SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [Fee Required]
For the fiscal year ended December 25, 1993
OR
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the Transition period from to
Commission file number 1-9256
__________________________
PREMARK INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
1717 Deerfield Road, Deerfield, Illinois
(Address of principal executive offices)
36-3461320
(I.R.S. Employer
Identification No.)
60015
(Zip Code)
Registrant's telephone number, including area code:(708) 405-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange
on Which Registered
Common Stock, $1.00 par value New York Stock Exchange
Pacific Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes X No .
Aggregate market value of the Registrant's voting stock held by
non-affiliates, based upon the closing price of said stock on the
New York Stock Exchange-Composite Transaction Listing on March
8, 1994 ($82.75 per share): $2,588,202,450.
As of March 8, 1994, 31,277,371 shares of the Common Stock,
$1.00 par value, of the Registrant were outstanding.
Documents Incorporated by Reference:
Portions of the Annual Report to Shareholders for the year
ended December 25, 1993 are incorporated by reference into Parts
I, II and IV of this Report.
Portions of the Proxy Statement relating to the Annual
Meeting of Shareholders to be held May 4, 1994 are incorporated
by reference into Part III of this Report.
PART I
Item 1. Business
(a) General Development of Business
Premark International, Inc. (the "Registrant") is a
multinational consumer and commercial products company. The
Registrant is a Delaware corporation which was organized on
August 29, 1986 in connection with the corporate reorganization
of Kraft, Inc. ("Kraft"). In the reorganization, the businesses
of the Registrant and certain other assets and liabilities of
Kraft and its subsidiaries were transferred to the Registrant.
On October 31, 1986 the Registrant became a publicly held company
through the pro-rata distribution by Kraft to its shareholders of
all of the outstanding shares of common stock of the Registrant.
The Registrant's principal operating subsidiaries are Dart
Industries Inc. ("Dart"), which owns the operating subsidiaries
comprising the Registrant's Tupperware business; Premark FEG
Corporation, which owns the operating subsidiaries comprising the
Registrant's Food Equipment Group; Ralph Wilson Plastics Company
("Ralph Wilson Plastics"); The West Bend Company ("West Bend");
Florida Tile Industries, Inc. ("Florida Tile"); Tibbals Flooring
Co. ("Tibbals Flooring"); and Precor Incorporated ("Precor").
Dart was organized in Delaware in 1928 as a successor to a
business originally established in 1902. Tupperware U.S., Inc.
is a Delaware corporation formed in 1989 which operates the U.S.
Tupperware business. In 1988, Ralph Wilson Plastics and West
Bend were organized in Delaware as separate corporations owned
directly by the Registrant, having previously been operating
divisions of Dart. Premark FEG Corporation was organized in
Delaware in 1984, a successor to a business originally
incorporated in 1897. Florida Tile, a Florida corporation
organized in 1954, was acquired in 1990. Tibbals Flooring,
acquired in 1988, was organized in Tennessee in 1946. Precor, a
Delaware corporation, was acquired in 1984.
(b) Financial Information About Industry Segments
For certain financial information concerning the
Registrant's business segments, see Note 10 ("Segments of the
Business") of the Notes to the Consolidated Financial Statements
of Premark International, Inc., appearing on pages 38 and 39 of
the Annual Report to Shareholders for the year ended December 25,
1993, which is incorporated by reference into this Report by
Item 8 hereof.
(c) Narrative Description of Business
The Registrant conducts its business through its three
business segments: Tupperware, Food Equipment Group, and Consumer
and Decorative Products. A discussion of the three business
segments follows. Words appearing in italics constitute
trademarks and tradenames utilized by the Registrant's
businesses.
TUPPERWARE
Principal Products, Markets and Distribution
Tupperware manufactures and markets a broad line of highest-
quality plastic consumer products for the kitchen, gifts and
children's products. Important products include Bell tumblers,
Modular Mates stackable storage containers, Wonderlier and
Servalier bowls, Tuppertoys educational toys, One Touch
canisters, and Tupperwave microwave cookware. The containers and
canisters both feature highly successful Tupperware seals.
During 1993, Tupperware continued to introduce new designs
and colors in its products lines, and to extend existing products
into new markets around the world. Tupperware also continued a
major design upgrade program in its U.S. product line, which was
launched in 1991.
Beginning in 1989, a number of U.S. franchisees converted
to the Tupperware Express product delivery system, under which
Tupperware products are shipped directly from the plant to the
ultimate consumer. Prior to Tupperware Express, all franchisees
warehoused an inventory of Tupperware products for resale to
their consultants, who in turn were responsible for coordinating
delivery to the ultimate consumers. Under Tupperware Express,
there are presently 95 franchisees who process the orders of
their sales consultants for direct shipment and no longer are
required to maintain an inventory of Tupperware products. High
shipping and administrative costs have adversely affected
Tupperware Express. Tupperware is continuing to test
alternatives in the distribution network.
In fiscal years 1993, 1992, and 1991, Tupperware contributed
approximately 40%, 38% and 38%, respectively, of the sales of the
Registrant's businesses. Tupperware products are sold in the
United States and in 55 foreign countries. In 1993, sales in
foreign countries represented approximately 81% of total
Tupperware revenues. Although Tupperware's international
distribution system is similar to that of its domestic
operations, international product lines vary. Market penetration
varies significantly throughout the world, with the highest
levels occurring in Germany and Australia.
Tupperware products are sold directly to the consumer
through over 500,000 dealers (called "consultants" in the U.S.)
worldwide, over 25% of which are considered active. Consultants
are supported by over 32,000 unit managers and approximately
1,400 distributors or franchisees. All of such distributors and
franchisees, and the vast majority of consultants, dealers and
managers, are independent contractors. The dealer force
continued to increase overall in 1993.
Tupperware primarily relies on the "party plan" method of
sales, which is designed to enable the purchaser to appreciate
through demonstration the features and benefits of Tupperware
products. Approximately 1.9 million parties and product
demonstrations were held in 1993 in the United States, with
millions more held in foreign countries. Parties are held in
homes, offices, social clubs and other locations. Tupperware
products are also being marketed through preview catalogs mailed
to persons invited to attend parties and various other types of
demonstrations. Sales of Tupperware products are supported
through a program of sales promotions, sales and training aids
and motivational conferences. Tupperware U.S. also utilizes
catalogs and toll-free telephone ordering, which increases its
success with hard-to-reach customers, in support of its
sales force.
Raw Materials and Facilities
The manufacture of Tupperware products requires plastic
resins meeting Tupperware's specifications. These resins are
purchased from a number of large chemical companies, and
Tupperware has experienced no difficulties in obtaining adequate
supplies. Tupperware's headquarters are in Florida.
Tupperware's domestic manufacturing plant (which is owned) is
located in South Carolina. In 1993, Tupperware ceased
manufacturing operations at its Halls, Tennessee facility,
eliminating excess capacity in the United States. Fourteen
additional manufacturing plants (one of which is leased) are
located in 14 foreign countries. Tupperware conducts a
continuing program of new product design and development at its
research and development facilities in Florida, Hong Kong and
Belgium. Research and development of resins used in Tupperware
products are performed by its suppliers.
Competition
The Registrant believes that Tupperware holds approximately
65% of the U.S. market for plastic storage and serving
containers. Tupperware products compete with a broad range of
food preparation, cooking, storage and serving items made of
various materials, which are sold primarily through retail
outlets. Tupperware's competitive strategy is to provide
high-quality products at premium prices through a direct-selling
distribution system. Direct selling, featuring demonstration of
its products prior to purchase, price, and new product
development are significant factors affecting competition.
Tupperware competes with other direct selling organizations for
sales personnel and party dates.
FOOD EQUIPMENT GROUP
Principal Products, Markets and Distribution
The Food Equipment Group, composed primarily of Premark FEG
Corporation and its operating subsidiaries (the "Group"), is a
leading manufacturer of commercial equipment relating to food
preparation, cooking, storage and cleaning. Its core products
include warewashing equipment; food preparation machines, such as
mixers, slicers, cutters, meat saws and grinders; weighing and
wrapping equipment and related systems; baking and cooking
equipment, such as ovens, ranges, fryers, griddles and broilers;
and refrigeration equipment. Products are marketed under the
trademarks Hobart, Stero, Vulcan, Wolf, Tasselli, Adamatic, Still
and Foster.
Food equipment products are sold to the retail food
industry, including supermarket chains, independent grocers,
delicatessens, bakeries and convenience and other food stores,
and to the foodservice industry, including independent
restaurants, fast-food chains, hospitals, schools, hotels,
resorts and airlines. Although historically the retail food
market has grown at a faster pace than the larger foodservice
industry, in 1993 this growth trend was reversed.
Food equipment products are distributed in more than 100
countries, either through wholly-owned subsidiaries or through
distributors, dealers or licensing arrangements covering
virtually all areas of the world where a market for such products
currently exists. The Group is the only major food equipment
manufacturer in the U.S. with its own nationwide service network
for the markets in which it sells, providing not only an
important source of income but also an important source for
developing new sales. The Group directly services its food
machines, warewashers, weigh/wrap equipment and cooking
equipment, while authorized independent agents service
refrigeration units and some cooking equipment.
For the fiscal years 1993, 1992, and 1991, sales by the
Group contributed approximately 32%, 36%, and 36%, respectively,
of the sales of the Registrant's businesses. Revenues from
foreign operations constituted approximately 40% of the Group's
1993 sales. Major new products introduced by the Group in 1993
included a new undercounter warewasher, a new line of fryers and
the Ultima 2000 weighing system in the U. S., as well as a new
concept mixer, a new line of warewashers, a new refrigeration
line and a new line of combi steam ovens in Europe.
Raw Materials and Facilities
The Group uses stainless and carbon steel, aluminum and
plastics in the manufacture of its products. These materials are
readily available from several sources, and no difficulties have
been experienced with respect to their availability. In addition
to manufacturing certain component parts, the Group also
purchases many component parts, including electrical and
electronic components, castings, hardware, fasteners and
bearings, certain manufacturers of which utilize tooling provided
by the Group.
The Group owns its headquarters building and a major
manufacturing complex consisting of four plants in Ohio. In
addition, the Group operates 13 manufacturing plants in
California, Georgia, Kansas, Maryland, New Jersey, Ohio, and
Virginia, and nine manufacturing plants in Canada, France, Italy,
the United Kingdom and Germany. Most of these plants are owned.
Competition
The Group competes in a slowly growing worldwide market
which is highly fragmented. No single manufacturer competes with
respect to all of the Group's products, and the degree of
competition varies among different customer segments and
products. The extensiveness of the Group's brand acceptance
across a broad range of products is deemed by the Registrant to
be a significant competitive advantage. Competition is also
based on numerous other factors, including product quality,
performance and reliability, labor savings and energy
conservation.
Miscellaneous
The Group grants extended payment terms to end-user
customers who meet its creditworthiness requirements. Currently,
payment periods range from three to 36 months, with installments
including finance charges. The Group also grants extended
payment terms to dealers who meet specified creditworthiness and
facility requirements, which allow its products to be on display
at the dealerships or to be available for immediate delivery by
the dealer to end-users. Payments to the Group by such dealers
are generally without interest and are made at the earlier of the
date of final sale or up to six months after delivery to the
dealer.
The Group had approximately $99 million and $102 million of
backlog orders at the end of 1993 and 1992, respectively, after
restatement for exchange rate effects. The Group considers such
orders to be firm, though changes or cancellations of
insignificant amounts may occur, and expects that the 1993
backlog orders will be filled in 1994.
CONSUMER AND DECORATIVE PRODUCTS
Consumer and Decorative Products is comprised of the
Decorative Products Group and the Consumer Products Group, which
contributed 28%, 26% and 26% of the sales of the Registrant's
businesses for the fiscal years 1993, 1992 and 1991,
respectively. Ralph Wilson Plastics, Florida Tile and Tibbals
Flooring make up the Decorative Products Group, while the
Consumer Products Group contains West Bend and Precor.
DECORATIVE PRODUCTS GROUP
Principal Products, Markets and Distribution
Ralph Wilson Plastics manufactures decorative laminates
through a production process utilizing heated high pressure
presses. These laminates, sold principally under the Wilsonart
trademark in more than 550 colors, designs and finishes, are used
for numerous interior surfacing applications, including
cabinetry, countertops, vanities, store fixtures and furniture.
Approximately 50% of the Wilsonart brand decorative laminate sold
is used in residential applications, primarily for surfacing
kitchen and bathroom countertops and cabinetry. Decorative
laminate applications in the commercial market include office
furniture, retail store fixtures, restaurant and hotel furniture,
and doors. Ralph Wilson Plastics also manufactures specialty-
grade laminates, including chemical-resistant, wear-resistant,
and fire-retardant types. Among the specialized applications for
Wilsonart brand laminates are those in laboratory work surfaces,
jetways and naval vessels. In addition to laminate products,
Ralph Wilson Plastics manufactures a solid surface product which
is marketed under the Gibraltar brand. In 1993, Ralph Wilson
Plastics added approximately 17 new designs to its laminate
product line and 16 new designs to its line of Gibraltar solid
surfacing products.
The company also produces and/or sells contact adhesives
under the Lokweld trademark, metallic surfacings, and decorative
edge molding for countertops and furniture.
Wilsonart brand decorative products are sold throughout the
United States through wholesale building material distributors
and directly to original equipment manufacturers. Export sales
are now made to Japan, Ireland, Canada, Mexico, Central and South
America, the Caribbean, Australia, New Zealand, Hong Kong,
Taiwan, Korea and Singapore.
Florida Tile manufactures glazed ceramic wall and floor tile
products in a wide variety of sizes, shapes, colors and finishes,
which are suitable for residential and commercial uses. Tile
products are marketed under the Florida Tile trademark through
company-owned and independent distributors. Major product groups
of Florida Tile are marketed under the trademarks Natura and
Artura. Products are exported to Canada, the Caribbean Basin,
Iceland, Ireland, the United Kingdom, Mexico, Saudi Arabia and
Pacific Rim nations. Florida Tile also imports foreign-produced
tile products to meet the growing demand for low to mid-priced
products.
Tibbals Flooring manufactures and distributes high-quality,
prefinished oak flooring for residential and commercial
applications. Its flooring products are pre-cut parquet panels
and laminated two and three-ply oak plank lineal flooring
products, each of which is sold in a variety of colors and
finishes. Tibbals Flooring also manufactures wood moldings,
installation adhesives and a full line of proprietary floor care
products to complement its line of oak flooring products. These
products are marketed under the Hartco trademark to a nationwide
network of wholesale floor covering distributors.
Raw Materials and Facilities
The manufacture of decorative laminates requires various raw
materials, including kraft and decorative paper, overlays, and
melamine and phenolic resins. Each of these items is available
from a limited number of manufacturers, but Ralph Wilson Plastics
has not experienced difficulties in obtaining sufficient
quantities. The principal raw materials used in Florida Tile
products are talc, stains, frit (ground glass) and clay, all of
which are available to Florida Tile in sufficient quantities.
The principal raw materials used in Tibbals Flooring's hardwood
flooring products are Appalachian red and white oak, steel wire,
and various chemicals. All such raw materials are readily
available from many sources in sufficient quantities, but lumber
supplies are at a premium price compared to prior years.
Ralph Wilson Plastics owns and operates three manufacturing
facilities in Texas and North Carolina, giving it the largest
decorative laminate production capacity in North America.
Adhesives are produced at two plants located in Louisiana and
Texas. Solid surfacing products are manufactured in one facility
in Texas. Ralph Wilson Plastics has 14 regional distribution
centers which are geographically dispersed throughout the United
States. Stock items can be delivered in 24 hours, and non-stock
items can be produced and delivered within 10 working days.
Florida Tile manufactures products in three owned manufacturing
plants located in Florida, Georgia, and Kentucky, and distributes
its products through a network of company-owned and independent
distribution outlets. Tibbals Flooring manufactures its products
in an owned manufacturing facility in Tennessee and a leased
facility in Kentucky.
Competition
Wilsonart brand products are sold in highly competitive
markets in the United States. Ralph Wilson Plastics has
approximately 47% of the U.S. market for decorative laminates.
Ralph Wilson Plastics successfully competes with other companies
by providing fast product delivery, offering a broad choice of
colors, designs, and finishes, and emphasizing quality and
service. Florida Tile competes with a number of other domestic
and foreign tile manufacturers, and the Registrant believes
Florida Tile is the third largest U.S. tile manufacturer.
Foreign-manufactured products account for approximately 54% of
the U.S. tile market. Important competitive factors in the tile
market include price, style, quality, and service. Tibbals
Flooring competes with a number of other domestic and foreign
suppliers of prefinished wood flooring product, and estimates
that it has a major share of this market. Important competitive
factors include the fit, appearance and durability of the
flooring products, the variety of finishes and colors, and the
complementary molding, adhesive and floor care products.
Miscellaneous
The Decorative Products Group maintains a continuing program
of product development. Its efforts emphasize product design,
performance and durability, product enhancement, and new product
applications, as well as manufacturing processes. Materials
development for laminate products is generally performed by the
companies providing those materials.
CONSUMER PRODUCTS GROUP
Principal Products, Markets and Distribution
West Bend manufactures and sells small electric appliances
(such as electric skillets, slow cookers, woks, corn poppers,
beverage makers and electronic timers) primarily under the West
Bend trademark, and high-quality, direct-to-the-home stainless
steel cookware. Precor manufactures physical fitness equipment,
such as treadmills, stationary bicycles, low-impact climbers and
ski machines marketed under the Precor trademark. During 1993,
West Bend introduced an automatic breadmaker, a line of hand
mixers and a food steamer. In 1993 Precor extended to its
treadmill lines its Ergo Logic fitness software, which records
and recalls personal exercise information for up to four people,
and introduced a line of commercial treadmills featuring a low-
impact bed to minimize stress to ankles and knees.
West Bend small appliances are sold primarily in the United
States and Canada, directly to mass merchandisers, department
stores, hardware stores, warehouse stores and catalog showrooms.
West Bend's stainless steel cookware is sold to consumers through
food preparation dinner parties and by other direct sales
methods. Cookware is sold in 19 countries under 14 separate
product lines. Precor equipment is sold primarily through
specialty fitness equipment retail stores and high-end sporting
goods and bicycle stores in the U.S. and Canada. In Asia,
Europe, Latin America, and the Middle East, Precor products are
sold through select distributors.
Raw Materials and Facilities
West Bend uses aluminum, stainless steel, plastic resins and
other materials in the manufacture of its products. Precor uses
steel, stainless steel, aluminum and other materials in the
manufacture of its products. Generally, neither West Bend nor
Precor has experienced any significant difficulties in obtaining
any of these raw materials or products. West Bend owns and
operates two manufacturing plants in Wisconsin and Mexico.
Precor maintains three leased plants in Washington state.
Competition
Products sold by West Bend and Precor compete with products
sold by numerous other companies of varying sizes in highly
competitive markets. Important competitive factors include price,
development of new products, product performance, warranties, and
service.
Miscellaneous
West Bend's sales in the fourth quarter are significantly
higher due to the gift-giving season. Precor's business is
significantly higher in the first and fourth quarters, when
winter weather forces more people to exercise indoors. The West
Bend small appliance business is dependent upon two customers for
approximately 33% of its revenues.
OTHER INFORMATION RELATING TO THE BUSINESS
Trademarks and Patents. The Registrant considers trademarks
and patents to be of importance to its businesses. The
Registrant's trademarks represent the leading brand names for
most of its product lines. Its businesses have followed the
practice of applying for patents with respect to most of the
significant patentable developments and now own a number of
patents relating to their products, including design patents
covering Tupperware products. In certain cases the Registrant
has elected common law trade secret protection in lieu of
obtaining patent protection. In addition, exclusive and
nonexclusive licenses under patents owned by others are utilized.
No business is, however, dependent to any material extent upon
any single patent or trade secret or group of patents or trade
secrets.
Research and Development. For fiscal years ended 1993, 1992
and 1991, the Registrant spent approximately $41 million, $41
million and $31 million, respectively, on research and
development activities.
Environmental Laws. Compliance by the Registrant's
businesses with federal, state and local environmental protection
laws has not in the past had, and is not expected to have in the
future, a material effect upon its capital expenditures,
liquidity, earnings or competitive position. The Registrant
expects to expend approximately $1.1 million through 1995 on
capital expenditures related to environmental facilities. In
1993, the Registrant had approximately $4 million of capital
expenditures for environmental facilities, and approximately $3.7
million of remedial expenditures for environmental sites. See
Item 3 for a further discussion of environmental matters.
Employees. The Registrant and its subsidiaries employ
approximately 24,000 people. Approximately 18% of such employees
are affiliated with one of the several unions with which the
Registrant's subsidiaries have collective bargaining agreements.
In recent years there has been no major effort to organize
additional persons working for the Registrant's businesses, and
there have been no significant work stoppages. The Registrant
considers its relations with its employees to be good. The
independent consultants, dealers, managers, distributors and
franchisees engaged in the direct sale of Tupperware products are
not employees of the Registrant.
Properties. The principal executive offices of the
Registrant are located in Illinois and are leased. Most of the
principal properties of the Registrant and its subsidiaries are
owned, and none of the owned principal properties is subject to
any encumbrance material to the consolidated operations of the
Registrant. The Registrant considers the condition and extent of
utilization of the plants, warehouses and other properties in its
respective businesses to be generally good, and the capacity of
its plants generally to be adequate for the needs of its
businesses.
Miscellaneous. Except as disclosed above in the narrative
descriptions of the Registrant's business segments, none of the
Registrant's businesses are seasonal, have working capital
practices or backlog conditions which are material to an
understanding of their businesses, are dependent on a small
number of customers, or are subject to renegotiation of profits
or termination of contracts or subcontracts at the election of
the Federal Government.
Executive Officers of the Registrant. Following is a list
of the names and ages of all the Executive Officers of the
Registrant, indicating all positions and offices with the
Registrant held by each such person, and each such person's
principal occupations or employment during the past five years.
Each such person has been elected to serve until the next annual
election of officers of the Registrant (expected to occur on May
4, 1994).
Name and Age Positions and Offices Held and
Principal Occupations or Employment
During Past Five Years
Warren L. Batts (61) Chairman of the Board and Chief
Executive Officer.
James M. Ringler (48) President and Chief Operating
Officer since June 1992, after
having served as Executive Vice
President, Consumer and Commercial
Products since January, 1990, and
President, Food Equipment Group
since August, 1990. Prior to
January, 1990, Mr. Ringler served
as President of White Consolidated
Industries.
E. V. Goings (48) Executive Vice President of Premark
and President of Tupperware
Worldwide since November 1992,
after serving as a Senior Vice
President of Sara Lee Corporation
Prior thereto, Mr. Goings served in
various executive positions with
Avon Products, Inc.
Joseph W. Deering(53) Group Vice President of Premark and
President of Premark's Food
Equipment Group since June 1992,
after serving as President of
Leucadia National's Manufacturing
Group. Prior thereto, Mr. Deering
served in various executive
positions with Philips Industries,
Inc.
Bobby D. Dillon (64) Group Vice President and President
of the Decorative Products Group
since August 1989, after serving in
various executive positions with
Ralph Wilson Plastics.
Thomas W. Kieckhafer(55) Corporate Vice President and
President of West Bend since
December 1989, after serving in
various executive positions with
West Bend.
James C. Coleman(54) Senior Vice President, Human
Resources since July 1991. Prior
thereto, Mr. Coleman served as
Staff Vice President, Personnel
Relations for General Dynamics
Corporation.
John M. Costigan (51) Senior Vice President, General
Counsel, and since December 1990,
Secretary.
Lawrence B. Skatoff (54) Senior Vice President and Chief
Financial Officer since September
1991. Mr. Skatoff served as Vice
President-Finance of Monsanto
Company from October 1987 until
joining the Registrant.
L. John Fletcher(50) Vice President and Assistant
General Counsel.
Robert W. Hoaglund(55) Vice President, Control &
Information Systems since December
1990, after serving as Vice
President, Control & Administrative
Services, Vice President, Internal
Audit and Corporate Services, and
Vice President, Auditing.
Wendy R. Katz (36) Vice President, Internal Audit
since May 1992. Prior thereto, Ms.
Katz served in various financial
positions at Tupperware.
Thomas P. O'Neill,Jr.(40) Vice President and Treasurer since
February 1992, after serving as
Vice President, Auditing since
April, 1989. Prior thereto, Mr.
O'Neill served as Director,
External Reporting and Accounting
Standards.
Lisa Kearns Richardson (41) Vice President, Planning and
Analysis since February 1991.
Prior thereto, Ms. Kearns
Richardson served as Assistant
Controller, a position assumed in
October 1986.
James E. Rose, Jr. (51) Vice President, Taxes.
For information concerning foreign and domestic operations
and export sales, see Note 7 ("Income Taxes") appearing on pages
33 and 34, and "Segments of Business by Geographical Areas" in
Note 10 ("Segments of the Business") appearing on page 39 of the
Annual Report to Shareholders for the year ended December 25,
1993, which are incorporated by reference into this Report by
Item 8 hereof.
Item 2. Properties
For information concerning material properties of the
Registrant and its subsidiaries, see the information under the
sub-captions "Narrative Description of Business" in Section (c)
of Item 1 above and "Properties" under the caption "Other
Information Relating To The Business" in Section (c) of Item 1
above.
Item 3. Legal Proceedings
The Registrant and its subsidiaries are parties against
which are pending a number of legal and administrative
proceedings. Among such proceedings are those involving the
discharge of materials into or otherwise relating to the
protection of the environment. Certain of such proceedings
involve Federal environmental laws such as the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as well as state and local laws. The Registrant establishes
reserves with respect to certain of such sites. Because of the
involvement of other parties and the uncertainty of potential
environmental impacts, the eventual outcomes of such actions and
the cost and timing of expenditures cannot be estimated with
certainty. It is not expected that the outcome of such
proceedings, either individually or in the aggregate, will have a
materially adverse effect upon the Registrant's consolidated
financial position or operations.
Kraft has assumed any liabilities arising out of any legal
proceedings in connection with certain divested or discontinued
former Dart businesses, including matters alleging product
liability, environmental liability and infringement of patents.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The stock price information set forth in Note 12 ("Quarterly
Summary (unaudited)") appearing on page 40 of the Annual Report
to Shareholders for the year ended December 25, 1993 is
incorporated by reference into this Report. The information set
forth in Note 13 ("Shareholders' Rights Plan") on page 40 of the
Annual Report to Shareholders for the year ended December 25,
1993 is incorporated by reference into this Report. As of March
8, 1994, the Registrant had 26,442 shareholders of record.
Item 6. Selected Financial Data
The information set forth under the caption "Selected
Financial Data" on pages 24 and 25 of the Annual Report to
Shareholders for the year ended December 25, 1993 is incorporated
by reference into this Report.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information entitled "Financial Review" set forth on
pages 19 through 23 of the Annual Report to Shareholders for the
year ended December 25, 1993 constitutes "Management's Discussion
and Analysis of Financial Condition and Results of Operations"
and is incorporated by reference into this Report.
Item 8. Financial Statements and Supplementary Data
(a) The following Consolidated Financial Statements of
Premark International, Inc. and Report of Independent Accountants
set forth on pages 26 through 40, and on page 41, respectively,
of the Annual Report to Shareholders for the year ended December
25, 1993 are incorporated by reference into this Report:
Consolidated Statements of Operations, Cash Flows and
Shareholders' Equity--Years ended December 25, 1993, December 26,
1992 and December 28, 1991
Consolidated Balance Sheet--December 25, 1993 and December
26, 1992
Notes to the Consolidated Financial Statements
Report of Independent Accountants dated February 11, 1994
(b) The supplementary data regarding quarterly results of
operations contained in Note 12 ("Quarterly Summary (unaudited)")
of the Notes to the Consolidated Financial Statements of Premark
International, Inc. on page 40 of the Annual Report to
Shareholders for the year ended December 25, 1993 is incorporated
by reference into this Report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
The information as to the Directors of the Registrant set
forth under the sub-caption "Board of Directors" appearing under
the caption "Election of Directors" on pages 1 through 3 of the
Proxy Statement relating to the Annual Meeting of Shareholders to
be held on May 4, 1994 is incorporated by reference into this
Report. The information as to the Executive Officers of the
Registrant is included in Part I hereof under the caption
"Executive Officers of the Registrant" in reliance upon General
Instruction G to Form 10-K and Instruction 3 to Item 401(b) of
Regulation S-K.
Item 11. Executive Compensation
The information set forth under the caption "Compensation of
Directors" and beginning on page 14 of the Proxy Statement
relating to the Annual Meeting of Shareholders to be held on May
4, 1994, and the information on pages 6 through 8, and beginning
on page 10 of such Proxy Statement relating to executive
officers' compensation, is incorporated by reference into this
Report.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information set forth under the captions "Security
Ownership of Certain Beneficial Owners" on page 5 and "Security
Ownership of Management" on page 4 of the Proxy Statement
relating to the Annual Meeting of Shareholders to be held on May
4, 1994 is incorporated by reference into this Report.
Item 13. Certain Relationships and Related Transactions
None
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports On
Form 8-K
(a) (1) List of Financial Statements
The following Consolidated Financial Statements of Premark
International, Inc. and Report of Independent Accountants set
forth on pages 26 through 40, and on page 41, respectively, of
the Annual Report to Shareholders for the year ended December 25,
1993 are incorporated by reference into this Report by Item 8
hereof:
Consolidated Statements of Operations, Cash Flows and
Shareholders' Equity--Years ended December 25, 1993, December 26,
1992 and December 28, 1991
Consolidated Balance Sheet--December 25, 1993 and December
26, 1992
Notes to the Consolidated Financial Statements
Report of Independent Accountants dated February 11, 1994
(a) (2) List of Financial Statement Schedules
The following consolidated financial statement schedules
(numbered in accordance with Regulation S-X) of Premark
International, Inc. are included in this Report:
Report of Independent Accountants on Financial Statement
Schedules, page 21 of this Report
Schedule V--Property, Plant and Equipment for the three
years ended December 25, 1993, page 22 of this Report
Schedule VI--Accumulated Depreciation of Property, Plant and
Equipment for the three years ended December 25, 1993, page 24 of
this Report
Schedule VII--Guarantees of Securities of Other Issuers as
of December 25, 1993, page 26 of this Report
Schedule VIII--Valuation and Qualifying Accounts for the
three years ended December 25, 1993, page 28 of this Report
Schedule X--Supplementary Income Statement Information for
the three years ended December 25, 1993, page 30 of this Report
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions, are
inapplicable, or the information called for therein is included
elsewhere in the financial statements or related notes thereto
contained or incorporated by reference herein.
(a) (3) List of Exhibits: (numbered in accordance with Item 601
of Regulation S-K)
Exhibit
Number Description
* 3A Restated Certificate of Incorporation (Exhibit 3A
to the Registrant's Annual Report on Form 10-K for
the year ended December 28, 1991)
* 3B Amended By-Laws (Exhibit 3B to the Registrant's
Annual Report on Form 10-K for the year ended
December 28, 1991)
* 4A Form of Common Stock Certificate (Exhibit 3 to the
Registrant's Current Report on Form 8-K dated
March 20, 1989)
* 4B Rights Agreement dated March 7, 1989 (Exhibit 1 to
the Registrant's Current Report on Form 8-K dated
March 20, 1989)
* 4C Form of Right Certificate of Common Stock Purchase
Right (Exhibit 1 to the Registrant's Current
Report on Form 8-K dated March 20, 1989)
* 4D Form of Indenture (Revised) in connection with the
Registrant's Form S-3 Registration Statement No.
33-35137 (Exhibit (c)(3) to the Registrant's
Current Report on Form 8-K dated September 17,
1990)
*10A Reorganization and Distribution Agreement dated as
of September 4, 1986 (Exhibit 2 to Registration of
Securities on Form 10 dated September 8, 1986,
File No. 1-9256)
*10B Tax Sharing Agreement dated as of September 4,
1986 (Exhibit 10C to Registration of Securities on
Form 10 dated September 8, 1986, File No. 1-9256)
*10C Facilities and Guarantee Agreement, as amended,
and Termination Agreement dated as of September 4,
1986 (Exhibit 10D to Registration of Securities on
Form 10 dated September 8, 1986, File No. 1-9256)
*10D $250,000,000 Credit Agreement dated as of May 12,
1992 (Exhibit (19)(10) to the Registrant's
Quarterly Report on Form 10-Q for the 26 weeks
ended June 27, 1992)
COMPENSATORY PLANS OR ARRANGEMENTS
*10E Premark International, Inc. Annual Incentive Plan
(Exhibit 10H to the Registrant's Annual Report on
Form 10-K for the year ended December 28, 1991)
*10F Premark International, Inc. Restricted Stock Plan
(Exhibit 10I to the Registrant's Annual Report on
Form 10-K for the year ended December 28, 1991)
*10G Premark International, Inc. Performance Unit Plan
(Exhibit 10J to the Registrant's Annual Report on
Form 10-K for the year ended December 28, 1991)
10H Premark International, Inc. Stock Option Plan, as
amended
*10I Premark International, Inc. Supplemental Benefits
Plan (Exhibit 10L to the Registrant's Annual
Report on Form 10-K for the year ended December
28, 1991)
*10J Premark International, Inc. Change of Control
Policy, as amended 1989 (Exhibit 4 to the
Registrant's Current Report on Form 8-K dated
March 20, 1989)
*10K Employment Agreement entered into on July 11, 1991
between the Registrant and Lawrence B. Skatoff
(Exhibit 10K to the Registrant's Annual Report on
Form 10-K for the year ended December 26, 1992)
*10L Form of Employment Agreement entered into on March
7, 1989 between the Registrant and certain
executive officers (Exhibit 5 to the Registrant's
Current Report on Form 8-K dated March 20, 1989)
*10M Employment Agreement entered into on June 2, 1992
between the Registrant and Joseph W. Deering
(Exhibit 10M to the Registrant's Annual Report on
Form 10-K for the year ended December 26, 1992)
10N Employment Agreement dated November 9, 1992
between the Registrant and E. V. Goings
10O Premark International, Inc. Director Stock Plan,
as amended 1993
11 A statement of computation of 1993 per share
earnings
13 Pages 19 through 41 of the Annual Report to
Shareholders of the Registrant for the year ended
December 25, 1993
22 Subsidiaries of the Registrant as of March 8, 1994
24 Manually signed Consent of Independent Accountants
to the incorporation of their report by reference
into the prospectuses contained in specified
registration statements on Form S-8 and Form S-3
25 Powers of Attorney
*Document has heretofore been filed with the Commission and is
incorporated by reference and made a part hereof.
The Registrant agrees to furnish, upon request of the
Commission, a copy of all constituent instruments defining the
rights of holders of long-term debt of the Registrant and its
consolidated subsidiaries.
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed by the Registrant
for the quarter ended December 25, 1993.
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT
SCHEDULES
To the Board of Directors and Shareholders
of Premark International, Inc.
Our audits of the consolidated financial statements referred
to in our report dated February 11, 1994, appearing on page 41 of
the 1993 Annual Report to Shareholders of Premark International,
Inc., (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedules
listed in Item 14(a)(2) of this Form 10-K. In our opinion, these
Financial Statement Schedules present fairly, in all material
respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/s/ Price Waterhouse
Chicago, Illinois
February 11, 1994
<PAGE>
<TABLE>
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
For the three years ended December 25, 1993
(Dollars in millions)
<CAPTION>
Col. A Col. B Col. C Col. D Col.E Col. F
Balance at Balance
Beginning Additions Retirements at End
Classification of Period at Cost or Sales Other<F1> of Period
<S> <C> <C> <C> <C> <C>
Year ended December 25, 1993
Land $ 34.0 $ 0.7 $ (0.3) $ (2.4) $ 32.0
Buildings and 374.9 16.1 (6.3) (2.9) 381.8
improvements
Machinery and 1,064.2 120.9 (35.5) (17.0) 1,132.6
equipment
Construction in 52.6 8.4 - (1.0) 60.0
progress
Totals $ 1,525.7 $ 146.1 $ (42.1) $ (23.3) $ 1,606.4
Year ended December 26, 1992
Land $ 33.9 $ 1.1 $ (0.8) $ (0.2) $ 34.0
Buildings and 348.3 34.2 (3.7) (3.9) 374.9
improvements
Machinery and 1,022.5 93.2 (41.7) (9.8) 1,064.2
equipment
Construction in 44.7 12.3 - (4.4) 52.6
progress
Totals $ 1,449.4 $ 140.8<F2>$ (46.2) $ (18.3) $ 1,525.7
Year ended December 28, 1991
Land $ 30.0 $ 2.9 $ (0.1) $ 1.1 $ 33.9
Buildings and 327.3 29.6 (2.9) (5.7) 348.3
improvements
Machinery and 947.2 97.7 (29.0) 6.6 1,022.5
equipment
Construction in 82.0 (32.7) - (4.6) 44.7
progress
Totals $ 1,386.5 $ 97.5<F3> $ (32.0) $ (2.6) $ 1,449.4
_____________
<FN>
<F1> Amounts reflect the effect of foreign exchange rate changes. In addition, 1991
activity includes a reclassification of restructuring reserves of $6 million for
buildings and improvements and $5.3 million for machinery and equipment.
<F2> Additions resulting from 1992 business acquisitions include $3.5 million for
buildings and improvements and $0.6 million of machinery and equipment.
<F3> Additions resulting from 1991 business acquisitions include $0.9 million for
buildings and improvements.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
SCHEDULE VI--ACCUMULATED DEPRECIATION OF PROPERTY,
PLANT AND EQUIPMENT
For the three years ended December 25, 1993
(In millions)
<CAPTION>
Col. A Col. B Col. C Col. D Col. E Col. F
Additions Other
Balance at Charged to Changes-- Balance
Beginning Costs and Retirements Add(Deduct) at End
Classification of Period Expenses or Sales Describe<F1> of Period
<S> <C> <C> <C> <C> <C>
Year ended December 25, 1993
Buildings and $ 156.7 $ 15.0 $ (2.6) $ 0.9 $ 170.0
improvements
Machinery and 714.4 87.0 (24.3) (12.2) 764.9
equipment
Totals $ 871.1 $ 102.0 $ (26.9) $ (11.3) $ 934.9
Year ended December 26, 1992
Buildings and $ 138.3 $ 21.7 $ (1.9) $ (1.4) $ 156.7
improvements
Machinery and 609.3 146.3 (30.4) (10.8) 714.4
equipment
Totals $ 747.6 $ 168.0<F2>$ (32.3) $ (12.2) $ 871.1
Year ended December 28, 1991
Buildings and $ 127.5 $ 14.9 $ (4.7) $ 0.6 $ 138.3
improvements
Machinery and 539.1 87.6 (23.8) 6.4 609.3
equipment
Totals $ 666.6 $ 102.5 $ (28.5) $ 7.0 $ 747.6
_____________
<FN>
<F1> Amounts primarily reflect the effect of foreign exchange rate changes.
<F2> The 1992 activity includes a restructuring charge of $5.9 million in
buildings and improvements and $54.5 million in machinery and equipment.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
SCHEDULE VII - GUARANTEES OF SECURITIES OF OTHER ISSUERS
December 25, 1993
(Dollars in millions)
<CAPTION>
Amount in
Treasury
Name of Primary Total Amount Of Primary
Obligor of Securities Guaranteed Amount Obligor of
Guaranteed by Title of Issue of Date of and Owned by Securities
Registrant Each Class of Securities Issue Outstanding<F1>Registrant Guaranteed
<S> <C> <C> <C> <C> <C>
Kraft, Inc. Industrial Revenue Bonds by issue:
Industrial Development
Authority of the City of
Springfield, MO - 6% 07/01/79 $ 1.0 - -
Development Authority of
DeKalb County, GA - 6% 08/01/78 1.0 - -
The Industrial Development
Board of the City of Trenton,
TN - 5.4% 10/01/77 1.3 - -
The Industrial Development
Board of the City of Trenton,
TN - 5.875% 12/01/78 0.7 - -
The Town of Johnson,
WI-5.4% 11/01/77 1.0 - -
The Industrial Development
Board of the City of Memphis
and County of Shelby, TN
- 5.875% 12/01/78 1.0 - -
St. Lawrence County Industrial
Development Agency,
NY - 6% 03/01/79 0.6 - -
City of New Ulm, MN - 6% 03/01/79 2.5 - -
Illinois Development Finance
Authority, IL - 11% 10/01/84 1.0 - -
City of Kendallville,
IN - 9.875% 04/01/83 0.5 - -
____________
<FN>
<F1> Principal and interest are guaranteed by Dart for all issues.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
For the three years ended December 25, 1993
(In millions)
(CAPTION>
Col. A Col. B Col. C Col. D Col. E
Additions
Balance at Charged Charged to Balance
Beginning to Costs Other Accounts Deductions at End
Description of Period Expenses --Describe --Describe of Period
Allowance for doubtful
accounts, current and
long term:
<S> <C> <C> <C> <C> <C)
Year ended December
25, 1993 $70.6 $15.5 -- {$ (18.6)<F1> $66.1
{ (1.4)<F2>
Year ended December
26, 1992 $53.0 $33.5 -- {$ (14.3)<F1> $70.6
{ ( 1.7)<F2>
{ 0.1 <F3>
Year ended December
28, 1991 $46.6 $20.7 -- {$ (14.8)<F1> $53.0
{ 0.5 <F2>
Valuation allowance for deferred tax assets:
Year ended December
25, 1993 $84.6 ($17.9) -- -- $66.7
Year ended December
26, 1992 $65.5 $19.1 -- -- $84.6
____________
<FN>
<F1> Represents write-offs less recoveries.
<F2> Foreign currency translation adjustment.
<F3> Business acquired.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
PREMARK INTERNTIONAL, INC.
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
For the three years ended December 25, 1993
(In millions)
<CAPTION>
Col. A Col. B
Charged to Costs and Expenses
Dec. 25, Dec. 26, Dec. 28,
Item 1993 1992 1991
<S> <C> <C> <C>
Depreciation $102.0 $107.6 $102.5
Maintenance and repairs 63.6 63.1 61.4
Advertising 42.5 43.0 37.4
Taxes other than payroll and
taxes on income 28.9 31.0 35.1
</TABLE>
</PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Premark International, Inc.
(Registrant)
By /s/ WARREN L. BATTS
Warren L. Batts
Chairman of the Board and
Chief Executive Officer
March 14, 1994
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the date indicated.
Signature Title
/s/ Warren L. Batts Chairman of the Board of Directors,
Warren L. Batts Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Lawrence B. Skatoff Senior Vice President and Chief
Lawrence B. Skatoff Financial Officer (Principal
Financial Officer)
/s/ Robert W. Hoaglund Vice President, Control and
Robert W. Hoaglund Information Systems (Principal
Accounting Officer)
* Director
William O. Bourke
* Director
Dr. Ruth M. Davis
* Director
Lloyd C. Elam, M.D.
* Director
Clifford J. Grum
* Director
Joseph E. Luecke
* Director
Bob Marbut
* Director
John B. McKinnon
* Director
David R. Parker
* Director
Robert M. Price
/s/ James M. Ringler President, Chief Operating Officer and
James M. Ringler Director
* Director
Janice D. Stoney
*By /s/ John M. Costigan
John M. Costigan
Attorney-in-fact
March 14, 1994
EXHIBIT INDEX
Exhibit No. Description Page
10H Premark International, Inc. 34-44
Stock Option Plan, as amended
10N Employment Agreement dated 45-50
November 9, 1992 between
Registrant and E. V. Goings
10O Premark International, Inc. 51-59
Director Stock Plan, as
amended 1993
11 A statement of computation of 60-61
1993 per share earnings
13 Pages 19 through 41 of the
Annual Report to Shareholders
of the Registrant for the year
ended December 25, 1993 62-96
22 Subsidiaries of the Registrant
as of March 8, 1994 97-99
24 Manually signed Consent of
Independent Accountants to the
incorporation of their report
by reference into the prospec-
tuses contained in specified
registration statements on Form
S-8 and Form S-3 100
25 Powers of Attorney 101-102
EXHIBIT 10H
PREMARK INTERNATIONAL, INC.
STOCK OPTION PLAN
(as amended)
1. Purposes. The purposes of the Premark International,
Inc. Stock Option Plan (the "Plan") of Premark International,
Inc. ("Premark") and its Affiliates (collectively, the
"Corporation") are to promote the long-term financial interests
of the Corporation, including its growth, by (i) attracting and
retaining executive personnel possessing outstanding ability;
(ii) motivating executive personnel, by means of growth-related
incentives, to achieve long-range growth goals; (iii) providing
incentive compensation opportunities which are competitive with
those of other major corporations; and (iv) furthering the
identity of interests of Participants with those of the
stockholders of Premark, through opportunities for increased
stock ownership in Premark.
2. Definitions. The following definitions are applicable to
the Plan:
"Affiliate"--means any subsidiary or parent corporation
of Premark or any other corporation, partnership, association,
joint venture or other entity in whose decisions regarding
management thereof, or the production or marketing of products or
services produced or marketed thereby, Premark or any such
subsidiary or parent corporation participates either directly or
indirectly (whether through stock ownership, by contract, through
the power to appoint key personnel or otherwise).
"Change of Control"--means the following events:
(a) The acquisition by any person (including a
group, within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")),
other than Premark or any of its subsidiaries, of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
1934 Act) of 20% or more of the combined voting power of
Premark's then outstanding voting securities;
(b) The first purchase under a tender offer or
exchange offer, other than an offer by Premark or any of its
subsidiaries, pursuant to which shares of Common Stock have been
purchased;
(c) During any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board of Directors of Premark cease for any reason to constitute
at least a majority thereof, unless the election or the
nomination for the election by stockholders of Premark of each
new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the
beginning of the period; or
(d) Approval by stockholders of Premark of a
merger, consolidation, liquidation or dissolution of Premark, or
of the sale of all or substantially all of the assets of Premark.
"Committee"--means the committee referred to in section
3 hereof.
"Common Stock"--means the common stock of Premark.
"Disinterested Person"--means any director of Premark,
who, at the time discretion under the Plan is exercised, is not
eligible, and who has not at any time within one year prior
thereto been eligible, for selection as a Participant in the Plan
or as a person to whom stock may be allocated or to whom stock
options or stock appreciation rights may be granted pursuant to
any other plan of Premark or any of its affiliates (as that term
is used in the 1934 Act) entitling the participants therein to
acquire stock, stock options or stock appreciation rights of
Premark or any of such affiliates.
"Participant"--means any employee of the Corporation
who is selected by the Committee to participate in the Plan.
3. Administration. The Plan shall be administered under the
direction of a Committee of the Board of Directors of Premark
consisting of three or more members, each of whom is to be a
Disinterested Person. The members of the Committee, presently
known as the Compensation and Employee Benefits Committee, shall
be appointed by the Board of Directors of Premark. The Committee
shall have sole and complete authority to (i) select the
Participants; (ii) grant stock options; (iii) determine the
number of shares of Common Stock to be subject to each option to
be awarded to each of the Participants under the Plan (subject to
the limitations of sections 4 and 5 hereof); (iv) grant stock
appreciation rights in connection with stock options granted
under the Plan; (v) determine the terms and conditions on which
grants of stock options and stock appreciation rights shall be
made under the Plan; (vi) prescribe the form and terms of
instruments evidencing such grants; and (vii) establish from time
to time regulations for the administration of the Plan, interpret
the Plan, and make all determinations deemed necessary or
advisable for the administration of the Plan, all subject to its
express provisions.
A majority of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at
which a quorum is present, or acts approved in writing by a
majority of the Committee without a meeting, shall be the acts of
the Committee.
4. Participation. The Committee may select from time to
time Participants in the Plan from those employees of the
Corporation who, in the opinion of the Committee, have the
capacity for contributing in a substantial measure to the
successful performance of the Corporation; provided, however,
that no employee shall be eligible for the grant of an option or
options to purchase and/or a stock appreciation right or rights
exercisable with respect to more than an aggregate of 10% of the
maximum number of shares reserved under the Plan. No employee
shall have the right to be selected as a Participant nor, having
been so selected, to be selected as a Participant again.
5. Stock Subject to Option. The maximum number of shares
of Common Stock which shall be reserved for issuance under the
Plan shall not exceed 5,500,000 shares, subject to adjustment by
the operation of section 13 hereof. Such shares may be either
authorized and unissued shares or issued shares heretofore or
hereafter reacquired and held as treasury shares, as the
Committee may from time to time determine. If options granted
under the Plan shall terminate by reason of expiration, surrender
for cancellation or otherwise without being wholly exercised, or
for any reason become unexercisable as to any shares, new options
may be granted under the Plan covering the number of shares to
which such termination relates or as to which such options have
become unexercisable; provided, however, that no new options may
be granted with respect to any shares which shall be deemed to
have been purchased under the Plan upon the exercise of stock
appreciation rights as provided in section 9 hereof.
6. Price. The purchase price per share under each option
granted under the Plan shall be as determined by the Committee,
in the exercise of its discretion, at the time the option is
granted.
7. Terms and Conditions of Options. The Committee shall
have full and complete authority subject to the limitations of
the Plan, to grant stock options and to prescribe terms and
conditions (which need not be identical as among optionees) in
respect of the granting or exercise of any option under the Plan,
and in particular shall prescribe the following terms and
conditions: (i) the duration of the option, which shall not
exceed 10 years and one day from the date on which the option is
granted; (ii) the manner, time and rate (cumulative or otherwise)
of exercise of such options, except that no option granted under
the Plan shall be exercisable until one year after the effective
date of the grant thereof, except as provided in section 12,
unless there shall occur within such one-year period either a
Change of Control or a transaction referred to in paragraph (b)
of section 11 (provided that in the latter event the Committee
shall determine to accelerate exercisability); and (iii) the
restrictions, if any, to be placed upon such options or upon the
shares which are issued upon exercise of such options; provided,
however, that (y) in the case of an optionee receiving a grant or
grants of an incentive stock option (within the meaning of
Section 422A of the Internal Revenue Code of 1986 (the "Code"))
in any calendar year ending on or before December 31, 1986, the
aggregate fair market value (determined at the time such option
is granted) of the Common Stock for which any such optionee may
be granted an incentive stock option under the Plan (and any
other stock option plan of Premark and its parent and subsidiary
corporations within the meaning of Section 422A(b)(8) of the
Code) shall not exceed $100,000 plus any unused carryover limit
to such year (within the meaning of Section 422A(b)(8) of the
Code) and (z) in the case of an optionee receiving a grant or
grants of an incentive stock option in any calendar year
beginning after 1986 under the Plan and such other plans, the
aggregate fair market value (determined at the time any such
option is granted) of the Common Stock with respect to such
option or options are exercisable by an optionee for the first
time during any such calendar year shall not exceed $100,000. To
the extent that any options which are granted within the terms of
the Plan qualify under present or future law for tax treatment
that is beneficial to an optionee, then any such beneficial
treatment shall be considered within the intent, purpose and
operational purview of the Plan and the discretion of the
Committee, and to the extent that any such options could so
qualify within the terms of the Plan, the Committee shall have
full and complete authority to grant options that so qualify
(including the authority to grant, simultaneously or otherwise,
options which do not so qualify) and to prescribe the terms and
conditions (which need not be identical as among optionees) in
respect to the grant or exercise of any such option under the
Plan.
8. General Terms and Conditions of Exercise. (a) Except as
provided in sections 11 and 12 hereof, no option may be exercised
unless the optionee, at the time he or she exercises his or her
option, is an employee of, and has continuously since the grant
of his or her option been an employee of, the Corporation.
Absence or leave, if approved by an authorized representative of
the Corporation, shall not be considered an interruption or
termination of employment for any purpose of the Plan.
(b) The Committee may, as a condition of granting any stock
option, require the optionee to agree that he or she will not
thereafter exercise one or more stock options previously granted
to him or her.
(c) To exercise an option under the Plan, the optionee
shall give written notice to the Corporation in form satisfactory
to the Committee, specifying the number of option shares which he
or she then elects to purchase, together with payment of the full
option price of the shares being purchased; provided, however,
that during the 60-day period from and after a Change of Control
(other than a Change of Control initiated by a Participant) (x)
an optionee who is an officer or director of Premark (within the
meaning of Section 16 of the 1934 Act, and the rules and
regulations promulgated thereunder) with respect to an option
that is unaccompanied by a stock appreciation right granted at
least six months prior to the date of exercise pursuant to this
proviso and (y) all other optionees who are not officers and
directors with respect to any or all of their respective options
that are unaccompanied by stock appreciation rights shall, unless
the Committee shall determine otherwise at the time of grant,
have the right, in lieu of the payment of the full option price
of the shares of Common Stock being purchased under the option
and by giving written notice to the Corporation in form
satisfactory to the Committee, to elect (within such 60-day
period) to surrender all or part of the option to the Corporation
and to receive in cash an amount equal to the amount by which the
fair market value per share of the Common Stock on the date of
exercise shall exceed the option price per share under the option
multiplied by the number of shares of Common Stock granted under
the option as to which the right granted by this proviso shall
have been exercised.
As used in this paragraph (c) of section 8 with respect to
an election by an optionee to receive cash in respect of an
option that does not qualify as an incentive stock option (within
the meaning of Section 422A of the Code) the term "fair market
value" shall mean the higher of (x) the highest reported sales
price, regular way, of a share of the Common Stock on the
Composite Tape for New York Stock Exchange Listed Stocks (the
"Composite Tape") during the 60-day period prior to the first
date of actual knowledge by the Premark Board of Directors of a
Change of Control and (y) if the Change of Control is the result
of a transaction or series of transactions described in
paragraphs (a), (b) or (d) of the definition of Change of Control
set forth in section 2, the highest price per share of the Common
Stock paid in such transaction or series of transactions (which
in the case of paragraph (a) shall be the highest price per share
of the Common Stock as reflected in a Schedule 13D filed by the
person having made the acquisition).
The date of exercise shall be the date on which such notice
is received by the Corporation. Payment to the Corporation
shall be made either (i) in cash (including check, bank draft or
money order), or (ii) at the discretion of the Committee, by
delivering (A) shares of Common Stock already owned by the
optionee and having a fair market value equal to the exercise
price applicable to such option, or the portion thereof being
exercised, such fair market value to be determined in such
appropriate manner as may be provided for by the Committee or as
may be required in order to comply with or to conform to
requirements of any applicable laws or regulations, or (B) a
combination of cash and such shares. Notwithstanding the
foregoing, at the discretion of the Committee, payment
requirements may be satisfied by cashless exercise as permitted
by the Federal Reserve Board's Regulation T, subject to
applicable securities law and state corporation law requirements.
(d) An option granted under the Plan may provide that the
Corporation's obligation to deliver shares of Common Stock under
such option is conditioned upon the receipt of a representation
as to the investment intention of the optionee in such form as
the Committee shall determine to be necessary or advisable solely
to comply with the provisions of the Securities Act of 1933 or
any other Federal, state or local securities legislation. Such
option may further provide that any representation requirement
shall become inoperative upon a registration of the shares or
other action eliminating the necessity of such representation
under such Securities Act or other securities legislation.
(e) An option granted under the Plan shall be exercisable
during the optionee's lifetime only by the optionee.
9. Stock Appreciation Rights. Stock appreciation rights may
be granted by the Committee in connection with all or any part of
any option granted under the Plan either at the time of the grant
of such option or at any time thereafter during the term of the
option in order to further the purposes of the Plan. A stock
appreciation right shall, upon its exercise, entitle the holder
of the related option, to the extent unexercised, to surrender
the related option, in whole or part, and to receive a number of
shares of Common Stock, or cash, or partly such shares and partly
cash, determined as hereinafter set forth.
(a) The Committee shall have sole authority to
determine the Participants who are to be granted stock
appreciation rights under the Plan, the portion of an option to
which such rights relate, and the limitations, if any, to be
imposed upon such rights. To the extent that any stock
appreciation rights which are granted within the terms of the
Plan qualify under present or future law for tax treatment that
is beneficial to an optionee, then any such beneficial treatment
shall be considered within the intent, purpose and operational
purview of the Plan and the discretion of the Committee, and to
the extent that any such stock appreciation rights could so
qualify within the terms of the Plan, the Committee shall have
full and complete authority to grant stock appreciation rights
that so qualify (including the authority to grant simultaneously
or otherwise, stock appreciation rights which do not so qualify)
and to prescribe the terms and conditions (which need not be
identical as among optionees) in respect to the grant or exercise
of any such stock appreciation right under the Plan. Stock
appreciation rights shall be subject to such other terms and
conditions, not inconsistent with the Plan, under which the
related option shall be granted as shall from time to time be
determined by the Committee, and to the following terms and
conditions:
(i) A stock appreciation right shall be
exercisable at such time or times and to the extent, but only to
the extent, that the option to which it relates shall be
exercisable, and shall be exercisable only by the person by whom
the option to which it relates shall be exercisable; provided,
however, that no stock appreciation right granted under the Plan
to an officer of director of Premark (within the meaning of
Section 16 of the 1934 Act, and the rules and regulations
promulgated thereunder) shall be exercised during the first six
months of its term.
(ii) To exercise a stock appreciation right under
the Plan, the optionee shall give written notice to the
Corporation in form satisfactory to the Committee, specifying the
number of shares in respect of which the stock appreciation right
shall be exercised. The date of exercise shall be the date on
which such notice is received by the Corporation. Upon exercise
of the stock appreciation right, the optionee thereof shall be
entitled, subject to any limitations or restrictions set forth in
the stock appreciation right grant or in the Plan, to receive a
whole number of shares of Common Stock equal (or as nearly equal
as practicable, disregarding fractions) in aggregate fair market
value to the amount by which the fair market value per share of
Common Stock on the date of such exercise shall exceed the option
price per share of the related option multiplied by the number of
shares of Common Stock in respect of which the stock appreciation
right shall have been exercised. All or any part of the
obligation arising out of the exercise of a stock appreciation
right may be settled, at the sole discretion of the Committee, by
the payment of cash, currently or deferred for a period specified
by the Committee, at the time such payment is deferred, in an
amount equal to the aggregate fair market value of the whole
number of shares that would otherwise be delivered under the
preceding sentence. In the event of payment of such amount on a
deferred basis, there shall be credited at the end of each year
(or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum to be determined by the
Committee.
(iii) Any exercise by an optionee of his or her
stock appreciation rights which results in receipt of any cash by
the optionee shall be made only in compliance with any applicable
rules or regulations of the Securities and Exchange Commission
exempting such exercise from the operation of Section 16(b) of
the 1934 Act, and any other applicable law, rule, regulation or
other provision that may hereafter relate to the exercise and
cash settlement rights of stock appreciation rights under the
Federal securities laws.
(b) To the extent that a stock appreciation right
shall be exercised, the stock option in connection with which
such stock appreciation right shall have been granted shall be
deemed to have been exercised for the purpose of the maximum
limitation as to the number of shares that may be reserved under
the Plan and under the related option.
(c) As used in paragraph (a)(ii) of this section 9,
"fair market value" shall be the average of the high and low
quoted sales prices of a share of Common Stock on the Composite
Tape on the date of exercise or, if there is no reported sale on
that day, on the last preceding date on which any reported sale
occurred; provided, however, that during the 60-day period from
and after a Change of Control "fair market value" with respect to
a stock appreciation right which is related to an option that
does not qualify as an incentive stock option (within the meaning
of Section 422A of the Code) shall mean the higher of (x) the
highest reported sales price, regular way, per share of the
Common Stock on the Composite Tape during the 60-day period prior
to the first date of actual knowledge by the Premark Board of
Directors of a Change of Control and (y) if the Change of Control
is the result of a transaction or series of transactions
described in paragraphs (a), (b) or (d) of the definition of
Change of Control set forth in section 2, the highest price per
share of the Common Stock paid in such transaction or series of
transactions (which in the case of paragraph (a) shall be the
highest price per share of the Common Stock as reflected in a
Schedule 13D filed by the person having made the acquisition).
10. Assignments and Transfers. The rights and interests of
a Participant under the Plan may not be assigned, encumbered or
transferred except, in the event of the death of a Participant,
by will or the laws of descent and distribution.
11. Termination of Employment. (a) If an optionee shall
cease to be employed by the Corporation for any reason (including
disability or retirement), other than death or for cause, he or
she may, but in no event after the expiration date of his or her
option (the "Expiration Date"), exercise all or part of his or
her option or related stock appreciation right, if any (whether
or not wholly exercisable at the date of such cessation of
employment), subsequent to the date of such cessation of
employment if and to the extent expressly specified in the
applicable instrument or instruments evidencing the grant of the
option or stock appreciation right (or under the circumstances
set forth in paragraph (b) of this section 11, if the Committee
takes the action referred to in clause (ii) thereof). If an
optionee's employment by the Corporation is terminated for cause,
all rights under his or her option and any related stock
appreciation right shall expire immediately upon the giving to
him or her of the notice of such termination. The Plan and the
options and any stock appreciation rights granted pursuant to it
shall not confer upon any optionee any right with respect to
continuation of employment by the Corporation, and neither the
Plan nor any such option or stock appreciation right shall
interfere in any way with his or her right, or the Corporation's
right, to terminate his or her employment at any time.
(b) In the event that the Corporation shall diminish or
eliminate its ownership interest in any Operating Unit (whether
by distribution to the stockholders of the Corporation, by sale
to a person other than the Corporation, or otherwise) so that
such Operating Unit shall cease to be an Affiliate, then, with
respect to options and stock appreciation rights held by
employees of such Operating Unit who subsequent to such event
shall not be employees of the Corporation, the Committee may
(either prior or subsequent to such event) take such action and
make such adjustments as the Committee shall determine, and,
without limiting the foregoing, the Committee may (i) accelerate
the exercisability of options and stock appreciation rights to
the extent not yet otherwise exercisable and (ii) extend the
period during which options or stock appreciation rights shall be
exercisable to a date subsequent to the date when such option or
stock appreciation rights would otherwise have expired by reason
of the termination of such employee's employment with the
Corporation without regard to any limitation as the Committee may
specify as described in paragraph (a) of this section 11 (but in
no event to a date later than the Expiration Date); provided,
however, that the Committee shall not take any action or make any
adjustment pursuant to this section inconsistent with the proviso
of the first sentence of section 8(c), or with the second
sentence of section 8(c), or with the proviso of section 9(c), or
with section 17. As used herein, "Operating Unit" shall mean any
division, group, subsidiary or other operating unit of the
Corporation which is designated as such by the Committee.
12. Death of Optionee. (a) In the event of the death of an
optionee while in the employ of the Corporation or within a
period after such employment ceases during which an option is
exercisable by him or her under section 11 hereof, any option or
stock appreciation right theretofore granted to him or her shall
be exercisable in full, if such death occurs prior to cessation
of employment; or, to the extent that the employee was entitled
to exercise the option on the date of cessation of employment, if
such death occurs subsequent to cessation of employment, by the
person to whom such option or stock appreciation right is
transferred by will or the laws of descent and distribution, at
any time within a period of one year succeeding the date of death
of such optionee, but in no event later than the last date on
which the optionee could have exercised the option or stock
appreciation right had he or she not died.
(b) Following the death of any employee who holds an option
granted under the Plan, irrespective of whether stock
appreciation rights shall have theretofore been granted to him or
her in connection with such option, and upon the surrender of
such option, the Committee may, as an alternative means of
settlement of such option, elect to pay, currently or on a
deferred basis, to the person to whom such option is transferred
by will or by the laws of descent and distribution the amount by
which the fair market value per share on the date of such
election shall exceed the option price per share multiplied by
the number of shares which remain exercisable under such option.
In the event that the Committee elects to pay such amount on a
deferred basis, it shall have discretion to determine the period
of time during which such payment is to be deferred (to be
specified by the Committee at the time such payment is deferred)
and there shall be credited at the end of each year (or portion
thereof), during such period interest on the amount deferred at
the beginning of such year at a rate per annum to be determined
by the Committee. The number of shares subject to an option so
surrendered shall be charged against the maximum limitation as to
the number of shares that may be reserved under the Plan, as
specified in sections 5 and 13 hereof. As used in the foregoing,
"fair market value" shall be the average of the high and low
quoted sales prices of a share of Common Stock on the Composite
Tape on the date of such election or, if there was no reported
sale on that date, on the last preceding date on which any
reported sale occurred.
13. Adjustments upon Changes in Capitalization. The
options and stock appreciation rights granted under the Plan may
contain such provisions as the Committee may determine with
respect to adjustments to be made in the number and kind of
shares covered and in the option price in the event of a
reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation,
spin-off or any other change in the corporate structure or shares
of Premark and, in the event of any such change, the aggregate
number and kind of shares available under the Plan and the
maximum number of shares as to which options and stock
appreciation rights may be granted to any individual shall be
appropriately adjusted by the Committee, whose determination
shall be conclusive.
14. Delivery and Registration of Stock. The Corporation
shall not be required to deliver any shares of stock upon the
exercise of an option or stock appreciation right prior to (a)
the admission of such shares to listing on any stock exchange on
which Common Stock may then be listed, and (b) the completion of
such registration or other qualification of such shares under any
state or Federal law, rule or regulation, as the Committee shall
determine to be necessary or advisable.
15. Employee Rights Under the Plan. No employee or other
person shall have any claim or right to be granted an award under
the Plan or any other incentive bonus or similar plan of the
Corporation. Neither the Plan nor any action taken thereunder
shall be construed as giving any employee any right to be
retained in the employ of the Corporation.
16. Withholding Tax. The Corporation shall have the right
to deduct from all amounts paid in cash with respect to the
exercise of a stock appreciation right under the Plan any taxes
required by law to be withheld with respect to such cash
payments. Where a Participant or other person is entitled to
receive shares of Common Stock pursuant to the exercise of a
stock option or a stock appreciation right pursuant to the Plan,
the Corporation shall have the right to require the Participant
or such other person to pay to the Corporation the amount of any
taxes which the Corporation is required to withhold with respect
to such shares, or, in lieu thereof, to retain, or sell without
notice, a sufficient number of such shares to cover the amount
required to be withheld. Upon the disposition of shares of
Common Stock acquired pursuant to the exercise of an incentive
stock option as defined in Section 422A of the Code, the
Corporation shall have the right to require the payment of the
amount of any taxes which are required by law to be withheld with
respect to such disposition.
17. Amendments or Termination. The Board of Directors of
Premark may amend, suspend or terminate the Plan or any portion
thereof at any time, but (except as provided in section 13
hereof) no amendment shall be made without approval of the
stockholders of Premark, which shall (i) increase the total
number of shares of Common Stock which may be sold under the
Plan, (ii) change the class of employees eligible to participate
in the Plan or (iii) withdraw the direction of the administration
of the Plan from the Committee; provided that no such amendment,
suspension or termination shall impair the rights of any
Participant, without his or her consent, in any option or stock
appreciation right theretofore granted under the Plan.
18. Effective Date and Term of the Plan. The effective
date of the Plan shall be November 1, 1986. No stock option or
stock appreciation right shall be granted under the Plan after
November 1, 1996.
Adopted by the Board of Directors of the Corporation on October
28, 1986 and approved by the sole Stockholder of the Corporation
on October 31, 1986; and amended by the Board of Directors on
February 6, 1991 and approved by the Stockholders of the
Corporation on May 1, 1991.
EXHIBIT 10N
November 9, 1992
Mr. Everett V. Goings
18 Tomac Avenue
Old Greenwich, Connecticut 06870
Dear Rick:
I am pleased to offer you the position of Executive Vice
President of Premark International, Inc. and President of
Tupperware, Worldwide. We hope that you will be able to commence
employment with Premark as soon as possible. As you are aware,
the Board of Directors met on November 4, and elected you to this
position and approved the terms and conditions of your employment
as outlined below, effective on your first day of employment.
1. Your initial annual base salary will be $325,000, paid on
Tupperware's regular payroll cycle.
2. You will participate in the Premark International, Inc.
Annual Incentive Plan. You will be awarded $150,000 as your 1992
award to be paid on or before November 30, 1992. This amount
approximates the bonus you will forfeit when you leave your
current employer. For 1993, your individual incentive target
will be 50% of your base salary. The maximum award is 100% of
your base salary. The financial component of your 1993 award
will be based on Worldwide Tupperware financial performance. For
1993, we will guarantee you a minimum incentive award of
$162,500, which is your target award. For 1994 through 1996, the
financial component of your award would be based on non-North
American Tupperware financial performance. Annual incentive
awards are paid in March, following the year of the award. You
must be employed through December 31, to be entitled to an award
for any given year.
3. You will participate in the Premark International, Inc.
Performance Unit Plan (the long-term incentive program).
Starting on January 1, 1993, your award will be based on
Worldwide Tupperware financial performance. This program
provides the opportunity to earn an award ranging from the target
award at 25% of your base salary up to a maximum of 75% of your
base salary. For the two-year long-term incentive program
performance cycle of 1993-1994, we will guarantee you a minimum
award of $81,500, your award at target. The award is based on
1993 financial performance and 1993 and 1994 employment service.
Therefore, payment of any award under the long-term incentive
program is contingent on your continued employment through
December 31, 1994. Beginning in 1994, we expect there to be a
new long-term incentive program, which would likely base your
award on non-North American financial performance.
4. The Compensation and Employee Benefits Committee of the Board
of Directors ("Committee") has granted you a stock option award
of 50,000 shares, effective on your first day of employment. The
number of option shares was determined in part on the stock
compensation you will forfeit when you leave your current
employer. This option would vest three years after the effective
date. You would be considered for additional stock options
annually on each subsequent November, when the Committee normally
grants stock options to the key management employees and
executives.
5. The Committee has awarded you 20,000 shares of restricted
stock, effective on your first day of employment. The number of
restricted shares was determined in part on the stock
compensation you will forfeit when you leave your current
employer. The restrictions would be lifted on one-third of these
shares on the first anniversary of your employment. And one-
third of the restrictions on the remainder would be lifted on the
second and third anniversaries of your employment, so that all
restrictions will have been lifted in three years. Dividends
will be paid during the period of restriction.
6. You will participate in an annual gainsharing program for the
years 1994, 1995 and 1996 to be based on pre-tax segment income
of Tupperware North America, as determined by the Company. For
each year, the gainsharing award will be equal to 10 percent of
the pre-tax segment income if such pre-tax segment income is
$10,000,000 or less. If pre-tax segment income is over
$10,000,000, the gainsharing award will be equal to 10 percent of
pre-tax segment income for the first $10,000,0000 and 15 percent
of the pre-tax segment income for any amount in excess of
$10,000,000. Notwithstanding the above, the maximum gainsharing
award for any year may not exceed $3,000,000, and the maximum
cumulative gainsharing award during the three-year period may not
exceed $6,000,000. The gainsharing award shall be payable 50
percent in cash and 50 percent in Premark restricted stock. The
restrictions on the stock shall lapse in two years. Dividends
will be paid during the period of restriction. Further, the
payment of gainsharing awards is conditioned upon maintaining
non-North American pre-tax segment income of at least the actual
1992 amount, measuring such segment income using foreign exchange
rates in effect on December 31, 1992, in order to eliminate the
effect of changing currency values. Any payments and restricted
stock awards will be made in March, following the year of the
gainsharing award. You must be employed through the date the
award is paid, to be entitled to an award for any given year.
After 1996, the Company intends to structure a program that would
provide an award based on increases in Worldwide Tupperware
segment income, with potential awards at levels which would not
be comparable to the 1994-1996 program, but would be competitive
with market compensation for similar positions.
As we discussed, the purpose of the gainsharing program is to
restore the long-term profitability of Tupperware North America,
while maintaining and increasing the long-term profitability of
non-North American Tupperware. It is understood that the
Committee will consider how the financial results were achieved
and has the right to adjust your award, as equitable, if the
financial results are achieved by short-term decisions which
adversely affect the long-term profitability of Tupperware. In
addition, the Committee may adjust such award, as equitable, in
recognition of extraordinary or non-recurring events or changes
in accounting standards or practices. These principles reflect
the plan provisions and administrative rules that are applied
throughout the Company when determining awards under all annual
and long-term incentive plans and, therefore, will be applied to
all of the incentive plans and programs described above.
Similarly, accruals for the gainsharing program will be charged
to the operating earnings of the North America Tupperware
business, and accruals for the annual and long-term incentive
plans described above will be charged to the appropriate business
segment on which the award is based.
7. In the event your employment is terminated by the Company,
other than for cause (such as gross misconduct, conviction of a
felony, or willful conduct that enriches you at the expense of
the Company), you would be entitled to receive severance payments
equal to two year's salary. Such severance payments would be
paid out in accordance with the Tupperware payroll cycle. These
payments would be offset by any amount you would be entitled to
receive under the Premark International, Inc. Severance Pay Plan.
There would be no award paid out of the Annual Incentive Plan or
the Performance Unit Plan (long-term program). Nor would any
annual gainsharing payment be made, because you must be employed
on the date the award is paid. Your stock options would continue
to become exercisable for a period of one year, and would be
exercisable during that one year period, at which point all
unexercised stock options would be forfeited. You would forfeit
all restricted shares which are still under restriction. The
Company would continue to provide you with medical and dental
benefits, as well as life insurance during this two-year period.
With respect to the medical benefits, the Company would pay the
total cost of COBRA coverage continuation for the first eighteen
months, and then the Company would pay the cost of conversion to
an individual policy and the premium cost for six months. With
respect to the life insurance, the Company would pay the cost of
conversion to an individual policy and would pay the premium cost
for two years. Any payments or benefits that are not required by
law to be paid will be conditioned upon your execution of and
compliance with a confidentiality and non-competition agreement.
8. Should you voluntarily terminate your employment, you would
not become entitled to any payments or benefits other than those
that the Company is obligated by law or by plan to provide. Any
stock options that are exercisable on your last date of
employment would continue to be exercisable for thirty days, and
if not exercised during such period, would be forfeited.
9. As an officer of Premark International, Inc., the Company
will enter into a Change of Control Employment Agreement (golden
parachute) with you. This agreement provides significant
benefits to you in the event you are terminated due to a change
in control.
10. You will be eligible for relocation benefits in accordance
with our standard relocation policy, less any relocation expenses
Avon will cover under your agreement with it. A copy of our
relocation policy, still in draft form, is enclosed for your
information.
11. You will be entitled to participate in the standard
benefits package offered to Tupperware employees, which includes
the following programs:
Base Retirement Plan (pension plan)
Retirement Savings Plan (401(k) plan)
Medical Plan (includes standard medical benefits, and
effective January 1, 1993, mental health and chemical dependency
benefits and prescription drugs)
Dental Plan
Flexible Spending Account Plan
Disability Plan
Group Life Insurance Plan
Business Travel Accident Insurance Plan
12. As an officer of Premark International, Inc., you will be
eligible for our standard executive perquisites, which are as
follows:
Three weeks of vacation per year
Supplemental Benefits Plan
Tax Preparation (up to $2,500 per year)
First Class Travel (Domestic); Business Class Travel
(International)
Annual Physical
Country Club Membership
13. Based on your representation to Premark that you have not
breached, nor will you breach, your agreement with Avon, dated
February 12, 1992, the Company agrees to indemnify you in the
event Avon determines that you have violated the non-competition
and non-disclosure provisions of the Avon agreement. Such
indemnification is limited to the payment of the last two
installments of severance pay under such agreement, to a maximum
of $500,000 in February of 1993 and $500,000 in February of
1994, and reasonable legal fees associated with your defense if
Avon were to seek monetary damages or equitable relief. In the
event Premark were required to make the severance payments
described above, you agree that Premark would subrogate to your
rights to seek payment from Avon and would cooperate with Premark
in such action.
14. Following two years of your employment with the Company, and
based on performance, we will recommend to our Board of
Directors' Committee on Directors that you be nominated for
election to the Board of Directors.
If you have any specific questions regarding these items, don't
hesitate to contact Jim Coleman, Senior Vice President, Human
Resources, directly for clarification or further explanation. If
there is any major item which has been overlooked, please feel
free to contact me directly. Warren Batts and I are very
enthusiastic about your joining Premark International, and
believe you will make a significant contribution to the future
success of the Company. Rick, I hope this letter meets your
expectations. If it does, I would appreciate your signing below
on both copies of this letter. Please return one signed copy to
me by Monday, November 16, 1992. You may retain the other for
your records.
Sincerely,
/s/ James M. Ringler
James M. Ringler
Enclosure
cc: Warren L. Batts
James C. Coleman
Accepted: /s/ E. V. Goings
12/10/92 Everett V. Goings Date
EXHIBIT 10O
PREMARK INTERNATIONAL, INC.
DIRECTOR STOCK PLAN
Section 1. Purpose
The purposes of the Plan are to assist the Company in (1)
promoting a greater identity of interests between the Company's
non-employee directors and its shareholders, and (2) attracting
and retaining directors by affording them an opportunity to share
in the future successes of the Company.
Section 2. Definitions
"Act" shall mean the Securities Exchange Act of 1934, as amended.
"Award" shall mean the award of Common Stock as contemplated by
Section 7 of this Plan.
"Board" shall mean the Board of Directors of the Company.
"Change of Control" shall mean the happening of any of the
following events:
(i) An acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Act)
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Act) of 20% or more of either (1) the
then outstanding shares of Common Stock (the "Outstanding Company
Common Stock") or (2) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); excluding, however, the following: (1) any
acquisition directly from the Company, other than an acquisition
by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired from the Company,
(2) any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company or
(4) any acquisition by any Person pursuant to a transaction which
complies with clauses (1), (2) and (3) of subsection (iii) of
this definition; or
(ii) A change in the composition of the Board such that
the individuals who, as of the effective date of the Plan,
constitute the Board (such Board shall be hereinafter referred to
as the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, for purposes of
this definition, that any individual who becomes a member of the
Board subsequent to such effective date, whose election, or
nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of those individuals
who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso)
shall be considered as though such individual were a member of
the Incumbent Board; but, provided further, that any such
individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board shall
not be so considered as a member of the Incumbent Board; or
(iii) The approval by the stockholders of the Company
of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company ("Corporate Transaction"); excluding, however, such a
Corporate Transaction pursuant to which (1) all or substantially
all of the individuals and entities who are the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or
indirectly, more than 60% of, respectively, the outstanding
shares of common stock, and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the company
resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (2) no Person (other than the
Company, any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the
Company or such corporation resulting from such Corporate
Transaction) will beneficially own, directly or indirectly, 20%
or more of, respectively, the outstanding shares of common stock
of the corporation resulting from such Corporate Transaction or
the combined voting power of the outstanding voting securities of
such corporation entitled to vote generally in the election of
directors except to the extent that such ownership existed with
respect to the Company prior to the Corporate Transaction and (3)
individuals who were members of the Incumbent Board will
constitute at least a majority of the board of directors of the
corporation resulting from such Corporate Transaction; or
(iv) The approval by the stockholders of the Company
of a complete liquidation or dissolution of the Company.
"Change of Control Price" shall mean the higher of (a) the Fair
Market Value of a share of Common Stock on the day of
cancellation of an Award, and (b) the highest cash purchase price
per share of Common Stock paid in a Corporate Transaction.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations thereunder.
"Common Stock" shall mean the common stock, $1.00 par value, of
the Company.
"Company" shall mean Premark International, Inc., a Delaware
corporation.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations
thereunder.
"Fair Market Value" shall mean the composite price of the Common
Stock at the close of business on the New York Stock Exchange
upon the relevant date, adjusted to the next higher five cents if
such price shall not be divisible by five cents.
"Fees" shall mean the annual retainer fee for a Participant in
connection with his or her service on the Board for any fiscal
year of the Company.
"Participant" shall mean each member of the Board who is not an
employee of the Company or any subsidiary of the Company.
"Plan" shall mean the Premark International, Inc. Director
Stock Plan.
"Retirement" shall mean the retirement by a Participant from the
Board in accordance with the Company's stated policy on Director
retirement.
"Rules" shall mean the rules promulgated under the Act from time
to time and the interpretations issued by Securities and Exchange
Commission in respect thereof.
"Stock Option" shall mean a non-qualified stock option, which is
further defined as any right to Common Stock which does not
qualify as an "incentive stock option" as defined under the Code.
Section 3. Eligibility
Each member of the Board who is not an employee of the Company or
any subsidiary of the Company shall be eligible to participate in
the Plan.
Section 4. Shares Subject to the Plan
The number of shares of Common Stock which shall be available for
use under the Plan shall be 300,000, subject to adjustment
pursuant to Section 17 hereunder. The shares issued under the
Plan may be authorized and unissued shares or issued shares
heretofore or hereafter acquired and held as treasury shares.
Section 5. Duration of Plan
Unless earlier terminated pursuant to Section 11 hereof, this
Plan shall automatically terminate on, and no grants, awards or
elections may be made after, the date of the tenth anniversary of
the approval by stockholders of the Plan pursuant to Section 19
hereof.
Section 6. Administration
The Plan shall be administered under the direction of the Board
or any committee thereof so designated by the Board; provided,
however, that the Board or any such committee shall have no
authority to administer the Plan with respect to selection of
Participants under the Plan or the timing, pricing or amounts of
any grants or awards.
Section 7. Initial Awards
Each Participant shall receive one thousand (1,000) shares of
Common Stock, upon serving his or her initial three months as a
member of the Board.
Section 8. Stock in Lieu of Retainer
Each Participant who, in any year of the Plan, files with the
Company an irrevocable election concerning the Fees to be earned
in the next fiscal year of the Company, may receive in lieu of
cash an amount of shares of Common Stock equal in value to all or
any portion of the Fees (but only increments of 25% or a multiple
thereof) as so designated by the Participant, which amount shall
be determined by dividing the Fees payable in each fiscal quarter
of the Company by the Fair Market Value of a share of Common
Stock on the last business day of such fiscal quarter (but if
such date is not a day on which the New York Stock Exchange is
open, then on the next preceding day on which the New York Stock
Exchange is open), except that only whole numbers of shares shall
be obtainable pursuant to this Section, and any remainder Fees
which otherwise would have purchased a fractional share shall be
paid in cash.
Section 9. Stock Options
(a) Each Participant who, in any year of the Plan, files with
the Company an irrevocable election concerning the Fees to be
earned in the next fiscal year of the Company, may receive in
lieu of all or any portion of the cash Fees (but only increments
of 25% or a multiple thereof) as so designated by the
Participant, a Stock Option for an amount of shares of Common
Stock in each fiscal year as follows:
Percent of Annual Number of
Retainer Forgone Options Received
100% 2,000
75% 1,500
50% 1,000
25% 500
The exercise price of such shares shall be determined as follows:
Fair Market Value
of a Share - 100% of Fee = Exercise Price
of Common Stock 2,000 Per Share
Fair Market Value
of a Share - 75% of Fee = Exercise Price
of Common Stock 1,500 Per Share
Fair Market Value
of a Share - 50% of Fee = Exercise Price
of Common Stock 1,000 Per Share
Fair Market Value
of a Share - 25% of Fee = Exercise Price
of Common Stock 500 Per Share
In no event, however, shall the exercise price be less than 50%
of the Fair Market Value of a share of Common Stock on the date
of the grant.
(b) The date of grant of a Stock Option pursuant to this Section
9 shall be the date of the annual meeting of stockholders of the
Corporation, provided that such meeting occurs at least six (6)
months and one day after the Participant's election to receive a
Stock Option in lieu of cash Fees; otherwise, the date of grant
shall be six (6) months and one day after the Participant's
election to receive a Stock Option in lieu of cash Fees. If such
day would not be a day on which the New York Stock Exchange is
open, then on the next succeeding day on which the New York Stock
Exchange is open.
(c) A Stock Option granted pursuant to this Section 9 shall vest
and be exercisable on the last day of the fiscal year in which
the Stock Option is granted. In the event that a Participant is
not a member of the board on the last day of the fiscal year in
which the Stock Option is granted, except in the case of a
Participant's Retirement or termination for cause, such
Participant's Stock Option which has not become vested and
exercisable as of such time shall (i) be reduced to an amount
which reflects the amount of Fees earned as of the date of
termination from service on the Board, and (ii) shall continue to
vest. The term of exercisability for a Stock Option granted
under this Section 9 shall be ten (10) years.
(d) The remaining terms and conditions of each such Stock Option
shall be as set forth in this Plan and in the form of Stock
Option Agreement used in connection with this Plan.
Section 10. Transferability
Rights, grants and awards under the Plan may not be assigned,
transferred, pledged or hypothecated, and shall not be subject to
execution, attachment or similar process. Notwithstanding the
foregoing, any such right, grant or award constituting a
"derivative security" under the Rules shall not be transferable
by a Participant other than by will or by operation of applicable
laws of descent and distribution or pursuant to a domestic
relations order or qualified domestic relations order as such
terms are defined by the Code or ERISA.
Section 11. Amendment
The Plan may be amended by the Board; provided, however, that (a)
no amendment shall be made that would impair prior awards or
rights of a Participant without his or her consent; (b) no
amendment shall be made more frequently than once every six
months, unless such amendment is required because of changes in
the Code or ERISA; (c) no such amendment shall be effective
without the approval by the holders of a majority of the shares
of the Common Stock present, or represented, and entitled to vote
at a meeting held for such purpose, if such amendment would (i)
materially increase the benefits accruing to Participants under
the Plan, (ii) materially increase the number of securities which
may be issued under the Plan, or (iii) materially modify the
requirements as to eligibility for participation in the Plan; and
(d) no amendment shall be made which would prevent a
Participant's participation in the Plan from being entitled to an
exemption from Section 16(b) of the Act.
Section 12. Termination
The Plan may be terminated at any time by the Board or by the
approval by the holders of a majority of the shares of the Common
Stock present, or represented, and entitled to vote at a meeting
held for such purpose.
Section 13. Withholding Taxes
No later than the date as of which an amount first becomes
includible in the gross income of the Participant for Federal
income tax purposes with respect to any Award under the Plan or
with respect to any exercise of any Stock Option granted under
the Plan, the Participant shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment
of, any Federal, state, local or foreign taxes of any kind
required by law to be withheld. Such withholding obligations may
be settled with Common Stock, including Common Stock that is part
of the Award or that is received upon the exercise of the Stock
Option that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional
upon such payment or arrangements, and the Company shall, to the
extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the Participant. The Company
may establish such procedures as it deems appropriate, including
the making of irrevocable elections or the timing of the use of
Common Stock, for the settlement of its withholding obligations.
Section 14. Effect of Change of Control
Notwithstanding any other provision of the Plan to the contrary,
in the event of a Change of Control, any Stock Options
outstanding and not then exercisable and vested as of the date
such Change of Control is determined to have occurred, shall
become fully exercisable and vested to the full extent of the
original grant. During the 60-day period from and after a Change
of Control, (the "Exercise Period"), a Participant who holds a
Stock Option shall have the right, in lieu of the payment of the
exercise price for the shares of Common Stock being purchased
under the Stock Option and by giving notice to the Company, to
elect (within the Exercise Period) to surrender all or part of a
Stock Option to the Company and to receive cash, within 30 days
of such notice, in an amount equal to the amount by which the
Change of Control Price per share of Common Stock on the date of
such election shall exceed the exercise price per share of Common
Stock under the Stock Option (the "Spread") multiplied by the
number of shares of Common Stock granted under the Stock Option
as to which the right granted under this Section shall have been
exercised; provided, however, that if the Change of Control is
within six (6) months of the date of grant of a particular Stock
Option held by a Participant no such election shall be made by
such Participant with respect to such Stock Option prior to six
(6) months from the date of grant. If the end of such 60-day
period from and after a Change of Control is within six (6)
months from the date of grant of a Stock Option or the date of an
Award, such Stock Option or Award shall be cancelled in exchange
for a cash payment to the Participant, effected on the day which
is six (6) months and one day after the date of grant of such
Stock Option or Award, as the case may be, equal to (a) in the
case of a Stock Option, the Spread multiplied by the number of
shares of Common Stock granted under the Stock Option, or (b) in
the case of an Award, the Change of Control Price multiplied by
the number of shares of Common Stock comprising an outstanding
Award.
Section 15. Death, Disability, Termination or Retirement of
Participant
(a) Death While A Director. Notwithstanding any other provision
of the Plan to the contrary, in the event of the death of a
Participant while a member of the Board, any Stock Options
outstanding as of the date of death and not then exercisable
shall become immediately exercisable, and all outstanding Stock
Options held by such Participant shall remain exercisable by the
person to whom the Stock Option is transferred by will or by the
laws of descent and distribution for a period of the lesser of
(i) the remaining term of the Stock Option, or (ii) three (3)
years after the date of death.
(b) Disability, Retirement or Other Termination. Except as
otherwise provided by the Plan, in the event of a Participant's
termination of membership on the Board as a result of the
Participant's disability or Retirement or for another reason
other than cause, any Stock Options outstanding as of the date of
such termination and not then exercisable shall (i) be adjusted
in amount to reflect the proportion of Fees earned in the final
year of such Participant's service in such year (in accordance
with the operation of Section 8 and 9 of this Plan and in
consideration of such Participant's elections for such year), and
(ii) become exercisable on the last day of the Company's then-
current fiscal year. All outstanding Stock Options held by such
Participant shall remain exercisable for the full period
contemplated by the terms of such Stock Option. In the event of
the death of a Participant subsequent to termination of
membership from the Board as a result of circumstances described
in this Section 15(b), any Stock Options outstanding as of the
date of death and not then exercisable shall become immediately
exercisable, and all outstanding Stock Options held by such
Participant shall remain exercisable by the person to whom the
Stock Option is transferred by will or by the laws of descent and
distribution for a period of the lesser of (i) the remaining term
of the Stock Option, or (ii) three (3) years after the date of
death.
Section 16. Effect of Termination for Cause
If a Participant incurs a termination of membership on the Board
for cause, such Participant's Stock Options which are not then
exercisable shall be deemed automatically cancelled immediately.
Unless otherwise determined by the Board, for purposes of the
Plan "cause" shall mean (i) the conviction of the Participant for
commission of a felony under Federal law or the law in the state
in which such action occurred, or (ii) dishonesty in the course
of fulfilling the Participant's duties as a director.
Section 17. Adjustments Upon Changes in Capitalization
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, extraordinary
distribution with respect to the Common Stock or other change in
corporate structure affecting the Common Stock, the Board may
make such substitution or adjustments in the aggregate number and
kind of shares reserved for issuance under the Plan, in the
number, kind and option price of shares subject to outstanding
Stock Options, in the number and kind of shares as Awards to be
granted under the Plan and/or such other substitution or
adjustments in the consideration receivable upon exercise as it
may determine to be appropriate in its sole discretion; provided,
however, that the number of shares subject to any Award shall
always be a whole number.
Section 18. Regulatory Matters
The Plan is intended to be construed so that participation in the
Plan will be exempt from Section 16(b) of the Act, pursuant to
Rule 16b-3 as promulgated thereunder, as may be further amended
or interpreted by the Securities and Exchange Commission. In the
event that any provision of the Plan shall be deemed not to be in
compliance with the Rules in order to enjoy the exemption from
the Act, such provision shall be deemed of no force or effect and
the remaining provisions of the Plan shall remain in effect.
Section 19. Effectiveness of Plan
The Plan shall become effective as of the date its adoption by
the Board is approved by the holders of a majority of the shares
of the Common Stock present, or represented, and entitled to vote
at a meeting held for such purpose.
<PAGE>
<TABLE>
Exhibit 11
PREMARK INTERNATIONAL, INC.
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Earnings
Income before cumulative effect
of accounting changes $172.5 $4.6 $102.3
Cumulative effect of changes in
method of accounting for:
Income Taxes - 15.0 -
Postretirement Benefits - (98.9) -
Net income (loss) $172.5 ($79.3) $102.3
PRIMARY METHOD
Shares
Cumulative average outstanding 31,842 31,627 30,863
shares
Common equivalent shares 1,679 1,287 648
Weighted average number of common
shares and common equivalent
shares outstanding 33,521 32,914 31,511
Primary earnings per share
Before cumulative effect of
accounting changes $5.15 $0.14 $3.25
Cumulative effect of changes in
method of accounting for:
Income Taxes - 0.46 -
Postretirement Benefits - (3.01) -
Net income (loss) per share $5.15 ($2.41) $3.25
FULLY DILUTED METHOD
Shares
Cumulative average outstanding
shares 31,842 31,627 30,863
Common equivalent shares 1,772 1,319 1,463
Weighted average number of common
shares and common equivalent
shares outstanding 33,614 32,946 32,326
Fully diluted earnings per share:
Before cumulative effect of
accounting changes $5.13 $0.14 $3.16
Cumulative effect of changes in
method of accounting for:
Income Taxes - 0.46 -
Postretirement Benefits - (3.01) -
Net income (loss) per share $5.13 ($2.41) $3.16
</TABLE>
</PAGE>
EXHIBIT 13
<PAGE>
FINANCIAL REVIEW
The information contained in this financial review should be read
in conjunction with the consolidated financial information
provided on pages 26 to 40 of this Annual Report.
RESULTS OF OPERATIONS
OVERALL
Sales and Net Income (Loss) Sales increased by 5 percent in
1993 to $3.1 billion. All segments reported strong improvement
other than the Food Equipment Group, which reported a moderate
decline attributable to its European operations.
The improvement in 1993 follows a comparable percentage
increase in reported sales in 1992 over 1991. The increase in
1992 reflected strength in Tupperware's European and Asia Pacific
operations, the Food Equipment Group, and Ralph Wilson Plastics.
Net income in 1993 was $172.5 million versus a net loss of
$79.3 million reported in 1992. The prior year's net loss
included an after-tax restructuring charge of $111.4 million, and
net charges of $83.9 million for the adoption of two new
accounting standards. Net income in 1993 would have increased 49
percent over 1992, excluding these unusual items. The increase
was driven by higher sales volume throughout Tupperware and its
lower U.S. cost structure. A lower effective tax rate, along with
record volume at Ralph Wilson Plastics, record profit at West
Bend and significantly higher results in the domestic operations
of the Food Equipment Group, also contributed to the improvement.
Weakness at the Food Equipment Group in Europe and adhesive
warranty costs at Ralph Wilson Plastics had negative impacts on
1993 results.
Compared with 1991, net income in 1992, excluding the
unusual items, improved by $13.7 million. The 13 percent increase
was the result of substantially lower interest expense,
significant profit improvement in the U.S. Food Equipment Group
and Tupperware Europe, and a lower tax rate. These improvements
were partially offset by lower results in Tupperware's U.S. and
Latin American operations as well as in Food Equipment Group
Europe, and higher costs in the Decorative Products Group.
In 1993, 45 percent of Premark's sales and 62 percent of
total segment profit were generated outside the United States. In
1992, 47 percent of sales and 70 percent of segment profit,
excluding the Tupperware restructuring charge, were generated
outside the United States.
Costs and Expenses The cost of products sold in relation to
sales was 51.8 percent in 1993, 53.3 percent in 1992 and 53.8
percent in 1991. Reduced manufacturing costs and increased
capacity utilization at Tupperware U.S., as a result of the
consolidation of manufacturing operations; more favorable pricing
at Tupperware Europe; and higher volume, lower costs and
nominally higher prices at Food Equipment Group U.S. had
favorable impacts on the ratio in 1993, compared with 1992. These
factors were somewhat offset by increased adhesive warranty costs
at Ralph Wilson Plastics. There was a consistent relationship
between the components of sales and cost of sales in 1992 versus
1991.
Delivery, sales and administrative expenses as a percentage
of sales were 39.9 percent in 1993, compared with 39.7 percent in
1992 and 38.9 percent in 1991. There was no significant change in
the 1993 ratio as cost increases and decreases were comparable,
in percentage terms, with sales increases and decreases
throughout the company's operating segments. The 1992 increase
from 1991 was mainly due to increased promotional and marketing
expenses at Tupperware, as well as additional annual expenses for
retiree medical benefits due to the adoption of a new accounting
standard.
The $136.7 million pretax charge recorded by Tupperware in
1992 was primarily for the restructuring of the U.S. business. In
implementing the restructuring, Tupperware ceased manufacturing
at its Halls, Tennessee facility, wrote down certain other
manufacturing assets and took steps to strengthen its
distribution network.
Tax Rate The effective tax rate in 1993 was 24.9 percent. This
compares with 32.0 percent in 1992 before the restructuring
charge and 36.0 percent in 1991. The lower tax rate in 1993 was
attributable to improved operating income that allowed the
recognition of previously reserved tax assets for temporary
differences and foreign tax credits. The lower tax rate in 1992
compared with 1991 was due to two primary factors: lower income
taxes on foreign source income due to the use of foreign tax
credits, and a reduction in the domestic effective tax rate
attributable to the decrease in the deferred tax asset valuation
allowance recorded as a result of the change in accounting for
deferred tax assets.
Net Interest Expense Interest expense, net of interest income,
was $26.1 million in 1993, comparable with the $26.6 million of
net expense in 1992. In 1991, net interest expense was $43.5
million due to higher debt levels resulting from the 1990
acquisition of Florida Tile and a stock repurchase program
completed in the first half of 1990. Additionally, $75 million of
long-term debt was refinanced in February 1992 with commercial
paper borrowings at lower interest rates.
SEGMENTS
TUPPERWARE
Sales and Segment Profit 1993 vs. 1992 Sales were $1.23 billion
in 1993, an 11 percent increase from $1.11 billion in 1992. All
regions made strong contributions to the increase. Excluding
foreign exchange effects, sales increased by 15 percent. Segment
profit improved to $171.0 million from a reported loss of $25.3
million in 1992. After adjusting for the effect of 1992's pretax
restructuring charge of $136.7 million, 1993's segment profit
increased by $59.6 million from 1992. All regions had significant
gains, with the United States showing the most dramatic
improvement. In 1993, the worldwide average active sales force
was 6 percent higher than in 1992. For 1993 and 1992,
respectively, Tupperware accounted for 40 percent and 38 percent
of Premark's sales and generated 61 percent and 51 percent,
excluding the 1992 restructuring charge, of Premark's segment
profit.
Regional Results Europe continues to be Tupperware's largest
market, accounting for 44 percent of total Tupperware sales in
1993. Sales grew by 8 percent from 1992 despite the negative
effect of foreign exchange rates. Profits were up significantly
on substantial volume and pricing improvements in Germany and
volume improvement in Austria, partially offset by lower volume
in Spain.
Asia Pacific's sales rose by 11 percent over 1992 to $307.8
million, and segment profit was up sharply. The region's sales
accounted for 25 percent of Tupperware's 1993 total. Results
benefited from higher volume in Japan and certain other smaller
markets. This was partially offset by a less advantageous sales
mix in Japan and lower volume in Korea.
In the United States, sales of $234.1 million were 11
percent higher than in 1992 and accounted for 19 percent of
Tupperware's sales. Segment profit improved to $12.5 million from
a prior year loss of $21.5 million, after excluding 1992's
restructuring charge. The sharp improvement was due to the
combination of the higher sales, reflecting an 11 percent
increase in the active sales force, and lower manufacturing costs
resulting from the restructuring actions taken beginning in 1992.
Cost savings arising from the restructuring amounted to
approximately $25 million in 1993.
Latin America's sales rose to $120.8 million, 16 percent
higher than in 1992, and represented 10 percent of Tupperware's
sales. The strong sales increase was led by higher volume in
Argentina and improved pricing in Mexico. The area reported a
significant increase in segment profit on continued strength in
Mexico and improved operations in other markets.
1992 vs. 1991 In 1992, Tupperware's sales grew by 3 percent to
$1.11 billion from $1.08 billion in 1991. Higher sales in Europe
and Asia Pacific, together with favorable foreign exchange rates,
more than offset declines in the United States and Latin America.
Segment profit, however, was significantly affected by the 1992
restructuring charge, which resulted in a $25.3 million loss for
the year compared with segment profit of $121.2 million in 1991.
Excluding the charge, profit would have been down 8 percent
mainly due to lower results in the United States and Latin
America as well as higher promotional costs worldwide.
FOOD EQUIPMENT GROUP
Sales and Segment Profit 1993 vs. 1992 Food Equipment Group's
worldwide sales of $1.01 billion in 1993 decreased by 4 percent
from 1992. Excluding the negative effect of foreign exchange
rates on the comparison, 1993 sales were even with 1992 as
moderately higher U.S. sales were offset by a decline in Europe.
Segment profit of $51.3 million was up 3 percent from the $49.6
million reported for 1992 as improved U.S. margins more than
offset weaker European results. The Food Equipment Group
contributed 32 percent and 36 percent of Premark's sales, and 18
percent and 23 percent, excluding the 1992 Tupperware
restructuring charge, of segment profit in 1993 and 1992,
respectively.
Regional Results Sales in the United States rose 4 percent to
$610.3 million in 1993 led by strong improvement in shipments to
restaurants and other institutions comprising the foodservice
market and a modest increase in service revenue. The higher sales
were the result of higher unit volume and nominal price
increases. Nearly all major product lines experienced increases.
Segment profit increased sharply from the higher sales and
continued cost-reduction efforts.
European sales declined 17 percent compared with 1992
because of the negative impact of foreign exchange rates and
lower volume stemming from the recessionary environment in
several markets. Likewise, despite cost-reduction measures taken
last year, segment profit was off sharply due to the lower sales
and production volumes. Domestic operations accounted for 60
percent and 56 percent of the group's sales and 79 percent and 66
percent of its segment profit in 1993 and 1992, respectively.
1992 vs. 1991 Worldwide, Food Equipment Group sales in 1992
increased more than 4 percent to $1.05 billion from $1.01 billion
in 1991. The increase was the result of higher volume in the
United States and Europe. Favorable foreign exchange rates also
contributed to the increase. Segment profit rose nearly 21
percent to $49.6 million from $41.1 million in 1991, as higher
sales volume and cost-reduction efforts in the United States led
to substantial improvement, which more than countered sharply
lower profits in Europe.
CONSUMER AND DECORATIVE PRODUCTS
Sales and Segment Profit 1993 vs. 1992 Consumer and Decorative
Products sales in 1993 rose 10 percent to $857.7 million from
$779.4 million with all units in the segment reporting strong
sales increases. Segment profit was essentially flat in 1993 at
$56.2 million compared with $55.9 million in 1992, as the higher
sales were offset by increased costs at Ralph Wilson Plastics,
Florida Tile and Precor. Consumer and Decorative Products
accounted for 28 percent and 26 percent of Premark's sales, and
21 percent and 26 percent, before the 1992 Tupperware
restructuring charge, of segment profit in 1993 and 1992,
respectively.
Decorative Products Group Group sales in 1993 were $618.3
million, which represents an 8 percent improvement from 1992. At
Ralph Wilson Plastics, sales rose 6 percent to a record $429.2
million in 1993, but segment profit declined due to adhesive
warranty claims. Excluding charges for the adhesives issue,
profit would have been at a record level based on improved unit
volume and pricing, and lower manufacturing costs. The company
has not been able to predict the aggregate cost of the adhesive
issue. Reserves have been provided based upon an evaluation of
past claim information and are subject to revision based on an
ongoing review of new claim data. Charges could continue in 1994
and beyond.
Florida Tile's 1993 sales posted a good increase on volume
improvements in all lines. Segment profit, however, was
significantly lower than in 1992 due to costs to improve the
unit's distribution system and for asset disposals and
environmental matters. Tibbals had sharply higher sales as the
result of increased volume in all of its lines except parquet.
Segment profit approached breakeven for the year, a significant
increase over 1992, as a result of the higher volume and
improvement at its Somerset plant.
Consumer Products Group In 1993, West Bend had a double digit
percentage increase in sales on the strength of new products and
its direct to-the-home cookware business, which led to record
segment profit. Precor reported a strong sales improvement in
1993 on the strength of treadmill volume. Segment profit,
however, fell significantly because of lower prices and costs
associated with developing commercial and export markets.
1992 vs. 1991 In 1992, sales in the Consumer and Decorative
Products segment rose 7 percent to $779.4 million from $729.0
million in 1991 due to higher volume in the Decorative Products
group. Segment profit was down 8 percent to $55.9 million from
$60.9 million as slight improvements at Ralph Wilson Plastics and
West Bend were overshadowed by declines at Florida Tile, Precor
and Tibbals.
FINANCIAL CONDITION
Liquidity and Capital Resources Working capital was $251.8
million at the end of 1993, compared with $251.0 million in 1992
and $256.8 million in 1991. The current ratio was 1.3-to-1 at the
end of 1993, 1992 and 1991. On February 1, 1994, the company
called its $150 million 8 3/8% notes, which had a stated maturity
date in 1997. The redemption was funded through available cash
and the issuance of commercial paper at more favorable interest
rates. At December 25, 1993, $45 million of the $150 million of
8 3/8% notes was classified as long-term, representing the
portion expected to be financed throughout 1994 using commercial
paper borrowings. The build up of cash in anticipation of the
redemption, along with higher inventories and accounts
receivable, offset by higher accounts payable and the
classification of $105 million of the 8 3/8% notes as short-term,
accounted for the slight increase in 1993's working capital. The
1992 decline in working capital was due to decreases in accounts
and notes receivable, primarily as a result of reclassification
from short-term to long-term, as well as lower inventories and
cash, and an increase in accrued liabilities, all of which was
mostly offset by a decline in short-term debt.
The total debt-to-capital ratio at the end of 1993 was 27.7
percent, compared with 29.6 percent at the end of 1992. As of
December 25, 1993, the company had unused lines of credit of
$456.1 million, including $250 million under an unsecured
revolving credit facility, which expires in May 1995. Future cash
flows, lines of credit and other short-term financing
arrangements are expected to be adequate to fund operating and
investing requirements.
Operating Activities In 1993, cash provided by operating
activities was $254.5 million compared with $239.8 million in
1992 and $323.3 million in 1991. The 1993 increase over the
previous year reflects the improvement in income partially offset
by increased working capital needs to support the higher level of
business. Cash provided by operating activities in 1992 was lower
than in 1991, as the absence of a significant reduction in
inventories was only partially offset by an increase in the
levels of accounts payable and accruals.
Investing Activities Capital expenditures amounted to $146.1
million in 1993, $136.7 million in 1992 and $96.6 million in
1991. A higher level of machinery and equipment purchases to
support Tupperware's European operations in 1993, and completion
of the Tupperware Korea plant in 1992, respectively, accounted
for significant portions of the increases over 1991. Capital
expenditures are expected to be approximately $170 million in
1994.
Share Repurchase In May 1993, the company announced it would
purchase up to three million of its shares of common stock over
five years, with volume and timing to depend on market
conditions. The purpose of the program is to minimize the
fluctuation in the number of shares outstanding resulting from
the exercise of employee stock options. Shares acquired will be
used to satisfy the exercise of stock options as well as for
other general corporate needs. Purchases will be made in the open
market and will be financed primarily by cash flow from
operations. Through December 25, 1993, and February 28, 1994,
569,400 and 989,700 shares have been repurchased at an average
cost of $70 and $75 per share, respectively.
Dividends In 1993, dividends declared per common share were
$1.09, up from $0.96 in 1992 and $0.84 in 1991. Quarterly
dividends increased to 28 cents and 25 cents in the second
quarters of 1993 and 1992, respectively.
NEW ACCOUNTING STANDARDS
In 1993, the company adopted Statement of Financial Accounting
Standards (SFAS) No. 112, "Employers' Accounting for
Postemployment Benefits." This standard requires the recognition
on the accrual basis of the company's obligation to provide
certain benefits to former or inactive employees after they leave
employment but before retirement. As Premark's existing policies
included accrual basis accounting for many of the benefits
covered by SFAS No. 112, the cumulative pretax effect of adopting
the new standard was only $2.1 million. This amount has been
included as a component of "Other expense, net" in the 1993
Consolidated Statement of Operations.
In 1992, the company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other then Pensions," and
SFAS No. 109, "Accounting for Income Taxes." The $98.9 million
negative after-tax effect of adopting SFAS No. 106 and the $15.0
million benefit of adopting SFAS No. 109 were both recorded in
1992. The incremental annual expense of accounting for
postretirement benefits other than pensions, under SFAS 106
rather than the company's previous accounting method, was $6
million in 1993 and $8 million in 1992.
IMPACT OF INFLATION AND FOREIGN EXCHANGE
Inflation continues at a low level in the United States and
recently has not had a significant impact on the company's
domestic operations. A significant portion of Premark's profits
comes from international operations. As a result, its earnings
and financial position are subject to fluctuation in foreign
currency exchange rates. A strengthening U.S. dollar generally
has a negative impact on both. The company uses financial
instruments, including forward contracts, foreign currency
borrowings, currency swaps and financial guarantees, to hedge its
exposure to certain foreign exchange risk as appropriate.<PAGE>
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
(Dollars in millions, except per share amounts) 1993 1992 1991 1990 1989 1988 1987
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating results
Net Sales:
Tupperware $1,229.7 $1,112.3 $1,076.3 $1,019.2 $ 949.1 $ 895.1 $ 829.4
Food Equipment Group 1,009.9 1,054.3 1,010.4 999.0 931.8 874.0 808.9
Consumer and Decorative Products 857.7 779.4 729.0 703.2 634.9 555.8 489.3
--------- --------- --------- --------- --------- --------- ---------
Total net sales $3,097.3 $2,946.0 $2,815.7 $2,721.4 $2,515.8 $2,324.9 $2,127.6
========= ========= ========= ========= ========= ========= =========
Segment profit (loss):
Tupperware $ 171.0 $ (25.3) $ 121.2 $ 64.9 $ 104.2 $ 115.7 $ 65.2
Food Equipment Group 51.3 49.6 41.1 26.9 21.8 57.8 53.3
Consumer and Decorative Products 56.2 55.9 60.9 66.1 59.4 58.1 50.7
--------- --------- --------- --------- --------- --------- ---------
Total segment profit 278.5 80.2 223.2 157.9 185.4 231.6 169.2
Unallocated expenses (22.7) (19.7) (19.8) (19.7) (20.7) (22.9) (27.8)
Interest expense, net (26.1) (26.6) (43.5) (39.1) (22.3) (12.1) (15.3)
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes and
cumulative effect of accounting changes 229.7 33.9 159.9 99.1 142.4 196.6 126.1
Provision for income taxes 57.2 29.3 57.6 47.1 64.0 75.4 54.6
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative
effect of accounting changes 172.5 4.6 102.3 52.0 78.4 121.2 71.5
Cumulative effect of accounting changes - (83.9) - - - (15.9) -
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) $ 172.5 $ (79.3) $ 102.3 $ 52.0 $ 78.4 $ 105.3 $ 71.5
========= ========= ========= ========= ========= ========= =========
Per share:
Income before cumulative effect
of accounting changes $ 5.15 $ 0.14 $ 3.25 $ 1.64 $ 2.24 $ 3.50 $ 2.08
Net income (loss) 5.15 (2.41) 3.25 1.64 2.24 3.03 2.08
========= ========= ========= ========= ========= ========= =========
Profitability ratios
As a percent of sales:
Tupperware segment profit (loss) 13.9% (2.3)% 11.3% 6.4% 11.0% 12.9% 7.9%
Food Equipment Group segment profit 5.1 4.7 4.1 2.7 2.3 6.6 6.6
Consumer and Decorative
Products segment profit 6.6 7.2 8.4 9.4 9.4 10.5 10.4
Total segment profit 9.0 2.7 7.9 5.8 7.4 10.0 8.0
Net income (loss) 5.6 (2.7) 3.6 1.9 3.1 4.5 3.4
Return on average equity 22.7 (10.3) 12.8 6.7 10.1 14.9 11.5
Return on average invested capital<F1> 19.3 (5.6) 11.2 6.4 9.0 12.6 9.5
_____________
<FN>
<F1> Net income plus after-tax interest expense divided by average long-term debt and equity.
/TABLE
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
(Dollars in millions, except per share amounts) 1993 1992 1991 1990 1989 1988 1987
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Financial condition
Working capital $ 251.8 $ 251.0 $ 256.8 $ 367.5 $ 440.4 $ 430.0 $ 477.2
Property, plant and equipment, net 671.5 654.6 701.8 719.9 509.5 494.0 464.2
Total assets 2,117.0 1,958.8 2,034.0 2,034.3 1,757.2 1,655.2 1,585.7
Short-term borrowings and current
portion of long-term debt 143.4 24.6 121.4 73.9 77.3 88.9 53.0
Long-term debt 168.0 274.2 278.5 495.9 254.1 237.9 235.7
Shareholders' equity 811.9 710.3 836.4 757.9 800.6 754.4 663.1
Current ratio 1.3 1.3 1.3 1.6 1.7 1.8 1.9
Long-term debt-to-equity 20.7% 38.6% 33.3% 65.4% 31.7% 31.5% 35.5%
Total debt-to-capital 27.7% 29.6% 32.4% 42.9% 29.3% 30.2% 30.3%
Other data
Net cash provided by operating activities $ 254.5 $ 239.8 $ 323.3 $ 221.7 $ 131.4 $ 132.8 $ 182.1
Capital expenditures 146.1 136.7 96.6 183.2 103.4 104.1 87.2
Depreciation and amortization 111.9 118.0 115.3 101.2 84.3 76.0 70.5
Advertising 42.5 43.0 37.4 32.9 28.8 30.0 32.4
Research and development 41.0 41.3 31.2 31.4 28.7 24.5 25.4
Number of employees (thousands) 23.9 24.2 24.0 25.4 24.7 24.0 22.8
Common stock data
Dividends declared per share $ 1.09 $ 0.96 $ 0.84 $ 0.84 $ 0.78 $ 0.53 $ 0.29
Dividend payout ratio<F1> + 29.5% 51.2% 37.5% 25.7% 25.5% +
Average shares outstanding (thousands) 33,521 32,914 31,511 31,824 35,078 34,721 34,313
Year-end book value per share $ 25.45 $ 22.33 $ 26.87 $ 24.67 $ 23.53 $ 22.27 $ 19.67
Year-end price/earnings ratio 15.58 (17.43) 12.50 10.59 13.73 10.40 10.76
Year-end market/book ratio 3.15 1.88 1.51 0.70 1.31 1.41 1.14
Year-end shareholders (thousands) 26.9 29.0 31.3 33.7 36.3 39.3 43.5
_____________
<FN>
<F1> Dividends declared per share divided by prior year earnings per share.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
<CAPTION>
(In millions, except per share amounts) Dec. 25, Dec. 26, Dec. 28,
Year ended 1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Net sales $3,097.3 $2,946.0 $2,815.7
--------- --------- ---------
Costs and expenses
Cost of products sold 1,604.2 1,579.0 1,514.5
Delivery, sales and administrative expense 1,236.6 1,169.7 1,095.8
Interest expense 32.1 35.1 55.7
Interest income (6.0) (8.5) (12.2)
Other expense, net 0.7 0.1 2.0
Restructuring costs - 136.7 -
--------- --------- ---------
Total costs and expenses 2,867.6 2,912.1 2,655.8
--------- --------- ---------
Income before income taxes and
cumulative effect of accounting changes 229.7 33.9 159.9
Provision for income taxes 57.2 29.3 57.6
--------- --------- ---------
Income before cumulative effect
of accounting changes 172.5 4.6 102.3
Cumulative effect of change in accounting for:
Income taxes - 15.0 -
Postretirement benefits (net of $41.1 tax benefit) - (98.9) -
--------- --------- ---------
Net income (loss) $ 172.5 $ (79.3) $ 102.3
========= ========= =========
Net income (loss) per common and common equivalent share:
Before cumulative effect of accounting changes $ 5.15 $ 0.14 $ 3.25
Cumulative effect of change in accounting for:
Income taxes - 0.46 -
Postretirement benefits - (3.01) -
--------- --------- ---------
Net income (loss) per common and common equivalent share $ 5.15 $ (2.41) $ 3.25
========= ========= =========
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
Dec. 25, Dec. 26, Dec. 28,
(In millions) Year ended 1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $ 172.5 $ (79.3) $ 102.3
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 111.9 118.0 115.3
Loss (gain) on sale of assets 3.6 (0.5) 1.4
Foreign exchange gain, net (1.9) (1.7) (0.9)
Cumulative effect of changes in accounting for:
Income taxes - (15.0) -
Postretirement benefits - 98.9 -
Write-down of manufacturing facilities - 60.4 -
Changes in assets and liabilities, excluding effects of acquisitions:
(Increase) decrease in accounts and notes receivable (35.7) 18.3 (4.4)
(Increase) decrease in inventory (45.3) 6.8 72.1
Increase in deferred income taxes (15.8) (30.4) (2.9)
Increase in accounts payable and accruals 41.5 61.8 34.9
Increase in income taxes payable 5.4 9.0 10.5
Other 18.3 (6.5) (5.0)
--------- --------- ---------
Net cash provided by operating activities 254.5 239.8 323.3
--------- --------- ---------
Cash flows from investing activities
Capital expenditures (146.1) (136.7) (96.6)
Other 11.1 0.7 5.2
--------- --------- ---------
Net cash used in investing activities (135.0) (136.0) (91.4)
--------- --------- ---------
Cash flows from financing activities
Repayment of long-term debt (5.5) (86.2) (17.8)
Net increase (decrease) in short-term debt 15.4 (20.2) (153.3)
Proceeds from long-term debt 2.5 1.9 0.8
Purchase of equipment for lease - - (35.9)
Proceeds from equipment lease receivable - 1.9 33.4
Payment of dividends (33.8) (29.0) (25.9)
Proceeds from exercise of stock options 12.9 14.1 8.7
Purchase of treasury stock (36.3) - -
--------- --------- ---------
Net cash used in financing activities (44.8) (117.5) (190.0)
--------- --------- ---------
Effect of exchange rate changes on cash and cash equivalents (6.7) (2.3) 4.7
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 68.0 (16.0) 46.6
Cash and cash equivalents at beginning of year 72.0 88.0 41.4
--------- --------- ---------
Cash and cash equivalents at end of year $ 140.0 $ 72.0 $ 88.0
========= ========= =========
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
<CAPTION>
Dec. 25, Dec. 26,
(In millions, except share amounts) 1993 1992
--------- ---------
<S> <C> <C>
Assets
Cash and cash equivalents $ 140.0 $ 72.0
Accounts and notes receivable, less allowances of $37.1 in 1993 and $34.5 in 1992 434.4 414.2
Inventories 441.2 410.8
Deferred income tax benefits 96.3 78.8
Prepaid expenses 27.5 25.4
--------- ---------
Total current assets 1,139.4 1,001.2
--------- ---------
Investments, long-term receivables, less
allowances of $29.0 in 1993 and $36.1 in 1992, and deferred charges 123.8 112.1
Property, plant and equipment, net 671.5 654.6
Intangibles, less accumulated amortization of $73.8 in 1993 and $66.1 in 1992 182.3 190.9
--------- ---------
Total assets $2,117.0 $1,958.8
========= =========
Liabilities and shareholders' equity
Accounts payable $ 194.4 $ 165.9
Short-term borrowings and current portion of long-term debt 143.4 24.6
Accrued liabilities 549.8 559.7
--------- ---------
Total current liabilities 887.6 750.2
--------- ---------
Long-term debt 168.0 274.2
Accrued postretirement benefit cost 144.5 140.1
Deferred income taxes 9.0 10.3
Other liabilities 96.0 73.7
Shareholders' equity:
Preferred stock, $1.00 par value, authorized 50,000,000 shares; issued - none - -
Common stock, $1.00 par value, authorized 200,000,000 shares;
issued 34,501,920 shares 34.5 34.5
Capital surplus 582.3 566.4
Retained earnings 418.7 286.8
Treasury stock, 2,595,387 shares at December 25, 1993
and 2,694,832 shares at December 26, 1992, at cost (93.0) (69.3)
Unearned portion of restricted stock issued for future service (1.0) (2.2)
Cumulative foreign currency adjustments (129.6) (105.9)
--------- ---------
Total shareholders' equity 811.9 710.3
--------- ---------
Total liabilities and shareholders' equity $2,117.0 $1,958.8
========= =========
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<CAPTION>
Number of shares Amounts
----------------- ------------------------------------------------------
Cumulative
foreign
Common Treasury Common Capital Retained Treasury currency
(In millions) stock stock stock surplus earnings stock adjustments
------- --------- ------- -------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
December 29, 1990 34.5 (3.8) $34.5 $571.7 $320.2 $(97.1) $(67.4)
Net income 102.3
Cash dividends declared (26.0)
Treasury stock issued for option
and restricted stock plans 0.4 (2.4) 10.3
Translation adjustments (7.6)
------- --------- ------- -------- --------- --------- ------------
December 28, 1991 34.5 (3.4) 34.5 569.3 396.5 (86.8) (75.0)
Net loss (79.3)
Cash dividends declared (30.4)
Treasury stock issued for option
and restricted stock plans 0.7 (2.9) 17.5
Translation adjustments (30.9)
------- --------- ------- -------- --------- --------- ------------
December 26, 1992 34.5 (2.7) 34.5 566.4 286.8 (69.3) (105.9)
Net income 172.5
Cash dividends declared (34.8)
Purchase of treasury stock (0.6) (39.6)
Treasury stock issued for option
and restricted stock plans and
related tax benefits 0.7 15.9 (5.8) 15.9
Translation adjustments (23.7)
------- --------- ------- -------- --------- --------- ------------
December 25, 1993 34.5 (2.6) $34.5 $582.3 $418.7 $(93.0) $(129.6)
======= ========= ======= ======== ========= ========= ============
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Summary of Significant Accounting Policies
Principles of Consolidation The consolidated financial
statements include the accounts of Premark and all of its
subsidiaries. Intercompany accounts and transactions have been
eliminated. The company's fiscal year ends on the last Saturday
of December.
Cash and Cash Equivalents The company considers all highly
liquid investments with a maturity of three months or less when
purchased to be cash equivalents.
Inventories Inventories are valued at the lower of cost or
market. Inventory cost includes cost of raw material, labor and
overhead. Substantially all domestic inventories are valued on
the last-in, first-out (LIFO) cost method. For the remaining
inventories - approximately 44 percent - the first-in, first-out
(FIFO) cost method is generally used. If inventories valued on
the LIFO method had been valued using the FIFO method, they would
have been $56.0 million higher at the end of 1993 and 1992.
Property and Depreciation Properties are stated at the lower of
cost or fair value. An impairment loss is recognized for the
difference between estimated fair value and carrying value when
the carrying value of an asset, including associated intangibles,
exceeds the sum of estimated undiscounted future cash flows.
Depreciation is determined on a straight-line basis over
estimated useful lives. Generally, the estimated useful lives are
10 to 45 years for buildings and improvements and 3 to 20 years
for machinery and equipment. Upon the sale or retirement of
property, plant and equipment, a gain or loss is recognized.
Expenditures for maintenance and repairs are charged to expense.
Intangibles The excess of cost over the fair value of net
assets of businesses acquired ($164.1 million in 1993 and $169.6
million in 1992) and other intangibles are being amortized over
periods ranging up to 40 years.
Postemployment and Postretirement Benefits The company adopted
SFAS No. 112, "Employers' Accounting for Postemployment Benefits"
in 1993. This standard requires the company to recognize the cost
of certain benefits provided to former or inactive employees on
the accrual basis rather than when they are paid. The cumulative
pretax effect of adopting this standard was $2.1 million, which
has been included as a component of "Other expense, net" in the
1993 Consolidated Statement of Operations.
In 1992, the company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," for
its retiree medical and life insurance plans. Under SFAS No. 106,
the company accrues the cost of retiree benefits during the years
that employees provide service. The company's past practice was
to recognize these costs on a cash basis. As part of adopting the
new standard, the company recorded a one-time, non-cash charge of
$140.0 million before taxes, or $98.9 million after tax in 1992.
The new standard resulted in additional annual expense of
approximately $6 million in 1993 and $8 million in 1992.
Revenue Recognition Revenue is recognized when product is
shipped.
Advertising and Research and Development Costs Advertising and
research and development costs are charged to expense as
incurred.
Income Taxes In 1992, the company adopted SFAS No. 109,
"Accounting for Income Taxes." Under SFAS No. 109, deferred tax
assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the
financial statement carrying amounts of assets and liabilities
and their respective tax bases. Deferred tax assets are also
recognized for credit carryforwards. Deferred tax assets and
liabilities are measured using the rates expected to apply to
taxable income in the years in which the temporary differences
are expected to reverse and the credits are expected to be used.
The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the
enactment date. SFAS No. 109 requires an assessment, which
includes anticipating future income, in determining the
likelihood of realizing deferred tax assets. The cumulative
effect of this change was a benefit to income of $15.0 million in
1992.
The company previously followed SFAS No. 96 in accounting
for income taxes, under which only reversing temporary
differences were considered when recording the deferred tax
assets and liabilities.
Net Income (Loss) Per Share Net income (loss) per share is
based upon the weighted average number of common shares and
common equivalent shares, consisting of stock options,
outstanding during the year.
Foreign Currency Translation Results of operations for foreign
subsidiaries are translated into U.S. dollars using the average
exchange rates during the year. The assets and liabilities, other
than those of operations in highly inflationary countries, are
translated into U.S. dollars using the exchange rates at the
balance sheet date. Resulting translation adjustments are
recorded in a separate component of shareholders' equity,
"Cumulative Foreign Currency Adjustments." Gains and losses on
transactions that hedge the value of investments in foreign
subsidiaries also are included in shareholders' equity. Gains and
losses on foreign currency transactions and translation of
financial statements of subsidiaries in highly inflationary
countries are included in income. Foreign exchange (losses) gains
included in income before taxes in 1993, 1992 and 1991 were
$(1.8) million, $(1.4) million and $1.0 million, respectively.
Note 2 Tupperware Restructuring Charge
In 1992, the company recorded a pretax charge of $136.7 million
($111.4 million after tax, or $3.39 per share) primarily to
consolidate manufacturing capacity and restructure the Tupperware
U.S. distribution system. Of that amount, $60.4 million related
to the write-down of Tupperware's Halls, Tennessee manufacturing
facility and certain other manufacturing assets to their
estimated net realizable values. The charge included $45.6
million to restructure and strengthen Tupperware's distribution
network in the United States. The remaining $30.7 million related
to shutdown costs, including severance, relocation and transfer
costs. The restructuring plan was intended to result in
manufacturing capacity and related overhead consistent with U.S.
sales levels, and in improved distributor profitability.
Note 3 Inventories
[CAPTION]
(In millions) 1993 1992
------ ------
[S] [C] [C]
Finished goods $196.8 $183.5
Work in process 65.1 64.5
Raw materials and supplies 179.3 162.8
------ ------
Total inventories $441.2 $410.8
====== ======
In 1993 and 1992, certain inventories were reduced, resulting in
liquidations of LIFO inventory quantities carried at lower costs
prevailing in prior years. The effect was to increase net income
by $0.4 million in 1993 and $2.9 million in 1992.
Note 4 Property, Plant and Equipment
[CAPTION]
(In millions) 1993 1992
-------- --------
[S] [C] [C]
Land $ 32.0 $ 34.0
Buildings and improvements 381.8 374.9
Machinery and equipment 1,132.6 1,064.2
Construction in progress 60.0 52.6
-------- --------
Total property, plant and equipment 1,606.4 1,525.7
Less accumulated depreciation 934.9 871.1
-------- --------
Property, plant and equipment, net $ 671.5 $ 654.6
======== ========
Note 5 Accrued Liabilities
[CAPTION]
(In millions) 1993 1992
-------- --------
[S] [C] [C]
Compensation and employee benefits $ 121.8 $ 120.0
Warranties and maintenance
service agreements 74.8 65.3
Insurance 60.9 56.0
Restructuring reserves 52.1 70.8
Taxes other than income taxes 51.4 47.8
Advertising and promotion 43.0 41.3
Income taxes 17.3 26.3
Other 128.5 132.2
-------- --------
Total accrued liabilities $ 549.8 $ 559.7
======== ========
Note 6 Financing Arrangements
Short-term Borrowings
[CAPTION]
(Dollars in millions) 1993 1992 1991
------ ------- -------
[S] [C] [C] [C]
Total short-term borrowings
at year-end $35.0 $ 19.1 $ 35.6
Weighted average interest
rate at year-end 5.4% 11.3% 10.4%
Average borrowings
during the year $28.3 $ 80.7 $149.6
Weighted average interest
rate for the year 8.5% 6.3% 8.3%
Maximum borrowings
during the year $54.3 $117.5 $210.4
The average borrowings and weighted average interest rates
were determined using month-end borrowings and the interest rates
applicable to them. All short-term borrowings are obligations of
foreign entities at the end of 1993.
Long-term Debt
[CAPTION]
(Dollars in millions) 1993 1992
------ ------
[S] [C] [C]
8 3/8% notes due 1997 $150.0 $150.0
10 1/2% notes due 2000 100.0 100.0
5.95% - 6.5% industrial revenue
bonds due 1996-2009 17.9 20.0
Other 8.5 9.7
------ ------
276.4 279.7
Less current portion 108.4 5.5
------ ------
Total long-term debt $168.0 $274.2
====== ======
Interest paid in 1993, 1992 and 1991 was $30.6 million,
$37.4 million and $50.7 million, respectively.
The company's 8 3/8% long-term notes were called at par on
February 1, 1994. The redemption was funded through available
cash and the issuance of commercial paper. As of December 25,
1993, $45.0 million of the $150 million of borrowings outstanding
were classified as long-term, representing the portion expected
to be financed throughout 1994 using commercial paper borrowings.
Based on the borrowing rates currently available to the
company for long-term debt with similar terms and average
maturities, the fair value of the 10 1/2% notes at the end of
1993 is $122.6 million. The fair value of the remaining long-term
debt approximates its book value.
The company had unused lines of credit amounting to $456.1
million at December 25, 1993, including $250 million under an
unsecured revolving credit facility, which expires in May 1995.
Total principal payments due on long-term debt in the five
years subsequent to December 25, 1993, are as follows: 1994 -
$153.4 million; 1995 - $1.3 million; 1996 - $0.7 million; 1997 -
$0.8 million; and 1998 - $4.3 million. The 1994 amount includes
$150 million for the company's 8 3/8% notes, which had been
irrevocably called for February 1, 1994 redemption, prior to the
1993 fiscal year end. Under agreements entered into prior to the
spinoff of Premark from Dart & Kraft, Inc., Dart guaranteed
certain long-term indebtedness of Kraft, Inc. and its
subsidiaries. As of December 25, 1993, such outstanding debt
totaled $10.6 million.
Operating Leases Rental expense for operating leases (reduced
by sublease income of approximately $1 million in 1993 and $2
million in each of 1992 and 1991) totaled $79.6 million in 1993,
$75.0 million in 1992 and $75.6 million in 1991. Approximate
minimum rental commitments under noncancelable operating leases
in effect at December 25, 1993, are: 1994 - $37.7 million; 1995 -
$24.7 million; 1996 - $15.4 million; 1997 - $12.6 million; 1998 -
$5.9 million; after 1998 - $32.6 million.
Other Financial Instruments The company manages its exposure to
fluctuations in foreign currency exchange rates using financial
instruments that include forward contracts, foreign currency
borrowings, currency swaps and financial guarantees. The
counterparties to these agreements are major international
financial institutions. The company continually monitors its
positions and the credit ratings of its counterparties and
believes the risk of incurring losses related to credit risk is
remote.
At December 25, 1993, the company had forward exchange
contracts maturing between January 10 and December 15, 1994, to
purchase $18.0 million and sell $111.0 million in foreign
currencies at fixed rates on the value dates. The company also
had a currency swap to exchange 37.1 million German Deutsche
Marks on October 2, 1995, for $20.0 million. The fair value of
forward exchange contracts is calculated using published year end
exchange rates.
Note 7 Income Taxes
The domestic and foreign components of income (loss) before
income taxes were as follows:
[CAPTION]
(In millions) 1993 1992 1991
------- ------- -------
[S] [C] [C] [C]
Domestic $164.4 $(18.9) $ 53.3
Foreign 65.3 52.8 106.6
------- ------- -------
Total $229.7 $ 33.9 $159.9
======= ======= =======
The provision for income taxes charged to continuing
operations was as follows:
[CAPTION]
(In millions) 1993 1992 1991
------- ------- -------
[S] [C] [C] [C]
Current
Federal $ 26.7 $ 20.6 $ 10.6
Foreign 43.7 40.4 47.6
State 5.0 (0.9) 4.1
------- ------- -------
75.4 60.1 62.3
------- ------- -------
Deferred
Federal (12.1) (22.4) (5.7)
Foreign (5.2) (9.5) 3.2
State (0.9) 1.1 (2.2)
------- ------- -------
(18.2) (30.8) (4.7)
------- ------- -------
Total $ 57.2 $ 29.3 $ 57.6
======= ======= =======
The differences between the provision for income taxes and
income taxes computed using the U.S. federal statutory rate were
as follows:
[CAPTION]
(In millions) 1993 1992 1991
------- ------- -------
[S] [C] [C] [C]
Amount computed using
statutory rate $ 80.4 $ 11.5 $ 54.4
Increase (reduction) in taxes
resulting from:
Foreign tax
benefits recognized (27.9) (22.9) (9.4)
Unrecognized portion of
federal deferred
tax assets (16.1) 24.0 5.2
Foreign income taxes 10.9 14.1 8.7
Repatriation of
foreign earnings 4.7 1.6 1.4
Effect of U.S. statutory
rate increase on net
deferred tax asset (2.5) - -
Net amortization
of intangibles 1.6 1.6 1.6
State taxes 2.4 (1.7) 1.2
Other 3.7 1.1 (5.5)
------- ------- -------
Total $ 57.2 $ 29.3 $ 57.6
======= ======= =======
In 1993, the company recognized $16.3 million of benefits
for deductions associated with the exercise of employee stock
options. These benefits were added directly to capital surplus
and are not reflected in the provision for income taxes.
In 1991, the company purchased computer equipment for $35.9
million and leased it back to the sellers. A portion of the
future rent receivable was sold to a third party. This
transaction resulted in taxable income for federal and state
purposes, but not for financial statement purposes.
Deferred tax assets (liabilities) are comprised of the
following:
[CAPTION]
(In millions) 1993 1992
-------- --------
[S] [C] [C]
Depreciation $ (69.8) $ (67.2)
Undistributed earnings
of subsidiaries (7.3) (7.0)
Other (3.1) (4.5)
-------- --------
Gross deferred tax liabilities (80.2) (78.7)
-------- --------
Postretirement benefits 59.7 55.7
Restructuring reserves 41.5 56.7
Computer leasing transactions 25.6 31.8
Tax carryforwards 22.7 17.0
Employee benefit accruals 22.6 24.3
Self-insurance reserves 17.5 17.0
Bad debt reserves 17.5 14.7
Other 55.9 43.1
-------- --------
Gross deferred tax assets 263.0 260.3
-------- --------
Valuation allowance (66.7) (84.6)
-------- --------
Net deferred tax assets $ 116.1 $ 97.0
======== ========
The net decrease in the deferred tax asset valuation
allowance during 1993 was $17.9 million. The reserve decreased
due to improvement in operating income allowing the recognition
of previously reserved domestic tax assets for temporary
differences and foreign tax credits. These decreases were
partially offset by reserves applicable to assets recognized in
the current year at certain foreign entities. In determining the
amount of its valuation allowance against its deferred tax
assets, the company has used certain assumptions about levels of
future pretax income that are consistent with historical results.
Provision has been made for U.S. federal income taxes to be
paid on that portion of the undistributed earnings of certain
foreign subsidiaries expected to be remitted to the parent
company. Undistributed earnings expected to be permanently
reinvested totaled $200.3 million at December 25, 1993. Foreign
withholding taxes payable, if these earnings were distributed,
would be approximately $18.0 million.
At December 25, 1993 the company has foreign net operating
loss carryforwards of $14.7 million. Of the total, $12.9 million
expire at various dates from 1994 to 1999, and the remainder have
unlimited lives. The company also has alternative minimum tax
credit carryforwards of approximately $8.0 million that are
available to reduce future regular federal income taxes.
The company paid income taxes in 1993, 1992 and 1991 of
$48.9 million, $66.2 million and $54.9 million, respectively.
Note 8 Retirement Benefit Plans
Pension Plans The company has various pension plans covering
substantially all domestic employees and certain employees in
other countries.
The company's actuarial cost method used in determining
pension expense is the projected unit credit method. Generally,
annual cash contributions are equal to the minimum funding
amounts required by ERISA for U.S. plans.
Net pension expense included the following components:
[CAPTION]
(In millions) 1993 1992 1991
------- ------- -------
[S] [C] [C] [C]
Service cost on benefits
earned during the year $ 11.6 $ 10.6 $10.4
Interest cost on benefits
earned in prior years 22.7 21.5 20.6
Return on plan assets
Actual gain (32.6) (22.3) (40.6)
Deferred gain (loss) 9.0 (0.7) 18.6
------- ------- -------
Net gain recognized (23.6) (23.0) (22.0)
Net amortization (1.6) (1.1) (0.4)
------- ------- -------
Net pension expense $ 9.1 $ 8.0 $ 8.6
======= ======= =======
The assumed long-term rates of return on assets used in
determining net pension expense were: U.S. plans - 9%; foreign-
funded plans - various rates from 6.5% to 10%. The assumed
discount rates used in determining the actuarial present value of
the projected benefit obligation were: U.S. plans - 7.25% at
December 25, 1993, and 8.5% at December 26, 1992; foreign plans -
various rates from 5.0% to 10.0%. The assumed rates of increase
in future compensation levels were: U.S. plans - 6%; foreign
plans - various rates from 3.0% to 8.0%. The funded status of the
company's plans is as follows:
[CAPTION]
U.S. plans Foreign plans
------------- -------------
(In millions) 1993 1992 1993 1992
----- ----- ----- -----
[S] [C] [C] [C] [C]
Actuarial present value of
benefit obligations:
Vested benefits $216.8 $177.9 $ 50.0 $ 42.3
Nonvested benefits 7.7 5.9 4.8 3.5
------- ------- ------- -------
Accumulated benefit
obligation 224.5 183.8 54.8 45.8
Effect of projected future
salary increases 39.8 29.4 18.5 16.9
------- ------- ------- -------
Projected benefit
obligation 264.3 213.2 73.3 62.7
Plan assets at fair value -
primarily equity securities
and corporate and
government bonds 257.0 248.2 42.7 36.3
------- ------- ------- -------
Plan assets (less than)
in excess of projected
benefit obligation (7.3) 35.0 (30.6) (26.4)
Unrecognized prior
service cost 2.3 3.1 1.6 1.2
Unrecognized net loss (gain) 22.2 (16.8) 7.4 6.3
Unrecognized net transition
(asset) obligation (15.6) (17.8) 4.3 5.4
------- ------- ------- -------
Prepaid pension asset
(liability) $ 1.6 $ 3.5 $(17.3) $(13.5)
======= ======= ======= =======
The accumulated benefit obligations of certain plans,
primarily at foreign locations, exceeded plan assets. For those
plans, the obligations were $39.8 million and $24.1 million for
1993 and 1992, respectively. The fair value of those plans'
assets at the end of 1993 and 1992 were $17.9 million and $6.2
million, respectively.
There are also several savings, thrift and profit-sharing
plans. The company's contributions to these plans are based upon
various levels of employee participation. The total cost of these
plans was $14.9 million in 1993, $14.6 million in 1992 and $13.7
million in 1991.
Medical and Life Insurance Benefits
In addition to providing pension benefits, the company provides
certain postretirement health care and life insurance benefits
for selected U.S. and Canadian employees. Most employees and
retirees outside the United States are covered by government
health care programs. Employees may become eligible for these
benefits if they reach normal retirement age while working for
the company and satisfy years of service requirements. The
medical plans are contributory, with retiree contributions
adjusted annually, and contain other cost sharing features such
as deductibles and coinsurance. The medical plans include an
allowance for Medicare for post-65 retirees.
The net periodic postretirement benefit costs for 1993 and
1992 are:
[CAPTION]
(In millions) 1993 1992
------- -------
[S] [C] [C]
Service cost $ 2.9 $ 3.1
Interest on accumulated
postretirement benefit
obligation 11.8 11.9
Net amortization (0.5) -
------- -------
Total $ 14.2 $ 15.0
======= =======
The expense recognized for retiree health care and life
insurance benefits was $5.7 million in 1991.
The projected liabilities, which are not funded, are
reconciled to the amounts recognized in the company's statement
of financial position as follows:
[CAPTION]
(In millions) 1993 1992
------- -------
[S] [C] [C]
Accumulated postretirement
benefit obligation:
Retirees $ 96.2 $ 95.9
Other fully eligible
participants 18.0 17.0
Other active participants 39.1 37.4
------- -------
153.3 150.3
Unrecognized prior service
benefit 10.0 -
Unrecognized loss (9.5) (2.1)
------- -------
Accrued postretirement
benefit cost 153.8 148.2
Less current portion 9.3 8.1
------- -------
Total long-term accrued
postretirement benefit cost $144.5 $140.1
======= =======
The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 7.25% at
December 25, 1993 and 8.5% at December 26, 1992. The assumed
health care cost trend rate is 13% for the pre-65 plan and 10%
for the post-65 plan for 1993. These rates are assumed to
decrease by 1% per year until an ultimate level of 6% is reached
and remain at that level thereafter. The health care cost trend
rate assumption has a significant effect on the amounts reported.
For example, increasing the assumed health care cost trend rates
by one percentage point in each year would increase the
accumulated postretirement benefit obligation for the medical
plan as of December 25, 1993 by $15.6 million, and the aggregate
of the service and interest cost components of net periodic
postretirement benefit cost for 1993 by $2.0 million.
The company continues to evaluate ways in which it can
improve management of these benefits and control the costs. Any
changes in the plans or revisions to assumptions that affect the
amount of expected future benefits may have a significant effect
on the amount of the reported obligation and future annual
expense.
Note 9 Incentive Compensation Plans
Incentive Plans Key employees, including officers of the
company, earned approximately $17.5 million in 1993, $12.7
million in 1992 and $19.4 million in 1991 under the Annual
Incentive Plan and other incentive plans. As of December 25,
1993, 482 employees participated in these plans. The company's
Long-Term Incentive Plan is comprised of performance-based
incentive programs available to key employees who make
substantial contributions to the company's long-term financial
objectives. Payouts are based entirely on achievement of
financial objectives; no payouts are made unless a threshold
level of financial performance is attained. In 1993, $6.8 million
was earned under these programs.
Restricted Stock Plan The company's Restricted Stock Plan
authorizes the issuance of restricted stock to retain key
employees, including officers. The maximum number of shares of
common stock that may be issued under the plan may not exceed
1,000,000. The holding periods, prior to any vesting occurring on
restricted shares, range from one to five years. Restrictions
lapse on the majority of unvested shares awarded to date in 1994
and 1995. Compensation expense is determined by reference to the
market value of the stock on the date of award and is being
amortized over the period during which the restrictions lapse.
The expense was $0.6 million in 1993, $1.1 million in 1992 and
$2.4 million in 1991. Restricted stock activity in 1993 and 1992
is summarized below:
[CAPTION]
Shares
available
Outstanding for issuance
----------- ------------
[S] [C] [C]
Balance at December 28, 1991 150,009 103,520
Shares awarded 33,250 (33,250)
Shares forfeited (3,600) 3,600
Shares released (30,242) -
-------- --------
Balance at December 26, 1992 149,417 73,870
Shares awarded 1,200 (1,200)
Shares forfeited (20,350) 20,350
Shares released (35,867) -
-------- --------
Balance at December 25, 1993 94,400 93,020
======== ========
Stock Option Plans The company's Stock Option Plan authorizes
the grant of stock options to officers and other key employees of
the company. As of December 25, 1993, 449 employees participated
in the plan. The maximum number of shares of common stock that
may be granted under the Stock Option Plan may not exceed
5,500,000. The exercise prices of options granted to date have
been the fair market value of the shares on the date of grant.
Options have a term of 10 years and one day, and all options that
are not exercisable at December 25, 1993 become exercisable three
years after the date of grant. Options outstanding will expire
during the period December 26, 1996 through November 2, 2003. No
charges have been reflected in income for any period with respect
to these options.
In May 1993, the company's stockholders approved a Director
Stock Plan under which non-employee directors may elect to
receive stock options for up to 2,000 shares of the company's
common stock in lieu of all or part of their annual retainers.
Options granted to directors become exercisable on the last day
of the fiscal year in which they are granted and have a term of
10 years. Directors' stock options have exercise prices that
compensate for the foregone cash retainer based on the market
price of the company's stock on the date of grant. This amount
has been recognized as an expense by the company. The number of
shares available for grant under this plan is 300,000.
Stock option activity in 1993 and 1992 is summarized below:
[CAPTION]
Average
Shares subject option price
to option per share
-------------- ------------
[S] [C] [C]
Balance at December 28, 1991 3,582,400 $22.74
Options granted 652,100 36.33
Options canceled (73,500) 23.86
Options exercised (663,359) 21.33
---------- ------
Balance at December 26, 1992 3,497,641 25.52
Options granted 365,700 74.44
Options canceled (83,600) 32.47
Options exercised (774,731) 21.20
---------- ------
Balance at December 25, 1993 3,005,010 $32.39
========== ======
Shares reserved for future grants at December 25, 1993,
December 26, 1992 and December 28, 1991, were 463,750, 445,850
and 1,024,450, respectively.
Options to purchase 1,490,210 and 1,595,591 shares were
exercisable at December 25, 1993 and December 26, 1992,
respectively.
Note 10 Segments of the Business
The company has the following business segments: Tupperware-
plastic food storage and serving containers, microwave cookware,
and educational toys; Food Equipment Group- commercial food
equipment for the foodservice and food retail industries; and
Consumer and Decorative Products-home appliances, direct-to-the-
home cookware, physical fitness equipment, decorative laminates,
ceramic tile and prefinished hardwood flooring.
Segments of Business by Classes of Products
[CAPTION]
(In millions) 1993 1992 1991
--------- --------- ---------
[S] [C] [C] [C]
Net sales
Tupperware $1,229.7 $1,112.3 $1,076.3
Food Equipment Group 1,009.9 1,054.3 1,010.4
Consumer and
Decorative Products 857.7 779.4 729.0
--------- --------- ---------
Total net sales $3,097.3 $2,946.0 $2,815.7
========= ========= =========
Segment profit (loss)
Tupperware $ 171.0 $ (25.3)<F1>$ 121.2
Food Equipment Group 51.3 49.6 41.1
Consumer and
Decorative Products 56.2 55.9 60.9
--------- --------- ---------
Total segment profit 278.5 80.2 223.2
Unallocated expenses (22.7) (19.7) (19.8)
Interest expense, net (26.1) (26.6) (43.5)
--------- --------- ---------
Income before income taxes
and cumulative effect of
accounting changes $ 229.7 $ 33.9 $ 159.9
========= ========= =========
Identifiable assets
Tupperware $ 711.7 $ 619.7 $ 624.1
Food Equipment Group 583.5 571.8 618.2
Consumer and
Decorative Products 646.5 624.5 660.7
Corporate 175.3 142.8 131.0
--------- --------- ---------
Total identifiable assets $2,117.0 $1,958.8 $2,034.0
========= ========= =========
Depreciation and amortization
Tupperware $ 42.5 $ 49.9 $ 45.9
Food Equipment Group 25.0 27.3 28.3
Consumer and
Decorative Products 41.1 38.5 37.3
Corporate 3.3 2.3 3.8
--------- --------- ---------
Total depreciation
and amortization $ 111.9 $ 118.0 $ 115.3
========= ========= =========
Capital expenditures
Tupperware $ 85.4 $ 79.7 $ 49.6
Food Equipment Group 22.4 26.0 19.8
Consumer and
Decorative Products 36.4 30.3 26.6
Corporate 1.9 0.7 0.6
--------- --------- ---------
Total capital expenditures $ 146.1 $ 136.7 $ 96.6
========= ========= =========
[FN]
<F1> Includes a $136.7 million charge primarily to restructure
Tupperware U.S.
Segments of Business by Geographical Areas
[CAPTION]
(In millions) 1993 1992 1991
-------- -------- --------
[S] [C] [C] [C]
Net sales
United States $1,693.3 $1,569.7 $1,544.5
Europe 882.4 908.7 810.2
Asia Pacific 311.7 278.2 253.9
Latin America 131.3 111.9 115.1
Canada 78.6 77.5 92.0
-------- -------- --------
Total net sales $3,097.3 $2,946.0 $2,815.7
======== ======== ========
Segment profit (loss)
Europe $ 115.4 $ 107.1 $ 98.7
United States 106.1 (53.9) 71.2
Asia Pacific 38.5 19.3 29.5
Latin America 14.0 9.3 15.7
Canada 4.5 (1.6) 8.1
-------- -------- --------
Total segment profit $ 278.5 $ 80.2 $ 223.2
======== ======== ========
Identifiable assets
United States $1,175.6 $1,077.3 $1,179.3
Europe 462.7 455.4 460.2
Asia Pacific 196.0 191.6 167.8
Latin America 79.4 61.5 55.0
Canada 28.0 30.2 40.7
Corporate 175.3 142.8 131.0
-------- -------- --------
Total identifiable assets $2,117.0 $1,958.8 $2,034.0
======== ======== ========
Sales to a single customer did not exceed 10 percent of
total sales. Export sales were insignificant. In the Consumer and
Decorative Products segment the only class of products that
accounted for more than 10 percent of combined sales is
decorative laminates with sales of approximately $429 million in
1993, $405 million in 1992 and $368 million in 1991.
Unallocated expenses are corporate expenses and other items
not related to the operations of the segments. Corporate assets
consist of cash and assets maintained for general corporate
purposes. As of December 25, 1993, the company's net investment
in international operations was $416.5 million.
Note 11 Contingencies
The company and certain subsidiaries are involved in litigation
and various legal matters that are being defended and handled in
the ordinary course of business. Included among these matters are
environmental issues for which the company estimates its range of
possible exposure as $19 million to $44 million. The company
anticipates that any necessary expenditures would be made over
the next 10 years. As of December 25, 1993, the company has
accrued $20.9 million for these matters. The company has not
recorded any significant claims against third parties associated
with these accruals. None of the company's contingencies are
expected to have a material adverse effect on its financial
position, results of operations or any individual year's cash
flow.
Note 12 Quarterly summary (unaudited)
Following is a summary of the unaudited interim results of
operations, the dividends declared per share of common stock and
the price range of the common stock composite for each quarter in
the years ended December 25, 1993 and December 26, 1992.
[CAPTION]
First Second Third Fourth
quarter quarter quarter quarter
------- ------- ------- -------
(In millions, except
per share amounts)
[S] [C] [C] [C] [C]
Year ended December 25, 1993
Net sales $706.1 $763.2 $744.8 $883.2
Cost of products sold 365.5 388.5 395.3 454.9
Net income 24.0 41.0 32.9 74.6
Net income per share 0.72 1.22 0.98 2.21
Dividends declared
per share 0.25 0.28 0.28 0.28
Composite stock price range:
High 49 59 65 5/8 83 3/4
Low 38 1/4 45 1/4 54 1/2 61
Close 46 1/4 54 1/4 63 1/4 80 1/4
Year ended December 26, 1992
Net sales $678.4 $731.5 $712.9 $823.2
Cost of products sold 364.4 385.7 395.4 433.5
Net income (loss) before
cumulative effect of
accounting changes 19.1 29.4 (94.7) 50.8
Net income (loss) (64.8) 29.4 (94.7) 50.8
Per share:
Net income (loss) before
cumulative effect of
accounting changes 0.58 0.89 (2.89) 1.55
Net income (loss) (1.97) 0.89 (2.89) 1.55
Dividends declared
per share 0.21 0.25 0.25 0.25
Composite stock price range:
High 50 1/4 51 1/4 37 1/4 42 1/2
Low 39 29 3/4 32 1/2 34
Close 45 1/2 35 37 1/4 42
During the third quarter of 1992, the company adopted SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," and SFAS No. 109, "Accounting for Income Taxes,"
retroactive to the beginning of 1992. The first and second
quarters' results for 1992 have been restated to reflect the
effects of the changes in the accounting methods. See notes 1 and
7.
Also in the third quarter of 1992, the company recorded a
$136.7 million pretax charge primarily to consolidate
manufacturing capacity and restructure the Tupperware U.S.
distribution system. See note 2.
Note 13 Shareholders' Rights Plan
In 1989, the company adopted a shareholders' rights plan with a
duration of 10 years, under which shareholders received a
dividend of a right to purchase a share of common stock for each
share owned. The rights are exercisable if 20 percent of the
company's common stock is acquired or threatened to be acquired,
and the rights are redeemable by the company if exercisability
has not been triggered. Under certain circumstances, if 30
percent of the company's shares are acquired, a right entitles
the holder to buy shares of the company equal to twice the $125
exercise price of each right. Upon acquisition of the company by
a third party, a holder could receive the right to purchase stock
in the acquirer. The foregoing percentage thresholds may be
reduced to not less than 15 percent.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Premark
International, Inc.:
In our opinion, the accompanying consolidated balance sheet and
the related consolidated statements of operations, of cash flows
and of shareholders' equity present fairly, in all material
respects, the financial position of Premark International, Inc.
and its subsidiaries at December 25, 1993 and December 26, 1992,
and the results of their operations and their cash flows for each
of the three years in the period ended December 25, 1993, in
conformity with generally accepted accounting principles. These
financial statements are the responsibility of Premark
International, Inc.'s management; our responsibility is to
express an opinion on these financial statements based on our
audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 1 to the financial statements, Premark
International, Inc. changed its method of accounting for
postretirement benefits other than pensions and income taxes in
1992 to reflect the requirements of SFAS No. 106, "Employers
Accounting for Postretirement Benefits other than Pensions" and
SFAS No. 109, "Accounting for Income Taxes."
Price Waterhouse
Chicago, Illinois February 11, 1994
REPORT OF MANAGEMENT
The management of Premark is responsible for the preparation of
the financial statements and other information contained in this
Annual Report. The financial statements were prepared in
accordance with generally accepted accounting principles and
include amounts that are based upon management's best estimates
and judgments, as appropriate. Price Waterhouse has audited these
financial statements and has expressed an independent opinion
thereon.
The company maintains internal control systems, policies and
procedures designed to provide reasonable assurances that assets
are safeguarded, that transactions are executed in accordance
with management's authorization and properly recorded, and that
accounting records may be relied upon for the preparation of
financial information. There are inherent limitations in all
internal control systems based on the fact that the cost of such
systems should not exceed the benefits derived. Management
believes the company's systems provide the appropriate balance of
costs and benefits. The company also maintains an internal
auditing function that evaluates and reports on the adequacy and
effectiveness of internal accounting controls, policies and
procedures.
The Audit Committee of the Board of Directors is composed
entirely of outside directors. The Committee meets periodically
and independently with management, the internal auditors and
Price Waterhouse to discuss the company's internal accounting
controls, auditing and financial reporting matters. Both the
internal auditors and Price Waterhouse have unrestricted access
to the Audit Committee.
Management recognizes its responsibility for conducting the
company's affairs in a manner that is responsive to the interests
of its shareholders and its employees. This responsibility is
characterized in the Code of Conduct, which provides that the
company will fully comply with laws, rules and regulations of
every country in which it operates and will observe the rules of
ethical business conduct. Employees of the company are expected
and directed to manage the businesses of the company accordingly.
Warren L. Batts Lawrence B. Skatoff
Chairman of the Board Senior Vice President
and Chief Executive Officer and Chief Financial Officer
EXHIBIT 22
Premark International, Inc.
Active Subsidiaries as of
March 8, 1994
The following active subsidiaries are wholly-owned by the
Registrant or another subsidiary of the Registrant (degree of
remoteness from the Registrant is shown by indentations), except
in the case of certain subsidiaries as to which the percentage
ownership of voting is stated in parenthesis.
Premark Real Estate Holdings, Inc.
Premark Services, Inc.
Deerfield Land Corporation
Tibbals Flooring Co.
Premark Financial Corporation
Florida Tile Industries, Inc.
Premark FT Holdings, Inc.
Dart Industries Inc.
Premark Far East, Inc.
Dart Far East Sdn. Bhd.
Dart Argentina S.A.
Tupperware Venezolana, S.A.
Dart de Venezuela, C.A.
Dart do Brasil Industria e Comercio Ltda.
Adota Artigos Domesticos Ltda.
Dart Europe S.A.
Dart Hellas S.A.I.
Dart Iberica S.A.
Dart Industries Belgium N.V.
Premark GmbH
Dart Industries G.m.b.H.
Dart Industries Hong Kong Limited
Dart Nederland Properties B.V.
Dart Industries Nederland B.V.
Dart Industries (New Zealand) Limited
Dart Industries (Proprietary) Limited
Premark Italia SpA
Dart (Philippines), Inc.
Premark Realty Corporation
Dart, S.A. de C.V.
Tupperware - Dart (Suisse) SA
Dartco Manufacturing Inc.
Dartluso-Industria Lusitana de Artigos Domesticos, Lda.
Premiere Products, Inc.
Exportadora Lerma, S.A. de C.V.
Premark Resources N.V.
Premiere Manufacturing, Inc.
Premiere Korea Ltd.
Tupperware U.S., Inc.
Tupperware Distributors, Inc.
Japan Tupperware Co., Ltd.
Tupperware Australia Pty. Ltd.
Tupperware Chile Sociedad Comercial Limitada
Tupperware Iberica S.A.
Tupperware (Portugal) Artigos Domesticos, Lda.
Tupperware Singapore Pte. Ltd.
Tupperware (Thailand) Limited
Tupperware Uruguay S.A.
Dart Executive Pension Fund Limited
Dart Pension Fund Limited
Tupperware Home Parties Corporation
Wavebest Limited
Dart Industries Limited
Precor Products Limited
The Hobart Manufacturing Company, Limited
Hobart Equipment Leasing Limited
Premark Scandinavia A/S
The Premark International Foundation
Ralph Wilson Plastics Company
Premark RWP Holdings, Inc.
The West Bend Company
Premark WB Holdings, Inc.
Precor Incorporated
West Bend de Mexico, S.A. de C.V.
Premark FEG Corporation
Hobart Corporation
Premark FEG Beteiligingsgesellschaft MbH
The Stero Company
Hobart International Holdings, Inc.
Premark Canada Inc.
Hobart Dayton Mexicana, S.A. de C.V.
Maquilas y Componentes Industriales, S.A. de C.V.
PMI Food Equipment Group France S.A.
Inox Equipment S.A.
Equipment Technique Service S.A.R.L.
Premark FEG GmbH & Co. KG
Hobart GmbH
Foster Regrigerator (U.K.) Limited
Foster Refrigerator France S.A.
PMI Technical Food Equipment Group Holland B.V.
Foster Refrigerator U.K. Management Services
Foster Refrigerator S.E. Asia (Pty.) Ltd.
Foster Scandia Danmark A/S
Foster Scandia Sverige AB
Foster Scandia Norge AS
Foster Refrigerator G.m.b.H.
Hobart Sales & Service, Inc.
SC Bourgeois (35%)
Hobart Korea Co. Ltd.
PMI Food Equipment Group Europe S.A.
The Wolf Range Company
Premark HII Holdings, Inc.
Hobart International, Inc.
PMI Food Equipment (Hong Kong) Limited
Hobart (Japan) K.K.
PMI Food Equipment Group Belgium, N.V.
Compagnie Hobart S.A.
Hobart A.G.
PMI Food Equipment Group Holland B.V.
Hobart (Swiss) A.G.
Tricault Regethermic International S.A.
Nutri-Pack S.A.
Adamatic, A Corporation
Cook Insurance Co., Ltd.
All Subsidiaries listed above are included in the
consolidated financial statements of the Registrant as
consolidted subsidiaries, except for subsidiaries owned 50% or
less.
Exhibit 24
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No. 33-18405), the
Registration Statement on Form S-8 (No. 33-51021) and
Prospectuses constituting part of the Registration Statement on
Form S-3 (No. 33-35137) of Premark International, Inc. of our
report dated February 11, 1994 appearing on page 41 of the Annual
Report to Shareholders which is incorporated in this Annual
Report on Form 10-K. We also consent to the incorporation by
reference of our report on the Financial Statement Schedules,
which appears on page 21 of this Form 10-K.
PRICE WATERHOUSE
/s/ Price Waterhouse
Chicago, Illinois
March 14, 1994
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of Premark International, Inc., a Delaware corporation,
(the "Corporation"), hereby constitutes and appoints John M.
Costigan, L. John Fletcher and Thomas M. Roehlk, and each of
them, true and lawful attorneys-in-fact and agents of the
undersigned, with full power of substitution and resubstitution,
for and in the name, place and stead of the undersigned, in any
and all capacities, to sign the Annual Report on Form 10-K of the
Corporation for its fiscal year ended December 25, 1993, and any
and all amendments thereto, and to file or cause to be filed the
same, together with any and all exhibits thereto and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and
agents and substitutes, and each of them, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises as
fully to all intents and purposes as the undersigned might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and substitutes, and each of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set
his hand and seal this 3rd day of March, 1994.
/s/William O. Bourke
William O. Bourke
/s/Ruth M. Davis
Ruth M. Davis
/s/ Lloyd C. Elam
Lloyd C. Elam
/s/ Clifford J. Grum
Clifford J. Grum
/s/ Joseph E. Luecke
Joseph E. Luecke
/s/ Bob Marbut
Bob Marbut
/s/ John B. McKinnon
John B. McKinnon
/s/ David R. Parker
David R. Parker
/s/ Robert M. Price
Robert M. Price
/s/ Janice D. Stoney
Janice D. Stoney
