================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-K
AS AMENDED
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
$250
[ ] FOR THE FISCAL YEAR ENDED DECEMBER 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-6633
FOR BETTER LIVING, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 5-2598411
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13620 LINCOLN WAY, SUITE 380 95603
AUBURN, CA (Zip code)
(Address of principal
executive offices)
AREA CODE (916) 823-9600
(Registrant's telephone number, including area code)
----------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
(Title of Class)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.05 PAR VALUE
(Title of Class)
----------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock held by nonaffiliates as of March
15, 1996 was $4,280,000.
Number of shares outstanding of each of the Registrant's classes of common
stock as of March 15, 1996:
COMMON STOCK, $.05 PAR VALUE--877,816 SHARES
----------
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
DOCUMENT IDENTIFICATION REFERENCE INCORPORATED
- ---------------------------------------------------------------------------- --------------------------
<S> <C>
Annual Report to Shareholders for the Fiscal Year Ended December 30, 1995 .. Parts I, II, and IV
Proxy Statement for Annual Meeting of Shareholders on May 8, 1996 .......... Part III
</TABLE>
================================================================================
<PAGE>
FOR BETTER LIVING, INC.ANNUAL REPORT (FORM 10-K)
FOR THE FISCAL YEAR ENDED DECEMBER 30, 1995
PART I
ITEM 1. BUSINESS
The text appearing under the caption "Business" on page 13 of the
Registrant's Annual Report to Shareholders for the fiscal year ended December
30, 1995 is incorporated herein by reference in accordance with the provisions
of Rule 12b-23.
ITEM 2. PROPERTIES
The following tabulation summarizes the approximate building and land areas
of the principal properties of the Registrant's operations as of December 30,
1995:
<TABLE>
<CAPTION>
SQUARE FT. SQUARE FT.
OF FLOOR ACRES OF OF FLOOR ACRES OF EXPIRATION
LINE OF BUSINESS LOCATION TYPE SPACE LAND SPACE LAND DATE
- --------------------- ----------------------- -------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Quikset Organization Irvine, CA Office 14,800 .8
Santa Ana, CA Plant 37,000 42.7 2034
Riverside, CA Plant 92,000 10.0 2003
Livermore, CA Plant 18,000 20.0 1999
San Diego, CA Plant 17,200 7.3 1996
Santa Paula, CA Plant 6,200 18.3 1997
Arlington, TX Plant 33,700
San Antonio, TX Plant 20,300 19.6
Katy, TX Plant 17,600 40.0
El Paso, TX Plant 24,000 20.0
Benton, AR Plant 12,100 15.6
Jonesboro, AR Plant 45,600 10.7 2002
Toccoa, GA Plant 17,100 12.8
Green Cove Springs, FL Plant 2,000 5.1
Magazine publications San Juan Capistrano, CA Office 16,400 1997
General office .......Auburn, CA Office 1,583 1998
</TABLE>
All of the above facilities are in good operating condition and adequate for
current business requirements.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
The text and tabular presentation appearing under the caption "Market for the
Registrant's Common Stock and Related Stockholder Matters" on page 14 of the
Registrant's Annual Report to Shareholders for the fiscal year ended December
30, 1995 is incorporated herein by reference in accordance with the provisions
of Rule 12b-23.
ITEM 6. SELECTED FINANCIAL DATA
The tabular presentation appearing under the caption "Selected Financial
Data" on page 15 of the Registrant's Annual Report to Shareholders for the
fiscal year ended December 30, 1995 is incorporated herein by reference in
accordance with the provisions of Rule 12b-23.
1
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The text appearing under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" commencing on page 12 and ending
on page 13 of the Registrant's Annual Report to Shareholders for the fiscal year
ended December 30, 1995 is incorporated herein by reference in accordance with
the provisions of Rule 12b-23.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and related Notes to Consolidated
Financial Statements and Independent Auditors' Report commencing on page 1 and
ending on page 11 of the Registrant's Annual Report to Shareholders for the
fiscal year ended December 30, 1995 are incorporated herein by reference in
accordance with the provisions of Rule 12b-23.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10-13.
The information required by these items will be included in a definitive
proxy statement pursuant to Regulation 14A filed with the Commission not later
than 120 days after the close of the fiscal year covered by this Report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(1) Financial Statements:
Consolidated Balance Sheets as of December 30, 1995 and December 31, 1994 and
the related Consolidated Statements of Operations, Stockholders' Equity and Cash
Flows for each of the three fiscal years in the period ended December 30, 1995,
Notes to Consolidated Financial Statements and Independent Auditors' Report
commencing on page 1 and ending on page 11 of the Registrant's Annual Report to
Shareholders for the fiscal year ended December 30, 1995 are incorporated herein
by reference. With the exception of the pages referred to in the preceding
sentence and other information specifically incorporated by reference in this
Form 10-K, the Registrant's Annual Report to Shareholders for the fiscal year
ended December 31, 1994 is not deemed filed as a part of this Report.
(2) Financial Statement Schedules:
Independent Auditors' Report on Schedule II Valuation and Qualifying Accounts
for the Fiscal Years Ended December 30, 1995, December 31, 1994 and December 25,
1993. Financial statements and schedules not listed above are omitted because of
the absence of the conditions under which they are required or because the
information, if material, is set forth in the consolidated financial statements
or the notes thereto.
2
<PAGE>
(3) The following Exhibits are filed as part of this Report: The numbers
refer to the Exhibit Table of Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
<S> <C>
3.1 Certificate of Incorporation of the Registrant as Amended October 17, 1994.
3.2 By-Laws of the Registrant, as Amended May 7, 1991.
10.1 Performance Recognition Plan, dated December 25, 1993.(1)
10.2 Performance Share Plan, as Amended May 9, 1990.(1)
10.3 Executive Deferred Compensation Plan. Incorporated by reference to Exhibit 10.2 of
the Registrant's Form 10-K for the year ended December 26, 1987.(1)
10.4 Incentive Bonus Compensation Plan, as Amended September 1980.(1)
10.5 Salary Continuation Plan. Incorporated by reference to Exhibit 5.4.1 of the
Registrant's Form 10-K for the year ended June 30, 1975.(1)
10.6 Loan and Security Agreement, Guarantees and Promissory Notes for loan from The CIT
Group/Equipment Financing, Inc. Incorporated by reference to Exhibit 10 of the
Registrant's Form 10-Q for the period ended March 26, 1994.
10.7 Loan and Security Agreement and Guarantees from the CIT Group/Credit Finance, Inc.
Incorporated by reference to Exhibit 10.2P of the Registrant's Form 10Q-A for the
period ended July 1, 1995.
13 Annual Report to Shareholders for the Fiscal Year Ended December 30, 1995 (parts
not incorporated by reference are furnished for information purposes only and are
not filed herewith).
21 Subsidiaries of the Registrant.
27 Financial Data Schedule
</TABLE>
(1) Designates management contracts or compensatory plan arrangements
required to be filed pursuant to Item 14(c) of Form 10-K.
(b) No reports on Form 8-K were filed during the three months ended
December 30, 1995.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FOR BETTER LIVING, INC.
(Registrant)
Date: April 29, 1996 By: KARL M. STOCKBRIDGE
--------------------- --------------------------------------
Karl M. Stockbridge
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Capacity Date
--------------------- --------------------------------------------- -----------------
RICHARD G. FABIAN Chairman of the Board April 29, 1996
----------------------- (Principal Executive Officer and Director)
Richard G. Fabian
F.G. FABIAN Chairman Emeritus and Director April 29, 1996
-----------------------
F.G. Fabian
WILLIAM S. FARMER Director April 29, 1996
-----------------------
William S. Farmer
DANNA LEWIS-GORDON Director April 29, 1996
-----------------------
Danna Lewis-Gordon
KARL M. STOCKBRIDGE Director April 29, 1996
-----------------------
Karl M. Stockbridge
PETER F. SULLIVAN Director April 29, 1996
-----------------------
Peter F. Sullivan
</TABLE>
4
<PAGE>
INDEPENDENT AUDITORS' REPORT ON SCHEDULE
To the Stockholders and Board of Directors of
For Better Living, Inc.:
We have audited the consolidated financial statements of For Better Living,
Inc. and subsidiaries as of December 30, 1995 and December 31, 1994, and for
each of the three fiscal years in the period ended December 30, 1995, and have
issued our report thereon dated March 15, 1996; such financial statements and
report are included in your 1995 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the consolidated
financial statement schedule of For Better Living, Inc. and subsidiaries, listed
in Item 14. This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
Deloitte & Touche LLP
Costa Mesa, California
March 15, 1996
5
<PAGE>
SCHEDULE II
FOR BETTER LIVING, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 31, 1994 AND DECEMBER 25, 1993
(IN THOUSANDS)
1995 1994 1993
------- ------- -------
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Balance at beginning of fiscal year .....................$ 841 $ 570 $ 838
Provision charged to income ............................. 230 424 159
Uncollectible receivables written off, net of recoveries (324) (153) (427)
------- ------- -------
Balance at end of fiscal year ...........................$ 747 $ 841 $ 570
======= ======= =======
6
CERTIFICATE OF INCORPORATION
OF
FOR BETTER LIVING, INC.
(As Amended 17 October 1994)
1. The name of the Corporation is For Better Living, Inc.
2. The address of the Corporation's registered office in
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware,
19001, and the name of its registered agent at said address is The Corporation
Trust Company.
3. The purpose of the Corporation is to engage in any lawful
act or activity for which Corporations may be organized under the Delaware
General Corporation Law.
4. The Corporation shall have authority to issue 2,650,000
shares of stock, consisting of 2,500,000 shares of Common Stock, par value $.05
per share, and 150,000 shares of Preferred Stock par value $1 per share.
The shares of Preferred Stock may be issued from time to time
in one or more series. The Board of Directors is expressly granted authority to
fix by resolution the designations and the powers, preferences and relative,
participating, optional or other rights (including voting powers, full or
limited, or no voting powers) and the qualifications, limitations or
restrictions thereof, in respect of the Preferred Stock or any series thereof,
and by resolution to fix, increase or decrease (but not below the number of
shares thereof then outstanding) the number of shares of any such series. Except
as otherwise provided by law or this Certificate of Incorporation as amended
from time to time or the resolutions of the Board of Directors relating to the
Preferred Stock or any series thereof (i) the Common Stock shall possess the
full voting power of the Corporation and each share thereof shall be entitled to
one vote, and (ii) the number of authorized shares of any class or classes may
be increased or decreased by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote.
5. The Board of Directors shall have the power to make, alter
or repeal the By-Laws of the Corporation, subject to any voting requirements
contained in the By-Laws, including any such requirements relating to the vote
required for amendment of any By-Law by the Board of Directors. Elections of
directors need not be by ballot unless the By-Laws so provide.
6. The Corporation is authorized to provide indemnification to
all persons whom it may indemnify pursuant to applicable law, through By-Law
provisions,
<PAGE>
agreements or otherwise, to the fullest extent permissible under Delaware, or if
applicable, California law, as amended from time to time.
7. The affirmative vote of the holders of four-fifths of the
outstanding shares of the capital stock of the Corporation entitled to vote
shall be required (a) for the adoption of any agreement for the merger or
consolidation of the Corporation with or into any other Corporation, and (b) to
authorize any sale, lease or exchange of all or substantially all of the assets
of the Corporation to or with, or any sale, lease or exchange to or with the
Corporation (in exchange for its securities in a transaction for which
stockholder approval is required by law or any agreement between the Corporation
and any national securities exchange) of any assets of, any other corporation,
person or other entity, if (as of the record date for the determination of
stockholders entitled to notice thereof and to vote thereon) such other
corporation, person or entity referred to in clause (a) or clause (b) above, is
the beneficial owner, directly, or indirectly, of more than 10% of any class of
capital stock of the Corporation. For the purposes hereof any corporation,
person or other entity shall be deemed to be the beneficial owner of any shares
of capital stock of the Corporation, (1) which it has the right to acquire
pursuant to any agreement, or upon exercise of conversion rights, warrants or
options, or otherwise, or (ii) which are beneficially owned, directly or
indirectly (including shares deemed owned through application of clause (1)
above), by any other corporation, person or entity with which it has any
agreement, arrangement or understanding with respect to the acquisition,
holding, voting or disposition of stock of the Corporation, or which is its
"affiliate" or "associate" as those terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934.
8. Whenever a compromise or arrangement is proposed between
the Corporation and its creditors or any class of them and/or between the
Corporation and its shareholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or shareholder thereof, or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
shareholders or class of shareholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the shareholders or class of shareholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or
2
<PAGE>
class of creditors, and/or on all the shareholders or class of shareholders, of
the Corporation, as the case may be, and also on the Corporation.
9. The names and mailing addresses of the incorporators are as
follows:
NAME MAILING ADDRESS
---- ---------------
B.J. Consono Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19001
F.J. Obara, Jr. Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19001
A.D. Grier Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19001
10. A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, as the same exists or hereafter may be amended, or (iv) for any
transaction from which the director derived an improper personal benefit. If the
Delaware General Corporation Law is hereafter amended to authorize the further
elimination or limitation of the liability of directors, then the liability of a
director of the Corporation, in addition to the limitation on liability provided
by this Article 10, shall be limited to the fullest extent permitted by any such
amended Delaware General Corporation Law. Any repeal or modification of this
Article 10 or any new provision of the Certificate of Incorporation inconsistent
with this Article 10 shall be prospective only and shall not adversely affect
any limitation on the personal liability of a director of the Corporation
existing at the time of such repeal or modification or adoption of such
inconsistent provision.
3
BY-LAWS
OF
FOR BETTER LIVING, INC.
(as Amended May 7, 1991)
1. MEETING OF SHAREHOLDERS.
1.1 Annual Meeting. The annual meeting of shareholders shall be
held on the second Wednesday of May in each year, or as soon thereafter as
practicable, and shall be held at a place and time designated by the Board of
Directors (the "Board").
1.2 Special Meetings. Special meetings of the shareholders may
be called by resolution of the Board or by the Chairman of the Board
("Chairman") and shall be called by the Chairman, the President or the Secretary
upon the written request (stating the purpose or purposes of the meeting) of a
majority of the Board or of the holders of record of a majority of the issued
and outstanding shares of the Company entitled to vote at such a meeting. The
time and place of any special meeting of the shareholders shall be designated
and specified in the notice thereof by the person or persons calling the
meeting.
1.3 Notice of Meetings. Written notice of each meeting of
shareholders shall be mailed to each shareholder entitled to vote at the
meeting, not less than ten nor more than fifty days before the meeting. Such
notice shall state the place, date and
1
<PAGE>
hour of the meeting, and in the case of a special meeting, the purpose or
purposes for which it is called.
1.4 Quorum. The presence in person or by proxy of the holders
of a majority of the shares entitled to vote shall constitute a quorum for the
transaction of any business, except as otherwise provided by law. In the absence
of a quorum any officer entitled to preside at or act as secretary of such
meeting shall have the power to adjourn the meeting from time to time until a
quorum is present, without further notice other than announcement at the meeting
of the adjourned time and place; but if the meeting is adjourned for more than
thirty days, or if a new record date is set, a new notice must be given. At any
adjourned meeting at which a quorum is present any action may be taken which
might have been taken at the meeting as originally called.
1.5 Voting; Proxies. Shareholders may attend meetings and
vote either in person or by proxy. Corporate action to be taken by shareholder
vote, other than the election of directors, shall be authorized by a majority of
the votes cast at a meeting of shareholders at which a quorum is present, except
as otherwise provided by law, the Certificate of Incorporation, or these ByLaws.
1.6 Inspectors of Election. The Board shall, in advance of
any meeting of shareholders, appoint one or more inspectors to
2
<PAGE>
act at the meeting and make a written report thereof. The Board may designate
one or more persons as alternate inspectors to replace any inspector who fails
to act. If no inspector or alternate is able to act at a meeting of
shareholders, the Chairman of the meeting shall appoint one or more inspectors
to act at the meeting. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his ability. The
number of inspectors shall be either one or three, as determined by the Board,
or if the inspectors are appointed at the meeting, by the Chairman of the
meeting.
The inspectors shall (a) ascertain the number of shares
outstanding and the voting power of each, (b) determine the shares represented
at a meeting an the validity of proxies and ballots, (c) count all votes and
ballots, (d) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors, and
(e) certify their determination of the number of shares represented at the
meeting, and their count of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors. If there are three inspectors, the decision, act
or certificate of a majority is effective in all respects as the decision, act
or certificate of all.
3
<PAGE>
1.7 Voting by Ballot. If directed by the chairman of any
meeting of shareholders, or if requested by shareholders possessing more than
10% of the voting power represented at any such meeting, any election of
directors or shareholder vote at such meeting shall be conducted by written
ballot. In the absence of such direction or request, any such election or vote
may be conducted by voice vote in such manner as the chairman may determine.
1.8 Record Date. The Board may fix, in advance, a record
date, not more than sixty, nor less than ten, days before the date of any
meeting of shareholders, in the manner and with the effect provided by law.
1.9 List of Shareholders. At least ten days before every
meeting of shareholders, a complete list of the shareholders entitled to vote at
the meeting shall be prepared, arranged in alphabetical order, showing the
address of each shareholder and the number of shares registered in his name.
Such list shall be open to the examination of any shareholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at the place where the meeting is to be
held or at some other place specified in the notice of the meeting within the
city where the meeting is to be held. The list shal1 also be available
throughout the meeting and may be inspected by any shareholder who is present.
4
<PAGE>
1.10 Notice of Business. At any meeting of shareholders, only
such business shall be conducted as shall have been brought before the meeting
(a) by or at the direction of the Board, (b) in accordance with Rule 14a-8 under
the Securities Exchange Act of 1934, or (c) by a shareholder of record entitled
to vote at such meeting who complies with the notice procedures set forth in
this Section. For business to be properly brought before a meeting by such a
shareholder, the shareholder shall have given timely notice thereof in writing
to the Secretary of the Company. To be timely, such notice shall be delivered to
or mailed and received at the principal executive office of the Company not less
than thirty days nor more than ninety days prior to the meeting; provided,
however, that in the event that less than forty days' notice of the date of the
meeting is given by the Company, notice by the shareholder to be timely must be
so received not later than the close of business on the tenth day following the
day on which such notice of the date of the meeting was mailed or otherwise
given. Such shareholder's notice to the Secretary shall set forth as to each
matter the shareholder proposes to bring before the meeting (a) a brief
description of the business desired to be brought before the meeting, and in the
event that such business includes a proposal to amend either the Certificate of
Incorporation or the By-Laws of the Company, the language of the proposed
amendment, (b) the name and address of the shareholder proposing such business,
(c) the class and number of shares of stock of the Company which are owned by
such shareholder, and (d) any material personal interest of such
5
<PAGE>
shareholder in such business. If notice has not been given pursuant to this
Section, the Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that the proposed business was not properly brought
before the meeting, and such business may not be transacted at the meeting. The
foregoing provisions of this Section do not relieve any shareholder of any
obligation to comply with all applicable requirements of the Securities Exchange
Act of 1934 and rules and regulations thereunder.
1.11 Nomination of Directors. At any meeting of shareholders, a
person may be a candidate for election to the Board only if such person is
nominated (a) by or at the direction of the Board: (b) by any nominating
committee or person appointed by the Board, or (c) by a shareholder of record
entitled to vote at such meeting who complies with the notice procedures set
forth in this Section. To properly nominate a candidate, a shareholder shall
give timely notice of such nomination in writing to the Secretary of the
Company. To be timely, such notice shall be delivered to or mailed and received
at the principal executive office of the Company not less than thirty days nor
more than ninety days prior to the meeting; provided, however, that in the event
that less than forty days' notice of the date of the meeting is given by the
Company, notice of such nomination to be timely must be so received not later
than the close of business on the tenth day following the day on which such
notice of the date of the meeting was mailed or
6
<PAGE>
otherwise given. Such shareholder's notice to the Secretary shall set forth (a)
as to each person whom the shareholder proposes to nominate (i) the name, age,
business address and residence address of the person, (ii) the principal
occupation or employment of the person, (iii) the class and number of shares of
stock of the Company which are owned by the person, and (iv) any other
information relating to the person that would be required to be disclosed in a
solicitation of proxies for election of directors pursuant to Rule 14a under the
Securities Exchange Act of 1934; and (b) as to the shareholder giving the notice
(i) the name and address of such shareholder and (ii) the class and number of
shares of stock of the Company owned by such shareholder. The Company may
require such other information to be furnished respecting any proposed nominee
as may be reasonably necessary to determine the eligibility of such proposed
nominee to serve as a director of the Company. No person shall be eligible for
election by the shareholders as a director at any meeting unless nominated in
accordance with this Section.
2. BOARD OF DIRECTORS.
2.1 Number of Directors. The business of the Company shall be
managed by the Board, which shall consist of the number of directors fixed from
time to time as provided in this Section. If any director shall die, resign, or
become incapacitated, or if any incumbent director who is a nominee for
reelection at any annual or other meeting of shareholders at which directors are
to
7
<PAGE>
be elected should be unable, or decline, to stand for reelection, then the
authorized number of directors shall automatically be reduced by one, so that no
vacancy shall exist on the Board; provided, however, that the authorized number
of directors shall never be reduced to less than three. Subject to the
foregoing, the authorized number of directors may be fixed or altered from time
to time, by resolution adopted by the shareholders or the Board of Directors as
provided in, and subject to the limitations of Section 6.5 of the By-Laws.
2.2 Election and Term of Directors. At such time as the Company
has a public issuance of its stock or when the authorized number of directors is
increased to six (6) or more, the Board shall then and thereafter be divided
into three classes, the first and second classes each to consist of one-third of
the authorized number of directors (increased or reduced, if necessary, to the
nearest whole number) and the third class to consist of the remainder of the
authorized number of directors. The term of office of the first class will
expire at the first annual meeting of shareholders following such division into
classes, that of the second class will expire at the second annual meeting, and
that of the third class will expire at the third annual meeting. At each annual
meeting of shareholders after such classification, directors shall be chosen for
a term of three years to succeed those whose terms expire, and shall hold office
until the third following annual meeting of shareholders and until the election
of their
8
<PAGE>
respective successors. When such classification shall become effective as
provided in the first sentence of this Section 2.2, the class to which each
director then in office shall belong shall be designated by the Board, or by the
shareholders if the Board shall fail to make such designation. The shareholders
or, as the case may be, the Board, shall in like manner designate the class of
each director who shall be chosen to fill one of the vacancies created by such
amendment. No subsequent reduction of the authorized number of directors shall,
of itself, change the foregoing provisions for classification of directors. The
number of directors may be changed by resolution of two-thirds of the entire
Board or by a vote of the holders of two-thirds of the issued and outstanding
stock of the Company entitled to vote, but any such change shall be made as
nearly pro rata as possible among the three classes, and no decrease may shorten
the term of any incumbent director; in no event shall the Board of Directors
consist of less than three directors. Directors shall be elected at each annual
meeting of shareholders by a plurality of the votes cast. As used in these
By-Laws, "entire Board" means the total number of directors which the Company
would have if there were no vacancies.
2.3 Quorum and Manner of Acting. If the Chairman is present at
a meeting of the Board, then a quorum shall consist of three directors, unless
there be five or fewer directors in the office, in which case a quorum shall
consist of two directors. If
9
<PAGE>
the Chairman is not present at a meeting of the Board, then a quorum shall
consist of two-thirds of the entire Board, or one less than the number of
directors in office, whichever number is smaller. Action of the Board shall be
authorized by the vote of the majority of the directors present at the time of
the vote, if a quorum is present, unless otherwise provided by the law or these
By-Laws. In the absence of a quorum, a majority of the directors present may
adjourn any meeting from time to time until a quorum is present, on notice given
as provided in Section 2.6 hereof.
2.4 Annual and Regular Meetings. Annual meetings of the Board,
for the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of shareholders
and at the same place or (b) as soon as practicable after the annual meeting of
shareholders, on notice provided in section 2.6 of these By-Laws, at a time and
place designated by the Chairman or by a majority of the entire Board. Regular
meetings of the Board may be held at such times and places as may be designated
by the Chairman or by resolution adopted by a majority of the entire Board.
2.5 Special Meetings. Special meetings of the Board may -be
called by the Chairman or by two-thirds of the directors then in office,
including at least one from each class of directors then in office.
10
<PAGE>
2.6 Notice of Meetings; Waiver of Notice. Notice of the time
and place of each regular and special meeting of the Board, and of each annual
meeting not held immediately after the annual meeting of shareholders and at the
same place, shall be given to each director by mailing it to him, or by
delivering or telegraphing it to him, at his residence or usual place of
business. In the case of special meetings called by the Chairman, or a regular
or annual meeting held at a time and place designated by the Chairman, such
notice if mailed shall be given at least three days before the meeting or if
delivered or telegraphed, shall be given at least 48 hours before the meeting.
In the case of special meetings called by the directors, such notice if mailed
shall be given at least twenty days before the meeting, or if delivered or
telegraphed, at least eighteen days before the meeting. In the case of a regular
meeting, or annual meeting held at a time and place designated by the Board,
such notice if mailed shall be given at least fourteen days before the meeting,
or if delivered or telegraphed, shall be given at least twelve days before the
meeting. Notice of a special meeting shall also state the general purpose or
purposes for which the meeting is called. Notice need not be given to any
director who submits a signed waiver of notice before or after the meeting, or
who attends the meeting without protesting the lack of notice to him, either
before the meeting or when it begins. Notice of any adjourned meeting need not
be given, other than by announcement at the meeting at which the adjournment is
taken.
11
<PAGE>
2.7 Resignation of Directors. Any director may resign at any
time by giving written notice to the President or Secretary of the Company, to
take effect at the time specified therein. The acceptance of such resignation,
unless required by the terms thereof, shall not be necessary to make it
effective.
2.8 Vacancies. Any vacancy in the Board, including one created
by an increase in the number of directors, may be filled for the unexpired term
by a majority of the remaining directors if such majority includes the Chairman,
or otherwise by a two-thirds vote of the remaining directors provided that any
vacancy not so filled within five days may thereafter be filled by the vote or
written consent of shareholders entitled to exercise a majority of the voting
power of the Company or by the vote of a majority of the shares represented and
entitled to vote at a meeting of shareholders; and provided, further, that a
sole remaining director shall not be entitled to fill vacancies on the Board,
and such vacancies may be filled only by the shareholders as provided in the
foregoing clause.
2.9 Action by Directors without a Meeting. Any action by the
Board or any committee of the Board may be taken without a meeting if a written
consent to the action is signed by all of the members of the Board or committee.
12
<PAGE>
2.10 Compensation. Directors shall receive such compensation as
the Board determines, together with reimbursement of such reasonable expenses as
may be authorized by the Board in connection with the performance of the
directors' duties. A director may also be paid compensation, at the discretion
of the Board, for serving the Company, its affiliates or subsidiaries in other
capacities.
2.11 Participation in Meetings by Conference Telephone. Members
of the Board may participate in a meeting through the use of conference
telephone or similar communications equipment, so long as all members
participating in such meeting can hear one another.
2.12 Authority. Directors shall have no authority to commit the
Company or to enter into commitments binding on the Company, except as
authorized by the Board.
3. COMMITTEES
3.1 Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, may designate an Executive Committee of at least
three directors, including the Chairman, who shall be ex officio a member of the
Executive Committee and shall act as chairman thereof unless he shall appoint
another member to serve as chairman. The Executive Committee shall have and may
exercise the powers of the Board in the management of
13
<PAGE>
the business and affairs of the Company except as otherwise provided by law, the
Certificate of Incorporation or these By-Laws, or as otherwise provided or
limited from time to time by resolutions of the Board designating such committee
or defining its powers or authority. The Executive Committee hall serve at the
pleasure of the Board. A majority of the members of the Executive Committee,
including the Chairman, shall constitute a quorum for the transaction of
business at every meeting of the Executive Committee. The Board may designate
one or more directors as alternate members of the committee, who may replace any
absent or disqualified member (other than the Chairman) at any meeting of the
committee. In the absence of disqualification of any member of the committee, if
no alternate member has been designated by the Board, the member or members at
the meeting of the committee and not disqualified, whether or not a quorum, may,
by unanimous vote, appoint another director to act at the meeting in place of
the absent or disqualified member. The Executive Committee shall keep minutes of
its meetings, and all action of the committee shall be reported to the Board at
its next meeting succeeding such action. The committee shall adopt rules of
procedure and shall meet as provided by those rules or by resolutions of the
Board.
3.2 Other Committees. The Board, by resolution adopted by a
majority of the entire Board, may designate other committees or two or more
directors, which to the extent provided in the resolutions creating them, may
exercise the powers of the Board in
14
<PAGE>
the management of the business and affairs of the Company. The Board may also,
by such resolution, designate committees of one or more directors and one or
more persons who are not directors, with such powers and duties as the Board may
assign to them. Any such committees shall serve at the pleasure of the Board.
Without limiting the power of the Board to appoint such committees and designate
their function, it is contemplated that the Company will have a compensation
committee as provided for in section 4.11 of these By-Laws and the following
advisory committees:
A. An Operating Committee composed of the Chairman and the
presidents or general managers of the operating divisions and subsidiaries of
the Company, as appointed by the Chairman. The Chairman shall serve as chairman
of the Operating Committee.
B. A Control Report and Audit Committee composed of the
Chairman, the Controller and such other members as may be appointed by the
Chairman. The chairman of this committee shall be appointed by the Chairman.
C. A Finance Committee composed of the Chairman, the Financial
Vice President and such other members as may be appointed by the Chairman. The
chairman of this committee shall be appointed by the Chairman.
15
<PAGE>
D. An Acquisitions Committee composed of the Chairman, who
shall serve as chairman, and such other members as may be appointed by the
Chairman to review and make recommendations concerning proposed acquisitions
which may be brought to the attention of the Company.
4. OFFICERS
4.1 Executive Officers. The executive officers of the Company
shall be the Chairman, the President, and one or more Vice Presidents, one of
whom may be designated Executive Vice President, one of whom may be designated
Financial Vice President, and one or more of whom may be designated as Senior
Vice President. The Chairman shall be elected from among the directors. The
offices of Chairman and President, may be held by the same person. The executive
officers shall be elected annually by the Board. The Chairman shall hold office
until the next annual meeting of the Board and until the election of his
successor, and shall not be subject to removal by the Board. The other executive
officers shall hold office until the next annual meeting of the Board and until
the election of their successors, or until their removal by the Board.
4.2 Other Officers. The Board shall appoint annually a
Treasurer, a Secretary and a Controller. Any of such offices may be filled by a
Vice President and the offices of Treasurer or Controller or Secretary may be
filled by the same person. The
16
<PAGE>
Board or the Chairman may appoint other officers (including Assistant Vice
Presidents, Assistant Secretaries and Assistant Treasurers) or agents, each of
whom shall hold office for such period and have such powers and duties as the
Board or the Chairman determines.
4.3 Vacancies. A vacancy in any office may be filled for the
unexpired term in the manner prescribed in Sections 4.1 and 4.2 of these By-Laws
for election or appointment to the office.
4.4 Chairman. The Chairman of the Board shall be the chief
executive officer of the Company and shall preside at all meetings of the Board
and of the shareholders, and subject to the control of the Board, shall have
such powers and duties as chief executive officers of corporations usually have,
or as the Board assigns to him, in addition to those provided for by law or
these By-Laws.
4.5 The President. If there be no Chairman, the President
shall serve as the chief executive officer of the Company and shall preside at
meetings of the Board and of the shareholders. The President shall have such
other powers and duties as the Board assigns to him, and subject to the control
of the Board and the authority of the Chairman, shall be the general manager of
the business of the Company and shall have such duties as presidents of
corporations usually have.
17
<PAGE>
4.6 Vice Presidents. Each Vice President shall have such
designation as the Board may determine and such powers and duties as the Board
or the Chairman or the President, subject to the control of the Board, assigns
to him. One of the Vice Presidents may be designated by the Board to act, in the
absence of the President, in the President's place.
4.7 The Treasurer. The Treasurer shall, subject to the
direction of the President or Financial Vice President have charge of all funds,
securities, notes, receipts and disbursements of the Company. He shall be
responsible for the deposit of Company funds in or withdrawal from such banks or
other depositories as shall be selected by or with the approval of the Board,
and shall provide all necessary cash and other records to the Controller. He
shall perform such other duties as treasurers of corporations usually have or as
shall have been assigned by the Chairman, the President or the Financial Vice
President. If a Controller shall not have been appointed, the Treasurer shall
have the duties of Controller.
4.8 The Secretary. The Secretary shall be the secretary of,
and keep the minutes of, all meetings of the Board and of the shareholders,
shall be responsible for giving notice of all meetings of shareholders and of
the Board, shall keep the seal and shall apply it to any instrument requiring
it. He shall be the custodian of the corporate records (except accounting
records), contracts and documents, and shall have such other powers and
18
<PAGE>
duties as the Chairman or the President assigns to him. In the absence of the
Secretary from meetings, the minutes shall be kept by the person appointed for
that purpose by the presiding officer.
4.9 The Controller. The Controller shall be the officer in
charge of accounts of the Company and shall be responsible for the maintenance
of adequate accounting and internal auditing procedures and adequate records of
the Company and for the preparation of financial statements and reports on the
operation of the business. He shall be responsible to the President or Financial
Vice President with respect to the administration of his office and shall have
such other powers and duties as the Board, the Chairman, the President, or the
Financial Vice President assigns to him.
4.10 Division Officers. For administrative and management
purposes, the Chairman with the approval of the Board may designate divisions of
the Company, and may appoint division officers with such titles as deemed
necessary or advisable for the transaction of the business of the Company. Any
division officer may be authorized to appoint subordinate division officers in
accordance with such written limitations and instructions as may be given to him
by the Chairman. Division officers shall serve at the pleasure of the. Board,
the Chairman or any other executive office of the Company or officer of a
division to whom such division officers may from time to time be responsible
pursuant to
19
<PAGE>
instructions of the Board of Directors or the Chairman. Any division officer may
be removed from office as a division officer, either with or without cause, at
any time, by the Board, the Chairman or by any other executive officer of the
Company or officer of a division to whom such division officer may at the time
be responsible. A division officer shall not be an officer of the Company by
virtue of his position as such division officer. Division officers shall perform
such duties as shall be assigned to them from time to time by the Board or the
Chairman, or the officers to whom they are responsible, but no division officer
shall execute any deed, lease or other conveyance or transfer of real property
of the Company, any note or other evidence of indebtedness or any mortgage or
other security for indebtedness without express authorization by the Board or
the Executive Committee.
4.11 Salaries and Benefits. The Board may appoint a
Compensation Committee composed of the Chairman and at least two other members
of the Board to review and determine the salaries, extra compensation and other
benefits of the corporate executive officers, including incentive awards or
allocations under any plan which may be adopted from time to time by the
Company, unless such plan specifically provides for determination thereunder to
be made in some other manner. The Compensation Committee, if there be such a
committee, and otherwise the Board of Directors shall establish plans and set
policy for all salaries, bonuses and other incentive
20
<PAGE>
programs and shall annually review the operations of such programs and consider
their effectiveness and the need for any changes. The Compensation Committee
shall make specific determinations as to salary and bonus action in the case of
corporate officers. Specific determinations as to other officers, including
officers of subsidiaries, shall be made by or under the authority of the
Chairman, in accordance with policies established by the Board or the
Compensation Committee, and shall be reviewed at least annually by the Board or
the Compensation Committee. If no Compensation Committee has been appointed, all
of the functions of the Compensation Committee shall be performed by the Board
or by such other committees as the Board may designate. No member of the Board
or of any such committee shall take any part in the deliberations with respect
to salary, bonus or other benefits to be received by such member in his capacity
as an officer of the Company.
5. SHARES.
5.1 Certificates. The shares of the Company shall be
represented by certificates in the form approved by the Board. Each certificate
shall be signed by the Chairman or the President or a Vice President and by the
Secretary or the Treasurer. If the certificate is countersigned by (a) a
transfer agent other than the Company or its employee, or (b) a registrar other
than the Company or its employee, any other signature on the certificate may be
a facsimile. In any case, any officer, transfer agent, or registrar
21
<PAGE>
who has signed or whose facsimile has been placed upon a certificate shall have
ceased to be such officer, transfer agent, or registrar before such certificate
is issued, it may be issued by the Company with the same effect as if he were
such officer, transfer agent, or registrar at the date of issue. The corporate
seal may, but need not, be placed upon the certificates representing the
Company's shares.
5.2 Transfers. Shares shall be transferable only on the
Company's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory surety before issuing a new
certificate to replace a certificate claimed to have been lost or destroyed.
5.3 Transfer Agents and Registrars. The Company may have one or
more transfer agents and one or more registrars of its shares, whose respective
duties shall be defined by the Board.
6. MISCELLANEOUS.
6.1 Seal. The corporate seal shall be in the form of a circle
and shall bear the Company's name and the year and state in which it was
incorporated.
6.2 Fiscal Year. The Board may determine the Company's fiscal
year. Until changed by the Board, the Company's fiscal year shall end on the
last Saturday in December.
22
<PAGE>
6.3 Voting of Share in Other Corporations. Shares in other
corporations which are held by the Company may be represented and voted by the
Chairman or the President or a Vice President of the Company or by proxy or
proxies appointed by one of them. The Board may, however, appoint some other
person to vote such shares.
6.4 Indemnification of Officers, Directors, Employees and
Agents.
6.4.1 Policy. It is the policy and intention of the corporation
to provide to its directors and officers broad and comprehensive indemnification
from liability to the full extent permitted by law.
6.4.2 Right to Indemnification. Each person who was or is a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether. the basis of such proceeding is alleged action
in an official capacity or in any other capacity while serving as a director,
23
<PAGE>
officer, employee or agent, shall be indemnified and held harmless by the
corporation to the fullest extent permitted by the laws of Delaware against all
costs, charges, expenses, liabilities and losses (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that, except
as provided in Section 6.4.3, the corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was initiated
or authorized by the Board of Directors of the corporation. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the corporation
of an undertaking, by or on behalf of such director or officer, to
24
<PAGE>
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise. The corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
6.4.3 Right of Claimant to Bring Suit. If a claim under this
Section is not paid in full by the corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
corporation) that the claimant has failed to meet a standard of conduct which
makes it permissible under Delaware law for the corporation to indemnify the
claimant for the amount claimed. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is permissible in the circumstances
because he or she has met such standard of conduct, nor an actual determination
by the
25
<PAGE>
corporation (including its Board of Directors, independent legal counsel or its
stockholders), that the claimant has not met such standard of conduct, shall be
a defense to the action or create a presumption that the claimant has failed to
meet such standard of conduct.
6.4.4 Non-Exclusivity of Rights. The right to indemnification
and the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Section shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, By-Law, agreement, vote of
stockholders or disinterested directors or otherwise.
6.4.5 Insurance. The corporation may maintain insurance, at
its expense, to protect itself and any director, officer, employee or agent of
the corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under Delaware law.
6.4.6 Expenses as a Witness. To the extent that any director,
officer, employee or agent of the corporation is by reason of such position, or
a position with another entity at the request of the corporation, a witness in
any action, suit or
26
<PAGE>
proceeding, he or she shall be indemnified against all costs and expenses
actually and reasonably incurred by him or her or on his or her behalf in
connection therewith.
6.4.7 Indemnity Agreements. The corporation may enter into
indemnity agreements with the persons who are members of its Board of Directors
from time to time, and with such officers, employees and agents as the Board may
designate, such indemnity agreements to provide in substance that the
corporation will indemnify such persons to the full extent contemplated by this
Section.
6.4.8 Effect of Repeal or Modification. Any repeal or
modification of this Section shall not result in any liability for a director
with respect to any action or omission occurring prior to such repeal or
modification.
6.5 Amendments. By-Laws may be amended, repealed or adopted by
the affirmative vote of majority of the entire Board or of the holders of a
majority of the issued and outstanding stock of the Company entitled to vote,
except that amendment, repeal or adoption of By-Laws relating to (i) the number,
classification or election of directors, or (ii) the number and classification
or directors necessary to call special meetings of directors or shareholders, or
to designate the time and place of annual or regular meetings of the Board, or
(iii) the number and
27
<PAGE>
classification of directors who shall constitute a quorum, or (iv) the notice to
be given of meetings of the Board, or (v) the presence of the Chairman at
meetings of the Executive Committee, or (vi) the powers of the Chairman, or
(vii) the power of the Board to elect or remove officers, shall require the
affirmative vote of two-thirds of the entire Board or of the holders of
two-thirds of the issued and outstanding stock of the Company entitled to vote.
This section 6.5 shall not be amended except by the affirmative vote of
two-thirds of the issued and outstanding stock of the Company entitled to vote.
28
FOR BETTER LIVING, INC.
Performance Recognition Plan
Effective December 25, 1993
ARTICLE I
TITLE AND PURPOSE
This plan shall be known as the "For Better Living, Inc. Performance
Recognition Plan" and units granted under the Plan shall be known as Performance
Recognition Units. The purpose of this Plan is to provide (i) a long-term
performance incentive to certain officers, key employees, directors and
consultants of the Company and its subsidiaries and (ii) a means of attracting
and retaining the services of persons of outstanding abilities to serve in such
capacities.
ARTICLE II
DEFINITIONS
2.1. Appreciated Book Value shall mean the book value, calculated as
provided in Section 6.1, of a Unit as of any Valuation Date following the grant
of such Unit to a Participant.
2.2. Appreciated Fair Market Value shall mean the value, calculated as
provided in Section 6.2, of a Unit as of any Valuation Date following the grant
of such Unit to a Participant.
2.3. Base Book Value shall mean the book value, calculated as provided
in Section 6.1, of a Unit as of the Valuation Date coinciding with or
immediately preceding the Grant Date of such Unit.
2.4. Base Fair Market Value shall mean the value, calculated as
provided in Section 6.2, of a Unit as of the Valuation Date immediately
preceding or coinciding with the Grant Date of such Unit.
2.5. Board of Directors or Board shall mean the Board of Directors of
the Company.
2.6. Committee shall mean the group of individuals appointed and
acting in accordance with Article IX.
<PAGE>
2.7. Common Stock shall mean the common stock of the company.
2.8. Company shall mean For Better Living, Inc., a Delaware
corporation.
2.9. Employment and Termination of Employment shall have the usual
meaning of such terms in referring to regular employees of the Company or its
subsidiaries. In the case of a participant other than a regular employee, such
as a director, consultant, or officer who serves the Company on a part-time
basis, "employment" shall mean the continuance of such relationship, and
"termination of employment" shall mean the termination of all significant
relationships between such Participant and the Company, but not a change in
nature of the relationship; for example, it shall not be deemed "termination of
employment" if a director is not reelected to the Board but continues as a
consultant to the Company or as an officer or full time employee of the Company.
Similarly, it shall not be deemed "termination of employment" if a participant
who has been a regular employee becomes, instead, a director, consultant or
part-time officer of the Company.
2.10. Fiscal Year shall mean the fiscal year of the Company.
2.11. Grant Date shall mean the date on which the Committee grants a
Unit or Units to a Participant.
2.12. Participant shall mean a person who has been selected to
participate in the Plan by the Committee pursuant to Article III.
2.13. Permanent and Total Disability shall mean the total and permanent
incapacity, as determined by the Committee based upon reasonable evidence, of a
Participant to render substantial services to the Company by reason of mental or
physical disability.
2.14. Plan shall mean the For Better Living Inc. Performance
Recognition Plan.
2.15. Change of Control shall mean the acquisition of 50% or more of
the issued and outstanding shares of voting stock of the Company by one
individual or entity, who or
2
<PAGE>
which is not the owner of such shares at the date of this Plan, or any
reorganization, merger, consolidation, sale of assets or like transaction or
series of transactions following which the former shareholders of the Company
own less than 50% of the voting power of the surviving or resulting entity, or
(as the case may be) the Company, or a surviving entity controlled by the former
shareholders of the Company owns less than 50% of the assets or earning power of
the Company as it existed prior to such transaction or series of transactions.
2.16. Unit shall mean one Performance Recognition Unit granted under
this Plan.
2.17. Unit Account shall mean the account maintained by the Committee
for each Participant in accordance with Article V.
2.18. Valuation Date shall mean the last day of each Fiscal Quarter
and such other dates as may be approved by the Committee.
ARTICLE III
PARTICIPATION
Eligibility for participation in the Plan shall be determined by the
Committee and the Participants in the Plan shall be selected by the Committee
from time to time at such intervals as the Committee deems appropriate.
ARTICLE IV
GRANT OF UNITS
The Committee may from time to time grant Units to a Participant. A
Participant may receive more than one grant of Units.
The Units shall be used solely as a device for the measurement and
determination of the amounts to be paid as benefits under this Plan. The Units
shall not be treated as property or as a trust fund of any kind. All amounts at
any time attributable to the Units or allocated to a Participant's Unit Account
shall be and remain the sole property of the Company, and each Participant's
rights in
3
<PAGE>
the Units and Unit Account is limited to the right to receive cash as herein
provided.
The Committee shall establish a Unit Account for each Participant,
which account shall be a memorandum account on the books of the Company. Each
grant of Units to a Participant under this Plan shall be credited to his Unit
Account.
4
<PAGE>
ARTICLE VI
VALUATION
6.1. Determination of Book Value. The Base Book Value of a Unit shall
be the consolidated shareholders' equity of the Company as reflected in the
Company's regularly prepared financial statements in accordance with generally
accepted accounting principles, consistently applied, divided by one-tenth of
the number of outstanding shares of Common Stock. The Appreciated Book Value of
a Unit shall be its book value determined as provided in the foregoing sentence
(using the same divisor) subject to the following adjustments: shareholders'
equity shall be increased by (i) cash dividends paid and (ii) the amount of any
distributions to shareholders (including any repurchases, redemptions or
retirements of shares), and shareholders' equity shall be reduced by any
additions to such equity arising from the issuance of shares or other capital
contributions, in either case occurring subsequent to the Valuation Date as of
which the Base Book Value of the Unit in question was determined.
Notwithstanding the generality of the foregoing, with respect to Units granted
prior to 1/1/94, consolidated shareholder's equity shall not include the effect
of the adjustment made to the Company's financial statements in the first
quarter of 1994 as a result of the application of PASB Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investment in Debt and
Equity Securities."
6.2. Determination of Fair Market Value. The Base Fair Market Value of
a Unit shall be ten times the last quoted closing price for the Common Stock on
the last trading day preceding the Valuation Date in question on which there was
trading in the Common Stock. The Appreciated Fair Market Value of a Unit shall
be determined in the same way as the Base Fair Market Value but shall be
adjusted to reflect stock dividends, stock splits or like capital adjustments
occurring subsequent to the Valuation Date as of which the Base Fair Market
Value was determined, and any other adjustments deemed equitable by the
Committee in determination of Appreciated Fair Market Value shall be made as
directed or approved by the Committee, which may (among other things) apply such
methods and information as it may deem appropriate for ascertaining the market
value of
5
<PAGE>
a share of stock at any particular date if quoted trading prices are not readily
available.
6.3. Powers of the Committee. In making any determination for
purposes of this Plan as to the determinations of book value, appreciated fair
market value, or other determination respecting the units, the Committee shall
have the power to fix and alter, from time to time in its discretion, the
computational methods and formulae to be used in arriving at such
determinations, for the purpose of providing, as nearly as possible, in the sole
judgment of the Committee, mathematical determinations which carry out the
intent and purposes of this Plan after taking into account such factors as may
have arisen over the life of the Units and which may not have been specifically
provided for herein.
ARTICLE VII
VESTING
7.1. Vesting Schedule. The interest of a Participant in his Units
shall vest and become nonforfeitable according to the following schedule:
Anniversary of Percentage
Grant Date Vested
-------------- ----------
1st 10%
2nd 20%
3rd 30%
4th 40%
5th 50%
6th 60%
7th 70%
8th 80%
9th 90%
10th 100%
7.2. Early Vesting. Notwithstanding the provisions of Section 7.1,
the interest of a Participant in his Units shall be 100% vested upon (i) his
attainment of age 65, (ii) his death, (iii) his Permanent and Total Disability,
[(iv) the occurrence of a Change of Control,] or [(v) the occurrence of a sale
or other disposition of the division or subsidiary of the Company in which the
Participant is
6
<PAGE>
primarily employed or engaged, unless the Participant remains in the employ of
the Company or another one of its subsidiaries for one year or more following
such sale or other disposition.]
7.3. Fully-Vested Units. Fully Vested Units are Units that are 100%
vested. Notwithstanding the vesting schedule provisions of Section 7.1., the
Committee may grant fully Vested Units to a Participant or may determine and
provide that Units previously granted to a Participant are henceforth fully
vested Units. Fully Vested Units are still subject to the maturity provisions of
Section 8.1.2.
ARTICLE VIII
BENEFITS
8.1.1. Amount and Timing of Benefits on Termination. Upon a
Participant's termination of employment with the Company, his Units will be
treated as retired and he shall become entitled to a payment from the Company.
With respect to each Unit, the amount of such payment shall be equal to the
greater of (a) or (b) where
(a) is equal to the difference (if a positive number) between the
Appreciated Book Value, as of the Valuation Date immediately preceding the date
of termination of employment, and the Base Book Value of such Unit multiplied by
his vested percentage determined under Article VII of the Plan, and
(b) is equal to the difference (if a positive number) between the
Appreciated Fair Market Value, as of the Valuation Date immediately preceding
the date of termination of employment, and the Base Fair Market Value of such
Unit multiplied by his vested percentage determined under Article VII of the
Plan.
8.1.2. Amount and Timing of Benefits on Maturity of Units. Units
mature on the first to occur of the following:
(i) the tenth anniversary of their grant date; or
(ii) one of the events triggering the early vesting of Units
under the provisions of Section 7.2.
7
<PAGE>
Upon the maturity of a Unit, the participant shall become entitled to a
payment from the Company with respect to such Unit in an amount equal to 100% of
the greater of (a) or (b), as defined in Section 8.1.1, above, and, upon payment
of such amount, said matured Units shall be retired.
8.2. Manner of Payment. Except as otherwise provided in Section 8.3,
payment shall be in the form of a cash lump sum payment on or before the first
day of the third month beginning after the Participant's termination of
employment or the maturity of the Unit, as the case may be.
Notwithstanding the generality of the foregoing, a Participant may
elect to defer receipt or all or any portion of a cash lump sum otherwise
payable to participant upon maturity of Units, and, instead, have said amount
credited to Participant's account in the For Better Living, Inc. Deferred
Compensation Plan. Participant's election to so defer shall be in writing and
shall be delivered to the Committee on or before the first day of the second
month beginning after the maturity of the Units, but in no case later than
Participant's receipt of the cash lump sum.
8.3. Company's Right to Withhold. The Company shall have the right to
deduct from any payment any federal, state or local taxes required by law to be
withheld with respect to such payments.
8.4. Forfeitures. Upon termination of a Participant's employment with
the Company, the unvested portion of Units previously granted to the Participant
shall be deemed retired and shall cease to exist and the Company shall not
thereafter be obligated to the Participant with respect thereto.
ARTICLE IX
ADMINISTRATION
9.1. The Committee. The Compensation Committee of the Company's Board
of Directors, as it shall be constituted from time to time, shall serve as the
committee hereunder.
9.2 Committee Action. The Committee shall, for the purpose of
administering the Plan, choose a Secretary who may be, but is not required to
be, a member of the
8
<PAGE>
Committee, who shall keep minutes of the Committee's proceedings and all records
and documents pertaining to the Committee's administration of the Plan. A member
of the Committee shall not vote or act upon any matter which relates solely to
himself as a Participant in this Plan. The Secretary may execute any certificate
or other written direction on behalf of the Committee. Any act which this plan
authorizes or requires the Committee to do may be done by a majority of its
members. The action of such majority, expressed from time to time by a vote at a
meeting or by unanimous written consent of Committee members without a meeting,
shall constitute the action of the Committee.
9.3. Rights and Duties. Subject to the limitations of this Plan, the
Committee shall be charged with the general administration of this Plan and the
responsibility for carrying out its provisions, and shall have powers necessary
to accomplish those purposes, including, but not by way of limitation, the
following:
(a) To construe, interpret and administer the Plan;
(b) To select the Participants to be granted Units under the Plan;
(c) To determine the number of Units included in each grant;
(d) To determine the time or times when Units will be granted;
(e) To make all other determinations required by this Plan;
(f) To compute and certify the amount of benefits payable to
Participants;
(g) To authorize all payments pursuant to the Plan;
(h) To maintain all the necessary records for the administration of
the plan;
(i) To make the and publish rules for the administration,
interpretation and regulation of the plan;
9
<PAGE>
(j) To communicate to each Participant annually, as soon as
practicable after the close of each Fiscal Year, the number of Units credited to
his Unit Account and his vested percentages in such Units; and
(k) To establish claims procedures consistent with regulations of the
Secretary of Labor for presentation of claims by Participants and Beneficiaries
for Plan benefits, consideration of such claims, review of claim denials and
issuance of a decision on review. Such claims procedures shall at a minimum
consist of the following:
(1) The Committee shall notify Participants and, where
appropriate, Beneficiaries of their right to claim benefits under the
claims procedures, shall make forms available for filing of such
claims, and shall provide the name of the person or persons with whom
such claims should be filed;
(2) The Committee shall establish procedures for action
upon claims initially made and the communication of a decision to the
claimant promptly and, in any event, not later than 90 days after the
claim is received by the Committee, unless special circumstances
require an extension of time for processing the claim. If an extension
is required, notice of the extension shall be furnished to the claimant
prior to the end of the initial 90-day period, which notice shall
indicate the reasons for the extension and the expected decision date.
The extension shall not exceed 90 days. The claim may be deemed by the
claimant to have been denied for purposes of further review described
below in the event a decision is not furnished to the claimant within
the period described in the three preceding sentences. Every claim for
benefits which is denied shall be denied by written notice set forth in
a manner calculated to be understood by the claimant and shall state
(i) the specific reason or reasons for the denial, (ii) specific
reference to any provisions of this Plan on which the denial is based,
(iii) description of any additional material or information necessary
for the claimant to perfect his claim with an explanation of why such
material or information is necessary, and (iv) an explanation of the
procedure for
10
<PAGE>
further reviewing the denial of the claim under the Plan;
(3) The Committee shall establish a procedure for review
of claim denials, such review to be undertaken by the Committee. The
review given after denial of any claim shall be a full and fair review
with the claimant or his duly authorized representative having 60 days
after receipt of denial of his claim to request such review, the right
to review all pertinent documents and the right to submit issues and
comments in writing; and
(4) The Committee shall establish a procedure for issuance
of a decision by the Committee not later than 60 days after receipt of
a request for review from a claimant unless special circumstances, such
as the need to hold a hearing, require a longer period of time, in
which case a decision shall be rendered as soon as possible but not
later than 120 days after receipt of the claimant's request for review.
The decision on review shall be in writing and shall include specific
reasons for the decision written in a manner calculated to be
understood by the claimant with specific reference to any provisions of
this plan on which the decision is based.
The determination of the Committee in good faith as to any disputed
question or controversy and the Committee's calculation of benefits payable to
Participant shall be conclusive. In performing its duties, the Committee shall
be entitled to rely on information, opinions, reports or statements prepared or
presented by: (i) officers of employees of the Company whom the Committee
believes to be reliable and competent as to such matters; and (ii) counsel (who
may be employees of the Company), independent accountants and other persons as
to matters which the Committee believes to be within such persons' professional
or expert competence. The Committee shall be fully protected with respect to any
action taken or omitted by it in good faith pursuant to the advice of such
persons.
9.4. Indemnity and Liability. All expenses of the Committee shall be
paid by the Company, and the Company shall furnish the Committee with such
clerical and other assistance as is necessary in the performance of its duties.
11
<PAGE>
No member of the Committee shall be liable for any act or omission of any other
member of the Committee nor for any act or omission on his own part, excepting
only his own willful misconduct or gross negligence. To the extent permitted by
law, the Company shall indemnify and save harmless each member of the Committee
against any and all expenses and liabilities arising out of his membership on
the Committee, excepting only expenses and liabilities arising out of his own
willful misconduct or gross negligence.
ARTICLE X
PLAN CHANGES TERMINATION
It is the expectation of the Company that this Plan shall be continued
indefinitely, but continuance of this Plan is not assumed as a contractual
obligation of the Company. The Board of Directors shall have the right to amend
this Plan in whole or in part from time to time or may at any time suspend or
terminate this Plan; provided, however, that no amendment or termination shall
cancel or otherwise adversely affect in any way any Participant's rights with
respect to Units previously granted or to any amounts previously credited to his
Unit Account. Such amendments shall be stated in an instrument in writing and
all Participants shall be bound thereby.
ARTICLE XI
MISCELLANEOUS
11.1. Receipt or Release. Any payment to any Participant in accordance
with the provisions of this Plan shall, to the extent thereof, be in full
satisfaction of all claims against the Committee and the Company, and, to the
extent permitted by law, the Committee may require such Participant, as a
condition precedent to such payment, to execute a receipt and release to such
effect.
11.2. Limitation on Participant's Rights. Participation in this Plan
shall not give any Participant the right to be retained in the employ of the
Company or any rights or interest other than as herein provided. No Participant
shall have any right to any payment or benefit hereunder except to the extent
provided in this Plan. The
12
<PAGE>
rights of any Participant as an employee of the Company shall not be enlarged,
guaranteed or affected by reason of any of the provisions of the Plan. The
Company reserves the right to terminated the Participant's employment without
any liability for any claim against the Company under this Plan, except for
payment of vested benefits to the extent expressly provided herein with respect
to Units granted hereunder. This Plan and such Units shall create only a
contractual obligation on the part of the Company as to such amounts and shall
not be construed as creating a trust. This Plan, in and of itself, has no
assets. Participants shall have only the rights of general unsecured creditors
of the Company with respect to amounts credited to and benefits payable from
their Unit Accounts.
11.3. Beneficiaries.
(a) Upon forms provided by the Committee each Participant shall
designate in writing the Beneficiary or Beneficiaries (as defined in Section
11.3(b)) whom such Participant desires to receive any payments payable after his
death. A Participant may from time to time change his designated Beneficiary or
Beneficiaries without the consent of such Beneficiary or Beneficiaries by filing
a new designation in writing with the Committee. However, if a married
Participant wishes to designate a person other than his spouse as Beneficiary,
such designation shall be consented to in writing by the spouse. Notwithstanding
the foregoing, spousal consent shall not be necessary if it is established that
the required consent cannot be obtained because the spouse cannot be located or
because of other circumstances prescribed by the Committee. The Company and the
Committee may rely on the Participant's designation of a Beneficiary or
Beneficiaries last filed in accordance with the terms of this Plan.
(b) A Participant's "Beneficiary" or "Beneficiaries" shall be the
person or persons, including a trustee, personal representative or other
fiduciary, last designated in writing by the Participant in accordance with the
provisions of Section 11.3(a) to receive the payments specified hereunder in the
event of the Participant's death. If there is no valid Beneficiary designation
in effect that complies with the provisions of Section 11.3(a), or if there is
no surviving designated Beneficiary, then the Participant's surviving spouse
shall be the Beneficiary. If
13
<PAGE>
there is no surviving spouse to receive any payments payable in accordance with
the preceding sentence, the duly appointed and currently acting personal
representative of the Participant's probate estate (which shall include either
the Participant's probate estate or living trust) shall be the Beneficiary. In
any case where there is no such personal representative of the Participant's
estate duly appointed and acting in that capacity within 90 days after the
Participant's death (or such extended period as the Committee determines as
reasonably necessary to allow such personal representative to be appointed, but
not to exceed 180 days after the Participant's death), then the Beneficiary or
Beneficiaries shall be the person or persons who can verify by affidavit or
court order to the satisfaction of the Committee that they are legally entitled
to receive the payment specified hereunder. In the event any amount is payable
under this Plan to a minor, payment shall not be made to the minor, but instead
shall be paid (a) to that person's then living parent(s) to act as custodian,
(b) if that person's parents are then divorced and one parent is the sole
custodial parent, to such custodial parent, or (c) if no parent of that person
is then living, to a custodian selected by the Committee to hold the funds for
the minor under the Uniform Transfers or Gifts to Minors Act in effect in the
jurisdiction in which the minor resides. If no parent is living and the
Committee decides not to select another custodian to hold the funds for the
minor, then payment shall be made to the duly appointed and currently acting
guardian of the estate for the minor or, if no guardian of the estate for the
minor is duly appointed and currently acting within 60 days after the date the
amount becomes payable, payment shall be deposited with the court having
jurisdiction over the estate of the minor. Subject to the foregoing, any
payments which would have been payable to any Participant if he had lived shall
be paid to the Participant's Beneficiary or Beneficiaries in the same amounts
and on the same dates as such payments would have been paid to the Participant
had he lived (and terminated his employment with the Company on the date of his
death).
11.4. Benefits Not Assignable; Obligations Binding Upon Successors.
Benefits of a Participant under this Plan shall not be assignable or
transferable and any purported transfer, assignment, pledge or other encumbrance
or attachment of any payments or benefits under this Plan, other than by
operation of law or pursuant to Section 11.3,
14
<PAGE>
shall not be permitted or recognized. Obligations of the Company under this Plan
shall be binding upon successors of the Company.
11.5. California Law Governs; Severability. The validity of this Plan
or any of its provisions shall be construed, administered and governed in all
respects under and by the laws of the State of California. If any provisions of
this instrument shall be held by a court of competent jurisdiction to be invalid
or unenforceable, the remaining provisions hereof shall continue to be fully
effective.
11.6. Headings Not Part of Plan. Headings and subheadings in this
Plan are inserted for reference only and are not to be considered in the
construction of the provisions hereof.
11.7. Gender. The masculine pronoun and adjective shall be deemed to
include the feminine.
15
<PAGE>
IN WITNESS WHEREOF, the Company has caused its duly authorized officers
to execute this Plan document as of December 25, 1993.
FOR BETTER LIVING, INC.
By
--------------------------------------
By
--------------------------------------
16
FOR BETTER LIVING, INC.
PERFORMANCE SHARE PLAN
As Amended and in Effect, May 9, 1990
1. The Purpose of the Plan is to provide a continuing incentive
compensation program for key executives of the Company and its subsidiaries to
achieve increased profit.
2. Participants shall be key employees selected by the Board or a committee
of the Board and may include members of the Board or consultants to the Company;
provided that in the case of directors or consultants who are not also full-time
employees of the Company or a subsidiary, the maximum number of performance
share units that may be awarded to any one such individual in any one year shall
be one thousand. With respect to participation by directors or consultants, the
terms "employee" and "full-time employee" as used herein shall be construed to
mean "director" or "consultant" and the term "employment" shall be construed to
mean service as a director or consultant, as the case may be. An individual
whose term of office as a director terminates but who continues to serve the
Company as a consultant will be deemed to have continued as an "employee" of the
Company for purposes of this Plan if such continuance is expressly approved by
the Board.
3. Performance Shares may be awarded annually by the Board. The number of
performance share units awarded to a participant shall be determined by the
Board on the basis of such criteria as the Board deems appropriate from time to
time, including the grant of fully vested performance share units in lieu of
cash salary payments to participants who are willing to accept such units in
place of up to 50% of their base compensation. Initially, in the case of
employees having direct profit responsibility, the number of performance share
units shall be determined by dividing the participant's bonus under the
Executive Bonus Plan for the year in question by the book value of the Company's
common stock at the end of such year. The award date of a performance share unit
shall be deemed to be the last day of the fiscal year for which it was awarded.
4. Vesting of performance share units awarded to a participant shall occur
at the rate of 20% per year so long as the participant continues as a full-time
employee of the Company or one of its subsidiaries. Thus, one-fifth of each
award to a participant shall vest on the first anniversary of the award date if
the participant continues as an employee, an additional one-fifth shall vest on
the second anniversary
1
<PAGE>
of the award date if the participant then continues as an employee, and so
forth. In the case of (i) death, (ii) retirement at 65, (iii) disability deemed
serious and permanent by the Board, or (iv) early retirement with the approval
of the Board, all performance share units then held by the participant shall
become vested. No amount shall ever be payable with respect to a performance
share unit that is not vested.
5. Maturity Date of a performance share unit shall be the fifth anniversary
of its award date, unless (i) a different maturity date is fixed by the Board at
the time of award or (ii) the maturity date is extended, or (iii) the
participant shall cease to be a full-time employee of the company or one of its
subsidiaries, in which case the maturity date of his performance shares shall be
the last day of the fiscal year preceding the date of termination of such
employment.
6. Payment at Maturity of a vested performance share unit shall be made in
cash within seventy-five days after its maturity date or the event which fixes
its maturity date, if later, in an amount equal to (i) the excess of book value
at the maturity date over book value at the award date of one share of common
stock of the Company, plus (ii) the amount of cash dividends and the cash value
of any property distributions between the award date and the maturity date on
one share of common stock of the Company. Computation of such amount shall be
based on one share of common stock existing at the award date with appropriate
adjustments for any stock dividends, stock splits, recapitalizations or like
transactions occurring prior to the maturity date. "Book value" shall mean the
net amount of Common Shareholders Equity, per share. "Common Shareholders
Equity" shall mean the par value of common stock outstanding plus paid-in
capital plus retained earnings less common stock in treasury as stated in the
audited financial statements included in the Company's annual report to
shareholders.
7. Beneficiaries may be designated by a participant to receive payment in
the event of the participant's death, and any such designation may be changed
during the participant's lifetime. Any designation or change therein shall be
made by written notice to the Company. If the participant be married, the spouse
of the participant must join in or consent to such notice unless such spouse is
designated to receive as beneficiary at least one-half of all payments. Except
as provided in this paragraph, the rights of a participant under the plan shall
not be assignable or transferable in any manner whatsoever during the lifetime
of the participant.
8. The Board of Directors of the Company shall administer the plan, make
all determinations required or
2
<PAGE>
appropriate thereunder, modify, amend or supplement the plan from time to time
as it sees fit. The Board may delegate some or all of its functions or powers
under the plan to a committee the Board.
9. Termination of the plan and all performance share units theretofore
awarded may be ordered by the Board in the event of liquidation of the Company,
sale of all or substantially all the assets of the Company, or a merger of the
Company with or into another entity having net assets greater than those of the
Company. In such case, all performance share units shall be deemed vested as of
the date of such event and their maturity date shall be the last day of the
fiscal quarter next preceding such event.
10. Extension of Maturity of a performance share unit may be made, with the
approval of the Board, by written election of the participant delivered to the
Board at least thirteen months prior to the maturity date then in effect. The
new maturity date designated by such election shall be an anniversary of the
award date and shall be at least one year later than the former maturity date.
In no event will the Board approve of an election by the participant for the
extension of the maturity date beyond three years of the original maturity date.
11. Participants may surrender fully vested performance share units, solely
for the purpose of purchasing common stock from the Company at the market price
of such stock then prevailing, upon the terms and conditions set forth below.
12. The amount which shall be credited against the purchase price of common
stock, upon surrender of a vested performance share unit, shall be the amount
which would have been the Maturity Value of such unit computed as if the most
recent anniversary of its award date had been the Maturity Date of the unit.
Such amount shall be applied to payment of the purchase price of shares of
common stock of the Company which are concurrently purchased from the Company at
a price equal to the mean of the bid and asked prices of the Company's common
stock as quoted in the over-the-counter market on the ten business days before
the date of purchase.
13. The number of shares purchased shall not exceed the number of units
which surrendered for the purchase of such shares. If the total purchase price
of such shares exceeds the amount credited, the remainder of the purchase price
may be paid in cash by the participant, or the number of shares of stock
purchased may be reduced. If the total purchase price is less than the amount
credited, the difference shall be adjusted by cash payment.
3
<PAGE>
14. A participant may borrow from the company an amount reasonably
necessary to pay the Federal and State income tax liability incurred by such
participant upon surrender of units for credit against purchase of common stock
as provided in the foregoing paragraphs. The amount so borrowed shall not bear
interest. At the election of the Company the amount so borrowed may be paid
directly to the taxing authorities, in whole or in part, in connection with tax
withholding payments or otherwise. The amount so borrowed shall be due and
payable by the participant on the date which would have been the Maturity Date
of the last to mature of the performance share units which were surrendered in
the transaction for which the borrowing was incurred. The amount so borrowed
shall be secured by a pledge of all the shares purchased in such transaction,
and the share certificates representing such shares shall be retained in pledge
by the Company until the borrowing is repaid in full. The participant shall
execute a note and pledge agreement, evidencing such borrowing and pledge, in
such form as the Company shall reasonably specify. The Company may require
execution of such documents and retention of the share certificates at the time
the shares are purchased, and as a condition thereto, unless the participant
presents evidence reasonably satisfactory to the Company showing that he will
pay his income tax liability without recourse to borrowing from the Company as
permitted by this paragraph.
15. The number of units eligible for surrender shall not exceed, at any
time, 10% of the number of shares of common stock of the Company then
outstanding. If the total number of vested performance share units outstanding
at any time exceeds said 10% ceiling, then the number of such units eligible for
surrender shall be reduced proportionately, and such reduction shall be applied
pro-rata to the number of vested units held by each participant.
16. Participants who are directors or officers (including general managers)
of the Company or one of its subsidiaries shall not surrender performance share
units for purchase of common stock except during the time periods beginning on
the third business day following the date of release for publication of the
financial data contemplated by paragraph (e) (1) (ii) of Rule 16b-3 of the
Securities Exchange Act of 1934, and ending on the twelfth business day
following such date of release; provided that in each such case the ten business
days used for purposes of determining the purchase price of such shares shall be
the ten days from such third to such twelfth day, inclusive.
4
<PAGE>
17. Compliance with securities law requirements, State and Federal shall be
a condition precedent to any obligation of the Company to issue or sell shares
of its common stock pursuant to this plan.
5
<PAGE>
APPENDIX
TO
FOR BETTER LIVING, INC.
PERFORMANCE SHARE PLAN
TABLE OF CONTENTS
ARTICLE I Page
DEFINITIONS.......................................... 1
1.1 Definitions ......................................... 1
1.2 Accounting Terms .................................... 3
ARTICLE II
APPLICATION OF APPENDIX ............................. 4
2.1 Election ............................................ 4
ARTICLE III
CREDIT .............................................. 5
3.1 Crediting of Account ................................ 5
3.2 Investment Equivalent ............................... 6
ARTICLE IV
PAYMENT OF BENEFIT .................................. 9
4.1 Methods and Time of Payment ......................... 9
4.2 Adjustment of Payments in Case of Hardship .......... 10
ARTICLE V
BENEFITS UPON DEATH.................................. 12
5.1 Designation of Beneficiary .......................... 12
5.2 Rights of Heirs at Law .............................. 12
ARTICLE VI
ADMINISTRATIVE PROVISIONS............................ 13
6.1 Duties and Powers ................................... 13
6.2 Effect of Company Action ............................ 14
6.3 Delegation of Routine Duties ........................ 15
6.4 Inspection of Records ............................... 15
6.5 Information ......................................... 15
6.6 Employment of Outside Advisors ...................... 16
i
<PAGE>
Page
ARTICLE VII
AMENDMENT AND TERMINATION ........................... 16
7.1 Amendments .......................................... 16
7.2 Discontinuance of Plan .............................. 17
ARTICLE VIII
MISCELLANEOUS ....................................... 18
8.1 Limitation on Participants' Rights .................. 18
8.2 Receipt or Release .................................. 18
8.3 California Law Governs .............................. 19
8.4 Headings Not Part of Agreement ...................... 19
8.5 Successors and Assigns .............................. 19
8.6 Forfeiture .......................................... 20
8.7 Withholding ......................................... 20
8.8 Attorneys' Fees ..................................... 20
8.9 Construction ........................................ 21
ii
<PAGE>
ARTICLE I.
DEFINITIONS
1.1 Definitions.
Whenever the following terms are used in this Appendix to the Plan they
shall have the meaning specified below unless the context clearly indicates to
the contrary. These definitions shall not apply to the provisions of the Plan
which are not contained in this Appendix.
a. "Anniversary Date" shall mean the last day of the Plan Year.
b. "Beneficiary" shall mean the person properly designated by the
Participant, in accordance with Article V of this Appendix, to receive the
benefits provided herein.
c. "Board of Directors" shall mean the Board of Directors of For
Better Living, Inc.
d. "Committee" shall mean the committee appointed by the Board of
Directors to administer this Plan pursuant to Article VI of this Appendix.
The Committee may be comprised of Employees who may be Participants.
1
<PAGE>
e. "Company" shall mean For Better Living, Inc., its subsidiaries and
successors.
f. "Computation Period" shall mean the Company's fiscal quarter.
g. "Credits" shall mean the sum of the value of all performance share
units and Investment Equivalents credited (or debited) to a Participant.
h. "Employee" shall mean any regular employee or director or
consultant of the Company.
1. "Investment Equivalent" shall be determined by the Committee
pursuant to Article III of this Appendix.
j. "Investment Options" shall mean the options available to
Participants pursuant to Article III of this Appendix.
k. "Investment Return" for each Computation Period shall mean the
hypothetical return on each Investment Option as calculated by the
Committee pursuant to Article III of this Appendix. An Investment Return
may be positive or negative for any Computation Period.
2
<PAGE>
1. "Maturity Date" shall mean the date or dates set forth in Section 5
of the Plan.
m. "Net Worth" shall mean the net stockholders equity of the Company.
n. "Participant" shall mean any person who was or is awarded any
performance share units under the Plan. A Participant shall cease to be a
Participant upon receipt of all benefits previously accrued.
0. "Plan" shall mean the For Better Living, Inc. Performance Share
Plan.
p. "Plan Year" shall mean the Company's fiscal year.
1.2 Accounting Terms.
To the extent an accounting term of art is not defined herein, its meaning
shall be determined according to generally accepted accounting principles.
3
<PAGE>
ARTICLE II.
APPLICATION OF APPENDIX
2.1 Election.
Each Participant in the Plan shall elect, prior to each Maturity Date,
whether or not this Appendix shall apply to the performance shares (or a portion
thereof) for which such Maturity Date is to occur. Such election shall be
permitted for each Participant prior to each Maturity Date. Such election shall
specify the portion of such performance shares for which this Appendix shall
apply, expressed as a percentage, a dollar amount or in such other manner as the
Committee permits. If a Participant elects that this Appendix applies to all or
a portion of the performance shares for which such Maturity Date shall occur,
and the Participant remains an Employee on such Maturity Date, then his benefits
in the Plan relating to the specified portion of such performance shares shall
be determined and paid according to this Appendix. If a Participant elects that
this Appendix does not apply to all or a portion of the performance shares for
which such Maturity Date is to occur, or fails to make an election prior to such
Maturity Date, or is no longer an Employee on such Maturity Date, then his
benefits in the Plan relating to all or the appropriate portion of such
performance shares shall be determined and paid according to the terms of the
Plan without regard to this Appendix.
4
<PAGE>
Each Participant for whom this Appendix applies shall elect, with respect
to the performance shares for which this Appendix applies:
a. The timing and form of payment of benefits pursuant to Section 4.1
of this Appendix;
b. The Beneficiary designated pursuant to Section 5.1 of this
Appendix; and
c. The Investment Option(s) desired.
The elections specified in items (a) and (c) above shall be made separately for
each award of performance shares for which the Maturity Date is to occur.
ARTICLE III.
CREDIT
3.1 Crediting of Account.
As of each Maturity Date, each Participant for whom this Appendix applies
shall be credited with the value of the performance share units for which he
elects this Appendix shall apply, determined as of such Maturity Date in
accordance with Section 6 of the Plan. Such amounts shall be
5
<PAGE>
credited to the appropriate Investment Option(s) according to the Participant's
election.
3.2 Investment Equivalent.
On the last day of each Computation Period, each Participant who has
Credits shall be credited (or debited) with the appropriate Investment
Equivalent. The Investment Equivalent shall be calculated separately for each
Investment Option under which each Participant has Credits by multiplying (i)
the Participant's monthly average Credits for the Computation Period for the
Investment Option, times (ii) the Investment Return for the Computation Period
for the Investment Option. A Participant's monthly average Credits for an
Investment Option for any Computation Period shall be calculated by the
Committee according to uniform procedures.
3.3 Investment Options and Investment Returns.
There shall be at least the three Investment Options described below. The
Investment Return for each such Investment Option shall be determined by the
Committee according to the methods described below. The Committee may add
additional Investment Options by adopting written rules which describe the
method of determining the Investment Return on such Investment Options. The
three initial Investment Options and
6
<PAGE>
the applicable methods of determining the Investment Returns are as follows:
a. Income Fund. The Investment Return on this Investment Option is
calculated as if the Credits under this Investment Option were paid
interest at the prime rate or stated reference rate established by the
lead bank of the Company (as determined by the Committee) as of the last
day of the Computation Period.
b. FBLI Equity Fund. The Investment Return on this Investment Option
is calculated as if the Credits under this Investment Option were invested
in common stock of the Company, purchased at the Net Worth per share, and
credited (or debited) with the primary income (loss) per common share
during the Computation Period.
c. Life Insurance Fund. Amounts for which Participants elect the Life
Insurance Fund are not credited with an Investment Return. Instead, such
amounts are used to purchase split-dollar, single-premium life insurance
policies. The election of the Participant of the Life Insurance Fund is
subject to the terms and conditions specified by the life insurance
company which issues the policies under the Fund. The Company is entitled
to the proceeds of the policy to the extent of the Credits invested in the
Life Insurance Fund, which
7
<PAGE>
amounts shall continue to be credited to the Participant under this Plan.
The Participant specifies the beneficiary for any benefits in excess of
the Company's entitlement.
Each Participant may designate the Investment Option(s) of his choice by
so electing on the form prescribed by the Committee. Elections shall be in ten
percent (10%) increments. Each Participant may change Investment Options once
per year, at the time and upon such notice as is required by the Committee. The
removal of Credits from the Life Insurance Fund shall be subject to the
restrictions established by the Committee and any insurance company which issues
the life insurance policies purchased under such fund.
Notwithstanding any election to the contrary, when payments relating to
the performance units of a Participant relating to a particular Maturity Date
commence, any Credits relating to the performance units which had the same
Maturity Date and which are not invested in the Life Insurance Fund shall be
deemed to be invested in the Income Fund. Furthermore, upon a Participant's
termination of employment, any Credits not invested in the Life Insurance Fund
shall be deemed to be invested in the Income Fund.
Except for Credits for which the Life Insurance Fund is elected, the
Company has no obligation to invest any
8
<PAGE>
Credits in any particular matter. All amounts under the Plan (including the
Company's share of Credits invested in the Life Insurance Fund) are subject to
the creditors of the Company; the Participants and Beneficiaries shall have no
rights superior to those of the unsecured creditors of the Company.
ARTICLE IV.
PAYMENT OF BENEFIT
4.1 Methods and Time of Payment.
In making each election pursuant to Section 2.1 of this Appendix, a
Participant shall elect, in writing, a method of payment of the Credits relating
to the performance shares for which such election is made. There shall be a
separate elect ion for the performance shares relating to each Maturity Date.
Such election shall specify the timing and form of payment of such Credits, as
follows:
a. Timing: A Participant may chose that payments Commence as of (i)
termination of employment (including but not limited to death, retirement,
early retirement, resignation and discharge) or (ii) a specified number of
years from the date of the election, provided that if a Participant's
employment terminates before such specified number of years, then payments
shall commence as of
9
<PAGE>
termination of employment, regardless of the Participant's election.
b. Form: A Participant may elect that benefit payments be made either
(i) as a single lump sum on the date payments commence or (ii) over the
period of years specified by the Participant, starting on the date
payments commence. If a Participant elects payment over a period of years,
he may elect that all remaining payments to his Beneficiary be made in a
lump sum upon his death.
A Participant may, after his election, request of the Committee that his
benefits be paid at a different time or in a different form. The Participant's
request shall not be binding upon the Committee, but the Committee shall, in its
sole discretion, have the power to pay benefits according to the timing and form
requested by the Participant, after giving consideration to the financial
ability of the Company to pay benefits according to such request.
4.2 Adjustment of Payments in Case of Hardship.
While it is the primary purpose of the Plan to provide funds for the years
after Participants are no longer able to render active service to the Company,
it is recognized that in some circumstances it would be in the best interests of
10
<PAGE>
Participants to permit a lump sum payment or accelerated payments to be made to
them. Accordingly, the Committee, in its sole discretion, may, upon written
request of a Participant, make a lump sum payment to a Participant or
Beneficiary and/or accelerate the payment of part or all of the amounts such
Participant or Beneficiary is entitled to receive under Article IV or Article V
of this Appendix to take account of and ameliorate a financial hardship
occasioned by accident, illness, disability or similar misfortune or change of
circumstance affecting him or any of his dependents. If the Participant
requesting a distribution upon hardship is a member of the Committee, he shall
not participate in the decision of the Committee concerning such withdrawals.
The amount of any such lump sum payment and/or accelerated amount shall not
exceed the lesser of
(a) the amount necessary to take account of and ameliorate such
misfortune or change of circumstance, or
(b) the entire amount of such Participant's Credits.
The remaining portion of such Participant's Credits, if any, shall be
distributed according to the election made pursuant to Section 4.1 of this
Appendix prior to the adjustment under this section or according to the
provisions of Article V or Article VI of this Appendix. This section
11
<PAGE>
shall not be construed to allow distribution under the Plan of amounts greater
than those the Participant would have otherwise received, if no adjustment under
this section had been made.
ARTICLE V.
BENEFITS UPON DEATH
5.1 Designation of Beneficiary.
Each Participant shall have the right to designate, revoke and redesignate
Beneficiaries hereunder, including his estate, and to direct payment thereto of
the amounts credited to him, such designation or redesignation being made in
writing on a form provided by the Company, to become effective upon delivery to
the Committee. Notwithstanding the above, if a married Participant designates a
Beneficiary other than the Participant's spouse, the Committee may require the
spouse to consent to the selection of such Beneficiary.
5.2 Rights of Heirs at Law.
If a deceased Participant shall have failed to designate any Beneficiary
under Section 5.1 of this Appendix, the amounts credited to him shall be paid
promptly after the appropriate Anniversary Date to the participant's estate, in
a lump sum.
12
<PAGE>
ARTICLE VI.
ADMINISTRATIVE PROVISIONS
6.1 Duties and Powers.
The Committee shall conduct the general administration of the Plan in
accordance with the Plan and shall retain all the necessary power and authority
to carry out that function. Among such necessary powers and duties are the
following:
a. To construe, interpret and administer the Plan;
b. To make allocations and determinations required by the Plan;
c. To compute and certify to the Company the amount and kind of
benefits payable to Employees;
d. To authorize all disbursements by the Company pursuant to the Plan;
e. To determine the necessity for and the amount of any hardship
adjustment pursuant to Section 4.2 of this Appendix;
13
<PAGE>
f. To maintain all the necessary records for the administration of the
Plan;
g. To prepare and submit such reports as shall be required by the
Board of Directors from time to time;
h. To make and publish such rules for the regulation of the Plan as
are not inconsistent with the terms hereof; and
i. To establish a procedure for notifying, in writing, any Participant
or Beneficiary whose claim for benefits under the Plan is denied, stating
the specific reasons for such denial, and for providing any such
Participant or Beneficiary a reasonable opportunity for a full and fair
review by the Committee of such denial.
6.2 Effect of Company Action.
All actions taken and all determinations made by the Committee or the
Company in good faith shall be final and binding upon all Participants, the
Company, the Committee and any persons interested in the Plan.
14
<PAGE>
6.3 Delegation of Routine Duties.
The Committee may delegate the authority to perform ministerial duties in
connection with the administration of the Plan. Such authority shall include
that necessary to perform the record keeping and notification functions of the
Committee; provided, however, that such authority shall not be construed to
include the exercise of discretionary powers which are vested solely in the
Committee.
6.4 Inspection of Records.
Copies of the Plan, records reflecting a Participant's individual Credits,
and any other documents and records which a Participant is entitled by law to
inspect shall be open to inspection by him or his duly authorized
representatives at the office of the Committee at any reasonable business hour.
6.5 Information.
To enable the Committee to perform its functions, the Company shall supply
full and timely information to the Committee on all matters relating to the
compensation of all Employees, their employment, their retirement, death, or the
15
<PAGE>
cause for termination of employment, and such other pertinent facts as the
Committee may require.
6.6 Employment of Outside Advisors.
The Committee may consult with legal counsel (who may be counsel for the
Company), accountants, consultants, physicians, or other persons and shall be
fully protected with respect to any action taken or omitted by it in good faith
pursuant to the advice of such advisors.
ARTICLE VII.
AMENDMENT AND TERMINATION
7.1 Amendments.
The Company shall have the right to amend this Plan or Appendix in whole
or in part from time to time by resolutions of the Board of Directors, and to
amend or cancel any amendments; provided, however, that no action under this
section shall cancel or affect in any way amounts previously credited to any
Participant. Furthermore, should any action be taken under this section to
change the method by which any Investment Returns are determined, the
Participants, as of the date of such action, must be allowed to change the
investment of the amounts credited to them as of the date of such action to the
Income Fund. The Plan may not be amended to reduce the
16
<PAGE>
Investment Return on the Income Fund for the amounts credited to Participants as
of the date of such action. Any amendments to this Plan shall be stated in an
instrument in writing, executed by the Company in the same manner as this Plan,
and this Plan shall be amended in the manner and at the time therein set forth,
and all Participants shall be bound thereby.
7.2 Discontinuance of Plan.
In the event that the Company decides to discontinue and terminate the
Plan, it shall notify the Committee of its action in an instrument in writing,
executed by the Company in the same manner as this Plan, and this Plan shall be
terminated at the time therein set forth, and all Participants shall be bound
thereby; provided, however, that no action under this section shall cancel or
affect in any way Credits of any Participant, except that the Company in its
sole discretion may elect to immediately commence to pay benefits to all
Participants according to the form of benefit payments previously elected by
such Participants.
17
<PAGE>
ARTICLE VIII.
MISCELLANEOUS
8.1 Limitation on Participants' Rights.
Participation in this Plan shall not give any Participant the right to be
retained in the Company's employ. The Company reserves the right to dismiss any
Participant without any liability for any claim against the Company, except to
the extent provided herein. This Plan shall create only a contractual obligation
on the part of the Company and shall not be construed as creating a trust or any
fiduciary relationship. No funds or assets of the Company shall be set aside or
otherwise segregated to satisfy the obligations created hereunder. The right of
a Participant or Beneficiary to receive payments pursuant to the Plan shall be
no greater than the right of any unsecured creditor of the Company.
8.2 Receipt or Release.
Any payment to any Participant or Beneficiary in accordance with the
provisions of this Plan shall, to the extent thereof, be in full satisfaction of
all claims against the Committee and the Company, and the Committee may require
such Participant or Beneficiary, as a condition precedent to such payment, to
execute a receipt and release to such effect.
18
<PAGE>
8.3 California Law Governs.
This Plan shall be construed, administered and governed in all respects
under and by the laws of the State of California. If any provisions of this
instrument shall be held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof shall continue to be fully
effective.
8.4 Headings Not Part of Agreement.
Headings and subheadings in this Plan are inserted for convenience of
reference only and are not to be considered in the construction of the
provisions hereof.
8.5 Successors and Assigns.
This Plan shall inure to the benefit of, and be binding upon, the parties
hereto and their successors and assigns; provided, however, that the amounts
credited to the accounts of a Participant shall not be assignable, transferable
or subject to be taken in execution by levy, attachment or garnishment. Any
purported transfer, assignment, encumbrance or attachment shall be void.
19
<PAGE>
8.6 Forfeiture.
Any payment or distribution to a Participant or Beneficiary under the Plan
shall be deemed made when mailed by normal first class mail to the last known
mailing address of the Participant or Beneficiary. Any Company check used to
make a payment pursuant to this Plan which is not cashed within three years
shall be cancelled and the Company shall have no further obligation to the
Participant or Beneficiary. Neither the Committee nor the Company shall have any
duty to give notice that amounts are payable under the Plan to any person other
than the Participant.
8.7 Withholding.
The Company shall deduct from the amount of all distributions under the
Plan any taxes required to be withheld by the federal or any state or local
government.
8.8 Attorneys' Fees.
Should any dispute arise under this Plan and resort to legal services be
required, the prevailing party shall be entitled to all costs and legal fees
from the other party.
20
<PAGE>
8.9 Construction.
Wherever the context so requires, words in the masculine include the
feminine and in the feminine include the masculine.
IN WITNESS WHEREOF, the Company has caused this APPENDIX to the FOR BETTER
LIVING, INC. PERFORMANCE SHARE PLAN to be executed by its duly authorized
officers and the corporate seal to be hereunto affixed effective this _____ day
of _________________, 1987.
FOR BETTER LIVING, INC.
By: ______________________________
Attest: __________________________
21
FOR BETTER LIVING, INC.
INCENTIVE BONUS COMPENSATION PLAN
Effective September 15, 1980, the Incentive Bonus Compensation Plan for Chief
Executive Officers ("CXO") of the Company and its operating subsidiaries has
been amended by the Board of Directors of the Company ("Board"). The provisions
of the Plan, as amended, are as follows:
Part I. For the size of the participant's area of profit responsibility -- a
payment of 4% of the audited earnings before taxes ("earnings") for the
first $500,000 earned; plus 3% of the earnings between $500,000 and
$1,000,000; plus 2% of the earnings between $1,000,000 and $2,000,000; plus
1% of the earnings above $2,000,000.
Part II. If the hardcore commitment is achieved, for improvement over the best
prior year (agreed best prior year targets to be stated in writing), an
additional amount equal to the greater of: (A) 5% of the increase in such
earnings over the previous high since assumption of profit responsibility
by the participant, (B) 10% of the increase in the hardcore commitment over
such commitment in the prior year, or (C) 10% of the increase in earnings
on investment, viz, 10% of the amount by which earnings were increased on
every dollar of invested capital (equity and long-term debt) over the
previous high for the area of operations up to a maximum of 100% of
earnings on invested capital (for earnings in excess of $2,000,000, the
percentages are one-half the rates specified in (A), (B) and (C), above.)
Ground Rules: The Board requires that the Company and its operating
subsidiaries' earnings and bonus rewards be achieved by complying with the
Company's basic policies, which include observance of applicable laws and
principles of integrity in dealing with employees. In this section, the Board
does not propose to cite all possible rules or contingencies governing the
Incentive Bonus Compensation Plan, but the following rules are mentioned for
examples and for emphasis:
A. The incentive is payable only for a whole year's work and will be
payable only if the CXO remains in that position until completion of
the year for which the bonus was calculated. Effective January 1,
1980, non-forfeitable advance payments may be made under this Plan on
a quarterly basis. Such payments will be at the rate of 50% of the
amount computed under Part I, above, calculated on a year-to-date
basis.
B. Internal target and hardcore figures must be established with the
Board in the Total Annual Plan meeting at the beginning of each fiscal
year; however, adjustments in these amounts may be appealed to the
Board during the first ninety days of the fiscal year.
C. Accounting calculations will be made in accordance with the latest
provisions of the Company's Accounting Manual.
D. All payments made under the Plan are subject to normal Federal, State
and Local withholding taxes.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this APPENDIX to the FOR BETTER
LIVING, INC. PERFORMANCE SHARE PLAN to be executed by its duly authorized
officers and the corporate seal to be hereunto affixed effective this 13th day
of October, 1987.
FOR BETTER LIVING, INC.
By: /s/ Frank Ciotti Executive Vice President
-----------------------------------------------
Attest: /s/ W. J. Nolan
--------------------------------------------
EXHIBIT 13
<PAGE>
FOR BETTER LIVING, INC.
1995 Annual Report
<PAGE>
- --------------------------------------------------------------------------------
A MESSAGE TO OUR STOCKHOLDERS
Our Company was profitable for 1995 as a result of record earnings at our
magazine subsidiary and a gain from the sale of securities. Quikset, our precast
concrete and plastics manufacturer, had an operating loss for 1995.
Quikset continues to identify and respond to the fundamental changes in its
market, which require more highly engineered, complex products. Quikset has
undergone extensive changes in personnel, plant, equipment and engineering
ability to supply its customers profitably; changes which are now largely
complete. We continue to believe that Quikset is on a course to long-term
profitability.
The Communications Group encountered paper cost increases of more than 40% in
1995. It is a credit to the Communications Group that they achieved record high
earnings once again in the face of this increase.
As I predicted in my letter to you last year, the California Franchise Tax
Board did appeal our favorable ruling in the dispute over the deductibility of
oil and gas expenses from 1978 through 1981. We are contesting their appeal
vigorously and have entered a motion to recover some attorney costs if we
ultimately prevail. We anticipate a ruling from the California Court of Appeal
sometime later this year.
Sincerely,
/s/ RICHARD G. FABIAN
------------------------
Richard G. Fabian
Chairman of the Board
March 15, 1996
<PAGE>
FOR BETTER LIVING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- ---------------------------------------------------------------------------- 1
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
<S> <C> <C>
December 30, December 31,
1995 1994
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ..............................................$ 1,528 $ 1,828
Available-for-sale securities .......................................... 1,559
Accounts receivable (less allowance for doubtful accounts of $747,000 13,177 9,350
and $841,000 at December 30, 1995 and December 31, 1994, respectively).
Inventories ............................................................ 8,401 8,406
Deferred income taxes .................................................. 2,065 1,705
Other current assets ................................................... 3,881 3,488
--------- ----------
Total current assets ................................................ 29,052 26,336
--------- ----------
PROPERTY:
Property at cost ....................................................... 39,967 37,960
Less accumulated depreciation and amortization ......................... (28,614) (27,126)
--------- ----------
Property, net ....................................................... 11,353 10,834
--------- ----------
AVAILABLE-FOR-SALE SECURITIES ........................................... 1,700 1,605
OTHER ASSETS ............................................................ 477 729
--------- ----------
$ 42,582 $ 39,504
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings ..................................................$ -- $ 1,225
Current portion of long-term debt and capital lease obligations ....... 1,217 1,633
Accounts payable ....................................................... 4,139 5,029
Accrued salaries and wages ............................................. 1,941 1,614
Deferred income ........................................................ 1,860 1,591
Accrued insurance ...................................................... 999 830
Other current liabilities .............................................. 3,026 3,468
--------- ----------
Total current liabilities ........................................... 13,182 15,390
--------- ----------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS ............................ 11,718 5,790
--------- ----------
OTHER LIABILITIES (primarily deferred compensation) ..................... 1,039 1,356
--------- ----------
COMMITMENTS
STOCKHOLDERS' EQUITY:
Preferred stock--par value $1 per share (authorized, 150,000 shares;
outstanding, none) ....................................................
Common stock--par value $.05 per share (authorized, 2,500,000 shares; 44 44
outstanding, 877,816 shares) ..........................................
Additional paid-in capital ............................................. 1,083 1,083
Net unrealized gains on available-for-sale securities, net of taxes ... 214 767
Retained earnings ...................................................... 15,302 15,074
--------- ----------
Total stockholders' equity .......................................... 16,643 16,968
--------- ----------
$ 42,582 $ 39,504
========= ==========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
FOR BETTER LIVING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
2 ------------------------------------------------------------------------------
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
Years Ended
----------------------------------------
December 30, December 31, December 25,
1995 1994 1993
--------- ---------- -----------
<S> <C> <C> <C>
NET REVENUES ...................................$ 81,517 $ 71,396 $ 67,857
COST AND EXPENSES:
Cost of sales ................................. 50,422 45,563 40,986
Selling, general and administrative expenses .. 29,265 27,711 26,399
Interest expense .............................. 1,253 873 998
Total cost and expenses .................... 80,940 74,147 68,383
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR
TAXES ......................................... 577 (2,751) (526)
PROVISION (BENEFIT) FOR TAXES .................. 261 (915) (181
--------- ---------- -----------
NET INCOME (LOSS) ..............................$ 316 $ (1,836) $ (345)
========= ========== ===========
NET INCOME (LOSS) PER COMMON SHARE ............. $0.36 ($2.09) ($0.39)
===== ====== ======
</TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Net Unrealized
Gains on
Common Stock Additional Available-for-sale
---------------- Paid-in Securities, Retained
Shares Amount Capital Net of Taxes Earnings Total
------- ------ ----------- -------------------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 26, 1992 ..............878 $ 44 $1,083 $ -- $17,430 $18,557
Net loss ................................ (345) (345)
Cash dividends ($.10 per share) ........ (87) (87)
---- ---- ------ -------- --------- -------
BALANCE, December 25, 1993 ..............878 44 1,083 16,998 18,125
Effect of change in accounting 716 716
principle, net of taxes ................
Net unrealized gains on available- 51 51
for-sale securities, net of taxes .....
Net loss ................................ (1,836) (1,836)
Cash dividends ($.10 per share) ........ (88) (88)
---- ---- ------ -------- --------- -------
BALANCE, December 31, 1994 ..............878 44 1,083 767 15,074 16,968
Net unrealized gains on available- (553) (553)
for-sale securities, net of taxes .....
Net income .............................. 316 316
Cash dividends ($.10 per share) ........ (88) (88)
---- ---- ------ -------- --------- -------
BALANCE, December 30, 1995 ..............878 $ 44 $1,083 $ 214 $15,302 $16,643
==== ==== ====== ======== ========= =======
<FN>
See accompanying notes to consolidated financial statements.
</FN>
<PAGE>
FOR BETTER LIVING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ----------------------------------------------------------------------------- 3
(IN THOUSANDS)
</TABLE>
<TABLE>
<CAPTION>
Years Ended
--------------------------------------------
December 30, December 31, December 25,
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ..............................................$ 316 $ (1,836) $ (345)
Adjustments to reconcile net income (loss) to net cash (used
in) provided by operating activities:
Depreciation and amortization of property .................... 1,803 2,065 2,255
Other amortization ........................................... 145 70 34
Provision for losses on accounts receivable .................. 230 424 159
Deferred income taxes ........................................ (412) (718) (912)
Deferred compensation ........................................ 73 (50) 136
(Gain) loss on sales of available-for-sale securities ....... (1,255) 4 (1,079)
Write-down of real estate to fair market value ............... 502
Other ........................................................ (70) (18) 144
Changes in operating assets and liabilities:
Accounts receivable ......................................... (4,057) 399 (378)
Inventories ................................................. 5 950 (1,254)
Other current assets ........................................ (451) (1,713) (194)
Other assets ................................................ 661 (270) 20
Accounts payable ............................................ (890) 399 1,248
Accrued salaries and wages .................................. 327 (739) 648
Deferred income ............................................. 269 406 179
Other current liabilities ................................... (273) (548) 1,357
Other liabilities ........................................... (390) (544) (151)
--------- --------- ---------
Net cash (used in) provided by operating activities ....... (3,969) (1,217) 1,867
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property ......................................... (2,343) (1,574) (854)
Purchases of available-for-sale securities .................... (717) (1,248)
Proceeds from sale of property and available-for-sale
securities .................................................... 1,886 194 4,409
--------- --------- ---------
Net cash (used in) provided by investing activities ........... (457) (2,097) 2,307
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt and capital lease obligations ................ (5,957) (7,204) (1,908)
Proceeds from short-term borrowings ........................... 3,025 1,225
Proceeds from long-term debt .................................. 7,146 7,000
Dividends paid ................................................ (88) (88) (87)
--------- --------- ---------
Net cash provided by (used in) financing activities ...... 4,126 933 (1,995)
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS ................................................... (300) (2,381) 2,179
CASH AND CASH EQUIVALENTS, beginning of year ................... 1,828 4,209 2,030
--------- --------- ---------
CASH AND CASH EQUIVALENTS, end of year .........................$ 1,528 $ 1,828 $ 4,209
========= ========= =========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
FOR BETTER LIVING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4 ------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING
PRINCIPLES AND OTHER
Nature of Operations--For Better Living, Inc. (the Company) was incorporated
in Delaware in 1969. The Quikset Organization, a wholly-owned subsidiary, is
primarily engaged in the manufacture and distribution of precast concrete and
plastic products, which are primarily marketed to utility companies throughout
the United States and Canada. Surfer Publications, also a wholly-owned
subsidiary, is primarily engaged in the publication of specialty magazines.
Surfer Publications also produces cable television and home video programs.
Principles of Consolidation--The accompanying consolidated financial
statements include the accounts of For Better Living, Inc. and its wholly-owned
subsidiaries (the Company). All significant intercompany balances and
transactions have been eliminated.
Fiscal Year-end--The Company's fiscal year ends on the last Saturday in
December.
Inventories--Inventories are stated principally at the lower of first-in,
first-out cost or market.
Cash Equivalents--The Company considers all highly-liquid investments with a
maturity of three months or less when purchased to be cash equivalents.
Property, Depreciation and Amortization--The cost of property is depreciated
over the estimated useful lives of the assets by application of the
straight-line method to specific assets. The cost of leasehold improvements is
amortized over the shorter of the estimated useful lives of the assets or the
remaining lease periods of the associated leases.
Income (Loss) Per Common Share--Income (loss) per common share is computed by
dividing net income (loss) by the weighted average number of shares of common
stock outstanding during each year. The number of common shares used in
computing earnings per common share for the fiscal years ended December 30,
1995, December 31, 1994 and December 25, 1993 is 877,816.
Deferred Income--Deferred income represents amounts received from
subscriptions in advance of magazine deliveries and is reflected in revenues
over the subscription term.
Reclassifications--Certain amounts as previously reported have been
reclassified to conform to the current period presentation.
Related Party Transactions--A director of the Company is associated with a
law firm that rendered legal services resulting in fees charged to the Company
during 1995 and 1994 of approximately $156,000 and $358,000, respectively.
Approximately $51,000 and $184,000 is included in other current liabilities as
of December 30, 1995 and December 31, 1994, respectively.
Fair Value of Financial Instruments--The recorded amounts of assets and
liabilities at December 30, 1995 approximate fair value in accordance with
Financial Accounting Standards No. 107, Disclosures About Fair Value of
Financial Instruments.
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
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
Magazine Distribution--The Company has an agreement with an outside service
bureau that handles all subscription mailings of its specialty magazines. The
Company also has an agreement with a newsstand distributor that handles all
shipments, returns and collections with respect to single copy magazine sales.
The termination of either agreement could result in delays in magazine
distribution which could have a material adverse effect on the Company's
business, operating results and financial condition until alternative sources of
distribution could be obtained.
2. INVESTMENTS
The Company adopted Statement of Financial Accounting Standards No. 115 (SFAS
115), Accounting for Certain Investments in Debt and Equity Securities, as of
the beginning of fiscal year 1994. SFAS 115 requires the classification of
investments in debt and equity securities into three categories:
held-to-maturity, trading, and available-for-sale. Debt securities that the
Company has the positive intent and ability to hold to maturity are classified
as held-to-maturity securities and reported at amortized cost. Debt and equity
securities that are bought and held principally for the purpose of selling in
the near term are classified as trading securities and reported at fair value,
with unrealized gains and losses included in the consolidated statements of
operations. Debt and equity securities not classified as either held-to-maturity
or trading securities are classified as available-for-sale securities and
reported at fair value, with unrealized gains and losses excluded from the
consolidated statements of operations and reported on the consolidated balance
sheet
<PAGE>
- ----------------------------------------------------------------------------- 5
in a separate component of stockholders' equity, net of deferred taxes.
The Company has no held-to-maturity or trading securities. Realized gains and
losses on the sales of available-for-sale securities are determined on the
specific identification method and are included in the consolidated statements
of operations.
Investments are classified as either current or noncurrent based upon
management's present intention to retain a specific security. Aggregate cost and
fair value of available-for-sale securities are as follows (in thousands):
December December
30, 1995 31, 1994
---------- ----------
Aggregate cost ..............$ 1,342 $ 1,882
Aggregate market value ..... 1,700 3,164
Gross unrealized gains ..... 378 1,400
Gross unrealized losses .... 20 118
Net unrealized gains
included in
stockholders' equity, net
of taxes ................... 214 767
Purchases ................... 717
Proceeds from sale .......... 1,795 134
Net gains and losses realized on the disposition of investments included in
the consolidated statements of operations for the fiscal years ended December
30, 1995, December 31, 1994 and December 25, 1993 were $1,255,000, $(4,000) and
$1,079,000, respectively.
3. INVENTORIES
Inventories consist of the following (in thousands):
December December
30, 1995 31, 1994
---------- ----------
Finished products .........$ 5,455 $ 5,404
Work-in-process ........... 337 100
Raw materials and supplies 2,609 2,902
--------- ---------
$ 8,401 $ 8,406
========= =========
4. PROPERTY
Property consists of the following (in thousands):
Accumulated
Depreciation
Property, and Property,
at cost Amortization net
---------- -------------- -----------
December 30, 1995:
Land .............$ 2,287 $ -- $ 2,287
Buildings and
leasehold
improvements .... 9,691 5,626 4,065
Machinery and
equipment ....... 27,989 22,988 5,001
---------- -------------- -----------
$ 39,967 $ 28,614 $ 11,353
========== ============= ===========
Accumulated
Depreciation
Property, and Property,
at cost Amortization net
---------- -------------- -----------
December 31, 1994:
Land .............$ 2,287 $ -- $ 2,287
Buildings and
leasehold
improvements .... 9,660 5,203 4,457
Machinery and
equipment ....... 26,013 21,923 4,090
---------- -------------- -----------
$ 37,960 $ 27,126 $ 10,834
========== ============== ===========
5. BORROWING ARRANGEMENTS AND
LONG-TERM DEBT
Long-term debt (exclusive of the current portion included in current
liabilities) consists of the following (in thousands):
December December
30, 1995 31, 1994
-------- --------
Secured line of credit, due June $ 7,076 $ --
27, 1997 ..........................
Secured term loan, due July 31,
2000 .............................. 3,500 4,587
Subordinated income debentures,
due December 15, 1997 (less
unamortized discount of $72,000
and $107,000, respectively) ...... 496 514
Other .............................. 280 226
------- -------
$11,352 $ 5,327
======= =======
The Company borrowed $7,000,000 in 1994 secured by virtually all the
Company's machinery and equipment (the Term Loan). The Term Loan is to be repaid
in 75 monthly installments beginning in April 1994, with principal payments as
follows: 12 payments of approximately $117,000, 12 payments of approximately
$113,000, and 5l payments of approximately $83,000. The Term Loan bears interest
at the 30-day London Interbank Offered Rate, plus 2.97% (8.7825% at December 30,
1995). Because the Company was not in compliance with all the covenants of the
Term Loan at the end of 1994, the rate increased to the 30-day London Interbank
Offered Rate, plus 3.97%, until the first month following the second quarter
after the Company was in compliance with the original covenants. The Company was
in compliance at December 30, 1995.
Also during 1994, the Company entered into a line of credit agreement (the
Credit Agreement) with its lead bank for $5,000,000. That line of credit bore
interest at the bank's reference rate and was secured by virtually all the
Company's receivables and inventory.
During 1994, the Company repaid two unsecured term loans prior to their due
date, incurring prepayment penalties of approximately $128,000.
In June 1995, the Company entered into a new revolving line of credit
agreement (the Line of Credit).
<PAGE>
6 ------------------------------------------------------------------------------
The new Line of Credit replaced the Credit Agreement which was paid in full in
June 1995. The Line of Credit provides the Company up to $10 million of
available funds on a revolving basis (based on a borrowing base formula, as
defined) at an interest rate of prime plus 1.25%. The prime rate was 8.75% at
December 30, 1995. The Line of Credit is collateralized by essentially all of
the Company's accounts receivable, inventories, plant and equipment (excluding
land and buildings), and certain intangible assets. The commitment under the
Line of Credit may be used to support letters of credit issued for the Company,
the face amounts of which are applied to total commitment. The terms of the Line
of Credit require the Company to maintain a minimum tangible net worth. The Line
of Credit expires June 27, 1997, but may be renewed for successive two-year
periods.
The subordinated income debentures require annual sinking fund payments of
$53,000 over the remaining term. The interest rate is variable at the rate of 1%
per annum for each $100,000 of consolidated net income for the immediately
preceding fiscal year, with minimum and maximum rates of 5% and 10%,
respectively. The interest rate was 5% per annum at December 30, 1995, which
rate will be effective through June 30, 1996. The interest rate will be 5% per
annum for the period July 1, 1996 through June 30, 1997. The income debentures
were discounted to approximate the market rate of interest at date of issuance
for similar obligations (approximately 11%).
As of December 30, 1995, the Company had two standby letters of credit
outstanding, one for $97,000 and one for $922,000.
Cash interest payments on borrowing arrangements and long-term debt during
the fiscal years ended December 30, 1995, December 31, 1994 and December 25,
1993 were $1,080,000, $828,000 and $919,000, respectively.
Future principal payments on long-term debt as of December 30, 1995 are
summarized as follows (in thousands):
1996 ........ $1,116
1997 ........ 8,584
1998 ........ 1,012
1999 ........ 1,013
2000 ........ 513
Thereafter . 231
--------
$ 12,469
========
6. LEASES
The Company leases a significant portion of its facilities under operating
leases that expire at various times through 2034.
Future rental commitments at December 30, 1995 under operating leases are
summarized as follows (in thousands):
1996 ..........................$ 893
1997 .......................... 657
1998 .......................... 515
1999 .......................... 484
2000 .......................... 462
Thereafter .................... 7,268
--------
Total minimum rental
commitments ..................$ 10,279
========
Rental expense under operating leases is summarized as follows (in
thousands):
Years Ended
--------------------------------
December December December
30, 1995 31, 1994 25, 1993
---------- ---------- ----------
Total rental
expense ...........$ 984 $ 1,068 $ 1,051
========== ========== ==========
The Company also leases certain properties under capital leases. Property
held under capital leases is summarized as follows (in thousands):
December December
30, 1995 31, 1994
-------- --------
Land ....................$ 80 $ 80
Buildings and leasehold $ 570 $ 570
improvements ...........
Machinery and equipment $ 511 $ 511
Accumulated amortization $ 653 $ 540
The Company leased $104,000 of machinery and equipment in 1994 under capital
leases.
Future minimum lease payments as of December 30, 1995 under capital leases
are summarized as follows (in thousands):
1996 ...................................................$ 130
1997 ................................................... 87
1998 ................................................... 86
1999 ................................................... 69
2000 ................................................... 69
Thereafter ............................................. 138
-----
Total future minimum lease payments .................... 579
Less amount representing interest at rates implicit in
the lease agreements .................................. (112)
-----
Present value of net minimum lease payments ........... 467
Less current portion ................................... (101)
-----
Noncurrent portion .....................................$ 366
=====
<PAGE>
- ----------------------------------------------------------------------------- 7
Interest paid on capital lease obligations was $37,000, $51,000 and $54,000
for the fiscal years ended December 30, 1995, December 31, 1994 and December 25,
1993, respectively.
7. STOCKHOLDERS' EQUITY
The Company has adopted a Performance Share Plan (Plan) under which
performance share units (Units) may be awarded by the Board of Directors to key
employees of the Company. Units mature five years after the award date (subject
to certain extensions), have a maturity value equal to the increase in the book
value per common share (as defined) since the date of award and vest to the
participant at the rate of 20% per year. The Plan permits, among other options,
the participant to receive the value of the matured Units in cash or, subject to
certain limitations, to apply the value of vested Units towards the purchase of
an equal number of the Company's $.05 par value common stock (Stock) at the
prevailing market price. As of December 30, 1995, the Company had 85,624 Units
outstanding, of which 52,109 were vested. Of the vested Units, 1,938 could be
surrendered to purchase shares of the Company's Stock during 1996.
In October 1988, the Board of Directors adopted the For Better Living, Inc.
1988 Stock Option Plan (the Option Plan) and the stockholders of the Company
approved the Option Plan in May 1989. There are no options outstanding under the
Option Plan and the Board of Directors discontinued the plan in March 1994.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation,
which requires adoption of the recognition and measurement provisions for
nonemployee transactions no later than after December 15, 1995. The new standard
defines a fair value method of accounting for stock options and other equity
instruments. Under the fair value method, compensation cost is measured at the
grant date based on the fair value of the award and is recognized over the
service period, which is usually the vesting period.
Pursuant to the new standard, companies are encouraged, but are not required,
to adopt the fair value method of accounting for employee stock-based
transactions. Companies are also permitted to continue to account for such
transactions under Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, but would be required to disclose in a note to the
financial statements pro forma net income and, if presented, earnings per share
as if the Company had applied the new method of accounting.
The accounting requirements of the new method are effective for all employee
awards granted after the beginning of the fiscal year of adoption. The Company
has not yet determined if it will elect to change to the fair value method, nor
has it determined the effect the new standard will have on net income and
earnings per share should it elect to make such a change. Adoption of the new
standard will have no effect on the Company's cash flows.
8. TAXES BASED ON INCOME
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes.
This statement requires the recognition of deferred tax assets and liabilities
for the future tax consequences of events that have been recognized in the
Company's consolidated financial statements or tax returns. The measurement of
the deferred items is based on enacted tax laws. In the event the future
consequences of differences between financial reporting bases and the tax bases
of the Company's assets and liabilities result in a deferred tax asset, SFAS 109
requires an evaluation of the probability of being able to realize the future
benefits indicated by such an asset. A valuation allowance related to a deferred
tax asset is recorded when it is more likely than not that some portion or all
of the deferred tax asset will not be realized.
The provision (benefit) for taxes based on income consists of the following
(in thousands):
Years Ended
-------------------------------
December December December
30, 1995 31, 1994 25, 1993
--------- -------- ---------
Currently
payable:
Federal ........$ (161) $ (543) $ 553
State .......... 10 346 178
Deferred:
Federal ........ 343 (480) (749)
State .......... 69 (238) (163)
--------- -------- ---------
$ 261 $ (915) $ (181)
========= ======== =========
<PAGE>
8 ------------------------------------------------------------------------------
As of December 30, 1995 and December 31, 1994, the Company had net deferred
tax assets as follows (in thousands):
December December
30, 1995 31, 1994
---------- ----------
Restructuring provisions .............$ 236 $ 499
Deferred compensation plan ........... 254 273
Vacation accruals .................... 180 180
Allowance for doubtful accounts ..... 323 364
Workers compensation plan ............ 62 86
Inventory reserves ................... 1,064 1,108
Net operating loss carryforward ..... 119 104
California unitary assessment ....... 262 262
Write-down of fixed asset ............ 217 217
Miscellaneous loss reserves .......... 229 290
Other ................................ 132 117
Alternative minimum tax credit 214
carryforward ........................
Gross deferred tax assets ............ 3,292 3,500
---------- ----------
Excess of tax depreciation over (441) (263)
financial depreciation ..............
State taxes .......................... (222) (216)
Unrealized gain on available-for-sale (155) (555)
securities ..........................
Other ................................ (233) (269)
---------- ----------
Gross deferred tax liabilities ...... (1,051) (1,303)
---------- ----------
Net deferred tax asset ...............$ 2,241 $ 2,197
========== ==========
The Company estimates that the majority of its deferred tax assets will be
realized during the next three fiscal years.
Of the total net deferred tax assets shown above, $176,000 and $492,000,
respectively, are included in other assets as of December 30, 1995 and December
31, 1994 on the accompanying consolidated balance sheets.
A reconciliation between the provision (benefit) for taxes computed by
applying the federal statutory rate to income before taxes and the actual
provision (benefit) for taxes is as follows (in thousands):
Years Ended
---------------------------------
December December December
30, 1995 31, 1994 25, 1993
--------- -------- --------
Provision (benefit) for
taxes at statutory
rate ..................$ 202 $ (935) $ (184)
State taxes, after
federal income tax
benefit ............... 52 (115) 10
Dividend exclusion .... (96) (16) (16)
Other, net ............. 103 151 9
--------- -------- -------
$ 261 $ (915) $ (181)
========= ======== =======
Effective income tax
rate .................. 45.2% 33.3% 34.4%
========= ======== =======
Income tax cash payments during the fiscal years ended December 30, 1995,
December 31, 1994 and December 25, 1993 were $77,000, $380,000 and $207,000,
respectively.
The Company received, in prior periods, notices of proposed assessments from
the California Franchise Tax Board (CFTB) relating to its 1978-1981 tax years.
The principal issue raised in these notices was whether the Company's oil and
gas operations were part of a unitary business with the other operations of the
Company. The CFTB has taken the position that the oil and gas operations are not
unitary in nature and, therefore, has disallowed, for California purposes,
losses arising from oil and gas operations. The Company paid the assessed taxes
of $379,000 and associated interest of $946,000 in 1992. It filed suit in 1994
and received a decision in its favor in February 1995 for recovery of these
amounts, plus interest. The CFTB has appealed that decision however, and the
matter is now pending before the California Court of Appeal. The Company expects
a decision before the end of 1996.
Deductions similar to those questioned by the CFTB for the 1978-1981 tax
years were also taken by the Company in its subsequent tax years. The CFTB is
currently examining these subsequent periods and, as a result of its
examination, has issued a notice of pro- posed assessment of additional taxes
for tax years 1982-1987. The proposed assessment is for $272,000 in additional
taxes which would result in associated interest expense of approximately
$457,000 through the end of fiscal year 1995. The Company's management believes
that the ultimate outcome of this matter will not have a material adverse effect
on the Company's consolidated financial statements.
9. SEGMENT INFORMATION
As of December 30, 1995, the significant industry segments of the Company
were (1) the manufacture and distribution of precast concrete and plastic
structures (The Quikset Organization), and (2) the publication of specialty
magazines (Communications Group). Total revenues by industry include both
revenues to unaffiliated customers, as reported in the Company's consolidated
statements of operations and intersegment revenues. Intersegment revenues are
accounted for on the same basis as revenues to unaffiliated customers.
The Quikset Organization markets a substantial portion of its products to
utility companies and general contractors serving the utility industry. This
segment's risk of loss due to granting credit to its customers is reduced by,
among other things, the use of applicable lien laws to secure payments.
<PAGE>
- ----------------------------------------------------------------------------- 9
Operating profit is equal to net revenues less operating expenses. In
computing operating profit, taxes on income, general corporate expenses and
interest expense have been excluded.
Identifiable assets by industry are those assets that are used in the
Company's operations in each industry segment.
REVENUES (IN THOUSANDS)
Unaffiliated Inter-
Customers segment Total
--------- --------- ----------
Fiscal year ended
December 30,
1995:
The Quikset
Organization ......... $ 64,704 $ -- $ 64,704
Communications ........ 14,889 14,889
Group
Other ................. 1,924 158 2,082
-------- -------- --------
81,517 158 81,675
Eliminations .......... (158) (158)
-------- -------- --------
Consolidated net
revenues ............ $ 81,517 $ -- $ 81,517
======== ======== ========
Fiscal year ended
December 31, 1994:
The Quikset
Organization ......... $ 60,267 $ -- $ 60,267
Communications
Group ................. 10,958 10,958
Other ................. 171 158 329
71,396 158 71,554
Eliminations .......... (158) (158)
-------- -------- --------
Consolidated net
revenues ............ $ 71,396 $ -- $ 71,396
======== ======== ========
Fiscal year ended
December 25, 1993:
The Quikset ........... $ 58,453 $ -- $ 58,453
Organization
Communications
Group ................ 8,130 8,130
Other ................. 1,274 265 1,539
67,857 265 68,122
Eliminations .......... (265) (265)
-------- -------- --------
Consolidated net
revenues ............ $ 67,857 $ -- $ 67,857
======== ======== ========
OPERATING PROFIT (LOSS) (IN THOUSANDS)
December December December
30, 1995 31, 1994 25, 1993
-------- --------- ---------
The Quikset
Organization ............ $ (41) $(1,745) $ 1,643
Communications
Group ................... 1,985 1,243 670
Other .................... 2,038 (122) 1,393
Total operating
profit (loss) ........ 3,982 (624) 3,706
General corporate
expenses ................ (2,152) (1,254) (3,234)
Interest expense ......... (1,253) (873) (998)
------- ------- -------
Income (loss)
before provision
(benefit) for
taxes ................ $ 577 $(2,751) $ (526)
======= ======= =======
IDENTIFIABLE ASSETS, DEPRECATION, AMORTIZATION AND
PROPERTY ADDITIONS (IN THOUSANDS)
Depreciation
Identifiable and Property
Assets Amortization Additions
----------- ------------- ----------
December 30, 1995:
The Quikset
Organization .............. $32,632 $ 1,692 $ 2,273
Communications
Group ..................... 4,958 48 51
Corporate .................. 2,447 174 19
Other ...................... 2,545 34
------- ------- -------
$42,582 $ 1,948 $ 2,343
======= ======= =======
December 31, 1994:
The Quikset
Organization .............. $30,108 $ 1,931 $ 1,477
Communications
Group ..................... 3,917 42 71
Corporate .................. 3,046 111 26
Other ...................... 2,433 51
------- ------- -------
$39,504 $ 2,135 $ 1,574
======= ======= =======
December 25, 1993:
The Quikset
Organization .............. $31,602 $ 2,090 $ 692
Communications
Group ..................... 2,100 74 45
Corporate .................. 3,725 57 117
Other ...................... 3,054 68
------- ------- -------
$40,481 $ 2,289 $ 854
======= ======= =======
<PAGE>
10 -----------------------------------------------------------------------------
10. PENSION PLAN
The Company has a defined benefit pension plan (Pension Plan) covering
certain employees. The benefits associated with the Pension Plan are determined
by a formula based on years of service. The Company's funding policy is to
contribute amounts that are sufficient to satisfy legal funding requirements and
are deductible for federal income tax purposes.
Pension expense for the fiscal years ended December 30, 1995, December 31,
1994 and December 25, 1993 consists of the following (in thousands):
December December December
30, 1995 31, 1994 25, 1993
--------- --------- ----------
Service cost .........$ 132 $ 170 $ 182
Interest cost ........ 232 222 200
Return on plan assets (131) (134) (178)
Other ................ (115) (100) (45)
--------- --------- ----------
$ 118 $ 158 $ 159
========= ========= ==========
A reconciliation of the funded status of the Pension Plan with the amount
included in other current liabilities consists of the following (in thousands):
December December
30, 1995 31, 1994
---------- ----------
Plan assets at fair value ..........$ 3,209 $ 3,144
========= =========
Actuarial present value of
accumulated plan benefits:
Vested ............................ 3,057 2,740
Nonvested ......................... 43 52
--------- ---------
3,100 2,792
Additional projected benefits ..... 154 166
--------- ---------
Projected benefit obligation ...... 3,254 2,958
--------- ---------
Excess of plan assets over (45) 186
projected benefit obligation ......
Less:
Unrecognized transition assets ... 21 32
Unrecognized net gain ............. 201 397
Unrecognized prior service cost .. (148) (173)
--------- ---------
Pension liability ..................$ (119) $ (70)
========= =========
Significant assumptions for the fiscal years ended December 30, 1995,
December 31, 1994 and December 25, 1993 were as follows:
Discount rate on projected benefit obligation 8%
==
Long-term rate of return on plan assets 8%
==
Assets held by the Pension Plan consist of unallocated insurance contracts
stated at contract value which approximates market value.
11. FOURTH QUARTER ADJUSTMENTS
During the fourth quarter of fiscal year 1994, the Company recorded certain
inventory write-offs and obsolescence reserves totaling $1,500,000, the write
down to fair market value of certain real estate in the amount of $502,000, and
a loss reserve for certain pending litigation of $200,000.
12. SUBSEQUENT EVENTS
The Company sold the Quikset Organization's Irvine, California headquarters
building in March of 1996. The building had a net book value of $886,000 at
December 30, 1995. The Company received approximately $989,000 in net proceeds
and recognized approximately a $109,000 gain on the sale during the first
quarter of 1996.
<PAGE>
- ----------------------------------------------------------------------------- 11
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of
Directors of For Better Living, Inc.:
We have audited the accompanying consolidated balance sheets of For Better
Living, Inc. and subsidiaries as of December 30, 1995 and December 31, 1994, and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the three fiscal years in the period ended December 30, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these 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, such consolidated financial statements present fairly, in all
material respects, the financial position of For Better Living, Inc. and
subsidiaries at December 30, 1995 and December 31, 1994, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended December 30, 1995 in conformity with generally accepted accounting
principles.
As described in Note 2, the Company adopted Statement of Financial Accounting
Standards No. 115, Accounting for Certain Debt and Equity Securities, effective
December 26, 1993.
DELOITTE & TOUCHE LLP
Costa Mesa, California
March 15, 1996
<PAGE>
12 -----------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
LIQUIDITY AND CAPITAL REQUIREMENTS
For the fiscal year ended December 30, 1995, cash and cash equivalents
decreased by $300,000. The primary source of cash in 1995 was $7,146,000 from
long-term borrowings and $3,025,000 from short- term borrowings. The predominant
uses of cash included $5,957,000 for the payments of debt and capital lease
obligations, $3,969,000 used in operating activities and $2,343,000 for
purchases of property, primarily for The Quikset Organization.
For the fiscal year ended December 31, 1994, cash and cash equivalents
decreased $2,381,000. The primary source of cash during the period was
$7,000,000 from long-term borrowings and $1,225,000 from short-term borrowings.
The predominant uses of cash included $7,204,000 for debt and capital lease
obligation repayments, $1,574,000 for purchases of property primarily for The
Quikset Organization, $1,217,000 for operating activities and $717,000 for
purchases of available-for-sale securities.
For the fiscal year ended December 25, 1993, cash and cash equivalents
increased $2,179,000. The primary sources of cash during the period were
$4,409,000 from sales of property and available-for- sale securities and
$1,867,000 for operating activities. Significant uses of cash were $1,908,000
for debt and capital lease obligation repayments, $1,248,000 for purchases of
available-for-sale securities and $854,000 for purchases of property primarily
for The Quikset Organization.
As described in Note 5 of the Notes to Consolidated Financial Statements, in
June 1995 the Company entered into a new line of credit agreement (the Line of
Credit) to replace the Credit Agreement which was paid in full in June of 1995.
The Line of Credit provides up to $10 million of available funds.
In March 1994 the Company retired early its Unsecured Loans and obtained the
Term Loan from a financial institution. The net effect of these two transactions
was that the Company received approximately $900,000 of incremental cash
proceeds. The Company also obtained in the second quarter of 1994 its $5,000,000
Credit Agreement to provide working capital financing on an as-needed basis.
Management believes that its cash position, together with available credit
and funds anticipated to be generated from its operations, will provide
sufficient cash resources to finance its operating activities.
RESULTS OF OPERATIONS
In fiscal year 1995 the Company's revenues increased $10,121,000. This was
the result of increases of $3,931,000 at the Communications Group, $4,437,000 at
The Quikset Organization, and $1,753,000 at the corporate level primarily as a
result of the sale of securities.
Revenues increased at the Communications Group primarily as a result of
increased advertising and newsstand sales for all four of its magazines.
Revenues increased at The Quikset Organization as a result of greater sales of
its products throughout its markets, especially at Quikset's Texas operations.
During 1995 the Company's pre-tax income increased $3,328,000, primarily as a
result of an increase in operating profit of $1,704,000 at Quikset, an increase
in the operating profit of $742,000 at the Communications Group, and an increase
of $2,160,000 in other operating profit. These increases were partially offset
by an increase in general corporate expense of $898,000 and an increase in
interest expense of $380,000.
The increase in Quikset's 1995 operating profit was a result of increased
revenue and associated profit, and a significant decrease in the write-offs for
obsolete and excess inventory. The increase in operating profit at the
Communications Group was primarily a result of increased revenue from
advertising and newsstand sales and associated profits. The increase in other
operating profit was primarily a result of the profitable disposition of
available-for-sale securities.
The increase in general corporate expenses was primarily due to the one-time
reversal in 1994 of previously accrued expenses which were no longer required.
The increase in interest expense was a result of the Company's increased
borrowing.
In 1995, the Company recognized a net profit on the sale of
available-for-sale securities of $1,255,000.
In fiscal year 1994, the Company's revenues increased $3,539,000. This
resulted from increases in revenues of $2,828,000 at the Communications Group
and of $1,814,000 at The Quikset Organization, partially offset by a decrease in
other revenues (primarily gains from the sales of available-for-sale securities)
of $1,210,000. Revenues increased at the Communications Group due to increases
in advertising and newsstand income from its new Bike Magazine as well as from
several of its other magazines. Increases in revenues at The Quikset
Organization resulted from increased revenues in its plastics operation and
Texas concrete operation.
<PAGE>
- ----------------------------------------------------------------------------- 13
During 1994, the Company's pre-tax loss increased $2,225,000. This increase
in pre-tax loss primarily resulted from a decrease in operating profit of
$3,388,000 at The Quikset Organization and a decrease in other operating profit
of $1,515,000, partially offset by an increase in operating profit of $573,000
at the Communications Group and a decrease of $1,980,000 in general corporate
expenses.
The decrease in operating profit at The Quikset Organization was primarily
due to the recording of certain inventory write-offs and obsolescence reserves
totaling $1,500,000, a decline in standard gross profits of $1,100,000, an
increase of $225,000 in bad debt expense, and the recording of a loss reserve of
$200,000 for certain pending litigation. The increase in operating profits at
the Communications Group was primarily a result of increases in newsstand and
advertising revenues and associated profits from its Surfer, Powder and
Snowboarder magazines. The decrease in other operating profit resulted primarily
from a reduction in gains on sales of available-for-sale securities of
$1,083,000 and the write-down to fair market value of its Irvine property which
resulted in a recorded loss of $502,000 (including amounts recognized by The
Quikset Organization). The decrease in general corporate expenses resulted from
the one-time costs recorded in 1993 associated with the reorganization and
restructuring of the Company's corporate office and the resulting reduction in
ongoing overhead costs.
The increase in general corporate expenses in 1993 was primarily the result
of the Company's recognizing approximately $1,300,000 in costs associated with
the reorganization and restructuring of its corporate offices. These
reorganization and restructuring costs were primarily comprised of severance and
associated costs related to the separation of certain Company officers and other
employees, expenses relating to ongoing contractual arrangements with several of
these employees, a loss incurred on the abandonment of certain rental property
and costs associated with the relocation of the Company's corporate offices.
These costs were recorded in the third quarter of 1993 and were included in
selling, general and administrative expenses in the accompanying consolidated
statements of operations. Approximately $100,000 of the recognized expenditures
were disbursed in fiscal year 1993, with $708,000 and $162,000 being disbursed
in fiscal years 1994 and 1995, respectively. The remaining costs associated with
contractual arrangements will be disbursed in future years.
The reduction in interest expense in 1994 was primarily due to the debt
refinancing and associated reduction in interest rates as described in Note 5 of
the Notes to Consolidated Financial Statements.
In 1994, the Company incurred a net loss of $4,000 on the disposition of
available-for-sale securities.
BUSINESS
For Better Living, Inc. was incorporated in Delaware in 1969 and first issued
publicly traded equity securities in 1972. The Company is primarily engaged in
(1) the manufacture and distribution of precast concrete and plastic products,
and (2) the publication of specialty magazines. Following is a description of
the Company's segments and the principal operations of each as of December 30,
1995 (see Note 9 in the accompanying consolidated financial statements):
CONCRETE AND PLASTIC PRODUCTS
Associated Concrete Products, Inc., Dalworth Concrete Products, Inc. and
DeKalb Concrete Products, Inc. (Concrete) and Associated Plastics, Inc.
(Plastics) comprise the concrete and plastic products segment (The Quikset
Organization). Concrete designs, manufactures and distributes underground
precast concrete structures. These products are marketed primarily to utility
companies and general contractors by Concrete's eleven plants located in
California, Texas, Arkansas, Georgia and Florida. Concrete has developed a
patented line of precast concrete sectional boxes to house underground
transformers, distribution systems and splicing manholes which are marketed
under the trade name of Quikset.
Concrete obtains its raw materials from domestic sources. Alternate sources
are readily available.
Although no reliable industry statistics are available, the Company believes
that Concrete is one of the larger producers of underground precast concrete
structures in the United States; however, in addition to other manufacturers of
precast concrete and plastic products, Concrete also competes with contractors
who pour structures on site.
Plastics produces plastic products using a fiber reinforced plastic process
and a "structural foam" process developed for injection molding. A number of
products are now manufactured out of plastic material and are similar to
existing product lines of Concrete.
<PAGE>
14 -----------------------------------------------------------------------------
These products are marketed primarily to electrical and telephone utility
companies throughout the United States and parts of Canada by Plastics' two
plants located in California and Arkansas. The primary raw materials used by
Plastics are acrylonitrile- butadiene-styrene copolymers, polyester resins and
glass fiber reinforcements, which are purchased from alternate domestic sources.
SPECIALTY MAGAZINE PUBLICATIONS
Surfer Publications (Communications Group) constitutes the specialty magazine
publications segment. As of December 30, 1995, this segment published Surfer,
Powder, Snowboarder and Bike Magazines (published twelve, seven, seven and nine
times, respectively, per year). In February 1994, the first issue of Bike was
published. The Communications Group also produces cable television and home
video programs.
The in-house staff sells advertising, markets circulation and produces the
editorial product (which is prepared electronically to press-ready film). The
magazines are distributed to newsstands under contract with right of return for
unsold copies. Subscription fulfillment, printing and television post-production
services are procured from outside sources.
PRODUCT DEVELOPMENT
The Company believes that its future growth depends upon its ability to
continue developing new products and refining its existing products with a plus
that is better than competition.
During the fiscal years ended December 30, 1995, December 31, 1994 and
December 25, 1993, the Company spent $248,000, $179,000 and $341,000,
respectively, for product development. These activities were primarily directed
toward the improvement of existing products.
EMPLOYEES
As of December 30, 1995, the Company employed 522 persons.
MARKET FOR THE REGISTRANT'S COMMON
STOCK AND RELATED STOCKHOLDER MATTERS
The common stock of For Better Living, Inc. is traded on the NASDAQ
Small-Cap Market under the symbol FBTR. The per-share range of closing high
and low bid quotations and the dividends declared and paid, by quarter, for
the fiscal years ended December 30, 1995 and December 31, 1994 were as
follows:
Fiscal Year Ended December 30, 1995
- ------------------------------------------------------
Quarter
-------------------------------------
First Second Third Fourth
----- ----- ----- -----
High bid .....$9.00 $8.63 $8.63 $9.00
Low bid ...... 8.50 8.50 8.50 8.50
Dividends .... 0.10
- ------------------------------------------------------
Fiscal Year Ended December 31, 1994
- ------------------------------------------------------
Quarter
-------------------------------------
First Second Third Fourth
----- ----- ----- -----
High bid .. $9.00 $9.00 $9.00 $9.00
Low bid .... 8.50 8.50 9.00 9.00
Dividends . 0.10
- ------------------------------------------------------
The market quotations were obtained from the NASD statistical report. Such
quotations reflect interdealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions. There were 200 record
holders of the Company's common stock as of March 15, 1996.
FORM 10-K AVAILABLE
The Company will furnish without charge to security holders a copy of its
most recent Annual Report on Form 10-K filed with the Securities and Exchange
Commission. Direct your request to Karl M. Stockbridge, Executive Vice
President, For Better Living, Inc., 13620 Lincoln Way, Suite 380, Auburn,
California 95603.
<PAGE>
- ---------------------------------------------------------------------------- 15
<TABLE>
SELECTED FINANCIAL DATA
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<CAPTION>
December 30, December 31, December 25, December 26, December 27,
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net revenues ...........................$ 81,517 $ 71,396 $ 67,857 $ 68,846 $ 71,906
========== ========== ========== ========== ==========
Net income (loss) ......................$ 316 $ (1,836) $ (345) $ 720 $ 455
========== ========== ========== ========== ==========
Total assets ...........................$ 42,582 $ 39,504 $ 40,481 $ 39,522 $ 43,959
========== ========== ========== ========== ==========
Long-term obligations ..................$ 11,718 $ 5,790 $ 5,615 $ 7,486 $ 9,363
========== ========== ========== ========== ==========
Weighted average number of common
shares outstanding .................... 878 878 878 878 885
=== === === === ===
Income (loss) per common share ......... $0.36 $(2.09) $(0.39) $0.82 $0.51
===== ====== ====== ===== =====
Cash dividends declared per common
share ................................. $0.10 $0.10 $0.10 $0.10 $0.10
===== ===== ===== ===== =====
</TABLE>
<PAGE>
16 ----------------------------------------------------------------------------
COMPANY INFORMATION
- -----------------------------------------------------------------------------
DIRECTORS
Richard G. Fabian
Chairman of the Board
For Better Living, Inc.
Episcopal Priest
F. G. Fabian, Jr.
Chairman Emeritus
For Better Living, Inc.
William S. Farmer
Attorney at Law
Collette & Erickson
Danna Lewis-Gordon
President
Surfer Publications
Karl M. Stockbridge
Executive Vice President
For Better Living, Inc.
Peter F. Sullivan
Marketing Manager Eastern Area
Pre-Sales Consulting
J.D. Edwards & Company
OFFICERS
Richard G. Fabian
Chairman of the Board
Karl M. Stockbridge
Executive Vice President
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
695 Town Center Drive
Costa Mesa, California 92626
COMMON STOCK
REGISTRAR AND TRANSFER AGENT
U.S. Stock Transfer Corporation
1745 Gardena Avenue, Suite 200
Glendale, California 91204
CORPORATE OFFICE
13620 Lincoln Way, Suite 380
Auburn, California 95603
Tel: (916) 823-9600
Fax: (916) 823-9650
OPERATING COMPANIES
THE QUIKSET ORGANIZATION
2301 Dupont Drive, Suite 100
Irvine, California 92715
SURFER PUBLICATIONS
33046 Calle Aviador
San Juan Capistrano, California 92675
EXHIBIT 21
<PAGE>
Exhibit 21
FOR BETTER LIVING, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
- --------------------------------------------------------------------------------
The following is a list of subsidiaries and sub-subsidiaries, each of which is
wholly-owned and included in the Registrant's consolidated financial statements:
State of
Subsidiary Incorporation
---------- -------------
The Quikset Organization California
Associated Concrete Products, Inc. California
DeKalb Concrete Products, Inc. Georgia
Dalworth Concrete Products, Inc. Texas
Associated Plastics, Inc. California
Surfer Publications California
BLI Facilities, Inc. California
BLI Investments California
All unnamed subsidiaries, when considered in the aggregate as a single
subsidiary, would not constitute a significant subsidiary.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000037946
<NAME> FOR BETTER LIVING INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> DEC-30-1995
<CASH> 1,528,000
<SECURITIES> 0
<RECEIVABLES> 13,177,000
<ALLOWANCES> 747,000
<INVENTORY> 8,401,000
<CURRENT-ASSETS> 29,052,000
<PP&E> 39,967,000
<DEPRECIATION> 28,614,000
<TOTAL-ASSETS> 42,582,000
<CURRENT-LIABILITIES> 13,182,000
<BONDS> 0
<COMMON> 44,000
0
0
<OTHER-SE> 16,599,000
<TOTAL-LIABILITY-AND-EQUITY> 42,582,000
<SALES> 79,512,000
<TOTAL-REVENUES> 81,517,000
<CGS> 50,422,000
<TOTAL-COSTS> 80,940,000
<OTHER-EXPENSES> 30,518,000
<LOSS-PROVISION> 230,000
<INTEREST-EXPENSE> 1,253,000
<INCOME-PRETAX> 577,000
<INCOME-TAX> 261,000
<INCOME-CONTINUING> 316,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 316,000
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.36
</TABLE>
