<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number 1-4188
------
RUBBERMAID INCORPORATED
-----------------------
(Exact name of Registrant as specified in its charter)
OHIO 34-0628700
---- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1147 AKRON ROAD, WOOSTER, OHIO 44691-6000
- ------------------------------ ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code - 330-264-6464
------------
Securities registered pursuant to Section 12(b) of the act:
Title of each class Name of each exchange on which registered
COMMON, PAR VALUE $1.00 PER SHARE NEW YORK STOCK EXCHANGE
- --------------------------------- -----------------------
Securities registered pursuant to Section 12(g) of the act: NONE
----
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Common Shares, Par Value $1.00, Outstanding at January 31, 1997 -- 149,942,060.
Aggregate market value of such shares held by non-affiliates of Registrant as of
that date -- $3,381,784,055.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Proxy Statement for the Annual Meeting of Shareholders
on April 22, 1997 -- Part III
Consolidated financial statements and other data from Registrant's 1996 Annual
Report to Shareholders -- Parts I and II
<PAGE> 2
PART I
------
ITEM 1. BUSINESS
- ----------------
General
-------
Registrant was incorporated under the laws of the State of
Ohio in 1920. Registrant and its subsidiaries operate in one industry segment
which consists of the manufacture, marketing, selling and distribution of
predominantly plastic and rubber products in the consumer, commercial,
industrial, agricultural, institutional, office, specialty, contract, juvenile,
infant and home health care accessories markets. The items produced and marketed
by Registrant are in such categories as: housewares; hardware; decorative
coverings; automotive accessories; marine, leisure and recreational products;
infant furnishings; children's toys and products; office and computer furniture;
commercial and industrial maintenance products; home health care products;
sanitary maintenance; and food service products. Registrant's broad range of
products are sold and distributed through its own sales personnel and
manufacturers' agents to a variety of retailers and wholesalers, including mass
merchandisers, toy stores, office supply outlets, catalog showrooms, home
centers, hardware stores and distributors serving institutional markets.
Registrant's basic philosophy is to manufacture and market
branded, high-quality products that offer superior value to consumers and
customers. Value is that best combination of quality, service, timeliness,
innovation and price as perceived by the user. Registrant's strategic direction
is to grow as a global enterprise by focusing on developing best values through
innovation, alliances and continuous improvement, which will be reflected in the
strength and recognition of the Registrant's brands worldwide.
Registrant's growth objective is to double sales and earnings
per share over a five-to-six year period. Prior to the late 1970s, the objective
was to double sales and earnings on average over a six-year period. Reflecting
the higher rates of inflation that then existed in the U.S. economy, the growth
objective was increased to an annual average compounded rate of 15 percent,
which would cause a doubling in size every five years. In 1995, Registrant
announced an adjustment of its growth objective to reflect the lower inflation
in the U.S. economy, resulting in the current objective of doubling over a
five-to-six year period.
Registrant expects to meet its long-term growth objective
primarily from internally generated core business activities, supplemented from
time-to-time by selective acquisitions. Registrant has focused its resources to
achieve growth through continued introduction of new products and line
extensions, entry into new product categories and markets, maintaining
competitiveness in its existing product lines, expanding its core businesses to
attain a global presence, and through business development activities, such as
acquisitions, strategic alliances, joint ventures or licensing arrangements.
To support this growth initiative, Registrant has accelerated
its focus on continuous improvement and value enhancements. Since announcing an
initiative of accelerated value improvement in 1994, productivity achieved by
Company associates has reached record levels. Those savings are being reinvested
in activities that support the long-term growth initiative of the Registrant,
such as capital expenditures for expansion and productivity improvements, new
product research and development, human resource training and global business
development activities.
During the fourth quarter of 1995, the Company's management
approved a two-year strategic realignment program designed to reduce costs and
improve operating efficiencies. This
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program, to be completed by the end of 1997 and anticipated to provide $50
million in annual cost savings, includes the cost of exiting certain facilities,
asset impairments primarily due to product realignments, and employee
termination costs. Costs associated with this program of $158 million were
recognized at December 31, 1995, and are reflected in the Company's Consolidated
Statement of Earnings as realignment costs. Included in this charge is $120
million relating to the disposition of inventories and machinery and equipment.
Disposition of these assets will not have a material effect on future periods'
revenues, depreciation, or earnings. These realignment charges reduced after-tax
earnings by $98.7 million or $0.62 per share in 1995. As of December 31, 1996,
$26.5 million of the realignment activities have not been completed.
Concurrent with the realignment announcement, Registrant also
implemented a strategic initiative to balance its long-term capital structure.
During 1996, the Registrant repurchased $185 million of Common Shares and
completed a significant acquisition for cash, which enabled the achievement of a
prudent amount of leverage and lowered the Registrant's overall cost of capital.
As part of this capital structure initiative, the Registrant
in 1996 entered the commercial paper market for the first time, which was
received with favorable pricing, and also filed a Shelf Registration for up to
$400 million of senior unsecured debt securities. The Registrant, subsequently,
issued $150 million of senior notes with a maturity of 2006 and a coupon rate of
6.6%.
Business Development Activities
-------------------------------
Registrant's acquisition strategy is focused on companies that
tend to fit one of three broad criteria: (1) provide a base for a new product
category offering significant growth opportunities; (2) provide an extension of
an existing core business; or (3) provide geographic extension and/or an
expanded presence in an international market. The companies acquired by the
Registrant tend to have common characteristics, many of which are shared with
the Registrant. Among these characteristics are: a high-quality product image;
emphasis on marketing and customer service; capability to benefit from new
product development; similar materials and/or related manufacturing processes
and/or comparable distribution channels. Business development activities during
the last several years include the following:
CIPSA, the leading plastic housewares manufacturer and
marketer in Mexico, was acquired in 1992. It now operates as Rubbermaid de
Mexico and is part of the Home Products Division.
Iron Mountain Forge Corporation, a leading manufacturer and
marketer of commercial playground equipment, was also acquired in 1992 and
formed the foundation for the Little Tikes Commercial Play Systems' business. It
expanded Little Tikes' development of the growing child care market into parks,
schools, playgrounds and other commercial recreation markets. Glenwood Systems
Pty. Ltd, acquired in 1994, a leading marketer and designer of commercial play
systems in Australia known as Ausplay and PAR-REC Holdings, Inc., acquired in
1995, a leading manufacturer of similar play equipment in Canada, expanded
product lines and the distribution of commercial play structures into additional
geographic markets. Decor Concepts, Inc., acquired in 1995 and known as OMNI,
makes contained-play systems for commercial uses such as in restaurants and
indoor playgrounds which expanded the commercial play business into new markets.
Empire Brushes, Inc., acquired in 1994, a manufacturer and
marketer of mops, brooms, brushes and other cleaning products for home and
commercial use, has been integrated with Registrant's Home Products Division.
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Carex, acquired in 1994, manufactures and sells bath safety,
mobility, daily living and personal care aids and accessories for the home
health care market, and has been integrated with Registrant's Commercial
Products business.
A joint venture with Richell Corporation, a leading Japanese
housewares manufacturer, was formed in 1994. The joint venture, Rubbermaid Japan
Inc., develops, markets and sells housewares, leisure and seasonal products in
Japan. In October 1994, Registrant exercised an option to increase its equity
position from an initial 40 percent to 51 percent.
In 1994, Registrant's Seasonal Products business divested its
outdoor casual resin furniture business, including the manufacturing facility in
Stanley, North Carolina. The divestiture allows management to provide greater
focus and resources on core business competencies.
Also in 1994, the Davson Division of Rubbermaid Office
Products Inc. was sold because the Davson product line was not considered a
long-term strategic complement to the remaining office products business.
In 1995, Injectaplastic S.A., a plastic housewares
manufacturer and marketer in France, was acquired. Injectaplastic re-established
the Registrant in the European marketplace for housewares and seasonal product
lines following the 1994 dissolution of the previous Curver Rubbermaid joint
venture with DSM, the Dutch Chemical Group. In November 1995, a majority
interest in Dom-Plast S.A., a leading manufacturer and marketer of plastic
housewares products in Poland, was acquired. This expanded Registrant's presence
in Central and Eastern Europe, and offers an attractive manufacturing
opportunity for distribution of Registrant's products into Northern and Western
Europe.
Royal Rubbermaid Structures Ltd., a joint venture of the
Registrant and Royal Plastics Group Limited of Canada, was formed early in 1995.
This venture manufactured and marketed modular plastic components and kits for
small structures. Each partner owned 50 percent of the joint venture. Registrant
sold its partnership interest to Royal Plastics Group Limited of Canada in 1996.
The Registrant will continue to market its own line of consumer snap-together
storage sheds produced by its Seasonal Products business.
During 1996, Registrant acquired Graco Children's Products
Inc. (Graco), a leading manufacturer of strollers, walkers, playards, high
chairs and other infant and toddler products. Graco provides a strategic,
cross-marketing complement to Registrant's Little Tikes toy business.
In January 1997, Registrant announced a long term, global
alliance with Amway Corporation to jointly develop and market an exclusive,
co-branded line of distinctive products. The new products will be launched
through Amway Japan's force of 1.1 million distributors in the spring of 1997.
Additional products and geographic markets are contemplated for introduction
during the year.
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Net Sales
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The percentage of net sales contributed by each of the
consumer and institutional classes of products for the three years ended
December 31, 1996 was as follows:
<TABLE>
<CAPTION>
Consumer Institutional
-------- -------------
<S> <C> <C>
1996 77% 23%
1995 77% 23%
1994 79% 21%
</TABLE>
Raw Materials
-------------
The principal raw materials used in the manufacture of
Registrant's products are various plastic resins and synthetic rubber (all of
which are derivatives of petroleum or natural gas liquids) and color
concentrates. All of these items are available from numerous competitive
sources. For the most part, the particular raw materials which Registrant uses
are of a commodity nature whose prices are subject to change as supply and
demand fluctuate. From 1991 to mid-1994, resin costs remained relatively stable,
however beginning mid-1994 and continuing into 1995, resin costs began to
escalate rapidly, as demand was growing and supply tightened. Because of the
sharpness and rapidity of the price increases, Registrant was unable to fully
recover the incremental costs through adjustments to its selling prices. The
sharp increases in resin costs began to moderate beginning mid-1995, but in
early 1996 again began to increase. The volatile resin costs, coupled with
decreases in Registrant's selling prices, negatively impacted earnings for 1996.
Registrant has accelerated its continuing programs for substituting available or
reformulated resins that are consistent with its quality standards. The
Registrant expects to obtain adequate supplies of raw materials for its needs.
Patents and Trademarks
----------------------
There are no patents or licenses considered material to the
business. Registrant is of the opinion that through sustained advertising and
use, the trademarks RUBBERMAID, LITTLE TIKES and GRACO have become of value in
the identification and acceptance of its products, especially in North America.
In addition, Registrant has many well-known brands such as BLUE ICE Brand (ice
substitute), BRUTE (maintenance products), CON-TACT Brand (pressure sensitive
decorative coverings), COZY COUPE (ride-on car), ELDON (office products), PACK'N
PLAY (playard), ROUGHNECK (tool boxes and storage containers), and SERVIN' SAVER
(containers) that compete in domestic and international markets.
Seasonality
-----------
Historically, the year-end holiday season records the highest
sales volume for the toy industry; however, the Little Tikes spring and summer
products have served to more evenly balance monthly shipments. Rubbermaid
Specialty Products concentrates its efforts on product categories of a seasonal
nature, including insulated products and bird feeders. Insulated product sales
are highest during the first six months of the year. No material portion of
Registrant's other business is of a highly seasonal nature.
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Working Capital
---------------
Working capital requirements of the business increase
generally as sales volumes increase. There are normally no unusual working
capital needs existent at any one time in the ordinary course of business.
Dating programs offering extended terms are carried on by the various operating
companies as part of their normal marketing activities.
Customers
---------
Sales are made to a broad range of customers, one of which
accounted for 14%, 15% and 15% of net sales in 1996, 1995 and 1994,
respectively. Due in part to Registrant's perception that consumers are loyal to
Registrant's brand names, Registrant does not believe that the loss of any one
customer would have a materially adverse effect on its business.
Backlog
-------
Registrant produces to and sells from inventory for the
majority of its products. The amount of backlog existent at any one time is not
a significant factor in the business.
Competition
-----------
All markets served by Registrant and its subsidiaries are
competitive as to price, service, and product performance. Most of Registrant's
products compete not only with those of other manufacturers using similar raw
materials but also with products manufactured from other materials. Many of the
competitor companies are either closely held or are divisions of larger
entities. Registrant is recognized as a strong competitive factor in the
marketplace, but there is no reliable quantitative manner in which the aggregate
competitive position of Registrant can be determined.
Research and Development
------------------------
Registrant expended approximately $29,505,000, $28,963,000 and
$27,747,000 during 1996, 1995 and 1994, respectively, on research and
development activities related to product, process and materials development,
and mold design. These costs are charged to operations as incurred.
Environmental Matters
---------------------
Compliance with Federal, State, and local provisions, which
have been enacted or adopted regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment, is not
expected to have an adverse effect upon the capital expenditures, earnings, or
competitive position of Registrant and its subsidiaries. Reference is made to
page 29 of the 1996 Annual Report to Shareholders, which is contained in Exhibit
13 hereof, concerning further information regarding Registrant's Environmental
Program.
Employees
---------
The average number of persons employed by Registrant and its
subsidiaries during 1996 was 13,861.
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Foreign Operations
------------------
Reference is made to page 26 of the 1996 Annual Report to
Shareholders, which is contained in Exhibit 13 hereof, for information
concerning Registrant's operations in different geographical areas. Revenues
from outside U.S. ("OUS") customers, including OUS net sales and exports from
U.S. operations, represented 19%, 18%, and 16% of total net sales in 1996, 1995,
and 1994, respectively.
The global management structure is a matrix of locally focused
marketing and sales organizations with centralized cross-divisional
administrative and operations functions. Within each of three OUS geographic
areas, an Area President is responsible for all of the Registrant's business
within that respective area. Commercial directors, reporting to the Area
President, are responsible for the marketing and sales for their respective
business categories, while administrative and operations staff functions provide
support across all the businesses in an area.
The Area Presidents report to the Chief Operating Officer of
the Registrant. The Senior Vice President, International, is responsible for the
strategic leadership, market development and direction of resource allocations
for global operations.
Registrant uses a variety of approaches to expand and develop
international markets. To initiate market development in certain geographic
areas, particularly new and developing markets, emphasis is placed on exporting
from existing manufacturing facilities. Where market size and economics justify,
manufacturing facilities are established - for example, Canada, Europe and
Mexico, while in markets where sufficient contract supply capabilities exist,
such arrangement may be utilized. In markets where it is deemed appropriate to
gain immediate access to manufacturing facilities or distribution, Registrant
may make selective acquisitions. Licensing arrangements are an alternative that
may be used in those markets where the costs of importing are prohibitive and
where Company owned manufacturing is not economically justified. In addition,
Registrant may use a combination of any or all of these approaches. Today,
Rubbermaid products are distributed worldwide.
No greater known significant risk is attendant to the foreign
business than to the domestic business conducted by Registrant and its
subsidiaries.
Forward-Looking Discussions
---------------------------
Except for the historical information contained, or
incorporated by reference herein, the statements and objectives set forth in
Item 1, or incorporated by reference in Item 7 of this report, the Registrant's
Annual Report or made by management of the Company, are forward-looking and
involve uncertainty and risk. Registrant's future financial performance may
differ materially from those described in the forward-looking statements made
by, or on behalf of, Registrant as a result of a variety of factors such as
changes in: the competitive environment; the condition of the industry and
economy, including the effects of weather, consumer and customer demand; the
cost of raw materials, which may not be recovered through selling prices; the
rate of growth in selling, general and administrative expenses due to
Registrant's business expansion; working capital requirements; changes in
interest rates; the under-utilization of Registrant's production facilities;
international factors, including currency exchange rates, economic conditions
and difficulties or delays in Registrant's business expansion outside the United
States; or difficulties or delays in the implementation of the Registrant's
realignment program.
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ITEM 2. PROPERTIES
- ------------------
Registrant and its subsidiaries have manufacturing and/or
warehousing locations in 13 states and 9 foreign countries.
Major plant and warehouse locations of Registrant are as
follows:
Home Products Division - Wooster and Akron, Ohio;
Phoenix, Arizona; Cortland, New York; Greenville and
Robersonville, North Carolina; Cleburne and
Greenville, Texas; Mississauga, Ontario, Canada;
Montreal, Quebec, Canada (leased) and Calgary,
Alberta, Canada (leased); Mexico City, Mexico
Rubbermaid Specialty Products Inc. - Winfield,
Kansas; Centerville, Iowa.
The Little Tikes Company - Hudson and Sebring, Ohio;
City of Industry, California (leased); Farmington,
Missouri; Shippensburg, Pennsylvania; Paris, Ontario,
Canada
Rubbermaid Commercial Products Inc. - Winchester,
Virginia; Phoenix, Arizona (leased); Cleveland,
Tennessee
Rubbermaid Office Products Inc. - Maryville,
Tennessee
Graco Children's Products Inc. - Elverson,
Pennsylvania; Hesperia, California; Greer, South
Carolina
Rubbermaid Europe S.A. - Oyonnax, France; Slupsk,
Poland; Dublin, Ireland; Differdange, Luxembourg;
Shefford, Bedfordshire, England (leased)
Rubbermaid Asia Pacific - Toyama, Japan; Melbourne,
Victoria, Australia (leased)
Certain domestic facilities are subject to mortgages securing
industrial revenue bonds or other governmental financing.
The properties and facilities of Registrant and its
subsidiaries are modern and suitable to the requirements of the business. On an
overall basis, these facilities, with certain exceptions due primarily to
general economic slowdowns, have been operated near capacity. As a general rule,
continuing capital expenditures are required each year to provide the necessary
plant, equipment, and tooling to support the growth of the business. To
supplement its own facilities, Registrant has followed a practice of sourcing a
portion of its production and warehousing requirements from third parties.
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ITEM 3. LEGAL PROCEEDINGS
- -------------------------
There are no material pending legal proceedings to which
Registrant or any of its subsidiaries is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------
During the fourth quarter of the fiscal year covered by this
Form 10-K, no matter was submitted to a vote of Registrant's shareholders,
through the solicitation of proxies or otherwise.
EXECUTIVE OFFICERS OF REGISTRANT
--------------------------------
<TABLE>
<CAPTION>
Employed By
-----------
Registrant
----------
Name Age Since Positions and Offices Held
---- --- ----- --------------------------
<S> <C> <C> <C>
Wolfgang R. Schmitt 53 1966 Chairman of the Board and
Chief Executive Officer
Mr. Schmitt has been Chairman
since September 1993 and Chief
Executive Officer since
November 1992. From May 1991,
he was President and Chief
Operating Officer, Executive
Vice President (1987-1991) and
President of the Home Products
Division (1984-1990).
Charles A. Carroll 47 1971 President and
Chief Operating Officer
Mr. Carroll was elected
President and Chief Operating
Officer of Registrant in
September 1993. From 1990, he
served as President and
General Manager of the Home
Products Division and
previously from 1988,
President and General Manager
of Rubbermaid Specialty
Products Inc.
Leavitt B. Ahrens, Jr. 53 1996 Senior Vice President,
International
Mr. Ahrens joined Registrant
in April 1996 as Senior Vice
President of International. He
was previously with VF
Corporation from 1985 to 1996,
where he served most recently
as President of Asia-Pacific
and previously as President of
Europe. His career in branded
consumer products began in
1970 and has included
seventeen years of overseas
residence.
</TABLE>
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EXECUTIVE OFFICERS OF REGISTRANT
--------------------------------
<TABLE>
<CAPTION>
Employed By
-----------
Registrant
----------
Name Age Since Positions and Offices Held
---- --- ----- --------------------------
<S> <C> <C> <C>
Richard D. Gates 54 1973 Senior Vice President,
Business Development and Investor
Relations
Mr. Gates was named
Senior Vice President,
Investor Relations and
Corporate Communications in
1991 and to his present
position in 1992. He joined
Registrant as Assistant
Controller in 1973 and was
elected Assistant Treasurer in
1977, Treasurer in 1979, and
Vice President in 1980.
Lucius W. Hoffa, Jr. 53 1967 Senior Vice President,
Information Services
Mr. Hoffa was named Senior
Vice President, Information
Services in January 1995 and
was previously Vice President
of Management Information
Services of the Home Products
Division from 1988.
James A. Morgan 61 1974 Senior Vice President,
General Counsel and Secretary
Mr. Morgan joined Registrant
as Assistant Secretary and
Counsel in February 1974 and
was elected Secretary in 1977,
Vice President in 1979, Senior
Vice President in 1983, and
General Counsel in 1988.
Michael E. Naylor 58 1992 Senior Vice President,
Operations
Mr. Naylor became Senior Vice
President, Operations in 1994,
having previously served
Registrant as Senior Vice
President, Technology and
Environment from 1992. He was
previously with General Motors
Corporation for 25 years.
David L. Robertson 51 1994 Senior Vice President,
Human Resources
Mr. Robertson joined
Registrant in April, 1994, as
Senior Vice President, Human
Resources. Previously and from
1982, he was Vice President,
Human Resources for
Hillenbrand Industries.
</TABLE>
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EXECUTIVE OFFICERS OF REGISTRANT
--------------------------------
<TABLE>
<CAPTION>
Employed By
-----------
Registrant
----------
Name Age Since Positions and Offices Held
---- --- ----- --------------------------
<S> <C> <C> <C>
George C. Weigand 45 1984 Senior Vice President and
Chief Financial Officer
Mr. Weigand became Senior Vice
President and Chief Financial
Officer in March, 1994, having
previously served as Vice
President and Corporate
Controller since 1992, and
Vice President, Auditing and
Taxes from 1990. Previously,
he was Manager of Auditing and
Taxes from 1987 and prior,
thereto, Manager of Auditing.
Lawrence M. Blackburn 42 1983 Vice President and
Corporate Controller
Mr. Blackburn was elected Vice
President and Corporate
Controller in January, 1997.
He previously served as
Vice-President, International
for Home Products (from 1992)
and Seasonal Products (from
1995) and as Vice President
and Controller for the
Registrant's Home Products
Division from 1988.
John W. Dean III 41 1988 Vice President and
Treasurer
Mr. Dean joined Registrant as
Assistant Treasurer in 1988
and was elected Vice President
and Treasurer in 1991. He was
previously Director of Banking
and Finance with The Uniroyal
Goodrich Tire Company.
Calvin C. Eller 48 1996 President and General Manager,
Rubbermaid Specialty Products Inc.
Mr. Eller joined Registrant in
August 1996 as President and
General Manager of Rubbermaid
Specialty Products Inc. He was
previously with Venture Stores
from 1979-1996 where he served
as Executive Vice President of
Merchandising from 1992-1996
and as Senior Vice
President/General
Merchandising Manager from
1985-1992.
</TABLE>
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EXECUTIVE OFFICERS OF REGISTRANT
--------------------------------
<TABLE>
<CAPTION>
Employed By
-----------
Registrant
----------
Name Age Since Positions and Offices Held
---- --- ----- --------------------------
<S> <C> <C> <C>
David T. Gibbons 53 1995 President and General Manager,
Home Products Division
Mr. Gibbons joined Registrant
in December 1995 as President
and General Manager of the
Home Products Division. He was
previously, from 1994, General
Manager of the Home and
Commercial Products Division
and from 1991-1994, General
Manager of the Ceramic
Material Business of the 3M
Company, which he joined in
1968.
Gary E. Kleinjan 48 1980 President and General Manager,
The Little Tikes Company
Mr. Kleinjan was appointed
President and General Manager
of The Little Tikes Company in
September 1994 having
previously served as President
and General Manager of
Rubbermaid Office Products
Inc. from March 1994. Prior
thereto and from August 1992,
he was Vice President and
General Manager of
MicroComputer Accessories,
Inc. Previously and from 1988,
he was Vice President, Sales
of the Home Products Division.
Gary F. Mattison 56 1967 President and General Manager,
Global Transformation Team
Mr. Mattison was appointed
President and General Manager,
Global Transformation Team in
1996. He previously served as
President and General Manager
of Rubbermaid Specialty
Products Inc. from June 1993
and from 1979, as Vice
President, Manufacturing for
the Home Products Division.
Joseph M. Ramos 55 1992 President and General Manager,
Rubbermaid Commercial Products Inc.
Mr. Ramos joined Rubbermaid
Commercial Products on January
1, 1992 as President and
General Manager. He was
previously employed with 3M
Company for 25 years in
various domestic and
international sales,
marketing, and general
management assignments.
</TABLE>
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EXECUTIVE OFFICERS OF REGISTRANT
--------------------------------
<TABLE>
<CAPTION>
Employed By
-----------
Registrant
----------
Name Age Since Positions and Offices Held
---- --- ----- --------------------------
<S> <C> <C> <C>
Derial H. Sanders 54 1996 President and General Manager,
Graco Children's Products Inc.
Mr. Sanders became President
and General Manager of Graco
Children's Products Inc. upon
its acquisition by Registrant
in 1996. He previously served
from 1980 to 1996 as
President. Since joining Graco
in 1969 as Sales Manager, he
has also held the position of
Vice President of Sales and
Marketing.
Carol S. Troyer 53 1962 President and General Manager,
Rubbermaid Office Products Inc.
Ms. Troyer was named President
and General Manager of
Rubbermaid Office Products
Inc. in 1994 having served
previously from 1992 as
President and General Manager
of Rubbermaid Canada Inc. From
1991, she was Vice President
Invincible Customer Service
of the Home Products Division
and prior thereto Eastern
Regional Sales Vice President
for the Division.
</TABLE>
All executive officers who are officers of Registrant are elected for a one-year
term.
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- -----------------------------------------------------------------------------
Registrant's Common Shares are traded on the New York Stock
Exchange under the symbol RBD. As of January 31, 1997, Registrant had
approximately 31,000 shareholders of record. Reference is made to page 27 of the
1996 Annual Report to Shareholders, which is contained in Exhibit 13 hereof, for
information concerning sales prices for and dividends paid on Registrant's
Common Shares during 1996 and 1995, which information is incorporated by
reference herein.
ITEM 6. SELECTED FINANCIAL DATA
- -------------------------------
Reference is made to pages 30 and 31 of the 1996 Annual Report
to Shareholders, which are contained in Exhibit 13 hereof, which pages include
the selected financial data for the five years ended December 31, 1996 as part
of Registrant's "Consolidated Financial Summary", which information is
incorporated by reference herein.
12
<PAGE> 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- -------------------------------------------------------------------------------
OF OPERATIONS
-------------
Reference is made to pages 27, 28 and 29 of the 1996 Annual
Report to Shareholders, which are contained in Exhibit 13 hereto, which include
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for the years 1996, 1995 and 1994, which information is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ---------------------------------------------------
Reference is made to pages 17 through 27 of the 1996 Annual
Report to Shareholders, which are contained in Exhibit 13 hereto, which include
the consolidated balance sheets and the notes thereto as of December 31, 1996
and 1995, and the related consolidated statements of earnings, cash flows and
shareholders' equity for each of the years in the three year period ended
December 31, 1996, together with the independent auditors' report thereon of
KPMG Peat Marwick LLP dated January 31, 1997, which information is incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- -----------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Registrant has not changed its independent auditors, and there
have been no reportable disagreements with such auditors regarding accounting
principles or practices or financial disclosure matters.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
- -------------------------------------------------------
Information regarding the directors of Registrant is included
under the caption "Information as to Board of Directors and Nominees" in
Registrant's proxy statement dated March 7, 1997, and is incorporated herein by
reference. Information regarding the executive officers of Registrant is
included under a separate caption in Part I hereof and is incorporated by
reference, in accordance with General Instruction G(3) to Form 10-K and
Instruction 3 to Item 401(b) of Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION
- -------------------------------
Information regarding the above is included under the caption
"Executive Compensation" in Registrant's proxy statement dated March 7, 1997,
and is incorporated herein by reference.
13
<PAGE> 15
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -----------------------------------------------------------------------
Information regarding the above is included under the captions
"Security Ownership of Certain Beneficial Owners" and "Ownership By Management"
in Registrant's proxy statement dated March 7, 1997, and is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------
Registrant has no relationships or related transactions
required to be reported by Item 404 of Regulation S-K.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- ------------------------------------------------------------------------
(a) The following documents are filed as part of this Form 10-K
Report.
(1) The financial statements referred to in Item 8 above
which are contained in Exhibit 13 hereto and which
are incorporated by reference thereto.
(2) Exhibits 10(a) through 10(g) to this Item 14
constitute each executive compensation plan and
arrangement of Registrant.
All schedules have been omitted because the material is not
applicable, or is not required, or because the required information is shown in
the consolidated financial statements or in the notes thereto, or is not
otherwise material to the consolidated financial statements.
(b) On October 16, 1996 Registrant filed a report on Form 8-K
reporting the acquisition on October 2, 1996 of Graco
Children's Products Inc.
(c) Exhibits (numbered in accordance with Item 601 of Regulation
S-K).
(3a,4a) Amended Articles of Incorporation of Rubbermaid
Incorporated. Incorporated by reference from
Exhibits 3a and 4a to Form 10-K for the year ended
December 31, 1992.
(3b,4b) Regulations of Rubbermaid Incorporated.
Incorporated by reference from Exhibits 3b and 4b
to Form 10-K for the year ended December 31, 1992.
(4c) Shareholder Rights Agreement between Rubbermaid
Incorporated and The First National Bank of Boston
dated June 25, 1996. Incorporated by reference
from Exhibit 4.1 to Form 8-K filed with the
Commission on June 26, 1996.
(10a) Rubbermaid Incorporated Management Incentive Plan.
Incorporated by reference from Exhibit 10a to Form
10-K for the year ended December 31, 1992.
14
<PAGE> 16
(10b) Rubbermaid Incorporated Amended 1989 Restricted
Stock Incentive and Option Plan. Incorporated by
reference from Exhibit A to Proxy Statement for
April 26, 1994 Annual Meeting of Shareholders.
(10c) Rubbermaid Incorporated Supplemental Executive
Retirement Plan, as amended. Incorporated by
reference from Exhibit 10d to Form 10-K for the
year ended December 31, 1993.
(10d) Rubbermaid Incorporated Supplemental Retirement
Plan. Incorporated by reference from Exhibit 10e
to Form 10-K for the year ended December 31, 1991.
(10e) Change-Of-Control Employment Agreement with
Wolfgang R. Schmitt. Identical agreements have
been entered into with Leavitt B. Ahrens, Jr.,
Charles A. Carroll, John W. Dean III, Calvin C.
Eller, Richard D. Gates, David T. Gibbons, Lucius
W. Hoffa, Jr., Gary E. Kleinjan, Gary F. Mattison,
James A. Morgan, Michael E. Naylor, Joseph M.
Ramos, David L. Robertson, Derial H. Sanders,
Carol S. Troyer, and George C. Weigand.
(10f) Rubbermaid Incorporated 1993 Deferred Compensation
Plan. Incorporated by reference to Exhibit A to
Proxy Statement for April 27, 1993 Annual Meeting
of Shareholders.
(10g) Employment Agreement with David T. Gibbons.
Incorporated by reference from Exhibit 10g to Form
10-K for the year ended December 31, 1995.
(13) Consolidated financial statements and other data
from pages 17 to 31 of 1996 Annual Report to
Shareholders.
(21) Subsidiaries of Registrant.
(23) Consent of KPMG Peat Marwick LLP.
(24) Power of Attorney.
(27) Financial Data Schedule.
15
<PAGE> 17
SIGNATURE
- ---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: March 24, 1997 RUBBERMAID INCORPORATED
By: /s/ Wolfgang R. Schmitt
----------------------------
Wolfgang R. Schmitt
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
Registrant and in the capacities indicated on March 24, 1997.
/s/ Wolfgang R. Schmitt Director, Chairman of the Board and
- ------------------------------ Chief Executive Officer
Wolfgang R. Schmitt
/s/ George C. Weigand Senior Vice President and
- ------------------------------ Chief Financial Officer
George C. Weigand
/s/ Lawrence M. Blackburn Vice President and Corporate Controller
- ------------------------------ (Principal Accounting Officer)
Lawrence M. Blackburn
Tom H. Barrett Director
Charles A. Carroll Director
Robert O. Ebert Director
Robert M. Gerrity Director
Karen N. Horn Director By: /s/ James A. Morgan
---------------------
James A. Morgan
William D. Marohn Director Attorney-in-Fact
Steven A. Minter Director
Jan Nicholson Director
Paul G. Schloemer Director
Gordon R. Sullivan Director
16
<PAGE> 1
EXHIBIT 10E
-----------
CHANGE IN CONTROL
-----------------
EMPLOYMENT AGREEMENT
--------------------
This Agreement dated as of October 21, 1996, by and between RUBBERMAID
INCORPORATED, an Ohio corporation (Rubbermaid), and WOLFGANG R. SCHMITT (the Key
Executive).
WHEREAS, Rubbermaid desires to be assured of the continued employment
of the Key Executive and wishes to make certain arrangements in the event
Rubbermaid becomes the subject of a "Change in Control" (as defined below); and
WHEREAS, The Key Executive is willing to continue in the employment of
Rubbermaid or that of one of its wholly-owned subsidiaries but desires assurance
of continued employment in the event of a Change in Control of Rubbermaid; and,
WHEREAS, The Board of Directors of Rubbermaid has authorized the
Company to enter into this Agreement with the Key Executive to provide the
protections set forth herein;
NOW, THEREFORE, In consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. CONTINUED EMPLOYMENT OF KEY EXECUTIVE.
(a) In the event of termination of employment of Key Executive,
within a period of two (2) years following a Change in Control for whatever
reason, including a voluntary termination by the Key Executive without Good
Reason, but excluding a termination by Rubbermaid for "Cause", Rubbermaid shall
pay to Key Executive within five (5) business days after the Date of Termination
the Severance Payment and Rubbermaid will provide the Key Executive Employee
Benefits for a period of three (3) years after such termination.
(b) In the event that after the expiration of two (2) years
following a Change in Control and prior to the expiration of five (5) years
following the Change in Control, Key Executive's employment with Rubbermaid is
terminated by Rubbermaid without Cause (as defined below) or in the event, after
the expiration of two (2) years following the Change in Control and prior to the
expiration of five (5) years following the Change in Control the Key Executive
terminates his employment for Good Reason (as defined below) (in either case a
"Qualifying Termination), (i) the Key Executive shall receive from Rubbermaid
within five (5) business days after
<PAGE> 2
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 2
the Date of Termination, as defined below, the Severance Payment, provided,
however, in the case of a termination prior to a Change in Control the Severance
Payment shall be made coincident with the date of the Change in Control and (ii)
Rubbermaid will provide to the Key Executive Employee Benefits (as defined
below) for a period of three (3) years after such termination; provided,
however, in the case of a termination prior to a Change in Control, the Employee
Benefits shall be provided for a period of three years after the Change in
Control. A resignation tendered by the Key Executive pursuant to the request of
Rubbermaid's Board of Directors shall, for the purposes of this Agreement, be
deemed and treated as a termination by Rubbermaid and the Key Executive's
entitlement to compensation as provided herein and Employee Benefits shall
depend on whether or not the Board's request was based on Cause.
2. DEFINITIONS. As used in this Agreement:
(a) "Cause" shall mean only if the termination of the Key
Executive's employment with Rubbermaid or its subsidiaries shall have been the
direct result of or based solely upon (i) an intentional act of fraud,
embezzlement or theft in connection with duties with Rubbermaid and resulting or
intended to result directly or indirectly in substantial personal gain to the
Key Executive at the expense of Rubbermaid or a subsidiary; (ii) intentional
wrongful disclosure of secret processes or confidential information of
Rubbermaid or a subsidiary; or (iii) intentional wrongful damage to property of
Rubbermaid or a subsidiary, and any such act shall have been materially harmful
to Rubbermaid. The Key Executive's employment shall in no event be considered to
have been terminated by Rubbermaid for Cause if such termination took place or
was the result of (x) bad judgment or negligence, (xi) any act or omission
without intent of directly or indirectly gaining therefrom a profit to which the
Key Executive was not legally entitled, (xii) any act or omission believed in
good faith by the Key Executive to have been in or not opposed to the interests
of Rubbermaid or a subsidiary, or (xiii) any act or omission in respect of which
a determination is made that the Key Executive met the applicable standard of
conduct prescribed for mandatory or permissive indemnification or reimbursement
or payment of expenses under the Code of Regulations of Rubbermaid or the laws
of the State of Ohio, in each case as in effect at the time of such act or
omission. The Key Executive also shall not be deemed to have been terminated for
Cause
<PAGE> 3
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 3
unless and until there shall have been delivered to him a copy of a resolution,
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Rubbermaid Board of Directors at a meeting of the Board
called and held for such purpose (after reasonable notice to the Key Executive
and an opportunity for him, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, the Key Executive
was guilty of conduct set forth in clauses (a)(i) or (a)(ii) or (a)(iii) of the
first sentence of this paragraph and specifying the particulars thereof in
detail.
(b) "Change in Control" means the occurrence of any of the
following events:
(i) Rubbermaid is merged, consolidated or reorganized into
or with another corporation or other legal person, and as a result of such
merger, consolidation or reorganization less than two-thirds of the combined
voting power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
the combined voting power of the then-outstanding securities entitled to vote
generally in the election of directors ("Voting Stock") of Rubbermaid
immediately prior to such transaction;
(ii) Rubbermaid sells or otherwise transfers all or
substantially all of its assets to another corporation or other legal entity,
and as a result of such sale or transfer less than two-thirds of the combined
voting power of the then-outstanding securities of such corporation or entity
immediately after such sale or transfer is held in the aggregate by the holders
of Voting Stock of Rubbermaid immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as promulgated pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
disclosing that any person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities representing 15% or
more of the Voting Stock of Rubbermaid;
(iv) Rubbermaid files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or report
or item
<PAGE> 4
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 4
therein) that a change in control of Rubbermaid has occurred or will occur in
the future pursuant to any then-existing contract or transaction; or
(v) If, during any period of two (2) consecutive years,
individuals who at the beginning of any such period constitute the Directors of
Rubbermaid cease for any reason to constitute at least a majority thereof;
PROVIDED, HOWEVER, that for purposes of this clause (v) each Director who is
first elected, or first nominated for election by the holders of the Voting
Stock, by a vote of at least two-thirds of the Directors of Rubbermaid (or a
committee thereof) then still in office who were Directors of Rubbermaid at the
beginning of any such period will be deemed to have been a Director of
Rubbermaid at the beginning of such period.
Notwithstanding the foregoing provisions of Sections 2(b)(iii) or
2(b)(iv), unless otherwise determined in a specific case by majority vote of the
Board, a Change in Control shall not be deemed to have occurred for purposes of
Sections 2(b)(iii) or 2(b)(iv) solely because (1) Rubbermaid, (2) an entity in
which Rubbermaid directly or indirectly beneficially owns 50% or more of the
voting equity securities (a "Subsidiary"), or (3) any employee stock ownership
plan or any other employee benefit plan of Rubbermaid or any Subsidiary either
files or becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange Act
disclosing beneficial ownership by it of shares of Voting Stock, whether in
excess of 15% or otherwise, or because Rubbermaid reports that a change in
control of Rubbermaid has occurred or will occur in the future by reason of such
beneficial ownership.
(c) "Date of Termination" shall mean the date specified in the
Notice of Termination.
(d) "Employee Benefits" means the perquisites, benefits and
service credit for benefits as provided under any and all welfare benefit
policies, plans, programs or arrangements in which the Key Executive is entitled
to participate, including without limitation any welfare benefit, pension,
deferred compensation, group or other life, health, medical/hospital or other
insurance (whether funded by actual insurance or self-insured by Rubbermaid),
disability, salary continuation, expense reimbursement and other welfare benefit
policies, plans, programs or arrangements that may now exist or any successor
policies, plans, programs or arrangements that may be adopted hereafter,
providing perquisites, benefits and
<PAGE> 5
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 5
service credit for benefits at least as great in the aggregate as are payable
thereunder immediately prior to a Change in Control.
(e) "Good Reason" shall mean any one or more of the following
situations, if not fully remedied within ten (10) calendar days after written
notice to Rubbermaid from the Key Executive of such determination:
(i) Failure by Rubbermaid to honor any of its material
obligations under this Agreement; or
(ii) Any purported termination of the Key Executive's
employment that is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 3 below and, for purposes of this Agreement, no such
purported termination shall be effective; or
(iii) Failure to elect or reelect or otherwise to maintain
the Key Executive to or in the office or the position (or a substantially
equivalent office or position) in Rubbermaid or a subsidiary (or a successor
company or division) that the Key Executive held immediately prior to a Change
in Control, or the removal of or failure to reelect the Key Executive as a
Director of Rubbermaid or a subsidiary, if the Key Executive shall have been a
Director of Rubbermaid or such subsidiary immediately prior to such removal or
failure to reelect; or
(iv) The Key Executive's overall compensation or perquisites
are reduced or adversely modified, or the Key Executive's authority or duties
are materially changed, in either case without the voluntary prior written
consent of the Key Executive. For purposes of this Agreement, the Key
Executive's authority or duties shall be conclusively considered to have been
"materially changed" if, without the Key Executive's express and voluntary
written consent, there is any substantial diminution or adverse modification in
the Key Executive's title, status, overall position, responsibilities, reporting
relationship, general working environment (including without limitation
secretarial and staff support, offices, and frequency and mode of travel), or
if, without the Key Executive's express and voluntary written consent, the Key
Executive's job location is transferred to a site more than twenty-five (25)
miles away from his place of employment as of the date of the Change in Control;
or
(v) A determination by the Key Executive made in good faith
that as a result of a change in circumstances significantly affecting his
position, including without limitation, a change in the scope of the business or
other activities
<PAGE> 6
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 6
for which he was responsible as of the date of this Agreement or on the date of
a Change in Control, he has been rendered substantially unable to carry out, has
been substantially hindered in the performance of, or has suffered a substantial
reduction in any of the authorities, powers, functions, responsibilities or
duties attached to the position held by the Key Executive as of the date hereof
or on the date of a Change in Control.
(f) "Severance Payment" shall mean a lump sum amount equal to the
product of (a) three, multiplied by (b) the sum of the items described in
clauses (i) through (iv):
(i) the amount of annualized base salary that the Key
Executive is earning immediately prior to the Qualifying Termination, or if
greater, immediately prior to a Change in Control of Rubbermaid;
(ii) the greatest of (A) the amount that the Key Executive
received or earned from any Rubbermaid annual incentive bonus plan with respect
to the fiscal year immediately preceding the fiscal year in which the Qualifying
Termination occurs or (B) the amount the Key Executive received with respect to
the fiscal year in which the Qualifying Termination occurs or (C) the amount the
Key Executive received under the Plan with respect to the fiscal year
immediately prior to a Change in Control of Rubbermaid;
(iii) the dollar value of the Key Executive's most recent
long term incentive award prior to the Qualifying Termination or, if greater;
immediately prior to a Change in Control of Rubbermaid, and
(iv) $50,000.00, which shall be increased by a percentage
equal to the percentage increase in the U.S. Consumer Price Index from 1996 to
the Date of Termination as published by the United States Department of Labor,
Bureau of Labor Statistics.
3. NOTICE OF TERMINATION. Any termination of the Key Executive's
employment by Rubbermaid or any subsidiary or by the Key Executive shall be
communicated by a written notice to the other party hereto (the "Notice of
Termination"). The Notice of Termination shall specify the date on which the Key
Executive's employment shall terminate (which date shall not be less than ten
(10) nor more than twenty-one (21) calendar days after the date that the Notice
of Termination is deemed to have been duly given (as provided in Section 19) and
<PAGE> 7
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 7
indicate the specific provision in this Agreement that is applicable and is
being relied upon, and if the termination is by the Company for Cause, shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of employment.
4. INDEMNIFICATION FOR GOLDEN PARACHUTE EXCISE TAX.
(a) In the event that it shall be determined that any payment,
benefit or distribution provided, or to be provided, by Rubbermaid (or by any
person whose actions result in a Change in Control or any person affiliated with
Rubbermaid or such person) to or for the benefit of the Key Executive under the
terms of this Agreement, or under any other agreement, plan or arrangement with
Rubbermaid (or with any person whose actions result in a Change in Control or
any person affiliated with Rubbermaid or such person), would be subject to any
excise tax imposed pursuant to Section 4999 of the Internal Revenue Code of
1986, as amended, or any comparable provision of state or local law (an "Excise
Tax"), Rubbermaid agrees that it will promptly pay or cause to be paid to the
Key Executive, in addition to any other payments made or required to be made
pursuant to the terms of this Agreement, an additional amount in cash (a
"Gross-Up Payment") equal to the sum of (i) the amount of such Excise Tax plus
(ii) all Attributable Taxes and Penalties. For purposes of this Agreement,
"Attributable Taxes and Penalties" means all taxes, interest and penalties,
including, without limitation, any federal, state and local income taxes and any
Excise Taxes, which become payable by the Key Executive as a result of the
receipt of the Gross-Up Payment or the assessment of any Excise Tax against the
Key Executive. It is intended that under this provision Rubbermaid will
indemnify the Key Executive in such a manner that the Key Executive shall not
suffer any loss or expense by reason of the assessment of any Excise Tax or the
reimbursement of the Key Executive for payment of any such Excise Tax.
(b) In determining the amount of any Gross-Up Payment payable
pursuant to Paragraph (a) above, the Key Executive shall be deemed to pay
federal income taxes at the highest marginal rate of federal income taxation in
the calendar year in which the Gross-Up Payment is to be made, and state and
local taxes at the highest marginal rates of taxation for such year in the state
and locality of the Key Executive's residence. For such purposes, federal income
<PAGE> 8
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 8
taxes shall be determined net of the maximum reduction in such federal income
taxes that could be obtained from the deduction of such state and local taxes.
(c) Within thirty (30) days after the Key Executive's Date of
Termination, KPMG Peat Marwick, or such other nationally recognized accounting
firm selected by the Key Executive (the "Accounting Firm"), shall make a
determination as to whether any Excise Tax should be reported and paid by the
Key Executive for any period or periods by reason of any payment, benefit or
distribution under this Agreement or under any other agreement, plan or
arrangement with Rubbermaid (or with any person whose actions result in a Change
in Control or any person affiliated with Rubbermaid or such person). If the
Accounting Firm determines that any Excise Tax should be reported and paid by
the Key Executive, the Accounting Firm shall also determine the amount of such
Excise Tax and the amount of the Gross-Up Payment required to be paid to the Key
Executive by Rubbermaid with respect to such Excise Tax. In such event,
Rubbermaid shall, within five (5) business days after such determination, pay or
cause to be paid to the Key Executive the amount of the Gross-Up Payment with
respect to the Excise Tax as determined by the Accounting Firm, and the Key
Executive shall report and pay the Excise Tax as so determined. If the
Accounting Firm determines that no Excise Tax should be reported and paid by the
Key Executive, it shall furnish the Key Executive with its opinion that there is
substantial authority not to report any Excise Tax, and the Key Executive shall
prepare and file his tax returns in accordance with such advice until such time
as the Internal Revenue Service (the "IRS") or any applicable state taxing
authority shall notify the Key Executive that such manner of reporting is
improper. Rubbermaid shall be responsible for all fees and expenses connected
with the determinations by the Accounting Firm Pursuant to this Section 4.
(d) In the event that the Key Executive is at any time required
to pay any Excise Tax (or any interest or penalties with respect to any Excise
Tax) in addition to any amount determined pursuant to Paragraph (c) by reason of
any payment, benefit or distribution under this Agreement or under any other
agreement, plan or arrangement with Rubbermaid (or with any person whose actions
result in a Change in Control or any person affiliated with Rubbermaid or such
person), within five (5) business days after the Key Executive notifies
Rubbermaid of such required additional Excise Tax (or additional interest or
<PAGE> 9
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 9
penalties) Rubbermaid shall pay or cause to be paid to the Key Executive a
Gross-Up Payment determined with respect to such additional Excise Tax (and any
such additional interest and penalties). In the event that the Key Executive
receives any refund of any Excise Tax with respect to which the Key Executive
has previously received a Gross-Up Payment hereunder, the Key Executive shall
promptly pay to Rubbermaid the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto).
(e) The Key Executive agrees to notify Rubbermaid in a timely
manner in the event of any audit or other proceeding by the IRS or any taxing
authority in which the IRS or other taxing authority asserts that any Excise Tax
should be assessed against the Key Executive and to cooperate with Rubbermaid
(at Rubbermaid's sole cost and expense) in contesting any such proposed
assessment with respect to such Excise Tax (a "Proposed Assessment"). The Key
Executive agrees not to settle any Proposed Assessment without the consent of
Rubbermaid. If, however, the Key Executive's tax liability for any year cannot
be finally resolved principally by reason of a failure to settle a Proposed
Assessment, the Key Executive may demand that Rubbermaid settle the Proposed
Assessment. If Rubbermaid does not settle the Proposed Assessment, or does not
consent to allow the Key Executive to settle the Proposed Assessment, within ten
(10) days following such demand, Rubbermaid shall indemnify and hold harmless
the Key Executive (i) with respect to any additional interest and/or penalties
that the Key Executive is required to pay by reason of the delay in finally
resolving the Key Executive's tax liability and (ii) with respect to any taxes,
interest and penalties that the Key Executive is required to pay by reason of
any indemnification payment under this Paragraph.
5. COMPETITIVE ACTIVITY. During a period ending one (1) year following
the Date of Termination, if the Key Executive shall have received or shall be
receiving benefits under this Agreement, the Key Executive shall not engage in
any Competitive Activity, without the prior written consent of Rubbermaid, which
consent shall not unreasonably be withheld. For purposes of this Agreement, the
term "Competitive Activity" shall mean the Key Executive's participation,
without the written consent of an officer of Rubbermaid, in the management of
any business enterprise if such enterprise engages in substantial and direct
<PAGE> 10
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 10
competition with Rubbermaid and such enterprise's sales of any product or
service competitive with any product or service of Rubbermaid amounted to 10% of
such enterprise's net sales for its most recently completed fiscal year and if
Rubbermaid's net sales of said product or service amounted to 10% of
Rubbermaid's net sales for its most recently completed fiscal year. "Competitive
Activity" shall not include (i) the mere ownership of securities in any such
enterprise and the exercise of rights appurtenant thereto or (ii) participation
in the management of any such enterprise other than in connection with the
competitive operations of such enterprise.
6. WITHHOLDING OF TAXES. Rubbermaid may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or government regulation or ruling.
7. LEGAL FEES AND EXPENSES. It is the intent of Rubbermaid that the
Key Executive not be required to incur any legal fees or disbursements
associated with, (i) the interpretation of any provision in, or obtaining of any
right or benefit under this Agreement, or (ii) the enforcement of his rights
under this Agreement, including without limitation by litigation or other legal
action, because the cost and expense thereof would substantially detract from
the benefits intended to be extended to the Key Executive hereunder.
Accordingly, Rubbermaid irrevocably authorizes the Key Executive from time to
time to retain counsel of his choice, at the expense of Rubbermaid as hereafter
provided, to represent the Key Executive in connection with the interpretation
and/or enforcement of this Agreement, including without limitation the
initiation or defense of any litigation or other legal action, whether by or
against Rubbermaid, or any Director, officer, stockholder or other person
affiliated with Rubbermaid in any jurisdiction. Rubbermaid shall pay or cause to
be paid and shall be solely responsible for any and all attorneys' and related
fees and expenses incurred by the Key Executive under this Section 7.
8. LATE PAYMENT OR REIMBURSEMENT. In the event Rubbermaid does not
make or provide any payment, reimbursement or benefit when due, then the amount
or value of such payment, reimbursement or benefit shall be deemed to bear
interest, from the due date until the date the payment, reimbursement or
<PAGE> 11
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 11
benefit is made or provided, at a rate equal to the Prime Rate as announced from
time to time by National City Bank, Cleveland, Ohio plus three (3) percentage
points or, if less, the maximum rate permitted by applicable law. Such
additional amount shall be in addition to, and not in lieu of, any and all other
amounts due to the Key Executive under this Agreement.
9. NOT A CONTRACT OF EMPLOYMENT - OTHER BENEFITS - TERMINATION PRIOR
TO CHANGE IN CONTROL. This Agreement shall be effective and binding immediately
upon its execution, but, except as provided in the last sentence of this Section
9, this Agreement shall not be operative unless and until there shall have
occurred a Change in Control. The terms and conditions of this Agreement shall
not be deemed to constitute a contract of employment between Rubbermaid or a
subsidiary and the Key Executive prior to a Change in Control, and the Key
Executive shall have no rights against Rubbermaid or a subsidiary except as may
otherwise be specifically provided herein. Moreover, nothing in this Agreement
shall be deemed to give the right to be retained in the service of Rubbermaid or
a subsidiary or to interfere with the right of Rubbermaid or a subsidiary to
discipline or discharge the Key Executive at any time.
Any termination of employment of the Key Executive or the
removal of the Key Executive from the office or position in Rubbermaid or a
Subsidiary following the commencement of any discussion with a third party that
ultimately results in a Change in Control shall be deemed to be a termination or
removal of the Key Executive without Cause after a Change in Control for
purposes of this Agreement.
10. NO OBLIGATION TO MITIGATE DAMAGES: NO EFFECT ON OTHER CONTRACTUAL
RIGHTS. The Key Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by Key Executive as the
result of employment by another employer after the date of termination of his
employment with Rubbermaid, or otherwise.
<PAGE> 12
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 12
11. RELEASE. Payment of the Severance Payment set forth in Section 2(f)
hereof is conditioned upon the Key Executive executing and delivering a release
reasonably satisfactory to Rubbermaid releasing Rubbermaid from any and all
claims, demands, damages, actions and/or causes of action whatsoever, which he
may have had on account of the termination of his employment, including, but not
limited to claims of discrimination, including on the basis of sex, race, age,
national origin, religion, or handicapped status (with all applicable periods
during which the Key Executive may revoke the release or any provision thereof
having expired); and any and all claims, demands and causes of action for
retirement (other than under any Rubbermaid retirement plan, deferred
compensation plan or any Company medical plan with respect to claims thereunder)
or severance or other termination pay. Such Release shall not, however, apply to
the obligations of Rubbermaid arising under this Agreement, or rights of
indemnification the Key Executive may have under Rubbermaid's Code of
Regulations or by statute.
12. SUCCESSORS BINDING AGREEMENT. Rubbermaid will require that any
successor (whether direct or indirect, by purchase of stock or assets, by
merger, by consolidation or otherwise) to all or substantially all of the
business and/or assets of Rubbermaid be liable for the obligations owed to the
Key Executive hereunder and will require that any such successor perform this
Agreement in the same manner and to the same extent that Rubbermaid is obligated
to perform it. Any succession shall not, however, relieve or alter Rubbermaid's
continuing liability for all obligations owing to the Key Executive hereunder.
The parties hereto agree, however, that the Key Executive's employment by a
successor to Rubbermaid, if consistent with the terms and provisions of this
Agreement, will not be deemed a termination of the Key Executive's employment
with Rubbermaid or a subsidiary.
The foregoing assumption shall be accomplished by a written agreement
satisfactory in form and substance to the Key Executive. Failure of Rubbermaid
to obtain such an agreement prior to the effectiveness of any such succession
shall be a material breach of this Agreement and shall entitle the Key Executive
to the Severance Payment and Employee Benefits as provided in Section 1 above as
though the Key Executive terminated his employment for Good Reason, except that
for purposes of implementing the foregoing, the date on which any such
<PAGE> 13
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 13
succession becomes effective shall be deemed the Date of Termination. As used
herein, "Rubbermaid" shall be deemed to include any successor to Rubbermaid or
any other person which otherwise becomes bound by the terms and provisions of
this Agreement.
This Agreement shall inure to the benefit of and shall be enforceable
by the Key Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributes, devisees, and legatees. If the
Key Executive should die while any amount or benefit would still be payable or
providable hereunder had the Key Executive continued to live, all such amounts
and benefits shall be paid or provided in accordance with the terms of this
Agreement to his devisee, legatee, or other designee or, if there be no such
designee, to his estate.
13. TERMINATION OF AGREEMENT. The term of this Agreement (the "Term")
shall commence as of the date hereof and shall expire as of the later of the
close of business on December 31, 1997, and the expiration of any Change in
Control employment guarantee; provided, however, that (A) the term of this
Agreement shall automatically be extended for an additional year unless, not
later than November 30 of the immediately preceding year, Rubbermaid or the Key
Executive shall have given notice that it or he, as the case may be, does not
wish to have the Term extended, and (B) subject to Sections 1 and 9 hereof, if
prior to a Change in Control, the Key Executive ceases for any reason to be an
employee of Rubbermaid or a subsidiary, thereupon this Agreement shall
immediately terminate and be of no further effect; and provided further,
however, that notwithstanding any notice by Rubbermaid to terminate this
Agreement, if a Change in Control shall have occurred prior to the Termination
Date this Agreement shall continue in effect for a period of five (5) years from
the date of the occurrence of the Change in Control.
14. TRUST AGREEMENT. To ensure that the provisions of this Agreement
can be enforced by the Key Executive in the event of an imminent Change in
Control, the Board of Directors of Rubbermaid Incorporated, upon the
recommendation of the Compensation and Management Development Committee of that
Board, may establish a trust or trusts and fund such trust or trusts with
<PAGE> 14
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 14
sufficient principal to pay Key Executive's Severance Payment and Employee
Benefits.
15. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in writing signed by both parties hereto. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party that are not set forth expressly in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Ohio.
16. VALIDITY. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, all of which shall remain in full force
and effect.
17. NON-EXCLUSIVITY. Except with respect to prior agreements regarding
severance payments, which are addressed in Section 18, the provisions of this
Agreement, and any payment provided for hereunder, shall not reduce any amounts
otherwise payable, or in any way diminish Key Executive's existing rights, or
rights which would accrue solely as a result of the passage of time, under any
other employment agreement or other contract, plan or arrangement with
Rubbermaid or a subsidiary.
18. PRIOR AGREEMENT. This Agreement supersedes any prior agreement
between the Company and the Key Executive regarding severance payments in the
event of a Change in Control, which prior agreement shall, without further
action, be terminated as of the date hereof.
19. NOTICE. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
<PAGE> 15
WOLFGANG R. SCHMITT
Change in Control Employment Agreement
Page 15
delivered or mailed by United States certified mail, return receipt requested,
postage prepaid, addressed to the respective addressees set forth below,
provided that all notices to Rubbermaid (or any successor to Rubbermaid) shall
be directed to the attention of the Chairman or the Secretary of Rubbermaid (or
any successor to Rubbermaid), or to such other address as any party may have
furnished to the other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
If to the Key Executive, at Key Executive's home address as maintained
in the records of Rubbermaid.
If to Rubbermaid: Rubbermaid Incorporated
1147 Akron Road
Wooster, Ohio 44691
Attn: Corporate Secretary
20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have entered into this Agreement
effective as of the date and year first above written.
"KEY EXECUTIVE" RUBBERMAID INCORPORATED
an Ohio corporation
/S/ WOLFGANG R. SCHMITT /S/ JAMES A. MORGAN
- ------------------------- ----------------------
By: WOLFGANG R. SCHMITT By: JAMES A. MORGAN
Title: SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
<PAGE> 1
Exhibit 13
FINANCIAL MESSAGE [RUBBERMAID LOGO]
- --------------------------------------------------------------------------------
In 1995's financial message we committed to balance the Company's capital
structure and enhance cash flow. We are now pleased to report that during 1996
we repurchased $185 million of Common Shares and completed a significant cash
acquisition enabling the Company to become prudently leveraged. The financial
strength of the Company was evidenced by favorable market pricing for both our
first ever commercial paper program and a $150 million term debt issuance. In
addition, we achieved record cash flow from operations, totaling $315 million,
resulting from a strong focus on working capital management.
In January 1997, we implemented a new incentive compensation system linked to
improvements in economic value-added (EVA) and global sales growth. Improvement
in EVA has been shown to have a strong correlation to improved stock price
performance, a goal all associates share at Rubbermaid.
In 1996, we added an accounting policy note to address the provisions of FAS No.
123 which describes accounting for stock-based compensation arrangements. The
notes payable and long-term debt footnote was also expanded to discuss the
issuance of debt securities resulting from the Company's balanced capital
structure initiative.
The responsibility for the integrity and objectivity of the consolidated
financial statements and other data included in this Annual Report rests with
management and the Board of Directors. Our management has established a system
of internal controls to provide reasonable assurance that this financial
information is reliable and the Company's assets are properly safeguarded. We
maintain these controls by selecting and training qualified associates and by
establishing and implementing accepted policies and procedures of accounting and
business practice. Concurrently, we employ internal auditors to monitor and
evaluate the effectiveness of these controls, policies, and procedures.
The Audit and Environmental Committee of the Board, comprised entirely of
outside directors, also monitors and reviews the Company's financial reporting
and accounting practices by meeting with management, internal auditors, and
external auditors. The internal and external auditors have unrestricted access
to the Committee.
/s/ George C. Weigand
George C. Weigand
Senior Vice President and Chief Financial Officer
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
SHAREHOLDERS AND BOARD OF DIRECTORS
RUBBERMAID INCORPORATED:
We have audited the accompanying consolidated balance sheets of Rubbermaid
Incorporated and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of earnings, cash flows, and shareholders' equity for
each of the years in the three-year period ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Rubbermaid
Incorporated and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Cleveland, Ohio
January 31, 1997
------
17
<PAGE> 2
CONSOLIDATED STATEMENT OF EARNINGS
- --------------------------------------------------------------------------------
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $2,354,989 $2,344,170 $2,169,354
Cost of sales 1,649,520 1,673,232 1,465,586
Selling, general, and administrative expenses 432,063 402,586 347,915
Realignment costs -- 158,000 --
Other charges (credits), net:
Interest expense 26,281 13,682 7,198
Interest income (1,933) (3,422) (5,066)
Miscellaneous 4,046 4,457 (13,430)
- ---------------------------------------------------------------------------------------------------------------------------
28,394 14,717 (11,298)
- ---------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes 245,012 95,635 367,151
Income taxes 92,614 35,863 139,025
- ---------------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 152,398 $ 59,772 $ 228,126
- ---------------------------------------------------------------------------------------------------------------------------
NET EARNINGS PER COMMON SHARE $ 1.01 $ .38 $ 1.42
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
[GRAPH]
<TABLE>
DISTRIBUTION OF 1996 NET SALES
<CAPTION>
<S> <C>
Materials 44.3%
Pretax Earnings 10.4%
Services 13.4%
Advertising and Promotion 6.5%
Taxes Other Than Income 1.9%
Depreciation and Amortization 4.6%
Compensation and Benefits 18.9%
</TABLE>
----------
18
<PAGE> 3
CONSOLIDATED BALANCE SHEET [RUBBERMAID LOGO]
- --------------------------------------------------------------------------------
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
At December 31 1996 1995
- ----------------------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 27,599 $ 50,969
Receivables, less allowance for doubtful accounts
of $10,900 in 1996 and $10,467 in 1995 496,601 499,203
Inventories 276,811 251,723
Other current assets 55,709 49,312
- ----------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 856,720 851,207
Property, plant, and equipment, net 721,914 626,637
Intangible and other assets, net 475,346 213,684
- ----------------------------------------------------------------------------------------------------
TOTAL ASSETS $2,053,980 $1,691,528
- ----------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Notes payable $ 399,865 $ 116,539
Long-term debt, current 3,287 5,957
Payables 154,518 102,003
Accrued liabilities 185,151 190,233
- ----------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 742,821 414,732
Other deferred liabilities 142,992 135,244
Long-term debt, non-current 154,467 6,179
SHAREHOLDERS' EQUITY:
Preferred stock, without par value.
Authorized 20,000,000 shares; none issued -- --
Common Shares of $1 par value.
Authorized 400,000,000 shares; issued
162,677,082 shares in 1996 and 1995 162,677 162,677
Paid-in capital 70,829 70,825
Retained earnings 1,165,052 1,098,670
Foreign currency translation adjustment (25,359) (18,420)
Treasury shares, at cost (12,924,764 shares in 1996
and 6,473,220 shares in 1995) (359,499) (178,379)
- ----------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 1,013,700 1,135,373
- ----------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,053,980 $1,691,528
- ----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
----------
19
<PAGE> 4
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
(Dollars in thousands)
( ) Denotes decrease in cash and cash equivalents
<TABLE>
<CAPTION>
Years Ended December 31 1996 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 152,398 $ 59,772 $ 228,126
Adjustments to reconcile net earnings to
net cash from operating activities:
Depreciation and amortization 109,082 104,158 93,724
Non-cash realignment costs -- 129,000 --
Employee benefits 8,762 11,992 13,887
Deferred income taxes 49,046 (22,388) (3,934)
Other 4,411 2,110 (2,137)
Changes in:
Receivables 9,078 (27,506) (117,716)
Inventories (1,980) 4,052 18,462
Other assets (17,723) (39,265) 4,898
Payables 10,345 (5,771) (45,012)
Accrued liabilities (8,178) 13,867 21,895
- ------------------------------------------------------------------------------------------------------
NET CASH FROM OPERATING ACTIVITIES 315,241 230,021 212,193
- ------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities -- (100,000) (277,312)
Proceeds from sale of marketable securities -- 159,049 284,535
Capital expenditures (171,764) (151,528) (118,000)
Acquisition of businesses, net of cash (318,047) (43,996) --
Other, net (6,246) (8,867) (6,792)
- ------------------------------------------------------------------------------------------------------
NET CASH FROM INVESTING ACTIVITIES (496,057) (145,342) (117,569)
- ------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in notes payable 283,326 95,562 6,961
Proceeds from long-term debt 150,000 -- 1,736
Repayment of long-term debt (4,382) (6,999) (15,766)
Cash dividends paid (86,016) (81,731) (74,425)
Common Shares repurchased (185,482) (134,190) (48,683)
Other, net -- 1,399 --
- ------------------------------------------------------------------------------------------------------
NET CASH FROM FINANCING ACTIVITIES 157,446 (125,959) (130,177)
- ------------------------------------------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (23,370) (41,280) (35,553)
Cash and cash equivalents at beginning of year 50,969 92,249 127,802
- ------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 27,599 $ 50,969 $ 92,249
- ------------------------------------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $ 48,762 $ 94,683 $ 123,673
Interest paid $ 17,720 $ 12,971 $ 7,346
- ------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
----------
20
<PAGE> 5
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY [RUBBERMAID LOGO]
- --------------------------------------------------------------------------------
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Foreign
Currency Total
Common Paid-in Retained Translation Treasury Shareholders'
Shares Capital Earnings Adjustment Shares Equity
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TRANSACTIONS FOR 1994:
Opening balance $ 160,357 $ 10,515 $ 966,928 $ (4,613) $ (2,705) $ 1,130,482
Net earnings -- -- 228,126 -- -- 228,126
Cash dividends, $.4625 per share -- -- (74,425) -- -- (74,425)
Employee stock plans 139 4,833 -- -- 696 5,668
Common Shares repurchased -- -- -- -- (48,683) (48,683)
Shares issued for an acquisition 2,181 54,447 -- -- -- 56,628
Foreign currency translation
adjustment -- -- -- (11,970) -- (11,970)
- ------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 162,677 69,795 1,120,629 (16,583) (50,692) 1,285,826
TRANSACTIONS FOR 1995:
Net earnings -- -- 59,772 -- -- 59,772
Cash dividends, $.515 per share -- -- (81,731) -- -- (81,731)
Employee stock plans -- 726 -- -- 4,244 4,970
Common Shares repurchased -- -- -- -- (134,190) (134,190)
Shares issued for an acquisition -- 304 -- -- 2,259 2,563
Foreign currency translation
adjustment -- -- -- (1,837) -- (1,837)
- ------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 162,677 70,825 1,098,670 (18,420) (178,379) 1,135,373
TRANSACTIONS FOR 1996:
Net earnings -- -- 152,398 -- -- 152,398
Cash dividends, $.57 per share -- -- (86,016) -- -- (86,016)
Employee stock plans -- 4 -- -- 4,362 4,366
Common Shares repurchased -- -- -- -- (185,482) (185,482)
Foreign currency translation
adjustment -- -- -- (6,939) -- (6,939)
- ------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1996 $ 162,677 $ 70,829 $ 1,165,052 $ (25,359) $ (359,499) $ 1,013,700
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
----------
21
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Dollars in thousands except per share amounts)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Rubbermaid Incorporated and its subsidiaries manufacture, market, sell, and
distribute predominantly plastic and rubber products in the consumer,
commercial, industrial, agricultural, office, specialty, contract, infant, and
juvenile markets. The Company's products include such items as housewares,
hardware, and decorative coverings; automotive accessories and outdoor consumer
storage, leisure, and recreational products; infant furnishings and children's
toys and products; furniture and office products; and products used in food
service, health care, sanitary maintenance, and industrial settings. The
Company's products are distributed primarily through its own sales personnel and
manufacturers' agents to a variety of retailers and wholesalers, including mass
merchandisers, toy stores, home centers, hardware stores, catalog showrooms, and
distributors serving institutional markets. The Company's raw materials are
readily available, and the Company is not dependent on a single supplier or only
a few suppliers.
Principles of Consolidation
The consolidated financial statements include the accounts of Rubbermaid
Incorporated and its subsidiary companies, all of which are wholly owned except
for 51% owned Rubbermaid Japan Inc. and 90% owned Dom-Plast S.A. All significant
intercompany profits, transactions, and balances have been eliminated in
consolidation.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined using
the last-in, first-out (LIFO) method for 78% and 80% of inventories in 1996 and
1995, respectively. Cost of the remaining inventories is determined using the
first-in, first-out (FIFO) method.
Long-Lived Assets
Property, plant, and equipment is stated at cost less accumulated depreciation
and amortization. Depreciation and amortization are computed on the
straight-line method over the following estimated useful lives:
Land improvements 10 to 45 years
Buildings and fixtures 5 to 45 years
Machinery and equipment 2 to 15 years
The excess of cost over fair value of net assets of businesses acquired at
December 31, 1996 and 1995 of $380,524 and $137,736, respectively, net of
accumulated amortization of $28,385 and $21,452, respectively, is amortized on a
straight-line basis over periods ranging from 20 to 40 years.
The Company utilizes the undiscounted cash flow method to determine impairment
in the carrying value of its long-lived assets. Measurement of an impairment
loss is determined by reducing the carrying value of assets to fair value.
Assets to be disposed of by sale or abandonment, as part of a plan committed to
and approved by management, are recorded at the lower of carrying value or fair
value less cost to sell.
Stock-Based Compensation Plans
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25), and related Interpretations in accounting
for its stock-based compensation. The Financial Accounting Standards Board
issued Statement No. 123, "Accounting for Stock-Based Compensation" (FAS 123),
which was effective in 1996. FAS 123 provides the option either to continue the
Company's current method of accounting for stock-based compensation or to adopt
the fair value method of accounting. The Company elected to continue accounting
for stock-based compensation using APB 25.
Financial Instruments
Investments with maturities at date of purchase of three months or less are
considered cash equivalents. The fair value of financial instruments, consisting
of investments in cash, cash equivalents, receivables, obligations under
accounts payable, and debt instruments, is based on interest rates available to
the Company and comparisons to quoted prices. At December 31, 1996 and 1995, the
fair value of these financial instruments approximates carrying value.
The Company uses a limited number of foreign exchange instruments to hedge firm
and anticipated commitments, as well as dividends denominated in foreign
currencies and net investments in foreign subsidiaries. Instruments have
included forward contracts, currency swaps, foreign currency loans, and foreign
currency options. Gains and losses incurred on foreign exchange instruments
identified as hedges are deferred and recognized in income in the same period as
the hedged transaction. The fair value of these foreign currency instruments is
estimated using current market prices provided by an outside quotation
----------
22
<PAGE> 7
[RUBBERMAID LOGO]
- --------------------------------------------------------------------------------
service. The net unrealized gains or losses from hedging anticipated
transactions were not material at December 31, 1996 and 1995.
The Company also uses interest rate swap agreements to manage interest rate risk
on a portion of its floating interest rate debt. Gains and losses on interest
rate agreements are deferred and recognized as a component of interest expense
over the term of the agreements. At December 31, 1996, the carrying value of
interest rate swaps approximates fair value.
Net Earnings Per Common Share
Net earnings per Common Share are based on the weighted average number of Common
Shares outstanding during each year. Average shares used in the calculations
were 151,003,599, 158,765,812, and 160,893,465 in 1996, 1995, and 1994,
respectively.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
2. REALIGNMENT COSTS
During the fourth quarter of 1995, the Company's management approved a two-year
strategic realignment program designed to reduce costs and improve operating
efficiencies. This program, anticipated to be completed by the end of 1997,
includes the cost of exiting certain facilities, asset impairments primarily
due to product realignments, and employee termination costs. Costs associated
with this program of $158,000 have been recognized at December 31, 1995, and
are reflected in the Company's Consolidated Statement of Earnings as
realignment costs. Included in this charge is $120,000 relating to the
disposition of inventories and machinery and equipment. Disposition of these
assets will not have a material effect on future periods' revenues,
depreciation, or earnings. These realignment charges reduced after-tax earnings
by $98.7 million or $0.62 per share in 1995. As of December 31, 1996, $26,483
of the realignment activities have not been completed.
3. BUSINESS DEVELOPMENT
During 1996, the Company acquired Graco Children's Products Inc. (Graco), a
leading manufacturer of strollers and other children's products, for $318,047,
net of cash. The excess of the purchase price over the fair value of the net
identifiable assets acquired of $244,579 is being amortized over 40 years.
During 1995, the Company acquired Injectaplastic S.A., a leading manufacturer
and marketer of plastic housewares, seasonal products, and bath accessories in
France; PAR-REC Holdings, Inc., a Canadian manufacturer of commercial playground
equipment; Decor Concepts, Inc., better known as Omni, an innovative leader in
the design and manufacture of contained soft play systems; and Dom-Plast S.A.,
the leading manufacturer and marketer of plastic housewares in Poland.
The acquisitions made in 1996 and 1995 were funded with cash, stock, debt, or a
combination thereof and were accounted for as purchases.
The operating results of these acquisitions have been included in the
consolidated financial statements since their dates of acquisition. On a pro
forma basis, assuming the results of operations of these acquisitions had been
combined with the Company's results since January 1, 1995, net sales, net
earnings, and per share amounts would not have been materially different.
4. INVENTORIES
A summary of inventories follows:
<TABLE>
<CAPTION>
1996 1995
- -----------------------------------------------------------
<S> <C> <C>
FIFO cost:
Raw materials $ 83,250 $ 73,862
Work-in-process 11,494 14,346
Finished goods 213,000 193,991
- -----------------------------------------------------------
307,744 282,199
Excess of FIFO over LIFO cost (30,933) (30,476)
- -----------------------------------------------------------
$ 276,811 $ 251,723
- -----------------------------------------------------------
</TABLE>
----------
23
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Dollars in thousands except per share amounts)
5. PROPERTY, PLANT, AND EQUIPMENT, NET
The components of property, plant, and equipment are summarized below:
<TABLE>
<CAPTION>
1996 1995
- -------------------------------------------------------------------
<S> <C> <C>
Land and land improvements $ 33,724 $ 30,696
Buildings and fixtures 320,527 282,094
Machinery and equipment 877,148 843,296
- -------------------------------------------------------------------
1,231,399 1,156,086
Accumulated depreciation (614,220) (636,397)
- -------------------------------------------------------------------
617,179 519,689
Additions in progress 104,735 106,948
- -------------------------------------------------------------------
$ 721,914 $ 626,637
- -------------------------------------------------------------------
</TABLE>
6. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable consist primarily of commercial paper and uncommitted credit
facilities. The commercial paper, of which $357,411 is outstanding at December
31, 1996, was placed through brokers and is supported by a $500,000 committed
credit facility entered into in January 1996. This facility is subject to normal
banking terms and conditions, and expires in January 2001. In addition, as of
December 31, 1996, the Company had approximately $270,100 in uncommitted credit
facilities made available by commercial banks, of which $42,454 had been
utilized. The Company's weighted average interest rate for notes payable was
5.7% and 6.1% as of December 31, 1996 and 1995, respectively.
During January 1996, the Company filed a Shelf Registration with the Securities
and Exchange Commission for up to $400,000 of senior unsecured debt securities
and subsequently, in November 1996, issued $150,000 senior notes with a maturity
of 2006 and a coupon rate of 6.6%.
Long-term debt at December 31, 1996 and 1995, is summarized as follows:
<TABLE>
<CAPTION>
1996 1995
- -------------------------------------------------------
<S> <C> <C>
6.6% Notes due 2006 $150,000 $ --
Other 7,754 12,136
- -------------------------------------------------------
157,754 12,136
Less current portion 3,287 5,957
- -------------------------------------------------------
$154,467 $ 6,179
- -------------------------------------------------------
</TABLE>
The aggregate principal payments due on the long-term debt for the five years
subsequent to December 31, 1996 are as follows:
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
$ 3,287 $ 285 $ 290 $296 $301
- -----------------------------------------------------------
</TABLE>
7. ACCRUED LIABILITIES
Accrued liabilities at December 31, 1996 and 1995, consist of the following:
<TABLE>
<CAPTION>
1996 1995
- -----------------------------------------------------------
<S> <C> <C>
Compensation and commissions $ 31,351 $ 27,193
Retirement plans 24,574 25,881
Other 129,226 137,159
- -----------------------------------------------------------
$ 185,151 $ 190,233
- -----------------------------------------------------------
</TABLE>
8. EMPLOYEE BENEFIT AND RETIREMENT PLANS
The Company provides retirement benefits primarily through noncontributory
defined contribution plans. The cost of these plans aggregated $13,742, $11,834,
and $22,178 in 1996, 1995, and 1994, respectively.
The Company's Restricted Stock Incentive and Option Plan provides for Common
Share awards to be made to key management associates with restrictions as to
disposition and subject to forfeiture upon termination of employment or if
certain performance goals are not achieved. The plan provides for supplemental
cash awards in the event performance goals are exceeded. During 1996, 1995, and
1994, 172,988, 147,946, and 139,341 Common Shares were awarded, and 39,230,
31,824, and 53,758 Common Shares were forfeited, respectively. The plan also
provides for the granting of non-qualified stock options as well as incentive
stock options. In 1996, 1995, and 1994, 595,871, 170,646, and 380,550 options
were granted at average option prices of $24.08, $28.13, and $29.91,
respectively. At December 31, 1996, 283,932 options were exercisable. The effect
of applying the fair value method as prescribed by FAS 123 to the Company's
stock-based awards results in net income and earnings per share that are not
materially different from amounts reported.
The Company maintains an incentive plan and an unfunded deferred compensation
plan for participating officers and key management associates. The liability
related to the deferred compensation plan ($33,881 and $30,154 at December 31,
1996 and 1995, respectively)
----------
24
<PAGE> 9
[RUBBERMAID LOGO]
- --------------------------------------------------------------------------------
is included in other deferred liabilities. The Company also maintains a
Voluntary Employee Beneficiary Association (VEBA).
9. OTHER POSTRETIREMENT BENEFIT PLANS
The Company sponsors defined benefit health care plans that provide medical
benefits to retired associates who meet certain eligibility requirements. The
plans generally contain cost-sharing features such as deductibles and
coinsurance, and some plans are contributory. The Company's annual per capita
contributions under certain plans are limited. The plans are unfunded.
At December 31, 1996 and 1995, the actuarially determined status of these plans
is as follows:
<TABLE>
<CAPTION>
1996 1995
- -----------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit
obligation:
Retirees $ 32,110 $29,408
Other fully eligible participants 1,935 3,298
Other active participants 16,959 19,266
- -----------------------------------------------------------
51,004 51,972
Unrecognized net reduction
in prior service costs 4,266 4,857
Unrecognized net gain 14,681 10,991
- -----------------------------------------------------------
Amount included in other
deferred liabilities $ 69,951 $67,820
- -----------------------------------------------------------
</TABLE>
The expense related to the plans is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- -----------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 1,520 $ 1,284 $1,317
Interest cost 3,681 3,721 3,872
Amortization (1,110) (1,799) (591)
- ----------------------------------------------------------
$ 4,091 $ 3,206 $4,598
- ----------------------------------------------------------
</TABLE>
In estimating the Company's December 31, 1996 obligation under these plans, the
annual increase in the per capita cost of covered benefits is assumed to
decrease approximately one percentage point per year from 9% in 1996 to an
ultimate rate of 6% in 2000. Adjusting the assumed annual increase in the per
capita cost of covered benefits upward by one percentage point each year would
increase the accumulated postretirement benefit obligation and the expense
related to these plans by approximately 10% and 11%, respectively. The discount
rate used in determining the accumulated postretirement benefit obligation was
7.75% and 7.25% at December 31, 1996 and 1995, respectively.
10. RESEARCH AND DEVELOPMENT COSTS
Research and development costs relating to both future and present products are
charged to selling, general, and administrative expenses as incurred. These
costs aggregated $29,505, $28,963, and $27,747 in 1996, 1995, and 1994,
respectively.
11. ADVERTISING COSTS
Costs incurred for producing and communicating advertising and other brand
support, including costs incurred under cooperative advertising programs with
customers, are charged to selling, general, and administrative expenses as
incurred or expensed ratably over the year in relation to revenues or certain
other performance measures. Advertising costs were $153,313, $142,025, and
$113,086 in 1996, 1995, and 1994, respectively.
12. INCOME TAXES
Income taxes are summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 36,778 $44,500 $ 112,704
State and local 4,496 6,151 16,430
OUS 2,294 7,600 13,825
- ----------------------------------------------------------
43,568 58,251 142,959
Deferred:
Federal 43,796 (13,663) (3,625)
State and local 3,753 (2,725) (390)
OUS 1,497 (6,000) 81
- ----------------------------------------------------------
49,046 (22,388) (3,934)
- ----------------------------------------------------------
$ 92,614 $35,863 $ 139,025
- ----------------------------------------------------------
</TABLE>
Earnings (loss) before income taxes aggregated $234,010, $98,835, and $336,798
for domestic operations and $11,002, $(3,200), and $30,353 for outside United
States (OUS) operations in 1996, 1995, and 1994, respectively. Total tax expense
as a percent of pretax income differs from the amounts computed by applying the
US federal income tax rate of 35% to earnings before income taxes primarily due
to the effect of state and local income tax expense.
As of December 31, 1996 and 1995, the Company had aggregate deferred tax assets
of $111,447 and $103,305, respectively, including $26,211 and $25,772,
respectively, related to postretirement benefits, and $10,064 and $43,125,
respectively, related to the realignment charge. Also, as of December 31, 1996
and 1995, the Company
----------
25
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Dollars in thousands except per share amounts)
had aggregate deferred tax liabilities of $88,247 and $46,605, respectively,
including $45,248 and $41,784, respectively, related to property, plant, and
equipment. Further, as of December 31, 1996 and 1995, current deferred tax
assets of $43,715 and $40,900, respectively, are reflected in other current
assets.
13. COMMON SHARES
Share Repurchase Program
As part of a program previously authorized by the Board of Directors, the
Company purchased approximately 6,587,000, 4,843,700, and 1,804,500 Common
Shares in 1996, 1995, and 1994, respectively, for the treasury at an aggregate
cost of $185,482, $134,190, and $48,683, respectively. In December 1995, the
Board of Directors increased the authorization for share repurchase through
1999 by 20,000,000 Common Shares of which approximately 12,900,000 Common
Shares remain available for repurchase at December 31, 1996.
Shareholder Rights Plan
Under the Company's Rights Agreement, each shareholder has the right to purchase
from the Company one Common Share at a price that is currently $125.00 per
share. The rights are only exercisable in the event a person acquires or
commences a tender offer or exchange offer for 10% or more of the Company's
outstanding Common Shares. In the event that a person who owns 10% or more of
the Company's outstanding Common Shares merges into the Company, engages in one
of a number of self-dealing transactions, or increases ownership to 15% or more,
each right would entitle its holder to purchase a number of the Company's Common
Shares having a market value equal to twice the right's exercise price. In the
event that the Company engages in a merger or other business transaction in
which the Company is not the surviving corporation, engages in a merger or other
business combination transaction in which its Common Shares are changed or
exchanged, or 50% or more of the Company's assets or earning power are sold,
each right would entitle its holder to purchase a number of common shares of the
acquiring, surviving, or resulting person having a market value equal to twice
the right's exercise price.
The rights expire June 24, 2006, and may be redeemed by the Company at a price
that is currently $.01 per right, prior to the occurrence of the events
described above.
14. BUSINESS AND CREDIT CONCENTRATIONS
The Company operates exclusively in one industry, which is the manufacture and
distribution of plastic and rubber products, and sells to a broad range of
customers, one of which accounted for 14%, 15%, and 15% of net sales in 1996,
1995, and 1994, respectively. The Company estimates an allowance for doubtful
accounts based on the credit worthiness of its customers as well as general
economic conditions. Consequently, an adverse change in those factors could
affect the Company's estimate.
15. GEOGRAPHIC SEGMENTS
At December 31, 1996, 1995, and 1994, the Company's equity in OUS subsidiaries
was $164,195, $148,143, and $123,855, respectively.
Revenues from OUS customers, including OUS net sales and exports from US
operations, represented 19%, 18%, and 16% of total net sales in 1996, 1995,
and 1994, respectively.
The following is information about the Company's operations in different
geographic areas. OUS amounts do not include minority-owned joint ventures which
are accounted for under the equity method.
<TABLE>
<CAPTION>
Net Sales Operating Earnings Total Assets
- --------------------------------------------------------------------------------------------------------------------------
(Dollars in millions) 1996 1995 1994 1996 1995(a) 1994 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States $ 2,045.0 $2,007.4 $1,906.4 $ 257.9 $108.5 $330.1 $ 1,774.9 $1,410.0 $1,481.3
OUS 310.0 336.8 263.0 15.5 1.9 25.8 279.1 281.5 227.9
- --------------------------------------------------------------------------------------------------------------------------
$ 2,355.0 $2,344.2 $2,169.4 $ 273.4 $110.4 $355.9 $ 2,054.0 $1,691.5 $1,709.2
- --------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Operating earnings in 1995 include a pretax realignment charge of $158 million, which reduced United States and OUS
operating earnings by $140.8 million and $17.2 million, respectively.
</TABLE>
----------
26
<PAGE> 11
[RUBBERMAID LOGO]
- --------------------------------------------------------------------------------
16. QUARTERLY FINANCIAL INFORMATION - UNAUDITED
<TABLE>
<CAPTION>
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
- ---------------------------------------------------------------------------------------------------------------------------
1996 1995(a) 1996 1995 1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $616,021 $581,950 $632,694 $641,520 $572,989 $556,844 $533,285 $563,856
Cost of sales 456,078 422,911 438,361 453,802 389,127 409,991 365,954 386,528
Net earnings (loss) 19,863 (73,468) 46,108 50,289 44,750 28,810 41,677 54,141
- ---------------------------------------------------------------------------------------------------------------------------
Per Common Share:
Net earnings (loss) .13 (.46) .31 .32 .30 .18 .27 .34
Cash dividends paid .150 .140 .140 .125 .140 .125 .140 .125
Market price range:
High 24.75 28.00 29.25 30.38 29.13 33.38 30.25 34.00
Low 22.63 25.00 22.38 27.63 26.75 26.13 25.25 27.88
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Included in the fourth quarter of 1995 is a pretax realignment charge of $158 million ($98.7 million after-tax, or $0.62 per
Common Share).
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- --------------------------------------------------------------------------
OPERATIONS
- ----------
RESULTS OF OPERATIONS
Net sales in 1996 were $2.355 billion, a slight increase over the $2.344 billion
posted in 1995. Acquisitions added 4% and continuing core unit volume was up 4%,
including the impact of the volume decrease at Juvenile Products. Divested and
discontinued SKUs had a negative 5% impact and price realization had an
unfavorable impact of 3%. Net sales in 1995 were 8% above those in 1994 as
acquisitions, net of divestitures, and higher selling prices each represented 4%
of the sales increase, while core unit volume was unchanged.
The Company's continuing emphasis on global expansion resulted in international
sales growth outpacing domestic sales growth for the fourth consecutive year.
Revenues from OUS customers, including exports from US operations, represented
19%, 18%, and 16% of total net sales in 1996, 1995, and 1994, respectively.
Net earnings in 1996 were $152.4 million, or $1.01 per share, compared to $59.8
million, or $0.38 per share in 1995 after recording a realignment charge of
$98.7 million after tax, or $0.62 per Common Share, in the fourth quarter of
1995. Results from both years are below earnings in 1994 of $228.1 million, or
$1.42 per share. In 1996 and 1995, the Company experienced volatile raw material
costs which exceeded 1994 levels, as well as historically low sales volume
growth due to lackluster retail demand and increased competition. In 1996 the
Company was also unfavorably impacted by reduced SKUs and lower price
realization compared with 1995 while increases in material cost inflation
adversely impacted 1995 net earnings compared to 1994.
During the fourth quarter of 1995, the Company's management approved a two-year
strategic realignment program designed to reduce costs, improve operating
efficiencies, and accelerate growth. This two-year program includes the cost of
exiting nine facilities, asset impairments primarily due to product
realignments, and employee termination costs associated with a reduction in the
total number of associates. The Company included in its 1995 Consolidated
Statement of Earnings a charge of $158.0 million for costs associated with this
program. These charges reduced after-tax earnings by $98.7 million, or $0.62 per
share. Approximately $129.0 million represents non-cash costs while the
remaining $29.0 million of costs is associated with employee terminations and
certain exit related costs. As of December 31, 1996, $26.5 million of the
realignment activities have not been completed.
The Company is on pace to achieve the estimated annual savings of $50.0 million
beginning in 1998 as a result of the realignment program. Of the nine locations
slated for closure in the plan, the Company to date has exited or initiated
closure of eight facilities. The Company has
----------
27
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- --------------------------------------------------------------------------
OPERATIONS
- ----------
experienced the majority of the associate reductions anticipated in the
realignment program.
Cost of sales as a percent of sales was 70.0%, 71.4%, and 67.6% in 1996, 1995,
and 1994, respectively. The improvement in 1996 over 1995 reflects productivity
gains as a result of the realignment, other structural improvements in cost, and
lower resin costs even though 1996 resin costs, particularly in the second half
of the year, still far exceeded those of 1994. The increase in 1995 over 1994
reflects the rapid increase in raw material costs, which began escalating in the
third quarter of 1994 and continued rising until late in the third quarter of
1995. In addition, in 1996 and 1995, the Company experienced substantial
underabsorbed overhead costs related to the combined impact of
lower-than-planned sales volume and efforts to reduce inventories.
Selling, general, and administrative expenses as a percent of net sales were
18.3%, 17.2%, and 16.0% in 1996, 1995, and 1994, respectively. The increase in
1996 over 1995 is attributable to additional marketing activities and
globalization efforts, partially offset by productivity improvements. The
increase in 1995 over 1994 reflects higher marketing expense on
lower-than-planned sales levels and the negative impact of consolidating
acquisitions having higher selling, general, and administrative expenses as a
percent of net sales, partially offset by productivity improvements.
Other charges increased in 1996 over 1995 primarily as the result of higher net
interest expense which is attributable to debt increases incurred to fund the
share repurchase program and the Graco acquisition. The net charge in 1995 is
primarily due to higher net interest expense, while the net credit in 1994
primarily reflects certain gains recognized from 1994 divestitures and a
reduction in the loss on disposal of equipment.
The effective tax rate as a percentage of earnings before income taxes was
37.8%, 37.5%, and 37.9% for 1996, 1995, and 1994, respectively.
OUTLOOK FOR 1997
While the retail environment remains very competitive, the Company anticipates
sales growth in 1997 through new product introductions and continued emphasis on
marketing and other brand support programs. Graco will further add to the sales
growth rate. Earnings are expected to grow at a rate in excess of the sales
growth with anticipated increases in volume and incremental as well as leap
productivity improvements outweighing the effects of higher raw material costs.
In January 1997, the Company announced a long-term, global alliance with Amway
Corporation to jointly develop and market an exclusive, co-branded line of
distinctive products. The new products will be launched through Amway Japan's
force of 1.1 million distributors in the spring of 1997. Additional products and
geographic markets are contemplated for introduction during the year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial condition remains strong and the Company has the
resources necessary to meet future anticipated funding requirements. The Company
has historically financed its growth through a combination of cash provided from
operations, new equity issuance, and debt financing. Cash provided from
operating activities is the primary source of liquidity and amounted to $315.2
million, $230.0 million, and $212.2 million in 1996, 1995, and 1994,
respectively. The record cash generated from operations in 1996, in addition to
proceeds from increased debt issuance, enabled the Company to satisfy capital
expenditure needs, complete the Graco acquisition, pay dividends, and repurchase
shares of its Common Stock.
In 1996, the Company commenced its balanced capital structure initiative in an
effort to enhance long-term shareholder value, without reducing financial
flexibility to pursue both internal growth and acquisition opportunities. In
January 1996, the Company entered into a $500.0 million unsecured, committed
credit facility designated to support its commercial paper program. Also in
January 1996, the Company filed a Shelf Registration with the Securities and
Exchange Commission for the issuance of up to $400.0 million of senior,
unsecured debt securities. In November 1996, the Company issued $150.0 million
of senior notes with a maturity of 10 years and a coupon rate of 6.6%. In
addition, at December 31, 1996, the Company maintained uncommitted arrangements
with various commercial banks to provide approximately $270.1 million in
availability under short-term unsecured credit facilities to finance
fluctuations in working capital and general corporate purposes.
As part of a program previously authorized by the Board of Directors, the
Company purchased approximately 6.6 million shares in 1996 and 4.8 million
shares in 1995 of its common stock for the treasury at an aggregate cost of
$185.5 million and $134.2 million, respectively.
----------
28
<PAGE> 13
[RUBBERMAID LOGO]
- --------------------------------------------------------------------------------
In 1996, the Company invested $171.8 million in property, plant, and equipment
to tool new products, expand capacity, improve productivity, and commence
implementation of a common, integrated, global management information system.
For 1997, a comparable capital investment has been budgeted.
Working capital, excluding cash and cash equivalents, decreased $299.2 million
in 1996. The net change is primarily the result of increased notes payable due
to share repurchases and the acquisition of Graco in the fourth quarter of 1996
and an increase in accounts payable, offset by an increase in inventories.
Dividends
The Company's dividend payments in 1996 marked 42 consecutive years of increased
dividends paid per share. The Company's objective is to pay approximately 30% of
current year earnings as dividends, to provide higher dividends to shareholders
each year and to retain sufficient earnings and capital to fund future
investment opportunities to enable sales and earnings per share to double every
5 to 6 years.
Acquisitions
During the fourth quarter of 1996, the Company acquired Graco, a leading
manufacturer of strollers and other children's products for $318.0 million, net
of cash. The acquisition was funded with cash and debt and accounted for as a
purchase. This acquisition had no material effect on the Company's 1996 results
of operations.
INFLATION
The Company maintains operations in Mexico which has experienced high inflation
levels. Neither the operations of Mexico nor the effects of the inflation are
material to the results of operations of the Company.
ENVIRONMENTAL PROGRAM
The Company is subject to various laws and regulations concerning environmental
matters and employee safety and health in the United States and other countries.
The Occupational Safety and Health Administration, the U.S. Environmental
Protection Agency, and other federal agencies, have authority to promulgate
regulations that have an impact on the Company's operations. Many state and
local governments also have adopted environmental and employee safety and health
laws and regulations. Federal and state authorities may seek fines and penalties
for violation of these laws and regulations. As part of its continuing
environmental program, the Company has been able to comply with regulations and
requirements of state and federal agencies without any materially adverse effect
on its business.
The Company is committed to a long-term environmental protection program which
is managed by the Company's environmental council. The council meets regularly
and assesses the impact of environmental laws and regulations on the Company's
operations. In addition, the Company uses outside firms to perform regular
environmental audits of its facilities that have, to date, revealed no
significant environmental problems.
ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued statement No. 123, "Accounting
for Stock-Based Compensation"(FAS 123), which is effective in 1996. FAS 123
provides a fair value method of accounting for stock-based compensation
arrangements rather than the intrinsic value based method contained in APB
Opinion No. 25 (APB 25). However, the Statement does not require an entity to
adopt the new fair value based method for purposes of preparing its basic
financial statements. FAS 123 provides the option either to continue the
Company's current method of accounting for stock-based compensation under APB
25, or to adopt the fair value method of accounting. The Company will continue
accounting for stock-based compensation using APB 25. The effect of applying FAS
123's fair value method to the Company's stock-based awards results in net
income and earnings per share that are not materially different from the amounts
reported.
FORWARD-LOOKING DISCUSSIONS
Forward-looking statements contained in this report involve uncertainty and
risk. As such, it is possible that the Company's future financial performance
may differ materially from current expectations due to a variety of factors such
as changes in: the competitive environment; the condition of the industry and
economy, including the effects of weather, consumer and customer demand; the
cost of raw materials, which may not be recovered through selling prices; the
rate of growth in selling, general, and administrative expenses due to the
Company's business expansion; working capital requirements; changes in interest
rates; the under-utilization of production facilities; international factors,
including currency exchange rates, economic conditions, and difficulties or
delays in the Company's business expansion outside the United States; or
difficulties or delays in the implementation of the Company's realignment
program.
----------
29
<PAGE> 14
11-YEAR FINANCIAL SUMMARY
- --------------------------------------------------------------------------------
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Years ended December 31 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING RESULTS
Net sales $2,354,989 $2,344,170 $2,169,354 $1,960,207
Cost of sales 1,649,520 1,673,232 1,465,586 1,285,949
Selling, general, and administrative expenses 432,063 402,586 347,915 328,741
NET EARNINGS 152,398 59,772(a) 228,126 211,413
- ------------------------------------------------------------------------------------------------------------------
Per Common Share $ 1.01 $ .38(a) $ 1.42 $ 1.32
- ------------------------------------------------------------------------------------------------------------------
Percent of net sales 6.5% 2.5% 10.5% 10.8%
- ------------------------------------------------------------------------------------------------------------------
Return on average shareholders' equity 14.2% 4.9% 18.9% 20.0%
FINANCIAL POSITION
Current assets $ 856,720 $ 851,207 $ 926,666 $ 829,744
Property, plant, and equipment, net 721,914 626,637 607,628 572,136
Intangible and other assets, net 475,346 213,684 174,886 111,244
- ------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $2,053,980 $1,691,528 $1,709,180 $1,513,124
- ------------------------------------------------------------------------------------------------------------------
Current liabilities $ 742,821 $ 414,732 $ 295,597 $ 259,314
Other deferred liabilities 142,992 135,244 116,181 103,914
Long-term debt 154,467 6,179 11,576 19,414
Shareholders' equity 1,013,700 1,135,373 1,285,826 1,130,482
- ------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,053,980 $1,691,528 $1,709,180 $1,513,124
- ------------------------------------------------------------------------------------------------------------------
Total debt as a percent of capitalization 35% 10% 3% 3%
- ------------------------------------------------------------------------------------------------------------------
Working capital $ 113,899 $ 436,475 $ 631,069 $ 570,430
- ------------------------------------------------------------------------------------------------------------------
Current ratio 1.15 2.05 3.13 3.20
OTHER DATA
- ------------------------------------------------------------------------------------------------------------------
Average Common Shares outstanding (000) 151,004 158,766 160,893 160,318
- ------------------------------------------------------------------------------------------------------------------
Cash dividends paid $ 86,016 $ 81,731 $ 74,425 $ 64,938
- ------------------------------------------------------------------------------------------------------------------
Cash dividends paid per Common Share $ .57 $ .515 $ .4625 $ .405
- ------------------------------------------------------------------------------------------------------------------
Shareholders' equity per Common Share $ 6.77 $ 7.27 $ 8.00 $ 7.05
- ------------------------------------------------------------------------------------------------------------------
Stock price range - NYSE $ 30-22 $ 34-25 $ 35-24 $ 37-28
- ------------------------------------------------------------------------------------------------------------------
Capital expenditures $ 171,764 $ 151,528 $ 118,000 $ 141,697
- ------------------------------------------------------------------------------------------------------------------
Depreciation and amortization $ 109,082 $ 104,158 $ 93,724 $ 85,415
- ------------------------------------------------------------------------------------------------------------------
Number of shareholders at year end 31,112 32,439 30,889 22,508
- ------------------------------------------------------------------------------------------------------------------
Average number of associates 13,861 14,054 12,939 11,978
- ------------------------------------------------------------------------------------------------------------------
<FN>
(a) Included in 1995 is a pretax realignment charge of $158 million ($98.7 million after tax, or $0.62 per Common Share).
(b) Results before/after the cumulative effect of changing the method of accounting for postretirement benefits other than pensions.
</TABLE>
----------
30
<PAGE> 15
[RUBBERMAID LOGO]
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1992 1991 1990 1989 1988 1987 1986
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,805,332 $ 1,667,305 $ 1,534,013 $ 1,452,365 $ 1,291,584 $ 1,096,055 $ 864,721
1,200,651 1,102,685 1,014,526 967,563 886,850 727,927 554,421
310,410 307,780 286,647 268,148 221,497 199,145 166,954
184,207/164,095(b) 162,650 143,520 124,984 106,858 90,723 75,004
- --------------------------------------------------------------------------------------------------------------------------------
$ 1.15/1.02(b) $ 1.02 $ .90 $ .78 $ .67 $ .57 $ .47
- --------------------------------------------------------------------------------------------------------------------------------
10.2%/9.1%(b) 9.8% 9.4% 8.6% 8.3% 8.3% 8.7%
- --------------------------------------------------------------------------------------------------------------------------------
19.5%/17.5%(b) 19.7% 20.2% 20.6% 20.6% 20.8% 20.5%
$ 699,650 $ 663,999 $ 602,697 $ 567,307 $ 452,639 $ 418,563 $ 332,655
517,096 461,375 405,520 379,107 347,677 310,017 248,224
109,823 119,157 106,033 38,591 42,389 45,748 45,780
- --------------------------------------------------------------------------------------------------------------------------------
$ 1,326,569 $ 1,244,531 $ 1,114,250 $ 985,005 $ 842,705 $ 774,328 $ 626,659
- --------------------------------------------------------------------------------------------------------------------------------
$ 223,246 $ 245,500 $ 235,300 $ 215,121 $ 197,431 $ 209,771 $ 156,456
95,395 85,479 71,555 67,114 47,471 47,585 40,013
20,279 27,812 39,191 50,294 39,023 40,042 35,668
987,649 885,740 768,204 652,476 558,780 476,930 394,522
- --------------------------------------------------------------------------------------------------------------------------------
$ 1,326,569 $ 1,244,531 $ 1,114,250 $ 985,005 $ 842,705 $ 774,328 $ 626,659
- --------------------------------------------------------------------------------------------------------------------------------
4% 6% 7% 10% 10% 12% 12%
- --------------------------------------------------------------------------------------------------------------------------------
$ 476,404 $ 418,499 $ 367,397 $ 352,186 $ 255,208 $ 208,792 $ 176,199
- --------------------------------------------------------------------------------------------------------------------------------
3.13 2.70 2.56 2.64 2.29 2.00 2.13
- --------------------------------------------------------------------------------------------------------------------------------
160,207 160,126 159,688 159,250 158,928 158,468 158,064
- --------------------------------------------------------------------------------------------------------------------------------
$ 56,477 $ 49,643 $ 42,621 $ 35,975 $ 29,520 $ 24,581 $ 19,771
- --------------------------------------------------------------------------------------------------------------------------------
$ .3525 $ .31 $ .27 $ .23 $ .19 $ .16 $ .13
- --------------------------------------------------------------------------------------------------------------------------------
$ 6.16 $ 5.53 $ 4.80 $ 4.10 $ 3.52 $ 3.01 $ 2.50
- --------------------------------------------------------------------------------------------------------------------------------
$ 37-27 $ 38-19 $ 23-16 $ 19-13 $ 14-11 $ 18-10 $ 14-8
- --------------------------------------------------------------------------------------------------------------------------------
$ 134,528 $ 122,513 $ 103,720 $ 89,787 $ 87,333 $ 104,429 $ 71,587
- --------------------------------------------------------------------------------------------------------------------------------
$ 73,836 $ 66,686 $ 58,586 $ 65,866 $ 50,173 $ 50,032 $ 35,455
- --------------------------------------------------------------------------------------------------------------------------------
20,255 15,429 13,305 11,225 10,482 10,104 8,379
- --------------------------------------------------------------------------------------------------------------------------------
11,296 9,754 9,304 9,098 8,643 7,512 6,509
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------
31
<PAGE> 1
EXHIBIT 21
----------
SUBSIDIARIES OF REGISTRANT*
---------------------------
STATE OR
JURISDICTION OF PERCENT OF
NAME** INCORPORATION OWNERSHIP
------ ------------- ---------
The Little Tikes Company Ohio 100%
Graco Children's Products Inc. Delaware 100%
Rubbermaid Commercial Products Inc. Delaware 100%
Rubbermaid Office Products Inc. Delaware 100%
Rubbermaid Specialty Products Inc. Delaware 100%
Rubbermaid Canada Inc. Ontario, Canada 100%
* All of the listed subsidiaries are included in Registrant's consolidated
financial statements.
** All subsidiaries conduct their businesses under the names shown.
<PAGE> 1
EXHIBIT 23
----------
[Letter Head]
The Board of Directors
Rubbermaid Incorporated:
We consent to incorporation by reference in the registration statements (File
Nos. 33-63420, 33-56105, and 33-61817) on Form S-8, and in the registration
statement (File No. 33-00471) on Form S-3 of Rubbermaid Incorporated of our
report dated January 31, 1997, relating to the consolidated balance sheets of
Rubbermaid Incorporated and subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of earnings, cash flows, and shareholders'
equity for each of the years in the three-year period ended December 31, 1996,
which report appears in the December 31, 1996 annual report on Form 10-K of
Rubbermaid Incorporated.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Cleveland, Ohio
March 24, 1997
<PAGE> 1
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENT, that each of the undersigned Directors of
Rubbermaid Incorporated (the "Registrant"), a corporation organized and existing
under the laws of the State of Ohio, hereby constitute and appoint Wolfgang R.
Schmitt, George C. Weigand and James A. Morgan, and each of them a true and
lawful attorney-in-fact in their name, place and stead with full power of
substitution, to sign, in their name as a Director of the Registrant, the
Registrant's Form 10-K Report for the fiscal year ended December 31, 1996, which
will be filed with the Securities and Exchange Commission, Washington, D.C., and
any and all amendments thereto.
/s/ Tom H. Barrett /s/ William D. Marohn
- -------------------------------- ---------------------------------
Tom H. Barrett, Director William D. Marohn, Director
Date: February 28, 1997 Date: February 28, 1997
------------------------- -----------------
/s/ Charles A. Carroll /s/ Steven A. Minter
- -------------------------------- ---------------------------------
Charles A. Carroll, Director Steven A. Minter, Director
Date: February 28, 1997 Date: February 28, 1997
------------------------- --------------------------
/s/ Robert O. Ebert /s/ Jan Nicholson
- -------------------------------- ---------------------------------
Robert O. Ebert, Director Jan Nicholson, Director
Date: February 28, 1997 Date: February 28, 1997
------------------------- --------------------------
/s/ Robert M. Gerrity /s/ Paul G. Schloemer
- -------------------------------- ---------------------------------
Robert M. Gerrity, Director Paul G. Schloemer, Director
Date: February 28, 1997 Date: February 28, 1997
------------------------- --------------------------
/s/ Karen N. Horn /s/ Gordon R. Sullivan
- -------------------------------- ---------------------------------
Karen N. Horn, Director Gordon R. Sullivan, Director
Date: February 28, 1997 Date: February 28, 1997
------------------------- --------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO AS OF DECEMBER 31, 1996 AND
1995, AND FOR EACH OF THE YEARS IN THE THREE YEAR PERIOD ENDED DECEMBER 31,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 27,599
<SECURITIES> 0
<RECEIVABLES> 507,501
<ALLOWANCES> 10,900
<INVENTORY> 276,811
<CURRENT-ASSETS> 856,720
<PP&E> 1,336,134
<DEPRECIATION> 614,220
<TOTAL-ASSETS> 2,053,980
<CURRENT-LIABILITIES> 742,821
<BONDS> 154,467
0
0
<COMMON> 162,677
<OTHER-SE> 851,023
<TOTAL-LIABILITY-AND-EQUITY> 2,053,980
<SALES> 2,354,989
<TOTAL-REVENUES> 2,354,989
<CGS> 1,649,520
<TOTAL-COSTS> 2,081,583
<OTHER-EXPENSES> 2,113
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,281
<INCOME-PRETAX> 245,012
<INCOME-TAX> 92,614
<INCOME-CONTINUING> 152,398
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152,398
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 1.01
</TABLE>
