<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
DURACELL INTERNATIONAL INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
DURACELL INTERNATIONAL INC.
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
LOGO LOGO
DURACELL INTERNATIONAL INC.
BERKSHIRE CORPORATE PARK
BETHEL, CONNECTICUT 06801
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Duracell
International Inc., a Delaware corporation (the "Company"), will be held at the
Penthouse Suite, St. Regis Hotel, Two East 55th Street, New York, New York 10021
on Thursday, October 26, 1995 at 11:00 a.m., for the following purposes:
1. To elect directors of the Company to serve for a term of one year
and until their successors are elected and have qualified;
2. To ratify the appointment of Deloitte & Touche LLP as independent
auditors for the fiscal year 1996; and
3. To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
Only stockholders of record at the close of business on September 13, 1995
will be entitled to notice of and to vote at the Annual Meeting and at any and
all adjournments thereof.
You are cordially invited to attend the Annual Meeting. If you plan to
attend the Annual Meeting, please so indicate by checking the appropriate box on
the enclosed proxy card. Whether or not you plan to attend the Annual Meeting in
person, in order to ensure your representation, please complete, sign, date and
promptly return the enclosed proxy card. A return envelope, which requires no
postage if mailed in the United States, has been provided for your use. If you
attend the Annual Meeting and inform the Secretary of the Company in writing
that you wish to vote your shares in person, your proxy will not be used.
At the Annual Meeting, the Company's senior management will report on the
Company's affairs, and time will be allowed for stockholder questions.
By Order of the Board of Directors,
GREGG A. DWYER, Secretary
Dated: September 22, 1995
<PAGE> 3
LOGO LOGO
DURACELL INTERNATIONAL INC.
BERKSHIRE CORPORATE PARK
BETHEL, CONNECTICUT 06801
------------------------------
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders on behalf of the
Board of Directors of Duracell International Inc., a Delaware corporation
("Duracell" or the "Company"), in connection with the solicitation by the Board
of Directors of proxies for use at the Annual Meeting of Stockholders of the
Company, to be held at the Penthouse Suite, St. Regis Hotel, Two East 55th
Street, New York, New York 10021, on Thursday, October 26, 1995, at 11:00 a.m.,
and at any and all adjournments thereof. It is anticipated that the mailing to
stockholders of this Proxy Statement and enclosed proxy card and 1995 Annual
Report will commence on or about September 22, 1995.
Only stockholders of record at the close of business on September 13, 1995
will be entitled to vote at the Annual Meeting. At the close of business on
September 13, 1995 there were outstanding 117,915,239 shares of the Company's
common stock ("Common Stock"). Each share of Common Stock not in the treasury is
entitled to one vote. There is no provision in the Company's Restated
Certificate of Incorporation for cumulative voting.
If shares are not voted in person, they cannot be voted on your behalf
unless a signed proxy is given. Even if you expect to attend the Annual Meeting
in person, in order to ensure your representation, please complete, sign and
date the enclosed proxy card and mail it promptly in the enclosed envelope. A
stockholder giving a proxy pursuant to the present solicitation may revoke it at
any time before it is exercised by giving a subsequent proxy or by delivering to
the Secretary of the Company a written notice of revocation prior to the voting
of the proxy at the Annual Meeting. If you attend the Annual Meeting and inform
the Secretary of the Company in writing that you wish to vote your shares in
person, your proxy will not be used. If you receive two or more proxy cards,
please complete, sign, date and return each to complete your representation.
Unless otherwise directed, the persons named in the accompanying form of
proxy intend to vote all proxies received by them in favor of the election of
nominees to the Board of Directors of the Company named herein and the
ratification of selected independent auditors. All shares represented by each
properly executed and unrevoked proxy will be voted as specified unless the
proxy is mutilated or otherwise received in such form or at such time as to
render it unusable. All matters to be acted upon at the Annual Meeting will be
determined by the affirmative vote of the holders of a majority of the Common
Stock present in person or represented by proxy. Abstentions and broker nonvotes
will not be counted either "for" or "against" the items being voted on. Votes
will be counted and certified by the Inspectors of Election, who are employees
of First Chicago Trust Company of New York.
The cost of this solicitation will be borne by the Company. Solicitation
will be made by mail, and may be made personally or by telephone by officers and
other employees of the Company who will not receive additional compensation for
solicitation. Brokers, nominees and fiduciaries will be reimbursed for out-of-
pocket expenses incurred in obtaining proxies or authorizations from the
beneficial owners of shares of Common Stock.
The purpose of the Annual Meeting and the matters to be acted upon are set
forth in the foregoing Notice of Annual Meeting of Stockholders. As of the date
of this Proxy Statement, management knows of no other business which will be
presented for consideration at the Annual Meeting. However, if any such other
1
<PAGE> 4
business shall properly come before the Annual Meeting, votes will be cast
pursuant to proxies in respect of any such other business in accordance with the
best judgment of the persons acting under those proxies.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's By-Laws provide that the Board of Directors shall consist of
from one to fifteen directors who shall be elected annually by the stockholders.
The Board has fixed the number of directors to be elected at the Annual Meeting
at eleven and the following persons are proposed as directors of the Company to
hold office until the next Annual Meeting of Stockholders and until their
respective successors have been duly elected and qualified. In the event that
any nominee should become unavailable to serve as a director, it is intended
that the shares represented by the proxies will be voted for such substitute
nominee as may be nominated by the Board of Directors, unless the number of
directors constituting the full Board of Directors is reduced. The Company has
no reason to believe, however, that any of the nominees is, or will be,
unavailable to serve as a director.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
The following information sets forth, for each of the nominees for election
to the Board of Directors, their name, age, and principal occupation or
employment during the past five years, the name of the corporation or other
organization, if any, in which such occupation or employment has been carried on
and the period during which they have served as a director. Mr. Robert M.
Kavner, a director the Company since April, 1994, has chosen not to stand for
reelection for personal reasons.
<TABLE>
<S> <C>
Earnest J. Edwards
Age: 57
PHOTO Vice President and Controller, Aluminum Company of America.
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
C. Robert Kidder
Age: 51
PHOTO Director of the Company since June, 1988; Chairman of the Board and Chief
Executive Officer, Borden, Inc. since January, 1995; Chairman of the Board
and Chief Executive Officer of the Company and Duracell Inc. from April,
1992 until January, 1995 and October, 1994, respectively; Chairman of the
Board, President and Chief Executive Officer of the Company and Duracell
Inc. from August, 1991 until April, 1992; President and Chief Executive
Officer of the Company and Duracell Inc. from June, 1988 until August,
1991.
</TABLE>
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2
<PAGE> 5
<TABLE>
<S> <C>
Charles E. Kiernan
PHOTO Age: 50
Director of the Company since October, 1994; President and Chief Operating
Officer of the Company and Duracell Inc. from January, 1995 and October,
1994, respectively; President, Duracell North America from September, 1993
until October, 1994; President, Duracell USA from April, 1992 until
September, 1993; Senior Vice President, Marketing and Manufacturing
Operations, Duracell USA from September, 1991 until April, 1992; Vice
President, Marketing, Duracell USA prior thereto.
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Henry R. Kravis
PHOTO Age: 51
Director of the Company since June, 1988; General Partner, Kohlberg Kravis
Roberts & Co., L.P. ("KKR") and KKR Associates.
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
G. Wade Lewis
PHOTO Age: 48
Director of the Company since October, 1993; Senior Vice President, Finance
and Chief Financial Officer of the Company and Duracell Inc. since June,
1988.
</TABLE>
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<TABLE>
<S> <C>
Arno A. Penzias
PHOTO Age: 62
Director of the Company since June, 1995; Vice President, Research, AT&T
Bell Laboratories.
</TABLE>
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<TABLE>
<S> <C>
Charles R. Perrin
PHOTO Age: 50
Director of the Company since June, 1988; Chairman of the Board and Chief
Executive Officer of the Company and Duracell Inc. since January, 1995 and
October, 1994, respectively; President and Chief Operating Officer of the
Company and Duracell Inc. from April, 1992 until October, 1994; President,
Duracell North America and International Development Markets, from June,
1988 until April, 1992.
</TABLE>
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3
<PAGE> 6
<TABLE>
<S> <C>
Paul E. Raether
PHOTO Age: 49
Director of the Company since June, 1992; General Partner, KKR and KKR
Associates.
</TABLE>
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<TABLE>
<S> <C>
George R. Roberts
PHOTO Age: 52
Director of the Company since June, 1988; General Partner, KKR and KKR
Associates.
</TABLE>
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<TABLE>
<S> <C>
Paula Stern
PHOTO Age: 50
Director of the Company since October, 1994; President, the Stern Group
(economic analysis and trade advisory firm); Senior Fellow, Progressive
Policy Institute.
</TABLE>
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<TABLE>
<S> <C>
Scott M. Stuart
PHOTO Age: 36
Director of the Company since June, 1992; General Partner, KKR and KKR
Associates.
</TABLE>
--------------------------------------------------------------------------------
Mr. Kidder is a director of Borden, Inc., General Signal Corp. and Dean
Witter, Discover & Co.
Mr. Kravis is a director of American Re Corporation, AutoZone, Inc.,
Borden, Inc., Bruno's, Inc., Flagstar Companies, Inc., Flagstar Corporation,
IDEX Corporation, K-III Communications Corp., Owens-Illinois, Inc.,
Owens-Illinois Group, Inc., Safeway Inc., The Stop & Shop Companies, Inc., Union
Texas Petroleum Holdings, Inc. and World Color Press, Inc.
4
<PAGE> 7
Mr. Raether is a director of Bruno's, Inc., Fred Meyer, Inc., Flagstar
Companies, Inc., Flagstar Corporation, IDEX Corporation and The Stop & Shop
Companies, Inc.
Mr. Roberts is a director of American Re Corporation, AutoZone, Inc.,
Borden, Inc., Bruno's, Inc., Flagstar Companies, Inc., Flagstar Corporation,
IDEX Corporation, K-III Communications Corp., Owens-Illinois, Inc.,
Owens-Illinois Group, Inc., Red Lion Properties, Inc., Safeway Inc., The Stop &
Shop Companies, Inc., Union Texas Petroleum Holdings, Inc. and World Color
Press, Inc.
Ms. Stern is a director of Dynatech Corporation, Harcourt General Inc. and
Westinghouse Electric Corporation.
Mr. Stuart is a director of Borden, Inc. and World Color Press, Inc.
Messrs. Kravis and Roberts are first cousins.
BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of September 13, 1995, assuming the exercise of all
options exercisable on, or within 60 days of, such date, by (i) each director,
(ii) the Chief Executive Officer and each of the other four most highly
compensated executive officers of the Company, (iii) all executive officers and
directors as a group and (iv) the Company's principal stockholders. Other than
as set forth in the table below, there are no persons known to the Company to
beneficially own more than 5% of the Common Stock.
<TABLE>
<CAPTION>
NAME FULLY DILUTED PERCENTAGE
---- ------------- ----------
<S> <C> <C>
KKR Associates(1)
9 West 57th Street
New York, New York 10019........................................ 41,100,000 33.97%
Charles R. Perrin(2, 8)........................................... 677,806 .56%
C. Robert Kidder(3, 8)............................................ 328,817 .27%
Charles E. Kiernan(4, 8).......................................... 140,153 .12%
David G. Bluestein(8)............................................. 38,182 (9)
Robert M. Kavner.................................................. 1,500 (9)
Henry R. Kravis(1, 5)............................................. -- --
G. Wade Lewis(8).................................................. 71,918 (9)
Arno A. Penzias................................................... 1,500 (9)
Paul E. Raether(1, 6)............................................. -- --
Christophe Ripert(8).............................................. 18,750 (9)
George R. Roberts(1, 7)........................................... -- --
Paula Stern....................................................... 1,500 (9)
Scott M. Stuart(1)................................................ 4,528 (9)
All directors and executive officers as a group (21 persons)(8)... 1,440,656 1.19%
</TABLE>
---------------
(1) Shares of Common Stock shown as owned by KKR Associates are owned of record
by limited partnerships affiliated with KKR (the "Common Stock
Partnerships") of which KKR Associates is the sole general partner and as to
which it possesses sole voting and investment power. Messrs. Kravis,
Raether, Roberts and Stuart and Robert I. MacDonnell, Michael W. Michelson,
Saul A. Fox, James H. Greene, Jr., Michael T. Tokarz, Clifton S. Robbins,
Perry Golkin and Edward A. Gilhuly, as the general partners of KKR
Associates, may be deemed to share beneficial ownership of such shares. Each
of these individuals disclaims beneficial ownership of any shares shown as
owned by KKR Associates.
(2) A private foundation established by Mr. Perrin owns 98,700 shares. Mr.
Perrin has disclaimed beneficial ownership of these shares.
(3) A trust for the benefit of members of Mr. Kidder's family owns 43,000
shares. Mr. Kidder has disclaimed beneficial ownership of these shares.
5
<PAGE> 8
(4) A trust for the benefit of Mr. Kiernan's family owns 44,503 shares. Mr.
Kiernan has disclaimed beneficial ownership of these shares.
(5) A trust for the benefit of members of Mr. Kravis's family owns 50,000
shares. Mr. Kravis has disclaimed beneficial ownership of these shares.
(6) A trust for the benefit of members of Mr. Raether's family owns 50,000
shares. Mr. Raether has disclaimed beneficial ownership of these shares.
(7) A private foundation established by Mr. Roberts owns 70,000 shares. Mr.
Roberts has disclaimed beneficial ownership of these shares.
(8) Includes the following shares issuable upon the exercise of outstanding
stock options that are exercisable now or within 60 days after September 13,
1995: 483,200 for Mr. Perrin; 135,000 for Mr. Kidder; 93,250 for Mr.
Kiernan; 17,500 for Mr. Bluestein; 21,250 for Mr. Lewis; 18,750 for Mr.
Ripert; and 873,650 for all directors and executive officers as a group.
(9) Less than 0.1%.
BOARD MEETINGS AND COMMITTEES
The Company's Board of Directors held seven meetings in fiscal 1995. During
the period in which he served, each incumbent director, except Messrs. Kavner,
Kravis and Roberts, attended more than 75% of the total number of Board meetings
and meetings of Board committees on which he served. The Board of Directors has
established the following standing committees: Executive, Audit, Management
Compensation and Employee Benefits, and Stock Option. There is no standing
Nominating Committee. The membership and functions of the committees of the
Board of Directors are as follows:
Executive: The Executive Committee's function is to fulfill such duties as
may be delegated to it by the Board of Directors. The Executive Committee's
members are Messrs. Perrin, Kravis and Raether. There were no Executive
Committee meetings during fiscal 1995.
Audit: Principal functions of the Audit Committee include recommending
independent auditors to be employed by the Company; conferring with the auditors
regarding their audit of the Company; considering the adequacy of internal
financial controls and the results of fiscal policies and financial management
of the Company; meeting with the Company's internal auditors; reviewing with the
auditors the results of their examination; and recommending changes in financial
policies or procedures as suggested by the auditors. The Audit Committee
consists of Messrs. Kavner and Stuart and Ms. Stern. The Audit Committee held
three meetings during fiscal 1995.
Management Compensation and Employee Benefits: Principal functions of the
Management Compensation and Employee Benefits Committee are to determine the
salaries of the Company's executive officers and to approve certain other
actions, including the determination of individual bonus targets and payments
under the Company's Management Incentive Compensation Plan. The Management
Compensation and Employee Benefits Committee consists of Ms. Stern and Messrs.
Kravis, Raether and Stuart. The Management Compensation and Employee Benefits
Committee held five meetings during fiscal 1995.
Stock Option: The function of the Stock Option Committee is to conduct the
general administration of the Company's stock option plans. The Stock Option
Committee consists of Messrs. Raether, Kravis and Stuart. There were four Stock
Option Committee meetings during fiscal 1995.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to or accrued by the
Company for the Chief Executive Officer and the other four most highly
compensated executive officers of the Company during the last three fiscal years
(the position titles are those presently held by the named individuals).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- AWARDS
OTHER ANNUAL ------------ ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION3
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
----------------------------- ------ -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Perrin............ 1995 $535,049 $531,787 $30,613 24,000 $ 4,500
Chairman of the Board and 1994 439,393 373,490 36,491 -- 4,436
Chief Executive Officer 1993 410,593 300,000 6,300 160,000 4,497
C. Robert Kidder............. 1995 $308,774 $166,399 $61,963(1) -- $ 563
Former Chairman of the Board 1994 653,439 631,800 64,240(1) -- 4,620
and Chief Executive Officer 1993 610,486 410,000 17,700 200,000 4,497
Charles E. Kiernan........... 1995 $326,895 $288,788 $43,680 39,000 $ 5,112
President and 1994 264,736 224,114 35,766 -- 4,905
Chief Operating Officer 1993 244,106 141,282 8,817 75,000 4,702
David G. Bluestein........... 1995 $256,904 $221,125 $31,883 6,000 $ 4,770
President, Duracell North 1994 222,679 146,250 8,395 -- 4,230
America 1993 199,664 92,000 6,790 70,000 4,178
G. Wade Lewis................ 1995 $294,338 $238,950 $14,703 -- $ 4,845
Senior Vice President and 1994 278,639 200,200 42,183 -- 4,767
Chief Financial Officer 1993 273,806 129,690 6,550 85,000 4,694
Christophe Ripert............ 1995 $322,985 $223,556 $60,438(2) -- $ 81,709(4)
President, Duracell Europe 1994 263,072 187,370 66,076(2) -- 82,583(4)
1993 244,836 130,177 81,017(2) 75,000 177,529(4)
</TABLE>
---------------
1 Fiscal 1995 includes $22,600 of financial planning and tax consulting payments
and $14,798 for a Company-paid leased automobile. Fiscal 1994 includes $26,750
of financial planning and tax consulting payments and $17,572 of payments for
family travel.
2 Fiscal 1995 includes $19,299 for a Company-paid leased automobile and $26,363
of family education related payments. Fiscal 1994 includes $25,924 for a
Company-paid leased automobile and $23,929 of payments for family travel.
Fiscal 1993 includes $36,064 of family education related payments and $31,251
of financial planning and tax consulting payments.
3 The amounts reported as "All Other Compensation" reflect the employer matching
contributions under the Duracell Inc. Thrift Plan; Mr. Ripert does not
participate in the Thrift Plan.
4 Fiscal 1995 constitutes $81,709 of housing allowance payments. Fiscal 1994
includes $80,483 of housing allowance payments and $2,100 of foreign currency
protection payments. During fiscal 1993 these latter payments were $155,542
and $21,987, respectively.
7
<PAGE> 10
The following table provides information on option exercises in fiscal 1995
by the named executive officers and the value of such officers' unexercised
options at June 30, 1995.
AGGREGATED OPTION EXERCISES IN FISCAL 1995
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END(1) ($)
SHARES ACQUIRED --------------------------- ---------------------------
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Perrin...... -- -- 483,200 144,000 $17,324,800 $ 1,144,080
C. Robert Kidder....... 70,000 $1,293,238 195,000 -- $ 7,458,750 --
Charles E. Kiernan..... 45,000 $1,718,125 93,250 95,250 $ 3,024,188 $ 567,368
David G. Bluestein..... 40,000 $1,466,875 17,500 58,500 $ 162,925 $ 495,495
G. Wade Lewis.......... -- -- 21,250 63,750 $ 197,838 $ 593,513
Christophe Ripert...... -- -- 18,750 56,250 $ 174,562 $ 523,688
</TABLE>
-------------------------
(1) Values are based upon the difference between the option exercise prices and
the June 30, 1995 closing price for the Company's Common Stock of $43.25 per
share.
PENSION PLANS
Duracell Inc. established the Duracell Pension Plan for Salaried Employees
-- 1976 (the "Prior Plan") effective September 30, 1976 for its U.S. salaried
employees. For service after September 30, 1976, the pension benefits provided
by the Prior Plan are equal to 1.67% of a participant's average pay (including
salary, bonus, and overtime wages) for the five highest consecutive years within
the last ten years of service times years of service reduced by 1.67% of the
participant's social security benefit times years of service. For service before
October 1, 1976, the Prior Plan provided a pension benefit equal to 1.0% of a
participant's average pay for the five highest consecutive years within the last
ten years of service times years of service.
In connection with the Company's 1988 acquisition of Duracell Inc. and its
battery-related subsidiaries and affiliates from Kraft, Inc. (the
"Acquisition"), Kraft, Inc. retained all assets and liabilities of the Prior
Plan and fully vested all participants in their then accrued benefits under the
Prior Plan.
On July 1, 1988, Duracell Inc. established the Duracell Inc. Pension Plan
for Salaried Employees (the "Salaried Plan"). The pension formula for the
Salaried Plan was the same as the formula in the Prior Plan, and it recognized
all years of service a participant had prior to the Acquisition. However, the
pension benefits payable under the Salaried Plan were reduced by the amount
payable under the Prior Plan.
Effective July 1, 1989, the Salaried Plan was amended and restated so as to
comply with certain provisions of the Tax Reform Act of 1986. Under the amended
and restated Plan (the "Cash Balance Plan") each participant has an account
balance which represents his or her benefit under the Cash Balance Plan. The
participant's initial account balance equals the present value of his or her
benefit earned through June 30, 1989 under the Salaried Plan. Benefit accruals
earned after June 30, 1989 are credited monthly to the participant's account and
are comprised of the sum of three components: Company Credits, Supplemental
Credits and Interest Credits.
8
<PAGE> 11
The Company Credits equal the product of the participant's pay and an
accrual percentage. The accrual percentages are set forth in the following
table:
<TABLE>
<CAPTION>
YEARS OF SERVICE ACCRUAL PERCENTAGE
---------------- ------------------
<S> <C>
0 to 4.99.................................................. 4.0%
5 to 9.99.................................................. 5.0%
10 to 19.99................................................ 6.5%
20 to 29.99................................................ 8.5%
30 and over................................................ 11.0%
</TABLE>
Supplemental Credits are granted to participants who were age 30 or over on
December 31, 1990. This Supplemental Credit is a fixed percentage of pay that is
credited to the participant's account. The supplemental percentages are set
forth in the following table:
<TABLE>
<CAPTION>
AGE ON DECEMBER 31, 1990 SUPPLEMENTAL PERCENTAGE
------------------------ -----------------------
<S> <C>
30 to 32 years........................................ 0.50%
33 to 35 years........................................ 1.00%
36 to 38 years........................................ 2.00%
39 to 41 years........................................ 2.75%
42 to 44 years........................................ 3.75%
45 to 47 years........................................ 4.75%
48 to 50 years........................................ 5.75%
51 to 53 years........................................ 6.75%
54 to 56 years........................................ 8.00%
57 to 59 years........................................ 9.00%
60 and over........................................... 10.00%
</TABLE>
The Interest Credits are equal to the monthly interest rate times the
participant's account balance at the end of the previous month. The interest
rate, which is equal to a five-year average of the yield on one year treasury
bills, is computed at the beginning of the plan year and is used throughout the
plan year. The annual interest rate credit for fiscal 1995 is 5.75%.
Benefits earned under the Cash Balance Plan are vested after five years of
service. The Cash Balance Plan limits the pay that is counted in the pension
formula. The limit is $150,000 for fiscal 1995. A limit is also imposed on the
amount of benefit payable to the participant from the Cash Balance Plan.
Benefits under the Cash Balance Plan are payable upon normal retirement
(age 65), vested termination or death. A participant may elect to commence
benefit payments on the first day of the month that is coincident with or next
following the earlier of his or her fifty-fifth birthday or the first
anniversary of separation of employment. The benefits are payable in the form of
an increasing annuity, level annuity or lump sum which are all actuarially
equivalent.
All of the individuals named in the table entitled "Summary Compensation
Table," except Christophe Ripert, are participants in the Cash Balance Plan. As
of June 30, 1995, Charles R. Perrin had 10 full years of credited service, C.
Robert Kidder had 16 full years of credited service, Charles E. Kiernan had 9
full years of credited service, David G. Bluestein had five full years of
credited service, and G. Wade Lewis had 18 full years of credited service. The
estimated annual benefits payable upon retirement at 65 is $68,835 for Charles
R. Perrin, $35,808 for C. Robert Kidder, $66,159 for Charles E. Kiernan, $59,429
for David G. Bluestein and $85,890 for G. Wade Lewis.
9
<PAGE> 12
SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
On July 1, 1995 Duracell Inc. established the Duracell Inc. Supplemental
Employee Retirement Plan (the "Supplemental Plan"). The Supplemental Plan was
made effective retroactive to July 1, 1994, and is a non-qualified plan. The
Supplemental Plan is designed to provide the benefit which would have been
earned under the Cash Balance Plan for that portion of a participant's
compensation which was excluded from the calculation of the benefit payable
under the Cash Balance Plan due to Internal Revenue Code limitations. All of the
individuals named in the table entitled "Summary Compensation Table," except
Christophe Ripert, are participants in the Supplemental Plan. The estimated
benefits payable as a lump sum upon retirement at 65 pursuant to the
Supplemental Plan is $2,519,396 for Charles R. Perrin, $199,285 for C. Robert
Kidder, $1,182,711 for Charles E. Kiernan, $714,233 for David G. Bluestein, and
$1,377,988 for G. Wade Lewis.
DURACELL UK PENSION PLAN
All United Kingdom employees who are over the age of 21 and have completed
one year of service are eligible for participation in the Duracell UK Pension
Plan (the "UK Plan").
Each participating employee contributes to the UK Plan a certain percentage
of his total earnings. Each employee participating in the UK Plan will be
entitled to a monthly retirement benefit commencing on the retirement at age 65
(male) or 60 (female) or over. Benefits are computed on a formula based on the
employee's final average annual salary (average of the highest three consecutive
years of the last ten years earnings before retirement), the amount of the
employee's contributions to the UK Plan and the number of years of membership in
the UK Plan.
The UK Plan also provides for incapacity pension benefits to be paid upon
26 weeks of continuous sickness absence of the employee and for a death benefit
to be paid upon the death of the employee.
Christophe Ripert is the only executive officer who is presently
participating in the UK Plan. As of June 30, 1995, Mr. Ripert had three years of
credited service. The estimated annual benefit payable to Mr. Ripert upon
retirement at age 65 is $90,731.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company receives an annual fee
of $30,000. Directors who are also employees of the Company or its subsidiaries
receive no remuneration for serving as directors. Ms. Stern and Messrs. Kavner
and Penzias have been granted 1,500 restricted shares of the Company's Common
Stock and, if elected, Mr. Edwards will be granted 1,500 restricted shares on
the date of his election. The restrictions on the sale or transfer of these
1,500 shares lapse pro rata over a period of three years, provided the recipient
continues to serve as a director. Each non-employee director is also granted a
formula-based stock option under the Duracell Shares Plan upon his or her
election as a director. Ms. Stern was granted an option to purchase 3,000 shares
of the Company's Common Stock in October, 1994 at an option price of $42.13 per
share. Mr. Penzias was granted an option to purchase 2,500 shares of the
Company's Common Stock in June, 1995 at an option price of $43.00. Mr. Kidder
has been granted an unfunded life insurance benefit in the amount of $648,000.
CERTAIN INTERESTS AND TRANSACTIONS
KKR renders management, consulting and financial services to the Company
and its subsidiaries for an annual fee of $600,000, payable quarterly in
arrears. The Company believes that this fee is no less favorable
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<PAGE> 13
than that which could be obtained for comparable services from unaffiliated
third parties. Messrs. Kravis, Raether, Roberts and Stuart are general partners
of KKR.
The Common Stock Partnerships hold an aggregate of 41.1 million shares of
Common Stock, which they purchased at the time of the Acquisition in June, 1988
at a price of $5.00 per share. The general partner of the Common Stock
Partnerships is KKR Associates, a New York limited partnership of which Henry R.
Kravis, George R. Roberts, Robert I. MacDonnell, Paul E. Raether, Michael W.
Michelson, Saul A. Fox, James H. Greene, Scott M. Stuart, Michael T. Tokarz,
Clifton S. Robbins, Perry Golkin and Edward A. Gilhuly are the general partners
and certain past and present employees of KKR and partnerships and trusts for
the benefit of the families of such general partners and employees and a former
partner of KKR are the limited partners. KKR Associates has sole voting and
investment power with respect to such shares. The funds for these purchases were
contributed by the limited partners of the Common Stock Partnerships and KKR
Associates from their respective assets.
The Common Stock Partnerships have the right, under certain circumstances
and subject to certain conditions, to require the Company to register under the
Securities Act shares of Common Stock held by them. The Common Stock
Partnerships have both demand and "piggyback" registration rights. Under the
agreements providing for registration rights, the Company will pay all expenses
in connection with any such registration. Certain senior Company managers,
including eight of its current executive officers, were also given certain
"piggyback" registration rights with respect to the Common Stock purchased by
them in June, 1988.
For further information regarding the equity ownership of the Company see
"Beneficial Ownership of Securities."
THE MANAGEMENT COMPENSATION AND EMPLOYEE BENEFITS COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
This Report describes the executive compensation philosophy adopted by the
Management Compensation and Employee Benefits Committee ("the Committee") as
well as the basis of the various elements of executive compensation as found on
pages 7 through 10 of this Proxy Statement.
EXECUTIVE COMPENSATION PHILOSOPHY
The Committee believes a significant portion of the total annual
compensation paid to the Company's executive officers should depend on the
Company's worldwide financial results and on the degree of their accomplishment
of aggressive, yet realistic, predetermined individual objectives. This variable
part of an executive officer's total compensation is referred to in this Report
as an "annual bonus." The fixed portion of their annual compensation, that is
their salaries, is generally competitive with the median salaries of a selected
"peer" group of consumer-oriented companies.
The peer group is comprised of fifteen companies, eight of which are used
in the "Comparison of Cumulative Total Return" graph shown on page 14 of this
Proxy Statement. This group serves as a benchmark in determining the
compensation levels for the Company's executive officers as well as for a
broader group of managerial employees.
The peer group is comprised of consumer products businesses having strong
brand franchises. The Committee believes the peer group companies are comparable
to the Company in that they have similar distribution channels, operate
worldwide, and their product technologies are closely associated with their
brands.
The Committee believes that in order for the Company to attract and retain
executive officers of the caliber needed to build long-term shareholder value,
it is necessary that they also have a substantial, long-term capital
accumulation opportunity. The Committee further believes the executive officers'
long-term capital
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<PAGE> 14
accumulation should be commensurate with the growth in the market value of the
Company's Common Stock. By including stock options in executive officer
compensation packages, an executive officer's long-term financial reward is
linked directly to the rewards realized by all shareholders over comparable
periods. Thus, in fiscal 1993, the Stock Option Committee awarded the initial
stock option grants under a unique new stock option plan called Duracell Shares
("Duracell Shares"). Duracell Shares is a performance-driven stock option plan
which will result in superior rewards to option holders only if there is a
superior level of appreciation in the market value of the Company's Common
Stock. Duracell Shares was approved at the Company's 1992 Annual Meeting of
Stockholders.
ELEMENTS OF EXECUTIVE COMPENSATION
The executive officers' annual compensation is comprised of a salary, an
annual bonus opportunity and benefits which are typical of those offered by most
major U.S. corporations. In addition to the life insurance benefits available to
all employees in the United States, Messrs. Perrin, Lewis and one other
executive officer are provided with an unfunded life insurance benefit in an
amount equal to their annual salaries. A Company-provided leased automobile and
professional financial planning and tax services are provided to all executive
officers at the Company's expense.
Available peer group compensation data and other published national salary
survey data are used in determining the salary ranges for executive officers.
Salary ranges are reviewed once a year.
The Management Incentive Compensation Plan ("MIC Plan") provides certain
managers, including all of the Company's executive officers, with an opportunity
to earn an annual bonus. The MIC Plan embraces a management valued-added concept
("MVA"). A participant's annual bonus, if any, is determined based upon the
measurement of the Company's MVA in any given year combined with an assessment
of the degree of such participant's accomplishment of specific individual
objectives established at the beginning of the year. The MVA measure represents
the Company's earnings before interest, tax, depreciation and amortization, net
of a cost of capital charge. The cost of capital charge is based on the
Company's average capital investment, including working capital, throughout the
year. The MVA calculation recognizes the importance of increasing earnings while
at the same time maintaining control of all forms of capital investment.
At the outset of each year, the Committee establishes a target MVA amount
for the Company after considering management's proposed business plan for such
year, as well as a target bonus percentage for each participant. The target
bonus is expressed as a percentage of a participant's annual salary. Mr.
Perrin's target bonus percentage for fiscal 1995 was 80% of his annual base
salary and the range of fiscal 1995 target bonus percentages for the executive
officer group as a whole, excluding Mr. Perrin, was 30% to 70% of their
respective annual base salaries. The range of fiscal 1996 target bonus
percentages for the executive officer group as a whole, excluding Mr. Perrin, is
30% to 75% of their respective annual base salaries. Mr. Perrin's target bonus
percentage for fiscal 1996 is 80%. If the Company does not achieve at least 80%
of its target MVA, no annual bonuses will be paid under the MIC Plan. Although
the MIC Plan does not provide for any limit on the amount of a participant's
annual bonus, any unusually high bonus payment will necessarily require that the
Company's MVA significantly exceed the targeted amount.
Mr. Perrin's 1995 award of $531,787 was based principally upon the
Company's strong financial results in fiscal 1995 as well as the progress made
by the Company in satisfying important strategic objectives, such as those
relating to improving product performance and quality, geographic expansion, and
the further development and commercialization of high power rechargeable
batteries.
The Duracell Shares stock options granted to executive officers are
five-year allocations. The size of Duracell Shares' grants made to individual
executive officers was based in part upon their perceived ability to
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<PAGE> 15
influence the Company's future business results and in part on a review of stock
option awards granted officers under stock option plans of the peer group
companies.
A key feature of Duracell Shares is its vesting provision and its
relationship to the creation of long-term stockholder value. The exercisability
of a number of option shares equivalent to 25% of each option grant is
accelerated only upon the attainment of specified appreciation levels in the
market value of the Company's Common Stock which is sustained over an average
period of 20 consecutive trading days. Such market value appreciation levels
have been set so as to reflect the expected increase in the market value of the
common stock of the top quartile companies within the peer group. To the extent
the exercisability of the Duracell Shares stock options is not accelerated, they
become exercisable as to half of each optionee's option grant on November 5,
1997 and as to the remaining portion on November 5, 1998. The exercisability of
all outstanding options will be accelerated in the event of certain transactions
constituting or following a change of control of the Company in which the
Company's Common Stock is changed into or exchanged for other consideration and
in the event of certain other fundamental transactions involving the Company.
Stock options are granted to all employees under Duracell Shares. In February,
1994, 25% of the then outstanding Duracell Shares options vested as the first
specified level of market value appreciation was attained.
Duracell Shares enables the Company to attract and retain the services of
employees considered essential to the Company's long-term success, aligns the
interests of the optionees with those of its stockholders and provides optionees
with the potential for a substantial reward in return for a superior level of
appreciation in the market value of the Company's Common Stock.
In August 1993, the Congress enacted Section 162(m) of the Internal Revenue
Code, which mandates that certain compensation in excess of $1 million paid
annually by a public company to certain executive officers is not deductible for
federal tax purposes. This provision became applicable to the Company in fiscal
year 1995. The Company does not currently intend to take the actions necessary
to secure tax deductibility for any excess compensation paid such executive
officers.
USE OF OUTSIDE ADVISOR
From time to time, the Committee utilizes the services of independent
consultants to perform analyses and to make recommendations to the Committee
relative to executive compensation matters. During fiscal 1995, Strategic
Compensation Associates ("SCA") was asked to analyze the competitive positioning
of executive officers' salaries and MIC target bonus percentages and to make
recommendations as to the appropriate adjustment in the executive officers'
salaries and target annual bonus percentages for fiscal 1996. The Committee gave
considerable weight to SCA's views in each matter on which SCA rendered advice.
No compensation consultant is paid on a retainer basis.
Management Compensation and
Employee Benefits Committee
Paula Stern
Henry R. Kravis
Paul E. Raether
Scott M. Stuart
13
<PAGE> 16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Kravis, Raether and Stuart served as members of the Management
Compensation and Employee Benefits and Stock Option Committees during fiscal
1995. Messrs. Kravis, Raether and Stuart are general partners of KKR. See
"Certain Interests and Transactions" above.
PERFORMANCE GRAPH
The following graph compares on a cumulative basis the yearly percentage
change from May 2, 1991 to June 30, 1995 in (a) the total stockholder return on
the Company's Common Stock with (b) the total return on the Standard & Poor's
500 Composite Stock Price Index (the "S&P 500 Index") and with (c) a peer
company index. Such yearly percentage change has been measured by dividing (i)
the sum of (A) the amount of dividends for the measurement period, assuming
dividend reinvestment, and (B) the difference between the price per share at the
end and at the beginning of the measurement period, by (ii) the price per share
at the beginning of the measurement period. The peer company index is comprised
of the following twelve consumer products companies: Alberto-Culver, American
Greetings, Carter-Wallace, Clorox, Gillette, Helene Curtis Industries, Newell,
Polaroid, Ralston Purina, Rubbermaid, Stanley Works, and Tambrands.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
DURACELL INTERNATIONAL INC., THE S&P 500 INDEX AND A PEER COMPANY INDEX
(MAY 2, 1991 AND FISCAL YEARS ENDING JUNE 30)
[CHART]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) DURACELL S&P 500 PEER INDEX
<S> <C> <C> <C>
MAY 2, 1991 100(1) 100 100
JUNE 1991 108 100 96
JUNE 1992 137 113 125
JUNE 1993 154 128 139
JUNE 1994 199 130 136
JUNE 1995 226 164 194
</TABLE>
Assumes $100 invested on May 2, 1991 in Duracell's Common Stock, S&P 500 Index
and Peer Company Index
(1) The stock price used as the base amount is $20.25, the price of the first
shares of the Company's Common Stock traded on the New York Stock Exchange
following the initial public offering in May, 1991. The initial public
offering price of the Company's Common Stock was $15.00 per share.
14
<PAGE> 17
PROPOSAL 2
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, acting on the recommendation of its Audit
Committee, has selected the firm of Deloitte & Touche LLP, which has served as
independent auditors for the past seven full fiscal years, to conduct an audit,
in accordance with generally accepted auditing standards, of the Company's
consolidated financial statements for the 52-week fiscal year ending June 30,
1996. A representative of that firm is expected to be present at the Annual
Meeting to respond to appropriate questions and will be given an opportunity to
make a statement if he so desires. Neither the firm nor any of its partners has
any direct or indirect financial interest in the Company or any of its
subsidiaries. The selection of Deloitte & Touche LLP is being submitted for
ratification at the Annual Meeting. The affirmative vote of the holders of a
majority of the shares of Common Stock present in person or represented by proxy
at the Annual Meeting is required for such ratification.
GENERAL
STOCKHOLDER PROPOSALS
Stockholder proposals for presentation at the 1996 Annual Meeting of
Stockholders must be received at the Company's principal executive offices on or
before May 24, 1996. The Company's By-Laws provide that stockholders desiring to
nominate persons for election as directors of the Company or bring any other
business before the stockholders at an annual meeting must notify the Secretary
of the Company thereof in writing not less than 60 nor more than 90 days before
the meeting (or, if less than 70 days' notice or prior public disclosure of the
meeting date is given, within 10 days after such notice was mailed or publicly
disclosed, whichever first occurs). All such notices must set forth (i) the
proposing stockholder's name and record address and (ii) the number of shares of
Common Stock beneficially owned by the stockholder. Stockholder notices of
nomination must also state, as to each person whom the stockholder proposes to
nominate for election or re-election, (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or employment of
the person, (iii) the number of shares of Common Stock which are beneficially
owned by the person, and (iv) any other information relating to the person that
would be required to be disclosed in solicitations for proxies for election of
directors pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended, or any successor rule thereto. Notices of proposals concerning other
matters must set forth a brief description of the business desired to be brought
before the Annual Meeting of Stockholders, the reasons for conducting such
business at the annual meeting and any material interest of the stockholder in
such business.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the year ended June 30,
1995 is being mailed to all stockholders of record with this Proxy Statement and
proxy card. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY STOCKHOLDER WHO
REQUESTS IN WRITING A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED JUNE 30, 1995, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. Requests should be
15
<PAGE> 18
addressed to Duracell International Inc., Berkshire Corporate Park, Bethel,
Connecticut 06801, attention: Walter B. Rogers, Vice President, Investor
Relations.
By Order of the Board of Directors
GREGG A. DWYER, Secretary
Dated: September 22, 1995
16
<PAGE> 19
DURACELL INTERNATIONAL INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON OCTOBER 26, 1995
The undersigned hereby appoints Charles R. Perrin, Gregg A. Dwyer and G.
Wade Lewis, and each of any of them, as proxies of the undersigned, with full
power of substitution, to represent the undersigned and to vote all shares of
the Common Stock of Duracell International Inc. (the "Company"), which the
undersigned is entitled to vote, at the Annual Meeting of Stockholders of the
Company to be held on October 26, 1995, at 11:00 A.M., New York City time, at
the St. Regis Hotel, Two East 55th Street, New York City, and at any
adjournment thereof, upon the matters listed on the reverse side hereof and in
their discretion, upon such other matters as may properly come before the
meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATION. THE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(Continued and to be signed on other side)
---------------
SEE REVERSE
SIDE
---------------
<PAGE> 20
/X/ Please mark your
vote as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR 1 AND 2.
FOR WITHHELD
1. To elect all / / / /
nominees
For, all nominees except those named below:
--------------------------------------------------------------
Nominees are:
Earnest J. Edwards, C. Robert Kidder, Charles E. Kiernan,
Henry R. Kravis, G. Wade Lewis, Arno A. Penzias, Charles R. Perrin,
Paul E. Raether, George R. Roberts, Paula Stern and
Scott M. Stuart.
FOR AGAINST ABSTAIN
2. Ratification of the Board of Director's / / / / / /
appointment of Deloitte & Touche as
auditors for the Company's 1996 fiscal
year.
3. In their discretion on such other matters as may properly come before the
meeting or any adjournment thereof; all as more particular described in the
Proxy Statement relating to such meeting, receipt of which is hereby
acknowledged.
FOR AGAINST ABSTAIN
/ / / / / /
Place "X" in box if you plan to attend the meeting / /
Please sign your name here exactly as it appears hereon. Joint owners must each
sign. When signing as attorney, executor, administrator, trustee or guardian,
pleas give your full title as it appears hereon. If a corporation, please sign
in full corporate name by President or other authorized officer. If it is a
partnership, please sign in partnership name by authorized person.
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SIGNATURE(S) DATE
