<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 3, 1995 Commission File No. 1-8044
HUNT MANUFACTURING CO.
(Registrant)
Pennsylvania 21-0481254
---------------------- -------------------------------
(State of incorporation) (IRS Employer Identification No.)
One Commerce Square, 2005 Market Street Philadelphia, PA 19103-7085
- -------------------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 656-0300
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class: on which registered:
-------------------- ----------------------
Common Shares, par value $.10 per share New York Stock Exchange
Rights to Purchase Series A Junior New York Stock Exchange
Participating Preferred Stock
Securities registered pursuant to Section 12(g) of the Act: None
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
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 the registrant's Common Shares (its only
voting stock) held by non-affiliates of the registrant as of February 2, 1996
was approximately $167,000,000. (Reference is made to the final paragraph of
Part I herein for a statement of the assumptions upon which this calculation is
based.)
The number of shares of the registrant's Common Shares outstanding as of
February 2, 1996 was 10,964,644.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant's 1996 definitive proxy statement
relating to its scheduled April 1996 Annual Meeting of Shareholders (which
proxy statement is expected to be filed with the Commission not later than 120
days after the end of the registrant's last fiscal year) are incorporated by
reference into Part III of this report.
<PAGE>
PART I
Item 1. Business
General
Hunt Manufacturing Co. and its subsidiaries (herein called the
"Company", unless the context indicates otherwise) are primarily engaged in the
manufacture and distribution of office products and art/craft products which the
Company markets worldwide.
Reference is made to Item 7 and Note 3 to Consolidated
Financial Statements herein for information concerning a pre-tax charge
aggregating $5.3 million (approximately $3.5 million after income taxes, or $.22
per share) recorded in fiscal 1995 for costs relating to organizational changes
and relocation and consolidation of certain of the Company's manufacturing and
distribution operations.
Reference is also made to Item 7 and Note 2 to Consolidated
Financial Statements herein for information regarding the Company's private
purchase of 2,150,165 shares at $16.32 per share and repurchase of 2,954,378
shares at $17.00 per share pursuant to a tender offer, both of which purchases
were made subsequent to the Company's 1995 fiscal year-end. The Company also
entered into a new five-year $125 million credit facility. The Company used
borrowings under this new credit facility, together with cash on hand, to fund
the aforesaid private purchase of shares and shares pursuant to the tender
offer.
Business Segments
The following table sets forth the Company's net sales and
operating profit by business segment for the last three fiscal years:
1995 1994 1993
-------- -------- ------
(In thousands)
Net Sales:
Office products ............. $163,378 $160,307 $142,462
Art/Craft products .......... 150,503 127,896 113,688
-------- -------- --------
Total ...................... $313,881 $288,203 $256,150
======== ======== ========
Operating Profit:
Office products ............. $ 6,966 $ 12,172 $ 11,411
Art/Craft products .......... 21,678 21,211 18,832
-------- -------- --------
Total ...................... $ 28,644 $ 33,383 $ 30,243
======== ======== ========
- ---------------
See Items 6 and 7 herein and Note 17 to Consolidated Financial
Statements herein for further information concerning the Company's business
segments (including information concerning identifiable assets).
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<PAGE>
Office Products
The Company has three major classes of office products:
mechanical and electromechanical products; office furniture; and desktop
accessories and supplies. The amounts and percentages of net sales of these
product classes for the last three fiscal years were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- --------------- --------------
(Dollars in thousands)
<S> <C> <C> <C>
Product Class:
Mechanical and
electromechanical..... $69,018 42% $ 76,897 48% $ 70,047 49%
Office furniture........ 60,278 37 51,715 32 44,233 31
Desktop accessories
and supplies.......... 34,082 21 31,695 20 28,182 20
-------- --- -------- --- -------- ---
Total.................. $163,378 100% $160,307 100% $142,462 100%
======== ==== ======== ==== ======== ====
</TABLE>
The Company's mechanical and electromechanical office products
consist of a variety of items sold under the Company's BOSTON brand, including
manual and electric pencil sharpeners; paper punches, trimmers and shredders;
electric letter openers; spring clips used to hold sheets of paper; manual and
electronic staplers; electric air cleaners; fans and heaters; laminators; and
other related products. The Company's office furniture products are sold
primarily under the BEVIS brand name. These products include conference,
computer, utility and folding tables; office chairs; bookcases and screen
panels; metal and wood workstations for computer terminals, personal computers,
word processors, printers and other similar electronic office equipment; and
home/office furniture. The Company's desktop accessories and supplies consist of
a broad range of products that support the use of computers, such as computer
diskette, CD and CD ROM storage and filing systems, printer stands, mouse pads
and other computer related accessories which are marketed under the MEDIAMATE
brand name. Also included in desktop accessories and supplies are an array of
items marketed under the LIT-NING brand name, including metal horizontal and
vertical files, letter trays, desk organizers and paper sorting racks. In 1994,
the Company obtained exclusive distribution rights in the United States and
Canada for Schwan-STABILO(1) highlighter markers and writing instruments which
are included under desktop accessories and supplies. In 1995, the Company
acquired the rights to the Calise line of lap-top computer carrying cases which
are included under desktop accessories and supplies.
The Company consistently has sought to expand its office
products business through internal product development, the acquisition of
distribution rights to products which complement or extend the Company's
established lines, the acquisition of complementary businesses and through
broadened distribution. Examples of new office product introductions by the
Company in recent years are BOSTON brand electronic staplers, various models of
air cleaners, fans and heaters, personal paper shredders, electric and battery
powered pencil sharpeners, paper punches, and desk-top laminators; BEVIS
- --------
1. Trademark of Schwan-STABILO Schwanhausser GmbH & Co.
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<PAGE>
UNIWORX, BEVIS ULTRAWORX and BEVIS MEGAWORX lines of modular office furniture
systems; BEVIS CONVERGENCE panel systems; MEDIAMATE LASERRAK printer stands;
MEDIAMATE FASTRAC mouse pads; MEDIAMATE multi-media storage files, MEDIAMATE
ROLL'N RAK portable printer stands, MEDIAMATE CD storage products; MEDIAMATE
DISCFINDER CD filing system and CALISE computer carrying cases.
There are three major and generally distinct domestic markets
for the Company's office products: commercial offices, home offices and the
general consumer. The commercial line of the Company's office products is
distributed primarily through a network of office supply wholesalers and dealers
and office product superstores. Sales to the home office and the general
consumer include mechanical and electromechanical, and desktop accessories and
supplies products which are sold through large retail outlets, such as office
products superstores, drug and food chain stores, variety stores, discount
chains, catalog showrooms and membership chains. The consumer market has
increased significantly over the last several years primarily due to the
dramatic growth of office products superstores. A more limited line of products
is sold to schools through specialized school supply distributors.
Art/Craft Products
The Company manufactures and distributes three major classes
of art/craft products: presentation graphics products; art supplies; and
hobby/craft products. The amounts and percentages of net sales of these three
product classes for the last three fiscal years were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------- ----------------
(Dollars in thousands)
<S> <C> <C> <C>
Product Class:
Presentation
graphics............. $104,271 69% $ 83,354 65% $ 68,734 61%
Art supplies........... 26,610 18 26,772 21 27,569 24
Hobby/craft............ 19,622 13 17,770 14 17,385 15
-------- --- ------ --- -------- ---
Total................ $150,503 100% $127,896 100% $113,688 100%
======== === ======== === ======== ===
</TABLE>
The Company's presentation graphics products are used largely
by picture framers, graphic artists, display designers and photo laboratories,
and include a range of BIENFANG and CENTAFOAM foam boards (which constitute a
significant portion, although less than 40%, of presentation graphics products);
TECHMOUNT dry mount adhesive products; pressure sensitive and dry mount adhesive
products sold under the SEAL and ADEMCO-SEAL brands, as well as under the
COLORMOUNT, SEALEZE, PRINT GUARD, PRINT MOUNT and GARDIAN brand names;
THERMASHIELD laminating films; an array of mounting and laminating equipment
sold under the CLEAR TECH, SEALEZE, and IMAGE brand names; and specialty tapes
and films supplied under various private brands. The Company's art supply
products are used primarily by commercial and amateur artists, and include
commercial and fine art papers which the Company converts, finishes and sells
under its BIENFANG brand name; various types of X-ACTO brand knives and blades;
-4-
<PAGE>
SPEEDBALL paint markers and acrylic and water-color paints; and CONTE(2)
pastels, crayons and related drawing products, for which the Company is the
exclusive United States and Canadian distributor. The Company's hobby/craft
products generally are used by hobbyists and craft enthusiasts and include
SPEEDBALL print-making products; ACCENT MATS beveled-edge picture framing mats;
SPEEDBALL ELEGANT WRITERS; LETTERSHOP calligraphy kits and PANACHE calligraphy
products; a range of punch quilting products; PAPER KRAZE paper making and
casting products; and X-ACTO brand tools and kits.
The Company consistently has sought to expand its art/craft
business primarily through acquisitions of complementary businesses and of
distribution rights to complementary products manufactured by others, through
internal product development, and through broadened distribution. Major
art/craft products introduced during the last several fiscal years include
SINGLE STEP adhesive coated BIENFANG foam board; BIENFANG project display
boards; ARMORCORE and STRATOCORE line of board products; PANACHE calligraphy
products; LETTERSHOP calligraphy kits; punch quilting products; PAPER KRAZE
papermaking and casting products; CLEAR TECH pouch laminators; IMAGE brand large
format laminators; GARDIAN outdoor protective laminates and adhesives; PRINT
MOUNT pressure sensitive adhesives; and THERMASHIELD laminating films. In 1993,
the Company acquired IMAGE TECHNOLOGIES, Inc., a start-up company engaged in the
development and production of large format laminators, which has allowed the
Company to broaden its distribution into the digital imaging market.
In late April, 1995, the Company acquired the Centafoam
business of Spicers, Ltd., a division of David S. Smith (Holdings) PLC, a United
Kingdom manufacturer and marketers of a line of styrene-based foam board
products, which will enable the Company to be more competitive in international
foam board markets, as well as provide the Company with a base from which to
build a rigid substrate business for sign and display markets in Europe.
BIENFANG foam board has been particularly important, as it has
allowed the Company to penetrate the picture framing, sign, display and exhibit
markets, yet it also holds wide appeal to the traditional customer groups in art
supply and hobby/craft markets. The success of foam board has been attributable,
in significant part, to the Company's ability to offer the end-user a variety of
value-added foam board products, such as colored or adhesive coated foam board.
Traditionally, the Company's art/craft products have been
distributed primarily through wholesalers (framing, photomounting, art and
hobby), dealers (specialized art supply and hobby/craft stores), general
consumer-oriented retail outlets (primarily office product superstores and chain
stores), industrial concerns (photo labs, screen printers) and through
specialized school supply distributors. Over the last several years,
consumer-oriented retail outlets have become an increasingly important
distribution channel for the Company's art/craft products.
- --------
2. Trademark of Conte S.A.
-5-
<PAGE>
Sales and Marketing
General
The Company has over 12,000 active customers, the ten largest
of which accounted for approximately 35% of its sales in fiscal 1995. Three of
these ten largest customers were office products superstore chains. The largest
single customer accounted for 9.4% of sales for that year. There is a continuing
trend toward consolidation of wholesalers, dealers and superstores, particularly
in the office products market, resulting in an increasing percentage of the
Company's sales being attributable to a smaller number of customers. See Item 7
of this report.
Because most of the Company's sales are made from inventory,
the Company generally operates without a material backlog. The Company's sales
generally are not subject to material seasonal fluctuations. See Note 16 to
Consolidated Financial Statements herein.
Domestic Operations
Domestic marketing of the Company's office products and
art/craft products is effected principally through six separate sales forces,
one each for office products, furniture, computer accessory products, art/craft
products, photomounting and mass market. The combined sales forces are comprised
of over 30 Company salespeople and over 300 independent manufacturers'
representatives.
The Company maintains domestic distribution operations in
Florence, Alabama; for office products; in Naugatuck, Connecticut; and Cottage
Grove, Wisconsin, for art/craft products; and in Statesville, North Carolina,
for both office and art/craft products.
Foreign Operations
The Company distributes its products in more than 60 foreign
markets through its own sales force of eight area sales managers and 9
salespersons, and through over 30 independent sales agents and over 300
distributors.
Sales of office products and art/craft products represented
approximately 40% and 60%, respectively, of the Company's export sales in fiscal
1995, with electrical and mechanical pencil sharpeners, paper punches, staplers,
X-ACTO brand knives and blades, BIENFANG paper and foam board products, and
pressure sensitive and dry mount adhesive products accounting for the major
portion of these sales. Sales from foreign operations in Europe included
principally presentation graphics products. See Note 17 to Consolidated
Financial Statements herein for further information concerning the Company's
foreign operations.
The Company maintains distribution operations in Ontario,
Canada; Basildon, England; Kornwestheim, Germany and in Hong Kong.
Foreign operations are subject to the usual risks of doing
business abroad, particularly currency fluctuations and foreign exchange
controls. See also Note 1 to Consolidated Financial Statements herein for
information concerning hedging.
-6-
<PAGE>
Manufacturing and Production
The Company's operations include manufacturing and converting
of products, as well as purchasing and assembly of various component parts.
Excluding products for which it acts as a distributor, the vast majority of the
Company's sales are of products which are either manufactured, converted or
assembled by it. See Item 2 herein for information concerning the Company's
major manufacturing facilities.
The Company customarily has more than one source of supply for
its critical raw materials and component parts and its businesses have not been
materially hindered by shortages or increased prices of such items. Although
higher costs were experienced, particularly during the first three quarters of
fiscal 1995 for commodities, such as wood, corrugated packaging material, steel
and styrene plastic, the Company began experiencing moderation of prices of some
of its raw materials near the end of fiscal 1995. However, management expects
the price of some of its raw materials to continue to increase in fiscal 1996.
See Item 7 herein.
Competition
The Company does not have any single competitor which offers
substantially the same overall lines of either office products or art/craft
products as the Company. However, competition in a number of areas of the
Company's businesses, such as electric pencil sharpeners, paper punches,
staplers, office furniture, computer diskette storage and related accessory
products, paints and foam board, is substantial, and some of the Company's
competitors are larger and have considerably greater financial resources than
the Company.
Because of the fragmented nature of the office products and
art/craft products businesses, the multiple markets served by the Company, and
the absence of published market data, the Company generally is not able to
determine with certainty its relative domestic or foreign market share for its
various products. Nevertheless, the Company believes that it is among the
leaders in domestic markets in a number of its products, including manual and
electric pencil sharpeners; electronic staplers; metal desktop paper organizing
products; BIENFANG foam board products; presentation graphics materials and
equipment; X-ACTO brand knives and blades; and calligraphy products. The Company
also believes that it is among the leaders in the United Kingdom picture framing
and photomounting market for dry mounting products.
The Company considers product performance and brand
recognition to be important competitive factors in its businesses, but
competitive pricing and promotional discounts also have become increasingly
important factors.
Trademarks, Patents and Licenses
The Company's business is not dependent, to a material extent,
upon any patents. However, the Company regards its many trademarks as being of
substantial value in the marketing of its various products. The following
trademarks mentioned in this report are owned by the Company:
ACCENT MATS(R), ADEMCO-SEAL(TM), BEVIS(R), BEVIS(R) CONVERGENCE(TM), BEVIS(R)
MEGAWORX(TM), BEVIS(R) ULTRAWORX(R), BEVIS(R) UNIWORX(R), BIENFANG(R),
BOSTON(R), CALISE(TM), CENTAFOAM(TM), CLEAR TECH(R), COLORMOUNT(R), GARDIAN(TM),
IMAGE(TM), LETTERSHOP(TM), LIT-NING(R), MEDIAMATE(R), MEDIAMATE DISCFINDER(TM),
-7-
<PAGE>
MEDIAMATE(R), FASTRAC(R), MEDIAMATE(R) LASERRAK(R), MEDIAMATE ROLL'N RAK(R),
PANACHE(R), PAPER KRAZE(TM), PRINT GUARD(R), PRINT MOUNT(R), SEAL(R),
SEALEZE(R), SINGLE STEP(R), SPEEDBALL(R), SPEEDBALL(R) ELEGANT WRITERS(R),
SPEEDBALL(R) FABRIC PAINTERS(TM), SPEEDBALL(R) PAINTERS(R), TECHMOUNT(R),
THERMASHIELD(TM) and X-ACTO(R).
The Company also has been granted exclusive distribution
rights in designated territories with respect to various products, including
CONTE drawing products; Schwan-STABILO highlighter markers and writing
instruments (the distribution rights to which in the U.S. and Canada were
obtained in fiscal 1994), air cleaners, fans and heaters which are manufactured
by other companies and sold by the Company under the BOSTON brand name; and
PERFECT DATA(3) computer cleaning products. Such rights customarily are granted
for limited periods, after which they expire or may be terminated at the option
of the grantor. The Company's distribution rights generally are of limited
duration (the longest usually not exceeding approximately seven years) and may
be terminated or expire, in certain cases, with as little as approximately six
months notice from the grantor of such rights. While the Company's business is
not dependent upon any of these distribution rights (no line of such distributed
products having accounted for as much as 3% of the Company's net sales in fiscal
1995), the loss of the right to market certain products could have an adverse
effect on the Company's profitability.
Research and Development
During fiscal 1995, the Company spent approximately $1.7
million on Company-sponsored research and development, as compared with
approximately $1.6 million in fiscal 1994 and $1.7 million in fiscal 1993.
Personnel
As of February 1, 1996, the Company had approximately 2,050
full-time employees.
Environmental Matters
Prior to the Company's acquisition of Seal Products, Inc.
("Seal") from Bunzl plc in May 1990, it was discovered that some hazardous waste
materials had been stored at Seal's premises located in Naugatuck, Connecticut.
In compliance with applicable state law, this environmental condition was
reported to the Connecticut Department of Environmental Protection by Bunzl.
Seal, which now is a subsidiary of the Company, may be partially responsible
under law for the environmental conditions on the premises and any liabilities
resulting therefrom. However, in connection with the Company's acquisition of
Seal, Bunzl agreed to take responsibility for correcting such environmental
conditions and, for a period of seven years, to indemnify Seal and the Company
for such resulting liabilities, subject to certain limitations. Bunzl is
continuing the process of remediating the environmental conditions. A
substantial portion of the remediation has been completed, although testing is
continuing.
- --------
3. Trademark of Perfect Data Corporation.
-8-
<PAGE>
The Company is also involved on a continuing basis in
monitoring its compliance with environmental laws and in making capital and
operating improvements necessary to comply with existing and anticipated
environmental requirements. Despite its efforts, the Company has been cited for
occasional violations or alleged violations of environmental laws or permits and
on several occasions has been named as a potentially responsible party for
remediation of sites. Expenses incurred by the Company to date relating to
violations of and compliance with environmental laws and permits and site
remediation have not been material. While it is impossible to predict with
certainty, management currently does not foresee such expenses in the future as
having a material effect on the Company's business, results of operations or
financial condition. See Note 13 to Consolidated Financial Statements herein.
Item 2. Properties
The Company presently maintains its principal executive
offices at One Commerce Square, 2005 Market Street, Philadelphia, PA 19103 in
approximately 56,000 square feet of leased space under a sublease expiring in
2002.
The following table sets forth information with respect to
certain of the other facilities of the Company:
<TABLE>
<CAPTION>
Industry Primary Approximate Owned or
segment function Location size leased
-------- --------- -------- ----------- --------
<S> <C> <C> <C> <C>
Office Manufacturing Florence, 108,000 sq. (1)
Products & Offices KY ft. bldg.
on 27 acres
Manufacturing, Florence, 293,000 sq. Owned
Distribution AL ft. bldg.
& Offices on 24 acres
------------
Art/Craft Manufacturing States- 219,000 sq. (2)
Products & Offices ville, NC ft. bldg.
on 13 acres
Manufacturing, Naugatuck, 86,000 sq. Leased
Distribution & CT ft. bldg. (exp. 2000)
Offices on 15 acres
Manufacturing, Basildon, 64,000 sq. Owned
Distribution & England ft. in two
Offices bldgs. on
3 acres
------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Industry Primary Approximate Owned or
segment function Location size leased
-------- --------- -------- ----------- --------
<S> <C> <C> <C> <C>
Office Manufacturing States- 218,000 sq. Owned
Products & Offices ville, ft. bldg.
and Art/ NC on 16 acres
Craft
Products
Distribution States- 320,000 sq. Leased
& Offices ville, ft. bldg. (exp. 2005)
NC
Distribution Ontario, 59,000 sq. Leased
& Offices Canada ft. bldg. (exp. 2001)
</TABLE>
- -----------
(1) The construction and expansion of this facility was financed by the issuance
of industrial revenue bonds by the City of Florence, Kentucky, which bonds have
matured and been paid off. The City retains title to the property and leases it
to the Company for a nominal consideration, and the Company has the option,
subject to certain conditions, to purchase the property for a nominal
consideration.
(2) A portion of this facility was financed by the issuance of industrial
revenue bonds, due 2004, by the Iredell County Industrial Facilities and
Pollution Control Financing Authority. The Authority retains title to the
property and leases it to the Company for rental payments equal to principal and
interest payments on the bonds. The Company has the option, subject to certain
conditions, to purchase the property for a nominal consideration upon payment of
the bonds.
At present, the above facilities generally are believed to be
adequately utilized and suitable for the Company's present needs.
Item 3. Pending Legal Proceedings
There currently are no material pending legal proceedings
(within the meaning of the Form 10-K Instructions), other than routine
litigation incidental to the business of the Company, to which the Company is a
party or to which any of its property is subject. See Note 13 to Consolidated
Financial Statements herein and Item 1-- "Environmental Matters" herein.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the security holders of
the Company during the fourth quarter of the fiscal year covered by this report.
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<PAGE>
Additional Information
The following information is furnished in this Part I pursuant
to Instruction 3 to Item 401(b) of Regulation S-K:
Executive Officers of the Company
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Robert B. Fritsch 64 President and Chief Executive Officer
John W. Carney 52 Vice President, Human Resources/Strategic
Planning
William E. Chandler 52 Senior Vice President, Finance (Chief
Financial Officer), and Secretary
Spencer W. O'Meara 49 Executive Vice President and General Manager
W. Ernest Precious 54 Executive Vice President and General Manager
Eugene A. Stiefel 48 Vice President, Information Services
</TABLE>
The executive officers of the Company customarily are elected
annually by the Board of Directors to serve, at the pleasure of the Board, for a
period of one year or until their successors are elected. All of the executive
officers of the Company, except for Messrs. Chandler and Stiefel have served in
varying executive capacities with the Company for over five years.
Mr. Chandler was elected an executive officer of the Company
in February 1993. He joined the Company in September 1992 after three years at
Bally Manufacturing Corporation during which he held positions as Acting Chief
Financial Officer and Vice President, Financial Operations and Controller. Prior
to that, he served for three years at Household Manufacturing, Inc. as Senior
Vice President of Finance, Treasurer and Chief Financial Officer.
Mr. Stiefel was elected an executive officer of the Company in April 1993. He
joined the Company in February 1985 and has served as Vice President,
Information Services since 1987.
------------
For the purposes of calculating the aggregate market value of
the shares of common stock of the Company held by nonaffiliates, as shown on the
cover page of this report, it has been assumed that all the outstanding shares
were held by nonaffiliates except for the shares held by directors and officers
of the Company. However, this should not be deemed to constitute an admission
that all directors and officers of the Company are, in fact, affiliates of the
Company, or that there are not other persons who may be deemed to be affiliates
of the Company. Further information concerning shareholdings of officers,
directors and principal shareholders is included in the Company's definitive
proxy statement filed or to be filed with the Securities and Exchange
Commission.
-----------
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<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock
and Related Stockholder Matters
(a) The Company's common stock is traded on the New York Stock
Exchange (trading symbol "HUN"). The following table sets forth the high and low
quarterly sales prices of the Company's common stock during the two most recent
fiscal years (all as reported by The Wall Street Journal):
Fiscal Quarter
1995
-----------------------------------------------------
First Second Third Fourth
----- ------ ----- ------
High $14 3/4 $15 1/2 $15 1/4 $18 3/8
Low 12 5/8 13 13 1/2 13 3/4
Fiscal Quarter
1994
-------------------------------------------------------
First Second Third Fourth
----- ------ ----- ------
High $18 1/4 $18 1/4 $17 $16 5/8
Low 15 1/8 15 1/4 15 1/8 14 1/4
See Note 12 to Consolidated Financial Statements herein for
information concerning certain Rights which were distributed by the Company to
shareholders and which currently are deemed to be attached to the Company's
common stock.
(b) As of February 2, 1996, there were over 800 record holders
of the Company's common stock, which number does not include shareholders whose
shares were held in nominee name.
(c) During the past two fiscal years, the Company has paid
regular quarterly cash dividends on its common stock at the following rates per
share: 1995 - $.095 per quarter and 1994 - $.09 per quarter.
Certain of the Company's credit agreements contain
restrictions on the Company's present and future ability to pay dividends. See
Notes 2 and 8 to Consolidated Financial Statements herein.
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<PAGE>
Item 6. Selected Financial Data
The following table contains selected financial data for each
of the Company's last five fiscal years. This data should be read in conjunction
with the Company's Consolidated Financial Statements (and related notes)
appearing elsewhere in this report and with Item 7 of this report.
<TABLE>
<CAPTION>
Year Ended
---------------------------------------------------------------------------
Dec. 3, Nov. 27, Nov. 28, Nov. 29, Dec. 1,
1995(1) 1994 1993 1992 1991(2)
------- -------- -------- -------- -------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Net Sales $313,881 $288,203 $256,150 $234,929 $228,622
Income from
Continuing
Operations 15,335 17,197 14,928 13,302 9,586
Income from
Continuing
Operations Per
Common Share .96 1.07 .93 .83 .60
Total Assets 182,810 173,385 156,317 144,170 151,824
Long-Term Debt 3,559 3,559 3,003 6,160 17,271
Cash Dividends
Per Share .38 .36 .35 .34 .32
</TABLE>
- ---------
(1) In fiscal 1995, the Company recorded a charge to net income of approximately
$3.5 million, or $.22 per share, for anticipated costs relating to
organizational changes and relocation and consolidation of operations.
(2) In fiscal 1991, the Company recorded a charge to net income of approximately
$2.7 million, or $.17 per share, for anticipated costs relating to the
relocation and consolidation of certain manufacturing and distribution
operations.
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<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
The Company's financial condition was further improved in
fiscal 1995 with working capital increasing to $69.1 million at the end of
fiscal 1995 from $64.6 million and $47.1 million at the end of fiscal 1994 and
1993, respectively. Net cash flows of $23.4 million, provided by operating
activities in fiscal 1995 combined with available cash balances, were more than
sufficient to fund additions to property, plant and equipment of $9.5 million,
to pay cash dividends of $6.1 million, to repurchase shares of the Company's
common stock for $2.8 million primarily for use in the Company's various
compensation plans, and to fund a portion ($1.9 million) of the Centafoam
acquisition. The Company acquired the Centafoam business of Spicers, Ltd., a
division of David S. Smith (Holdings) PLC, for cash consideration and related
costs aggregating $2.8 million. Centafoam, whose facilities are located in the
United Kingdom, manufactures and markets a line of styrene-based foam board
products. Net cash flows provided by operating activities were $20.8 million in
fiscal 1994 and $23.2 million in fiscal 1993.
The return on average equity, before special charges and an
accounting change discussed below, improved to 13.9% in fiscal 1995 from 13.8%
in fiscal 1994 and 13.1% in fiscal 1993. The current ratio improved to 3.2 at
the end of fiscal 1995 from 3.1 and 2.4 at the end of fiscal 1994 and 1993,
respectively, and the percentage of debt to equity at the end of fiscal 1995 was
further reduced to 3.2% from 3.5% and 5.3% for the same comparable years.
The Company's current assets increased to $100.1 million at
the end of fiscal 1995 from $95.3 million at the end of fiscal 1994, largely
attributable to a $2.6 million increase in inventories and a $1.7 million
increase in cash and cash equivalents. The increase in inventories was due
principally to additional inventories of new products, the Centafoam business
acquisition and the anticipated higher sales volume.
Other non-current assets increased to $4.7 million at the end
of fiscal 1995 from $2.4 million at the end of fiscal 1994, largely due to an
increase in the cash surrender value of officers' life insurance.
Current liabilities were essentially unchanged at the end of
fiscal 1995 from the levels at the end of fiscal 1994. The $1.4 million decrease
in income taxes payable was principally due to lower earnings and a lower
effective tax rate in fiscal 1995 than in fiscal 1994. The $1.2 million increase
in other accrued expenses was largely due to the accrual associated with the
provision for organizational changes and relocation and consolidation of
operations discussed below.
Other non-current liabilities increased to $7.6 million at the
end of fiscal 1995 from $5.5 million at the end of fiscal 1994 due to several
factors, including the accrual associated with the provision referred to above
and increases in pension liabilities.
At December 3, 1995, the Company had revolving credit
agreements with three banks that provided borrowing capacity totaling $45
million. There were no borrowings under these agreements at the end of fiscal
1995.
-14-
<PAGE>
Recent Developments
On December 19, 1995, the Company purchased from Mary F.
Bartol an aggregate of 2,150,165 of the Company's common shares for a cash
purchase price of $16.32 per share in a private purchase transaction. On
December 21, 1995, the Company commenced a tender offer to purchase up to
3,230,000 of its common shares at $17.00 net per share in cash. Aggregate of
2,954,378 shares were tendered to and purchased by the Company in January 1996
pursuant to the tender offer. The purchase price of the common shares purchased
in the tender offer and estimated expenses pursuant to the offer aggregated
$51.5 million. The Company also obtained a new five-year $125 million credit
facility, of which $75 million was used to finance the shares repurchased from
Mary F. Bartol and in the tender offer. This new credit facility replaced the
revolving credit agreements discussed above which were in effect at December 3,
1995. (See Notes 2 and 8 of the Notes to the Consolidated Financial Statements.)
Management believes that funds generated from operations
combined with the new credit facility will be sufficient to meet currently
anticipated working capital and other capital and debt service requirements.
Management currently anticipates expenditures for additions to property, plant
and equipment to be approximately $11 million in fiscal 1996. If additional
resources are needed, management believes that the Company could obtain funds at
competitive costs.
Results of Operations
Comparison of Fiscal 1995 vs. 1994
The Company's 1995 fiscal year was comprised of 53 weeks,
compared to 52 weeks for fiscal 1994.
Net Sales and Earnings. Net sales increased 8.9% to $313.9
million in fiscal 1995 from $288.2 million in fiscal 1994. The increase was
primarily the result of higher unit volume, particularly from new products, and
from average selling price increases of approximately 2%.
Office products sales increased 1.9% in fiscal 1995 to $163.4
million from $160.3 million in fiscal 1994 as a result of higher sales of office
furniture products (up 16.6%) and desktop accessories and supplies (up 7.5%),
partially offset by lower sales of mechanical and electromechanical products
(down 10.2%). The sales growth in office furniture products was due primarily to
higher sales of Bevis brand products, particularly folding tables,
computer-related furniture, conference tables and screen panels. The sales
increase in desktop accessories and supplies was the result of higher sales of
MediaMate brand products and Schwan-STABILO brand products, partially offset by
lower sales of Lit-Ning brand metal desk organizing products. The decrease in
mechanical and electromechanical sales was largely due to lower sales of Boston
brand products, particularly pencil sharpeners, manual staplers, paper punches
and office machines. The decrease in Boston brand products was primarily
attributable to lost distribution at some of the Company's large retail
customers and to general softness in demand. Management is taking measures aimed
at regaining such lost market share. Export sales of office products decreased
10.7% in fiscal 1995 as compared to fiscal 1994, primarily due to lower sales to
Latin America (particularly Mexico) and to a lesser extent the Middle East and
Europe.
Art/craft products sales of $150.5 million for fiscal 1995
increased 17.7% from fiscal 1994 sales of $127.9 million. This increase was led
-15-
<PAGE>
by higher sales of presentation graphics products, which were up 25.1% due to a
combination of factors, including higher sales in Europe, growth in the digital
imaging market and increases in sales of certain mounting and laminating
products (e.g., Seal and Image mounting and laminating equipment and Bienfang
and Centafoam brand foam boards). Sales of hobby/craft products increased 10.4%,
largely due to higher sales of Speedball Elegant Writer calligraphy markers and
Speedball Painters markers, as well as to the introduction of new products. Art
supplies products sales were essentially unchanged in fiscal 1995 when compared
to fiscal 1994. Export sales of art/craft products grew by 2.7% in fiscal 1995
from fiscal 1994. Foreign sales of art/craft products continued to increase
substantially, growing 51.9% in fiscal 1995 as compared to fiscal 1994. This
increase was due primarily to higher sales of presentation graphics products in
Europe, which includes sales of products of Centafoam (acquired in late April,
1995). Excluding sales from the Centafoam business, foreign sales grew 33.9% in
fiscal 1995.
The Company has experienced a 3% general decline in the rate
of orders for its products during the first two months of fiscal 1996.
Management is uncertain as to the reason for this and does not know if this is
indicative of a trend.
Net income of $15.3 million, or $.96 per share, for fiscal
1995 decreased approximately 15% from fiscal 1994 due to several factors,
including a provision in fiscal 1995 for organizational changes and relocation
and consolidation of operations aggregating $5.3 million (approximately $3.5
million after income taxes, or $.22 per share) discussed below and the adoption
of Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes," in fiscal 1994, the cumulative effect of which increased fiscal
1994 net income by $.8 million, or $.05 per share.
Gross Profit. The Company's gross profit margin decreased to
37.3% of net sales in fiscal 1995 from 39.3% in fiscal 1994. The decrease was
primarily the result of changes in product sales mix (i.e., higher sales for
certain office furniture products and higher foreign sales, which yield lower
gross profit percentages than many of the Company's other products), higher raw
material costs and lower sales and production volume of Boston brand products.
The gross profit percentage for foreign sales was 28.5% in fiscal 1995 and 28.7%
in fiscal 1994. Higher costs of commodities, such as wood, styrene plastics and
corrugated packaging materials had the greatest impact on raw material cost
increases.
During the latter part of fiscal 1995, the Company began to
realize the positive effects of its selling price increases and to some extent,
stabilization of prices of some of its raw materials. However, management
expects the price of some of its raw materials to continue to increase in fiscal
1996.
Selling, Shipping, Administrative and General Expenses.
Selling and shipping expenses decreased to 19.1% of net sales in fiscal 1995
from 20.3% in fiscal 1994, largely as a result of lower packing and shipping
expense, primarily freight expenses, and lower sales commission expenses
attributable to changes in customer sales mix.
Administrative and general expenses increased 3.5% to $28.3
million primarily as a result of salary and wage increases, offset partially by
lower fees for professional services.
-16-
<PAGE>
Provision for Organizational Changes and Relocation and
Consolidation of Operations. During fiscal 1995, the Company recorded a pre-tax
charge aggregating $5.3 million (approximately $3.5 million after income taxes,
or $.22 per share) as a provision for costs relating to organizational changes
and relocation and consolidation of certain manufacturing and distribution
operations. The pre-tax charge was comprised of $2.4 million for costs expected
to be incurred in connection with organizational changes being made to more
effectively align the Company's organization with its markets, including the
resignation and planned replacement of the Company's former Chairman and Chief
Executive Officer, and $2.9 million for anticipated costs relating to the
relocation and consolidation of its Hunt Data Products manufacturing and
distribution operations located in Nuevo Laredo, Mexico, and Laredo, Texas, with
its manufacturing facilities in Statesville, North Carolina and the move of the
distribution operations of its Lit-Ning business from Florence, Kentucky, to
Statesville. The relocation and consolidation of operations is expected to
reduce costs and improve product quality and distribution performance. The
provision included recognition of future lease obligations, write-off of
property, plant and equipment, relocation costs, employee severance costs and
other related costs. Approximately $2.2 million of this provision is included in
liabilities as of December 3, 1995 which principally relates to future severance
related payments. It is anticipated that the total pre-tax charge associated
with the relocation and consolidation of operations and organizational changes
will range from $6.1 million to $7.1 million, or from $.25 to $.32 per share.
The remaining portion of these charges (ranging from $.03 to $.10 per share) is
expected to be incurred during fiscal 1996.
Interest Income. Interest income increased $229,000 in fiscal
1995 from fiscal 1994 due primarily to higher average cash balances.
Provision for Income Taxes. The Company's effective tax rate
decreased to 35.1% in fiscal 1995 from 36.5% in fiscal 1994. This decrease was
principally a result of a reversal of valuation allowances relating to tax net
operating loss carryforwards from the European operations.
New Accounting Standards
SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," requires changes in
accounting and reporting for impairments of long-lived assets, certain
identifiable intangibles and goodwill related to those assets to be held and
used, and for long-lived assets and certain identifiable intangibles to be
disposed of. SFAS No. 121 is effective for fiscal years beginning after December
15, 1995. Accordingly, the Company will adopt SFAS No. 121 when required.
Management does not believe the adoption of SFAS No. 121 will have a material
effect on its results of operations or financial condition.
SFAS No. 123, "Accounting for Stock-Based Compensation,"
encourages, but does not require, companies to recognize compensation expense
for grants of stock, stock options, and other equity instruments to employees
based upon fair value or, alternatively, permits them to continue to apply the
existing accounting rules contained in Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB No. 25). Companies choosing
not to adopt the expense recognition provisions of SFAS No. 123 are required to
disclose pro forma net income and earnings per share data as if such provisions
had been applied. The Company anticipates continuing to account for stock-based
compensation in accordance with APB No. 25 and therefore the adoption of SFAS
No. 123 will not have an impact on the Company's financial position or results
of operations.
-17-
<PAGE>
Environmental Matters
The Company is involved, on a continuing basis, in monitoring
its compliance with environmental laws and in making capital and operating
improvements necessary to comply with existing and anticipated environmental
requirements. Despite its efforts, the Company has been cited for occasional
violations or alleged violations of environmental laws or permits and on several
occasions has been named as a potentially responsible party for the remediation
of sites. Expenses incurred by the Company for all years presented in the
consolidated financial statements relating to violations of and compliance with
environmental laws and permits and site remediation have not been material.
While it is impossible to predict with certainty, management currently does not
foresee such expenses in the future as having a material effect on the Company's
business, results of operations or financial condition. (See Note 13 of the
Notes to Consolidated Financial Statements.)
Comparison of Fiscal 1994 vs. 1993
Net Sales and Earnings. Net sales increased 12.5% to $288.2
million in fiscal 1994 from $256.2 million in fiscal 1993. This increase was
largely the result of higher unit volume, particularly from new products, as
selling prices were essentially unchanged in fiscal 1994 from those in fiscal
1993. Sales for both of the Company's business segments, office products and
art/craft products, grew by 12.5% in fiscal 1994.
The office products sales increase to $160.3 million in fiscal
1994 from $142.5 million in fiscal 1993 was led by a 16.9% increase in sales of
office furniture, while desktop accessories and supplies and mechanical and
electromechanical products contributed increases of 12.5% and 9.8%,
respectively. The office furniture sales increase was primarily due to higher
sales of Bevis brand furniture. The desktop accessories and supplies sales
increase was principally attributable to Schwan-STABILO highlighter markers, the
exclusive distribution rights to which in the United States and Canada were
obtained by the Company in fiscal 1994, and the mechanical and electromechanical
products sales increase was due to higher sales of Boston brand office products.
Export sales of office products increased 8.6% in fiscal 1994 as compared with
sales in fiscal 1993.
Art/craft products sales grew to $127.9 million in fiscal 1994
from $113.7 million in fiscal 1993 led by a 21.3% increase in sales of
presentation graphics products. Sales of art supplies and hobby/craft products
were essentially unchanged in fiscal 1994 from the levels in fiscal 1993. The
presentation graphics products sales increase was largely the result of new
products, growth in the digital imaging market, and improved economic conditions
in the United Kingdom. Foreign sales of art/craft products grew 34.6%, and
export sales were up 4.4% in fiscal 1994 from sales in fiscal 1993.
Net income of $18 million, or $1.12 per share, in fiscal 1994
represents an increase of 20.5% over net income for fiscal 1993. The Company
adopted SFAS No. 109, "Accounting for Income Taxes," in fiscal 1994, the
cumulative effect of which increased net income by $.8 million, or $.05 per
share. Income before the cumulative effect of this accounting change was up
15.2% from the comparable net income for fiscal 1993.
Gross Profit. Gross profit, as a percentage of net sales,
decreased to 39.3% in fiscal 1994 from 40.1% in fiscal 1993 due to several
factors, including changes in sales mix and higher raw material costs. Higher
sales of certain furniture products and higher foreign sales, which yield lower
gross profit percentages than the Company's other businesses, caused most of the
gross profit percentage decrease attributable to changes in sales mix. The gross
-18-
<PAGE>
profit percentage for foreign sales was 28.7% in fiscal 1994 and 26.7% in fiscal
1993. Higher costs, particularly near the end of fiscal 1994, for commodities
such as wood, corrugated packaging materials and styrene plastic were not offset
by selling price increases due in large part to continued competitive pressures
and the increasing power of superstores and other large customers in the office
products area.
Selling, Shipping, Administrative and General Expenses.
Selling and shipping expenses, as a percentage of net sales, were reduced to
20.3% in fiscal 1994 from 20.6% in fiscal 1993 largely as a result of lower
sales commission expenses attributable to changes in customer sales mix. Lower
freight expenses in the fourth quarter of fiscal 1994 also accounted for a
portion of the decrease.
Administrative and general expenses increased 7.6% to $27.3
million in fiscal 1994 from $25.4 million in fiscal 1993. This increase was the
result of several factors, including higher management incentive compensation
and new product development expenses, as well as a stronger British pound
sterling, which increased foreign administrative and general expenses in U.S.
dollar terms.
Interest Income and Expense. Interest income increased
$152,000 in fiscal 1994 from fiscal 1993 due primarily to higher average cash
balances. Interest expense was reduced by $157,000 in fiscal 1994 from fiscal
1993 largely as a result of debt reduction and higher capitalized interest
related to additions to property, plant and equipment.
Provision for Income Taxes. The Company's effective tax rate
decreased to 36.5% in fiscal 1994 from 37.9% in fiscal 1993. This decrease was
the result of several factors, including lower state and local income taxes.
Item 8. Financial Statements and Supplementary Data
Financial statements and supplementary financial information
specified by this Item, together with the report of Coopers & Lybrand L.L.P.
thereon, are presented following Item 14 of this report.
Item 9. Disagreements on Accounting and Financial Disclosure
Not applicable.
PART III
Incorporated by Reference
The information called for by Item 10 "Directors and Executive
Officers of the Registrant" (other than the information concerning executive
officers set forth after Item 4 herein), Item 11 "Executive Compensation", Item
12 "Security Ownership of Certain Beneficial Owners and Management" and Item 13
"Certain Relationships and Related Transactions" is incorporated herein by
reference to the Company's definitive proxy statement for its Annual Meeting of
Shareholders scheduled to be held April 17, 1996, which definitive proxy
statement is expected to be filed with the Commission not later than 120 days
after the end of the fiscal year to which this report relates.
-19-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
(a) Documents Filed as a part of the Report
1. Financial Statements:
Pages
-----
Report of Independent Accountants F-1
Consolidated Statements of
Income for the fiscal years
1995, 1994 and 1993 F-2
Consolidated Balance Sheets,
December 3, 1995 and
November 27, 1994 F-3
Consolidated Statements of
Stockholders' Equity
for the fiscal years 1995, 1994
and 1993 F-4
Consolidated Statements of
Cash Flows for the fiscal years
1995, 1994 and 1993 F-5
Notes to Consolidated Financial F-6-33
Statements
2. Financial Statement Schedule:
II. Valuation and Qualifying
Accounts for the fiscal years
1995, 1994 and 1993 F-34
All other schedules not listed above have been
omitted, since they are not applicable or are not
required, or because the required information is
included in the consolidated financial statements or
notes thereto.
Individual financial statements of the Company have
been omitted, since the Company is primarily an
-20-
<PAGE>
operating company and any subsidiary companies
included in the consolidated financial statements
are directly or indirectly wholly-owned and are not
indebted to any person, other than the parent or the
consolidated subsidiaries, in an amount which is
material in relation to total consolidated assets at
the date of the latest balance sheet filed, except
indebtedness incurred in the ordinary course of
business which is not overdue and which matures in
one year.
3. Exhibits:
(3) Articles of incorporation and bylaws:
(a) Restated Articles of Incorporation, as
amended (composite) (incorp. by ref. to Ex.
4(a) to Reg. Stmt. No. 33-57105 on Form
S-8) (reference also is made to Exhibit
4(b) below for the Designation of Powers,
Preferences, Rights and Qualifications of
Preferred Stock).
(b) By-laws, as amended (incorp. by ref. to Ex.
3(b) to Form 10-Q for quarter ended May 28,
1995).
(4) Instruments defining rights of security holders,
including indentures:*
(a) (1) Credit Agreement dated December 19,
1995 between the Company and NationsBank,
N.A. (incorp. by ref. to Ex. 9(b) to the
Company's Schedule 13E-4 filed with the SEC
on December 21, 1995 (the "1995 Schedule
13E-4"); (2) Amendment dated as of February
1, 1996 to Credit Agreement (filed
herewith); and (3) Amendment dated as of
February 26, 1996 to Credit Agreement
(filed herewith).
(b) Rights Agreement dated as of August 8, 1990
(including as Exhibit A thereto the
Designation of Powers, Preferences, Rights
and Qualifications of Preferred Stock),
between the Company and Mellon Bank (East),
-21-
<PAGE>
N.A., as original Rights Agent (incorp. by
ref. to Ex. 4.1 to August, 1990 Form 8-K)
and Assignment and Assumption Agreement
dated December 2, 1991, with American Stock
Transfer and Trust Company, as successor
Rights Agent (incorp. by ref. to Ex. 4(d)
to fiscal 1991 Form 10-K).
Miscellaneous long-term debt instruments
and credit facility agreements of the
Company, under which the underlying
authorized debt is equal to less than 10%
of the total assets of the Company and its
subsidiaries on a consolidated basis, may
not be filed as exhibits to this report.
The Company agrees to furnish to the
Commission, upon request, copies of any
such unfiled instruments.
(10) Material contracts:
(a) Lease Agreement dated June 1, 1979 and
First Supplemental Lease Agreement dated as
of July 31, 1994 between the Iredell County
Industrial Facilities and Pollution Control
Financing Authority and the Company
(incorp. by ref. to Ex. 10(a) to fiscal
1994 Form 10-K).
(b) 1978 Stock Option Plan, as amended, of the
Company (incorp. by ref. to Ex. 28(a) to
Reg. Stat. No. 33-25947 on Form S-8).**
(c) 1983 Stock Option and Stock Grant Plan, as
amended, of the Company (filed herewith).**
(d) 1993 Stock Option and Stock Grant Plan of
the Company, as amended (filed herewith).**
(e) 1988 Long-Term Incentive Compensation Plan
of the Company (incorp. by ref. to Ex.
10(e) to fiscal 1994 Form 10-K).**
(f) Form of Stock Grant Agreement between the
Company and Messrs. Carney, Chandler,
O'Meara and Precious (filed herewith).**
-22-
<PAGE>
(g) 1994 Non-Employee Directors' Stock Option
Plan (incorp. by ref. to Ex. 10(f) to
fiscal 1993 Form 10-K).**
(h) Loan and Security Agreement dated January
31, 1984, as amended, between the Company
and Ronald J. Naples (incorp. by ref. to
Ex. 10(g) to fiscal 1994 Form 10-K).**
(i) Loan and Security Agreement dated April 20,
1988 between the Company and Robert B.
Fritsch (incorp. by ref. to Exh 10(h) to
fiscal 1994 Form 10-K).**
(j) (1) Form of Change in Control Agreement
between the Company and various officers of
the Company (incorp. by ref. to Ex. 10(i)
to fiscal 1994 Form 10-K)** and (2) list of
executive officers who are parties (filed
herewith).**
(k) Employment-Severance Agreement between the
Company and William E. Chandler (incorp. by
ref. to Ex. 10(j) to fiscal 1993 Form
10-K).**
(l) (1) Supplemental Executive Benefits Plan of
the Company, effective April 16, 1992, and
(2) related Amended and Restated Trust
Agreement, effective February 17, 1993
(incorp. by ref. to Ex. 10(j) to fiscal
1992 Form 10-K).**
(m) Employment-Severance arrangements with
Robert B. Fritsch (filed herewith).**
(n) Transition Agreement dated June 13, 1995
between the Company and Ronald J. Naples
(incorp. by ref. to Form 10-Q for quarter
ended Sept. 3, 1995)**.
(o) Stock Purchase Agreement, dated December
19, 1996 between the Company and Mary F.
Bartol (incorp. by ref. to Ex. 9(c) to the
1995 Schedule 13E-4).
(11) Statement re: computation of per share
earnings (filed herewith).
-23-
<PAGE>
(21) Subsidiaries (incorp. by ref. to Ex. 21 to
fiscal 1993 Form 10-K).
(23) Consent of Coopers & Lybrand L.L.P. to
incorporation by reference, in Registration
Statement No.s 33-70660, 33-25947, 33-6359,
2-83144, 33-57105 and 33-57103 on Form S-8, of
their report on the consolidated financial
statements and schedules included in this
report (filed herewith).
(27) Financial Data Schedule (filed herewith).
- ---------------
* Reference also is made to (i) Articles 5th, 6th, 7th and 8th of the
Company's composite Articles of Incorporation (Ex. 3(a) to this report),
and (ii) to Sections 1, 7 and 8 of the Company's By-laws (Ex. 3 (b) to
this report).
** Indicates a management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
last quarter of the fiscal year covered by this report.
-----------
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders
and the Board of Directors of
Hunt Manufacturing Co.:
We have audited the consolidated financial statements and the financial
statement schedule of Hunt Manufacturing Co. and Subsidiaries listed in the
index on page 20 of this Form 10-K. These financial statements and the financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Hunt Manufacturing
Co. and Subsidiaries as of December 3, 1995 and November 27, 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 3, 1995 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
As discussed in Notes 1 and 9 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in fiscal year 1994.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 15, 1996, except as to the
information presented in Notes 2 and 8,
for which the date is January 30, 1996
F-1
<PAGE>
HUNT MANUFACTURING CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
for the fiscal years 1995, 1994 and 1993
(In thousands except per share amounts)
<TABLE>
<CAPTION>
1995 1994 1993
(53 weeks) (52 weeks) (52 weeks)
---------- ---------- ----------
<S> <C> <C> <C>
Net sales $313,881 $288,203 $256,150
Cost of sales 196,720 174,927 153,353
-------- -------- --------
Gross profit 117,161 113,276 102,797
Selling and shipping expenses 59,960 58,572 52,831
Administrative and general expenses 28,296 27,338 25,405
Provision for organizational changes and
relocation and consolidation of operations 5,342 -- --
-------- -------- --------
Income from operations 23,563 27,366 24,561
Interest expense (less $229, $354
and $283 capitalized in 1995,
1994 and 1993, respectively) (109) (85) (242)
Interest income 571 342 190
Other expense, net (380) (542) (471)
-------- -------- --------
Income before income taxes and
cumulative effect of accounting change 23,645 27,081 24,038
Provision for income taxes 8,310 9,884 9,110
-------- -------- --------
Income before cumulative effect of
accounting change 15,335 17,197 14,928
Cumulative effect of change in
accounting for income taxes -- 795 --
-------- -------- --------
Net income $ 15,335 $ 17,992 $ 14,928
======== ======== ========
Average shares of common stock
outstanding 16,003 16,102 16,107
======== ======== ========
Earnings per common share:
Income before cumulative effect
of accounting change $ .96 $ 1.07 $ .93
Cumulative effect of change in
accounting for income taxes -- .05 --
-------- -------- --------
Net income per share $ .96 $ 1.12 $ .93
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
HUNT MANUFACTURING CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 3, 1995 and November 27, 1994
(In thousands except share and per share amounts)
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 15,503 $ 13,807
Accounts receivable, less allowance for doubtful
accounts: 1995, $2,305; 1994, $2,510 42,036 41,390
Inventories 36,131 33,550
Deferred income taxes 4,938 5,051
Prepaid expenses and other current assets 1,484 1,520
-------- --------
Total current assets 100,092 95,318
Property, plant and equipment, at cost, less
accumulated depreciation and amortization 52,008 49,729
Excess of acquisition cost over net assets
acquired, less accumulated amortization 18,204 17,218
Intangible assets, at cost, less accumulated
amortization 7,793 8,764
Other assets 4,713 2,356
-------- --------
TOTAL ASSETS $182,810 $173,385
======== ========
LIABILITIES
Current liabilities:
Current portion of long-term debt $ 766 $ 1,003
Accounts payable 10,759 9,782
Accrued expenses:
Salaries, wages and commissions 5,446 5,742
Income taxes 3,064 4,464
Insurance 2,449 2,430
Compensated absences 1,673 1,741
Other 6,793 5,553
-------- --------
Total current liabilities 30,950 30,715
Long-term debt, less current portion 3,559 3,559
Deferred income taxes 4,520 4,331
Other non-current liabilities 7,588 5,546
STOCKHOLDERS' EQUITY
Capital stock:
Preferred, $.10 par value, authorized 1,000,000
shares (including 50,000 shares of Series A Junior
Participating Preferred); none issued -- --
Common, $.10 par value, authorized 40,000,000
shares; issued: 1995 - 16,152,322 shares;
1994 - 16,130,068 shares 1,615 1,613
Capital in excess of par value 6,434 6,217
Cumulative translation adjustment (983) (639)
Retained earnings 131,216 122,518
Less cost of treasury stock:
1995 - 159,159 shares; 1994 - 29,945 shares (2,089) (475)
-------- --------
Total stockholders' equity 136,193 129,234
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $182,810 $173,385
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
HUNT MANUFACTURING CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for the fiscal years 1995, 1994 and 1993
(In thousands except share and per share amounts)
<TABLE>
<CAPTION>
Common Stock Capital Cumulative
------------------ Excess of Translation Retained
Issued Treasury Par Value Adjustments Earnings
------ -------- --------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balances, November 29, 1992 (issued 16,114,848
shares; treasury 32,926 shares $1,611 $ (430) $6,045 $(1,136) $101,366
Net income 14,928
Cash dividends on common stock ($.35 per share) (5,639)
Translation adjustments (359)
Purchase of treasury stock (22,200 shares) (308)
Exercise of stock options (issued 10,473 shares;
treasury 32,875 shares, net of shares received
as payment upon exercise) 2 393 113 (367)
Issuance of stock grants (treasury 3,617 shares) 46 2
------ ------- ------ ------- --------
Balances, November 28, 1993 (issued 16,125,321
shares; treasury 18,634 shares) 1,613 (299) 6,158 (1,495) 110,290
Net income 17,992
Cash dividends on common stock ($.36 per share) (5,794)
Translation adjustments 856
Purchase of treasury stock (45,600 shares) (728)
Exercise of stock options (issued 1,988 shares;
treasury 25,925 shares, net of shares received
as payment upon exercise) 416 16 25
Issuance of stock grants (issued 2,759 shares;
treasury 8,364 shares) 136 43 5
------ ------- ------ ------- --------
Balances, November 27, 1994 (issued 16,130,068
shares; treasury 29,945 shares) 1,613 (475) 6,217 (639) 122,518
Net income 15,335
Cash dividends on common stock ($.38 per share) (6,081)
Translation adjustments (344)
Purchase of treasury stock (204,900 shares) (2,853)
Exercise of stock options (issued 8,044 shares;
treasury 70,580 shares, net of shares received
as payment upon exercise) 1 1,168 55 (562)
Issuance of stock grants (issued 14,210 shares;
treasury 5,106 shares) 1 71 162 6
------ ------- ------ ------- --------
Balances, December 3, 1995 (issued 16,152,322
shares; treasury 159,159 shares) $1,615 $(2,089) $6,434 $ (983) $131,216
====== ======= ====== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
HUNT MANUFACTURING CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the fiscal years 1995, 1994 and 1993
(In thousands)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $15,335 $17,992 $14,928
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 8,758 8,039 7,664
Provision for inventory obsolescence 1,778 2,083 1,598
Provision for doubtful accounts 916 921 1,022
Cumulative effect of change in accounting for income taxes -- (795) --
Deferred income taxes 410 (1,155) (456)
Loss on disposals of property, plant and equipment 184 634 571
Provision (payments) for organizational changes and
relocation and consolidation of operations 4,109 (132) (400)
Issuance of stock under management incentive bonus
and stock grant plans 240 312 48
Changes in operating assets and liabilities, net of
acquisition of businesses:
Accounts receivable (705) (2,609) (1,023)
Inventories (4,332) (7,485) (4,639)
Prepaid expenses and other current assets 44 1,124 (922)
Accounts payable 529 1,352 2,847
Accrued expenses (2,240) 400 2,009
Other non-current assets and liabilities (1,660) 2,820 (50)
------- ------- -------
Net cash provided by operating activities 23,366 20,797 23,197
------- ------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (9,523) (9,305) (10,339)
Acquisition of businesses 2,919 -- (1,051)
Other, net (667) (620) 2
------- ------- -------
Net cash used for investing activities (13,109) (9,925) (11,388)
------- ------- -------
Cash flows from financing activities:
Proceeds from long-term debt 930 -- --
Payments of long-term debt, including current maturities (1,167) (1,600) (1,209)
Purchases of treasury stock (2,853) (728) (308)
Proceeds from exercise of stock options 662 331 211
Dividends paid (6,081) (5,794) (5,639)
Other, net (20) (45) (49)
------- ------- -------
Net cash used for financing activities (8,529) (7,836) (6,994)
------- ------- -------
Effect of exchange rate changes on cash and cash equivalents (32) (7) (50)
------- ------- -------
Net increase in cash and cash equivalents 1,696 3,029 4,765
Cash and cash equivalents, beginning of year 13,807 10,778 6,013
------- ------- -------
Cash and cash equivalents, end of year $15,503 $13,807 $10,778
======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
HUNT MANUFACTURING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share amounts)
-----
1. Summary of Significant Accounting Policies:
------------------------------------------
Basis of Presentation:
---------------------
The consolidated financial statements include the accounts of the
Company and its subsidiaries, all of which are wholly-owned. The
Company's fiscal year ends on the Sunday nearest the end of November.
Fiscal year 1995 ended December 3, 1995; fiscal year 1994 ended
November 27, 1994 and fiscal year 1993 ended November 28, 1993. Fiscal
year 1995 comprised 53 weeks; fiscal years 1994 and 1993 comprised 52
weeks.
Cash Equivalents:
----------------
The Company considers all highly liquid temporary cash investments
purchased with a maturity of three months or less to be cash
equivalents.
Inventories:
-----------
Inventories are valued at the lower of cost or market. Cost is
determined by the last-in, first-out (LIFO) method for over half of the
inventories and by the first-in, first-out (FIFO) method for the
remainder. The Company uses the FIFO method of inventory valuation for
certain acquired businesses because the related products and operations
are separate and distinct from the Company's other businesses.
Property, Plant and Equipment:
-----------------------------
Expenditures for additions and improvements to property, plant and
equipment are capitalized, and normal repairs and maintenance are
charged to expense as incurred. The related cost and accumulated
depreciation of depreciable assets disposed of are eliminated from the
accounts, and any profit or loss is reflected in other expense, net.
Excess of Acquisition Cost Over Net Assets Acquired and Intangible
Assets:
------------------------------------------------------------------
Excess of acquisition cost over net assets acquired relates principally
to the Company's acquisitions of X-Acto (1981), Bevis Custom Tables,
Inc. (1985), the Graphic Arts Group of Bunzl plc (1990) and Centafoam
(1995). The Company's policy is to record an impairment loss against
the net unamortized excess of acquisition cost over net assets acquired
and net intangible assets in the period when it is determined that the
carrying amount of the net assets may not be recoverable. The Company
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
1. Summary of Significant Accounting Policies (continued):
------------------------------------------------------
Excess of Acquisition Cost Over Net Assets Acquired and Intangible
Assets (continued):
------------------------------------------------------------------
performs this evaluation on a quarterly basis. This determination
includes evaluation of factors such as current market value, future
asset utilization, business climate and future net cash flows
(undiscounted and without interest) expected to result from the use of
the net assets.
Depreciation and Amortization:
-----------------------------
Depreciation for financial reporting purposes is computed using the
straight-line method over the estimated useful life of the asset as
follows: buildings, 12 to 40 years; machinery and equipment, four to 12
years; and leasehold improvements over the lease term. Depreciation for
tax purposes is computed principally using accelerated methods. The
excess of acquisition cost over net assets acquired is amortized on a
straight-line basis over periods ranging from 20 to 40 years. The costs
of intangible assets are amortized on a straight-line basis over their
respective estimated useful lives, ranging from five to 30 years.
Amortization of assets under capital leases which contain purchase
options is provided over the assets' useful lives. Other capital leases
are amortized over the terms of the related leases or asset lives, if
shorter.
Currency Translation:
--------------------
The assets and liabilities of subsidiaries having a functional currency
other than the U.S. dollar are translated at the fiscal year-end
exchange rate, while elements of the income statement are translated at
the weighted average exchange rate for the fiscal year. The cumulative
translation adjustment is recorded as a separate component of
stockholders' equity. Gains and losses on foreign currency transactions
are included in the determination of net income and are reflected in
other expense, net. Such gains and losses were not material in any of
the years presented in the consolidated financial statements.
Income Taxes:
------------
Effective November 29, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
The adoption of SFAS No. 109 changed the Company's method of accounting
for income taxes from the deferral method under Accounting Principles
Board Opinion No. 11 to an asset/liability approach. The adoption of
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
1. Summary of Significant Accounting Policies (continued):
------------------------------------------------------
Income Taxes (continued):
------------------------
SFAS No. 109 has been recognized as the effect of a change in
accounting principle and increased net income in fiscal 1994 by $795,
or $.05 per share. The increase in net income results primarily from
adjusting deferred tax balances to current tax rates. Financial
statements for fiscal 1993 have not been restated.
Hedging:
-------
In fiscal year 1995, the Company adopted SFAS No. 119, "Disclosure
about Derivative Financial Instruments and Fair Value of Financial
Instruments." Derivative financial instruments are used to hedge risk
caused by fluctuating currency. The Company periodically enters into
forward exchange contracts to hedge foreign currency transactions for
periods generally consistent with its committed exposure. These
transactions were not material in any of the years presented in the
consolidated financial statements. Cash flows from hedges are
classified in the statement of cash flows in the same category as the
item being hedged. The Company does not hold or issue financial
instruments for trading purposes.
Earnings Per Share:
------------------
Earnings per share are calculated based on the weighted average number
of common shares outstanding. The effect of outstanding stock options
and stock grants is not material and has not been included in the
calculation.
Employee Benefit Plans:
----------------------
The Company and its subsidiaries have non-contributory, defined benefit
pension plans covering the majority of their employees. It is the
Company's policy to fund pension contributions in accordance with the
requirements of the Employee Retirement Income Security Act of 1974.
The benefit formula used to determine pension costs is the
final-average-pay method.
In fiscal year 1995, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits," which requires the accrual of
postemployment benefits if the obligation is attributable to employees'
services already rendered, employees' rights to those benefits
accumulate or vest, payment of the benefits is probable and the amount
of the benefits can be reasonably estimated. The adoption of this
standard did not have a material effect on the Company's results of
operations or financial condition.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
1. Summary of Significant Accounting Policies (continued):
------------------------------------------------------
Environmental Matters:
---------------------
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate to an
existing condition caused by past operations, and which do not
contribute to current or future revenue generation, are also expensed.
The Company records liabilities for environmental costs when
environmental assessments and/or remedial efforts are probable and the
costs can be reasonably estimated. The liability for future
environmental remediation costs is evaluated on a quarterly basis by
management. Generally, the timing of these accruals coincides with the
earlier of the completion of a feasibility study or the Company's
commitment to a plan of action based on the then-known facts.
Recoveries of expenditures are recognized as a receivable only when
they are estimable and probable.
2. Subsequent Events:
-----------------
On December 19, 1995, the Company purchased from Mary F. Bartol an
aggregate of 2,150,165 of the Company's common shares for a cash
purchase price of $16.32 per share, or $35.1 million in a private
transaction. Mrs. Bartol is the widow of George E. Bartol III, the late
Chairman of the Board, the mother-in-law of Gordon A. MacInnes, the
current Chairman of the Board, and the mother of Victoria B.
Vallely, another Director of the Company.
On December 21, 1995, the Company commenced a tender offer to purchase
up to 3,230,000 of the Company's common shares at a price of $17.00 net
per share in cash. The Company purchased 2,954,378 common shares in
January 1996 under the terms and subject to conditions of the tender
offer. The aggregate purchase price of the common shares and estimated
expenses pursuant to the offer was $51.5 million.
On December 19, 1995 the Company also obtained a new five-year $125
million bank credit facility, consisting of a revolving credit facility
in an amount up to $81.725 million, and an amortizing term loan in the
amount of $43.275 million. This new credit facility replaces the
revolving credit agreement discussed in Note 8 in effect at December 3,
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
2. Subsequent Events (continued):
-----------------------------
1995. The Company used borrowings of $31.725 million under the
revolving credit facility and $43.275 million pursuant to the term
loan, together with cash on hand, to fund the purchase of common shares
from Mrs. Bartol and common shares pursuant to the tender offer. The
balance of the new credit facility will be available for working
capital, strategic acquisitions, and general corporate purposes.
The revolving credit facility matures on December 31, 2000. The term
loan will amortize in twenty quarterly installments, consisting of four
installments each of $1.202 million, $1.683 million, $2.404 million,
$2.645 million, and $2.885 million, respectively. The first installment
is due and payable March 31, 1996, and the last installment is due and
payable December 31, 2000.
The interest rates under the revolving credit facility (6.14% at
January 30,1996) are at a base rate (defined as the higher of (i) the
applicable prime rate of the bank and (ii) the federal funds rate plus
50 basis points) or, at the option of the Company, LIBOR plus a margin
of between 40 and 72.5 basis points, the margin in each case to be
adjusted quarterly based on the Company's leverage ratio (as defined in
the new credit facility). The interest rates under the term loan (6.2%
at January 30, 1996) are at the base rate or, at the option of the
Company, LIBOR plus a margin of between 55 and 87.5 basis points, the
margin to be adjusted quarterly based on the Company's leverage ratio.
Commitment fees are payable to the bank under the new credit facility
with respect to the aggregate amount of the revolving credit facility
equal to a rate per annum of 15 basis points, payable quarterly. The
Company will also pay to the bank an administration fee equal to $50
per annum.
The new credit facility also contains certain representations,
warranties, covenants, and conditions, including, but not limited to,
requirements that the Company comply with certain financial covenants,
including interest coverage, fixed charge coverage and leverage ratios,
and maintenance of certain levels of net worth, and also contains
limitations on liens, indebtedness, investments, changes in lines of
business, acquisitions, transactions with affiliates, and modifications
of certain documents. In addition, the new credit facility prohibits
dividends and other distributions to shareholders unless a minimum
fixed charge coverage ratio is satisfied after giving effect to such
dividend or distribution; however, the Company does not presently
anticipate that this dividend restriction will require any reduction
from the Company's current dividend level.
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
2. Subsequent Events (continued):
-----------------------------
The following table sets forth the unaudited pro forma effects on the
financial results of the Company of the consummation of the purchase of
common shares from Mary F. Bartol and the tender offer and related
financing. The summary pro forma income statement data for the year
ended December 3, 1995 assumes that the repurchase of common shares by
the Company from Mary F. Bartol and the tender offer and the related
financing had occurred as of November 28, 1994. The summary pro forma
balance sheet data assumes that the repurchase of common shares by the
Company from Mary F. Bartol and the tender offer and related financing
had occurred as of December 3, 1995.
Summary Pro Forma Financial Information
(unaudited)
<TABLE>
<CAPTION>
Pro forma Pro forma
As reported adjustment as adjusted
----------- ---------- -----------
<S> <C> <C> <C>
Income statement:
Net income $ 15,335 $(3,227)(a) $ 12,108
Net income per share .96 .14 (b) 1.10
Balance sheet:
Working capital $ 69,142 $(16,754)(c) $ 52,388
Total assets 182,810 (11,070)(c) 171,740
Total long-term debt 4,325 75,000 (c) 79,325
Shareholders' equity 136,193 (86,070)(c) 50,123
</TABLE>
(a) Net increases, net of corresponding tax effects, in
interest expense relating to the utilized portion of
the new $125 million credit facility, as well as
amortization of fees incurred in connection with the
placement of the new credit facility and administrative
fees associated therewith.
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
2. Subsequent Events (continued):
-----------------------------
(b) Per share data adjusted to reflect the adjustments
described in notes (a) and (c). Pro forma average
number of shares outstanding during the year ended
December 3, 1995 was 10,996,000.
(c) Reflects the purchase of the Mary F. Bartol shares and
the shares pursuant to the tender offer and related
borrowings under the new credit facility.
3. Provision for Organizational Changes and Relocation and Consolidation
of Operations:
---------------------------------------------------------------------
During fiscal 1995, the Company recorded a pre-tax charge aggregating
$5.3 million (approximately $3.5 million after income taxes, or $.22
per share) as a provision for costs relating to organizational changes
and relocation and consolidation of certain manufacturing and
distribution operations. The pre-tax charge was comprised of $2.4
million for costs expected to be incurred in connection with
organizational changes being made to more effectively align the
Company's organization with its markets including the resignation and
planned replacement of the Company's former Chairman and Chief
Executive Officer, and $2.9 million for anticipated costs relating to
the relocation and consolidation of its Hunt Data Products
manufacturing and distribution operations located in Nuevo Laredo,
Mexico, and Laredo, Texas, with its manufacturing facilities in
Statesville, North Carolina, and the move of the distribution
operations of its Lit-Ning business from Florence, Kentucky, to
Statesville. The relocation and consolidation of operations is expected
to reduce costs and improve product quality and distribution
performance. The provision included recognition of future lease
obligations, write-off of property, plant, and equipment, relocation
costs, employee severance costs, and other related costs. Approximately
$2.2 million of this provision is included in liabilities as of
December 3, 1995 which principally relates to future severance related
payments. It is anticipated that the total pre-tax charge associated
with the relocation and consolidation of operations and organizational
changes will range from $6.1 million to $7.1 million, or from $.25 to
$.32 per share. The remaining portion of these charges (ranging from
$.03 to $.10 per share) is expected to be incurred during fiscal 1996.
4. Business Acquisition:
--------------------
On April 29, 1995, the Company acquired the Centafoam business of
Spicers, Ltd., a division of David S. Smith (Holdings) PLC, for cash
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
4. Business Acquisition (continued):
--------------------------------
consideration and related costs aggregating approximately $2.8 million.
Centafoam, whose facilities are located in the United Kingdom,
manufactures and markets a line of styrene-based foam board products.
Pro forma information is not presented as this acquisition had no
material effect on the Company's results of operations or financial
condition for fiscal years 1995 or 1994.
5. Inventories:
-----------
The classification of inventories at the end of fiscal years 1995 and
1994 is as follows:
1995 1994
------- -------
Finished goods $18,118 $17,242
Work in process 5,452 5,807
Raw materials 12,561 10,501
------- -------
$36,131 $33,550
======= =======
Inventories determined under the LIFO method were $18,446 and $17,276
at December 3, 1995 and November 27, 1994, respectively. The current
replacement cost for these inventories exceeded the LIFO cost by $6,226
and $5,881 at December 3, 1995 and November 27, 1994, respectively.
Inventory quantities were reduced in fiscal years 1995, 1994 and 1993
resulting in a liquidation of certain LIFO inventories carried at lower
costs prevailing in prior years. The effect of these reductions was to
increase net income by $115, or $.01 per share, $315, or $.02 per share
and $101, or $.01 per share, in fiscal years 1995, 1994 and 1993,
respectively.
6. Property, Plant and Equipment:
-----------------------------
Property, plant and equipment at the end of fiscal years 1995 and 1994
is as follows:
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
6. Property, Plant and Equipment (continued):
-----------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Land and land improvements $ 3,823 $ 3,859
Buildings 17,655 17,683
Machinery and equipment 70,874 66,708
Leasehold improvements 907 661
Construction in progress 6,860 6,981
--------- -------
100,119 95,892
Less accumulated depreciation
and amortization 48,111 46,163
------- -------
$ 52,008 $49,729
======= ======
</TABLE>
Depreciation expense was $6,669, $6,001, and $5,649 for fiscal years
1995, 1994 and 1993, respectively.
7. Excess of Acquisition Cost Over Net Assets Acquired and Intangible
Assets:
------------------------------------------------------------------
Excess of acquisition cost over net assets acquired at the end of
fiscal years 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Excess of acquisition cost
over net assets acquired $ 21,902 $20,298
Less accumulated amortization 3,698 3,080
-------- --------
$ 18,204 $17,218
======== ========
</TABLE>
Intangible assets at the end of fiscal years 1995 and 1994 are as
follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Covenants not to compete $ 11,646 $11,648
Customer lists 1,510 1,510
Patents 1,533 1,533
Trademarks 1,411 1,418
Licensing agreements 1,154 1,154
Other 2,137 1,829
-------- -------
19,391 19,092
Less accumulated amortization 11,598 10,328
-------- -------
$ 7,793 $ 8,764
======== =======
</TABLE>
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
7. Excess of Acquisition Cost Over Net Assets Acquired (continued):
---------------------------------------------------------------
New Accounting Standard:
-----------------------
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of," requires changes in
accounting and reporting for impairments of long-lived assets, certain
identifiable intangibles and goodwill related to those assets to be
held and used, and for long-lived assets and certain identifiable
intangibles to be disposed of. SFAS No. 121 is effective for fiscal
years beginning after December 15, 1995. Accordingly, the Company will
adopt SFAS No. 121 when required. Management does not believe the
adoption of SFAS No. 121 will have a material effect on its results of
operations or financial condition.
8. Debt:
----
Credit Agreements and Lines of Credit:
-------------------------------------
At December 3, 1995, the Company had revolving credit agreements with
three banks that provide for unsecured borrowings up to $45 million.
There were no borrowings under these agreements at December 3, 1995 or
November 27, 1994. On December 19, 1995, the Company entered into a new
five-year $125 million credit facility, consisting of a revolving
credit facility in an amount up to $81.725 million, and an amortizing
term loan in the amount of $43.275 million. This new credit facility
agreement replaced the revolving credit agreements discussed above
which were in effect at December 3, 1995. (See Note 2.)
Long-Term Debt:
--------------
Long-term debt at the end of fiscal years 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Term loan -- $ 938
Line of credit (a) $ 766 --
Capitalized lease obligation (See Note13) 2,000 2,000
Industrial development revenue bond (b) 1,559 1,559
Industrial development revenue bond -- 65
------- -------
4,325 4,562
Less current portion 766 1,003
------- -------
$ 3,559 $ 3,559
======= =======
</TABLE>
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
8. Debt (continued):
---------------
Long-Term Debt (continued):
-------------------------
(a) This line of credit is payable in April 1996. The interest is
at a floating rate based on LIBOR (7.4375% at December 3,
1995).
(b) This industrial development revenue bond has a maturity date
of June 15, 1999. The interest rate (5.6875% at December 3,
1995) is 65% of the lending bank's average daily prime rate.
The terms of certain financing agreements in effect at December 3, 1995
(but since terminated) contain, among other provisions, requirements
for maintaining certain working capital and other financial ratios and
restrictions on incurring additional indebtedness and obligate the
Company to equally and ratably collateralize the indebtedness under
such agreements if the Company grants or assumes certain liens on its
assets. Under the most restrictive covenants, dividends and purchases
of capital stock of the Company may not exceed, on a cumulative basis,
$2 million plus cumulative net income of the Company at any time during
the period beginning November 30, 1987. As of December 3, 1995, $73
million was available to the Company under this provision for future
cash dividends and future purchases of its own capital stock.
The capitalized lease obligation is collateralized by the property,
plant and equipment described in Note 13.
There are no maturities of long-term debt, including the capitalized
lease, for two fiscal years subsequent to December 1, 1996 on debt in
effect as of that date. In fiscal 1999 there will be an aggregate
maturity of $1,559. (See Note 2 for other maturities.)
9. Income Taxes:
------------
Income before provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Domestic $19,999 $24,935 $21,758
Foreign 3,646 2,146 2,280
------- ------- -------
$23,645 $27,081 $24,038
======= ======= =======
</TABLE>
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
9. Income Taxes (continued):
------------------------
The provision for income taxes consists of the following:
1995 1994 1993
---- ---- ----
Currently payable:
Federal $ 7,084 $ 9,863 $ 8,406
State 707 1,009 877
Foreign 109 167 283
-------- -------- --------
7,900 11,039 9,566
Deferred 410 (1,155) (456)
-------- -------- --------
$ 8,310 $ 9,884 $ 9,110
======== ======== ========
The following is a reconciliation of the statutory federal income tax
rate with the Company's effective income tax rate:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory federal rate 35.0% 35.0% 34.9%
State income taxes, net of
federal tax benefit 1.8 2.1 2.2
Tax benefit of loss carryforwards
of foreign subsidiaries (2.3) (.4) --
Other, net .6 (.2) .8
---- ---- ----
Effective tax rate 35.1% 36.5% 37.9%
==== ==== ====
</TABLE>
Effective November 29, 1993, the Company adopted SFAS No. 109. (See
Note 1.)
F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
9. Income Taxes (continued):
------------------------
The significant components of deferred tax assets and liabilities
at December 3, 1995 and November 27, 1994 consist of:
<TABLE>
<CAPTION>
1995 1994
-------------------------- --------------------------
Assets Liabilities Assets Liabilities
------ ----------- ------ -----------
<S> <C> <C> <C> <C>
Inventories $ 2,138 -- $ 2,609 --
Accrued expenses 3,277 $ 499 2,705 $ 443
Allowance for doubtful
accounts 746 -- 901 --
Net operating loss
carryforwards-foreign 207 -- 821 --
Pensions 1,014 441 766 271
Net operating loss
carryforwards-states 347 -- 313 --
Depreciation and
amortization 759 6,701 497 6,044
------- ------- ------- -------
8,488 7,641 8,612 6,758
Valuation allowance (429) -- (1,134) --
------- ------- ------- -------
$ 8,059 $ 7,641 $ 7,478 $ 6,758
======= ======= ======= =======
</TABLE>
As of December 3, 1995, the Company had foreign net operating loss
carry-forwards of approximately $600 which may be carried forward
indefinitely, approximately $300 of which were acquired in
connection with business acquisitions. To the extent that net
operating loss carryforwards acquired in connection with business
acquisitions are utilized in the future and the associated
valuation allowance reduced, the tax benefit thereof will be
allocated to reduce excess of acquisition cost over net assets
acquired related to the acquisition.
The valuation allowance of approximately $400 relates to net
operating losses which are uncertain as to realizability as of
December 3, 1995. The net change in the total valuation allowance
for the year ended December 3, 1995 was a decrease of approximately
$700. The Company has recognized approximately $130 of deferred tax
assets relating to the likely future utilization of net operating
losses. Of this amount, approximately $100 relates to net operating
losses acquired in connection with business acquisitions.
F-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
9. Income Taxes (continued):
------------------------
Deferred income taxes at November 28, 1993 relate to the following
timing differences between amounts reported for financial
accounting and income tax purposes:
Depreciation $ 53
Provision for relocation
and consolidation of
operations 61
Other, net (570)
-----
$(456)
=====
10. Employee Benefit Plans:
----------------------
Pension Plans:
-------------
Net pension costs for fiscal years 1995, 1994 and 1993 consist of
the following:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Service cost-benefits earned
during the period $ 1,901 $ 2,049 $ 1,580
Interest cost on projected
benefit obligation 2,387 2,155 1,852
Actual return on plan assets (4,749) (1,031) (1,863)
Net amortization and deferral 2,643 (759) 107
------- ------- -------
Net pension costs $ 2,182 $ 2,414 $ 1,676
======= ======= =======
</TABLE>
Net amortization and deferral consists of the deferral of the
excess of actual return on assets over estimated return and
amortization of the net unrecognized transition asset on a
straight-line basis, principally over 15 years.
F-19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
10. Employee Benefit Plans (continued):
----------------------------------
Pension Plans (continued):
-------------------------
The funded status of the Company's pension plans at September 30,
1995 and 1994 (dates of actuarial valuations) is as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------- -------------------------
Overfunded Underfunded Overfunded Underfunded
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Plan assets at fair value $ 32,192 $ 728 $ 26,227 $ 643
-------- -------- -------- --------
Actuarial present value of benefit obligations:
Vested 23,324 2,429 18,434 1,715
Non-vested 79 390 67 185
-------- -------- -------- --------
Accumulated benefit obligation 23,403 2,819 18,501 1,900
Effect of increase in
compensation 8,634 1,396 7,999 818
-------- -------- -------- --------
Projected benefit obligation 32,037 4,215 26,500 2,718
-------- -------- -------- --------
Projected benefit obligation less
than (in excess of) plan assets 155 (3,487) (273) (2,075)
Unrecognized net (gain) loss 123 816 (7) 89
Unrecognized transition asset (1,457) (16) (1,668) (19)
Unrecognized prior service cost 495 1,344 754 1,102
Minimum liability adjustment -- (763) -- (355)
-------- -------- -------- --------
Pension liability $ (684) $ (2,106) $ (1,194) $ (1,258)
======== ======== ======== ========
</TABLE>
Pension costs are determined using the assumptions as of the
beginning of the year. The funded status is determined using the
assumptions as of the date of the actuarial valuation and is deemed
overfunded or underfunded based on a comparison of the plan assets
at fair value with the accumulated benefit obligation. Plan assets
consist principally of common stock and U.S. Government and
corporate obligations.
F-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
10. Employee Benefit Plans (continued):
----------------------------------
Pension Plans (continued):
-------------------------
Significant assumptions as of the dates of actuarial valuations
include:
<TABLE>
<CAPTION>
1995 1994 1993
----- ---- ----
<S> <C> <C> <C>
Discount rate 7.50% 8.00% 7.00%
Rate of increase in
compensation levels 6.00% 6.00% 6.00%
Expected long-term rate of
return on plan assets 7.50% 7.50% 7.50%
</TABLE>
Supplemental Executive Benefits Plan:
------------------------------------
The Company has instituted a nonqualified, Supplemental Executive
Benefits (retirement) Plan covering all officers. Expenses of $505,
$394 and $331 in fiscal years 1995, 1994 and 1993, respectively,
relating to this plan were actuarially determined and are included
in the pension costs described above. In 1994 the Company added an
elective salary deferral feature to this plan. Contributions to
this portion of the plan by the Company were $32 for fiscal 1995.
Employee Savings Plan:
---------------------
The Company has a defined contribution 401(k) plan available to a
majority of its employees in the United States. For participating
employees, the Company matches 25 cents for each dollar contributed
up to a maximum of 6% of pre-tax compensation, subject to
limitations of the plan and the Internal Revenue Code.
Contributions to the 401(k) plan by the Company were $433, $407 and
$379 for fiscal years 1995, 1994 and 1993, respectively.
F-21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
11. Stock Option, Stock Grant and Long-Term Incentive Compensation
Plans:
--------------------------------------------------------------
In 1993 the Company adopted the 1993 Stock Option and Stock Grant
Plan which replaced the expired 1983 Stock Option and Stock Grant
Plan. The 1993 plan authorizes the issuance of up to 1,750,000
common shares, of which up to 525,000 may be issued in the form of
stock grants. The terms of the 1993 plan are essentially similar to
the terms of the 1983 plan described below.
The Company's 1983 Stock Option and Stock Grant Plan and the 1978
Stock Option Plan expired by their terms in February 1993 and
November 1988, respectively, and, while incentive stock options
granted under them remain outstanding, no further options may be
granted under these two plans. Under the 1983 plan, common shares
were authorized for the granting of incentive stock options,
nonqualified stock options and stock grants to key employees,
provided that stock grants may be made for no more than 373,125
common shares. The option price of options granted under the plan
may not be less than the market value of the shares at the date
granted. Options may be granted for terms of between two and ten
years and generally become exercisable not less than one year
following the date of grant.
Stock grants under the 1983 plan are subject to a vesting period or
periods of between one and five years from the date of grant.
Common shares are not actually issued to a grantee until such
shares have vested under the plan. The plan also provides for the
payment of an annual cash bonus to recipients of stock grants in an
amount equal to the cash dividends which would have been received
had the shares not yet vested under the grant been actually held by
the recipients.
Under the 1978 plan, options for 632,813 common shares were
authorized for the granting of options to key employees at option
prices not less than the market value of the common shares at the
date of grant. Options granted under this plan have terms of not
more than ten years and generally become exercisable not less than
one year following the date of grant.
Payment upon exercise of stock options under the 1993, 1983 and
1978 plans may be by cash and/or by the Company's common stock in
an amount equivalent to the market value of the stock at the date
exercised.
F-22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
11. Stock Option, Stock Grant and Long-Term Incentive (continued):
-------------------------------------------------------------
A summary of options under the Company's stock option plans is as
follows:
<TABLE>
<CAPTION>
1993 Plan 1983 Plan
--------- ---------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Outstanding, beginning of year 363,400 -- 730,003 779,004
Options granted 317,300 388,100 -- --
Options exercised (at an average
price per share of $9.55 and
$12.49, respectively) -- -- (89,561) (31,501)
Options expired -- -- -- --
Options terminated (45,900) (24,700) (8,600) (17,500)
---------- ---------- ---------- ----------
Outstanding, end of year 634,800 363,400 631,842 730,003
========== ========== ========== ==========
Average option price per share $ 15.05 $ 15.79 $ 13.95 $ 13.44
Outstanding exercisable options,
end of year -- -- 631,842 596,803
Shares reserved for future
stock options and grants 1,115,200 1,386,600 -- --
</TABLE>
In 1993 there were 102,282 and 855 options exercised at an average
price of $10.47 and $6.22 under the 1983 and 1978 plans,
respectively. At the end of both 1995 and 1994 there remained 2,638
outstanding exercisable options at an average option price per
share of $10.58 relating to the 1978 plan.
The Company's 1988 Long-Term Incentive Compensation Plan provides
for the granting to management-level employees of long-term
incentive awards, which are payable in cash and/or by the Company's
common stock at the end of a designated performance period of from
two to five years, based upon the degree of attainment of
pre-established performance standards during the performance
period. A maximum of 180,000 shares are authorized for issuance
under this plan.
As of the end of fiscal 1995, an aggregate of 85,122 shares had
been earned under this plan (19,114, 17,042 and 13,394 shares in
fiscal years 1995, 1994 and 1993, respectively, and 35,572 shares
in all previous years), and an aggregate of 41,558 shares were
subject to outstanding unvested grants. There is no stated
limitation on the aggregate amount of cash payable under this plan,
but the maximum amount (in cash and/or shares) which may be paid to
F-23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
11. Stock Option, Stock Grant and Long-Term Incentive (continued):
-------------------------------------------------------------
a participant under all long-term incentive awards under the plan
with respect to the same performance period may not exceed 125% of
the participant's base salary in effect at the time the award
initially was made. The charges to administrative and general
expenses relating to this plan were $186, $532 and $563 in fiscal
years 1995, 1994 and 1993, respectively.
In fiscal 1994, the Company adopted the 1994 Non-Employee
Directors' Stock Option Plan authorizing the granting of up to an
aggregate of 90,000 common shares to non-officer directors of the
Company. Options to purchase an aggregate of 45,000 common shares
at $16.875 per share were automatically granted in January 1994 in
equal amounts to each of the non-officer directors of the Company.
Options granted under this plan extend for a term of ten years and
become exercisable at the rate of 20% per year over five years
commencing one year after the date of grant. No other options have
been granted and as of December 3, 1995 no options have been
exercised.
Other Grants:
------------
During 1995 the Company made stock grants in the amount of 84,759
common shares to certain officers and other employees. By their
terms, these grants will vest at varying times during 1997. The
charge to administrative and general expense with respect to these
grants was $310 in fiscal year 1995.
New Accounting Standard:
-----------------------
SFAS No. 123, "Accounting for Stock-Based Compensation,"
encourages, but does not require, companies to recognize
compensation expense for grants of stock, stock options, and other
equity instruments to employees based upon fair value or,
alternatively, permits them to continue to apply the existing
accounting rules contained in Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB No. 25).
Companies choosing not to adopt the expense recognition provisions
of SFAS No. 123 are required to disclose pro forma net income and
earnings per share data as if such provisions had been applied. The
Company anticipates continuing to account for stock-based
compensation in accordance with APB No. 25 and therefore the
adoption of SFAS No. 123 will not have an impact on the Company's
financial position or results of operations.
12. Shareholders' Rights Plan:
-------------------------
In 1990 the Company adopted a Shareholders' Rights Agreement and
declared a dividend of one right (a "Right") for each outstanding
share of the Company's common shares held of record as of the close
of business on August 22, 1990.
F-24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
12. Shareholders' Rights Plan (continued):
-------------------------------------
The Rights initially are deemed to be attached to the common shares
and detach and become exercisable only if (with certain exceptions
and limitations) a person or group attempts to obtain beneficial
ownership of 15% or more of the Company's common shares or is
determined to be an "adverse person" by the Board of Directors of
the Company. Each Right, if and when it becomes exercisable,
initially will entitle holders of the Rights to purchase one
one-thousandth of a share of Junior Participating Preferred Shares
(Series A, of which 50,000 shares currently are authorized for
issuance) for $60, subject to adjustment. The Rights will convert
into the right to purchase common shares or other securities or
property of the Company or an acquiring company in certain other
potential or actual takeover situations. The Rights are redeemable
by the Company at $.01 per Right in certain circumstances and
expire, unless earlier exercised or redeemed, on December 31, 2000.
13. Commitments and Contingencies:
-----------------------------
Leases:
------
The capitalized lease obligation (see Note 8) represents the amount
payable under a lease which is, in substance, an installment
purchase. Property, plant and equipment includes the following
assets under a capital lease:
1995 1994
---- ----
Land $ 314 $ 314
Buildings 2,632 2,632
Machinery and equipment 1,009 1,009
Accumulated depreciation (2,853) (2,746)
------- -------
$ 1,102 $ 1,209
======= =======
The Company has the option to purchase the above assets at any time
during the term of the lease for amounts sufficient to redeem and
retire the underlying lessor debt obligation. The capitalized lease
obligation has one principal payment at maturity on June 15, 2004.
The minimum rental commitments under all noncancellable leases as
of December 3, 1995 are as follows:
F-25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
13. Commitments and Contingencies (continued):
----------------------------------------
Leases (continued):
------------------
Fiscal Operating
Period Leases
------ ---------
1996 $ 3,744
1997 3,145
1998 2,701
1999 2,646
2000 2,636
Thereafter 8,248
-------
Minimum lease payments $23,120
Rent expense, including related real estate taxes charged to
operations, amounted to $4,637, $3,912 and $4,217 for fiscal years
1995, 1994 and 1993, respectively.
Contingencies:
-------------
The Company has employment/severance (change in control) agreements
with its officers under which severance payments and benefits would
become payable in the event of specified terminations of employment
following a change in control (as defined) of the Company. The
Company also has a termination policy applicable to other employees
which provides severance payments and benefits in the event of
certain terminations of employment. In the event of a change in
control of the Company and subsequent termination of all employees,
the maximum contingent severance liability would have been
approximately $16.6 million at December 3, 1995.
Prior to the acquisition of the Graphic Arts Group by the Company
from Bunzl plc in May 1990, it was discovered that some hazardous
waste materials had been stored on the premises of one of the Graphic
Arts Group companies, Seal, located in Naugatuck, Connecticut. In
compliance with applicable state law, this environmental condition
was reported to the Connecticut Department of Environmental
Protection by Bunzl. Seal, which is now a subsidiary of the Company,
may be partially responsible under law for the environmental
conditions on the premises and any liabilities resulting therefrom.
However, in connection with the Company's acquisition of Seal, Bunzl
agreed to take responsibility for correcting such environmental
conditions and, for a period of seven years, to indemnify Seal and
the Company for such resulting liabilities, subject to certain
limitations. Management believes that this contingency will not have
a material effect on the Company's results of operations or financial
condition.
F-26
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
13. Commitments and Contingencies (continued):
-----------------------------------------
Contingencies (continued):
-------------------------
The Company is also involved on a continuing basis in monitoring its
compliance with environmental laws and in making capital and
operating improvements necessary to comply with existing and
anticipated environmental requirements. Despite its efforts, the
Company has been cited for occasional violations or alleged
violations of environmental laws or permits and on several occasions
has been named as a potentially responsible party for the remediation
of sites. Expenses incurred by the Company to date relating to
violations of and compliance with environmental laws and permits and
site remediation have not been material. While it is impossible to
predict with certainty, management currently does not foresee such
expense in the future as having a material effect on the Company's
business, results of operations or financial condition. There are
other contingent liabilities with respect to product warranties,
legal proceedings and other matters occurring in the normal course of
business. In the opinion of management, all such matters are
adequately covered by insurance or by accruals, and if not so
covered, are without merit or are of such kind, or involve such
amounts, as would not have significant effect on the financial
condition or results of operations of the Company, if disposed of
unfavorably.
14. Research and Development:
------------------------
Research and development expenses were approximately $1,705, $1,606
and $1,657 in fiscal years 1995, 1994 and 1993, respectively.
15. Cash Flow Information:
---------------------
Cash payments for interest and income taxes (net of refunds) were as
follows:
1995 1994 1993
---- ---- ----
Interest paid $ 282 $ 408 $ 580
Income taxes 8,941 9,481 8,761
Excluded from the Consolidated Statements of Cash Flows are the
effects of certain non-cash investing and financing activities
relating to certain acquisitions as follows:
1995 1994 1993
---- ---- ----
Fair value of assets acquired $3,863 -- $1,512
Liabilities assumed or created 944 -- 461
F-27
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
16. Quarterly Financial Data (unaudited):
------------------------------------
Results of operations for each of the quarters during fiscal years
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995
----
First Second Third Fourth Total
----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C>
Net sales $ 70,530 $ 74,881 $ 86,302 $ 82,168 $313,881
Gross profit 25,642 28,086 31,247 32,186 117,161
Net income 3,347 2,934 3,655 5,399 15,335
Net income per share .21 .18 .23 .34 .96
</TABLE>
<TABLE>
<CAPTION>
1994
----
First Second Third Fourth Total
----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C>
Net sales $ 64,550 $ 69,023 $ 75,765 $ 78,865 $288,203
Gross profit 25,155 27,866 29,350 30,905 113,276
Net income 3,798 4,088 4,391 5,715 17,992
Net income per share .24 .25 .27 .36 1.12
</TABLE>
The second, third and fourth quarters of fiscal 1995 results include
charges to net income of approximately $1.4 million, or $.09 per share;
$1.0 million, or $.06 per share; and $1.1 million, or $.07 per share,
respectively, relating to the provision for organizational changes and
relocation and consolidation of operations as described in Note 3. The
third quarter of fiscal years 1995 and 1994 contained 14 weeks and 13
weeks, respectively.
The first quarter of fiscal 1994 results include the cumulative effect of
a change in accounting for income taxes (adoption of SFAS No. 109) which
increased net income by $.8 million, or $.05 per share.
17. Industry Segment Information:
----------------------------
The Company operates in two industry segments, Office Products and
Art/Craft Products. Total export sales aggregated $20,559 in fiscal 1995,
$21,235 in fiscal 1994 and $21,580 in fiscal 1993, of which $12,921,
$11,844 and $11,619 in fiscal years 1995, 1994 and 1993, respectively,
were made in Canada.
Operating profits include all revenues and expenses of the reportable
segment except for general corporate expenses, interest expense, interest
income, other expenses, other income and income taxes.
Identifiable assets are those assets used in the operations of each
business segment.
F-28
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
17. Industry Segment Information (continued):
----------------------------------------
Corporate assets include cash and miscellaneous other assets not
identifiable with any particular segment. Capital additions include
amounts related to acquisitions.
<TABLE>
<CAPTION>
Office Art/Craft Corp.
Fiscal Year 1995 Products Products Assets Consolidated
---------------- -------- --------- ------ -------------
<S> <C> <C> <C> <C>
Net sales $ 163,378 $ 150,503 $ 313,881
========= ========= =========
Operating profit * $ 6,966 $ 21,678 $ 28,644
========= =========
General corporate (5,081)
Interest expense (109)
Interest income 571
Other expense, net (380)
---------
Income before income
taxes $ 23,645
=========
Identifiable assets $ 78,272 $ 77,310 $ 27,228 $ 182,810
========= ========= ========= =========
Capital additions ** $ 5,619 $ 3,550 $ 1,473 $ 10,642
========= ========= ========= =========
Depreciation and
amortization $ 4,494 $ 3,676 $ 588 $ 8,758
========= ========= ========= =========
</TABLE>
* Includes the provision for organizational changes and relocation and
consolidation of operations which reduced the office products operating
profit by $4.1 million and art/craft products operating profit by $1.2
million.
** Includes $1.1 million of capital additions relating to business
acquisitions.
F-29
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
17. Industry Segment Information (continued):
---------------------------------------
<TABLE>
<CAPTION>
Office Art/Craft Corp.
Fiscal Year 1994 Products Products Assets Consolidated
---------------- -------- --------- ------ -------------
<S> <C> <C> <C> <C>
Net sales $160,307 $127,896 $288,203
======== ======== ========
Operating profit $ 12,172 $ 21,211 $ 33,383
======== ========
General corporate (6,017)
Interest expense (85)
Interest income 342
Other expense, net (542)
--------
Income before income
taxes $ 27,081
========
Identifiable assets $ 80,218 $ 70,362 $ 22,805 $173,385
======== ======== ======== ========
Capital additions $ 5,923 $ 3,109 $ 273 $ 9,305
========= ======== ======== ========
Depreciation and
amortization $ 4,123 $ 3,286 $ 630 $ 8,039
======== ======== ======== ========
Office Art/Craft Corp.
Fiscal Year 1993 Products Products Assets Consolidated
---------------- -------- --------- ------ -------------
Net sales $142,462 $113,688 $256,150
======== ======= ========
Operating profit $ 11,411 $ 18,832 $ 30,243
======== ========
General corporate (5,682)
Interest expense (242)
Interest income 190
Other expense, net (471)
--------
Income before income
taxes $ 24,038
========
Identifiable assets $ 74,098 $ 67,619 $ 14,600 $156,317
======== ======== ======= ========
Capital additions $ 5,559 $ 4,082 $ 698 $ 10,339
======== ======== ========= ========
Depreciation and
amortization $ 3,898 $ 3,234 $ 532 $ 7,664
======== ======== ========= ========
</TABLE>
F-30
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
17. Industry Segment Information (continued):
----------------------------------------
The Company's operations by geographical areas for fiscal years 1995,
1994 and 1993 are presented below. Intercompany sales to affiliates
represent products which are transferred between geographic areas on a
basis intended to reflect as nearly as possible the market value of the
products.
<TABLE>
<CAPTION>
Adjustments
and
Fiscal Year 1995 North America Europe Corporate Eliminations Consolidated
---------------- ------------- ------ --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales:
Customers $285,313 $ 28,568 -- $313,881
Intercompany 8,866 3,257 $(12,123) --
-------- -------- -------- --------
Total $294,179 $ 31,825 $(12,123) $313,881
======== ======== ======== ========
Operating profit $ 26,622 $ 2,022 -- $ 28,644
======== ======== ======== ========
Identifiable assets $131,496 $ 24,086 $ 27,228 -- $182,810
======== ======== ======== ======== ========
Adjustments
and
Fiscal Year 1994 North America Europe Corporate Eliminations Consolidated
---------------- ------------- ------ --------- ------------ ------------
Net sales:
Customers $268,710 $ 19,493 -- $288,203
Intercompany 5,060 2,154 $ (7,214) --
-------- -------- -------- --------
Total $273,770 $ 21,647 $ (7,214) $288,203
======== ======== ======== ========
Operating profit $ 32,648 $ 735 -- $ 33,383
======== ======== ======== ========
Identifiable assets $131,310 $ 19,270 $ 22,805 -- $173,385
======== ======== ======== ======== ========
</TABLE>
F-31
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
17. Industry Segment Information (continued):
----------------------------------------
<TABLE>
<CAPTION>
Adjustments
and
Fiscal Year 1993 North America Europe Corporate Eliminations Consolidated
---------------- ------------- ------ --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales:
Customers $241,059 $ 15,091 -- $256,150
Intercompany 2,941 1,640 $ (4,581) --
-------- -------- -------- --------
Total $244,000 $ 16,731 $ (4,581) $256,150
======== ======== ======== ========
Operating profit $ 30,203 $ 40 -- $ 30,243
======== ======== ======== ========
Identifiable assets $124,841 $ 16,876 $ 14,600 -- $156,317
======== ======== ======== ======== ========
</TABLE>
18. Financial Instruments:
---------------------
Off-Balance Sheet Risk:
----------------------
Letters of credit are issued by the Company during the ordinary course
of business through major domestic banks as required by certain vendor
contracts. As of December 3, 1995 and November 27, 1994, the Company
had outstanding letters of credit for $400 and $216, respectively.
Concentrations of Credit Risk:
-----------------------------
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary cash
investments and trade receivables. The Company places its temporary
cash investments ($13.7 million and $11.7 million at December 3, 1995
and November 27, 1994, respectively) with quality financial
institutions and, by policy, limits the amount of credit exposure to
any one financial institution.
The Company provides credit, in the normal course of business, to a
large number of distributors and retailers and generally does not
require collateral or other security to support customer receivables.
Management believes that concentrations of credit risk with respect to
trade receivables are limited due to the large number of customers
comprising the Company's customer base, their dispersion across many
different industries and geographies with no single customer accounting
for more than 10% of net sales; however, the Company's ten largest
customers account for approximately 37% and 32% of accounts receivable
at December 3, 1995 and November 27, 1994, respectively. The Company
F-32
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(In thousands except share and per share amounts)
------
18. Financial Instruments (continued):
---------------------------------
performs ongoing credit evaluations of its customers, maintains
allowances for potential credit losses and carries credit insurance
coverage for most of its large customer accounts.
Fair Value:
----------
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:
Cash and cash equivalents -
-------------------------
The carrying amount approximates fair value because of the short
maturity of these instruments.
Debt (excluding capital lease obligation) -
----------------------------------------
The fair value of the Company's debt is estimated based on the current
rates offered to the Company for debt of the same remaining maturities.
The estimated fair values of the Company's financial instruments at
December 3, 1995 and November 27, 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
--------------------------- -------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- ------
<S> <C> <C> <C> <C>
Cash and cash
equivalents $15,503 $15,503 $13,807 $13,807
Debt (excluding
capital lease
obligation) 2,325 2,303 2,561 2,523
</TABLE>
Debt and Equity Securities:
--------------------------
In fiscal 1995 the Company adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," which requires
changes in accounting and reporting for certain investments in debt and
equity securities. The adoption of this standard had no effect on the
Company's results of operations or financial condition.
F-33
<PAGE>
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
for the fiscal years 1995, 1994 and 1993
(in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
---------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
Classification Of Period Expenses Accounts Deductions Period
-------------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
1995:
-----
Allowance for doubtful accounts $2,510 $ 916 $ -- $1,121(A) $2,305
====== ====== ==== ====== ======
Reserve for customer returns and deductions $1,267 $ 735 $ -- $ 281(C) $1,721
====== ====== ==== ====== ======
Reserve for inventory obsolescence $3,530 $1,778 $ -- $2,887(D) $2,421
====== ====== ==== ====== ======
1994:
-----
Allowance for doubtful accounts $2,643 $ 921 $ -- $1,054(A) $2,510
====== ====== ==== ====== ======
Reserve for customer returns and deductions(B) $ 702 $1,539 $ -- $ 974(C) $1,267
====== ====== ==== ====== ======
Reserve for inventory obsolescence $2,236 $2,083 $ -- $ 789(E) $3,530
====== ====== ==== ====== ======
1993:
-----
Allowance for doubtful accounts $2,587 $1,022 $ 3 $ 969(A) $2,643
====== ====== ==== ====== ======
Reserve for inventory obsolescence $1,655 $1,598 $ -- $1,017(E) $2,236
====== ====== ==== ====== ======
</TABLE>
(A) Doubtful accounts written off, net of collection expenses.
(B) These reserves were not significant in years prior to 1994.
(C) Primarily credits issued to customers.
(D) Largely the result of programs in effect during 1995 to dispose of fully
reserved obsolete inventory. Amount is net of recoveries.
(E) Primarily a result of disposals of obsolete inventory in the normal course
of business, net of recoveries.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 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.
HUNT MANUFACTURING CO.
Dated: February 28, 1996 By:/s/ Robert B. Fritsch
---------------------
Robert B. Fritsch
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on behalf of the registrant and in the
capacities and on the dates indicated:
/s/ Robert B. Fritsch February 28, 1996
- --------------------------
Robert B. Fritsch
President and
Chief Executive Officer
/s/ William E. Chandler February 28, 1996
- --------------------------
William E. Chandler
Senior Vice President,
Finance (Principal Financial and
Accounting Officer)
/s/ Vincent G. Bell, Jr. February 28, 1996
- -------------------------
Vincent G. Bell, Jr.
Director
/s/ Jack Farber
- ------------------------ February 28, 1996
Jack Farber
Director
<PAGE>
/s/ William F. Hamilton, Ph.D. February 28, 1996
- ------------------------------
William F. Hamilton, Ph.D.
Director
/s/ Mary R. Henderson February 28, 1996
- ------------------------
Mary R. (Nina) Henderson
Director
/s/ Gordon A. MacInnes, Jr. February 28, 1996
- ---------------------------
Gordon A. MacInnes, Jr.
Director
/s/ Wilson D. McElhinny February 28, 1996
- ------------------------
Wilson D. McElhinny
Director
/s/ Robert H. Rock February 28, 1996
- ------------------------
Robert H. Rock
Director
- ------------------------
Roderic H. Ross
Director
/s/ Victoria B. Vallely February 28, 1996
- ------------------------
Victoria B. Vallely
Director
<PAGE>
EXHIBIT INDEX
(Exhibits being filed with this Form 10-K)
(4) Instruments defining rights of security holders, including
indentures:
(a)(2) Amendment dated as of February 1, 1996 to Credit
Agreement dated December 19, 1995 between the Company
and NationsBank, N.A.
(a)(3) Amendment dated as of February 26, 1996 to Credit
Agreement.
(10) Material contracts:
(c) 1983 Stock Option and Stock Grant Plan, as amended, of
the Company.
(d) 1993 Stock Option and Stock Grant Plan of the Company,
as amended.
(f) Form of Stock Grant Agreement between the Company and
Messrs. Carney, Chandler, O'Meara and Precious.
(j)(2) List of executive officers who are parties to Change in
Control Agreement.
(m) Employment-Severance arrangements with Robert B.
Fritsch.
(11) Statement re: computation of per share earnings.
(23) Consent of Coopers & Lybrand L.L.P. to incorporation by
reference, in Registration Statement No.s 33-70660, 33-25947,
33-6359, 2-83144, 33-57105 and 33-57103 on Form S-8, of their
report on the consolidated financial statements and schedules
included in this report.
(27) Financial Data Schedule.
<PAGE>
EXHIBIT (4)(a)(2)
February 1, 1996
Hunt Manufacturing Co.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7085
RE: Credit Agreement dated as of December 19, 1995 (the
"Credit Agreement") among Hunt Manufacturing Co. (the
"Borrower"), the Guarantors party thereto and
NationsBank, N.A., as the sole Lender and as Agent
("NationsBank")
Gentlemen:
Reference is made to the Credit Agreement described above. All of the defined
terms in the Credit Agreement are incorporated herein by reference.
NationsBank agrees with the Borrower and the Subsidiary Guarantors to amend the
Credit Agreement in the following respects:
1. Section 7.11(a) to the Credit Agreement is amended in its
entirety to read as follows:
7.11 Financial Covenants.
(a) Consolidated Net Worth. Consolidated Net Worth at all
times shall be no less than $115,000,000, reduced on and after the date
of the Stock Repurchase by the amount of the reduction (not to exceed
$93,000,000), as determined in accordance with GAAP, in the net worth
of the Borrower and its consolidated Subsidiaries resulting from the
Stock Repurchase and increased on a cumulative basis by (i) as of the
last day of each fiscal year commencing with the last day of fiscal
year 1996 by an amount equal to the greater of (A) $0 or (B) 50% of the
excess of (1) Consolidated Net Income for the fiscal year then ended
over (2) dividends and other distributions to shareholders by the
Borrower and its consolidated Subsidiaries for the fiscal year then
ended and (ii) upon the consummation of any Equity Transaction on or
after the Closing Date, an amount equal to 85% of the Net Proceeds of
such Equity Transaction.
<PAGE>
2. Section 8.4(c) to the Credit Agreement is amended in its
entirety to read as follows:
8.4 Consolidation, Merger, Sale or Purchase of Assets, etc.
The Borrower will not, nor will it permit any of its Subsidiaries
to:
* * * * *
(c) except as otherwise permitted by Section 8.4(a) and
subject to the terms of Section 8.8, acquire all or any portion of the
capital stock or securities of any other Person or purchase, lease or
otherwise acquire (in a single transaction or a series of related
transactions) all or any substantial part of the Property of any other
Person if after giving effect on a Pro Forma Basis to such transaction,
the Consolidated Leverage Ratio shall not be greater than 3.00 to 1.00.
3. Section 11.3(b) to the Credit Agreement is amended in its
entirety to read as follows:
11.3 Benefit of Agreement.
* * * * *
(b) Assignments. Each Lender may assign all or a portion of
its rights and obligations hereunder pursuant to an assignment
agreement substantially in the form of Schedule 11.3(b) to one or more
Eligible Assignees, provided that any such assignment shall be in a
minimum aggregate amount of $5,000,000 of the Commitments and in
integral multiples of $1,000,000 above such amount. Any assignment
hereunder shall be effective upon delivery to the Agent of written
notice of the assignment together with a transfer fee of $3,500 payable
to the Agent for its own account. The assigning Lender will give prompt
notice to the Agent and the Borrower of any such assignment. Upon the
effectiveness of any such assignment (and after notice to the Borrower
as provided herein), the assignee shall become a "Lender" for all
purposes of this Credit Agreement and the other Credit Documents and,
to the extent of such assignment, the assigning Lender shall be
relieved of its obligations hereunder to the extent of the Loans and
Commitment components being assigned. Along such lines the Borrower
agrees that upon notice of any such assignment and surrender of the
appropriate Note or Notes, it will promptly provide to the assigning
<PAGE>
Lender and to the assignee separate promissory notes in the amount of
their respective interests substantially in the form of the original
Note (but with notation thereon that it is given in substitution for
and replacement of the original Note or any replacement notes thereof).
By executing and delivering an assignment agreement in accordance with
this Section 11.3(b), the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and
the other parties hereto as follows: (i) such assigning Lender warrants
that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim; (ii) except as
set forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant hereto
or thereto, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, any of the
other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto or the financial condition of any Credit
Party or the performance or observance by any Credit Party of any of
its obligations under this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant hereto
or thereto; (iii) such assignee represents and warrants that it is
legally authorized to enter into such assignment agreement; (iv) such
assignee confirms that it has received a copy of this Credit Agreement,
the other Credit Documents and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision
to enter into such assignment agreement; (v) such assignee will
independently and without reliance upon the Agent, such assigning
Lender or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Credit
Agreement and the other Credit Documents; (vi) such assignee appoints
and authorizes the Agent to take such action on its behalf and to
exercise such powers under this Credit Agreement or any other Credit
Document as are delegated to the Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto; and
<PAGE>
(vii) such assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this Credit
Agreement and the other Credit Documents are required to be performed
by it as a Lender.
All references in the Credit Agreement and the other Credit Documents to the
"Credit Agreement" shall be deemed to refer to the Credit Agreement as amended
hereby.
NationsBank and the Borrower hereby agree that the foregoing amendments shall be
effectuated by inserting appropriate replacement pages into the Credit Agreement
as originally executed.
Except as modified hereby, all of the terms and provisions of the Credit
Agreement and the other Credit Documents shall remain in full force and effect.
This letter agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina.
This letter agreement may be executed in one or more counterparts, each of which
constitute an original, and all of which taken together shall constitute a
single document.
Sincerely,
NATIONSBANK, N.A.,
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[Signatures Continued]
<PAGE>
Read and agreed to this 1st
day of February, 1996
HUNT MANUFACTURING CO.
By____________________________
Title_________________________
Read and consented to this 1st
day of February, 1996
BEVIS CUSTOM FURNITURE, INC.
By____________________________
Title_________________________
HUNT DATA PRODUCTS, INC.
By____________________________
Title_________________________
HUNT HOLDINGS, INC.
By____________________________
Title_________________________
HUNT X-ACTO, INC.
By____________________________
Title_________________________
SEAL PRODUCTS, INC.
By____________________________
Title_________________________
<PAGE>
EXHIBIT (4)(a)(3)
February 26, 1996
Hunt Manufacturing Co.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7085
RE: Credit Agreement dated as of December 19, 1995 (the
"Credit Agreement") among Hunt Manufacturing Co. (the
"Borrower"), the Guarantors party thereto and
NationsBank, N.A., as the sole Lender and as Agent
("NationsBank")
Gentlemen:
Reference is made to the Credit Agreement described above. All of the defined
terms in the Credit Agreement are incorporated herein by reference.
NationsBank agrees with the Borrower and the Subsidiary Guarantors to amend the
Credit Agreement in the following respects:
1. The definition of "Excess Sale Event" in Section 1.1 of the Credit
Agreement is amended in its entirety to read as follows:
"Excess Sale Event" means, with respect to any sale of assets
made pursuant to the terms of Section 8.4(b)(v), the failure of the
Borrower to apply (or cause its applicable Subsidiary to apply) an
amount equal to the Net Proceeds of such asset sale to the purchase,
acquisition or construction of Alternative Assets during the
Application Period for such asset sale as contemplated by the terms of
Section 8.4(b)(v)(B)(1).
2. Section 3.12(a) of the Credit Agreement is amended in its entirety
to read as follows:
3.12 Pro Rata Treatment. Except to the extent otherwise
provided herein:
(a) Loans. Each Loan, each payment or prepayment of principal
of any Loan or reimbursement obligations arising from drawings under
Letters of Credit, each payment of interest on the Loans or
<PAGE>
reimbursement obligations arising from drawings under Letters of
Credit, each payment of Facility Fees, each payment of the Standby
Letter of Credit Fee, each payment of the Trade Letter of Credit Fee,
each reduction of the Revolving Committed Amount and/or Term Loan
Committed Amount and each conversion or extension of any Loan, shall be
allocated pro rata among the Lenders in accordance with the respective
principal amounts of their outstanding Loans and Participation
Interests.
3. Section 7.13(b) of the Credit Agreement is amended in its entirety
to read as follows:
7.13 Ownership of Subsidiaries; Limitation of Foreign
Operations.
* * * * *
(b)(i) The Borrower and its Domestic Subsidiaries
shall own at all times at least 75% of Consolidated Total Assets and
(ii) as of each Calculation Date, the portion attributable to the
Borrower and its Domestic Subsidiaries of Consolidated Net Income for
the four quarter then ended shall be at least 75% of Consolidated Net
Income for such period; provided, however, that the parties hereto
hereby agree that, at such time, if any, as the Foreign Subsidiaries of
the Borrower shall have obtained bank financing for their working
capital and general corporate needs in such amounts, on such terms
(including without limitation intercreditor arrangements between the
provider(s) of such financing and the Lenders) and from such lenders as
shall be satisfactory to the Required Lenders in their sole reasonable
discretion, the Credit Parties and the Lenders shall enter into an
agreement amending this Credit Agreement to eliminate this Section
7.13(b).
4. Section 8.4(c) of the Credit Agreement is amended in its entirety to
read as follows:
8.4 Consolidation, Merger, Sale or Purchase of Assets, etc.
The Borrower will not, nor will it permit any of its Subsidiaries to:
(c) except as otherwise permitted by Section 8.4(a) and
subject to the terms of Section 8.8, acquire all or any portion of
the capital stock or securities of any other Person or purchase, lease
<PAGE>
or otherwise acquire (in a single transaction or a series of related
transactions) all or any substantial part of the Property of any other
Person if after giving effect on a Pro Forma Basis to such transaction,
the Consolidated Leverage Ratio would be greater than 3.00 to 1.00.
5. Section 8.6 of the Credit Agreement is amended in its entirety to
read as follows:
8.6 Restricted Payments. The Borrower will not, nor will it
permit any of its Subsidiaries to, directly or indirectly declare,
order, make or set apart any sum for or pay any Restricted Payment,
except (i) to make (A) dividends payable solely in the same class of
capital stock of such Person and (B) other Restricted Payments payable
solely in common stock of such Person, (ii) to make dividends or other
distributions payable to the Borrower (directly or indirectly through
Subsidiaries of the Borrower), (iii) as permitted by Section 8.7 and
(iv) other Restricted Payments made by the Borrower, provided that,
after giving effect to any such Restricted Payment on a pro forma basis
(determined by calculating the Consolidated Fixed Charge Coverage Ratio
for the four quarter period ended as of the last day of the most recent
fiscal quarter with respect to which the Agent shall have received the
Required Financial Information, except that Restricted Payments
included in such calculation shall be the Restricted Payment proposed
to be made and all other Restricted Payments during the then current
fiscal quarter of the Borrower plus all Restricted Payments for the
three quarters ending as of the last day of the most recent fiscal
quarter), no Default or Event of Default would exist hereunder.
6. Section 9.1(c)(i) of the Credit Agreement is amended in its entirety
to read as follows:
9.1 Events of Default. An Event of Default shall
exist upon the occurrence of any of the following specified
events (each an "Event of Default"):
* * * * *
(c) Covenants. Any Credit Party shall
<PAGE>
(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.2,
7.9, 7.11, 7.12, 7.13 or 8.1 through 8.14, inclusive, or
All references in the Credit Agreement and the other Credit Documents to the
"Credit Agreement" shall be deemed to refer to the Credit Agreement as amended
hereby.
NationsBank and the Borrower hereby agree that the foregoing amendments shall be
effectuated by inserting appropriate replacement pages into the Credit Agreement
as originally executed.
Except as modified hereby, all of the terms and provisions of the Credit
Agreement and the other Credit Documents shall remain in full force and effect.
This letter agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina.
This letter agreement may be executed in one or more counterparts, each of which
constitute an original, and all of which taken together shall constitute a
single document.
Sincerely,
NATIONSBANK, N.A.,
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[Signatures Continued]
<PAGE>
Read and agreed to this 26th
day of February, 1996
HUNT MANUFACTURING CO.
By:____________________________
Title:_________________________
Read and consented to this 26th
day of February, 1996
BEVIS CUSTOM FURNITURE, INC.
By:____________________________
Title:_________________________
HUNT DATA PRODUCTS, INC.
By:____________________________
Title:_________________________
HUNT HOLDINGS, INC.
By:____________________________
Title:_________________________
HUNT X-ACTO, INC.
By:____________________________
Title:_________________________
SEAL PRODUCTS, INC.
By:____________________________
Title:_________________________
<PAGE>
EXHIBIT (10)(c)
As Amended and Restated
through November 30, 1995
HUNT MANUFACTURING CO.
1983 STOCK OPTION AND STOCK GRANT PLAN
1. Purpose.
The 1983 Stock Option and Stock Grant Plan (the "Plan") is
designed to enable Hunt Manufacturing Co. (the "Company") and its subsidiaries
to attract and retain capable officers and key management level employees and to
provide an inducement to such personnel to promote the best interests of the
Company and its subsidiaries by enabling and encouraging them, through the grant
of incentive and nonqualified stock options ("Options") and/or stock ("Stock
Grants") to acquire stock in the Company.
As used in the Plan, the term "incentive stock options" means
options which, at the time such options are granted under the Plan, qualify as
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"). The term
"nonqualified stock options" means options which, at the time such options are
granted, do not qualify as incentive stock options. The term "subsidiary" means
any corporation which, at the time an Option is granted or Stock Grant is made
under the Plan, qualifies as a subsidiary of the Company under the definition of
"subsidiary corporation" contained in Section 424(f) of the Code, or any similar
provision hereafter enacted, except that such term shall not include any
corporation which is classified as a foreign corporation pursuant to Section
7701 of the Code.
2. Administration.
The Plan shall be administered by the Company's Compensation
Committee (the "Committee") which shall consist of not less than three directors
of the Company who shall be appointed by, and shall serve at the pleasure of,
the Company's Board of Directors (the "Board"). Each member of the Committee,
while serving as such, shall be deemed to be acting in his/her capacity as a
director of the Company. Except to the extent otherwise permitted under Section
16(b) of the Securities Exchange Act of 1934 and the rules and regulations
thereunder, no member of the Committee shall be, at the time of service on the
Committee hereunder, or shall have been at any time within one year prior
<PAGE>
thereto, eligible to receive equity securities (within the meaning of 17 CFR ss.
240.16a-1(d)) under the Plan or any other plan of the Company or any of its
affiliates.
The Committee shall have full authority to construe and
interpret the Plan, and, subject to the provisions of the Plan: to establish,
amend and rescind appropriate rules and regulations relating to the Plan, to
take such action as may be appropriate and/or necessary to insure the continued
qualification of any incentive stock options granted under the Plan, to select
the persons to whom Options will be granted and/or Stock Grants made under the
Plan, to grant Options and make Stock Grants and set the date of grant and other
terms and conditions thereof, to make recommendations to the Board, and to take
all such steps and make all such determinations in connection with the Plan and
the Options and stock granted hereunder as it may deem necessary or advisable.
All such rules, regulations, determinations and interpretations of the Committee
shall be final, conclusive and binding on all persons.
3. Stock Subject to the Plan.
Subject to the provisions of Section 8 hereof, up to an
aggregate maximum of 1,348,125 of the Company's Common Shares, par value $.10
per share ("Shares") shall be authorized for the grant of Options and/or Stock
Grants under the Plan, provided that, of such amount, not more than 373,125
Shares shall be available for Stock Grants. Shares issuable under the Plan may
be authorized but unissued Shares or reacquired Shares, as the Board shall
determine. If any Option granted under the Plan expires or otherwise terminates,
in whole or in part, without having been exercised, or if any Stock Grant
hereunder is terminated, in whole or in part, the Shares subject to the
unexercised portion of such Option and the unvested Shares covered by such Stock
Grant shall be available for the granting of Options and Stock Grants under the
Plan as fully as if such Shares had never been subject to an Option or a Stock
Grant.
4. Eligibility.
Those persons eligible to participate in the Plan shall be the
officers and other key management level employees of the Company and any of its
subsidiaries ("Eligible Employees"), including directors who are also officers
or key management level employees of the Company or any of its subsidiaries.
Incentive stock options, nonqualified stock options or Shares, or a combination
thereof, may be granted under the Plan to an Eligible Employee. In making any
determination as to whether a given employee shall receive a grant under the
Plan, and in determining the size and nature of any such grant, the Committee
shall take into account the duties of such employee, his/her past, present and
potential contributions to the success of the Company and its subsidiaries
-2-
<PAGE>
and such other factors as the Committee shall deem relevant in accomplishing the
purposes of the Plan.
5. Grants, Terms and Conditions of Options.
From time to time until the expiration or earlier termination
of the Plan, the Committee may grant to Eligible Employees ("Optionees") under
the Plan such incentive and/or nonqualified stock options as it determines are
warranted; provided, however, that grants of incentive and nonqualified options
shall be separate and not in tandem. Options granted pursuant to the Plan shall
be in such form as the Committee, from time to time, shall approve, and shall be
subject to the following terms and conditions:
(a) Price. Except as provided in Subsection (k), the price per
Share under each Option granted under the Plan shall be determined and fixed by
the Committee in its discretion but shall not be less than the higher of one
hundred percent (100%) of the Fair Market Value of the Shares, or the par value
thereof, on the date of grant of such Option. As used in the Plan, the term
"Fair Market Value" shall mean: (i) if the principal market for the Shares is a
registered securities exchange, the mean between the highest and lowest quoted
selling prices of such Shares on the date of grant, or, if there are no such
reported sales on that date, then on the last previous date (within a reasonable
period prior to the date of grant) on which there were such reported sales; or
(ii) such other method of determining fair market value as shall be authorized
by the Code, or the rules or regulations thereunder, and adopted by the
Committee.
(b) Term. Subject to earlier termination as provided in
Subsections (c) through (g) below and in Section 8 hereof, and except as
otherwise provided in Subsection (k) below, the term of each Option shall not be
less than two (2) nor more than ten (10) years from the date of grant.
(c) Exercise and Payment. Options shall be exercisable in such
installments and on such dates, not less than one (1) year from the date of
grant, as the Committee may specify. Except as otherwise expressly provided in
the Plan, Options shall only be exercisable by an Optionee while he/she remains
in the employment of the Company or a subsidiary. Any Option Shares, the right
to the purchase of which has accrued, may be purchased at any time up to the
expiration or termination of the Option. Options may be exercised, in whole or
in part, from time to time, by giving written notice of exercise to the Company
at its principal office, specifying the number of Shares to be purchased and
accompanied by payment in full of the aggregate purchase price for such Shares.
Only full shares shall be issued and any fractional share which might otherwise
be issuable upon exercise of an Option granted hereunder shall be forfeited. The
purchase price shall be payable: (i) in cash or its equivalent; (ii) if the
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Committee, in its discretion, permits, in whole or in part through the surrender
or delivery of Shares previously acquired by the Optionee (provided that if such
Shares are statutory option stock, as defined in Section 424(c)(3) of the Code,
such Shares have been held by the Optionee for a period not less than the
holding period described in Section 422(a)(1) or 423(a)(1) of the Code, as
applicable); (iii) if the Committee, in its discretion, permits, in whole or in
part through the surrender or delivery of Shares newly acquired by the Optionee
upon exercise of such Option (which surrender or delivery shall constitute a
disqualifying disposition in the case of an Option which is an incentive stock
option); or (iv) if and to the extent the Committee, in its discretion, permits,
by delivering a properly executed notice of exercise of the Option to the
Company and a broker, with irrevocable instructions to the broker promptly to
deliver to the Company the amount of sale or loan proceeds necessary to pay the
exercise price of the Option (the sale of Shares pursuant to such instructions
shall constitute a disqualifying disposition in the case of an Option which is
an incentive stock option). In the event such purchase price is paid, in whole
or in part, with Shares, the portion of the purchase price so paid shall be
equal to the Fair Market Value, on the date of exercise of the Option, of the
Shares surrendered or delivered in payment of such purchase price.
(d) Termination of Optionee's Employment. If an Optionee's
employment by the Company and its subsidiaries is terminated by either party for
any reason, with or without cause, other than by reason of death, disability, or
retirement (as provided in Subsections (e), (f) and (g) hereof) prior to the
expiration date of his/her Option, such Option shall terminate immediately upon
such termination of employment, provided that the Committee, in its discretion,
may extend the period for exercise following any such termination of employment,
to the extent of the number of Shares with respect to which the Optionee could
have exercised it on the date of such termination, for up to three (3) months,
but not beyond the expiration date of such Option. Notwithstanding the
foregoing, in the event an Optionee's employment is terminated as contemplated
in this Subsection and Options held by him/her have not yet become exercisable
in accordance with their terms, the Committee, in its discretion, may allow all
or a part of such Options to be exercised pursuant to this Subsection, provided
that such Options have been outstanding for at least one year at the time of the
Optionee's termination of employment. For the purposes of the Plan, a leave of
absence of one (1) year or less which has been expressly approved by the Board
shall not be deemed to constitute a termination of employment. A leave of
absence for longer than one (1) year shall be deemed to constitute a termination
of employment, unless the Committee otherwise determines.
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(e) Death of Optionee. If an Optionee's employment is
terminated by reason of his/her death prior to the expiration of his/her Option,
or if an Optionee shall die following his/her termination of employment but
prior to the expiration date of his/her Option or expiration of the period
determined under Subsection (d), (f) or (g) hereof, if earlier, such Option may
be exercised, by the Optionee's estate, personal representative or beneficiary
who acquired the right to exercise such Option by bequest or inheritance or by
reason of the death of the Optionee, in whole or in part, but only to the extent
of the number of Shares with respect to which the Optionee could have exercised
it on the date of his/her death, at any time prior to the earlier of (i) one (1)
year following the date of the Optionee's death, or (ii) the expiration date of
such Option (which, in the case of death following a termination of employment
pursuant to Subsection (d), (f) or (g) hereof, shall be deemed to mean the
expiration of the exercise period determined thereunder). Notwithstanding the
foregoing, in the event that an Optionee's employment is terminated by his/her
death and Options held by him/her have not yet become exercisable in accordance
with their terms, the Committee, in its discretion, may allow all or a part of
such Options to be exercised pursuant to this Subsection, provided that such
Options have been outstanding for at least one (1) year at the time of the
Optionee's death.
(f) Disability of Optionee. If an Optionee shall become
permanently and totally disabled (within the meaning of Section 22(e)(3) of the
Code) during his/her employment and his/her employment with the Company and its
subsidiaries is terminated as a consequence of such disability prior to the
expiration date of his/her Option, such Option may be exercised by the Optionee,
in whole or in part, but only to the extent of the number of Shares with respect
to which the Optionee could have exercised it on the date of such termination of
employment, at any time prior to the earlier of (i) one (1) year following the
date of the Optionee's termination of employment, or (ii) the expiration date of
such Option. Notwithstanding the foregoing, if at the time of termination of an
Optionee's employment due to disability, Options held by such Optionee have not
yet become exercisable in accordance with their terms, the Committee, in its
discretion may allow all or a part of such Options to be exercised pursuant to
this Subsection, provided that such Options have been outstanding for at least
one (1) year at the time of the Optionee's termination of employment.
(g) Retirement of Optionee. If an Optionee retires in
accordance with the retirement policy of the Company, or with the express
consent of the Board, prior to the expiration date of his/her Option, such
Option may be exercised by the Optionee, in whole or in part, but only to the
extent of the number of Shares with respect to which the Optionee could have
exercised it on the date of his/her retirement, at any time prior to the earlier
of (i) three (3) months after the date of retirement or (ii) the expiration date
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specified in such Option. Notwithstanding the foregoing, the Committee may, in
its discretion, (x) extend the period for exercise following an Optionee's
retirement for up to nine (9) additional months, but not beyond the expiration
date of such Option, despite the fact that such an extension would prevent an
Option from qualifying as an incentive stock option under the Code and/or (y) in
the event that any Options held by a retiring Optionee have not yet become
exercisable in accordance with their terms, allow all or a part of such Options
to be exercised pursuant to this Subsection provided that such Options have been
outstanding for at least one year at the time of the Optionee's retirement.
(h) Transferability. No Option shall be assignable or
transferable by an Optionee otherwise than by will or by the laws
of descent and distribution.
(i) Rights as a Stockholder. An Optionee shall have no
rights as a stockholder with respect to any Shares covered by his/her Option
until the issuance of a stock certificate to him/her representing such Shares.
(j) Sequential Exercise of Incentive Stock Options. No
incentive stock option granted under the Plan prior to January 1, 1987, shall be
exercisable while there is outstanding (within the meaning of Section 422A(c)(7)
of the Code as in effect prior to January 1, 1987) any other incentive stock
option which was granted before the granting of such incentive stock option to
the same Optionee to purchase Shares, or to purchase stock in a corporation
which (as the time of granting of such incentive stock option) was a Related
Corporation or to purchase stock in a predecessor corporation of the Company or
a Related Corporation. As used in the Plan, the term "Related Corporation" shall
mean a subsidiary or a corporate parent of the Company as defined in Section 424
of the Code.
(k) Ten Percent Shareholder. Notwithstanding any other
provision of the Plan, if an Eligible Employee owns more than ten percent (10%)
of the total combined voting power of all shares of stock of the Company or of a
Related Corporation at the time an incentive stock option is granted to such
Eligible Employee, the incentive stock option price shall not be less than one
hundred ten percent (110%) of the Fair Market Value of the optioned Shares on
the date the incentive stock option is granted, and such incentive stock option
by its terms shall not be exercisable after the expiration of five (5) years
from the date the incentive stock option is granted.
(l) Annual Limit on Grant of Incentive Stock Options.
Effective for options granted after December 31, 1986, the aggregate Fair Market
Value (determined as of the time an incentive stock option is granted) of the
Shares with respect to which incentive stock options are exercisable for the
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first time during any calendar year (under this Plan and any other incentive
stock option plan of the Company or a Related Corporation) shall not exceed one
hundred thousand dollars ($100,000).
(m) Use of Shares to Satisfy Tax Obligation. When an Optionee
is required to pay to the Company or a Related Corporation an amount required to
be withheld under applicable federal, state or local income tax or similar laws
in connection with exercise of nonqualified stock options under the Plan, the
Committee may, in its discretion and subject to such rules as it may adopt,
permit the Optionee to satisfy the obligation, in whole or in part, by electing
to have the Company withhold Shares (or by returning to the Company previously
held Shares), which shares shall be valued, for this purpose, at their Fair
Market Value on the date of exercise of the nonqualified stock option (or, if
later, the date on which the Optionee recognizes ordinary income with respect to
such exercise); provided, however, that with respect to Optionees who are
subject to Section 16(b) of the Exchange Act, any such amount of taxes required
to be withheld automatically shall be satisfied by withholding Shares. If Shares
acquired by exercise of an incentive stock option are used for such purpose, and
if the holding period requirements of Section 422(a)(1) of the Code have not
been met with respect to such Shares, the use of such Shares to satisfy the
withholding obligation will be a disqualifying disposition of such Shares.
(n) Option Agreement and Further Conditions. Each Optionee
shall enter into, and be bound by the terms of, a stock option agreement (the
"Option Agreement") which shall include or incorporate by reference the terms of
the Option and the Plan and which shall contain such other terms, conditions and
restrictions not inconsistent with the Plan (or, in the case of incentive stock
options, the provisions of Section 422(b) of the Code) as the Committee shall
determine. Without limiting the generality of the foregoing, the Committee, in
its discretion, may impose further conditions upon the exercisability of
Options, and restrictions on transferability and repurchase rights with respect
to Shares issued upon exercise of Options.
6. Terms and Conditions of Stock Grants.
From time to time until the expiration or earlier termination
of the Plan, the Committee may make such Stock Grants under the Plan to Eligible
Employees ("Grantees") as it determines are warranted. Stock Grants shall be
subject to the following terms and conditions:
(a) Vesting Period. The Committee shall establish one or more
vesting periods ("Vesting Periods") with respect to the Shares covered by a
Stock Grant. The length of such Vesting Period shall be within the discretion of
the Committee, except that (subject to Subsection (c) below and Section 8
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hereof) such period or periods shall not be less than one (1) year nor more than
five (5) years from the date of grant. Subject to the provisions of this Section
6, Shares subject to a Stock Grant shall vest in the Grantee upon the expiration
of the Vesting Period with respect to such Shares.
(b) Bonus Payment. For so long as a Grantee's Stock Grant
remains outstanding and unvested, the Company shall pay to the Grantee a cash
bonus equal to the dividends which the Grantee would have received from the
Company had he/she actually held the Shares represented by the unvested portion
of his/her Stock Grant. Such payments shall be made within sixty (60) days
following the end of each fiscal quarter of the Company with respect to any
dividends which may have been paid by the Company on its Shares during such
quarter, and will constitute wages subject to withholding for Federal income tax
purposes.
(c) Termination.
(i) Death, Disability or Retirement. If, prior to
the expiration of the Vesting Period with respect to Shares subject to a Stock
Grant ("Unvested Shares"), a Grantee's employment with the Company and its
subsidiaries is terminated by reason of his/her death, or by reason of his/her
disability or retirement (as provided in Sections 5(f) and (g) hereof,
respectively), then in each such case there shall immediately be vested in the
Grantee, or in his/her beneficiary or estate, that number of full Shares that
bears the same ratio to all the Grantee's Unvested Shares having the same
Vesting Period as the number of the days which have elapsed from the date of the
original Stock Grant of such Shares to the date of such termination of the
Grantee's employment bears to the total number of days in the Vesting Period
with respect to such Shares. [An example of the operation of the preceding
sentence is set forth in the Appendix to the Plan.] The remainder of the
Grantee's Stock Grant not vested pursuant to the preceding sentence immediately
shall terminate, except that the Committee, if it determines that the
circumstances warrant, may direct that all or a portion of such remaining
Unvested Shares also be vested in the Grantee, subject to such further terms and
conditions, if any, as the Committee may determine.
(ii) Other Terminations of Employment. If a Grantee's
employment is terminated for any reason other than his/her death, disability or
retirement as aforesaid, the unvested portion of the Grantee's Stock Grant
immediately shall terminate, except that the Committee, if it determines that
the circumstances warrant, may direct that all or a portion of the Grantee's
Unvested Shares be vested in the Grantee, subject to such further terms and
conditions, if any, as the Committee may determine.
(d) Delivery of Certificates. Upon the vesting of a Stock
Grant, the Company promptly shall issue certificates representing the vested
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Shares to the Grantee or to his/her beneficiary or estate. Only full shares
shall be issued, and any fractional shares which might otherwise be issuable
pursuant to a Stock Grant shall be forfeited.
(e) Transferability. No Stock Grant shall be assignable or
transferable by a Grantee otherwise than by will or by the laws of descent and
distribution.
(f) Rights as a Stockholder. A Grantee shall have no rights as
a stockholder with respect to any Shares covered by a Stock Grant until the
issuance of a stock certificate to him/her representing such Shares.
(g) Use of Shares to Satisfy Tax Obligation. When a Grantee is
required to pay the Company or a Related Corporation an amount required to be
withheld under applicable federal, state or local income tax or similar laws in
connection with the vesting of a Stock Grant under this Plan, the Committee may,
in its discretion and subject to such rules as it may adopt, permit the Grantee
to satisfy the obligation, in whole or in part, by electing to have the Company
withhold Shares (or by returning to the Company previously held Shares), which
Shares shall be valued, for this purpose, at their Fair Market Value on the date
of vesting of the Stock Grant (or, if later, the date on which the Grantee
recognizes ordinary income with respect to such Stock Grant); provided, however,
that with respect to Grantees who are subject to Section 16(b) of the Exchange
Act, any such amount of taxes required to be withheld automatically shall be
satisfied by withholding Shares. If Shares acquired by the exercise of an
incentive stock option are used for such purpose, and if the holding period
requirements of Section 422(a)(1) of the Code have not been met with respect to
such Shares, the use of such Shares to satisfy the withholding obligation will
be a disqualifying disposition of such Shares.
(h) Stock Grant Agreement. Each Grantee shall enter into, and
be bound by the terms of, a Stock Grant Agreement (the "Stock Grant Agreement")
which shall include or incorporate by reference the terms of the Stock Grant and
of the Plan and which shall contain such other terms, conditions and
restrictions not inconsistent with the Plan as the Committee shall determine.
7. Listing and Registration of Shares.
Each Option and each Stock Grant under the Plan shall be
subject to the requirement that, if at any time the Board shall determine, in
its discretion, that the listing, registration or qualification of the Shares
covered thereby upon any securities exchange or under the laws of any
jurisdiction, or the consent or approval of any regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such Option,
the making of such Stock Grant or the purchase or vesting of Shares thereunder,
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then no such Option may be exercised in whole or in part and no certificate
representing Shares shall be issued pursuant to such Stock Grant unless and
until such listing, registration, qualification, consent or approval shall have
been effected or obtained, on conditions acceptable to the Board. Each Optionee
and Grantee, or his/her legal representative or beneficiaries, also may be
required to give satisfactory assurance that Shares purchased upon exercise of
an Option or received pursuant to a Stock Grant are being acquired for
investment and not with a view to distribution, and certificates representing
such Shares may be legended accordingly.
8. Adjustment Upon Changes in Capitalization, Mergers and
Other Events.
The number of Shares which may be issued under the Plan, as
stated in Section 3 hereof, and the number of Shares issuable upon exercise of
outstanding Options (as well as the exercise price per Share under such
outstanding Options) or issuable upon vesting of outstanding Stock Grants shall
be adjusted, as may be determined appropriate by the Committee (which
determination shall be subject to ratification by the Board), to reflect any
stock dividend, stock split, share combination, or similar change in the
capitalization of the Company.
In the event the Company is liquidated or a corporate
transaction described in Section 424(a) of the Code and the Treasury Regulations
issued thereunder (including, for example, a merger, consolidation, acquisition
of property or stock, separation or reorganization) occurs, each outstanding
Option and Stock Grant shall be assumed by the surviving or successor
corporation, if any; provided, however, that the Committee, in its discretion,
may terminate all or a portion of the outstanding Options and/or Stock Grants if
it determines that such termination would be in the best interests of the
Company. If the Committee decides to terminate an outstanding Option by reason
of such liquidation or corporate transaction, the Committee shall give the
holder thereof not less than twenty-one (21) days' prior notice of any such
termination, and such outstanding Option may be exercised up to, and including,
the date immediately preceding such termination, if the Option has not otherwise
expired, and if it is then exercisable under the Option Agreement. With respect
to any Option which has not yet become exercisable, the Committee also, in its
discretion, may allow an Optionee to exercise such Option in whole or in part
(if it has not otherwise terminated or expired). If the Committee decides to
terminate an outstanding Stock Grant by reason of such liquidation or corporate
transaction, the Stock Grant shall vest on such termination date to the same
extent as is provided in the first sentence of Section 6(c)(i) hereof. The
Committee, in its discretion, also immediately may vest all or a portion of the
remaining unvested Shares under any Stock Grant which is to be so determined.
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The Committee further, in its discretion, may change the
number of Shares issuable upon exercise of outstanding Options (as well as the
exercise price per Share under such outstanding Options) and Shares covered by
outstanding Stock Grants to reflect any such corporate transaction, provided, in
the case of an incentive stock option, that any such change is made in
accordance with Section 424(a) of the Code and is excluded from the definition
of "modification" under Section 424(h) of the Code.
Notwithstanding any other provisions of the Plan, the
Committee, in its discretion, may accelerate, in whole or in part, the date on
which Options become exercisable and/or the vesting of any Stock Grant in the
event that the Committee determines that a change in control of the Company has
occurred or is likely to occur.
9. Amendment or Discontinuance of the Plan.
The Board, from time to time, may suspend or discontinue the
Plan or amend it, and the Committee may amend any outstanding Options and Stock
Grants, in any respect whatsoever; provided, however, that, without the approval
of the holders of at least a majority of the outstanding Shares of the Company:
(i) the class of individuals eligible to receive Options or Stock Grants shall
not be changed, (ii) the maximum number of Shares with respect to which grants
may be made under the Plan shall not be increased otherwise than as permitted
under Section 8 hereof, (iii) the limitations on the price at which Options may
be granted shall not be changed, and (iv) the duration of the Plan, as specified
in Section 12 hereof, shall not be extended; and provided further, that no such
suspension, discontinuance, or amendment shall impair the rights of any holder
of an outstanding Option or Stock Grant without the consent of such holder.
10. Absence of Rights.
The recommendation or selection of an Eligible Employee as a
recipient of an Option or a Stock Grant under the Plan shall not entitle such
person to any Option or Stock Grant unless and until the grant actually has been
made by appropriate action of the Committee; and any such grant is subject to
the provisions of the Plan. Further, the granting of an Option or the making of
a Stock Grant to a person shall not entitle that person to continued employment
by the Company or its subsidiaries, and the Company shall have the absolute
right, in its discretion, to retire such person in accordance with its
retirement policies or otherwise to terminate his/her employment, whether or not
such termination may result in a partial or total termination of his/her Option
or of his/her Stock Grant.
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11. Application of Funds.
The funds received by the Company upon the exercise of Options
and otherwise under the Plan shall be used for general corporate purposes.
12. Effective Date and Duration.
The Plan became effective on February 7, 1983. Unless earlier
terminated as provided in the Plan, the Plan shall terminate at 12:00 midnight
on February 6, 1993, and no Options or Stock Grants shall be granted or made
thereafter. However, termination of the Plan shall not affect any Options or
Stock Grants theretofore granted or made, which Options and Stock Grants shall
remain in effect in accordance with their terms and the terms of the Plan.
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APPENDIX
Accelerated Vesting Pursuant
to Section 6(c) of the Plan
----------------------------
Example: If a Stock Grant of 30,000 shares is made to a
Grantee on February 10, 1983 to vest in three annual increments of 10,000 Shares
each on February 10, 1984, 1985 and 1986, respectively, and if the Grantee,
while still an employee of the Company, should die on August 10, 1984, the
number of Shares vested would be 22,474, calculated as follows:
1. The 10,000 Share increment scheduled to vest on February
10, 1984, would already have vested in full.
2. The 10,000 Share increment scheduled to vest on February
10, 1985 would vest automatically as to 7,483 Shares (i.e., out of the
total Vesting Period of 731 days with respect to such Shares, 547 days
would have elapsed; 547/731 = .748290 x 10,000 Shares).
3. The 10,000 Share increment scheduled to vest on February
10, 1986 would vest automatically as to 4,991 Shares (i.e., out of the
total Vesting Period of 1,096 days with respect to such Shares 547 days
would have elapsed; 547/1,096 = .499088 x 10,000 Shares = 4,991
Shares).
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EXHIBIT (10)(d)
As Amended and Restated
through November 30, 1995
HUNT MANUFACTURING CO.
1993 STOCK OPTION AND STOCK GRANT PLAN
--------------------------------------
1. Purpose.
The 1993 Stock Option and Stock Grant Plan (the "Plan") is
designed to enable Hunt Manufacturing Co. (the "Company") and its subsidiaries
to attract and retain capable officers and key management level employees and to
provide an inducement to such personnel to promote the best interests of the
Company and its subsidiaries by enabling and encouraging them, through the grant
of incentive and nonqualified stock options ("Options") and/or stock ("Stock
Grants") to acquire stock in the Company.
As used in the Plan, the term "incentive stock options" means
options which, at the time such options are granted under the Plan, qualify as
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") and are designated as incentive
stock options in the Option Agreement (as hereinafter defined). The term
"nonqualified stock options" means options which, at the time such options are
granted, do not qualify as incentive stock options and are designated as
nonqualified stock options in the Option Agreement. The term "subsidiary" means
any corporation which, at the time an Option is granted or Stock Grant is made
under the Plan, qualifies as a subsidiary of the Company under the definition of
"subsidiary corporation" contained in Section 424(f) of the Code, or any similar
provision hereafter enacted, except that such term shall not include any
corporation which is classified as a foreign corporation pursuant to Section
7701 of the Code.
2. Administration.
The Plan shall be administered by the Company's Compensation
Committee (the "Committee") which shall consist of not less than three directors
of the Company who shall be appointed by, and shall serve at the pleasure of,
the Company's Board of Directors (the "Board"). Each member of the Committee,
while serving as such, shall be deemed to be acting in his/her capacity as a
director of the Company. Except to the extent otherwise permitted under Section
16(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), and the rules
<PAGE>
and regulations thereunder, no member of the Committee shall be, at the time of
service on the Committee hereunder, or shall have been at any time within one
year prior thereto, eligible to receive equity securities (within the meaning of
Rule 16a-1(d) under the Exchange Act) under the Plan or any other plan of the
Company or any of its affiliates.
The Committee shall have full authority to construe and
interpret the Plan and, subject to the provisions of the Plan: to establish,
amend, and rescind appropriate rules and regulations relating to the Plan; to
take such action as may be appropriate or necessary to insure the continued
qualification of any incentive stock options granted under the Plan; to select
the persons to whom Options will be granted and/or Stock Grants made under the
Plan; to grant Options and make Stock Grants and set the date of grant and other
terms and conditions thereof; to make recommendations to the Board; and to take
all such steps and make all such determinations in connection with the Plan and
the Options granted and the Stock Grants made hereunder as it may deem necessary
or advisable. All such rules, regulations, determinations, and interpretations
of the Committee shall be final, conclusive, and binding on all persons.
3. Stock Subject to the Plan.
Subject to the provisions of Section 8, up to an aggregate
maximum of 1,750,000 of the Company's Common Shares, par value $.10 per share
("Shares"), shall be authorized for the grant of Options and/or Stock Grants
under the Plan, provided that, of such amount, not more than 525,000 Shares
shall be available for Stock Grants. Shares issuable under the Plan may be
authorized but unissued Shares or reacquired Shares, as the Board shall
determine. If any Option granted under the Plan expires or otherwise terminates,
in whole or in part, without having been exercised, or if any Stock Grant
hereunder is terminated, in whole or in part, the Shares subject to the
unexercised portion of such Option and the unvested Shares covered by such Stock
Grant shall be available for the granting of Options and Stock Grants under the
Plan as fully as if such Shares had never been subject to an Option or a Stock
Grant.
4. Eligibility.
Those persons eligible to participate in the Plan shall be the
officers and other key management level employees of the Company and any of its
subsidiaries ("Eligible Employees"), including directors who are also officers
or key management level employees of the Company or any of its subsidiaries.
Independent consultants who perform consulting services for the Company and any
of its subsidiaries ("Consultants") shall also be eligible to participate.
Incentive stock options, nonqualified stock options, or Shares, or a combination
thereof, may be granted under the Plan to an Eligible Employee, and nonqualified
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stock options and Shares, or a combination thereof, but not incentive stock
options, may be granted under the Plan to a Consultant. In making any
determination as to whether a given employee or Consultant shall receive a grant
under the Plan, and in determining the size and nature of any such grant, the
Committee shall take into account the duties of such employee or Consultant,
his/her past, present, and potential contributions to the success of the Company
and its subsidiaries, and such other factors as the Committee shall deem
relevant in accomplishing the purposes of the Plan.
5. Grants, Terms and Conditions of Options.
From time to time until the expiration or earlier termination
of the Plan, the Committee may grant to Eligible Employees and/or Consultants
("Optionees") under the Plan such incentive and/or nonqualified stock options as
it determines are warranted; provided, however, that grants of incentive and
nonqualified options shall be separate and not in tandem; and provided further
that incentive stock options shall not be granted to Consultants. Options
granted pursuant to the Plan shall be in such form as the Committee, from time
to time, shall approve, and shall be subject to the following terms and
conditions:
(a) Price. Except as provided in Subsection (j), the
price per Share under each Option granted under the Plan shall be
determined and fixed by the Committee in its discretion but shall not
be less than the higher of 100 percent of the Fair Market Value of the
Shares or the par value thereof on the date of grant of such Option. As
used in the Plan, the term "Fair Market Value" shall mean: (i) if the
principal market for the Shares is a registered securities exchange,
the mean between the highest and lowest quoted selling prices of such
Shares on the date of grant, or, if there are no such reported sales on
that date, then on the last previous date (within a reasonable period
prior to the date of grant) on which there were such reported sales; or
(ii) such other method of determining fair market value as shall be
authorized by the Code, or the rules or regulations thereunder, and
adopted by the Committee.
(b) Term. Subject to earlier termination as provided
in Subsections (c) through (g) and in Section 8, and except as
otherwise provided in Subsection (j), the term of each Option shall not
be less than two nor more than ten years from the date of grant.
(c) Exercise and Payment. Options shall be
exercisable in such installments and on such dates, not less than one
year from the date of grant, as the Committee may specify. Except as
otherwise expressly provided in the Plan, Options shall be exercisable
by an Optionee only while he/she remains in the employment of the
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Company or a subsidiary. Any Option Shares, the right to the purchase
of which has accrued, may be purchased at any time up to the expiration
or termination of the Option. Options may be exercised, in whole or in
part, from time to time, by giving written notice of exercise to the
Company at its principal office, specifying the number of Shares to be
purchased and accompanied by payment in full of the aggregate purchase
price for such Shares. Only full shares shall be issued, and any
fractional share which might otherwise be issuable upon exercise of an
Option granted hereunder shall be forfeited. The purchase price of
Option Shares shall be payable: (i) in cash or its equivalent; (ii) if
the Committee, in its discretion, permits, in whole or in part through
the surrender or delivery of Shares previously acquired by the Optionee
(provided that if such Shares are statutory option stock, as defined in
Section 424(c)(3) of the Code, such Shares have been held by the
Optionee for a period which is not less than the holding period
described in Section 422(a)(1) or 423(a)(1) of the Code, as
applicable); (iii) if and to the extent the Committee, in its
discretion, permits, in whole or in part through the surrender or
delivery of Shares newly acquired by the Optionee upon exercise of such
Option (which surrender or delivery shall constitute a disqualifying
disposition in the case of an Option which is an incentive stock
option); or (iv) if and to the extent the Committee, in its discretion,
permits, by delivering a properly executed notice of exercise of the
Option to the Company and a broker, with irrevocable instructions to
the broker promptly to deliver to the Company the amount of sale or
loan proceeds necessary to pay the exercise price of the Option (the
sale of Shares pursuant to such instructions shall constitute a
disqualifying disposition in the case of an Option which is an
incentive stock option). In the event such purchase price is paid, in
whole or in part, with Shares, the portion of the purchase price so
paid shall be equal to the Fair Market Value, on the date of exercise
of the Option, of the Shares surrendered or delivered in payment of
such purchase price.
(d) Termination of Optionee's Employment. If an
Optionee's employment by the Company and its subsidiaries is terminated
prior to the expiration date of his/her Option by either party for any
reason, with or without cause, other than by reason of death,
disability, or retirement (as provided in Subsections (e), (f), and
(g)), such Option shall terminate immediately upon such termination of
employment, provided that the Committee, in its discretion, may extend
the period for exercise following any such termination of employment,
to the extent of the number of Shares with respect to which the
Optionee could have exercised it on the date of such termination, for
up to three months, but not beyond the expiration date of such Option.
Notwithstanding the foregoing, in the event an Optionee's employment is
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<PAGE>
terminated as contemplated in this Subsection and Options held by
him/her have not yet become exercisable in accordance with their terms,
the Committee, in its discretion, may allow all or a part of such
Options to be exercised pursuant to this Subsection, provided that such
Options have been outstanding for at least one year at the time of the
Optionee's termination of employment. For purposes of the Plan, a leave
of absence of one year or less which has been expressly approved by the
Board shall not be deemed to constitute a termination of employment. A
leave of absence longer than one year shall be deemed to constitute a
termination of employment, unless the Committee determines otherwise.
For purposes of this Section 5, an Optionee who is a Consultant shall
be deemed to have terminated employment if such person's consulting
relationship with the Company and its subsidiaries is terminated.
(e) Death of Optionee. If an Optionee's employment is
terminated (within the meaning of Subsection (d)) by reason of his/her
death prior to the expiration of his/her Option, or if an Optionee
shall die following his/her termination of employment but prior to the
expiration date of his/her Option or expiration of the period
determined under Subsection (d), (f), or (g), if earlier, such Option
may be exercised, by the Optionee's estate, personal representative, or
beneficiary who acquired the right to exercise such Option by bequest
or inheritance or by reason of the death of the Optionee, in whole or
in part, but only to the extent of the number of Shares with respect to
which the Optionee could have exercised it on the date of his/her
death, at any time prior to the earlier of (i) one year following the
date of the Optionee's death, or (ii) the expiration date of such
Option (which, in the case of death following a termination of
employment pursuant to Subsection (d), (f), or (g), shall be deemed to
mean the expiration of the exercise period determined thereunder).
Notwithstanding the foregoing, in the event that an Optionee's
employment is terminated by his/her death and Options held by him/her
have not yet become exercisable in accordance with their terms, the
Committee, in its discretion, may allow all or a part of such Options
to be exercised pursuant to this Subsection, provided that such Options
have been outstanding for at least one year at the time of the
Optionee's death.
(f) Disability of Optionee. If an Optionee shall
become permanently and totally disabled (within the meaning of Section
22(e)(3) of the Code) and his/her employment with the Company and its
subsidiaries is terminated (within the meaning of Subsection (d)) as a
consequence of such disability prior to the expiration date of his/her
Option, such Option may be exercised by the Optionee, in whole or in
part, but only to the extent of the number of Shares with respect to
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<PAGE>
which the Optionee could have exercised it on the date of such
termination of employment, at any time prior to the earlier of (i) one
year following the date of the Optionee's termination of employment, or
(ii) the expiration date of such Option. Notwithstanding the foregoing,
if at the time of termination of an Optionee's employment due to
disability, Options held by such Optionee have not yet become
exercisable in accordance with their terms, the Committee, in its
discretion, may allow all or a part of such Options to be exercised
pursuant to this Subsection, provided that such Options have been
outstanding for at least one year at the time of the Optionee's
termination of employment.
(g) Retirement of Optionee. If an Optionee retires in
accordance with the retirement policy of the Company, or with the
express consent of the Board, prior to the expiration date of his/her
Option, such Option may be exercised by the Optionee, in whole or in
part, but only to the extent of the number of Shares with respect to
which the Optionee could have exercised it on the date of his/her
retirement, at any time prior to the earlier of (i) three months after
the date of retirement, or (ii) the expiration date specified in such
Option. Notwithstanding the foregoing, the Committee may, in its
discretion, (x) extend the period for exercise following an Optionee's
retirement for up to nine additional months, but not beyond the
expiration date of such Option, despite the fact that such an extension
would prevent an Option from qualifying as an incentive stock option
under the Code and/or (y) in the event that any Options held by a
retiring Optionee have not yet become exercisable in accordance with
their terms, allow all or a part of such Options to be exercised
pursuant to this Subsection provided that such Options have been
outstanding for at least one year at the time of the Optionee's
retirement.
(h) Transferability. No Option shall be assignable
or transferable by an Optionee otherwise than by will or by
the laws of descent and distribution.
(i) Rights as a Stockholder. An Optionee shall have
no rights as a stockholder with respect to any Shares covered by
his/her Option until the issuance of a stock certificate to him/her
representing such Shares.
(j) Ten Percent Shareholder. Notwithstanding any
other provision of the Plan, if an Eligible Employee owns more than ten
percent of the total combined voting power of all shares of stock of
the Company or of a Related Corporation at the time an incentive stock
option is granted to such Eligible Employee, the incentive stock option
price shall not be less than 110 percent of the Fair Market Value of
the optioned Shares on the date the incentive stock option is granted,
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<PAGE>
and such incentive stock option by its terms shall not be exercisable
after the expiration of five years from the date the incentive stock
option is granted. As used in this Plan, the term "Related Corporation"
shall mean a subsidiary or a corporate parent of the Company as defined
in Section 424 of the Code.
(k) Annual Limit on Grant of Incentive Stock Options.
The aggregate Fair Market Value (determined as of the time an incentive
stock option is granted) of the Shares with respect to which incentive
stock options are exercisable for the first time during any calendar
year (under this Plan and any other incentive stock option plan of the
Company or a Related Corporation) shall not exceed $100,000.
(l) Use of Shares to Satisfy Tax Obligation. When an
Optionee is required to pay to the Company or a Related Corporation an
amount required to be withheld under applicable Federal, state, or
local income tax or similar laws in connection with the exercise of
nonqualified stock options under the Plan, the Committee may, in its
discretion and subject to such rules as it may adopt, permit the
Optionee to satisfy the obligation, in whole or in part, by electing to
have the Company withhold Shares (or by returning to the Company
previously held Shares), which shares shall be valued, for this
purpose, at their Fair Market Value on the date of exercise of the
nonqualified stock option (or, if later, the date on which the Optionee
recognizes ordinary income with respect to such exercise); provided,
however, that with respect to Optionees who are subject to Section
16(b) of the Exchange Act, any such amount of taxes required to be
withheld automatically shall be satisfied by withholding Shares. If
Shares acquired by exercise of an incentive stock option are used for
such purpose, and if the holding period requirements of Section
422(a)(1) of the Code have not been met with respect to such Shares,
the use of such Shares to satisfy the withholding obligation will be a
disqualifying disposition of such Shares.
(m) Option Agreement and Further Conditions. Each
Optionee shall enter into, and be bound by the terms of, a stock option
agreement (the "Option Agreement") which shall include or incorporate
by reference the terms of the Option and the Plan and which shall
contain such other terms, conditions, and restrictions not inconsistent
with the Plan (or, in the case of incentive stock options, the
provisions of Section 422(b) of the Code) as the Committee shall
determine. Without limiting the generality of the foregoing, the
Committee, in its discretion, may impose further conditions upon the
exercisability of Options, and restrictions on transferability and
repurchase rights with respect to Shares issued upon exercise of
Options.
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<PAGE>
6. Terms and Conditions of Stock Grants.
From time to time until the expiration or earlier termination
of the Plan, the Committee may make such Stock Grants under the Plan to Eligible
Employees and/or Consultants ("Grantees") as it determines are warranted. Stock
Grants shall be subject to the following terms and conditions:
(a) Vesting Period. The Committee shall establish one
or more vesting periods ("Vesting Periods") with respect to the Shares
covered by a Stock Grant. The length of such Vesting Period shall be
within the discretion of the Committee, except that (subject to
Subsection (c) and Section 8) such period or periods shall not be less
than one year nor more than five years from the date of grant. Subject
to the provisions of this Section 6, Shares subject to a Stock Grant
shall vest in the Grantee upon the expiration of the Vesting Period
with respect to such Shares.
(b) Bonus Payment. For so long as a Grantee's Stock
Grant remains outstanding and unvested, the Company shall pay to the
Grantee a cash bonus equal to the dividends which the Grantee would
have received from the Company had he/she actually held the Shares
represented by the unvested portion of his/her Stock Grant. Such
payments shall be made within 60 days following the end of each fiscal
quarter of the Company with respect to any dividends which may have
been paid by the Company on its Shares during such quarter, and will
constitute wages subject to withholding for Federal income tax
purposes.
(c) Termination.
(i) Death, Disability, or Retirement. If,
prior to the expiration of the Vesting Period with respect to
Shares subject to a Stock Grant ("Unvested Shares"), a
Grantee's employment with the Company and its subsidiaries is
terminated by reason of his/her death, or by reason of his/her
disability or retirement (as provided in Sections 5(f) and
(g), respectively), then in each such case there shall
immediately be vested in the Grantee, or in his/her
beneficiary or estate, that number of full Shares that bears
the same ratio to all the Grantee's Unvested Shares having the
same Vesting Period as the number of the days which have
elapsed from the date of the original Stock Grant of such
Shares to the date of such termination of the Grantee's
employment bears to the total number of days in the Vesting
Period with respect to such Shares. [An example of the
operation of the preceding sentence is set forth in the
Appendix to the Plan.] The remainder of the Grantee's Stock
Grant not vested pursuant to the preceding sentence shall
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<PAGE>
immediately terminate, except that the Committee, if it
determines that the circumstances warrant, may direct that all
or a portion of such remaining Unvested Shares also be vested
in the Grantee, subject to such further terms and conditions,
if any, as the Committee may determine. For purposes of this
Section 6, a Grantee who is a Consultant shall be deemed to
have terminated employment if such person's consulting
relationship with the Company and its subsidiaries is
terminated.
(ii) Other Terminations of Employment. If a
Grantee's employment is terminated (within the meaning of
Paragraph (i)) for any reason other than his/her death,
disability, or retirement as aforesaid, the unvested portion
of the Grantee's Stock Grant shall immediately terminate,
except that the Committee, if it determines that the
circumstances warrant, may direct that all or a portion of the
Grantee's Unvested Shares be vested in the Grantee, subject to
such further terms and conditions, if any, as the Committee
may determine.
(d) Delivery of Certificates. Upon the vesting of a
Stock Grant, the Company shall promptly issue certificates representing
the vested Shares to the Grantee or to his/her beneficiary or estate.
Only full shares shall be issued, and any fractional shares which might
otherwise be issuable pursuant to a Stock Grant shall be forfeited.
(e) Transferability. No Stock Grant shall be
assignable or transferable by a Grantee otherwise than by will or by
the laws of descent and distribution.
(f) Rights as a Stockholder. A Grantee shall have no
rights as a stockholder with respect to any Shares covered by a Stock
Grant until the issuance of a stock certificate to him/her representing
such Shares.
(g) Use of Shares to Satisfy Tax Obligation. When a
Grantee is required to pay the Company or a Related Corporation an
amount required to be withheld under applicable Federal, state, or
local income tax or similar laws in connection with the vesting of a
Stock Grant under this Plan, the Committee may, in its discretion and
subject to such rules as it may adopt, permit the Grantee to satisfy
the obligation, in whole or in part, by electing to have the Company
withhold Shares (or by returning to the Company previously held
Shares), which Shares shall be valued, for this purpose, at their Fair
Market Value on the date of vesting of the Stock Grant (or, if later,
the date on which the Grantee recognizes ordinary income with respect
to such Stock Grant); provided, however, that with respect to Grantees
who are subject to Section 16(b) of the Exchange Act, any such amount
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<PAGE>
of taxes required to be withheld automatically shall be satisfied by
withholding Shares. If Shares acquired by exercise of an incentive
stock option are used for such purpose, and if the holding period
requirements of Section 422(a)(1) of the Code have not been met with
respect to such Shares, the use of such Shares to satisfy the
withholding obligation will be a disqualifying disposition of such
Shares.
(h) Stock Grant Agreement. Each Grantee shall enter
into, and be bound by the terms of, a Stock Grant Agreement (the "Stock
Grant Agreement") which shall include or incorporate by reference the
terms of the Stock Grant and of the Plan and which shall contain such
other terms, conditions, and restrictions not inconsistent with the
Plan as the Committee shall determine.
7. Listing and Registration of Shares.
Each Option and each Stock Grant under the Plan shall be
subject to the requirement that, if at any time the Board shall determine, in
its discretion, that the listing, registration, or qualification of the Shares
covered thereby upon any securities exchange or under the laws of any
jurisdiction, or the consent or approval of any regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such Option,
the making of such Stock Grant, or the purchase or vesting of Shares thereunder,
then no such Option may be exercised in whole or in part, and no certificate
representing Shares shall be issued pursuant to such Stock Grant, unless and
until such listing, registration, qualification, consent, or approval shall have
been effected or obtained, on conditions acceptable to the Board. Each Optionee
and Grantee, or his/her legal representative or beneficiaries, also may be
required to give satisfactory assurance that Shares purchased upon exercise of
an Option or received pursuant to a Stock Grant are being acquired for
investment and not with a view to distribution, and certificates representing
such Shares may be legended accordingly.
8. Adjustment Upon Changes in Capitalization, Mergers, and
Other Events.
The number of Shares which may be issued under the Plan, as
stated in Section 3, and the number of Shares issuable upon exercise of
outstanding Options (as well as the exercise price per Share under such
outstanding Options) or issuable upon vesting of outstanding Stock Grants shall
be adjusted, as may be determined appropriate by the Committee (which
determination shall be subject to ratification by the Board), to reflect any
stock dividend, stock split, share combination, or similar change in the
capitalization of the Company.
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<PAGE>
In the event the Company is liquidated or a corporate
transaction described in Section 424(a) of the Code and the Treasury Regulations
issued thereunder (including, for example, a merger, consolidation, acquisition
of property or stock, separation, or reorganization) occurs, each outstanding
Option and Stock Grant shall be assumed by the surviving or successor
corporation, if any; provided, however, that the Committee, in its discretion,
may terminate all or a portion of the outstanding Options and/or Stock Grants if
it determines that such termination would be in the best interests of the
Company. If the Committee decides to terminate an outstanding Option by reason
of such liquidation or corporate transaction, the Committee shall give the
holder thereof not less than 21 days' prior notice of any such termination, and
such outstanding Option may be exercised up to, and including, the date
immediately preceding such termination, if the Option has not otherwise expired,
and if it is then exercisable under the Option Agreement. With respect to any
Option which has not yet become exercisable, the Committee also, in its
discretion, may allow an Optionee to exercise such Option, in whole or in part
(if it has not otherwise terminated or expired). If the Committee decides to
terminate an outstanding Stock Grant by reason of such liquidation or corporate
transaction, the Stock Grant shall vest on such termination date to the same
extent as is provided in the first sentence of Section 6(c)(i). The Committee,
in its discretion, may also immediately vest all or a portion of the remaining
unvested Shares under any Stock Grant which is to be so determined.
The Committee, in its discretion, may also change the number
of Shares issuable upon exercise of outstanding Options (as well as the exercise
price per Share under such outstanding Options) and Shares covered by
outstanding Stock Grants to reflect any such corporate transaction, provided, in
the case of an incentive stock option, that any such change is made in
accordance with Section 424(a) of the Code and is excluded from the definition
of "modification" under Section 424(h) of the Code.
Notwithstanding any other provisions of the Plan, the
Committee, in its discretion, may accelerate, in whole or in part, the date on
which Options become exercisable and/or the vesting of any Stock Grant in the
event that the Committee determines that a change in control of the Company has
occurred or is likely to occur.
9. Amendment or Discontinuance of the Plan.
The Board, from time to time, may suspend or discontinue the
Plan or amend it, and the Committee may amend any outstanding Options and Stock
Grants, in any respect whatsoever; provided, however, that, without the approval
of the holders of at least a majority of the votes cast at a duly held
stockholders' meeting at which a quorum representing a majority of the
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<PAGE>
outstanding shares of the Company is, either in person or by proxy, present and
voting on the action: (i) the class of individuals eligible to receive Options
or Stock Grants shall not be changed; (ii) the maximum number of Shares with
respect to which grants may be made under the Plan shall not be increased
otherwise than as permitted under Section 8; (iii) the limitations on the price
at which Options may be granted shall not be changed; and (iv) the duration of
the Plan, as specified in Section 12, shall not be extended; and provided
further, that no such suspension, discontinuance, or amendment shall impair the
rights of any holder of an outstanding Option or Stock Grant without the consent
of such holder.
10. Absence of Rights.
The recommendation or selection of an Eligible Employee or
Consultant as a recipient of an Option or a Stock Grant under the Plan shall not
entitle such person to any Option or Stock Grant unless and until the grant
actually has been made by appropriate action of the Committee; and any such
grant is subject to the provisions of the Plan. Further, the granting of an
Option or the making of a Stock Grant to a person shall not entitle that person
to continued employment by the Company or its subsidiaries, and the Company
shall have the absolute right, in its discretion, to retire such person in
accordance with its retirement policies or otherwise to terminate his/her
employment, whether or not such termination may result in a partial or total
termination of his/her Option or of his/her Stock Grant.
11. Application of Funds.
The funds received by the Company upon the exercise of Options
and otherwise under the Plan shall be used for general corporate purposes.
12. Effective Date and Duration.
The Plan shall become effective on February 7, 1993; provided,
however, that if the Plan is not approved by the holders of at least a majority
of the votes cast at a duly held stockholders' meeting at which a quorum
representing a majority of the outstanding shares of the Company is, either in
person or by proxy, present and entitled to vote on the Plan, prior to February
7, 1994, the Plan and all Options and Stock Grants granted or made hereunder
shall be null and void. Unless earlier terminated as provided in the Plan, the
Plan shall terminate at 12:00 midnight on February 6, 2003, and no Options or
Stock Grants shall be granted or made thereafter. However, termination of the
Plan shall not affect any Options or Stock Grants theretofore granted or made,
which Options and Stock Grants shall remain in effect in accordance with their
terms and the terms of the Plan.
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APPENDIX
Accelerated Vesting Pursuant
to Section 6(c) of the Plan
----------------------------
Example: If a Stock Grant of 30,000 shares is made to a
Grantee on February 10, 1993, to vest in three annual increments of 10,000
Shares each on February 10, 1994, 1995, and 1996, respectively, and if the
Grantee, while still an employee of the Company, should die on August 10, 1994,
the number of Shares vested would be 22,465, calculated as follows:
1. The 10,000 Share increment scheduled to vest on February
10, 1994, would already have vested in full.
2. The 10,000 Share increment scheduled to vest on February
10, 1995, would vest automatically as to 7,479 Shares (i.e., out of the
total Vesting Period of 730 days with respect to such Shares, 546 days
would have elapsed; 546/730 = .747945 x 10,000 Shares = 7,479 Shares).
3. The 10,000 Share increment scheduled to vest on February
10, 1996, would vest automatically as to 4,986 Shares (i.e., out of the
total Vesting Period of 1,095 days with respect to such Shares 546 days
would have elapsed; 546/1,095 = .498630 x 10,000 Shares = 4,986
Shares).
<PAGE>
EXHIBIT (10)(f)
HUNT MANUFACTURING CO.
1993 STOCK OPTION AND STOCK GRANT PLAN
STOCK GRANT AGREEMENT
This Stock Grant Agreement is made this ____ day of ____________ 1995,
pursuant to the HUNT MANUFACTURING CO. 1993 STOCK OPTION AND STOCK GRANT PLAN,
between HUNT MANUFACTURING CO. (the "Company") and _______________________ (the
"Employee"), an officer or other key management level employee of the Company.
W I T N E S S E T H:
WHEREAS, the Compensation Committee of the Company's Board of Directors
(the "Committee"), by appropriate action, has, on [April 17 for Messrs. Carney,
O'Meara and Precious; June 27 for Mr. Chandler], 1995 (the "Date of Grant"),
made a grant to Employee (the "Grant") of Common Shares of the Company ("Common
Shares") under the HUNT MANUFACTURING CO. 1993 STOCK OPTION AND STOCK GRANT PLAN
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
hereto, intending to be legally bound hereunder, agree as follows:
1. Incorporation of Plan. The Grant is subject to all of the terms and
conditions of the HUNT MANUFACTURING CO. 1993 STOCK OPTION AND STOCK GRANT PLAN,
as said Plan may be amended from time to time (the "Plan"), which terms and
conditions are incorporated herein by reference, made a part hereof, and shall
control in the event of any conflict with any other terms of this Agreement. A
copy of the present form of the Plan is attached hereto as Exhibit A and
incorporated herein by reference.
2. The Grant. The Grant is for an aggregate of 12,000 Common Shares.
3. Vesting.
(a) Date of Vesting. The Common Shares subject to this Grant
shall vest in full as of the earliest of (1) one year after the date on
which the Board of Directors of the Company (the "Board") elects a
permanent (as opposed to acting) Chief Executive Officer to succeed
Robert B. Fritsch, (2) one year after the date on which a "Change in
Control" (as defined below) occurs, or (3) January 31, 1997, provided
<PAGE>
that Employee is then still employed by the Company or by any "Related
Corporation" (as defined below). Such Common Shares shall also vest in
full upon the earlier termination of Employee's employment with the
Company and all Related Corporations for any reason other than
resignation without the express consent of the Board or "Cause" (as
defined below). Notwithstanding the foregoing, the Committee, if it
determines that the circumstances warrant, may accelerate the date of
vesting of all or a portion of the Common Shares which are not vested,
subject to such further conditions, if any, as the Committee may
determine.
(b) Definitions. For purposes of this Section, the following
words and phrases shall have the following meanings:
(1) "Cause" shall mean the Employee's:
(i) willful and material breach of the duties,
responsibilities, and obligations of Employee's position with
the Company;
(ii) dishonesty, fraud, willful malfeasance, gross
negligence or other gross misconduct which is materially
injurious to the Company; or
(iii) conviction of or plea of guilty to a felony;
such Cause to be determined, in each case, by a resolution
approved by at least two-thirds of the Directors of the
Company after having afforded the Employee a reasonable
opportunity to appear before the Board and present his
position.
(2) "Related Corporation" shall mean a subsidiary or a
corporate parent of the Company as defined in section 424 of the
Internal Revenue Code of 1986, as amended (the "Code").
(3) "Change in Control" shall mean:
(i) any person (a "Person"), as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (other than (A) the
Company and/or its wholly-owned subsidiaries, (B) any ESOP or
other employee benefit plan of the Company, and any trustee or
other fiduciary in such capacity holding securities under such
plan, (C) any corporation owned, directly or indirectly, by
the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company or (D)
the Employee or any group of Persons of which he voluntarily
is a part), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding
securities, or such lesser percentage of voting power, but not
less than 15%, as the Board shall determine; provided, however
that a Change in Control shall not be deemed to have occurred
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<PAGE>
under the provisions of this subsection (i) by reason of the
beneficial ownership of voting securities by members of the
Bartol Family (as defined below) unless and until the
beneficial ownership of all members of the Bartol Family
(including any other individuals or entities who or which,
together with any member or members of the Bartol Family, are
deemed under Sections 13(d) or 14(d) of the Exchange Act to
constitute a single Person) exceeds 50% of the combined voting
power of the Company's then outstanding securities;
(ii) during any two-year period beginning after
October 1, 1994, Directors of the Company in office at the
beginning of such period plus any new Director (other than a
Director designated by a Person who has entered into an
agreement with the Company to effect a transaction within the
purview of subsections (i) or (iii) hereof) whose election by
the Board, or whose nomination for election by the Company's
shareholders, was approved by a vote of at least two-thirds of
the Directors then still in office who either were Directors
at the beginning of the period or whose election or nomination
for election was previously so approved, shall cease for any
reason to constitute at least a majority of the Board; or
(iii) the Company's shareholders or the Board shall
approve (A) any consolidation or merger of the Company in
which the Company is not the continuing or surviving
corporation or pursuant to which the Company's voting common
shares (the "Voting Shares") would be converted into cash,
securities and/or other property, other than a merger of the
Company in which holders of Voting Shares immediately prior to
the merger have the same proportionate ownership of common
shares of the surviving corporation immediately after the
merger as they had in the Voting Shares immediately before,
(B) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all the assets or earning power of the Company,
or (C) the liquidation or dissolution of the Company.
As used in this Agreement, "members of the Bartol
Family" shall mean the wife, children and descendants of such children
of the late George E. Bartol, III, their respective spouses and
estates, any trusts or partnerships primarily for the benefit of any of
the foregoing and the administrators, executors, trustees and partners
of any such estates, trusts or partnerships.
Whether a Change in Control has occurred shall be
determined by the Committee, as it is constituted on the day preceding
the date of the Change in Control.
4. Delivery of Share Certificates. Upon the vesting of the Grant, the
Company shall promptly issue certificates representing the vested Common Shares
to the Employee or to his Beneficiary in accordance with Section 6(d) of the
Plan. Only full Common Shares shall be issued, and any fractional Common Shares
which might otherwise be issuable pursuant to the Grant shall be forfeited. Such
-3-
<PAGE>
Common Shares shall be legended with reference to restrictions on transfer of
the Common Shares to the extent the Company may require pursuant to Section 7 of
the Plan.
5. Non-Transferability of Grant. The Grant shall not be assignable or
transferable by the Employee other than by will or by the laws of descent and
distribution as provided in Section 6(e) of the Plan.
6. Designation of Beneficiary. The Employee shall have the right to
designate a Beneficiary or Beneficiaries to receive any Common Shares which may
become vested upon the Employee's death. The Employee must designate such
Beneficiary on the form furnished by the Company. The Employee may, at any time,
change his designation of Beneficiary by completing a new form, but a
designation of Beneficiary shall remain in effect until such new form is
received by the Company. If no properly designated Beneficiary survives the
Employee, the Employee's estate shall be the Beneficiary.
7. Rights as a Shareholder; Cash Bonus.
(a) No Rights as Shareholder until Common Shares
Issued. The Employee shall have no rights as a shareholder with respect
to any Common Shares covered by the Grant until the issuance of a stock
certificate to him representing such Common Shares.
(b) Cash Bonus. Notwithstanding Section 7(a),
however, for so long as an Employee's Grant remains outstanding and
unvested, the Company shall, to the extent provided in Section 6(b) of
the Plan, pay to the Employee a cash bonus equal to the dividends which
the Employee would have received from the Company had he actually held
the Common Shares represented by the unvested portion of his Grant.
Such payments shall be made within 60 days following the end of each
fiscal quarter of the Company with respect to any dividends which may
have been paid by the Company on its Common Shares during such quarter,
and will constitute wages subject to withholding for Federal income tax
purposes.
8. Capital Adjustments, Corporate Transactions. The number of Common
Shares awarded under this Agreement shall be adjusted to reflect any stock
dividend, stock split, share combination, or similar change in the
capitalization of the Company. In the event of certain types of corporate
transactions, the Grant may be terminated, accelerated or otherwise modified by
the Committee as provided in Section 8 of the Plan.
9. Withholding of Taxes. The obligation of the Company to deliver
Common Shares hereunder shall be subject to compliance with applicable Federal,
state and local income tax and employment tax and similar tax withholding
requirements. To meet this obligation, the Company may withhold the amount
necessary from the Employee's salary from the Company. The Employee, however,
subject to the discretion of the Committee, and subject to such additional
withholding rules ("Withholding Rules") as shall be adopted by the Company, may
be permitted by the Committee to satisfy such withholding taxes, in whole or in
part, by electing to have the Company withhold (or by returning to the Company
previously held Common Shares) Common Shares, which Common Shares shall be
-4-
<PAGE>
valued, for this purpose, at their fair market value on the date on which the
value of such Common Shares is required to be included in income by the Employee
under section 83 of the Code (the "Determination Date"), provided, however, that
if Employee is subject to section 16(b) of the Securities Exchange Act of 1934,
any such amount of taxes required to be withheld automatically shall be
satisfied by withholding Common Shares. Such election must be made on or before
the Determination Date and must be in compliance with and subject to any
Withholding Rules.
10. Termination of Employment. Subject to, and except as otherwise
provided in, Section 3 of this Agreement, if Employee's employment is terminated
by the Company and all Related Corporations, the Grant shall be subject to
Section 6(c) of the Plan.
11. Other Benefits. The issuance of the Common Shares subject to this
Grant to Employee shall be in addition to any other benefits or amounts the
Employee may be entitled to under (a) any Company plans, policies, or
procedures, or (b) any Change in Control Agreement the Employee has entered into
with the Company.
12. Amendment. No provisions of this Agreement may be modified or
amended unless such modification or amendment is agreed to in a written
instrument signed by the Employee and such officer or officers as may be
specifically designated by the Company to sign on its behalf.
13. Absence of Rights. Notwithstanding any provisions of this Agreement
or the Plan, the Company shall have the right, subject to the provisions of any
employment contract the Employee and the Company have entered into, in its
discretion, to retire the Employee at any time pursuant to its retirement rules
or otherwise to terminate his employment at any time for any reason whatsoever.
14. Headings. The Section and Subsection headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In the event of a conflict between
a heading and the content of a Section or Subsection, the content of the Section
or Subsection shall control.
15. Severability. If any clause, phrase, provision or portion of this
Agreement or the application thereof to any person or circumstance shall be
invalid or unenforceable under any applicable law, such event shall not affect
or render invalid or unenforceable any other provision of this Agreement and
shall not affect the application of any clause, provision, or portion hereof to
other persons or circumstances.
16. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, assigns,
heirs, executors, and administrators.
17. Notice. Any notice or other communications required or permitted
hereunder shall be in writing and shall be sufficiently given if hand delivered
or sent by registered or certified mail, postage prepaid: if to the Company, at
One Commerce Square, 2005 Market Street, Philadelphia, PA 19103, Attention: The
-5-
<PAGE>
Corporate Secretary; and if to Employee, at the address specified after his name
on the signature page hereof, or to such other address or addresses as either
such party may specify to the other in writing.
18. Entire Agreement. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements, arrangements,
and communications, whether oral or written, pertaining to the subject matter
hereof.
19. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, this Stock Grant Agreement has been executed as of
the date first above written.
Attest: HUNT MANUFACTURING CO.
[SEAL]
By: ___________________________________
_______________________
Witness: EMPLOYEE
_______________________ _______________________________________
Signature Signature
_______________________________________
_______________________________________
_______________________________________
Address of Employee
(for the giving of notice)
-6-
<PAGE>
EXHIBIT (10)(j)(2)
The Company has Change in Control Agreements in essentially
the form incorporated by reference in Exhibit 10(j)(1) (with the indicated
variations on pp. 7, 8 and 9) with various of its officers, including the
following executive officers:
Executive Officers
------------------
John W. Carney Vice President, Human Resources/Strategic
Planning
William E. Chandler Senior Vice President, Finance (Chief
Financial Officer) and Secretary
Robert B. Fritsch President and Chief Executive Officer
Spencer W. O'Meara Executive Vice President and General
Manager
W. Ernest Precious Executive Vice President and General
Manager
Eugene A. Stiefel Vice President, Information Services
<PAGE>
EXHIBIT (10)(m)
Employment-Severance Arrangement with Robert B. Fritsch
In January 1996, the Company and Robert B. Fritsch agreed that Mr.
Fritsch will continue to serve as President and Chief Executive Officer of the
Company until September 30, 1996 or until a new Chief Executive Officer is
employed, whichever comes first. Under the terms of this arrangement, Mr.
Fritsch's salary was increased to $450,000 annually effective December 1, 1995;
a special bonus award of $112,000 was paid to Mr. Fritsch in January 1996; and
Mr. Fritsch will receive a payment of up to $240,000 the day the new Chief
Executive Officer begins employment with the Company. This latter payment will
be in lieu of any 1996 pro-rated bonus based on the annual incentive plan. Under
certain circumstances, Mr. Fritsch has agreed to continue as President and Chief
Executive Officer through December 31, 1996, in which case he would be entitled
to receive the greater of the up to $240,000 payment referred to above or his
pro rated portion of the 1996 annual bonus. Mr. Fritsch also has agreed to serve
in a transitional role for up to seven months after a new President and Chief
Executive Officer takes over, during which period Mr. Fritsch will continue to
receive his salary and certain benefits. Upon retirement, Mr. Fritsch will also
receive title to his company automobile.
<PAGE>
Exhibit 11
Computation of Per Share Earnings
(In thousands except per share amounts)
<TABLE>
<CAPTION>
December 3, November 27, November 28,
1995 1994 1993
----------- ------------ ------------
<S> <C> <C> <C>
Income before cumulative effect of
accounting change $15,335 $17,197 $14,928
Cumulative effect of change in
accounting for income taxes -- 795 --
------- ------- -------
Net income $15,335 $17,992 $14,928
======= ======= =======
Primary per share earnings
- --------------------------
Average number of common shares
outstanding 16,003 16,102 16,107
Add - common equivalent shares
representing shares issuable
upon exercise of stock options
and stock grants 161 194 146
------- ------- -------
Average shares used to calculate
primary per share earnings 16,164 16,296 16,253
======= ======= =======
Primary per share earnings before
change in accounting for income
taxes $0.95 $1.06 $0.92
Cumulative effect of change in
accounting for income taxes -- 0.05 --
------- ------- -------
Net primary per share earnings $0.95 $1.11 $0.92
======= ======= =======
Fully diluted per share earnings
- --------------------------------
Average number of common shares
outstanding 16,003 16,102 16,107
Add - common equivalent shares
representing shares issuable
upon exercise of stock options
and stock grants 172 216 167
------- ------- -------
Average shares used to calculate
fully diluted per share earnings 16,175 16,318 16,274
======= ======= =======
Fully diluted per share earnings
before change in accounting for
income taxes $0.95 $1.05 $0.92
Cumulative effect of change in
accounting for income taxes -- 0.05 --
------- ------- -------
Net fully diluted per share earnings $0.95 $1.10 $0.92
======= ======= =======
</TABLE>
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Registration Statements Number
33-57103, Number 33-57105, Number 33-70660, Number 33-25947, Number 33-6359 and
Number 2-83144 on Form S-8 dated December 28, 1994, December 28, 1994, October
21, 1993, December 7, 1988, June 29, 1986 and April 8, 1983, respectively, of
our report, which includes an explanatory paragraph regarding a change in the
Company's method of accounting for income taxes, dated January 15, 1996, except
as to the information presented in Notes 2 and 8, for which the date is January
30, 1996 on our audits of the consolidated financial statements and the
financial statement schedule of Hunt Manufacturing Co. and Subsidiaries
(Company) as of December 3, 1995 and November 27, 1994 and for each of the three
years in the period ended December 3, 1995 which report is included in this
Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 29, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000049146
<NAME> HUNT MANUFACTURING CO.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-03-1995
<PERIOD-START> NOV-28-1994
<PERIOD-END> DEC-03-1995
<EXCHANGE-RATE> .00001
<CASH> 15,503
<SECURITIES> 0
<RECEIVABLES> 44,341
<ALLOWANCES> (2,305)
<INVENTORY> 36,131
<CURRENT-ASSETS> 100,092
<PP&E> 100,119
<DEPRECIATION> (48,111)
<TOTAL-ASSETS> 182,810
<CURRENT-LIABILITIES> 30,950
<BONDS> 3,559
0
0
<COMMON> 1,615
<OTHER-SE> 134,578
<TOTAL-LIABILITY-AND-EQUITY> 182,810
<SALES> 313,881
<TOTAL-REVENUES> 313,881
<CGS> 196,720
<TOTAL-COSTS> 196,720
<OTHER-EXPENSES> 93,062
<LOSS-PROVISION> 916
<INTEREST-EXPENSE> (462)
<INCOME-PRETAX> 23,645
<INCOME-TAX> 8,310
<INCOME-CONTINUING> 15,335
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,335
<EPS-PRIMARY> 0.95
<EPS-DILUTED> 0.95
</TABLE>
