1995, approximately 1.1 million
shares were reserved for future grants under the Plan. There have been no
charges to income in connection with the Plan other than incidental expenses.
F-19
<PAGE> 120
ACCOUNTING FOR STOCK-BASED COMPENSATION
The Company has not adopted the recently issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-based Compensation" ("FAS
No. 123"), Statement of Financial Accounting Standards which is required to be
adopted in Fiscal 1996. The Company currently intends to continue to record
compensation based on the provisions of Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," as allowed by SFAS No. 123.
Although the Company has not determined the ultimate impact of adopting SFAS No.
123 on its present disclosure, it does not believe, based on the number of
options previously granted, that the adoption will have a material impact on its
current disclosure.
INCOME TAX BENEFITS
Income tax benefits, relating to stock option plans, restricted stock
plans and the employee stock purchase plan credited to additional
paid-in-capital, as realized in Fiscal 1993, Fiscal 1994 and Fiscal 1995 were
$318,000, $327,000 and $74,000, respectively.
(12) EARNINGS PER COMMON SHARE
Primary earnings per common share are based upon the weighted average
of common stock and dilutive common stock equivalent shares, including Series B
ESOP Convertible Preferred Stock, outstanding during each period. Fully diluted
earnings per share have been omitted since they are either the same as primary
earnings per share or anti-dilutive. The weighted average number of shares used
in computation of earnings per share consisted of the following for the periods
presented.
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1993 1994 1995
------ ------ ------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Weighted average shares of common stock outstanding
during the year .............................. 17,616 17,953 18,354
Weighted average common equivalent shares due to
stock options ................................ 713 545 426
Series B ESOP Convertible Preferred Stock ...... 1,670 1,617 1,538
------ ------ ------
19,999 20,115 20,318
====== ====== ======
</TABLE>
(13) COMMITMENTS AND CONTINGENCIES
EMPLOYMENT CONTRACTS
The Company has employment agreements with certain of its executive
officers and management personnel. These agreements generally continue until
terminated by the executive or the Company, and provide for salary continuation
for a specified number of months under certain circumstances. Certain of the
agreements provide the employees with certain additional rights after a Change
of Control (as defined) of the Company occurs. A portion of the Company's
obligations under certain of these agreements are secured by letters of credit.
The agreements include a covenant against competition with the Company, which
extends for a period of time after termination for any reason. As of December
31, 1995, if all of the employees under contract were to be terminated by the
Company without good cause (as defined) under these contracts, the Company's
liability would be approximately $6.6 million ($10.0 million following a Change
of Control).
SEVERANCE POLICY
The Board of Directors of the Company has adopted a severance policy
for all exempt employees of the Company. In the event of a Change of Control (as
defined), each exempt employee of the Company whose employment is terminated,
whose duties or responsibilities are substantially diminished, or who was
directed to
F-20
<PAGE> 121
relocate within 12 months after such Change of Control, will receive, in
addition to all other severance benefits accorded to similarly situated
employees, salary continuation benefits for a period of months determined by
dividing his or her then yearly salary by $10,000, limited to not more than 12
months. This policy does not apply to any exempt employee of the Company who is
a party to a contractual commitment with the Company which provides him or her
with greater than 12 months salary, severance payment or salary continuation
upon his or her termination in the event of a Change of Control. This policy may
be rescinded at any time by the Company's Board of Directors prior to a Change
of Control.
LEASES
The Company leases offices, warehouse facilities, vehicles and
equipment under operating and capital leases. The terms of certain leases
provide for payment of minimum rent, real estate taxes, insurance and
maintenance. Rents of approximately $1.9 million, $2.4 million and $3.4 million,
were charged to operations for Fiscal 1993, Fiscal 1994 and Fiscal 1995,
respectively.
The Company receives rental income from properties currently held for
sale. Rental income included in selling, general and administrative expenses was
approximately $1.5 million, $200,000 and $154,000, for Fiscal 1993, Fiscal 1994
and Fiscal 1995, respectively.
Minimum rental payments and income required under leases that had
initial or remaining noncancellable lease terms in excess of one year as of
December 31, 1995, were as follows:
<TABLE>
<CAPTION>
OPERATING RENTAL
FISCAL YEAR LEASES INCOME
----------- --------- ------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
1996 $2,241 $160
1997 1,609 166
1998 1,300 170
1999 1,294 --
2000 971 --
</TABLE>
LEGAL PROCEEDINGS
The Company is a party to several pending legal proceedings and claims.
Although the outcome of such proceedings and claims cannot be determined with
certainty, the Company's management, after consultation with outside legal
counsel, is of the opinion that the expected final outcome should not have a
material adverse effect on the Company's financial position, results of
operations or liquidity.
ENVIRONMENTAL MATTERS
From time to time, the Company has had claims asserted against it by
regulatory agencies or private parties for environmental matters relating to the
generation or handling of hazardous substances by the Company or its
predecessors and has incurred obligations for investigations or remedial actions
with respect to certain of such matters. While the Company does not believe that
any such claims asserted or obligations incurred to date will result in a
material adverse effect upon the Company's financial position, results of
operations or liquidity, the Company is aware that at its facilities at
Massillon and Hamilton, Ohio; Easthampton, Massachusetts; Chicago, Illinois;
Lititz, Pennsylvania and at the previously owned facility in Hudson, New
Hampshire hazardous substances and oil have been detected and that additional
investigation will be, and remedial action will or may be, required. Operations
at these and other facilities currently or previously owned or leased by the
Company utilize, or in the past have utilized, hazardous substances. There can
be no assurance that activities at these or any other facilities owned or
F-21
<PAGE> 122
operated by the Company or future facilities may not result in additional
environmental claims being asserted against the Company or additional
investigations or remedial actions being required.
In connection with the acquisition of Kellogg by the Company in 1993,
the Company engaged environmental engineering consultants ("Consultants") to
review potential environmental liabilities at all of Kellogg's properties.
Additional investigation and testing resulted in the identification of likely
environmental remedial actions, operation, maintenance and ground water
monitoring and the estimated costs therefore. Management, based upon the
engineering studies, originally estimated the total remediation and ongoing
ground water monitoring costs to be approximately $6.0 million, including the
effects of inflation, and accordingly at that time, recorded a liability of
approximately $3.8 million, representing the undiscounted costs of remediation
and the net present value of future costs discounted at 6%. Based upon the most
recent cost estimates provided by the Consultants, the Company believes the
total remaining remediation costs will be approximately $2.0 million and the
expense for the ongoing operation, maintenance and ground water monitoring will
be approximately $50,000 for Fiscal 1996 and approximately $25,000 for each of
the thirty years thereafter. As of December 31, 1995, the liability recorded by
the Company was approximately $3.5 million. The Company expects to pay
approximately $325,000 of the remediation costs in Fiscal 1996 with the balance
being paid out in Fiscal 1997 and Fiscal 1998. During Fiscal 1995, the Company
paid approximately $211,000 of such costs. The estimates may subsequently change
should additional sites be identified or further remediation measures be
required or undertaken or interpretation of current laws or regulations be
modified. The Company has not anticipated any insurance proceeds or third-party
payments in arriving at the above estimates.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which subject the Company to concentrations of
credit risk consist primarily of trade receivables. Mass merchandisers comprise
a significant portion of the Company's customer base. The Company had trade
receivables of approximately $11.4 million and $10.0 million from mass
merchandisers at January 1, 1995 and December 31, 1995, respectively. Although
the Company's exposure to credit risk associated with non-payment by mass
merchandisers is affected by conditions or occurrences within the retail
industry, trade receivables from mass merchandisers were current at December 31,
1995 and no retailer exceeded 10% of the Company's receivables at that date.
(14) INDUSTRY AND GEOGRAPHIC AREA INFORMATION
The Company is a manufacturer and marketer of multiple categories of
branded houseware products for everyday home use. The Company operates in one
industry segment, with revenues derived from sales in five principal product
categories: (i) bakeware, (ii) kitchenware, (iii) cleaning products, (iv) pest
control and small animal care and control products and (v) molded plastic
products. Sales and marketing operations outside the United States are conducted
principally through a subsidiary in Canada and by direct sales. One customer
accounted for net revenues of approximately $31.3 million (11.8%) and $37.3
million (13.4%) for Fiscal 1994 and Fiscal 1995, respectively. Two customers
each accounted for 9.5% or approximately $23.0 million and $22.9 million of net
revenues for Fiscal 1993.
F-22
<PAGE> 123
<TABLE>
The following table shows information by geographic area:
<CAPTION>
UNAFFILIATED INCOME BEFORE
NET REVENUES INCOME TAXES TOTAL ASSETS
------------ ------------ ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Fiscal 1993
United States $ 232,447 $ 7,677 $ 303,933
Canada......... 13,981 (736) 9,152
Eliminations... -- (104) (5,124)
--------- --------- ---------
Consolidated... $ 246,428 $ 6,837 $ 307,961
========= ========= =========
Fiscal 1994
United States.. $ 254,608 $ 21,576 $ 315,829
Canada......... 12,440 (308) 7,111
Eliminations... -- (33) (5,157)
--------- --------- ---------
Consolidated... $ 267,048 $ 21,235 $ 317,783
========= ========= =========
Fiscal 1995
United States.. $ 265,535 $ 16,423 $ 301,896
Canada......... 12,460 (380) 7,742
Eliminations... -- (104) (5,263)
--------- --------- ---------
Consolidated... $ 277,995 $ 15,939 $ 304,375
========= ========= =========
</TABLE>
United States revenues include approximately $10.6 million, $9.7 million and
$9.4 million of export sales to unaffiliated customers for Fiscal 1993, Fiscal
1994 and Fiscal 1995, respectively.
(15) SUPPLEMENTARY INFORMATION
The following amounts were charged to costs and expenses:
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1993 1994 1995
------- ------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Advertising .................................. $ 4,920 $ 5,971 $ 6,475
======= ======= =======
Provision for doubtful accounts .............. $ 449 $ 247 $ (442)
======= ======= =======
Amortization of excess of cost over fair value $ 4,195 $ 4,438 $ 4,437
======= ======= =======
Amortization of deferred finance costs ....... $ 467 $ 499 $ 590
======= ======= =======
Other amortization
Prepaid marketing costs .................... $ 1,768 $ 3,676 $ 5,799
Favorable lease rights ..................... 73 73 73
Unearned compensation ...................... 1,129 1,121 1,087
------- ------- -------
$ 2,970 $ 4,870 $ 6,959
======= ======= =======
</TABLE>
F-23
<PAGE> 124
(16) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table presents the unaudited quarterly results of
operations for Fiscal 1994 and Fiscal 1995:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- --------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Fiscal 1994
Net revenues................ $54,354 $59,199 $78,623 $74,872 $267,048
Gross profit................ 17,746 19,542 27,112 27,197 91,597
Income before income taxes 1,849 1,989 8,321 9,076 21,235
Net income.................. 979 1,033 4,476 4,935 11,423
Net income per share........ .05 .05 .22 .25 .57
Fiscal 1995
Net revenues................ $58,732 $61,691 $83,041 $74,531 $277,995
Gross profit................ 18,007 18,462 26,106 24,077 86,652
Income before income taxes 255 1,546 8,442 5,696 15,939
Net income.................. 134 811 4,647 2,453 8,045
Net income per share........ .01 .04 .23 .12 .40
</TABLE>
(17) RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE
The Company recorded an $11.0 million charge ($6.6 million after income
taxes) for restructuring/reorganization and excess facilities during the fourth
quarter of Fiscal 1993. The restructuring was the result of management's
analysis of the Company's operations and future strategy. The items covered by
the charge were (i) severance and other costs related to a reduction in
personnel: (ii) costs arising from the consolidation of different distribution
and information systems (including the closing of facilities and write-off of
equipment no longer relevant to the Company's operating strategy); and (iii)
costs associated with excess facilities currently classified as held for sale.
In 1995, the combination of the Company's principal housewares business units
into a single operating division completed this restructuring/reorganization. Of
the $11.0 million charge, approximately $2.7 million was non-cash, and $8.3
million was cash. Of the $8.3 million cash portion of the charge, $5.0 million
was expended in Fiscal 1994 and $3.3 million was expended in Fiscal 1995.
The table below shows the components of the original charge and the amounts
charged against the reserve.
<TABLE>
<CAPTION>
PROVISION
RECORDED FISCAL RESERVE FISCAL
IN 1994 BALANCE AT 1995
FISCAL RESERVE JANUARY 1, RESERVE
1993 ACTIVITY 1995 ACTIVITY
--------- -------- ---------- --------
(AMOUNT IN THOUSANDS)
<S> <C> <C> <C> <C>
Accrued Expenses
Severance and other related personnel
costs ............................ $3,200 $1,135 $2,065 $2,065
Costs associated with implementing
distribution and operating
strategy ......................... 2,600 2,600 -- --
Costs associated with excess
facilities ....................... 2,023 783 1,240 1,240
Other ............................... 500 500 -- --
------ ------ ------ ------
Total Cash Items ............ 8,323 $5,018 $3,305 $3,305
====== ====== ======
Non-Cash Charges and Write-offs
Property held for resale ............ 1,000
Write-off of equipment .............. 1,250
Other.................................. 427
-------
$11,000
=======
</TABLE>
F-24
<PAGE> 125
The Company estimates the benefit it received in Fiscal 1994 from the
restructuring at approximately $2.4 million and an additional benefit of $1.9
million during Fiscal 1995. The benefit is primarily due to lower expenses
associated with the reduction in personnel.
(18) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash, accounts receivable, accounts payable and
accrued expenses approximate fair value because of the short maturity of these
items.
The carrying amount of the debt issued pursuant to the Company's bank
credit agreement approximates fair value because the interest rates change with
market interest rates.
There are no quoted market prices for the 12.70% Notes, 7.0%
Convertible Subordinated Note or Series B ESOP Preferred Stock. Because each of
these securities contain unique terms, conditions, covenants and restrictions,
there are no identical obligations that have quoted market prices. In order to
determine the fair value of the 7.0% Convertible Subordinated Note, the Company
compared it to obligations which trade publicly and concluded that the fair
value of the Note is approximately its book value, $22.0 million. In order to
determine the fair value of the 12.70% Notes, the Company discounted the cash
payments on the Notes using discount rates ranging from 7.50% to 7.70%. Based
upon such discount rates, the fair value of the $60 million 12.70% Notes would
be approximately $65.6 million.
Each share of Series B ESOP Preferred Stock is redeemable at a price of
$3.61 per share or convertible into one share of the Company's common stock.
Assuming all shares were allocated and all employees were fully vested, the
redemption value of the ESOP Preferred Stock would be $5.7 million. Given these
same assumptions the shares could be converted into common stock having a market
value of $10.0 million at January 1, 1995.
These fair value estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore, cannot be
determined with precision. Changes in assumptions could significantly affect
these estimates.
F-25
<PAGE> 126
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 803 $ 142
Accounts receivable, net 39,020 43,823
Inventories 51,087 47,565
Prepaid expenses and other current assets 12,925 11,080
-------- --------
Total current assets 103,835 102,610
Property and equipment, net 56,006 56,380
Property held for sale or lease, net 2,812 2,830
Other assets 7,391 5,955
Excess of cost over fair value of net assets
acquired, net 135,493 136,600
-------- --------
Total assets $305,537 $304,375
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term obligations $ 60 $ 18,079
Accounts payable 12,934 15,607
Accrued expenses 22,028 23,711
Income taxes 160 538
-------- --------
Total current liabilities 35,182 57,935
-------- --------
Long-term obligations, less current portion 124,122 96,700
-------- --------
Other long-term liabilities 9,976 9,859
-------- --------
Series B ESOP Convertible Preferred Stock, net;
outstanding 1,490 shares and 1,488 shares,
respectively, redeemable at $3.61 per share 3,668 3,458
-------- --------
Commitments and contingencies - -
Minority interest 498 498
-------- --------
Stockholders' equity
Common stock, $.01 par value; outstanding
18,436 shares and 18,414 shares,
respectively 184 184
Capital in excess of par value 107,030 106,916
Cumulative translation adjustment 882 929
Retained earnings 29,630 33,614
Unearned compensation (3,887) (3,970)
Pension liability adjustment (1,748) (1,748)
-------- --------
132,091 135,925
-------- --------
Total liabilities and stockholders' equity $305,537 $304,375
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-26
<PAGE> 127
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND APRIL 2, 1995
(Amounts in thousands, except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net revenues $56,961 $58,732
------- -------
Costs and expenses
Cost of sales 41,089 40,725
Selling, general and administrative 13,359 13,285
Amortization of excess of cost over fair value 1,109 1,109
------- -------
55,557 55,119
------- -------
Income before interest and income taxes 1,404 3,613
------- -------
Net interest
Interest expense 3,026 3,433
Investment income (90) (75)
------- -------
2,936 3,358
------- -------
Income (loss) before income taxes and
extraordinary charge (1,532) 255
Income taxes (benefit) (733) 121
------- -------
Income (loss) before extraordinary charge (799) 134
Extraordinary charge for early retirement of debt,
net of tax benefit of $2,560 (2,787) -
------- -------
Net income (loss) $(3,586) $ 134
======= =======
Earnings (loss) per common share:
Income (loss) before extraordinary charge $(0.04) $0.01
Extraordinary charge (0.15) -
------- -------
Earnings (loss) per common share $(0.19) $0.01
====== =====
Weighted average number of shares used in
computation of per share data 18,410 20,224
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-27
<PAGE> 128
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,1996 AND APRIL 2, 1995
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ (3,586) $ 134
Adjustments to reconcile net income to net cash
provided by operations
Depreciation 2,471 2,466
Amortization of excess of cost over fair value 1,109 1,109
Amortization of deferred finance costs 106 119
Other amortization 1,604 1,662
Extraordinary charge 2,787 -
Other 1 (88)
Changes in certain assets and liabilities
affecting cash provided by operations
Accounts receivable 4,799 9,826
Inventories (3,572) (6,052)
Prepaid marketing costs (600) (1,045)
Other assets (2,511) (409)
Accounts payable and accrued expenses (4,237) 808
Income taxes payable 2,182 (851)
-------- -------
Net cash provided by operations 553 7,679
-------- -------
Cash flows from investing activities
Proceeds from sale of property and equipment 6 -
Capital expenditures (2,099) (3,009)
-------- -------
Net cash used in investing activities (2,093) (3,009)
-------- -------
Cash flows from financing activities
Proceeds from issuance of notes payable and
long-term obligations 120,504 5,820
Proceeds from sale of investment held as collateral - 3,600
Payment of dividends (398) (371)
Payment of notes and long-term obligations (118,005) (13,792)
Other 101 128
-------- -------
Net cash provided by (used in) financing
activities 2,202 (4,615)
Effect of exchange rate changes on cash (1) 1
-------- -------
Net increase in cash and cash equivalents 661 56
Cash and cash equivalents at beginning of year 142 129
-------- -------
Cash and cash equivalents at end of period $ 803 $ 185
======== =======
Cash paid during the period for
Interest $ 3,553 $ 978
Income taxes 355 726
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-28
<PAGE> 129
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION AND OTHER MATTERS
The consolidated condensed financial statements included herein have been
prepared by Ekco Group, Inc. (the "Company"), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. It is believed,
however, that the disclosures are adequate to make the information presented
not misleading. It is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes thereto
included in the Company's latest annual report on Form 10-K. The consolidated
condensed financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. The condensed financial statements, in the opinion of management,
reflect all adjustments necessary to fairly state the Company's financial
position and the results of its operations. Such adjustments are of a normal
recurring nature.
A large part of the Company's business is seasonal. Historically, revenues
in the last half of the calendar year have been greater than revenues in the
first half of the year. Accordingly, the results for the entire year may not
necessarily be the product of annualizing results for any interim period.
(2) ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Accounts receivable $40,009 $44,871
Allowance for doubtful accounts (989) (1,048)
------- -------
$39,020 $43,823
======= =======
</TABLE>
(3) INVENTORIES
The components of inventory were as follows:
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Raw materials $12,048 $11,489
Work in process 4,903 3,097
Finished goods 34,136 32,979
------- -------
$51,087 $47,565
======= =======
</TABLE>
F-29
<PAGE> 130
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(4) PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Property and equipment at cost ........ $23,217 $22,856
Land, buildings and improvements .... 73,452 71,922
------- -------
Equipment, factory and other ........ 96,669 94,778
Less accumulated depreciation ......... 40,663 38,398
------- -------
$56,006 $56,380
======= =======
</TABLE>
(5) EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED, NET
Excess of cost over fair value of net assets acquired is net of
accumulated amortization of $28,836 and $27,727 as of March 31, 1996 and
December 31, 1995, respectively.
(6) INCOME TAXES
The Company's effective tax rate as reported in its lastest annual
report on Form 10-K was 50% for the year ended December 31, 1995 ("Fiscal
1995"). The difference between the Company's effective tax rate of 48% for the
three months ended March 31, 1996 and the Fiscal 1995 rate results primarily
from amortization of excess of cost over fair value of net assets acquired,
which is not deductible for income taxes, being a lower percentage of earnings
(loss) before income taxes.
(7) SERIES B ESOP CONVERTIBLE PREFERRED STOCK
Series B ESOP Convertible Preferred Stock, net, consisted of the
following:
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Series B ESOP Convertible Preferred
Stock, par value $.01, redeemable at
$3.61 per share...................... $ 5,378 $ 5,372
Unearned compensation.................. (1,710) (1,914)
------- -------
$ 3,668 $ 3,458
======= =======
</TABLE>
F-30
<PAGE> 131
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(8) COMMON STOCK, $.01 PAR VALUE
Share information regarding common stock consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
Authorized shares ..................... 60,000,000 60,000,000
========== ==========
Shares issued ........................ 27,860,267 27,854,441
Shares held in treasury ............... 9,424,431 9,440,577
---------- ----------
18,435,836 18,413,864
========== ==========
</TABLE>
(9) NET INCOME (LOSS) PER COMMON SHARE
Primary earnings per common share are based upon the weighted average
of common stock and dilutive common stock equivalent shares outstanding during
each period. Fully diluted earnings per share have been omitted since they are
either the same as primary earnings per share or anti-dilutive. The weighted
average number of shares used in computation of earnings per share consisted of
the following for the periods presented:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------
MARCH 31, 1996 APRIL 2, 1995
-------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Weighted average shares of common stock
outstanding during the period ........ 18,410 18,204
Series B ESOP Convertible Preferred
Stock ................................ anti-dilutive 1,568
Weighted average common equivalent
shares due to stock options .......... anti-dilutive 452
------------- ------
18,410 20,224
====== ======
</TABLE>
(10) CONTINGENCIES
LEGAL PROCEEDINGS
The Company is a party to several pending legal proceedings and claims,
including the matters described below. Although the outcome of such proceedings
and claims cannot be determined with certainty, the Company's management is of
the opinion that the expected final outcome should not have a material adverse
effect on the Company's financial position, results of operations or liquidity.
In April 1996, the U.S. District Court for the Northern District of Ohio ruled
that certain insulated bakeware products manufactured by the Company infringed a
patent held by a third-party plaintiff. The Company ceased manufacturing such
products in December 1995. Monetary damages have not yet been assessed by
the Court. The Company and its counsel believe that the Company has
meritorious grounds for appeal. The Company will review the damage assessment
and will vigorously pursue an appeal as it deems appropriate.
ENVIRONMENTAL MATTERS
From time to time, the Company has had claims asserted against it by
regulatory agencies to private parties for environmental matters relating to the
generation or handling of hazardous substances by the Company or its
predecessors and has incurred obligations for investigations or remedial actions
with respect to certain of such matters. While the Company does not believe
that any such claims asserted or obligations incurred to date will result in a
material adverse effect upon the Company's financial position, results of
operations or liquidity, the Company is aware that at its facilities in
F-31
<PAGE> 132
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
ENVIRONMENTAL MATTERS (CONTINUED)
Massillon and Hamilton, Ohio, Easthampton, Massachusetts, Lititz, Pennsylvania,
Chicago, Illinois and at the previously owned facility in Hudson, New
Hampshire, hazardous substances and oil have been detected and that additional
investigation will be, and remedial action will or may be, required. Operations
at these and other facilities currently or previously owned or leased by the
Company utilize, or in the past have utilized, hazardous substances. There can
be no assurance that activities at these or any other facilities owned or
operated by the Company or future facilities may not result in additional
environmental claims being asserted against the Company or additional
investigations or remedial actions being required.
In connection with the acquisition of Kellogg Brush Manufacturing Co.
and subsidiaries ("Kellogg") by the Company in 1993, the Company engaged
environmental engineering consultants ("Consultants") to review potential
environmental liabilities at all of Kellogg's properties. Additional
investigation and testing resulted in the identification of likely
environmental remedial actions, operation, maintenance and ground water
monitoring and the estimated costs thereof. Management, based upon the
engineering studies, originally estimated the total remediation and ongoing
ground water monitoring costs to be approximately $6.0 million, including the
effects of inflation, and accordingly at that time, recorded a liability of
approximately $3.8 million, representing the undiscounted costs of remediation
and the net present value of future costs discounted at 6%. Based upon the most
recent cost estimates provided by the Consultants, the Company believes the
total remediation costs will be approximately $2.0 million and the expense for
the ongoing operation, maintenance and ground water monitoring will be $50,000
for Fiscal 1996 and $25,000 for each of the 30 years thereafter. As of March
31, 1996, the Company has recorded a liability of approximately $3.5 million.
The Company expects to pay approximately $325,000 of the remediation costs in
the current year ("Fiscal 1996") with the balance being paid out in fiscal
years 1997 and 1998. During the first quarter of Fiscal 1996, the Company paid
approximately $9,000 of such costs. The estimates may subsequently change if
additional sites are identified or further remediation measures are required or
undertaken or the interpretation of current laws or regulations are modified.
The Company has not anticipated any insurance proceeds or third-party payments
in arriving at the above estimates.
(11) EXTRAORDINARY CHARGE
On March 25, 1996, the Company sold $125.0 million of its 9.25% Senior
Notes due 2006, at a price of 99.291% of face value, in a private offering to
institutional investors. The Company used the net proceeds of the Senior Note
offering to (i) repurchase its outstanding 12.70% Notes due 1998 and 7.0%
Convertible Subordinated Note due 2002 and (ii) to repay substantially all
amounts outstanding under the Revolving Credit Facility. Concurrently with
closing the sale of the 9.25% Senior Notes, the Company entered into an
amendment to its Revolving Credit Facility, which amendment consolidated the
outstanding debt and borrowing capacity of the Company and its wholly-owned
subsidiaries, Ekco Housewares, Inc. and Frem Corporation, and revised certain
financial convenants. Borrowings under the amended Revolving Credit Facility
bear interest at the bank's prime rate, or at LIBOR plus 1.25% or 1.5%,
depending on the Company's borrowing strategy and the ratio of total debt to
cash flow. The Revolving Credit Facility provides for a commitment fee of
three-eighths of one percent on the unused portion of the commitment amount
and a $60,000 annual agency fee. Borrowings under the Revolving Credit Facility
mature in December 1998. The Senior Notes, as well as the Revolving Credit
Facility, contain certain financial covenants that may restrict the sale of
assets, the incurrence of additional indebtedness and certain investments and
acquisitions by the Company. The early extinguishment of the 12.70% Notes and 7%
F-32
<PAGE> 133
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
EXTRAORDINARY CHARGE (CONTINUED)
Convertible Subordinated Note resulted in an extraordinary charge of $2.8
million consisting of the following:
<TABLE>
<CAPTION>
(Amounts in Thousands)
<S> <C>
Premium on 12.70% Notes, due 1998......... $ 6,511
Discount on prepayment of 7% Convertible
Subordinated Note, due 2002............. (3,218)
Write-off of related unamortized
financing costs......................... 2,054
-------
Extraordinary charge before income tax
benefit................................. 5,347
Income tax benefit........................ 2,560
-------
Net extraordinary charge.................. $ 2,787
=======
</TABLE>
F-33
<PAGE> 134
===============================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE NEW SENIOR NOTES OFFERED HEREBY
TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION WHERE SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE
DATE HEREOF.
<TABLE>
---------------
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Available Information........................................................................................ 4
Prospectus Summary........................................................................................... 5
Risk Factors................................................................................................. 11
The Exchange Offer........................................................................................... 19
Use of Proceeds.............................................................................................. 16
Capitalization............................................................................................... 16
Selected Consolidated Financial Data......................................................................... 17
Management's Discussion and Analysis
of Financial Condition
and Results of Operations.................................................................................. 18
Business..................................................................................................... 23
Management................................................................................................... 34
Security Ownership of Certain
Beneficial Owners and
Management................................................................................................. 44
Certain Relationships and Related
Transactions............................................................................................... 48
Description of Senior Notes.................................................................................. 49
Description of Certain Indebtedness.......................................................................... 73
Certain Federal Income Tax Considerations.................................................................... 77
Plan of Distribution......................................................................................... 80
Legal Matters................................................................................................ 81
Independent Public Accountants............................................................................... 81
Index to Consolidated Financial
Statements................................................................................................. F-1
</TABLE>
===============================================================================
===============================================================================
LOGO
$125,000,000
EKCO GROUP, INC.
9 1/4% SERIES B SENIOR NOTES
DUE 2006
---------------
PROSPECTUS
---------------
__________, 1996
===============================================================================
<PAGE> 135
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, to be paid in connection with the sale
of the New Senior Notes being registered, all of which will be paid by the
Registrant. All amounts are estimates except the SEC registration fee and the
NASD filing fee (which have been rounded to the nearest dollar).
<TABLE>
<S> <C>
Registration Fee....................... $ 43,110
Accounting Fees and Expenses........... 40,000
Legal Fees and Expenses................ 60,000
Printing and Engraving Expenses ....... 50,000
Miscellaneous.......................... 6,890
--------
Total............................. $200,000
========
</TABLE>
_____________________
* To be supplied by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware provides that a
corporation may indemnify directors and officers against liabilities and
expenses they may incur in such capacities provided certain standards are met,
including good faith and the belief that the particular action is in or not
opposed to the best interests of the corporation. Article TENTH of the
Registrant's Certificate of Incorporation provides as follows:
"TENTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of Delaware, as the same may
be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any
and all of the expenses, liabilities or other matters referred to in or
covered by said section, and the indemnification provided for herein
shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such person."
The Registrant maintains insurance which insures the officers and
directors of the Registrant against certain losses and which insures the
Registrant against certain of its obligations to indemnify such officers and
directors.
In addition, the Registration Rights Agreement, the form of which will
be filed as Exhibit 4.2(c) hereto, contains provisions for indemnification by
the Initial Purchasers of the Registrant and its officers, directors and
controlling stockholders against certain liabilities under the Securities Act
of 1933, as amended (the "Act").
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
II-1
<PAGE> 136
On March 25, 1996, the Registrant sold $125,000,000 principal amount of
9 1/4% Senior Notes due 2006 (the "Old Senior Notes") to Bear, Stearns & Co.
Inc. and Smith Barney Inc. (the "Initial Purchasers") for an aggregate net
purchase price of $121,301,250. The securities issued in connection with such
transaction were exempt from registration pursuant to Section 4(2) of the
Securities Act. In accordance with the agreement pursuant to which the Intitial
Purchasers purchased the Senior Notes, the Initial Purcahsers agreed to offer
and sell the Senior Notes only to "qualified institutional buyers" (as defined
in Rule 144A under the Securities Act) and to a limited number of institutional
"accredited investors" (as defined in Rule 501(a)(1),(2),(3) or (7) under the
Act).
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
EXHIBIT NO. (1)(2) DESCRIPTION
------------------ -----------
3.1(i)(a) Restated Certificate of Incorporation dated February 17, 1987,
as amended, originally filed as Exhibit 3.1(a) to Form 10-K
for the year ended December 31, 1989 (incorporated herein by
reference to Exhibit 3.1(i)(a) to Form 10-K for the year ended
December 31, 1995).
3.1(i)(b) Certificate of Designations of Series A Junior Participating
Preferred Stock, originally filed as Exhibits 3.1(b) and
4.2(c) to Form 10-K for the year ended December 28, 1986,
included in Exhibit 4.1 (incorporated herein by reference to
Exhibit 3.1(b) to Form 10-K for the year ended January 1,
1995).
3.1(i)(c) Certificate of Designations of Series B ESOP Convertible
Preferred Stock, originally filed as Exhibit 3.1(d) to Form
10-K for the year ended January 1, 1989 (incorporated herein
by reference to Exhibit 3.1(c) to Form 10-K for the year ended
January 1, 1995).
3.1(ii) By-Laws as currently in effect (incorporated herein by
reference to Exhibit 3.2 to Form 10-K for the year ended
December 29, 1991).
4.1 Rights Agreement dated as of March 27, 1987, including Form of
Rights Certificate and Form of Certificate of Designations of
Series A Junior participating Preferred Stock, originally
filed as Exhibit 4.2(c) to Form 10-K for the year ended
December 28, 1986; First Amendment dated as of June 9, 1988,
originally filed as Exhibit 4.2(a) (2) to Form 10-K for the
year ended January 1, 1989; [Second] Amendment dated as of
January 10, 1989, originally filed as Exhibit 4.2(a) (3) to
Form 10-K for the year ended January 1, 1989; Third Amendment
dated as of March 23, 1992, originally filed as Exhibit 8 to
Form 8 Amendment No. 2 to Form 8-A dated June 30, 1992; and
Fourth Amendment dated as of December 22, 1992, originally
filed as Exhibit 9 to Form 8 Amendment No. 3 dated January 8,
1993 to Form 8-A (incorporated herein by reference to Exhibit
4.2 to Form 10-K for the year ended January 3, 1993).
4.2(a) Indenture dated as of March 25, 1996 among the registrant, its
U.S. operating subsidiaries and Fleet National Bank
(incorporated herein by reference to Exhibit 4.2(a) to Form
10-K for the year ended December 31, 1995).
4.2(b) Form of 9 1/4% Senior Note due 2006, included in Exhibit
4.2(a) (incorporated herein by reference to Exhibit 4.2(b) to
Form 10-K for the year ended December 31, 1995).
____________________________
(1) Numbered in accordance with Item 601 of Regulation S-K
(2) An asterisk (*) denotes the Company's management contracts or
compensatory plans or arrangements
II-2
<PAGE> 137
4.2(c) Registration Rights Agreement dated as of March 25, 1996
among the registrant, its U.S. operating subsidiaries, Bear,
Stearns & Co. Inc. and Smith Barney Inc. (incorporated
herein by reference to Exhibit 4.2(c) to Form 10-K for the
year ended December 31, 1995).
4.3 Ekco Group, Inc. Dividend Reinvestment and Stock Purchase
Plan (incorporated herein by reference to Exhibit 4.3 to
Form 10-K for the year ended December 31, 1995).
4.4 Form of Purchase Agreement dated as of December 1, 1988
among Ekco Housewares, Inc., Teachers Insurance and Annuity
Association of America, The Mutual Life Insurance Company of
New York, MONY Life Insurance Company of America, MONY
Legacy Life Insurance Company, Kemper Investors Life
Insurance Company and Federal Kemper Life Insurance Company,
as amended (incorporated herein by reference to Exhibit 4.1
to Form 8-K as of December 21, 1988, Exhibit 4.3(b) to Form
10-K for the year ended December 30, 1990, Exhibit 28.2 to
Form 8-K as of January 8, 1992, and Exhibit 4.3(a) to Form
1O-Q for the quarterly period ended July 4, 1993).
5 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C., with respect to the legality of the securities being
registered.
10.1(a)* 1984 Restricted Stock Purchase Plan, as amended
(incorporated herein by reference to Exhibit 10.1(a) to Form
10-K for the year ended December 29, 1991).
10.1(b)* 1985 Restricted Stock Purchase Plan, as amended
(incorporated herein by reference to Exhibit 10.3(a) to Form
10-K for the year ended December 29, 1991).
10.1(c)(1)* Form of Restricted Stock Purchase Agreement (incorporated
herein by reference to Exhibit 10.1(b) to Form 10-K for the
year ended January 1, 1995).
10.1(c)(2)* Schedule to Form of Restricted Stock Purchase Agreement
(incorporated herein by reference to Exhibit 10.1(c)(2) to
Form 10-K for the year ended December 31, 1995).
10.1(c)(3)* Form of Amendment to Restricted Stock Purchase Agreement
(incorporated herein by reference to Exhibit 10.1(c)(3) to
Form 10-K for the year ended December 31, 1995).
10.1(d)* Form of Restricted Stock Purchase Agreement, as amended, for
the quarterly purchase of restricted stock (incorporated
herein by reference to Exhibit 10.1(d) to Form 10-K for the
year ended December 31, 1995).
10.2(a)* 1987 Stock Option Plan, as amended, and form of incentive
stock option and non-qualified stock option agreements
(incorporated herein by reference to Exhibit 10.11(a) to
Form 10-K for the year ended December 29, 1991).
10.2(b)(1)* Form of Non-Qualified Stock Option and Repurchase Agreement
dated as of September 8, 1987, as amended (incorporated
herein by reference to Exhibit 10.2(b)(2) to Form 10- K for
the year ended December 31, 1995).
10.2(b)(2)* Form of Non-Qualified Stock Option and Repurchase Agreement
dated various dates, as amended (incorporated herein by
reference to Exhibit 10.2(b)(2) to Form 10-K for the year
ended December 31, 1995).
II-3
<PAGE> 138
10.2(c)* Form of Incentive Stock Option Agreement with Ronald N. Fox
and Richard J. Corbin dated as of October 28, 1988 and May
9, 1994, respectively (incorporated herein by reference to
Exhibit 10.3(c) to Form 10-K for the year ended January 1,
1995).
10.3(a)* Form of Indemnity Agreement for officers and directors
(incorporated herein by reference to Exhibit 10.3(c) to Form
10-K for the year ended January 1, 1995).
10.3(b) Schedule to Form of Indemnity Agreement (incorporated herein
by reference to Exhibit 10.3(b) to Form 10-K for the year
ended December 31, 1995).
10.4* Ekco Group, Inc. 1988 Directors' Stock Option Plan,
originally filed as Exhibit 10.15 to Form 10-K for the year
ended December 31, 1989, as amended (incorporated herein by
reference to Exhibit 10.4 to Form 10-K for the year ended
December 31, 1995).
10.5(a)* Ekco Group, Inc. Employees' Stock Ownership Plan effective
as of January 1, 1989, originally filed as Exhibit 10.13(a)
to Form 10-K for the year ended January 1, 1989, as amended
(incorporated herein by reference to Exhibits 10.6(a)(1) and
(2) to Form 10-K for the year ended January 1, 1995).
10.5(b) ESOP Loan Agreement dated as of October 1, 1990, originally
filed as Exhibit 10.10(c) to Form 10-K for the year ended
December 30, 1990 (incorporated herein by reference to
Exhibit 10.5(b) to Form 10-K for the year ended December 31,
1995).
10.5(c) ESOP Loan Agreement dated as of March 30, 1995 (incorporated
herein by reference to Exhibit 10.5(c) to Form 10-K for the
year ended December 31, 1995).
10.6* Amended and Restated Employment Agreement with Robert Stein
dated as of May 25, 1995 (incorporated herein by reference
to Exhibit 10.1 to Form 10-Q for the quarterly period ended
October 1, 1995).
10.8* Amended and Restated Employment Agreement with Jeffrey A.
Weinstein dated as of May 25, 1995 (incorporated herein by
reference to Exhibit 10.2 to Form 10-Q for the quarterly
period ended October 1, 1995).
10.9* Amended and Restated Employment Agreement with Donato A.
DeNovellis dated as of May 25, 1995 (incorporated herein by
reference to Exhibit 10.3 to Form 10-Q for the quarterly
period ended October 1, 1995).
10.10* Employment Agreement with Stuart W. Cohen dated as of
June 12, 1995 (incorporated herein by reference to Exhibit
10.4 to Form 10-Q for the quarterly period ended October 1,
1995).
10.10* Amended and Restated Employment Agreement with Brian R.
McQuesten and certain other Company employees dated as of
May 25, 1995 (incorporated herein by reference to Exhibit
10.5 to Form 10-Q for the quarterly period ended October 1,
1995).
10.11* Ekco Group, Inc. Incentive Compensation Plan for Executive
Employees of Ekco Group, Inc. and Subsidiaries, as amended
(incorporated herein by reference to Exhibit 10.9 to Form
10-K for the year ended December 29, 1991 and Exhibit
10.12(b) to Form 10-K for the year ended January 1, 1995).
10.12* 1995 Restatement of Incentive Compensation Plan for
Executive Employees of Ekco Group, Inc. and its Subsidiaries
(incorporated herein by reference to Exhibit 10.13 to Form
10-K for the year ended January 1, 1995).
II-4
<PAGE> 139
10.13* Ekco Group, Inc. Supplemental Executive Retirement Plan
dated as of July 1, 1992 (incorporated herein by reference
to Exhibit 10.13 to Form 10-K for the year ended January 2,
1994).
10.14(a)* Form of Split Dollar Agreement (incorporated herein by
reference to Exhibit 10.14 to Form 10-K for the year ended
January 2, 1994).
10.14(b)* Schedule to Form of Split Dollar Agreement (incorporated
herein by reference to Exhibit 10.14(b) to Form 10-K for the
year ended December 31, 1995).
10.15* Severance Agreement with Richard J. Corbin dated September
28, 1995 (incorporated herein by reference to Exhibit 10.15
to Form 10-K for the year ended December 31, 1995).
10.16* Severance Agreement with Ronald N. Fox dated September 21,
1995 (incorporated herein by reference to Exhibit 10.16 to
Form 10-K for the year ended December 31, 1995).
10.17(a)* Severance Agreement with Neil R. Gordon dated December 28,
1995 (incorporated herein by reference to Exhibit 10.17(a)
to Form 10-K for the year ended December 31, 1995).
10.17(b)* Consulting Agreement with N.R. Gordon & Company dated
December 28, 1995 (incorporated herein by reference to
Exhibit 10.17(b) to Form 10-K for the year ended December
31, 1995).
10.18 Standstill Agreement with Stephen Weinroth dated as of
March 27, 1987, originally filed as Exhibit 10.15 to Form
10-K for the year ended December 28, 1986 (incorporated
herein by reference to Exhibit 10.13 to Form 10-K for the
year ended January 3, 1993).
10.19 Standstill Agreement with G. Chris Andersen dated as of
March 30, 1987, originally filed as Exhibit 10.17 to Form
10-K for the year ended December 28, 1986 (incorporated
herein by reference to Exhibit 10.14 to Form 10-K for the
year ended January 3, 1993).
10.20(a) Indemnification Letter from American Home Products
Corporation dated February 8, 1985 to The Ekco Group, Inc.,
originally filed as Exhibit 2.2 to Form 8-K as of October
23, 1987 (incorporated herein by reference to Exhibit
10.15(a) to Form 10-K for the year ended January 3, 1993).
10.20(b) Letter of Restatement and Confirmation of the
Indemnification of American Home Products Corporation to The
Ekco Group, Inc. from American Home Products Corporation to
Centronics Corporation dated October 1, 1987, originally
filed as Exhibit 2.3 to Form 8-K as of October 23, 1987
(incorporated herein by reference to Exhibit 10.15(b) to
Form 10-K for the year ended January 3, 1993)
10.20(c) Letter from American Home Products Corporation dated
December 19, 1988, originally filed as Exhibit 10.17(d) to
Form 10-K for the year ended January 1, 1989 (incorporated
herein by reference to Exhibit 10.18(c) to Form 10-K for the
year ended January 1, 1995).
10.21 Agreement dated as of March 7, 1989 with Howard R. Curd et
al., originally filed as Exhibit 10.16 to Form 10-K for the
year ended January 1, 1989 (incorporated herein by reference
to Exhibit 10.19 to Form 10-K for the year ended January 1,
1995).
II-5
<PAGE> 140
10.22 Securities Purchase Agreement dated as of December 22, 1992
with The 1818 Fund, L.P., originally filed as Exhibit
10.20(a) to Form 10-K for the year ended January 3, 1993;
Subordinated Convertible Note dated December 22, 1992,
originally filed as Exhibit 10.20(b) to Form 10-K for the
year ended January 3, 1993; Registration Rights Agreement
with The 1818 Fund, L.P., originally filed as Exhibit
10.20(c) to Form 10-K for the year ended January 3, 1993;
and Standstill Agreement dated April 28, 1992 with Brown
Brothers Harriman & Co. and The 1818 Fund, L.P., originally
filed as Exhibit 10.20(d) to Form 10-K for the year ended
January 3, 1993 (incorporated herein by reference to Exhibit
10.22 to Form 10-K for the year ended January 2, 1994).
10.23(a) Credit Agreement dated as of April 11, 1995 among the
registrant, Ekco Housewares, Inc., Frem Corporation, Fleet
Bank of Massachusetts, N.A., as agent, and the Lenders party
thereto (incorporated herein by reference to Exhibit 10.28
to Form 10-Q for the quarterly period ended April 2, 1995).
10.23(b) First Amendment to Revolving Credit Agreement dated as of
December 31, 1995 (incorporated herein by reference to
Exhibit 10.28(b) to Form 8-K as of December 31, 1995).
10.23(c) Second Amendment to Credit Agreement dated as of March 25,
1996 (incorporated herein by reference to Exhibit 10.23(c)
to Form 10-K for the year ended December 31, 1995).
11 Statement re computation of per share earnings. (Reference
is made to Note 13 of Notes to Consolidated Financial
Statements included in Part I of this Registration
Statement.)
21 Subsidiaries of the registrant (incorporated herein by
reference to Exhibit 21 to Form 10- K for the year ended
December 31, 1995.)
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C. (see Exhibit 5).
24 Power of Attorney (included in this Part II).
25 Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939 of Fleet National Bank,
as Trustee (bound separately).
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees
99.4 Form of Letter to Clients
II-6
<PAGE> 141
- -------------------------------------------------------------------------------
Schedules to Exhibits 10.21, 10.22, 10.23(a) and 10.23(c) will be supplied upon
request by the Commission.
(B) FINANCIAL STATEMENTS SCHEDULES
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have been
omitted.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as a part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the foregoing provision, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-7
<PAGE> 142
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Boston,
Massachusetts on July 3, 1996.
EKCO GROUP, INC.
By /s/ Donato A. DeNovellis
-------------------------------------
DONATO A. DENOVELLIS
CHIEF FINANCIAL OFFICER
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on the dates
indicated.
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President, Chief Executive Officer July 3, 1996
-------------------------------------- (principal executive officer), and Director
ROBERT STEIN
*
Executive Vice President, Secretary, General July 3, 1996
-------------------------------------- Counsel, and Director
JEFFREY A. WEINSTEIN
/s/ Donato A. DeNovellis Executive Vice President, Finance and July 3, 1996
-------------------------------------- Administration, and Chief Financial Officer
DONATO A. DENOVELLIS (principal financial officer)
* Vice President and Controller July 3, 1996
-------------------------------------- (principal accounting officer)
BRIAN R. MCQUESTEN
* Director July 3, 1996
--------------------------------------
T. MICHAEL LONG
* Director July 3, 1996
--------------------------------------
STUART B. ROSS
* Director July 3, 1996
--------------------------------------
MALCOLM L. SHERMAN
* Director July 3, 1996
-------------------------------------
BILL W. SORENSON
* Director July 3, 1996
--------------------------------------
HERBERT M. STEIN
</TABLE>
*By: /s/ Donato A. DeNovellis
- --------------------------------------
DONATO A. DENOVELLIS, ATTORNEY-IN-FACT
II-8
<PAGE> 1
MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.
One Financial Center
Boston Massachusetts 02111
701 Pennsylvania Avenue, N.W. Telephone: 617/542-6000
Washington, D.C. 20004 Fax: 617/542-2241
Telephone: 202/434-7300
Fax: 202/434-7400
April 17, 1996
Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Ladies and Gentlemen:
This opinion is being furnished to you in connection with the Registration
Statement on Form S-1 (the "Registration Statement") to be filed by Ekco Group,
Inc. ("Ekco" and together with its subsidiaries, the "Company") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
on or about the date hereof. The Registration Statement relates to $125,000,000
in aggregate principal amount of the Company's 9 1/4% Series B Senior Notes due
2006 (the "New Senior Notes") as well as guarantees of the New Senior Notes (the
"Guarantees") to be issued by certain subsidiaries of Ekco. The New Senior Notes
will be exchanged for the Company's 9 1/4% Senior Notes due 2006. The New Senior
Notes are to be issued under an Indenture dated as of March 25, 1996 (the
"Indenture") between the Company, the Guarantors named therein and Fleet
National Bank of Connecticut, as trustee (the "Trustee").
We have acted as counsel for the Company in connection with the preparation
of the Registration Statement and are familiar with the proceedings taken by the
Company in connection with the authorization and issuance of the New Senior
Notes. We have examined such documents as we have deemed necessary for purposes
of this opinion.
Based upon and subject to the foregoing, we are of the opinion that the New
Senior Notes, when issued and authenticated pursuant to and in accordance with
the Indenture, and the Guarantees will be duly and validly authorized.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters."
Very truly yours,
/s/ Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent
Public Accountants" and to the use of our report dated February 5, 1996 on the
consolidated financial statements of Ekco Group, Inc. and its subsidiaries in
Amendment #1 to the Registration Statement on Form S-1 and related Prospectus of
Ekco Group, Inc.
/s/ KPMG PEAT MARWICK LLP
Boston, Massachusetts
July 2, 1996
<PAGE> 1
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
----------
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE
TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
----------
/ / CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
FLEET NATIONAL BANK OF CONNECTICUT
---------------------------------------------------------
(Exact name of trustee as specified in its charter)
Not applicable 06-0850628
- ------------------------------- -----------------------------
(State of incorporation (I.R.S. Employer
if not a national bank) Identification No.)
777 Main Street, Hartford, Connecticut 06115
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
Patricia Beaudry, 777 Main Street, Hartford, CT 203-728-2065
--------------------------------------------------------------
(Name, address and telephone number of agent for service)
Ekco Group, Inc.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 11-2167167
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
98 Spit Brook Road
Nashua, New Hampshire 03062
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
9 1/4% Series B Senior Notes due 2006
------------------------------------------------------------------
(Title of the indenture securities)
<PAGE> 2
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject,
The Comptroller of the Currency,
Washington, D.C.
Federal Reserve Bank of Boston
Boston, Massachusetts
Federal Deposit Insurance Corporation
Washington, D.C.
(b) Whether it is authorized to exercise
corporate trust powers:
The trustee is so authorized.
Item 2. Affiliations with obligor and underwriter. If the obligor or
any underwriter for the obligor is an affiliate of the trustee,
describe each such affiliation.
None with respect to the trustee.
Item 16. List of exhibits.
List below all exhibits filed as a part of this statement of
eligibility and qualification.
(1) A copy of the Articles of Association of the trustee as
now in effect.
(2) A copy of the Certificate of Authority of the trustee
to do business.
(3) A copy of the Certification of Fiduciary Powers of the
trustee.
(4) A copy of the By-Laws of the trustee as now in effect.
(5) Consent of the trustee required by Section 321(b)
of the Act.
(6) A copy of the latest Consolidated Reports of Condition
and Income of the trustee published pursuant to law or
the requirements of its supervising or examining authority.
<PAGE> 3
NOTES
In as much as this Form T-1 is filed prior to the ascertainment by the trustee
of all facts on which to base answers to Item 2, the answers to said Items are
based upon imcomplete information. Said Items may, however, be considered
correct unless amended by an amendment to this Form T-1.
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,
the trustee, Fleet National Bank of Connecticut, a national banking association
organized and existing under the laws of the United States, has duly caused this
statement of eligibility and qualification to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Hartford, and State
of Connecticut, on the 9th day of June, 1995.
FLEET NATIONAL BANK OF CONNECTICUT,
AS TRUSTEE
By: /s/ Michael M. Hopkins
-------------------------
Its Assistant Vice President
<PAGE> 5
EXHIBIT 1
ARTICLES OF ASSOCIATION
FLEET NATIONAL BANK OF CONNECTICUT
FIRST. The title of this Association, which shall carry on the business of
banking under the laws of the United States, shall be "Shawmut Bank Connecticut,
National Association".
SECOND. The main office of the Association shall be in Hartford, County of
Hartford, State of Connecticut. The general business of the Association shall be
conducted at its main office and its branches.
THIRD. The board of directors of this Association shall consist of not less
than five (5) nor more than twenty-five (25) shareholders, the exact number of
directors within such minimum and maximum limits to be fixed and determined from
time to time by resolution of a majority of the full board of directors or by
resolution of the shareholders at any annual or special meeting thereof. Unless
otherwise provided by the laws of the United States, any vacancy in the board of
directors for any reason, including an increase in the number thereof, may be
filled by action of the board of directors.
FOURTH. The annual meeting of the shareholders for the election of directors
and the transaction of whatever other business may be brought before said
meeting shall be held at the main office or such other place as the board of
directors may designate, on the day of each year specified therefore in the
bylaws, but if no election is held on that day, it may be held on any subsequent
day according to the provisions of law; and all elections shall be held
according to such lawful regulations as may be prescribed by the board of
directors.
FIFTH. The authorized amount of capital stock of this Association shall be
eight million five hundred thousand (8,500,000) shares of which three milliion
five hundred thousand (3,500,000) shares shall be common stock with a par value
of six and 25/100 dollars ($6.25) each, and of which five million (5,000,000)
shares without par value shall be preferred stock. The capital stock may be
increased or decreased from time to time, in accordance with the provisions of
the laws of the United States.
No holder of shares of the capital stock of any class of the corporation shall
have any pre-emptive or preferential right of subscription to any shares of any
class of stock of the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association, issued or sold, nor
any right of subscription to any thereof other than such, if any, as the board
of directors, in its discretion, may from time to time determine and at such
price as the board of directors may from time to time fix.
<PAGE> 6
The board of directors of the Association is authorized, subject to limitations
prescribed by law and the provisions of this Article, to provide for the
issuance from time to time in one or more series of any number of the preferred
shares, and to establish the number of shares be included in each series, and to
fix the designation, relative rights, preferences, qualifications and
limitations of the shares of each such series. The authority of the board of
directors with respect to each series shall include, but not be limited to,
determination of the following:
a. The number of shares constituting that series and the distinctive
designation of that series;
b. The dividend rate on the shares of that series, whether dividends shall be
cumulative, and, if so, from which dates or dates, and whether they shall be
payable in preference to, or in anther relation to, the dividends payable to
any other class or classes or series of stock;
c. Whether that series shall have voting rights, in addition to the voting
rights provided by law, and, if so, the terms of such voting rights;
d. Whether that series shall have conversion or exchange privileges, and,
if so, the terms and conditions of such conversion or exchange, including
provision for the adjustment of the conversion or exchange rate in such
events as the board of directors shall determine;
e. Whether or not the shares of that series shall be redeemable, and, if so,
the terms and conditions of such redemption, including the manner of
selecting shares for redemption if less than all shares are to be redeemed,
the date or dates upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
f. Whether that series shall be entitled to the benefit of a sinking fund to
be applied to the purchase or redemption of shares of that series, and, if
so, the terms and amounts of such sinking fund;
g. The right of the shares of that series to the benefit of conditions and
restrictions upon the creation of indebtedness of the Association or any
subsidiary, upon the issue of any additional stock (including additional
shares of such series or of any other series) and upon the payment of
dividends or the making of other distributions on, and the purchase,
redemption or other acquisition by the Association or any subsidiary of
any outstanding stock of the Association;
h. The right shares of that series in the event of voluntary or involuntary
liquidation, dissolution or winding up of the Association and whether such
rights shall be in preference to, or in another relation to, the comparable
rights of any other class or classes or series of stock; and
i. Any other relative, participating, optional or other special rights,
qualifications, limitations or restrictions of that series.
Shares of any series of preferred stock which have been redeemed (whether
through the operation of a sinking fund or otherwise) or which, if convertible
or exchangeable, have been converted into or exchanged for shares of stock of
any other class or classes shall have the status of authorized and unissued
shares of preferred stock of the same series and may be reissued as a part of
the series of which they were originally a part or may be reclassified and
reissued as part of a new series of preferred stock to be created by resloution
or resolutions of the board of directors or as part of any other series or
preferred stock, all subject to the conditions and the restrictions adopted by
the board of directors providing for the issue of any series of prefeffed stock
and by the provisions of any applicable law.
Subject to the provisions of any applicable law, or except as otherwise provided
by the resolution or resolutions providing for the issue of any series of
preferred stock, the holders of outstanding shares of common stock shall
exclusively possess voting power for the election of directors and for all
purposes, each holder of record of shares of common stock being entitled to one
vote for each share of common stock standing in his name on the books of the
Association.
Except as otherwise provided by the resolution or resolutions for the issue of
any series of preferred stock, after payment shall have been made to the holders
of preferred stock of the full amount of dividends to which they shall be
entitled pursuant to the resolution or resolutions providing for the issue of
any other series of preferred stock, the holders of common stock shall be
entitled, to the exclusion of the holders of preferred stock of any and all
series, to receive such dividends as from time to time may be declared by the
board of directors.
Except as otherwise provided by the resolution or resolutions for the issue of
any series of preferred stock, in the event of any liquidation, dissolution or
winding up of the Association, whether voluntary or involuntary, after payment
shall have been made to the holders of preferred stock of the full amount to
which they shall be entitled pursuant to the resolution or resolutions providing
for the issue of any series of preferred stock the holders of common stock shall
be entitled, to the exclusion of the holders of preferred stock of any and all
series, to share, ratable according to the number of shares of common stock held
by them, in all remaining assets of the Association available for distribution
to its shareholders.
The number of authorized shares of any class may be increased or decreased by
the affirmative vote of the holders of a majority of the stock of the
Association entitled to vote.
<PAGE> 7
SIXTH. The board of directors shall appoint one of its members president of
this Association, who shall be chairman of the board, unless the board appoints
another director to be the chairman. The board of directors shall have the power
to appoint one or more vice presidents; and to appoint a secretary and such
other officers and employees as may be required to transact the business of this
Association.
The board of directors shall have the power to define the duties of the
officers and employees of the Association; to fix the salaries to be paid to
them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of the
Association shall be made; to manage and administer the business and affairs of
the Association; to make all bylaws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a board of
directors to do and perform.
SEVENTH. The board of directors shall have the power to change the location of
the main office to any other place within the limits of the City of Hartford,
Connecticut, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of the Association to
any other location, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The board of directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than ten percent (10%) of the
stock of this Association, may call a special meeting of shareholders at any
time. Unless otherwise provided by the laws of the United States, a notice of
the time, place and purpose of every annual and special meeting of the
shareholders shall be given by first class mail, postage prepaid, mailed at
least ten (10) days prior to the date of such meeting to each shareholder of
record at his address as shown upon the books of this Association.
TENTH. (A) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a director, officer or employee of the Association or is or was
serving at the request of the Association as a director, officer employee or
agent of another corporation of a partnership, joint venture, limited liability
company, trust, or other enterprise, including service with respect to an
empolyee benefit plan, shall be indemnified and held harmless by the Association
to the fullest extent authorized by the law of the state in which the
Association's ultimate parent company is incorporated, except as provided in
subsection (b). The aforesaid indemnity shall protect the indemnified person
against all expense, liability and loss (including attorney's fees, judgements,
fines ERISA excise taxes or penalties, and amounts paid in settlement)
reasonably incurred by such person in connection with such a proceeding. Such
indemnification shall continue as to a person who has ceased to be a director,
officer or employee and shall inure to the benefit of his or her heirs,
executors, and administrators, but shall only cover such person's period of
service with the Association. The Association may, by action of its Board of
Directors, grant rights to indemnification to agents of the Association and to
any director, officer, employee or agent of any of its subsidiaries with the
same scope and effect as the foregoing indemnification of directors and
officers.
(b) Restrictions on Indemnification. Notwithstanding the foregoing, (i) no
person shall be indemnified hereunder by the Association against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by a federal bank regulatory agency which proceeding or action
results in a final order assessing civil money penalties against that person,
requiring affirmative action by that person in the form of payments to the
Association, or removing or prohibiting that person from service with the
Association, and any advancement of expenses to that person in that proceeding
must be repaid; and (ii) no person shall be indemnified hereunder by the
Association and no advancement of expenses shall be made to any person hereunder
to the extent such indemnification or advancement of expenses would violate or
conflict with any applicable federal statute now or hereafter in force or any
applicable final regulation or interpretation now or hereafter adopted by the
Office of the Comptroller of the Currency ("OCC") or the Federal Deposit
Insurance Corporation ("FDIC"). The Association shall comply with any
requirements imposed on it by any such statue or regulation in connection with
any indemnification or advancement of expenses hereunder by the Association.
With respect to proceedings to enforce a claimant's rights to indemnification,
the Association shall indemnify any such claimant in connection with such a
proceeding only as provided in subsection (d) herof.
(c) Advancement of Expenses. The conditional right to indemnification
conferred in this section shall be a contract right and shall include the right
to be paid by the Association the reasonable expenses (including attorney's
fees) incurred in defending a proceeding in advance of its final disposition (an
"advancement of expenses"); provided, however, that an advancement of expenses
shall be made only upon (i) delivery to the Association of a binding written
undertaking by or on behalf of the person receiving the advancement to repay all
amounts so advanced if it is ultimately determined that such person is not
entitled to be indemnified in such proceeding, including if such proceeding
results in a final order assessing civil money penalties against that person,
requiring affirmative action by that person in the form of payments to the
Association, or removing or prohibiting that person from service with the
Association, and (ii) compliance with any other actions or determinations
required by applicable law, regulation or OCC or FDIC interpretation to be taken
or made by the Board of Directors of the Association or other persons prior to
an advancement of expenses. The Association shall cease advancing expenses at
any time its Board of Directors believes that any of the prerequisites for
advancement of expenses are no longer being met.
(d) Right of Claimant to Bring Suit. If a claim under subsection (a) of the
section is not paid in full by the Association within thirty (30) days after
written claim has been received by the Association the claimant may at any time
thereafter bring suit against the Association to recover the unpaid amount of
the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Association to recover an advancement of expenses pursuant to the
terms of an undertaking, the claimant shall be entitled to be paid also the
expense of prosecuting or defending such claim. It shall be a defense to any
such action brought by the claimant to enforce a right to indemnification
hereunder (other than an action brought to enforce a claim for an advancement of
expenses where the required undertaking, if any, has been tendered to the
Association) that the claimant has not met any applicable standard for
indemnification under the law of the state in which the Association's ultimate
parent company is incorporated. In any suit brought by the Association to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Association shall be entitled to recover such expenses upon a final adjudication
that the claimant has not met any applicable standard for indemnification
standard for indemnification under the law of the state in which the
Association's ultimate parent company is incorporated.
(e) Non-Exclusivity of Rights. The rights to indeminification and the
advancement of expenses conferred in this section shall not be exclusive of any
other right which any person may have or hereafter acquired under any statute,
agreement, vote of stockholders or disinterested directors or otherwise.
(f) Insurance. The Association may purchase, maintain, and make payment or
reimbursement for reasonable premiums on, insurance to protect itself and any
director, officer, employee or agent of the Association or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Association would have the power to
indemnify such person against such expense, liability or loss under the law of
the state in which the Association's ultimate parent company is incorporated;
provided however, that such insurance shall explicitly exclude insurance
coverage for a final order of a federal bank regulatory agency assessing civil
money penalties against an Association director, officer, employee or agent.
ELEVENTH. These articles of association may be amended at any regular or special
meeting of the shareholders by the affirmative vote of the holders of a majority
of the stock of this Association, unless the vote of the holders of greater
amount of stock is required by law, and in that case by the vote of the holders
of such greater amount. The notice of any shareholders' meeting at which an
amendment to the articles of association of this Association is to be considered
shall be given as hereinabove set forth.
I hereby certify that the articles of association of this Association, in their
entirety, are listed above in items first through eleventh.
Secretary/Assistant Secretary
- --------------------------------------------------
Dated at , as of .
--------------------------------------- --------------------
Revision of January 11, 1993
<PAGE> 8
EXHIBIT 2
[LOGO]
- --------------------------------------------------------------------------------
COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
- --------------------------------------------------------------------------------
Washington, D.C. 20219
CERTIFICATE
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that:
(1) The Comptroller of the Currency, pursuant to Revised Statutes 324,
et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody
and control of all records pertaining to the chartering, regulation and
supervision of all National Banking Associations.
(2) "Fleet National Bank of Connecticut", Hartford, Connecticut, (Charter
No. 1338), is a National Banking Association formed under the laws of the United
States and is authorized thereunder to transact the business of banking on the
date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents at
the Treasury Department, in the City of
Washington and District of Columbia, this
28th day of December, 1995.
/s/ EUGENE A. LUDWIG
----------------------------------
Comptroller of the Currency
<PAGE> 9
EXHIBIT 3
[LOGO]
- --------------------------------------------------------------------------------
COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
- --------------------------------------------------------------------------------
Washington, D.C. 20219
Certification of Fiduciary Powers
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify the records
in this Office evidence "Fleet National Bank of Connecticut", Hartford,
Connecticut, (Charter No. 1338), was granted, under the hand and seal of the
Comptroller, the right to act in all fiduciary capacities authorized under the
provisions of The Act of Congress approved September 28, 1962, 76 Stat. 668, 12
U.S.C. 92a. I further certify the authority so granted remains in full force and
effect.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
Office of the Comptroller of the Currency
to be affixed to these presents at the
Treasury Department, in the City of
Washington and District of Columbia, this
28th day of December, 1995.
/s/ EUGENE A. LUDWIG
----------------------------------
Comptroller of the Currency
489
<PAGE> 10
EXHIBIT 4
AMENDED AND RESTATED BY-LAWS OF
FLEET NATIONAL BANK OF CONNECTICUT
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The regular annual meeting of the shareholders for
the election of Directors and the transaction of any other business that may
properly come before the meeting shall be held at the Main Office of the
Association, or such other place as the Board of Directors may designate, on the
fourth Thursday of April in each year at 1:15 o'clock in the afternoon unless
some other hour of such day is fixed by the Board of Directors.
If, from any cause, an election of Directors is not made on such day, the Board
of Directors shall order the election to be held on some subsequent day, of of
which special notice shall be given in accordance with the provisions of law,
and of these bylaws.
Section 2. Special Meetings. Special meetings of the shareholders may be called
at any time by the Board of Directors, the President, or any shareholders owning
not less than twenty-five percent (25%) of the stock of the Association.
Section 3. Notice of Meetings of Shareholders. Except as otherwise provided by
law, notice of the time and place of annual or special meetings of the share
holders shall be mailed, postage prepaid, at least ten (10) days before the date
of the meeting to each shareholder of record entitled to vote thereat at his
address as shown upon the books of the Association; but any failure to mail such
notice to any shareholder or any irregularity therein, shall not affect the
validity of such meeting or of any of the proceedings therat. Notice of a
special meeting shall also state the purpose of the meeting.
Section 4. Quorum; Adjourned Meetings. Unless otherwise provided by law, a
quorum for the transaction of business at every meeting of the shareholders
shall consist of not less than two-fifths (2/5) of the outstanding capital stock
represented in person or by proxy; less than such quorum may adjourn the meeting
to a future time. No notice need be given of an adjourned annual or special
meeting of the shareholders if the adjournment be to a definite place and time.
Section 5. Votes and Proxies. At every meeting of the shareholders, each share
of the capital stock shall be entitled to one vote except as otherwise provided
by law. A majority of the votes cast shall decide every question or matter
submitted to the shareholder at any meeting, unless otherwise provided by law or
by the Articles of Association or these By-laws. Share- holders may vote by
proxies duly authorized in writing and filed with the Cahsier, but no officer,
clerk, teller or bookeeper of the Association may act as a proxy.
<PAGE> 11
Section 6. Nominations to Board of Directors. At any meeting of shareholders
held for the election of Directors, nominations for election to the Board of
Directors may be made, subject to the provisions of this section, by any share-
holder of record of any outstanding class of stock of the Association entitled
to vote for the election of Directors. No person other than those whose names
are stated as proposed nominees in the proxy statement accompanying the notice
of the meeting may be nominated as such meeting unless a shareholder shall have
given to the President of the Association and to the Comptroller of the
Currency, Washington, DC written notice of intention to nominate such other
person mailed by certified mail or delivered not less than fourteen (14) days
nor or more than fifty (50) days prior to the meeting of shareholders at which
such nomination is to be made; provided, however, that if less than twenty-one
(21) days' notice of such meeting is given to shareholders, such notice of
intention to nominate shall be mailed by certified mail or delivered to said
President and said Comptroller on or before the seventh day following the day on
which the notice of such meeting was mailed. Such notice of intention to
nominate shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the Association that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
the number of shares of capital stock of the Association owned by the notifying
shareholder. In the event such notice is given, the proposed nominee may be
nominated either by the shareholder giving such notice or by any other
shareholder present at the meeting at which such nomination is to be made. Such
notice may contain the names or more than one proposed nominee, and if more than
one is named, any one or more of those named may be nominated.
Section 7. Action Taken Without a Shareholder Meeting. Any action requiring
shareholder approval or consent may be taken without a meeting and without
notice of such meetings by written consent of the shareholders.
ARTICLE II
DIRECTORS
Section 1. Number. The Board of Directors shall consist of such number of
shareholders, not less than five (5) nor more than twenty-five (25), as from
time to time shall be determined by a majority of the votes to which all of its
shareholders are at the time entitled, or by the Board of Directors as
hereinafter provided.
Section 2. Mandatory Retirement for Directors. No person shall be elected a
director who has attained the age of 68 and no person shall continue to serve as
a director after the date of the first meeting of the stockholders of the
Association held on or after the date on which such person attains the age of
68; provided, however, that any director serving on the Board as of December 15,
1995 who has attanined the age of 65 on or prior to such date shall be permitted
to continue to serve as a director until the date of the first meeting of the
stockholders of the Association held on or after the date on which such person
attains the age of 70.
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<PAGE> 12
Section 3. General Powers. The Board of Directors shall exercise all the
coporate powers of the Association, except as expressly limited by law, and
shall have the control, management, direction and dispositon of all its property
and affairs.
Section 4. Annual Meeting. Immediately following a meeting of shareholders
held for the election of Directors, the Cashier shall notify the directors-
elect who may be present of their election and they shall then hold a meeting at
the Main Office of the Association, or such other place as the Board of
Directors may designate, for the purpose of taking their oaths, organizing the
new Board, electing officers and transacting any other business that may come
before such meeting.
Section 5. Regular Meeting. Regular meetings of the Board of Directors shall
be held without notice at the Main Office of the Association, or such other
place as the Board of Directors may designate, at such dates and times as the
Board shall determine. If the day designated for a regular meeting falls on a
legal holiday, the meeting shall be held on the next business day.
Section 6. Special Meetings. A special meeting of the Board of Directors may
be called at anytime upon the written request of the Chairman of the Board, the
President, or of two Directors, stating the purpose of the meeting. Notice of
the time and place shall be given not later than the day before the date of the
meeting, by mailing a notice to each Director at his last known address, by
delivering such notice to him personally, or by telephoning.
Section 7. Quorum; Votes. A majority of the Board of Directors at the time
holding office shall constitute a quorum for the transaction of all business,
except when otherwise provided by law, but less than a quorum may adjourn a
meeting from time to time and the meeting may be held, as adjourned, without
further notice. If a quorum is present when a vote is taken, the affirmative
vote of a majority of Directors present is the act of the Board of Directors.
Section 8. Action by Directors Without a Meeting. Any action requiring
Director approval or consent may be taken without a meeting and without notice
of such meeting by written consent of all the Directors.
Section 9. Telephonic Participation in Directors' Meetings. A Director or
member of a Committee of the Board of Directors may participate in a meeting of
the Board or of such Committee may participate in a meeting of the Board or of
such Committee by means of a conference telephone or similar communications
equipment enabling all Directors participating in the meeting to hear one
another, and participation in such meeting shall constitute presence in person
at such a meeting.
Section 10. Vacancies. Vacancies in the Board of Directors may be filled by
the remaining members of the Board at any regular or special meeting of the
Board.
Section 11. Interim Appointments. The Board of Directors shall, if the share-
holders at any meeting for the election of Directors have determined a number of
Directors less than twenty-five (25), have the power, by affirmative vote of the
majority of all the Directors, to increase such number of Directors to not more
than twenty-five (25) and to elect Directors to fill the resulting vacancies and
to serve until the next annual meeting of shareholders or the next election of
Directors; provided, however, that the number of Directors shall not be so
increased by more than two (2) if the number last determined by shareholders was
fifteen (15) or less, or increased by more than four (4) if the number last
determined by shareholders was sixteen (16) or more.
Section 12. Fees. The Board of Directors shall fix the amount and direct the
payment of fees which shall be paid to each Director for attendance at any
meeting of the Board of Directors or of any Committees of the Board.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. Executive Committee. The board of directors shall appoint from its
members an Executive Committee which shall consist of such number of persons as
the Board of Directors shall determine; the Chairman of the Board and the
President shall be members ex-officio of the Executive Committee with full
voting power. The Chairman of the Board or the President may from time to time
appoint from the Board of Directors as temporary additional members of the
Executive Committee with full voting powers not more than two members to serve
for such periods as the Chairman of the Board or the President may determine.
The Board of Directors shall designate a member of the Executive Committee to
serve as Chairman thereof. A meeting of the Executive Committee may be called at
any time upon the written request of the Chairman of the Board, the President or
the Chairman of the Executive Committee, stating the purpose of the meeting. Not
less than twenty four hours' notice of said meeting shall be given to each
member the Committee personally, by telephoning, or by mail. The Chairman of the
Executive Committee of or, in his absence, a member of the Committee chosen by a
majority of the members present shall preside at meetings of the Executive
Committee.
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<PAGE> 13
The Executive Committee shall possess and may exercise all the powers of the
Board when the Board is not in session except such as the Board, only, by law,
is authorized to exercise; it shall keep minutes of its acts and proceedings
and cause same to be presented and reported at every regular meeting and at any
special meeting of the Board including specifically, all its actions relating
to loans and discounts. All acts done and powers and authority conferred by
the Executive Committee, from time to time, within the scope of its authority,
shall be deemed to be, and may be certified as being, the acts of and under the
authority of the Board.
Section 2. Risk Management Committee. The Board shall appoint from its members a
Risk Management Committee which shall consist of such number as the Board shall
determine. The Board shall designate a member of the Risk Management Committee
to serve as Chairman thereof. It shall be the duty of the Risk Management
Committee to (a) serve as the channel of communication with management and the
Board of Directors of Fleet Financial Group, Inc. to assure that formal
processes supported by management information systems are in place for the
identification, evaluation and management of significant risks inherent in or
associated with lending activities, the loan portfolio, asset-liablity
management, the investment portfolio, trust and investment advisory activities,
the sale of nondeposit investment products and new products and services and
such additional activities or functions as the Board may determine from time to
time; (b) assure the formulation and adoption of policies approved by the Risk
Management Committee or Board governing lending activities, management of the
loan portfolio, the maintenance of an adequate allowance for loan and lease
losses, asset-liability management, the investment portfolio, the retail sale of
non-deposit investment products, new products and services and such additional
activities or functions as the Board may determine from time to time (c) assure
that a comprehensive independent loan review program is in place for the early
detection of problem loans and review significant reports of the loan review
department, management's responses to those reports and the risk attributed to
unresolved issues; (d) subject to control of the Board, exercise general
supervision over trust activities, the investment of trust funds, the
disposition of trust investments and the acceptance of new trusts and the terms
of such acceptance, and (e) perform such additional duties and exercise such
additional powers of the Board may determine from time to time.
Section 3. Audit Committee. The Board shall appoint from its memebers and
Audit Committee which shall consist of such number as the Board shall determine
no one of whom shall be an active officer or employee of the Association or
Fleet Financial Group, Inc. or any of its affiliates. In addition, members of
the Audit Committee must not (i) have served as an officer or employee of the
Association or any of its affiliates at any time during the year prior to their
appointment; or (ii) own, control, or have owned or controlled at any time
during the year prior to appointment, ten percent (10%) or more of any
outstanding class of voting securities of the Association. At least two (2)
members of the Audit Committee must have significant executive, professional,
educational or regulatory experience in financial, auditing, accounting, or
banking matters. No member of the Audit Commitee may have significant direct or
indirect credit or other relationships with the Association, the termination of
which would materially adversely affect the Association's financial condition or
results of operations.
The Board shall designate a member of the Audit Committee to serve as Chairman
thereof. It shall be the duty of the Audit Committee to (a) cause a continuous
audit and examination to be made on its behalf into the affairs of the
Association and to review the results of such examination; (b) review
significant reports of the internal auditing department, management's responses
to those reports and the risk attributed to unresolved issues; (c) review the
basis for the reports issued under Section 112 of The Federal Deposit Insurance
Corporation Improvement Act of 1991; (d) consider, in consultation with the
independent auditor and an internal auditing executive, the adequacy of the
Association's internal controls,including the resolution of identified material
weakness and reportable conditions; (e) review regulatory communications
received from any federal or state agency with supervisory jurisdiction or other
examining authority and monitor any needed corrective action by management; (f)
ensure that a formal system of internal controls is in place for maintaining
compliance with laws and regulations; (g) cause an audit of the Trust Department
at least once during each calendar year and within 15 months of the last such
audit or, in liew thereof, adopt a continuous audit system and report to the
Board each calendar year and within 15 months of the previous report on the
performance of such audit function; and (h) perform such additional duties and
exercise such additional powers of the Board as the Board may determine from
time to time.
The Audit Committee may consult with internal counsel and retain its own outside
counsel without approval (prior or otherwise) from the Board or management and
obligate the Association to pay the fees of such counsel.
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<PAGE> 14
Section 4. Community Affairs Committee. The Board shall appoint from its
members a Community Affairs Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Community
Affairs Committee to serve as Chairman thereof. It shall be the duty of the
Commmunity Affairs Committee to (a) oversee compliance by the Association with
the Community Reinvestment Act of 1977, as amended, and the regulations
promulgated thereunder; and (b) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.
Section 5. Regular Meetings. Except for the Executive Committee which shall
meet on an ad hoc basis as set forth in Section 1 of this Article, regular
meetings of the Committees of the Board of Directors shall be held, without
notice, at such time and place as the Committee or the Board of Directors may
appoint and as often as the business of the Association may require.
Section 6. Special Meetings. A Special Meeting of any of the Committees of
the Board of Directors may be called upon the written request of the Chairman of
the Board or the President, or of any two members of the respective Committee,
stating the purpose of the meeting. Not less than twenty-four hours' notice of
such special meeting shall be given to each member of the Committee personally,
by telephoning, or by mail.
Section 7. Emergency Meetings. An Emergency Meeting of any of the Committees
of the Board of Directors may be called at the request of the Chairman of the
Board or the President, who shall state that an emergency exists, upon not less
than one hour's notice to each member of the Committee personally or by
telephoning.
Section 8. Action Taken Without a Committee Meeting. Any Committee of the
Board of Directors may take action without a meeting and without notice of such
meeting by resolution assented to in writing by all members of such Committee.
Section 9. Quorum. A majority of a Committee fo the Board of Directors shall
constitute a quorum for the transaction of any business at any meeting of such
Committee. If a quorum is not available, the Chairman of the Board or the
President shall have power to make temporary appointments to a Committee of-
members of the Board of Directors, to act in the place instead of members who
temporarily cannot attend any such meeting; provided, however, that any
temporary appointment to the Audit Committee must meet the requirements for
members of that Committee set forth in Section 3 of this Article.
Section 10. Record. The committes of the Board of Directors hall keeep a
record of their respective meetings and proceedings which shall be presented at
the regular meeting of the Board of Directors held in the calendar month next
following the meetings of the Committees. If there is no regular Board of
Directors meeting held in the calendar month next following the meeting of a
Committee, then such Committee's records shall be presented at the next regular
Board of Directors meeting held in a month subsequent to such Committee meeting.
Section 11. Changes and Vacancies. The Board of Directors shall have power
to change the members of any Committee at any time and to fill vacancies on any
Committee; provided, however, that any newly appointed member of the Audit
Committee must meet the requirements for members of that Committee set forth in
Section 3 of this Article.
Section 12. Other Committees. The Board of Directors may appoint, from time
to time, other committees of one or more persons, for such purposes and with
such powers as the Board may determine.
ARTICLE IV
WAIVER OF NOTICE OF MEETINGS
Section 1. Waiver. Whenever notice is required to be given to any shareholder
Director, or member of a Committee of the Board of Directors, such notice may be
waived in writing either before or after such meeting by any shareholder,
Director or Committee member respectively, as the case may be, who may be
entitled to such notice; and such notice will be deemed to be waived by
attendance at any such meeting.
-5-
<PAGE> 15
ARTICLE V
OFFICERS AND AGENTS
Section 1. Officers. The Board shall appoint a Chairman of the Board and a
President, and shall have the power to appoint one or more Executive Vice
Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a
Cashier, a Secretary, and Auditor, a Controller, one or more Trust Officers and
such other officers as are deemed necessary or desirable for the proper
transaction of business of the Association. The Chairman of the Board and the
President shall be appointed from members of the Board of Directors. Any two or
more offices, except those of President and Cashier, or Secretary, may be held
by the same person. The Board may, from time to time, by resolution passed by a
majority of the entire Board, designate one or more officers of the Association
or of an affiliate or of Fleet Financial Group, Inc. with power to appoint one
or more Vice Presidents and such other officers of the Association below the
level of Vice President as the officer or officers designated in such resolution
deem necessary or desirable for the proper transaction of the business of the
Association.
Section 2. Chairman of the Board. The chairman of the Board shall preside at
all meetings of the Board of Directors. Subject to definition by the Board of
Directors, he shall have general executive powers and such specific powers and
duties as from time to time may be conferred upon or assigned to him by the
Board of Directors.
Section 3. President. The president shall preside at all meetings of the
Board of Directors if there be no Chairman or if the Chairman be absent. Subject
to definition by the Board of Directors, he shall have general executive powers
and such specific powers and duties as from time to time may be conferred upon
or assigned to him by the Board of Directors.
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<PAGE> 16
Section 4. Cashier and Secretary. The Cashier shall be the Secretary of the
Board and of the Executive Committee, and shall keep accurate minutes of their
meetings and of all meetings of the shareholders. He shall attend to the giving
of all notices required by these By-laws. He shall be custodian of the corporate
seal, records, documents and papers of the Association. He shall have such
powers and perform such duties as pertain by law or regulation to the office of
Cashier, or as are imposed by these By-laws, or as may be delegated to him from
time to time by the Board of Directors, the Chairman of the Board or the
President.
Section 5. Auditor. The Auditor shall be the chief auditing officer of the
Association. He shall continuously examine the affairs of the Association and
from time to time shall report to the Board of Directors. He shall have such
powers and perform such duties as are conferred upon, or assigned to him by
these By-laws, or as may be delegated to him from time to time by the Board of
Directors.
Section 6. Officers Seriatim. The Board of Directors shall designate from
time to time not less than two officers who shall in the absence or disability
of the Chairman or President or both, succeed seriatim to the duties and
responsibilities of the Chairman and President respectively.
Section 7. Clerks and Agents. The Board of Directors may appoint, from time
to time, such clerks, agents and employees as it may deem advisable for the
prompt and orderly transaction of the business of the Association, define their
duties, fix the salaries to be paid them and dismiss them. Subject to the
authority of the Board of Directors, the Chairman of the Board or the President,
or any other officer of the Association authorized by either of them may appoint
and dismiss all or any clerks, agents and employees and prescribe their duties
and the conditions of their employment, and from time to time fix their
compensation.
Section 8. Tenure. The Chairman of the Board of Directors and the President
shall, except in the case of death, resignation, retirement or disqualification
under these By-laws, or unless removed by the affirmative vote of at least two-
thirds of all of the members of the Board of Directors, hold office for the term
of one year or until their respective successors are appointed. Either of such
officers appointed to fill a vacancy occurring in an unexpired term shall serve
for such unexpired term of such vacancy. All other officers, clerks, agents,
attorneys-in-fact and employees of the Association shall hold office during the
pleasure of the Board of Directors or of the officer or committee appointing
them respectively.
ARTICLE VI
TRUST DEPARTMENT
Section 1. General Powers and Duties. All fiduciary powers of the Association
shall be exercised through the Trust Department, subject to such regulations as
the Comptroller of the Currency shall from time to time establish. The Trust
Department shall be to placed under the management and immediate supervision of
an officer or officers appointed by the Board of Directors. The duties of all
officers of the Trust Department shall be to cause the policies and instructions
of the Board and the Risk Management Committee with respect to the trusts under
their supervision to be carried out, and to supervise the due performance of the
trusts and agencies entrusted to the Association and under their supervision, in
accordance with law and in accordance with the terms of such trusts and
agencies.
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<PAGE> 17
ARTICLE VII
BRANCH OFFICES
Section 1. Establishment. The Board of Directors shall have full power to
establish, to discontinue, or, from time to time, to change the location of any
branch office, subject to such limitations as may be provided by law.
Section 2. Supervision and Control. Subject to the general supervision and
control of the Board of Directors, the affairs of branch offices shall be under
the immediate supervision and control of the President or of such other officer
or officers, employee or employees, or other individuals as the Board of
Directors may from time to time determine, with such powers and duties as the
Board of Directors may confer upon or assign to him or them.
ARTICLE VIII
SIGNATURE POWERS
Section 1. Authorization. The power of officers, empolyees, agents and
attorneys to sign on behalf of and to affix the seal of the Association shall be
prescribed by the Board of Directors or by the Executive Committee or by both;
provided that the President is authorized to restrict such power of any officer,
employee, agent or attorney to the business of a specific department or
departments, or to a specific branch office or branch offices. Facsimile
signatures may be authorized.
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<PAGE> 18
ARTICLE IX
STOCK CERTIFICATES AND TRANSFERS
Section 1. Stock Records. The Trust Department shall have custody of the
stock certificate books and stock ledgers of the Association, and shall make all
transfers of stock, issue certificates thereof and disburse dividends declared
thereon.
Section 2. Form of Certificate. Every shareholder shall be entitled to a
certificate conforming to the requirements of law and otherwise in such form as
the Board of Directors may approve. The certificates shall state on the face
thereof that the stock is transferable only on the books of the Association and
shall be signed by such officers as may be prescribed from time to tiem by the
Board of Directors or Executive Committee. Facsimile signatures may be
authorized.
Section 3. Transfers of Stock. Transfers of stock shall be made only on the
books of the Association by the holder in person, or by attorney duly authorized
in writing, upon surrender of the certificate therefor properly endorsed, or
upon the surrender of such certificate accompanied by a properly executed
written assignment of the same, or a written power of attorney to sell, assign
or transfer the same or the shares represented thereby.
Section 4. Lost Certificate. The Board of Directors or Executive Committee
may order a new certificate to be issued in place of a certificate lost or
destroyed, upon proof of such loss or destruction and upon tender to the
Association by the shareholder, of a bond in such amount and with or without
surety, as may be ordered, indemnifying the Association against all liability,
loss, cost and damage by reason of such loss or destruction and the issuance of
a new certificate.
Section 5. Closing Transfer Books. The Board of Directors may close the
transfer books for a period not exceeding thirty days preceding any regular or
special meeting of the shareholders, or the day designated for the payment of a
dividend or the allotment of rights. In lieu of closing the transfer books the
Board of Directors may fix a day and hour not more than thirty days prior to the
day of holding any meeting of the shareholders, or the day designated for the
payment of a dividend, or the day designated for the allotment of rights, or the
day when any change of conversion or exchange of capital stock is to go into
effect, as the day as of which shareholders entitled to notice of and to vote at
such meetings or entitled to such dividend or to such allotment of rights or to
exercise the rights in respect of any such change, conversion or exchange of
capital stock, shall be determined, and only such shareholders as shall be
shareholders of record on the day and hour so fixed shall be entitled to notice
of and to vote at such meeting or to receive payment of such dividend or to
receive such allotment of rights or to exercise such rights, as the case may be.
ARTICLE X
THE CORPORATE SEAL
Section 1. Seal. The following is an impression of the seal of the Association
adopted by the Board of Directors.
ARTICLE XI
BUSINESS HOURS
Section 1. Business Hours. The main office of this Association and each
branch office thereof shall be open for business each day, except Saturdays,
Sundays and days recognized by the laws of the State of Rhode Island as legal
holidays, for such hours as the President, or such other officer as the Board of
Directors shall from time to time designate, may determine as to each office to
conform to local custom and convenience, provided that any one or more of the
main and branch offices or certain departments thereof may be open for such
hours as the President, or such other officer as the Board of Directors shall
from time to time designate, may determine as to each office or department on
any legal holiday on which work is not prohibited by law, and provided further
that any one or more of the main and branch offices or certain departments
thereof may be ordered closed or open on any day for such hours as to each
office or department as the President, or such other officer as the Board of
Directors shall from time to time designate, subject to applicable laws and
regulations, may determine when such action may be required by reason of
disaster or other emergency condition.
ARTICLE IX
CHANGES IN BY-LAWS
Section 1. Amendments. These By-laws may be amended upon vote of a majority
of the entire Board of Directors at any meeting of the Board, provided ten (10)
day's notice of the proposed amendment has been given to each member of the
Board of Directors. No amendment may be made unless the By-law, as amended, is
consistent with the requirements of law and of the Articles of Association.
These By-laws may also be amended by the Association's shareholders.
A true copy
Attest:
Secretary/Assistant Secretary
- ---------------------------------------
Dated at , as of .
--------------------------------------- ----------------------
Revision of January 11, 1993
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<PAGE> 19
EXHIBIT 5
CONSENT OF THE TRUSTEE
REQUIRED BY SECTION 321(b)
OF THE TRUST INDENTURE ACT OF 1939
The undersigned, as Trustee under the Indenture to be entered into between
Newcourt Receivables Asset Trust and Fleet National Bank of Connecticut, as
Trustee, does hereby consent that, pursuant to Section 321(b) of the Trust
Indenture Act of 1939, reports of examinations with respect to the undersigned
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
FLEET NATIONAL BANK OF CONNECTICUT,
as Trustee
By /s/ Michael M. Hopkins
-------------------------------
Its: Assistant Vice President
Dated: March 8, 1996
<PAGE> 20
EXHIBIT 6
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
Please refer to page i, / 1 /
[LOGO] Table of Contents, for
the required disclosure
of estimated burden.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 21
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
(951231)
REPORT AT THE CLOSE OF BUSINESS DECEMBER 31, 1995 -----------
(RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State member banks);
12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks).
This report form is to be filed by banks with branches and consolidation
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
-----------------------------------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and
Income (including the supporting schedules) have been prepared in conformance
with the instructions issued by the appropriate Federal regulatory authority
and are true to the best of my knowledge and belief.
/s/ GIRO DEROSA
- --------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report
January 25, 1996
- --------------------------------------------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in some
cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it has
been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
/s/ GUNNAR S. OVERSTROM
- --------------------------------------------------------------------------------
Director (Trustee)
/s/ JOEL B. ALVORD
- --------------------------------------------------------------------------------
Director (Trustee)
/s/ DAVID L. EYLES
- --------------------------------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
<PAGE> 22
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the appropriate Federal
Feserve District Bank.
STATE NONMEMBER BANKS: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Crofton, MD 21114.
NATIONAL BANKS: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Crofton, MD 21114.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
___
FDIC Certificate Number | 1 | 0 | 5 | 8 | 2 | |
______________________ CALL NO. 190 31 12-31-95
(RCRI 9050)
CERT: 02499 10582 STBK 09-0590
FLEET NATIONAL BANK OF CONNECTICUT
777 MAIN STREET
HARTFORD, CT 06115
| |
___ ___
<FN>
Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency
</FN>
</TABLE>
<PAGE> 23
FFIEC 031
Page i
/2/
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices
________________________________________________________________________________
TABLE OF CONTENTS
SIGNATURE PAGE Cover
REPORT OF INCOME
Schedule RI--Income Statement...........................................RI-1,2,3
Schedule RI-A--Changes in Equity Capital....................................RI-3
Schedule RI-B--Charge-offs and Recoveries and
Changes in Allowance for Loan and Lease
Losses..................................................................RI-4,5
Schedule RI-C--Applicable Income Taxes by
Taxing Authority..........................................................RI-5
Schedule RI-D--Income from
International Operations..................................................RI-6
Schedule RI-E--Explanations...............................................RI-7,8
REPORT OF CONDITION
Schedule RC--Balance Sheet................................................RC-1,2
Schedule RC-A--Cash and Balances Due
From Depository Institutions..............................................RC-3
Schedule RC-B--Securities.................................................RC-4,5
Schedule RC-C--Loans and Lease Fianancing
Receivables:
Part I. Loans and Leases..............................................RC-6,7
Part II. Loans to Small Businesses and
Small Farms (included in the forms for
June 30 only).....................................................RC-7a,7b
Schedule RC-D--Trading Assets and Liabilities
(to be completed only by selected banks)..................................RC-8
Schedule RC-E--Deposit Liabilities.......................................RC-9,10
Schedule RC-F--Only Assets.................................................RC-11
Schedule RC-G--Other Liabilities...........................................RC-11
Schedule RC-H--Selected Balance Sheet Items for
Domestic Offices.........................................................RC-12
Schedule RC-I--Selected Assets and Liabilities
of IBF's.................................................................RC-13
Schedule RC-K--Quarterly Averages..........................................RC-13
Schedule RC-L--Off-Balance Sheet Items..................................RC-14,15
Schedule RC-M--Memoranda................................................RC-16,17
Schedule RC-N--Past Due and Nonaccrual Loans,
Leases, and Other Assets..............................................RC-18,19
Schedule RC-O--Other Data for Deposit
Insurance Assessments.................................................RC-20,21
Schedule RC-R--Risk-Based Captial.......................................RC-22,23
Optional Narrative Statement Concerning the
Amounts Reported in the Reports of
Conditions and Income....................................................RC-24
Special Report (TO BE COMPLETED BY ALL BANKS)
Schedule RC-J--Repricing Opportunities (sent only to
and to be completed only by savings banks)
<PAGE> 24
DISCLOSURE OF ESTIMATED BURDEN
The estimated average burden associated with this information collection is 30.7
hours per respondent and is estimated to vary from 15 to 200 hours per response,
depending on individual circumstances. Burden estimates include the time for
reviewing instructions, gathering and maintaining data in the required form, and
completing the information collection, but exclude the time for compiling and
maintaining business records in the normal course of a respondent's activities.
Comments concerning the accuracy of this burden estimate and suggestions for
reducing this burden should be directed to the Office of Information and
Regulatory Affairs. Office of Management and Budget, Washington, D.C. 20503, and
to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
For information or assistance, national and state nonmember banks should contact
the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington, D.C.
20429, toll free on (800)688-FDIC (3342), Monday through Friday between 8:00
a.m. and 5:00 p.m., Eastern time. State member banks should contact their
Federal Reserve District Bank.
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-1
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT
Address: 777 MAIN STREET
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
Consolidated Report of Income
for the period January 1, 1995 - December 31, 1995
All Report of Income schedules are to be reported on a calendar year-to-date basis in thousands of dollars.
file
Schedule RI--Income Statement ________
| 1480 |
|________|
_______________________________________________________________________________________________ ___________|________|
<S> <C> <C>
1. Interest income: | ////////////////// |
a. Interest and fee income on loans: | ////////////////// |
(1) In domestic offices: | ////////////////// |
(a) Loans secured by real estate .................................................. | 4011 382,429 | 1.a.(1)(a)
(b) Loans to depository institutions .............................................. | 4019 732 | 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers ........... | 4024 309 | 1.a.(1)(c)
(d) Commercial and industrial loans ............................................... | 4012 466,509 | 1.a.(1)(d)
(e) Acceptances of other banks .................................................... | 4026 70 | 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expenditures: | ////////////////// |
(1) Credit cards and related plans ............................................ | 4054 813 | 1.a.(1)(f)(1)
(2) Other ..................................................................... | 4055 52,452 | 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions ........................ | 4056 0 | 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political | ////////////////// |
subdivisions in the U.S.: | ////////////////// |
(1) Taxable obligations ....................................................... | 4503 240 | 1.a.(1)(h)(1)
(2) Tax-exempt obligations .................................................... | 4504 2,486 | 1.a.(1)(h)(2)
(i) All other loans in domestic offices ........................................... | 4058 59,226 | 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 4059 0 | 1.a.(2)
b. Income from lease financing receivables: | ////////////////// |
(1) Taxable leases .................................................................... | 4505 1,015 | 1.b.(1)
(2) Tax-exempt leases ................................................................. | 4307 0 | 1.b.(2)
c. Interest income on balances due from depository institutions:(1) | ////////////////// |
(1) In domestic offices ............................................................... | 4105 7 | 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 4106 4,751 | 1.c.(2)
d. Interest and dividend income on securities: | ////////////////// |
(1) U.S. Treasury securities and U.S. Government agency and corporation obligations ... | 4027 187,576 | 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: | ////////////////// |
(a) Taxable securities ............................................................ | 4506 0 | 1.d.(2)(a)
(b) Tax-exempt securities ......................................................... | 4507 3 | 1.d.(2)(b)
(3) Other domestic debt securities .................................................... | 3657 78,170 | 1.d.(3)
(4) Foreign debt securities ........................................................... | 3658 223 | 1.d.(4)
(5) Equity securities (including investments in mutual funds) ......................... | 3659 6,646 | 1.d.(5)
e. Interest income from assets held in trading accounts .................................. | 4069 0 | 1.e.
______________________
<FN>
____________
(1) Includes interest income on time certificates of deposit not held for trading.
</FN>
</TABLE>
3
<PAGE> 26
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-2
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI--Continued
________________
Dollar Amounts in Thousands | Year-to-date |
___________________________________________________________________________________ ______________
<S> <C> <C>
1. Interest income (continued) | RIAD Bil Mil Thou |
f. Interest income on federal funds sold and securities purchased | ////////////////// |
under agreements to resell in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs ................... | 4020 11,399 | 1.f.
g. Total interest income (sum of items 1.a through 1.f) ............... | 4107 1,255,056 | 1.g.
2. Interest expense: | ////////////////// |
a. Interest on deposits: | ////////////////// |
(1) Interest on deposits in domestic offices: | ////////////////// |
(a) Transaction accounts (NOW accounts, ATS accounts, and | ////////////////// |
telephone and preauthorized transfer accounts) ............. | 4508 8,111 | 2.a.(1)(a)
(b) Nontransaction accounts: | ////////////////// |
(1) Money market deposit accounts (MMDAs) .................. | 4509 25,029 | 2.a.(1)(b)(1)
(2) Other savings deposits ................................. | 4511 49,772 | 2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 or more ....... | 4174 102,210 | 2.a.(1)(b)(3)
(4) All other time deposits ................................ | 4512 120,235 | 2.a.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and Agreement | ////////////////// |
subsidiaries, and IBFs ......................................... | 4172 38,926 | 2.a.(2)
b. Expense of federal funds purchased and securities sold under | ////////////////// |
agreements to repurchase in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs ................... | 4180 213,972 | 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading | ////////////////// |
liabilities, and other money borrowed .............................. | 4185 134,947 | 2.c.
d. Interest on mortgage indebtedness and obligations under | ////////////////// |
capitalized leases ................................................. | 4072 833 | 2.d.
e. Interest on subordinated notes and debentures ...................... | 4200 19,159 | 2.e.
f. Total interest expense (sum of items 2.a through 2.e) .............. | 4073 713,194 | 2.f.
___________________________
3. Net interest income (item 1.g minus 2.f) .............................. | ////////////////// | RIAD 4074 | 541,862 | 3.
___________________________
4. Provisions: | ////////////////// |
___________________________
a. Provision for loan and lease losses ................................ | ////////////////// | RIAD 4230 | 5,258 | 4.a.
b. Provision for allocated transfer risk .............................. | ////////////////// | RIAD 4243 | 0 | 4.b.
___________________________
5. Noninterest income: | ////////////////// |
a. Income from fiduciary activities ................................... | 4070 84,978 | 5.a.
b. Service charges on deposit accounts in domestic offices ............ | 4080 65,848 | 5.b.
c. Trading gains (losses) and fees from foreign exchange transactions . | 4075 1,436 | 5.c.
d. Other foreign transaction gains (losses) ........................... | 4076 0 | 5.d.
e. Other gains (losses) and fees from trading assets and liabilities .. | 4077 1,422 | 5.e.
f. Other noninterest income: | ////////////////// |
(1) Other fee income ............................................... | 5407 59,418 | 5.f.(1)
(2) All other noninterest income* .................................. | 5408 54,976 | 5.f.(2)
___________________________
g. Total noninterest income (sum of items 5.a through 5.f) ............ | ////////////////// | RIAD 4079 | 268,078 | 5.g.
6. a. Realized gains (losses) on held-to-maturity securities ............. | ////////////////// | RIAD 3521 | (6) | 6.a.
b. Realized gains (losses) on available-for-sale securities ........... | ////////////////// | RIAD 3196 | 300 | 6.b.
| ////////////////// |___________________________
7. Noninterest expense: | ////////////////// |
a. Salaries and employee benefits ..................................... | 4135 277,219 | 7.a.
b. Expenses of premises and fixed assets (net of rental income) | ////////////////// |
(excluding salaries and employee benefits and mortgage interest) ... | 4217 88,758 | 7.b.
c. Other noninterest expense* ......................................... | 4092 390,919 | 7.c.
___________________________
d. Total noninterest expense (sum of items 7.a through 7.c) ........... | ////////////////// | RIAD 4093 | 756,896 | 7.d.
___________________________
8. Income (loss) before income taxes and extraordinary items and other | ////////////////// |
___________________________
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b,
and 7.d) .............................................................. | ////////////////// | RIAD 4301 | 48,080 | 8.
9. Applicable income taxes (on item 8) ................................... | ////////////////// | RIAD 4302 | 20,832 | 9.
___________________________
10. Income (loss) before extraordinary items and other adjustments | ////////////////// |
___________________________
(item 8 minus 9) ...................................................... | ////////////////// | RIAD 4300 | 27,248 | 10.
_________________________________________________
<FN>
____________
*Describe on Schedule RI-E--Explanations.
</FN>
</TABLE>
4
<PAGE> 27
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-3
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI--Continued
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________ ______________
<S> <C> <C>
11. Extraordinary items and other adjustments: | ////////////////// |
a. Extraordinary items and other adjustments, gross of income taxes* | 4310 0 | 11.a.
b. Applicable income taxes (on item 11.a)* .......................... | 4315 0 | 11.b.
c. Extraordinary items and other adjustments, net of income taxes | ////////////////// |
___________________________
(item 11.a minus 11.b) ........................................... | ////////////////// | RIAD 4320 | 0 | 11.c.
12. Net income (loss) (sum of items 10 and 11.c) ........................ | ////////////////// | RIAD 4340 | 27,248 | 12.
_________________________________________________
</TABLE>
<TABLE>
<CAPTION>
__________
______|__I481__|
Memoranda | Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after | ////////////////// |
August 7, 1986, that is not deductible for federal income tax purposes ......................... | 4513 0 | M.1.
2. Income from the sale and servicing of mutual funds and annuities in domestic offices | ////////////////// |
(included in Schedule RI, item 8) .............................................................. | 8431 0 | M.2.
3. Estimated foreign tax credit included in applicable income taxes, items 9 and 11.b above ....... | 4309 0 | M.3.
4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Taxable equivalent adjustment to "Income (loss) before income taxes and extraordinary | ////////////////// |
items and other adjustments" (item 8 above) .................................................... | 1244 1,837 | M.4.
5. Number of full-time equivalent employees on payroll at end of current period (round to | //// Number |
nearest whole number) .......................................................................... | 4150 5,002 | M.5.
6. Not applicable | ////////////////// |
7. If the reporting bank has restated its balance sheet as a result of applying push down | //// MM DD YY |
accounting this calendar year, report the date of the bank's acquisition ....................... | 9106 00/00/00 | M.7.
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) | ////////////////// |
(included in schedule RI, items 5.c and 5.e): | //// Bil Mil Thou |
a. Interest rate esposures ..................................................................... | 8757 1,442 | M.8.a.
b. Foreign exchange exposures .................................................................. | 8758 1,416 | M.8.b.
c. Equity security and index exposures ......................................................... | 8759 0 | M.8.c.
d. Commodity and other exposures ............................................................... | 8760 0 | M.8.d.
9. Impact on income of off-balance sheet derivatives held for purposes other than trading: | ////////////////// |
a. Net increase (decrease) to interest income................................................... | 8761 (13,220)| M.9.a.
b. Net (increase) decrease to interest expense ................................................. | 8762 (6,842)| M.9.b.
c. Other (noninterest) allocations ............................................................. | 8763 0 | M.9.c.
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
<PAGE> 28
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-4
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-A--Changes in Equity Capital
Indicate decreases and losses in parentheses. _________
| I483 |
_____________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________|____________________|
<S> <C> <C>
1. Total equity capital originally reported in the December 31, 1994, Reports of Condition | ////////////////// |
and Income ..................................................................................... | 3215 1,236,358 | 1.
2. Equity capital adjustments from amended Reports of Income, net* ................................ | 3216 0 | 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) ........................... | 3217 1,236,358 | 3.
4. Net income (loss) (must equal Schedule RI, item 12) ............................................ | 4340 27,248 | 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net ............................. | 4346 125,000 | 5.
6. Changes incident to business combinations, net ................................................. | 4356 0 | 6.
7. LESS: Cash dividends declared on preferred stock ............................................... | 4470 11,330 | 7.
8. LESS: Cash dividends declared on common stock .................................................. | 4460 97,000 | 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions | ////////////////// |
for this schedule) ............................................................................. | 4411 0 | 9.
10. Corrections of material accounting errors from prior years* (see instructions for this schedule) | 4412 0 | 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities ............... | 8433 32,197 | 11.
12. Foreign currency translation adjustments ....................................................... | 4414 0 | 12.
13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ....... | 4415 30,000 | 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal Schedule RC, | ////////////////// |
item 28) ....................................................................................... | 3210 1,342,473 | 14.
______________________
<FN>
____________
*Describe on Schedule RI-E--Explanations.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-B--Charge-offs and Recoveries and Changes
in Allowance for Loan and Lease Losses
Part I. Charge-offs and Recoveries on Loans and Leases
Part I excludes charge-offs and recoveries through
the allocated transfer risk reserve.
__________
| I486 | (-
_________________________________ ________
| (Column A) | (Column B) |
| Charge-offs | Recoveries |
____________________ ____________________
| Calendar year-to-date |
_________________________________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Loans secured by real estate: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ........................................ | 4651 73,797 | 4661 17,780 | 1.a.
b. To non-U.S. addressees (domicile) .................................... | 4652 0 | 4662 0 | 1.b.
2. Loans to depository institutions and acceptances of other banks: | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository institutions ................. | 4653 0 | 4663 0 | 2.a.
b. To foreign banks ..................................................... | 4654 0 | 4664 0 | 2.b.
3. Loans to finance agricultural production and other loans to farmers ..... | 4655 73 | 4665 97 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ........................................ | 4645 11,164 | 4617 5,987 | 4.a.
b. To non-U.S. addressees (domicile) .................................... | 4646 0 | 4618 0 | 4.b.
5. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures: | ////////////////// | ////////////////// |
a. Credit cards and related plans ....................................... | 4656 1,137 | 4666 412 | 5.a.
b. Other (includes single payment, installment, and all student loans) .. | 4657 3,932 | 4667 2,290 | 5.b.
6. Loans to foreign governments and official institutions .................. | 4643 0 | 4627 0 | 6.
7. All other loans ......................................................... | 4644 1,131 | 4628 269 | 7.
8. Lease financing receivables: | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ........................................ | 4658 0 | 4668 0 | 8.a.
b. Of non-U.S. addressees (domicile) .................................... | 4659 0 | 4669 0 | 8.b.
9. Total (sum of items 1 through 8) ........................................ | 4635 91,234 | 4605 26,835 | 9.
___________________________________________
</TABLE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-5
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-B--Continued
Part I. Continued
Memoranda
_________________________________ ________
| (Column A) | (Column B) |
| Charge-offs | Recoveries |
____________________ ____________________
| Calendar year-to-date |
_________________________________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1-3. Not applicable | ////////////////// | ////////////////// |
4. Loans to finance commercial real estate, construction, and land | ////////////////// | ////////////////// |
development activities (not secured by real estate) included in | ////////////////// | ////////////////// |
Schedule RI-B, part I, items 4 and 7, above ............................. | 5409 1,891 | 5410 1,411 | M.4.
5. Loans secured by real estate in domestic offices (included in | ////////////////// | ////////////////// |
Schedule RI-B, part I, item1, above): | ////////////////// | ////////////////// |
a. Construction and land development .................................... | 3582 6,020 | 3583 2,428 | M.5.a.
b. Secured by farmLand .................................................. | 3584 104 | 3585 5 | M.5.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit .................... | 5411 1,696 | 5412 65 | M.5.c.(1)
(2) All other loans secured by 1-4 family residential properties ..... | 5413 19,988 | 5414 4,864 | M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties ............ | 3588 5,613 | 3589 1,633 | M.5.d.
e. Secured by nonfarm nonresidential properties ......................... | 3590 40,376 | 3591 8,785 | M.5.e.
|_________________________________________|
</TABLE>
Part II. Changes in Allowance for Loan and Lease Losses
<TABLE>
<CAPTION>
_____________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Balance originally reported in the December 31, 1994, Reports of Condition and Income ........ | 3124 283,800 | 1.
2. Recoveries (must equal part I, item 9, column B above) ....................................... | 4605 26,835 | 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above) ................................ | 4635 91,234 | 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a)........................ | 4230 5,258 | 4.
5. Adjustments* (see instructions for this schedule) ................................ ........... | 4815 42,284 | 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, | ////////////////// |
item 4.b) .................................................................................... | 3123 266,943 | 6.
|____________________|
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
Schedule RI-C--Applicable Income Taxes by Taxing Authority
Schedule RI-C is to be reported with the December Report of Income.
<TABLE>
<CAPTION>
| I489 | (-
____________ ________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Federal ...................................................................................... | 4780 17,383 | 1.
2. State and local............................................................................... | 4790 3,449 | 2.
3. Foreign ...................................................................................... | 4795 0 | 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b) ........... | 4770 20,832 | 4.
____________________________| |
5. Deferred portion of item 4 ........................................ | RIAD 4772 | (69,592)| ////////////////// | 5.
__________________________________________________
</TABLE>
7
<PAGE> 29
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-6
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-D--Income from International Operations
For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs where international operations
account for more than 10 percent of total revenues, total assets, or net income.
Part I. Estimated Income from International Operations
__________
| I492 | (-
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, | ////////////////// |
and IBFs: | ////////////////// |
a. Interest income booked .................................................................. | 4837 N/A | 1.a.
b. Interest expense booked ................................................................. | 4838 N/A | 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and IBFs | ////////////////// |
(item 1.a minus 1.b) .................................................................... | 4839 N/A | 1.c.
2. Adjustments for booking location of international operations: | ////////////////// |
a. Net interest income attributable to international operations booked at domestic offices . | 4840 N/A | 2.a.
b. Net interest income attributable to domestic business booked at foreign offices ......... | 4841 N/A | 2.b.
c. Net booking location adjustment (item 2.a minus 2.b) .................................... | 4842 N/A | 2.c.
3. Noninterest income and expense attributable to international operations: | ////////////////// |
a. Noninterest income attributable to international operations ............................. | 4097 N/A | 3.a.
b. Provision for loan and lease losses attributable to international operations ............ | 4235 N/A | 3.b.
c. Other noninterest expense attributable to international operations ...................... | 4239 N/A | 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a | ////////////////// |
minus 3.b and 3.c) ...................................................................... | 4843 N/A | 3.d.
4. Estimated pretax income attributable to international operations before capital allocation | ////////////////// |
adjustment (sum of items 1.c, 2.c, and 3.d) ................................................ | 4844 N/A | 4.
5. Adjustment to pretax income for internal allocations to international operations to reflect | ////////////////// |
the effects of equity capital on overall bank funding costs ................................ | 4845 N/A 5.
6. Estimated pretax income attributable to international operations after capital allocation | ////////////////// |
adjustment (sum of items 4 and 5) .......................................................... | 4846 N/A | 6.
7. Income taxes attributable to income from international operations as estimated in item 6 ... | 4797 N/A | 7.
8. Estimated net income attributable to international operations (item 6 minus 7) ............. | 4341 N/A | 8.
______________________
<CAPTION>
Memoranda ______________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Intracompany interest income included in item 1.a above .................................... | 4847 N/A | M.1.
2. Intracompany interest expense included in item 1.b above ................................... | 4848 N/A | M.2.
______________________
</TABLE>
<TABLE>
<CAPTION>
Part II. Supplementary Details on Income from International Operations Required
by the Departments of Commerce and Treasury for Purposes of the U.S.
International Accounts and the U.S. National Income and Product Accounts
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest income booked at IBFs .............................................................. | 4849 N/A | 1.
2. Interest expense booked at IBFs ............................................................. | 4850 N/A | 2.
3. Noninterest income attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs): | ////////////////// |
a. Gains (losses) and extraordinary items ................................................... | 5491 N/A | 3.a.
b. Fees and other noninterest income ........................................................ | 5492 N/A | 3.b.
4. Provision for loan and lease losses attributable to international operations booked at | ////////////////// |
domestic offices (excluding IBFs) ........................................................... | 4852 N/A | 4.
5. Other noninterest expense attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs) ............................................................................ | 4853 N/A | 5.
______________________
</TABLE>
8
<PAGE> 30
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-7
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-E--Explanations
Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.
Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all
significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.)
__________
| I495 | (-
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2)) | ////////////////// |
Report amounts that exceed 10% of Schedule RI, item 5.f.(2): | ////////////////// |
a. Net gains on other real estate owned .................................................... | 5415 0 | 1.a.
b. Net gains on sales of loans ............................................................. | 5416 0 | 1.b.
c. Net gains on sales of premises and fixed assets ......................................... | 5417 0 | 1.c.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 5.f.(2): | ////////////////// |
_____________
d. | TEXT 4461 |______________________________________________________________________________| 4461 33,165 | 1.d.
___________ REIMBURSEMENT FROM AFFILIATES
e. | TEXT 4462 |______________________________________________________________________________| 4462 | 1.e.
___________
f. | TEXT 4463 |______________________________________________________________________________| 4463 | 1.f.
_____________
2. Other noninterest expense (from Schedule RI, item 7.c): | ////////////////// |
a. Amortization expense of intangible assets ............................................... | 4531 23,094 | 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c: | ////////////////// |
b. Net losses on other real estate owned ................................................... | 5418 0 | 2.b.
c. Net losses on sales of loans ............................................................ | 5419 0 | 2.c.
d. Net losses on sales of premises and fixed assets ........................................ | 5420 0 | 2.d.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 7.c: | ////////////////// |
_____________
e. | TEXT 4464 |______________________________________________________________________________| 4464 166,229 | 2.e.
___________ MERGER & RESTRUCTURING CHARGES
f. | TEXT 4467 |______________________________________________________________________________| 4467 | 2.f.
___________
g. | TEXT 4468 |______________________________________________________________________________| 4468 | 2.g.
_____________
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and | ////////////////// |
applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe | ////////////////// |
all extraordinary items and other adjustments): | ////////////////// |
_____________
a. (1) | TEXT 4469 |__________________________________________________________________________| 4469 | 3.a.(1)
_____________
(2) Applicable income tax effect | RIAD 4486 | | ////////////////// | 3.a.(2)
_____________ ____________________________
b. (1) | TEXT 4487 |__________________________________________________________________________| 4487 | 3.b.(1)
_____________
(2) Applicable income tax effect | RIAD 4488 | | ////////////////// | 3.b.(2)
_____________ ____________________________
c. (1) | TEXT 4489 |__________________________________________________________________________| 4489 | 3.c.(1)
_____________
(2) Applicable income tax effect | RIAD 4491 | | ////////////////// | 3.c.(2)
____________________________
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, | ////////////////// |
item 2) (itemize and describe all adjustments): | ////////////////// |
_____________
a. | TEXT 4492 |______________________________________________________________________________| 4492 | 4.a.
___________
b. | TEXT 4493 |______________________________________________________________________________| 4493 | 4.b.
_____________
5. Cumulative effect of changes in accounting principles from prior years (from | ////////////////// |
Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): | ////////////////// |
_____________
a. | TEXT 4494 |______________________________________________________________________________| 4494 | 5.a.
___________
b. | TEXT 4495 |______________________________________________________________________________| 4495 | 5.b.
_____________
6. Corrections of material accounting errors from prior years (from Schedule RI-A, | ////////////////// |
item 10) (itemize and describe all corrections): | ////////////////// |
_____________
a. | TEXT 4496 |______________________________________________________________________________| 4496 | 6.a.
___________
b. | TEXT 4497 |______________________________________________________________________________| 4497 | 6.b.
_____________
______________________
</TABLE>
9
<PAGE> 31
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-8
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-E--Continued
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
7. Other transactions with parent holding company (from Schedule RI-A, item 13) | ////////////////// |
(itemize and describe all such transactions): | ////////////////// |
_____________ CAPITAL CONTRIBUTION FROM THE PARENT COMPANY
a. | TEXT 4498 |______________________________________________________________________________| 4498 30,000 | 7.a.
___________
b. | TEXT 4499 |______________________________________________________________________________| 4499 | 7.b.
_____________
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, | ////////////////// |
item 5) (itemize and describe all adjustments): | ////////////////// |
_____________
a. | TEXT 4521 | ADJUSTMENT DUE TO BARCLAY'S ACQUISITION
|______________________________________________________________________________| 4521 41,743 | 8.a.
_____________ SCC TRANSFER
b. | TEXT 4522 |______________________________________________________________________________| 4522 541 | 8.b.
_____________
____________________
9. Other explanations (the space below is provided for the bank to briefly describe, | I498 | I499 | (-
______________________
at its option, any other significant items affecting the Report of Income):
___
No comment |X| (RIAD 4769)
___
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
10
<PAGE> 32
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-1
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for December 31, 1995
All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
report the amount outstanding as of the last business day of the quarter.
Schedule RC--Balance Sheet
__________
| C400 | (-
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
ASSETS | ////////////////// |
1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// |
a. Noninterest-bearing balances and currency and coin(1) .................................. | 0081 1,363,000 | 1.a.
b. Interest-bearing balances(2) ........................................................... | 0071 50,200 | 1.b.
2. Securities: | ////////////////// |
a. Held-to-maturity securities (from Schedule RC-B, column A) ............................. | 1754 3,197 | 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ........................... | 1773 4,048,366 | 2.b.
3. Federal funds sold and securities purchased under agreements to resell in domestic offices | ////////////////// |
of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// |
a. Federal funds sold ..................................................................... | 0276 205,800 | 3.a.
b. Securities purchased under agreements to resell ........................................ | 0277 0 | 3.b.
4. Loans and lease financing receivables: ____________________________| ////////////////// |
a. Loans and leases, net of unearned income (from Schedule RC-C) | RCFD 2122 | 11,528,458 | ////////////////// | 4.a.
b. LESS: Allowance for loan and lease losses ................... | RCFD 3123 | 266,943 | ////////////////// | 4.b.
c. LESS: Allocated transfer risk reserve ....................... | RCFD 3128 | 0 | ////////////////// | 4.c.
____________________________
d. Loans and leases, net of unearned income, | ////////////////// |
allowance, and reserve (item 4.a minus 4.b and 4.c) .................................... | 2125 11,261,515 | 4.d.
5. Trading assets (from schedule RC-D )....................................................... | 3545 840 | 5.
6. Premises and fixed assets (including capitalized leases) .................................. | 2145 163,677 | 6.
7. Other real estate owned (from Schedule RC-M) .............................................. | 2150 684 | 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) .. | 2130 0 | 8.
9. Customers' liability to this bank on acceptances outstanding .............................. | 2155 7,330 | 9.
10. Intangible assets (from Schedule RC-M) .................................................... | 2143 310,314 | 10.
11. Other assets (from Schedule RC-F) ......................................................... | 2160 714,575 | 11.
12. Total assets (sum of items 1 through 11) .................................................. | 2170 18,129,498 | 12.
______________________
<FN>
____________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
</FN>
</TABLE>
11
<PAGE> 33
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-2
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC--Continued
___________________________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
<S> <C> <C>
LIABILITIES | /////////////////////// |
13. Deposits: | /////////////////////// |
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) .... | RCON 2200 10,797,121 | 13.a.
____________________________
(1) Noninterest-bearing(1) ................................ | RCON 6631 3,401,997 | /////////////////////// | 13.a.(1)
(2) Interest-bearing ...................................... | RCON 6636 7,395,124 | /////////////////////// | 13.a.(2)
____________________________
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, | /////////////////////// |
part II) ............................................................................. | RCFN 2200 431,872 | 13.b.
____________________________
(1) Noninterest-bearing ................................... | RCFN 6631 0 | /////////////////////// | 13.b.(1)
(2) Interest-bearing ...................................... | RCFN 6636 431,872 | /////////////////////// | 13.b.(2)
____________________________
14. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | /////////////////////// |
a. Federal funds purchased .............................................................. | RCFD 0278 2,699,716 | 14.a.
b. Securities sold under agreements to repurchase ....................................... | RCFD 0279 40,059 | 14.b.
15. a. Demand notes issued to the U.S. Treasury ............................................. | RCON 2840 304,843 | 15.a.
b. Trading liabilities (from Schedule RC-D) ............................................. | RCFD 3548 814 | 15.b.
16. Other borrowed money: | /////////////////////// |
a. With original maturity of one year or less ........................................... | RCFD 2332 1,557,198 | 16.a.
b. With original maturity of more than one year ......................................... | RCFD 2333 131,588 | 16.b.
17. Mortgage indebtedness and obligations under capitalized leases .......................... | RCFD 2910 9,173 | 17.
18. Bank's liability on acceptances executed and outstanding ................................ | RCFD 2920 7,330 | 18.
19. Subordinated notes and debentures ....................................................... | RCFD 3200 440,000 | 19.
20. Other liabilities (from Schedule RC-G) .................................................. | RCFD 2930 367,311 | 20.
21. Total liabilities (sum of items 13 through 20) .......................................... | RCFD 2948 16,787,025 | 21.
| /////////////////////// |
22. Limited-life preferred stock and related surplus ........................................ | RCFD 3282 0 | 22.
EQUITY CAPITAL | /////////////////////// |
23. Perpetual preferred stock and related surplus ........................................... | RCFD 3838 125,000 | 23.
24. Common stock ............................................................................ | RCFD 3230 19,487 | 24.
25. Surplus (exclude all surplus related to preferred stock)................................. | RCFD 3839 955,984 | 25.
26. a. Undivided profits and capital reserves ............................................... | RCFD 3632 238,795 | 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ............... | RCFD 8434 3,207 | 26.b.
27. Cumulative foreign currency translation adjustments ..................................... | RCFD 3284 0 | 27.
28. Total equity capital (sum of items 23 through 27) ....................................... | RCFD 3210 1,342,473 | 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, | /////////////////////// |
and 28) ................................................................................. | RCFD 3300 18,129,498 | 29.
___________________________
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the Number
most comprehensive level of auditing work performed for the bank by independent external __________________
auditors as of any date during 1994 .............................................................. | RCFD 6724 N/A | M.1.
__________________
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
<FN>
____________
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</FN>
</TABLE>
12
<PAGE> 34
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-3
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-A--Cash and Balances Due From Depository Institutions
Exclude assets held for trading.
__________
| C405 | (-
_________________________________ ________
| (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and | ////////////////// | ////////////////// |
coin ................................................................... | 0022 257,049 | ////////////////// | 1.
a. Cash items in process of collection and unposted debits ............. | ////////////////// | 0020 56,466 | 1.a.
b. Currency and coin ................................................... | ////////////////// | 0080 200,583 | 1.b.
2. Balances due from depository institutions in the U.S. .................. | ////////////////// | 0082 722,819 | 2.
a. U.S. branches and agencies of foreign banks (including their IBFs) .. | 0083 0 | ////////////////// | 2.a.
b. Other commercial banks in the U.S. and other depository institutions | ////////////////// | ////////////////// |
in the U.S. (including their IBFs) .................................. | 0085 722,819 | ////////////////// | 2.b.
3. Balances due from banks in foreign countries and foreign central banks . | ////////////////// | 0070 51,241 | 3.
a. Foreign branches of other U.S. banks ................................ | 0073 0 | ////////////////// | 3.a.
b. Other banks in foreign countries and foreign central banks .......... | 0074 51,241 | ////////////////// | 3.b.
4. Balances due from Federal Reserve Banks ................................ | 0090 382,091 | 0090 382,091 | 4.
5. Total (sum of items 1 through 4) (total of column A must equal | ////////////////// | ////////////////// |
Schedule RC, sum of items 1.a and 1.b) ................................. | 0010 1,413,200 | 0010 1,413,200 | 5.
___________________________________________
<CAPTION>
______________________
Memorandum Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, | ////////////////// |
column B above) ............................................................................. | 0050 722,619 | M.1.
______________________
</TABLE>
Schedule RC-B--Securities
Exclude assets held in trading accounts.
<TABLE>
_______
| C410 |
______________________________________________________________________________________
| Held-to-maturity | Available-for-sale |
___________________________________________ __________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
_____________________ _____________________ _____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________ _____________________ _____________________ _____________________ ____________________
<S> <C> <C> <C> <C> <C>
1. U.S. Treasury securities ........ | 0211 250 | 0213 250 | 1286 994,774 | 1287 987,179 | 1.
2. U.S. Government agency | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
and corporation obligations | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
(exclude mortgage-backed | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
securities): | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Issued by U.S. Govern- | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
ment agencies(2) ............. | 1289 0 | 1290 0 | 1291 0 | 1293 0 | 2.a.
b. Issued by U.S. | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
Government-sponsored | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
agencies(3) .................. | 1294 0 | 1295 0 | 1297 335,490 | 1298 335,336 | 2.b.
________________________________________________________________________________________
<FN>
_____________
(1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool Certificates," U.S. Maritime Administration obligations, and
Export-Import Bank participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the Farm Credit System, the Federal Home
Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Financing
Corporation, Resolution Funding Corporation, the Student Loan Marketing Association, and the Tennessee Valley Authority.
</FN>
</TABLE>
13
<PAGE> 35
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-5
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-B--Continued
______________________________________________________________________________________
| Held-to-maturity | Available-for-sale |
__________________________________________ __________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
_____________________ ____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________________________ _____________________ ____________________ _____________________ ____________________
<S> <C> <C> <C> <C> <C>
3. Securities issued by states | ////////////////// |/ //////////////// | ////////////////// | ///////////////// |
and political subdivisions | ////////////////// |////////////////// | ////////////////// | ///////////////// |
in the U.S.: | ////////////////// |////////////////// | ////////////////// | ////////// ////// |
a. General obligations ........ | 1676 0 |1677 0 | 1678 0 | 1679 0 | 3.a.
b. Revenue obligations ........ | 1681 47 |1686 52 | 1690 0 | 1691 0 | 3.b.
c. Industrial development ..... | ////////////////// |////////////////// | ////////////////// | ///////////////// |
and similiar obligations ...... | 1694 0 |1695 0 | 1696 0 | 1697 0 | 3.c.
4. Mortgage-backed: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Pass-through securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(1) Guaranteed by | ////////////////// |////////////////// | ////////////////// | ///////////////// |
GNMA ...................... | 1698 0 |1699 0 | 1701 917 | 1702 917 | 4.a.(1)
(2) Issued by FNMA | ////////////////// |////////////////// | ////////////////// | ///////////////// |
and FHLMC ................ | 1703 0 |1705 0 | 1706 1,459,829 | 1707 1,468,551 | 4.a.(2)
(3) Other pass-through | ////////////////// |////////////////// | /////////////////// | ///////////////// |
secruities ................ | 1709 0 |1710 0 | 1711 4,961 | 1713 5,044 | 4.a.(3)
b. Other mortgage-backed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (include CMO's, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
REMICs, and stripped | ////////////////// |////////////////// | ////////////////// | ///////////////// |
MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(1) Issued or guaranteed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
by FNMA, FHLMC, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
or GNMA ............... | 1714 0 |1715 0 | 1716 83,871 | 1717 85,311 | 4.b.(1)
(2) Collateralized | ////////////////// |////////////////// | ////////////////// | ///////////////// |
by MBS issued or | ////////////////// |////////////////// | ////////////////// | ///////////////// |
guaranteed by FNMA | ////////////////// |////////////////// | ////////////////// | ///////////////// |
FHLMC, or GNMA ........ | 1718 0 |1719 0 | 1731 0 | 1732 0 | 4.b.(2)
(3) All other mortgage- | ////////////////// |////////////////// | ////////////////// | //////////////// |
backed securities ..... | 1733 0 |1734 0 | 1735 320,670 | 1736 318,092 | 4.b.(3)
5. Other debt securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Other domestic debt | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities | 1737 0 |1738 0 | 1739 717,383 | 1741 723,027 | 5.a.
b. Foreign debt | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities ................. | 1742 2,900 |1743 2,900 | 1744 0 | 1746 0 | 5.b.
6. Equity securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Investments in mutual | ////////////////// |////////////////// | ////////////////// | ///////////////// |
funds ...................... | ////////////////// |////////////////// | 1747 8,471 | 1748 8,471 | 6.a.
b. Other equity securities | ////////////////// |////////////////// | ////////////////// | ///////////////// |
with readily determin- | ////////////////// |////////////////// | ////////////////// | ///////////////// |
able fair values ........... | ////////////////// |////////////////// | 1749 0 | 1751 0 | 6.b.
c. All other equity | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (1) ............. | ////////////////// |////////////////// | 1752 116,438 | 1753 116,438 | 6.c.
7. Total (sum of items 1 | ////////////////// |////////////////// | ////////////////// | ///////////////// |
through 6) (total of | ////////////////// |////////////////// | ////////////////// | ///////////////// |
column A must equal | ////////////////// |////////////////// | ////////////////// | ///////////////// |
Schedule RC, item 2.a) | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(total of column D must | ////////////////// |////////////////// | ////////////////// | ///////////////// |
equal Schedule RC, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
item 2.b) ..................... | 1754 3,197 | 1771 3,202 | 1772 4,042,804 | 1773 4,048,366 | 7.
____________ |_____________________________________________________________________________________|
1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D.
</TABLE>
14
<PAGE> 36
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-5
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-B--Continued
<CAPTION>
___________
Memoranda | C412 | (-
___________ _________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C>
1. Pledged securities(2) ......................................................................... | 0416 2,835,053 | M.1.
2. Maturity and repricing data for debt securities(2)(3)(4) (excluding those in nonaccrual status):| ////////////////// |
a. Fixed rate debt securities with a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................... | 0343 341,085 | M.2.a.(1)
(2) Over three months through 12 months .................................................... | 0344 145,034 | M.2.a.(2)
(3) Over one year through five years ....................................................... | 0345 2,473,872 | M.2.a.(3)
(4) Over five years ........................................................................ | 0346 785,951 | M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through 2.a.(4)) ..... | 0347 3,745,942 | M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently ........................................................... | 4544 177,962 | M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ........................ | 4545 2,750 | M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually ................. | 4551 0 | M.2.b.(3)
(4) Less frequently than every five years .................................................. | 4552 0 | M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4)) .. | 4553 180,712 | M.2.b.(5)
c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total debt | ////////////////// |
securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus nonaccrual | ////////////////// |
debt securities included in Schedule RC-N, item 9, column C) ............................... | 0393 3,926,654 | M.2.c.
3. Not applicable | ////////////////// |
4. Held-to-maturity debt securities restructured and in compliance with modified terms (included | ////////////////// |
in Schedule RC-B, items 3 through 5, column A, above) ......................................... | 5365 0 | M.4.
5. Not applicable | ////////////////// |
6. Floating rate debt securities with a remaining maturity of one year or less(2)(5) (to be | ////////////////// |
completed by all banks ........................................................................ | 5519 0 | M.6.
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or | ////////////////// |
trading securities during the calendar year-to-date (report the amortized cost at date of sale. | ////////////////// |
or transfer ................................................................................... | 1778 3,221,535 | m.7.
8. High-Risk mortgage securities (included in the held-to-maturity and available-for-sale | ////////////////// |
accounts in Schedule RC-B, item 4.b): | ////////////////// |
a. Amortized cost ............................................................................. | 8780 0 | M.8.a.
b. Fair Value ................................................................................. | 8781 0 | M.8.b.
9. Structured notes (included in the held-to-maturity and available-for-sale accounts in | ////////////////// |
Schedule RC-B, items.2, 3, and 5): | ////////////////// |
a. Amortized cost ............................................................................. | 8782 0 | M.9.a.
b. Fair Value ................................................................................. | 8783 0 | M.9.b.
----------------------
____________
<FN>
(2) Includes held-to-maturity securities at amortized cost and available-for-sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal Reserve stock, common stock, and preferred stock.
(4) Memorandum item 2 is not applicable to savings banks that must complete supplemental Schedule RC-J.
(5) For commercial banks, the debt securities included in Memorandum item 6 will also have been reported in Memorandum item
2.b. above. For savings bank, the debt securities included in Memorandum item 6 will also have been reported in supplemental
Schedule. RC-J, part I, item 4. Savings banks should note that available-for-sale cash debt securities are reported at fair
value in Memorandum item 6 and at amortized cost in Schedule RC-J.
</FN>
</TABLE>
15
<PAGE> 37
City, State Zip: HARTFORD, CT 06115
<TABLE>
<CAPTION>
Schedule RC-C--Loans and Lease Financing Receivables
Part I. Loans and Leases
Do not deduct the allowance for loan and lease losses from amounts ___________
reported in this schedule. Report total loans and leases, net of unearned __________________________________| C415 | (-
income. Exclude assets held for trading. | (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
_____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ _____________________ ____________________
<S> <C> <C>
1. Loans secured by real estate .......................................... | 1410 4,366,800 | ////////////////// | 1.
a. Construction and land development .................................. | ////////////////// | 1415 57,923 | 1.a.
b. Secured by farmland (including farm residential and other | ////////////////// | ////////////////// |
improvements) ...................................................... | ////////////////// | 1420 584 | 1.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit .................. | ////////////////// | 1797 380,335 | 1.c.(1)
(2) All other loans secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(a) Secured by first liens ..................................... | ////////////////// | 5367 2,632,460 | 1.c.(2)(a)
(b) Secured by junior liens .................................... | ////////////////// | 5368 212,499 | 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties .......... | ////////////////// | 1460 63,227 | 1.d.
e. Secured by nonfarm nonresidential properties ....................... | ////////////////// | 1480 1,019,772 | 1.e.
2. Loans to depository institutions: | ////////////////// | ////////////////// |
a. To commercial banks in the U.S. .................................... | ////////////////// | 1505 8,656 | 2.a.
(1) To U.S. branches and agencies of foreign banks ................. | 1506 0 | ////////////////// | 2.a.(1)
(2) To other commercial banks in the U.S. .......................... | 1507 8,656 | ////////////////// | 2.a.(2)
b. To other depository institutions in the U.S. ....................... | 1517 0 | 1517 0 | 2.b.
c. To banks in foreign countries ...................................... | ////////////////// | 1510 0 | 2.c.
(1) To foreign branches of other U.S. banks ........................ | 1513 0 | ////////////////// | 2.c.(1)
(2) To other banks in foreign countries ............................ | 1516 0 | ////////////////// | 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers ... | 1590 962 | 1590 962 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ...................................... | 1763 5,421,227 | 1763 5,421,227 | 4.a.
b. To non-U.S. addressees (domicile) .................................. | 1764 0 | 1764 0 | 4.b.
5. Acceptances of other banks: | ////////////////// | ////////////////// |
a. Of U.S. banks ...................................................... | 1756 1,096 | 1756 1,096 | 5.a.
b. Of foreign banks ................................................... | 1757 0 | 1757 0 | 5.b.
6. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures (i.e., consumer loans) (includes purchased paper) ........ | ////////////////// | 1975 572,541 | 6.
a. Credit cards and related plans (includes check credit and other | ////////////////// | ////////////////// |
revolving credit plans) ............................................ | 2008 31,493 | ////////////////// | 6.a.
b. Other (includes single payment, installment, and all student loans). | 2011 541,048 | ////////////////// | 6.b.
7. Loans to foreign governments and official institutions (including | ////////////////// | ////////////////// |
foreign central banks) ................................................ | 2081 0 | 2081 0 | 7.
8. Obligations (other than securities and leases) of states and political | ////////////////// | ////////////////// |
subdivisions in the U.S. (includes nonrated industrial development | ////////////////// | ////////////////// |
obligations) .......................................................... | 2107 34,682 | 2107 34,682 | 8.
9. Other loans ........................................................... | 1563 1,134,145 | ////////////////// | 9.
a. Loans for purchasing or carrying securities (secured and unsecured). | ////////////////// | 1545 43,527 | 9.a.
b. All other loans (exclude consumer loans) ........................... | ////////////////// | 1564 1,090,618 | 9.b.
10. Lease financing receivables (net of unearned income) .................. | ////////////////// | 2165 7,046 |10.
a. Of U.S. addressees (domicile) ...................................... | 2182 7,046 | ////////////////// |10.a.
b. Of non-U.S. addressees (domicile) .................................. | 2183 0 | ////////////////// |10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above ....... | 2123 18,697 | 2123 18,697 |11.
12. Total loans and leases, net of unearned income (sum of items 1 through | ////////////////// | ////////////////// |
10 minus item 11) (total of column A must equal Schedule RC, item 4.a). | 2122 11,528,458 | 2122 11,528,458 |12.
____________________________________________
</TABLE>
16
<PAGE> 38
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590
Address: 777 MAIN STREET
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-C--Continued
Part I. Continued
____________________________________________
| (Column A) | (Column B) |
| Consolidated | Domestic |
Memoranda | Bank | Offices |
_____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
________________________________________________________________________________ _____________________ ____________________
<S> <C> <C> <C>
1. Commercial paper included in Schedule RC-C, part I, above ................ | 1496 0 | 1496 0 | M.1.
2. Loans and leases restructured and in compliance with modified terms | ////////////////// | ////////////////// |
(included in Schedule RC-C, part I, above and not reported as past due | ////////////////// | ////////////////// |
or nonaccrual in Schedule RC-N, Memorandum item 1): | ////////////////// | ////////////////// |
a. Loans secured by real estate: | ////////////////// | ////////////////// |
(1) To U.S. addressees (domicile) ..................................... | 1687 34,952 | M.2.a.(1)
(2) To non-U.S. addressees (domicile) ................................. | 1689 0 | M.2.a.(2)
b. All other loans and all lease financing receivables (exclude loans | ////////////////// |
to individuals for household, family, and other personal expenditures). | 8691 0 | M.2.b.
c. Commercial and industrial loans to and lease financing receivables | ////////////////// |
of non-U.S. addressees (domicile) included in Memorandum item 2.b | ////////////////// |
above ................................................................. | 8692 0 | M.2.c.
3. Maturity and repricing data for loans and leases(1) (excluding those | ////////////////// |
in nonaccrual status): | ////////////////// |
a. Fixed rate loans and leases with a remaining maturity of: | ////////////////// |
(1) Three months or less .............................................. | 0348 627,991 | M.3.a.(1)
(2) Over three months through 12 months ............................... | 0349 91,775 | M.3.a.(2)
(3) Over one year through five years .................................. | 0356 883,482 | M.3.a.(3)
(4) Over five years ................................................... | 0357 1,974,606 | M.3.a.(4)
(5) Total fixed rate loans and leases (sum of | ////////////////// |
Memorandum items 3.a.(1) through 3.a.(4)) ......................... | 0358 3,577,854 | M.3.a.(5)
b. Floating rate loans with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently ...................................... | 4554 3,811,759 | M.3.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ... | 4555 809,284 | M.3.b.(2)
(3) Every five years or more frequently, but less frequently than | ////////////////// |
annually .......................................................... | 4561 3,175,427 | M.3.b.(3)
(4) Less frequently than every five years ............................. | 4564 107,097 | M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1) | ////////////////// |
through 3.b.(4)) .................................................. | 4567 7,903,567 | M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and 3.b.(5)) | ////////////////// |
(must equal the sum of total loans and leases, net, from | ////////////////// |
Schedule RC-C, part I, item 12, plus unearned income from | ////////////////// |
Schedule RC-C, part I, item 11, minus total nonaccrual loans and | ////////////////// |
leases from Schedule RC-N, sum of items 1 through 8, column C) ........ | 1479 11,481,421 | M.3.c.
4. Loans to finance commercial real estate, construction, and land | ////////////////// |
development activities (not secured by real estate) included in | ////////////////// |
Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2) ............. | 2746 54,772 | M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I, | ////////////////// |
above .................................................................... | 5369 0 | M.5.
6. Adjustable rate closed-end loans secured by first liens on 1-4 family | ////////////////// |_____________________
residential properties (included in Schedule RC-C, part I, item | ////////////////// | RCON Bil Mil Thou |
| ////////////////// |____________________
1.c.(2)(a), column B, page RC-6) ......................................... | ////////////////// | 5370 918,495 | M.6.
____________________________________________
<FN>
_____________________________
(1) Memorandum item 3 is not applicable to savings banks that must complete supplememtal Schedule RC-J.
(2) Exclude loans secured by real estate that are included in Schedule RC-C, part I, item 1, column A.
</FN>
</TABLE>
17
<PAGE> 39
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-7
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
_________
| C420 |
__________________________________________________________________________________________________ ________________|________|
<S> <C> <C>
ASSETS | /////////////////////// |
1. U.S. Treasury securities in domestic offices ............................................... | RCON 3531 0 | 1.
2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage- | /////////////////////// |
backed securities) ......................................................................... | RCON 3532 0 | 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic offices ..... | RCON 3533 0 | 3.
4. Mortgage-backed securities (MBS) in domestic offices ....................................... | /////////////////////// |
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA .................... | RCON 3534 0 | 4.a.
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA | /////////////////////// |
(include CMOs, REMICs, and stripped MBS) ................................................ | RCON 3535 0 | 4.b.
c. All other mortgage-backed securities .................................................... | RCON 3536 0 | 4.c.
5. Other debt securities in domestic offices .................................................. | RCON 3537 0 | 5.
6. Certificates of deposit in domestic offices ................................................ | RCON 3538 0 | 6.
7. Commercial paper in domestic offices ....................................................... | RCON 3539 0 | 7.
8. Bankers acceptances in domestic offices .................................................... | RCON 3540 0 | 8.
9. Other trading assets in domestic offices ................................................... | RCON 3541 0 | 9.
10. Trading assets in foreign offices .......................................................... | RCFN 3542 0 | 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts: | /////////////////////// |
a. In domestic offices ..................................................................... | RCON 3543 840 | 11.a.
b. In foreign offices ...................................................................... | RCFN 3544 0 | 11.b.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) .......... | RCFD 3545 840 | 12.
</TABLE>
<TABLE>
<CAPTION>
___________________________
___________________________
| ///////// Bil Mil Thou |
LIABILITIES _________________________
<S> <C> <C>
13. Liability for short positions .............................................................. | RCFD 3546 0 | 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts .................................................................................. | RCFD 3547 814 | 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) ..... | RCFD 3548 814 | 15.
___________________________
</TABLE>
18
<PAGE> 40
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-9
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Deposit Liabilities
Part I. Deposits in Domestic Offices
__________
| C425 | (-
______________________________________________________ ________
| | Nontransaction |
| Transaction Accounts | Accounts |
___________________________________________ ____________________
| (Column A) | (Column B) | (Column C) |
| Total transaction | Memo: Total | Total |
| accounts (including | demand deposits | nontransaction |
| total demand | (included in | accounts |
| deposits) | column A) | (including MMDAs) |
_____________________ _____________________ ____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou |
__________________________________________________________ _____________________ _____________________ ____________________
<S> <C> <C> <C> <C>
Deposits of: | ////////////////// | ////////////////// | ////////////////// |
1. Individuals, partnerships, and corporations ......... | 2201 2,628,372 | 2240 2,505,998 | 2346 7,107,737 | 1.
2. U.S. Government ..................................... | 2202 53,678 | 2280 53,432 | 2520 120 | 2.
3. States and political subdivisions in the U.S. ....... | 2203 163,019 | 2290 132,660 | 2530 133,788 | 3.
4. Commercial banks in the U.S. ........................ | 2206 554,474 | 2310 554,474 | ////////////////// | 4.
a. U.S. branches and agencies of foreign banks ...... | ////////////////// | ////////////////// | 2347 0 | 4.a.
b. Other commercial banks in the U.S. ............... | ////////////////// | ////////////////// | 2348 500 | 4.b.
5. Other depository institutions in the U.S. ........... | 2207 101,483 | 2312 101,483 | 2349 0 | 5.
6. Banks in foreign countries .......................... | 2213 1,730 | 2320 1,730 | ////////////////// | 6.
a. Foreign branches of other U.S. banks ............. | ////////////////// | ////////////////// | 2367 0 | 6.a.
b. Other banks in foreign countries ................. | ////////////////// | ////////////////// | 2373 0 | 6.b.
7. Foreign governments and official institutions | ////////////////// | ////////////////// | ////////////////// |
(including foreign central banks) ................... | 2216 1,023 | 2300 1,023 | 2377 0 | 7.
8. Certified and official checks ....................... | 2330 51,197 | 2330 51,197 | ////////////////// | 8.
9. Total (sum of items 1 through 8) (sum of | ////////////////// | ////////////////// | ////////////////// |
columns A and C must equal Schedule RC, | ////////////////// | ////////////////// | ////////////////// |
item 13.a) .......................................... | 2215 3,554,976 | 2210 3,401,997 | 2385 7,242,145 | 9.
_________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
______________________
Memoranda Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): | ////////////////// |
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts ....................... | 6835 888,500 | M.1.a.
b. Total brokered deposits ................................................................... | 2365 1,195,257 | M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above): | ////////////////// |
(1) Issued in denominations of less than $100,000 ......................................... | 2343 0 | M.1.c.(1)
(2) Issued either in denominations of $100,000 or in denominations greater than $100,000 | ////////////////// |
and participated out by the broker in shares of $100,000 or less ...................... | 2344 1,195,257 | M.1.c.(2)
d. Total deposits denominated in foreign currencies .......................................... | 3776 0 | M.1.d.
e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. | ////////////////// |
reported in item 3 above which are secured or collateralized as required under state law) . | 5590 226,852 | M.1.e.
2. Components of total nontransaction accounts (sum of Memoranda items 2.a through 2.d must | ////////////////// |
equal item 9, column C above): | ////////////////// |
a. Savings deposits: | ////////////////// |
(1) Money market deposit accounts (MMDAs) ................................................. | 6810 1,491,520 | M.2.a.(1)
(2) Other savings deposits (excludes MMDAs) ............................................... | 0352 1,862,085 | M.2.a.(2)
b. Total time deposits of less than $100,000 ................................................. | 6648 2,386,133 | M.2.b.
c. Time certificates of deposit of $100,000 or more .......................................... | 6645 1,502,407 | M.2.c.
d. Open-account time deposits of $100,000 or more ............................................ | 6646 0 | M.2.d.
3. All NOW accounts (included in column A above) ................................................ | 2398 152,979 | M.3.
______________________
</TABLE>
19
<PAGE> 41
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-10
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Continued
Part I. Continued
Memoranda (continued)
__________________________________________________________________________________________________________________________________
| Deposit Totals for FDIC Insurance Assessments ______________________ |
| Dollar Amounts in Thousands | RCON Bil Mil Thou | |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
| 4. Total deposits in domestic offices (sum of item 9, column A and item 9, column C) |/////////////////// | |
| (must equal Schedule RC, item 13.a) ........................................................ | 2200 10,797,121 | M.4. |
| | ////////////////// | |
| a. Total demand deposits (must equal item 9, column B) ..................................... | 2210 3,401,997 | M.4.a.|
| b. Total time and savings deposits(1) (must equal item 9, column A plus item 9, column C | ////////////////// | |
| minus item 9, column B) ................................................................. | 2350 7,395,124 | M.4.b.|
______________________
<FN>
| ____________ |
| (1) For FDIC insurance assessment purposes, "total time and savings deposits" consists of nontransaction accounts and all |
| transaction accounts other than demand deposits. |
</FN>
__________________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
5. Time deposits of less than $100,000 and open-account time deposits of $100,000 or more | ////////////////// |
(included in Memorandum items 2.b and 2.d above) with a remaining maturity or repricing | ////////////////// |
frequency of:(1) | ////////////////// |
a. Three months or less ..................................................................... | 0359 326,126 | M.5.a.
b. Over three months through 12 months (but not over 12 months) ............................. | 3644 1,116,701 | M.5.b.
6. Maturity and repricing data for time certificates of deposit of $100,000 or more:(1) | ////////////////// |
a. Fixed rate time certificates of deposit of $100,000 or more with a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................. | 2761 377,758 | M.6.a.(1)
(2) Over three months through 12 months .................................................. | 2762 268,933 | M.6.a.(2)
(3) Over one year through five years ..................................................... | 2763 852,593 | M.6.a.(3)
(4) Over five years ...................................................................... | 2765 3,123 | M.6.a.(4)
(5) Total fixed rate time certificates of deposit of $100,000 or more (sum of | ////////////////// |
Memorandum items 6.a.(1) through 6.a.(4)) ............................................ | 2767 1,502,407 | M.6.a.(5)
b. Floating rate time certificates of deposit of $100,000 or more with a repricing frequency | |
of: .................................................................................. | ////////////////// |
(1) Quarterly or more frequently ......................................................... | 4568 0 | M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ...................... | 4569 0 | M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually ............... | 4571 0 | M.6.b.(3)
(4) Less frequently than every five years ................................................ | 4572 0 | M.6.b.(4)
(5) Total floating rate time certificates of deposit of $100,000 or more (sum of | ////////////////// |
Memorandum items 6.b.(1) through 6.b.(4)) ............................................ | 4573 0 | M.6.b.(5)
c. Total time certificates of deposit of $100,000 or more (sum of Memorandum items 6.a.(5) | ////////////////// |
and 6.b.(5)) (must equal Memorandum item 2.c. above) ..................................... | 6645 1,502,407 | M.6.c.
______________________
<FN>
_____________
(1) Memorandum items 5 and 6 are not applicable to savings banks that must complete supplemental Schedule RC-J.
</FN>
</TABLE>
20
<PAGE> 42
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-11
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Continued
Part II. Deposits in Foreign Offices (including Edge and
Agreement subsidiaries and IBFs)
______________________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
Deposits of: | ////////////////// |
1. Individuals, partnerships, and corporations ................................................... | 2621 401,872 | 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks) ................................ | 2623 30,000 | 2.
3. Foreign banks (including U.S. branches and | ////////////////// |
agencies of foreign banks, including their IBFs) .............................................. | 2625 0 | 3.
4. Foreign governments and official institutions (including foreign central banks) ............... | 2650 0 | 4.
5. Certified and official checks ................................................................. | 2330 0 | 5.
6. All other deposits ............................................................................ | 2668 0 | 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b) .......................... | 2200 431,872 | 7.
______________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-F--Other Assets
__________
| C430 | (-
_________________ ________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. Income earned, not collected on loans ....................................................... | RCFD 2164 56,906 | 1.
2. Net deferred tax assets(1) .................................................................. | RCFD 2148 158,056 | 2.
3. Excess residential mortgage servicing fees receivable ....................................... | RCFD 5371 18,275 | 3.
4. Other (itemize amounts that exceed 25% of this item) ........................................ | RCFD 2168 481,338 | 4.
_____________ _________________________
a. | TEXT 3549 |____________________________________________________| RCFD 3549 | | /////////////////////// | 4.a.
___________
b. | TEXT 3550 |____________________________________________________| RCFD 3550 | | /////////////////////// | 4.b.
___________
c. | TEXT 3551 |____________________________________________________| RCFD 3551 | | /////////////////////// | 4.c.
_____________
_________________________
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) .......................... | RCFD 2160 714,575 | 5.
___________________________
</TABLE>
<TABLE>
<CAPTION>
Memorandum ___________________________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. Deferred tax assets disallowed for regulatory capital purposes ............................... | RCFD 5610 0 | M.1.
___________________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-G--Other Liabilities
__________
| C435 | (-
_________________ ________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. a. Interest accrued and unpaid on deposits in domestic offices(2) ........................... | RCON 3645 44,239 | 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable) ................ | RCFD 3646 300,519 | 1.b.
2. Net deferred tax liabilities(1) ............................................................. | RCFD 3049 0 | 2.
3. Minority interest in consolidated subsidiaries .............................................. | RCFD 3000 0 | 3.
4. Other (itemize amounts that exceed 25% of this item) ........................................ | RCFD 2938 22,553 | 4.
_____________ _________________________
a. | TEXT 3552 |____________________________________________________| RCFD 3552 | | /////////////////////// | 4.a.
___________
b. | TEXT 3553 |____________________________________________________| RCFD 3553 | | /////////////////////// | 4.b.
___________
c. | TEXT 3554 |____________________________________________________| RCFD 3554 | | /////////////////////// | 4.c.
_____________
_________________________
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) .......................... | RCFD 2930 367,311 | 5.
___________________________
<FN>
____________
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, include "dividends" accrued and unpaid on deposits.
</FN>
</TABLE>
21
<PAGE> 43
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-12
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-H--Selected Balance Sheet Items for Domestic Offices
__________
| C440 | (-
____________________
| Domestic Offices |
____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_______________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Customers' liability to this bank on acceptances outstanding .................................... | 2155 7,330 | 1.
2. Bank's liability on acceptances executed and outstanding ........................................ | 2920 7,330 | 2.
3. Federal funds sold and securities purchased under agreements to resell .......................... | 1350 205,800 | 3.
4. Federal funds purchased and securities sold under agreements to repurchase ...................... | 2800 2,739,775 | 4.
5. Other borrowed money ............................................................................ | 3190 1,688,786 | 5.
EITHER | ////////////////// |
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 2163 N/A | 6.
OR | ////////////////// |
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs ....................... | 2941 381,872 | 7.
8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and IBFs) . | 2192 18,079,498 | 8.
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and IBFs) | 3129 16,355,152 | 9.
______________________
</TABLE>
<TABLE>
<CAPTION>
Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices. ______________________
| RCON Bil Mil Thou |
____________________
<S> <C> <C>
10. U.S. Treasury securities .................................................................... | 1779 987,429 | 10.
11. U.S. Government agency and corporation obligations (exclude mortgage-backed | ////////////////// |
securities) ................................................................................. | 1785 335,336 | 11.
12. Securities issued by states and political subdivisions in the U.S. .......................... | 1786 47 | 12.
13. Mortgage-backed securities (MBS): | ////////////////// |
a. Pass-through securities: | ////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA ......................................... | 1787 1,469,468 | 13.a.(1)
(2) Other pass-through securities ........................................................ | 1869 5,044 | 13.a.(2)
b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS): | ////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA ......................................... | 1877 85,311 | 13.b.(1)
(2) Other pass-through securities ........................................................ | 2253 318,092 | 13.b.(2)
14. Other domestic debt securities .............................................................. | 3159 723,027 | 14.
15. Foreign debt securities ..................................................................... | 3160 2,900 | 15.
16. Equity securities: | ////////////////// |
a. Investments in mutual funds .............................................................. | 3161 8,471 | 16.a.
b. Other equity securities with readily determinable fair values ............................ | 3162 0 | 16.b.
c. All other equity securities .............................................................. | 3169 116,438 | 16.c.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) ....... | 3170 4,051,563 | 17.
______________________
</TABLE>
<TABLE>
<CAPTION>
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
EITHER | ////////////////// |
1. Net due from the IBF of the domestic offices of the reporting bank .............................. | 3051 N/A | M.1.
OR | ////////////////// |
2. Net due to the IBF of the domestic offices of the reporting bank ................................ | 3059 N/A | M.2.
______________________
</TABLE>
22
<PAGE> 44
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-13
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-I--Selected Assets and Liabilities of IBFs
To be completed only by banks with IBFs and other "foreign" offices. __________
| C445 | (-
_____________________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) .................. | 2133 N/A | 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, item 12, | ////////////////// |
column A) ...................................................................................... | 2076 N/A | 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, column A) ..... | 2077 N/A | 3.
4. Total IBF liabilities (component of Schedule RC, item 21) ...................................... | 2898 N/A | 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, | ////////////////// |
part II, items 2 and 3) ........................................................................ | 2379 N/A | 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6) ...... | 2381 N/A | 6.
______________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-K--Quarterly Averages (1)
__________
| C455 | (-
_________________ ________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
<S> <C> <C>
ASSETS | /////////////////////// |
1. Interest-bearing balances due from depository institutions .............................. | RCFD 3381 16,087 | 1.
2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2) ...... | RCFD 3382 2,872,045 | 2.
3. Securities issued by states and political subdivisions in the U.S.(2) ................... | RCFD 3383 49 | 3.
4. a. Other debt securities(2) ............................................................. | RCFD 3647 1,101,314 | 4.a.
b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock). | RCFD 3648 117,774 | 4.b.
5. Federal funds sold and securities purchased under agreements to resell in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs ............. | RCFD 3365 160,423 | 5.
6. Loans: | /////////////////////// |
a. Loans in domestic offices: | /////////////////////// |
(1) Total loans ...................................................................... | RCON 3360 11,541,536 | 6.a.(1)
(2) Loans secured by real estate ..................................................... | RCON 3385 4,433,576 | 6.a.(2)
(3) Loans to finance agricultural production and other loans to farmers .............. | RCON 3386 2,734 | 6.a.(3)
(4) Commercial and industrial loans .................................................. | RCON 3387 5,556,473 | 6.a.(4)
(5) Loans to individuals for household, family, and other personal expenditures ...... | RCON 3388 600,686 | 6.a.(5)
| /////////////////////// |
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs ............ | RCFN 3360 0 | 6.b.
7. Trading assets .......................................................................... | RCFD 3401 5,753 | 7.
8. Lease financing receivables (net of unearned income) .................................... | RCFD 3484 8,921 | 8.
9. Total assets (4) ........................................................................ | RCFD 3368 17,423,900 | 9.
LIABILITIES | /////////////////////// |
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, | /////////////////////// |
and telephone and preauthorized transfer accounts) (exclude demand deposits) ............ | RCON 3485 167,144 | 10.
11. Nontransaction accounts in domestic offices: | /////////////////////// |
a. Money market deposit accounts (MMDAs) ................................................ | RCON 3486 1,426,084 | 11.a.
b. Other savings deposits ............................................................... | RCON 3487 1,882,740 | 11.b.
c. Time certificates of deposit of $100,000 or more ..................................... | RCON 3345 1,601,542 | 11.c.
d. All other time deposits .............................................................. | RCON 3469 2,363,615 | 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs . | RCFN 3404 451,941 | 12.
13. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs ............. | RCFD 3353 3,225,979 | 13.
14. Other borrowed money .................................................................... | RCFD 3355 1,839,039 | 14.
___________________________
<FN>
_____________
(1) For all items, banks have the option of reporting either (1) an average of daily figures for the quarter, or
(2) an average of weekly figures (i.e., the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized cost.
(3) Quarterly averages for all equity securities should be based on historical cost.
(4) The quarterly average for total assets should reflect all debt securities (not held for trading) at amortized
cost, equity securities with readily determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
</FN>
</TABLE>
23
<PAGE> 45
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-4
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-L--Off-Balance Sheet Items
Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts
reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk. __________
| C460 | (-
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Unused commitments: | ////////////////// |
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home | ////////////////// |
equity lines .............................................................................. | 3814 454,277| 1.a.
b. Credit card lines ......................................................................... | 3815 0 | 1.b.
c. Commercial real estate, construction, and land development: | ////////////////// |
(1) Commitments to fund loans secured by real estate ...................................... | 3816 55,329 | 1.c.(1)
(2) Commitments to fund loans not secured by real estate .................................. | 6550 17,337 | 1.c.(2)
d. Securities underwriting ................................................................... | 3817 0 | 1.d.
e. Other unused commitments .................................................................. | 3818 6,446,592 | 1.e.
2. Financial standby letters of credit and foreign office guarantees ............................ | 3819 1,024,104 | 2.
_________________________
a. Amount of financial standby letters of credit conveyed to others | RCFD 3820 | 1,074 | ////////////////// | 2.a.
_________________________
3. Performance standby letters of credit and foreign office guarantees .......................... | 3821 121,267 | 3.
a. Amount of performance standby letters of credit conveyed to | ////////////////// |
_________________________
others .......................................................... | RCFD 3822 | 0 | ////////////////// | 3.a.
_________________________
4. Commercial and similar letters of credit ..................................................... | 3411 38,963 | 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by | ////////////////// |
the reporting bank ........................................................................... | 3428 0 | 5.
6. Participations in acceptances (as described in the instructions) acquired by the reporting | ////////////////// |
(nonaccepting) bank .......................................................................... | 3429 0 | 6.
7. Securities borrowed .......................................................................... | 3432 0 | 7.
8. Securities lent (including customers' securities lent where the customer is indemnified | ////////////////// |
against loss by the reporting bank) .......................................................... | 3433 0 | 8.
9. Mortgages transferred (i.e., sold or swapped) with recourse that have been treated as sold | ////////////////// |
for Call Report purposes: | ////////////////// |
a. FNMA and FHLMC residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date .......... | 3650 62,825 | 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report date .................. | 3651 56,528 | 9.a.(2)
b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date .......... | 3652 0 | 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report date .................. | 3653 0 | 9.b.(2)
c. Farmer Mac agricultural mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date .......... | 3654 0 | 9.c.(1)
(2) Amount of recourse exposure on these mortgages as of the report date .................. | 3655 0 | 9.c.(2)
10. When-issued securities: | ////////////////// |
a. Gross commitments to purchase ............................................................. | 3434 0 | 10.a.
b. Gross commitments to sell ................................................................. | 3435 0 | 10.b.
11. Spot foreign exchange contracts .............................................................. | 8765 0 | 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives ) (itemize and | ////////////////// |
describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") | 3430 0 | 12.
a. | TEXT 3555 |______________________________________________________| RCFD 3555 | | ////////////////// | 12.a.
b. | TEXT 3556 |______________________________________________________| RCFD 3556 | | ////////////////// | 12.b.
___________
c. | TEXT 3557 |______________________________________________________| RCFD 3557 | | ////////////////// | 12.c.
_____________
d. | TEXT 3558 |______________________________________________________| RCFD 3558 | | ////////////////// | 12.d.
_____________
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and | ////////////////// |
describe each component of this item over 25% of Schedule RC,item 28,"Total equity capital" | 5591 0 | 13.
_____________ __________________________
a. | TEXT 5592 |______________________________________________________| RCFD 5592 | | ////////////////// | 13.a.
___________
b. | TEXT 5593 |______________________________________________________| RCFD 5593 | | ////////////////// | 13.b.
___________
c. | TEXT 5594 |______________________________________________________| RCFD 5594 | | ////////////////// | 13.c.
_____________
d. | TEXT 5595 |______________________________________________________| RCFD 5595 | | ////////////////// | 13.d.
_____________
________________________________________________
</TABLE>
24
<PAGE> 46
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-15
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-L -- Continued
_____________
| C461 | (-
_______________________________________ ____________________________|___________|
| (Column A) | (Column B) | (Column C) | (Column D) |
| Interest Rate | Foreign Exchange | Equity Derivative | Commodity and other|
| Contracts | Contracts | Contracts | Contracts |
|___________________|___________________|___________________|____________________|
Dollar Amounts in Thousands |Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou |
______________________________________________________________________________________________________________________|
<S> <C> <C> <C> <C> <C>
| Off-balance Sheet Derivatives | //////////////// | //////////////// | //////////////// | ////////////////// |
| Position Indicators | //////////////// | //////////////// | //////////////// | ////////////////// |
___________________________________ | //////////////// | //////////////// | //////////////// | ////////////////// |
14. Gross amounts (e.g., notional | //////////////// | //////////////// | //////////////// | ////////////////// |
amounts) (for each column, sum of | //////////////// | //////////////// | //////////////// | ////////////////// |
items 14.a through 14.e must equal | //////////////// | //////////////// | //////////////// | ////////////////// |
sum of items 15, 16.a, and 16.b): |___________________|___________________|__________________ |____________________|
a. Future contracts .............. | 0 | 0 | 0 | 0 | 14.a.
| RCFD 8693 | RCFD 8694 | RCFD 8695 | RCFD 8696 |
b. Forward contracts ............. | 60,000 | 0 | 0 | 0 | 14.b.
| RCFD 8697 | RCFD 8698 | RCFD 8699 | RCFD 8700 |
c. Exchange-traded option contracts | //////////////// | //////////////// | //////////////// | ////////////////// |
(1) Written options .......... | 0 | 0 | 0 | 0 | 14.c.(1)
| RCFD 8701 | RCFD 8702 0 | RCFD 8703 | RCFD 8704 |
(2) Purchased options ........ | 0 | 0 | 0 | 0 | 14.c.(2)
| RCFD 8705 | RCFD 8706 | RCFD 8707 | RCFD 8708 |
d. Over-the-counter option contracts: | //////////////// | //////////////// | /////////////// | //////////////// |
(1) Written options .......... | 70,250 | 0 | 0 | 0 | 14.d.(1)
| RCFD 8709 | RCFD 8710 | RCFD 8711 | RCFD 8712 |
(2) Purchased options ........ | 370,250 | 0 | 0 | 0 | 14.d.(2)
| RCFD 8713 | RCFD 8714 | RCFD 8715 | RCFD 8716 |
e. Swaps ............................ | 3,537,871 | 0 | 0 | 0 | 14.e.
| RCFD 3450 | RCFD 3826 | RCFD 8719 | RCFD 8720 |
15. Total gross notional amount of | //////////////// | //////////////// | //////////////// | ////////////////// |
derivative contracts held for | //////////////// | //////////////// | //////////////// | ////////////////// |
trading ......................... | 191,500 | 0 | 0 | 0 | 15.
| RCFD A126 | RFD A127 | RCFD 8723 | RCFD 8724 |
16. Total gross notional amount of | //////////////// | ////////////// | //////////////// | ////////////////// |
derivative contracts held for | //////////////// | /////////////// | //////////////// | ////////////////// |
purposes other than trading: | //////////////// | /////////////// | //////////////// | ////////////////// |
a. Contracts marked to market ... | 0 | 0 | 0 | 0 | 16.a.
| RCFD 8725 | RCFD 8726 | RCF 8727 | RCFD 8728 |
b. Contracts not marked to market | 3,846,871 | 0 | 0 | 0 | 16.b.
| RCF 8729 | RCFD 8730 | RFD 8731 | RCFD 8732 |
__________________________________________________________________________________|
</TABLE>
25
<PAGE> 47
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-15
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-L -- Continued
<CAPTION>
___________________________________________________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Interest Rate | Foreign Exchange | Equity Derivative |Commodity and other|
| Contracts | Contracts | Contracts | Contracts |
|____________________|____________________|____________________|___________________|
Dollar Amounts in thousands |RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________________________________________________|
<S> <C> <C> <C> <C> <C>
| Off-balance Sheet Derivatives | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
| Position Indicators | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
_________________________________ | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
| ///////////////// | ///////////////// | ///////////////// | ///////////////// |
17. Gross fair values of | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
derivative contracts: | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
a. Contracts held for | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
trading: | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
(1) Gross positive | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
fair value .................. | 8733 840 | 8734 0 | 8735 0 | 8736 0 | 17.a.(1)
(2) Gross negative | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
fair value .................. | 8737 814 | 8738 0 | 8739 0 | 8740 0 | 17.a.(2)
b. Contracts held for | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
purposes other than | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
trading that are marked | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
to market: | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
(1) Gross positive | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
fair value .................. | 8741 0 | 8742 0 | 8743 0 | 8744 0 | 17.b.(1)
(2) Gross negative | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
fair value .................. | 8745 0 | 8746 0 | 8747 0 | 8748 0 | 17.b.(2)
c. Contracts held for | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
purposes other than | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
trading that are not | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
marked to market: | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
(1) Gross positive | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
fair value ................. | 8749 4,117 | 8750 0 | 8751 0 | 8752 0 | 17.c.(1)
(2) Gross negative | ///////////////// | ///////////////// | ///////////////// | ///////////////// |
fair value .................. | 8753 51,811 | 8754 0 | 8755 0 | 8756 0 | 17.c.(2)
|__________________________________________________________________________________|
</TABLE>
<TABLE>
<CAPTION>
______________________
Memoranda Dollar Amounts in Thousands | RCFD Bil Mil Thou |
_________________________________________________________________________________________________________________________
<S> <C> <C>
1. -2. Not applicable | ////////////////// |
3. Unused commitments with an original maturity exceeding one year that are reported in | ////////////////// |
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments | ////////////////// |
that are fee paid or otherwise legally binding) ............................................... | 3833 4,666,515 | M.3.
a. Participations in commitments with an original maturity | ////////////////// |
exceeding one year conveyed to others ................................|RCFD 3834 | 77,235 | ////////////////// | M.3.a.
______________________
4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Standby letters of credit and foreign office guarantees (both financial and performance) issued | ////////////////// |
to non-U.S. addresses (domicile) included in Schedule RC-L, items 2 and 3, above .............. | 3377 419,235 | M.4.
5. To be completed for the September report only: | ////////////////// |
Installment loans to individuals for household, family, and other personal expenditures that | ////////////////// |
have been securitized and sold without recourse (with servicing retained), amounts outstanding | ////////////////// |
by type of loan: | ////////////////// |
a. Loans to purchase private passenger automobiles ............................................ | 2741 N/A | M.5.a.
b. Credit cards and related plans ............................................................. | 2742 N/A | M.5.b.
c. All other consumer installment credit (Including mobile home loans) ........................ | 2743 N/A | M.5.c.
</TABLE>
26
<PAGE> 48
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-17
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9| ____________
| C465 |
________|__________|
Schedule RC-M--Memoranda | |
Dollar Amounts in Thousands | RCFD Bil Mil Thou|
______________________________________________________________________________________________________|__________________|
<S> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal | ///////////////// |
shareholders, and their related interests as of the report date: | ///////////////// |
a. Aggregate amount of all extensions of credit to all executive officers, directors, principal |
shareholders and their related interests .................................................... | 6164 6,676 | 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount of all | ///////////////// |
extensions of credit by the reporting bank (Including extensions of credit to | ///////////////// |
related interests) equals or exceeds the lesser of $500,000 or 5 percent Number | ///////////////// |
_________________________ | ///////////////// |
of total capital as defined for this purpose in agency regulations. | RCFD 6165 | 4 | ///////////////// |
_________________________ | ///////////////// | 1.b.
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches | ///////////////// |
and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b) ................... | 3405 0 | 2.
3. Not applicable. | ///////////////// |
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others | ///////////////// |
(include both retained servicing and purchased servicing): | ///////////////// |
a. Mortgages serviced under a GNMA contract ..................................................... | 5500 21,759 | 4.a.
b. Mortgages serviced under a FHLMC contract: | ///////////////// |
(1) Serviced with recourse to servicer ....................................................... | 5501 12,023 | 4.b.(1)
(2) Serviced without recourse to servicer .................................................... | 5502 1,173,885 | 4.b.(2)
c. Mortgages serviced under a FNMA contract: | ///////////////// |
(1) Serviced under a regular option contract ................................................. | 5503 50,802 | 4.c.(1)
(2) Serviced under a special option contract ................................................. | 5504 1,913,154 | 4.c.(2)
d. Mortgages serviced under other servicing contracts ........................................... | 5505 3,879,382 | 4.d.
5. To be completed only by banks with $1 billion or more in total assets: | ///////////////// |
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must | ///////////////// |
equal Schedule RC, item 9): | ///////////////// |
a. U.S. addressees (domicile) ................................................................... | 2103 7,330 | 5.a.
b. Non-U.S. addressees (domicile) ............................................................... | 2104 0 | 5.b.
6. Intangible assets: | ///////////////// |
a. Mortgage servicing rights ..................................................................... | 3164 26,116 | 6.a.
b. Other identifiable intangible assets: | ///////////////// |
(1) Purchased credit card relationships ....................................................... | 5506 0 | 6.b.(1)
(2) All other identifiable intangible assets .................................................. | 5507 3,834 | 6.b.(2)
c. Goodwill ..................................................................................... | 3163 280,364 | 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10) ....................... | 2143 310,314 | 6.d.
e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered or | ///////////////// |
are otherwise qualifying for regulatory capital purposes ..................................... | 6442 0 | 6.e.
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to | ///////////////// |
redeem the debt ................................................................................. | 3295 0 | 7.
_____________________
- ------------
<FN>
(1) Do not report federal funds sold and securities purchased under agreements to resell with other
commercial banks in the U.S. in this item.
</FN>
</TABLE>
27
<PAGE> 49
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATINAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-18
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-M--Continued __________________________
Dollar Amounts in Thousands | Bil Mil Thou|
___________________________________________________________________________________________ |_________________________|
<S> <C> <C>
8. a. Other real estate owned: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ....................... | RCFD 5372 0 | 8.a.(1)
(2) All other real estate owned: | /////////////////////// |
(a) Construction and land development in domestic offices ..................... | RCON 5508 0 | 8.a.(2)(a)
(b) Farmland in domestic offices .............................................. | RCON 5509 0 | 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices ..................... | RCON 5510 517 | 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices ........ | RCON 5511 0 | 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices ..................... | RCON 5512 167 | 8.a.(2)(e)
(f) In foreign offices ........................................................ | RCFN 5513 0 | 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7) ..... | RCFD 2150 684 | 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ....................... | RCFD 5374 0 | 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated companies . | RCFD 5375 0 | 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) ..... | RCFD 2130 0 | 8.b.(3)
c. Total assets of unconsolidated subsidiaries and associated companies .............. | RCFD 5376 0 | 8.c.
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, | /////////////////////// |
item 23, "Perpetual preferred stock and related surplus" ............................. | RCFD 3778 0 | 9.
10. Mutual fund and annuity sales in domestic offices during the quarter (include | /////////////////////// |
proprietary, private label, and third party products): | /////////////////////// |
a. Money market funds ................................................................ | RCON 6441 0 | 10.a.
b. Equity securities funds ........................................................... | RCON 8427 0 | 10.b.
c. Debt securities funds ............................................................. | RCON 8428 0 | 10.c.
d. Other mutual funds ................................................................ | RCON 8429 0 | 10.d.
e. Annuities ......................................................................... | RCON 8430 0 | 10.e.
f. Sales of proprietary mutual funds and annuities (included in itmes 10.a through | /////////////////////// |
10.e. above) ......................................................................... | RCON 8784 0 | 10.f.
_________________________
</TABLE>
<TABLE>
<CAPTION>
__________________________________________________________________________________________________________________________________
| |
______________________
|Memorandum Dollar Amounts in Thousands | RCFD Bil Mil Thou | |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
|1. Interbank holdings of capital instruments (to be completed for the December report only): | ////////////////// | |
| a. Reciprocal holdings of banking organizations' capital instruments ....................... | 3836 0 | M.1.a. |
| b. Nonreciprocal holdings of banking organizations' capital instruments .................... | 3837 0 | M.1.b. |
______________________
| |
__________________________________________________________________________________________________________________________________
</TABLE>
28
<PAGE> 50
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-19
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-N--Past Due and Nonaccrual Loans, Leases,
and Other Assets
The FFIEC regards the information reported in __________
all of Memorandum item 1, in items 1 through 10, | C470 | (-
column A, and in Memorandum items 2 through 4, _________________________________________________________________
column A, as confidential. | (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
| accruing | accruing | |
_____________________ _____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________ _____________________ _____________________ ____________________
<S> <C> <C> <C> <C>
1. Loans secured by real estate: | ////////////////// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ............... | 1245 74,980 | 1246 18,839 | 1247 36,031 | 1.a.
b. To non-U.S. addressees (domicile) ........... | 1248 0 | 1249 0 | 1250 0 | 1.b.
2. Loans to depository institutions and | ////////////////// | ////////////////// | ////////////////// |
acceptances of other banks: | ////////////////// | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository | ////////////////// | ////////////////// | ////////////////// |
institutions ................................ | 5377 0 | 5378 0 | 5379 0 | 2.a.
b. To foreign banks ............................ | 5380 0 | 5381 0 | 5382 0 | 2.b.
3. Loans to finance agricultural production and | ////////////////// | ////////////////// | ////////////////// |
other loans to farmers ......................... | 1594 17 | 1597 0 | 1583 2 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ............... | 1251 16,064 | 1252 1,062 | 1253 26,685 | 4.a.
b. To non-U.S. addressees (domicile) ........... | 1254 0 | 1255 0 | 1256 0 | 4.b.
5. Loans to individuals for household, family, and | ////////////////// | ////////////////// | ////////////////// |
other personal expenditures: | ////////////////// | ////////////////// | ///////////////// |
a. Credit cards and related plans .............. | 5383 592 | 5384 162 | 5385 149 | 5.a.
b. Other (includes single payment, installment, | ////////////////// | ////////////////// | ////////////////// |
and all student loans) ...................... | 5386 17,822 | 5387 1,880 | 5388 1,749 | 5.b.
6. Loans to foreign governments and official | ////////////////// | ////////////////// | ////////////////// |
institutions ................................... | 5389 0 | 5390 0 | 5391 0 | 6.
7. All other loans ................................ | 5459 4,902 | 5460 435 | 5461 1,118 | 7.
8. Lease financing receivables: | ////////////////// | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ............... | 1257 57 | 1258 0 | 1259 0 | 8.a.
b. Of non-U.S. addressees (domicile) ........... | 1271 0 | 1272 0 | 1791 0 | 8.b.
9. Debt securities and other assets (exclude other | ////////////////// | ////////////////// | ////////////////// |
real estate owned and other repossessed assets). | 3505 0 | 3506 0 | 3507 0 | 9.
__________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.
_________________________________________________________________
10. Loans and leases reported in items 1 | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
_____________________ _____________________ ____________________
<S> <C> <C> <C> <C>
through 8 above which are wholly or partially | ////////////////// | ////////////////// | ////////////////// |
guaranteed by the U.S. Government .............. | 5612 1,479 | 5613 321 | 5614 251 | 10.
a. Guaranteed portion of loans and leases | ////////////////// | ////////////////// | ////////////////// |
included in item 10 above ................... | 5615 1,252 | 5616 248 | 5617 225 | 10.a.
______________________ _____________________ _____________________
</TABLE>
29
<PAGE> 51
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-20
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-N--Continued
__________
| C473 | (-
_________________________________________________________________
| (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
Memoranda | accruing | accruing | |
_____________________ _____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
_______________________________________________________ _____________________ _____________________ ____________________
<S> <C> <C> <C> <C>
1. Restructured loans and leases included in | ////////////////// | /////////////////// | ////////////////// |
Schedule RC-N, items 1 through 8, above (and not | ////////////////// | /////////////////// | ////////////////// |
reported in Schedule RC-C, part I, Memorandum | ////////////////// | /////////////////// | ////////////////// |
item 2) ......................................... | 1658 0 | 1659 0 | 1661 1,578 | M.1.
2. Loans to finance commercial real estate, | ////////////////// | /////////////////// | ////////////////// |
construction, and land development activities | ////////////////// | /////////////////// | ////////////////// |
(not secured by real estate) included in | ////////////////// | /////////////////// | ////////////////// |
Schedule RC-N, items 4 and 7, above ............. | 6558 4,511 | 6559 0 | 6560 1,403 | M.2.
|_____________________|____________________ |____________________
3. Loans secured by real estate in domestic offices | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou |
|___________________ |_____________________ ____________________
(included in Schedule RC-N, item 1, above): | ////////////////// | /////////////////// | ////////////////// |
a. Construction and land development ............ | 2759 2,261 | 2769 268 | 3492 378 | M.3.a.
b. Secured by farmland .......................... | 3493 0 | 3494 0 | 3495 139 | M.3.b.
c. Secured by 1-4 family residential properties: | ////////////////// | /////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by | ////////////////// | /////////////////// | ////////////////// |
1-4 family residential properties and | ////////////////// | /////////////////// | ////////////////// |
extended under lines of credit ........... | 5398 4,446 | 5399 2,091 | 5400 2,628 | M.3.c.(1)
(2) All other loans secured by 1-4 family | ////////////////// | /////////////////// | ////////////////// |
residential properties ................... | 5401 39,576 | 5402 12,419 | 5403 10,421 | M.3.c.(2)
d. Secured by multifamily (5 or more) | ////////////////// | /////////////////// | ////////////////// |
residential properties ....................... | 3499 1,336 | 3500 175 | 3501 520 | M.3.d.
e. Secured by nonfarm nonresidential properties . | 3502 27,361 | 3503 3,886 | 3504 21,945 | M.3.e.
__________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
____________________________________________
| (Column A) | (Column B) |
| Past due 30 | Past due 90 |
| through 89 days | days or more |
_____________________ ____________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou |
_____________________ ____________________
<S> <C> <C> <C>
4. Interest rate, foreign exchange rate, and other | ////////////////// | ////////////////// |
commodity and equity contracts: | ////////////////// | ////////////////// |
a. Book value of amounts carried as assets ...... | 3522 0 | 3528 0 | M.4.a.
b. Replacement cost of contracts with a | ////////////////// | ////////////////// |
positive replacement cost .................... | 3529 0 | 3530 0 | M.4.b.
____________________________________________
</TABLE>
30
<PAGE> 52
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-21
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
______________________
Schedule RC-O--Other Data for Deposit Insurance Assessments | C475 |
|____________________|
Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Unposted debits (see instructions): | ////////////////// |
a. Actual amount of all unposted debits ..................................................... | 0030 N/A | 1.a.
OR | ////////////////// |
b. Separate amount of unposted debits: | ////////////////// |
(1) Actual amount of unposted debits to demand deposits .................................. | 0031 0 | 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits(1) ..................... | 0032 0 | 1.b.(2)
2. Unposted credits (see instructions): | ////////////////// |
a. Actual amount of all unposted credits .................................................... | 3510 N/A | 2.a.
OR | ////////////////// |
b. Separate amount of unposted credits: | ////////////////// |
(1) Actual amount of unposted credits to demand deposits ................................. | 3512 182,201 | 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits(1) .................... | 3514 0 | 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not included in total | ////////////////// |
deposits in domestic offices) ............................................................... | 3520 0 | 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in | ////////////////// |
Puerto Rico and U.S. territories and possessions (not included in total deposits): | ////////////////// |
a. Demand deposits of consolidated subsidiaries ............................................. | 2211 8,343 | 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries ................................ | 2351 0 | 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries ..................... | 5514 0 | 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: | ////////////////// |
a. Demand deposits in insured branches (included in Schedule RC-E, Part II) ................. | 2229 0 | 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II) .... | 2383 0 | 5.b.
c. Interest accrued and unpaid on deposits in insured branches | ////////////////// |
(included in Schedule RC-G, item 1.b) .................................................... | 5515 0 | 5.c.
______________________
______________________
Item 6 is not applicable to state nonmember banks that have not been authorized by the | ////////////////// |
Federal Reserve to act as pass-through correspondents. | ////////////////// |
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on | ////////////////// |
behalf of its respondent depository institutions that are also reflected as deposit | ////////////////// |
liabilities of the reporting bank: | ////////////////// |
a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, | ////////////////// |
Memorandum item 4.a) ..................................................................... | 2314 0 | 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, | ////////////////// |
Memorandum item 4.b) ..................................................................... | 2315 0 | 6.b.
7. Unamortized premiums and discounts on time and savings deposits:(1) | ////////////////// |
a. Unamortized premiums ..................................................................... | 5516 0 | 7.a.
b. Unamortized discounts .................................................................... | 5517 0 | 7.b.
______________________
_______________________________________________________________________________________________________________________________
| |
|8. To be completed by banks with "Oakar deposits." |
______________________
| Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) | ////////////////// | |
| of the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction Worksheet(s)). | 5518 292,130 | 8. |
______________________
| |
_______________________________________________________________________________________________________________________________
______________________
9. Deposits in lifeline accounts ............................................................... | 5596 ///////////// | 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total | ////////////////// |
deposits in domestic offices) ............................................................... | 8432 0 | 10.
______________________
<FN>
______________
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction
accounts and all transaction accounts other than demand deposits.
</FN>
</TABLE>
31
<PAGE> 53
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-22
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-O--Continued
Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Adjustments to demand deposits in domestic offices reported in Schedule RC-E for | ////////////////// |
certain reciprocal demand balances: | ////////////////// |
a. Amount by which demand deposits would be reduced if reciprocal demand balances | ////////////////// |
between the reporting bank and savings associations were reported on a net basis | ////////////////// |
rather than a gross basis in Schedule RC-E ................................................. | 8785 0 | 11.a.
b. Amount by which demand deposits would be increased if reciprocal demand balances | ////////////////// |
between the reporting bank and U.S. branches and agencies of foreign banks were | ////////////////// |
reported on a gross basis rather than a net basis in Schedule RC-E ......................... | A181 0 | 11.b.
c. Amount by which demand deposits would be reduced if cash items in process of | ////////////////// |
collections were included in the calculation of net reciprocal demand balances between | ////////////////// |
the reporting bank and the domestic offices of U.S. banks and savings associations | ////////////////// |
in Schedule RC-E ........................................................................... | A182 2,235 | 11.c.
____________________
<CAPTION>
Memoranda (to be completed each quarter except as noted) Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________|____________________|
1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a. (1) and | ////////////////// |
1.b.(1) must equal Schedule RC, item 13.a): | ////////////////// |
a. Deposits accounts of $100,000 or less: | ////////////////// |
(1) amount of deposit accounts of $100,000 or less .................................... | 2702 6,065,796 | M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (to be Number | ////////////////// |
completed for the June report only) ..........................|RCON 3779________N/A | ////////////////// | M.1.a.(2)
b. Deposit accounts of more than $100,000: | ////////////////// |
(1) Amount of deposit accounts of more than $100,000 .................................. | 2710 4,731,325 | M.1.b.(1)
Number | ////////////////// |
(2) Number of deposit accounts of more than $100,000 .............|RCON 2722______7,493 | ////////////////// | M.1.b.(2)
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by mutiplying the
number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2)
above by $100,000 and subtracting the result from the amount of deposit accounts of
more than $100,000 reported in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at the right whether your bank has a method or
procedure for determining a better estimate of uninsured deposits that the ____________YES_______NO__
estimated described above ............................................................... |RCON 6861| |///| x | M.2.a.
____________________
b. If the box marked YES has been checked, report the estimate of uninsured deposits |RCON Bil Mil Thou|
determined by using your bank's method or procedure .................................... | 5597 N/A | M.2.b.
_____________________________________________________________________________________________________________________________
| C477 | (-
Person to whom questions about the Reports of Condition and Income should be directed: __________
PAMELA S. FLYNN, VICE PRESIDENT (401) 278-5194
___________________________________________________________________________________ ______________________________________
Name and Title (TEXT 8901) Area code and phone number (TEXT 8902)
</TABLE>
32
<PAGE> 54
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-23
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-R--Risk-Based Capital
This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC,
item 12, for June 30, 1994, must complete items 2 through 9 and Memorandum item 1 and 2. Banks with assets of less than
$1 billion must complete items 1 and 2 below or Schedule RC-R in its entirety, depending on their response to item 1 below.
<S> <C>
1. Test for determining the extent to which Schedule RC-R must be completed. To be completed
____________
only by banks with total assets of less than $1 billion. Indicate in the appropriate | C480 | (-
_____|__________|
box at the right whether the bank has total capital greater than or equal to eight percent | YES NO |
____________ _______________
of adjusted total assets ............................................................... | RCFD 6056 | |////| | 1.
_____________________________
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government
agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan
and lease losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete items 2 below. If the box marked
NO has been checked, the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight
percent or that the bank is not in compliance with the risk-based capital guidelines.
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
|Subordinated Debt(1) | Other |
| and Intermediate | Limited- |
Item 2 is to be completed by all banks. | Term Preferred | Life Capital |
| Stock | Instruments |
_____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ______________________ ____________________
<S> <C> <C> <C>
2. Subordinated debt(1) and other limited-life capital instruments (original | ////////////////// | ////////////////// |
weighted average maturity of at least five years) with a remaining | ////////////////// | ////////////////// |
maturity of: | ////////////////// | ////////////////// |
a. One year or less ...................................................... | 3780 0 | 3786 0 | 2.a.
b. Over one year through two years ....................................... | 3781 0 | 3787 0 | 2.b.
c. Over two years through three years .................................... | 3782 0 | 3788 0 | 2.c.
d. Over three years through four years ................................... | 3783 0 | 3789 0 | 2.d.
e. Over four years through five years .................................... | 3784 0 | 3790 0 | 2.e.
f. Over five years ....................................................... | 3785 440,000 | 3791 0 | 2.f.
___________________________________________
3. Not applicable
___________________________________________
| (Column A) | (Column B) |
Items 4-9 and Memorandum item 1 and 2 are to be completed | Assets | Credit Equiv- |
by banks that answered NO to item 1 above and | Recorded | alent Amount |
by banks with total assets of $1 billion or more. | on the | of Off-Balance |
| Balance Sheet | Sheet Items(2) |
_____________________ ____________________
4. Assets and credit equivalent amounts of off-balance sheet items assigned | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
_____________________ ____________________
<S> <C> <C> <C>
to the Zero percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Securities issued by, other claims on, and claims unconditionally | ////////////////// | ////////////////// |
guaranteed by, the U.S. Government and its agencies and other | ////////////////// | ////////////////// |
OECD central governments .......................................... | 3794 995,941 | ////////////////// | 4.a.(1)
(2) All other ......................................................... | 3795 615,688 | ////////////////// | 4.a.(2)
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3796 0 | 4.b.
___________________________________________
<FN>
______________
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not report in column B the risk-weighted amount of assets reported in column A.
</FN>
</TABLE>
33
<PAGE> 55
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590
Address: 777 MAIN STREET
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-R--Continued
____________________________________________
| (Column A) | (Column B) |
| Assets | Credit Equiv- |
| Recorded | alent Amount |
| on the | of Off-Balance |
| Balance Sheet | Sheet Items(1) |
_____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ _____________________ ____________________
<S> <C> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 20 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Claims conditionally guaranteed by the U.S. Government and its | ////////////////// | ////////////////// |
agencies and other OECD central governments ...................... | 3798 21,803 | ////////////////// | 5.a.(1)
(2) Claims collateralized by securities issued by the U.S. Govern- | ////////////////// | ////////////////// |
ment and its agencies and other OECD central governments; by | ////////////////// | ////////////////// |
securities issued by U.S. Government-sponsored agencies; and | ////////////////// | ////////////////// |
by cash on deposit ............................................... | 3799 0 | ////////////////// | 5.a.(2)
(3) All other ........................................................ | 3800 2,925,314 | ////////////////// | 5.a.(3)
b. Credit equivalent amount of off-balance sheet items .................. | ////////////////// | 3801 50,397 | 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 50 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet ................................. | 3802 2,913,084 | ////////////////// | 6.a.
b. Credit equivalent amount of off-balance sheet items .................. | ////////////////// | 3803 62,727 | 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 100 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet ................................. | 3804 10,920,564 | ////////////////// | 7.a.
b. Credit equivalent amount of off-balance sheet items .................. | ////////////////// | 3805 3,386,096 | 7.b.
8. On-balance sheet asset values excluded from the calculation of the | ////////////////// | ////////////////// |
risk-based capital ratio(2) ............................................. | 3806 4,047 | ////////////////// | 8.
9. Total assets recorded on the balance sheet (sum of | ////////////////// | ////////////////// |
items 4.a, 5.a, 6.a, 7.a, and 8, column A)(must equal Schedule RC, | ////////////////// | ////////////////// |
item 12 plus items 4.b and 4.c) ......................................... | 3807 18,396,441 | ////////////////// | 9.
____________________________________________
</TABLE>
<TABLE>
<CAPTION>
Memoranda
_____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou|
____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1.Current credit exposure across all off-balance sheet derivative contracts covered by the | ///////////////// |
risked-based capital standards ................................................................... | 8764 4,957| M.1.
|___________________|
</TABLE>
<TABLE>
<CAPTION>
__________________________________________________________________
| With a remaining maturity of |
|________________________________________________________________|
| (Column A) | (Column B) | (Column C) |
| | | |
| One year or less | Over one year | Over five years |
| | through five years | |
|________________________________________________________________|
| RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
|____Tril____________ |_____Tril___________ |____Tril____________|
<S> <C> <C> <C> <C>
2. Notional principal amounts of
a. Interest rate contracts ................. | 3809 1,233,650 | 8766 2,389,471 | 8767 0 | M.2.a.
b. Foreign exchange contracts .............. | 3812 0 | 8769 0 | 8770 0 | M.2.b.
c. Gold contracts .......................... | 8771 0 | 8772 0 | 8773 0 | M.2.c.
d. Other precious metals contracts ......... | 8774 0 | 8775 0 | 8776 0 | M.2.d.
e. Other commodity contracts ............... | 8777 0 | 8778 0 | 8779 0 | M.2.e.
f. Equity derivative contracts ............. | A000 0 | A001 0 | A002 0 | M.2.f.
|________________________________________________________________|
<FN>
_________________
1) Do not report in column B the risk-weighted amount of assets reported in column A.
2) Include the difference between the fair value and the amortized cost of available-for-sale securities in item 8 and report
the amortized cost of these securities in items 4 through 7 above. Item 8 also includes on-balance sheet asset values (or
portions thereof) of off-balance sheet interest rate, foreign exchange rate, and commodity contracts and those contracts (e.g.,
futures contracts) not subject to risk-based capital. Exclude from item 8 margin accounts and accrued receivables as well as
any portion of the allowance for loan and lease losses in excess of the amount that may be included in Tier 2 capital.
3) Exclude foreign exchange contracts with an original maturity of 14 days or less and all futures contracts.
</FN>
</TABLE>
34
<PAGE> 56
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590
Address: 777 MAIN STREET
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
THIS PAGE IS TO BE COMPLETED BY ALL BANKS
- -------------------------------------------------------------------------------------------------------------------------------
| OMB No. For OCC: 1557-0081
Name and address of Bank | OMB No. For FDIC: 3064-0052
| OMB No. For Federal Reserve: 7100-0036
| Expiration Date: 3/31/96
|
PLACE LABEL HERE |
| SPECIAL REPORT
| (Dollar Amounts in Thousands)
|
|___________________________________________________________________
| CLOSE OF BUSINESS| FDIC Certificate Number | |
| DATE | | C-700 | (-
| 12/31/95 | |0|2|4|9|9 | |
__________________________________________________________________________________________________________________________________
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)
- ----------------------------------------------------------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 102-242, but does not constitute a part of the Report of Condition.
With each Report of Condition, these Laws require all banks to furnish a report of all loans or other extensions of credit to
their executive officers made since the date of the previous Report of Condition. Data regarding individual loans or other
extensions of credit are not required. If no such loans or other extensions of credit were made during the period, insert "none"
against subitem (a). (Exclude the first $15,000 of indebtedness of each executive officer under bank credit card plan.) See
Sections 215.2 and 215.3 of Title 12 of the Code of Federal Regulations (Federal Reserve Board Regulation 0) for the definitions
of "executive officer" and "extension of credit," respectively. Exclude loans and other extensions of credit to directors and
principal shareholders who are not executive officers.
________________________________________________________________________________________________________________________________
a. Number of loans made to executive officers since the previous Call Report date ...................| RCFD 3561| 0 a.
b. Total dollar amount of above loans (in thousands of dollars) .....................................| RCFD 3652| 0 b.
c. Range of interest charged on above loans
(example: 9 3/4% = 9.75) ........................................|RCFD 7701| 0.00 | % to | RCFD 7702 | 0.00 | % c.
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
SIGNATURE OF TITLE OF OFFICER AUTHORIZED TO SIGN REPORT | DATE (Month, Day, Year)
|
|
________________________________________________________________________________________________________________________________
NAME AND TITLE OF PERSON TO WHOM INQUIRIES MAY BE DIRECTED (TEXT 8903) | AREA CODE/PHONE NUMBER/EXTENSION
| (TEXT 8904)
|
ROBERT P. DUFF VICE PRESIDENT | (203) 986-2474
|
________________________________________________________________________________________________________________________________
FDIC 8040/53 (6-95)
</TABLE>
35
<PAGE> 1
LETTER OF TRANSMITTAL
To Tender for Exchange
9 1/4% Senior Notes due 2006
of
EKCO GROUP, INC.
Pursuant to the Prospectus dated ___________, 1996
===============================================================================
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
AUGUST 7, 1996, UNLESS EXTENDED.
===============================================================================
TO: FLEET NATIONAL BANK, AS EXCHANGE AGENT
<TABLE>
<CAPTION>
BY MAIL: BY FACSIMILE: BY HAND:
<S> <C> <C>
Fleet National Bank (860) 986-7908 Fleet National Bank
Corporate Trust Operations Corporate Trust Operations
777 Main Street, Lower Level CONFIRM BY TELEPHONE: 777 Main Street, Lower Level
CTMO 0224 Hartford, Connecticut 06115
Hartford, Connecticut 06115 (860) 986-2910 Attention: Patricia Williams
Attention: Patricia Williams
</TABLE>
Delivery of this instrument to an address other than as set forth above
or transmission of instructions via a facsimile number other than the one listed
above will not constitute a valid delivery. The instructions accompanying this
Letter of Transmittal should be read carefully before this Letter of Transmittal
is completed.
The undersigned acknowledges that he or she has received the
Prospectus, dated ____________, 1996 (the "Prospectus"), of Ekco Group, Inc.
(the "Company") and this Letter of Transmittal (the "Letter of Transmittal"),
which together constitute the Company's offer (the "Exchange Offer") to exchange
its 9 1/4% Series B Senior Notes due 2006 (the "New Senior Notes") for an equal
principal amount of its 9 1/4% Senior Notes due 2006 (the "Old Senior Notes"
and, together with the New Senior Notes, the "Senior Notes"). The terms of the
New Senior Notes are identical in all material respects to the Old Senior Notes,
except that the New Senior Notes have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), and, therefore, will not bear
legends restricting their transfer and will not contain certain provisions
relating to an increase in the interest rate which were included in the Old
Senior Notes under certain circumstances relating to the timing of the Exchange
Offer. The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
August 7, 1996, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term shall mean the latest date and time to
which the Exchange Offer is extended. Capitalized terms used but not defined
herein have the meaning given to them in the Prospectus.
The Letter of Transmittal is to be used by Holders of Old Senior Notes
if certificates are to be forwarded herewith. Holders of Old Senior Notes whose
certificates are not immediately available, or who are unable to deliver their
certificates and all other documents required by this Letter of Transmittal to
the Exchange Agent on or prior to the Expiration Date, must tender their Old
Senior Notes according to the guaranteed delivery procedures set forth in "The
Exchange Offer-Guaranteed Delivery Procedures" section of this Prospectus. See
Instruction 1.
<PAGE> 2
The term "Holder" with respect to the Exchange Offer means any person
in whose name Old Senior Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from the
registered holder. The undersigned has completed, executed and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. Holders who wish to tender their Old Senior
Notes must complete this letter in its entirety.
If it is a broker-dealer, the undersigned acknowledges that (i) Old
Senior Notes tendered by it hereunder were acquired in the ordinary course of
its business as a result of Senior market-making or other trading activities,
and (ii) it will deliver a prospectus in connection with any resale of New
Senior Notes received in the Exchange Offer. Notwithstanding the foregoing, by
so acknowledging and by delivering a prospectus, such broker-dealer shall not be
deemed to admit that it is an "underwriter" within the meaning of such term
under the Securities Act.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE LETTER OF TRANSMITTAL
<TABLE>
<CAPTION>
==============================================================================================================================
DESCRIPTION OF 9 1/4% SENIOR NOTES DUE 2006
- ------------------------------------------------------------------------------------------------------------------------------
Aggregate Principal Amount
Principal Tendered (must
Names and Address(es) of Amount be in integral
Registered Holder(s) Certificate Represented by multiples
(please fill in, if blank) Number (s) Certificate(s) of $1,000)*
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Unless indicated in the column labeled "Principal Amount Tendered," any
tendering Holder of 9 1/4% Senior Notes due 2006 will be deemed to have
tendered the entire aggregate principal amount represented by the column
labeled "Aggregate Principal Amount Represented by Certificate(s)."
If the space provided above is inadequate, lists the certificate numbers and
principal amounts on a separate signed schedule and affix the list to this
Letter of Transmittal.
The minimum permitted tender is $1,000 in principal amount. All other
tenders must be integral multiples of $1,000.
===============================================================================
/ / CHECK HERE IF TENDERED OLD SENIOR NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING (SEE INSTRUCTION 1):_______________________________
Name(s) of Registered Holder(s)___________________________________________
Window Ticket Number (if any)_____________________________________________
Date of Execution of Notice of Guaranteed Delivery________________________
Name of Institution which Guaranteed Delivery_____________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:_____________________________________________________________________
Address:__________________________________________________________________
__________________________________________________________________
- 2 -
<PAGE> 3
===============================================================================
SPECIAL REGISTRATION INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Old Senior Notes in a principal amount
not tendered, or New Senior Notes issued in exchange for Old Senior Notes
accepted for exchange, are to be issued in the name of someone other than the
undersigned.
Issue certificate(s) to:
Name:__________________________________________________________________________
(Please Print)
Address:_______________________________________________________________________
_______________________________________________________________________________
(Include Zip Code)
_______________________________________________________________________________
(Tax Identification or Social Security No.)
===============================================================================
===============================================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Old Senior Notes in a principal amount
not tendered, or New Senior Notes issued in exchange for Old Senior Notes
accepted for exchange, are to be sent to someone other than the undersigned, or
to the undersigned at an address other than that shown above.
Deliver certificate(s) to:
Name:_________________________________________________________________________
(Please Print)
Address:______________________________________________________________________
(Include Zip Code)
______________________________________________________________________________
(Tax Identification or Social Security No.)
===============================================================================
- 3 -
<PAGE> 4
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Old Senior
Notes indicated above. Subject to and effective upon the acceptance for exchange
of the principal amount of Old Senior Notes tendered in accordance with this
Letter of Transmittal, the undersigned sells, assigns and transfers to, or upon
the order of, the Company all right, title and interest in and to the Old Senior
Notes tendered hereby. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent its agent and attorney-in-fact (with full knowledge
that the Exchange Agent also acts as the agent of the Company) with respect to
the tendered Old Senior Notes with full power of substitution to (i) deliver
certificates for such Old Senior Notes to the Company and deliver all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Company and (ii) present such Old Senior Notes for transfer on the books of
the Company and receive all benefits and otherwise exercise all rights of
beneficial ownership of such Old Senior Notes, all in accordance with the terms
of the Exchange Offer. The power of attorney granted in this paragraph shall be
deemed to be irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign and transfer the Old Senior Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim, when the same are acquired by the Company. The
undersigned and any beneficial owner of Old Senior Notes hereby further
represent that any New Senior Notes acquired in exchange for Old Senior Notes
tendered hereby will have been acquired in the ordinary course of business of
the undersigned and any such beneficial owner of Old Senior Notes receiving such
New Senior Notes, that neither the Holder nor any such beneficial owner is
participating in, intends to participate in or has an arrangement or
understanding with any person to participate in the distribution of such New
Senior Notes and that neither the Holder nor any such beneficial owner is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company.
The undersigned and each beneficial owner acknowledge and agree that any person
participating in the Exchange Offer for the purpose of distributing the New
Senior Notes must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transactions of the New Senior Notes acquired by such person and may not rely on
the position of the Staff of the Securities and Exchange Commission set forth in
the no-action letters discussed in the Prospectus under the caption "The
Exchange Offer." If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a public
distribution of New Senior Notes. The undersigned and each beneficial owner
will, upon request, execute and deliver any additional documents deemed by the
Exchange Agent or the Company to be necessary or desirable to complete the
assignment, transfer and purchase of the Old Senior Notes tendered hereby.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Old Senior Notes when, as and if the Company has given
oral or written notice thereof to the Exchange Agent.
If any tendered Old Senior Notes are not accepted for exchange pursuant
to the Exchange Offer for any reason, certificates for any such unaccepted Old
Senior Notes will be returned, without expense, to the undersigned at the
address shown below or at a different address as may be indicated herein under
"Special Delivery Instructions" as promptly as practicable after the Expiration
Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned understands that tenders of Old Senior Notes pursuant
to the procedures described under the caption "The Exchange Offer - Procedures
for Tendering" in the Prospectus and in the instructions hereto will constitute
a binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer, subject only to withdrawal of
such tenders on the terms set forth in the Prospectus under the caption "The
Exchange Offer-Withdrawal of Tenders."
- 4 -
<PAGE> 5
Unless otherwise indicated under "Special Registration Instructions,"
please issue the certificates representing the New Notes issued in exchange for
the Old Senior Notes accepted for exchange and any certificates for Old Senior
Notes not tendered or not exchanged, in the name(s) of the undersigned.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please send the certificates representing the New Senior Notes issued in
exchange for the Old Senior Notes accepted for exchange and any certificates for
Old Senior Notes not tendered or not exchanged (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Registration Instructions" and
"Special Delivery Instructions" are completed, please issue the certificates
representing the New Senior Notes issued in exchange for the Old Senior Notes
accepted for exchange in the name(s) of, and return any certificates for Old
Senior Notes not tendered or not exchanged to, the person(s) so indicated. The
undersigned understands that the Company has no obligation pursuant to the
"Special Registration Instructions" and "Special Delivery Instructions" to
transfer any Old Senior Notes from the name of the registered Holder(s) thereof
if the Company does not accept for exchange any of the Old Senior Notes so
tendered.
Holders who wish to tender their Old Senior Notes and whose Old Senior
Notes are not immediately available or who cannot deliver their certificates and
all other documents required by this Letter of Transmittal to the Exchange Agent
prior to the Expiration Date, may tender their Old Senior Notes according to the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer-Guaranteed Delivery Procedures." See Instruction 1 regarding
the completion of this Letter of Transmittal printed below.
- 5 -
<PAGE> 6
PLEASE SIGN HERE WHETHER OR NOT
OLD SENIOR NOTES ARE BEING PHYSICALLY TENDERED HEREBY
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
X Date:
- ------------------------------------------------------------------------------------------------ ------------
X Date:
- ------------------------------------------------------------------------------------------------ ------------
</TABLE>
Signature(s) of Registered Holder(s) or Authorized Signatory
Area Code and Telephone Number:
------------------------------------------------
The above lines must be signed by the registered holder(s) as their name(s)
appear(s) on the Old Senior Notes or by person(s) authorized to become
registered holder(s) by a properly completed bond power from the registered
holder(s), a copy of which must be transmitted with this Letter of Transmittal.
If the Old Senior Notes to which this Letter of Transmittal relate are held of
record by two or more joint holders, then all such holders must sign this Letter
of Transmittal. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, then such person must (i) set forth his or her full
title below and (ii) unless waived by the Company, submit evidence satisfactory
to the Company of such person's authority so to act. See Instruction 4 regarding
the completion of this Letter of Transmittal printed below.
Name(s):
-----------------------------------------------------------------------
(Please Print)
- -------------------------------------------------------------------------------
Capacity:
----------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
(Include Zip Code)
Signature(s) Guaranteed by an Eligible Institution:
(If required by Instruction 4)
- -------------------------------------------------------------------------------
(Authorized Signature)
- -------------------------------------------------------------------------------
(Title)
- -------------------------------------------------------------------------------
(Name of Firm)
Date: , 1996
-------------
- -------------------------------------------------------------------------------
- 6 -
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD SENIOR NOTES;
GUARANTEED DELIVERY PROCEDURES. The tendered Old Senior Notes as well as
properly completed and duly executed copy of this Letter of Transmittal or
facsimile hereof and any other documents required by this Letter of Transmittal
must be received by the Exchange Agent at its address set forth herein prior to
5:00 p.m., New York City time, on the Expiration Date. The method of delivery of
the tendered Old Senior Notes, this Letter of Transmittal and all other required
documents to the Exchange Agent is at the election and risk of the Holder and,
except as otherwise provided below, the delivery will be deemed made only when
actually received by the Exchange Agent. Instead of delivery by mail, it is
recommended that the Holder use an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. No Letter of
Transmittal or Old Senior Notes should be sent to the Company.
Holders who wish to tender their Old Senior Notes and (i) whose Old
Senior Notes are not immediately available or (ii) who cannot deliver their Old
Senior Notes, this Letter of Transmittal or any other documents required hereby
to the Exchange Agent prior to the Expiration Date must tender their Old Senior
Notes according to the guaranteed delivery procedures set forth in the
Prospectus. Pursuant to such procedure: (a) such tender must be made by or
through an Eligible Institution (defined below); (b) prior to the Expiration
Date, the Exchange Agent must have received from the Eligible Institution a
properly completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) setting forth the name and address of the
Holder, the certificate number or numbers of such Old Senior Notes and the
principal amount of Old Senior Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within five New York Stock Exchange trading
days after the Expiration Date, this Letter of Transmittal (or facsimile hereof)
together with the certificate(s) representing the Old Senior Notes and any other
required documents will be deposited by the Eligible Institution with the
Exchange Agent; and (c) such properly completed and executed Letter of
Transmittal (or facsimile hereof) as well as the certificate(s) representing all
tendered Old Senior Notes in proper form for transfer and all other documents
required by this Letter of Transmittal must be received by the Exchange Agent
within five New York Stock Exchange trading days after the Expiration Date, all
as provided in the Prospectus under the caption "The Exchange Offer-Guaranteed
Delivery Procedures." Any Holder who wishes to tender his Old Senior Notes
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00
p.m., New York City time, on the Expiration Date. Upon request to the Exchange
Agent, a Notice of Guaranteed Delivery will be sent to Holders who wish to
tender their Old Senior Notes according to the guaranteed delivery procedures
set forth above.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Senior Notes, and withdrawal of tendered
Old Senior Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all Old Senior Notes not properly tendered or any Old Senior
Notes the Company's acceptance of which would, in the opinion of counsel for the
Company, be unlawful. The Company also reserves the right to waive any
irregularities or conditions of tender as to particular Old Senior Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in this Letter of Transmittal) shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Senior Notes must be cured within such time as
the Company shall determine. Neither the party, the Exchange Agent nor any other
person shall be under any duty to give notification of defects or irregularities
with respect to tenders of Old Senior Notes, nor shall any of them incur any
liability for failure to give such notification. Tenders of Old Senior Notes
will not be deemed to have been made until such defects or irregularities have
been cured or waived. Any Old Senior Notes received by the Exchange Agent that
are not properly tendered and as to which the defects or
- 7 -
<PAGE> 8
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders, unless otherwise provided in this Letter of
Transmittal, as soon as practicable following the Expiration Date.
2. TENDER BY HOLDER. Only a Holder of Old Senior Notes may tender such
Old Senior Notes in the Exchange Offer. Any beneficial owner of Old Senior Notes
who is not the registered holder and who wishes to tender should arrange with
such registered holder to execute and deliver this Letter of Transmittal on such
owner's behalf or must, prior to completing and executing this Letter of
Transmittal and delivering his or her Old Senior Notes, either make appropriate
arrangements to register ownership of the Old Senior Notes in such owner's name
or obtain a properly completed bond power from the registered holder.
3. PARTIAL TENDERS. Tenders of Old Senior Notes will be accepted only
in integral multiples of $1,000. If less than the entire principal amount of any
Old Senior Notes is tendered, the tendering Holder should fill in the principal
amount tendered in the fourth column of the box entitled "Description of 9 1/4%
Senior Notes due 2006" above. The entire principal mount of any Old Senior Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount of all Old Senior Notes is
not tendered, then Old Senior Notes for the principal amount of Old Senior Notes
not tendered and a certificate or certificates representing New Senior Notes
issued in exchange for any Old Senior Notes accepted will be sent to the Holder
at his or her registered address, unless a different address is provided in the
appropriate box on this Letter of Transmittal, promptly after the Old Senior
Notes are accepted for exchange.
4. SIGNATURE ON THE LETTER OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal (or
facsimile hereof) is signed by the registered holder(s) of the Old Senior Notes
tendered hereby, the signature must correspond with the name(s) as written on
the face of the Old Senior Notes without alteration, enlargement or any change
whatsoever.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered holder or holders of Old Senior Notes tendered and the certificate or
certificates for new Notes issued in exchange therefor is to be issued (or any
untendered principal amount of old Notes is to be reissued) to the registered
holder and neither the "Special Delivery Instructions" nor the "Special
Registration Instructions" has been completed, then such holder need not and
should not endorse any tendered Old Senior Notes, nor provide a separate bond
power. In any other case, such holder must either properly endorse the Old
Senior Notes tendered or transmit a properly completed separate bond power with
this Letter of Transmittal with the signatures on the endorsement or bond power
guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a
person other than the registered holder or holders of any Old Senior Notes
listed, such Old Senior Notes must be endorsed or accompanied by appropriate
bond powers in each case signed as the name of the registered holder or holders
appears on the Old Senior Notes.
If this letter of Transmittal (or facsimile hereof) or any Old Senior
Notes or bond powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, or officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing, and, unless waived by the Company, evidence satisfactory to the Company
of their authority so to act must be submitted with the Letter of Transmittal.
Endorsements on Old Senior Notes or signatures on bond powers required
by this Instruction 4 must be guaranteed by an Eligible Institution which is a
member of (a) the Securities Transfer Agents Medallion Program, (b) the New York
Stock Exchange Medallion Signature Program or (c) the Stock Exchange Medallion
Program.
Except as otherwise provided below, all signatures on this Letter of
Transmittal must be guaranteed by a firm that is a member of a registered
national securities exchange or the National Association of Securities Dealers,
- 8 -
<PAGE> 9
Inc., a commercial bank or trust company having an office or correspondent in
the United States or an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (an "Eligible
Institution"). Signatures on this Letter of Transmittal need not be guaranteed
if (a) this Letter of Transmittal is signed by the registered holder(s) of the
Old Senior Notes tendered herewith and such holder(s) have not completed the box
set forth herein entitled "Special Registration Instructions" or the box
entitled "Special Delivery Instructions" or (b) such Old Senior Notes are
tendered for the account of an Eligible Institution.
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering Holders
should indicate, in the applicable box or boxes, the name and address to which
New Senior Notes or substitute Old Senior Notes for principal amounts not
tendered or not accepted for exchange are to be issued or sent, if different
from the name and address of the person signing this Letter of Transmittal. In
the case of issuance in a different name, the taxpayer identification or social
security number of the person named must also be indicated.
6. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Senior Notes pursuant to the Exchange Offer.
If, however, certificates representing New Senior Notes or Old Senior Notes for
principal amounts not tendered or accepted for exchange are to be delivered to,
or are to be registered in the name of, any person other than the registered
holder of the Old Senior Notes tendered hereby, or if tendered Old Senior Notes
are registered in the name of any person other than the person signing this
Letter of Transmittal, or if a transfer tax is imposed for any reason other than
the exchange of Old Senior Notes pursuant to the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or on any
other persons) will be payable by the tendering Holder. If Satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with this
Letter of Transmittal, the amount of such transfer taxes will be billed directly
to such tendering Holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Senior Notes listed in this Letter
of Transmittal.
7. WAIVER OF CONDITION. The Company reserves the right, in its sole
discretion, to amend, waive or modify specified conditions in the Exchange Offer
in the case of any Old Senior Notes tendered.
8. MUTILATED, LOST, STOLEN OR DESTROYED OLD SENIOR NOTES. Any tendering
Holder whose Old Senior Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated herein for further
instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
specified in the Prospectus. Holders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Exchange Offer.
- 9 -
<PAGE> 10
(DO NOT WRITE IN SPACE BELOW)
<TABLE>
<CAPTION>
=================================================================================================================================
Certificate Surrendered Old Senior Notes Tendered Old Senior Notes Accepted
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
=================================================================================================================================
</TABLE>
Delivery Prepared by ________________________ Checked By_______________________
Date__________________
- 10 -
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
OF
9 1/4 SENIOR NOTES DUE 2006
OF
EKCO GROUP, INC.
As set forth in the Prospectus, dated ________, 1996 (as the same may
be amended from time to time, the "Prospectus"), of Ekco Group, Inc. (the
"Company") under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures," this form or one substantially equivalent hereto must be used to
accept the Company's offer (the "Exchange Offer") to exchange its 9 1/4% Series
B Senior Notes due 2006 (the "New Senior Notes"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), for an
equal principal amount of its 9 1/4% Senior Notes due 2006 (the "Old Senior
Notes"), if (i) certificates representing the Old Senior Notes to be exchanged
are not lost but are not immediately available or (ii) time will not permit all
required documents to reach the Exchange Agent prior to the Expiration Date.
This form may be delivered by an Eligible Institution by mail or hand delivery
or transmitted, via facsimile, to the Exchange Agent at its address set forth
below not later than 5:00 p.m., New York City Time, on August 7, 1996. All
capitalized terms used herein but not defined herein shall have the meanings
ascribed to them in the Prospectus.
THE EXCHANGE AGENT IS:
FLEET NATIONAL BANK
<TABLE>
<CAPTION>
BY MAIL: BY FACSIMILE: BY HAND:
<S> <C> <C>
Fleet National Bank (860) 986-7908 Fleet National Bank
Corporate Trust Operations Corporate Trust Operations
777 Main Street, Lower Level CONFIRM BY TELEPHONE: 777 Main Street, Lower Level
CTMO 0224 Hartford, Connecticut 06115
Hartford, Connecticut 06115 (860) 986-2910 Attention: Patricia Williams
Attention: Patricia Williams
</TABLE>
DELIVERY, OR TRANSMISSION VIA FACSIMILE, OF THIS INSTRUMENT TO AN ADDRESS OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby tender(s) for exchange to the Company, upon the
terms and subject to the conditions set forth in the Prospectus and Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Senior Notes set forth below pursuant to the guaranteed delivery procedures
set forth in the Prospectus under the caption "The Exchange Offer--Guaranteed
Delivery Procedures."
The undersigned understands and acknowledges that the Exchange Offer
will expire at 5:00 p.m., New York City time, on August 7, 1996, unless
extended by the Company. With respect to the Exchange Offer, "Expiration Date"
means such time and date, or if the Exchange Offer is extended, the latest time
and date to which the Exchange Offer is so extended by the Company.
All authority herein conferred or agreed to be conferred by this Notice
of Guaranteed Delivery shall survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Notice of Guaranteed
<PAGE> 2
Delivery shall be binding upon the heirs, personal representatives, executors,
administrators, successors and assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
<TABLE>
<S> <C>
__________________________________________________________
SIGNATURES Principal Amount of Old Senior Notes
Exchanged: $
Certificate Nos. of Old Senior Notes (if available)
__________________________________________________
Signature of Owner
_____________________________________
__________________________________________________
Signature of Owner (if more than one) _____________________________________
Dated: , 1996 Total $______________________________
Name(s):______________________________________________
______________________________________________
(Please Print)
Address:______________________________________________
______________________________________________
______________________________________________
(Include Zip Code)
Area Code and
Telephone No.:________________________________________
Capacity (full title), if signing in a
representative capacity_______________________________
Taxpayer Identification or
Social Security No.:__________________________________
__________________________________________________________
</TABLE>
- 2 -
<PAGE> 3
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guaranteed institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, guarantees deposit with the Exchange Agent of the Letter of Transmittal
(or facsimile thereof), together with the Old Senior Notes tendered hereby in
proper form for transfer (or confirmation of the book-entry transfer of such Old
Senior Notes into the Exchange Agent's account at the Book- Entry Transfer
Facility described in the Prospectus under the caption "The Exchange
Offer-Guaranteed Delivery Procedures" and in the Letter of Transmittal) and any
other required documents, all by 5:00 p.m., New York City time, on the fifth New
York Stock Exchange trading day following the Expiration Date.
<TABLE>
______________________________________________________________________________________________________________________
<S> <C>
Name of Firm:___________________________________________ __________________________________________________________
Authorized Signature
Address:________________________________________________ Name:_____________________________________________________
________________________________________________________ Title:____________________________________________________
Area Code and Telephone No.:____________________________ Date:_____________________________________________________
______________________________________________________________________________________________________________________
</TABLE>
NOTE: DO NOT SEND OLD SENIOR NOTES WITH THIS FORM. ACTUAL SURRENDER OF
OLD SENIOR NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, THE LETTER OF
TRANSMITTAL.
- 3 -
<PAGE> 1
Offer to Exchange its
9 1/4% Series B Senior Notes due 2006
for any and all of its outstanding
9 1/4% Senior Notes due 2006
of
EKCO GROUP, INC.
===============================================================================
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON
AUGUST 7, 1996 UNLESS EXTENDED.
===============================================================================
To Brokers, Dealers, Commercial Banks, ____________, 1996
Trust Companies and Other Nominees:
Ekco Group, Inc., a Delaware corporation, (the "Company") is offering
upon the terms and conditions set forth in the Prospectus, dated __________,
1996 (as the same may be amended from time to time, the Prospectus"), and in the
related Letter of Transmittal enclosed herewith, to exchange (the "Exchange
Offer") its 9 1/4% Series B Senior Notes due 2006 (the "New Senior Notes") for
an equal principal amount of its 9 1/4% Senior Notes due 2006 (the "Old Senior
Notes" and together with the New Senior Notes, the Notes") As set forth in the
Prospectus, the terms of the New Senior Notes are identical in all material
respects to the Old Senior Notes, except for certain transfer restrictions
relating to the Old Senior Notes and except that the New Senior Notes will not
contain certain provisions relating to an increase in the interest rate which
were included in the Old Senior Notes under certain circumstances relating to
the timing of the Exchange Offer. Old Senior Notes may only be tendered in
integral multiples of $1,000.
THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE "THE EXCHANGE
OFFER-CONDITIONS" IN THE PROSPECTUS.
Enclosed herewith for your information and forwarding to your clients
are copies of the following documents:
1. The Prospectus, dated _________, 1996.
2. The Letter of Transmittal to exchange New Senior Notes for
your use and for the information of your clients. Facsimile copies of
the Letter Transmittal may be used to exchange New Senior Notes.
3. A form of letter which may be sent to your clients for
whose accounts you hold Old Senior Notes registered in your name or in
the name of your nominee, with space provided for obtaining such
client's instructions with regard to the Exchange Offer.
4. A Notice of Guaranteed Delivery.
5. Guidelines of the Internal Revenue Service for
Certification of Taxpayer Identification Number on Substitute Form W-9.
6. A return envelope addressed to Fleet National Bank, the
Exchange Agent.
<PAGE> 2
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON AUGUST 7, 1996, UNLESS EXTENDED. PLEASE FURNISH COPIES
OF THE ENCLOSED MATERIALS TO THOSE OF YOUR CLIENTS FOR WHOM YOU HOLD OLD SENIOR
NOTES REGISTERED IN YOUR NAME OF YOUR NOMINEE AS QUICKLY AS POSSIBLE.
In all cases, exchanges of Old Senior Notes accepted for exchange
pursuant to the Exchange Offer will be made only after timely receipt by the
Exchange Agent of (a) certificates representing such Old Senior Notes, (b) the
Letter of Transmittal (or facsimile thereof) properly completed and duly
executed with any required signature guarantees, and (c) any other documents
required by the Letter of Transmittal.
If holders of Old Senior Notes wish to tender, but it is impracticable
for them to forward their certificates for Old Senior Notes prior to the
expiration of the Exchange Offer or to comply with the book-entry transfer
procedures on a timely basis, a tender may be offered by following the
guaranteed delivery procedure described in the Prospectus under "The Exchange
Offer-Guaranteed Delivery Procedures."
The Exchange Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Old Senior Notes residing in any jurisdiction
in which the making of the Exchange Offer or the acceptance thereof would not be
in compliance with the laws of such Old Senior jurisdiction.
The Company will not pay any fees or commissions to brokers, dealers or
other persons for soliciting exchanges of Old Senior Notes pursuant to the
Exchange Offer. The Company will, however, upon request, reimburse you for
customary clerical and mailing expenses incurred by you in forwarding any of the
enclosed materials to your clients. The Company will pay or cause to be paid any
transfer taxes payable on the transfer of Old Senior Notes to it, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Questions and requests for assistance with respect to the Exchange
Offer or for copies of the Prospectus and Letter of Transmittal may be directed
to the Exchange Agent at its address set forth in the Prospectus or at (860)
986-2910.
Very truly yours,
EKCO GROUP, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU OR ANY OTHER PERSON THE AGENT OF THE COMPANY, OR ANY AFFILIATE THEREOF, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
Offer to Exchange its
9 1/4% Series B Senior Notes due 2006
for any and all of its outstanding
9 1/4% Senior Notes due 2006
of
EKCO GROUP, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON
AUGUST 5, 1996 (THE "INITIAL EXPIRATION DATE"), UNLESS EXTENDED.
To Our Clients:
Enclosed for your consideration is a Prospectus, dated
__________________, 1996 (as the same may be amended from time to time, the
"Prospectus"), and a Letter of Transmittal (the "Letter of Transmittal")
relating the offer by Ekco Group, Inc. (the "Company") to exchange (the
"Exchange Offer") its 9 1/4% Series B Senior Notes due 2006 (the "New Senior
Notes") for an equal principal amount of its 9 1/4% Senior Notes due 2006 (the
"Old Senior Notes") upon the terms and conditions set forth in the Prospectus
and in the related Letter of Transmittal. As set forth in the Prospectus, the
terms of the New Senior Notes are identical in all material respects to the Old
Senior Notes, except for certain transfer restrictions relating to the Old
Senior Notes and except that the New Senior Notes will not contain certain
provisions relating to an increase in the interest rate which were included in
the Old Senior Notes under certain circumstances relating to the timing of the
Exchange Offer. The Exchange Offer is subject to certain customary conditions.
See "The Exchange Offer" in the Prospectus. Old Senior Notes may be tendered
only in integral multiples of $1,000.
The material is being forwarded to you as the beneficial owner of Old
Senior Notes carried by us for your account or benefit but not registered in
your name. An exchange of any Old Senior Notes may only be made by us as the
registered Holder and pursuant to your instructions. Therefore, the Company
urges beneficial owners of Old Senior Notes registered in the name of a broker,
dealer, commercial bank, trust company or other nominee to contact such Holder
promptly if they wish to exchange Old Senior Notes in the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to
exchange any or all such Old Senior Notes held by us for your account or
benefit, pursuant to the terms and conditions set forth in the Prospectus and
Letter of Transmittal. We urge you to read carefully the Prospectus and Letter
of Transmittal before instructing us to exchange your Old Senior Notes.
Your instructions to us should be forwarded as promptly as possible in
order to permit us to exchange Old Senior Notes on your behalf in accordance
with the provisions of the Exchange Offer. THE EXCHANGE OFFER EXPIRES AT 5:00
P.M., NEW YORK CITY TIME, ON AUGUST 5, 1996, UNLESS EXTENDED. With respect to
the Exchange Offer, "Expiration Date" means the Initial Expiration Date, or if
the Exchange Offer is extended, the latest time and date to which the Exchange
Offer is so extended by the Company. Tender of Old Senior Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for the exchange of $1,000 principal
amount of the New Senior Notes for each $1,000 principal amount of the
Old Senior Notes, of which $125,000,000 aggregate principal amount of
the Old Senior Notes was outstanding as of April 19, 1996. The terms of
the New Senior Notes are identical in all material respects to the Old
Senior Notes, except for certain transfer restrictions relating to the
Old Senior Notes and except that the New Senior Notes will not contain
certain provisions relating
<PAGE> 2
to an increase in the interest rate which were included in the Old
Senior Notes under certain circumstances relating to the timing of the
Exchange Offer.
2. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE "THE
EXCHANGE OFFER--CONDITIONS" IN THE PROSPECTUS.
3. The Exchange Offer and withdrawal rights will expire at 5:00
p.m., New York City time, on August 7, 1996, unless extended.
4. The Company has agreed to pay the expenses of the Exchange
Offer.
5. Any transfer taxes incident to the transfer of Old Senior Notes
from the tendering Holder to the Company will be paid by the Company,
except as provided in the Prospectus and the Letter of Transmittal.
The Exchange Offer is not being made to, nor will exchanges be accepted
from or on behalf of, holders of Old Senior Notes residing in any jurisdiction
in which the making of the Exchange Offer or acceptance thereof would not be in
compliance with the laws of such jurisdiction.
If you wish us to exchange any or all of your Old Senior Notes held by
us for your account or benefit, please so instruct us by completing, executing
and returning to us the instruction form that appears below. THE ACCOMPANYING
LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATIONAL PURPOSES ONLY AND
MAY NOT BE USED BY YOU TO EXCHANGE OLD SENIOR NOTES HELD BY US AND REGISTERED IN
OUR NAME FOR YOUR ACCOUNT OR BENEFIT.
<PAGE> 3
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer of Ekco Group, Inc.
This will instruct you to exchange the aggregate principal amount of
Old Senior Notes indicated below (or, if no aggregate principal amount is
indicated below, all Old Senior Notes) held by you for the account or benefit of
the undersigned, pursuant to the terms of and conditions set forth in the
Prospectus and the Letter of Transmittal.
Aggregate Principal Amount of Old Senior Notes to be exchanged
$ *
* I (we) understand that if
I (we) sign these _______________________________________
instruction forms without
indicating an aggregate _______________________________________
principal amount of Old Signature(s)
Senior Notes in the space
above, all Old Senior _______________________________________
Notes held by you for my
(our) account will be _______________________________________
exchanged.
_______________________________________
_______________________________________
(Please print name(s) and address here)
Dated:___________________________, 1996
_______________________________________
(Area Code and Telephone Number)
_______________________________________
(Taxpayer Identification and Social
Security Number)
_______________
* Unless otherwise indicated, it will be assumed that all of your Old Senior
Notes are to be exchanged.
