<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: October 14, 1994
Date of earliest
event reported: October 3, 1994
STANHOME INC.
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(Exact name of registrant as specified in its charter)
MASSACHUSETTS 0-1349 04-1864170
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
333 WESTERN AVENUE, WESTFIELD, MASSACHUSETTS 01085
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (413) 562-3631
Total Number of Pages Contained Herein: 88
Index to Exhibits to this Form 8-K is on Page: 6
<PAGE>
ITEM 2. Acquisition or Disposition of Assets.
(a) On October 3, 1994, Stanhome plc, a wholly-owned subsidiary of
Stanhome Inc., declared its offer, publicly announced September 1, 1994 and
formally made on September 9, 1994, to be unconditional in all respects and
unlimited as to the acquisition of fifteen million two hundred thirty-nine
thousand seven hundred and forty-six (15,239,746) ordinary shares of five (5)
pence each of Lilliput Group plc, a public limited company organized and
existing in the United Kingdom ("Lilliput"), with its principal place of
business located at Skirsgill, Penrith, Cumbria CA11 0DP. The tendered amount of
said shares constitutes sixty-five and forty-nine hundredths percent (65.49%) of
all the allotted, called up and fully paid shares of capital stock of Lilliput
(the "Shares") and is being acquired by Stanhome from the assenting Lilliput
Shareholders and their nominees, trustees or custodians (collectively referred
to as the "Sellers"). Between September 1, 1994 and September 30, 1994, Stanhome
additionally purchased in the open market six million six hundred seventy-four
thousand two hundred and nineteen (6,674,219) of the Shares on the London Stock
Exchange, which number of Shares represented twenty-eight and sixty-eight
hundredths percent (28.68%) of all the Shares. The remaining one million three
hundred fifty-five thousand four hundred and fifty-five (1,355,455) of the
Shares constitute five and eighty-three hundredths percent (5.83%) of all the
Shares and are owned by the non-assenting Lilliput Shareholders. With the
intention of acquiring one hundred percent (100%) of the Shares, Stanhome has
offered to acquire such remaining Shares. Stanhome has also offered to pay for
the surrender of thirty-nine thousand nine hundred and thirty-eight (39,938)
options capable of being exercised under the Lilliput Savings-Related Share
Option Scheme and five hundred and ninety thousand (590,000) options capable of
being exercised under the Lilliput Executive Share Option Scheme (collectively
referred to as the "Options") pursuant to applicable law of the United Kingdom.
Consideration for the Shares being acquired by Stanhome in connection with
its declared offer of one hundred and sixty (160) pence per share
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<PAGE>
consists of a payment totaling (Pounds)24,383,594 in cash to be made at the
closing currently scheduled for October 21, 1994 and allocated among the Sellers
according to their percentage equity interests. Consideration for the Shares
acquired by Stanhome in the open market totals (Pounds)10,609,772. Consideration
for the acquisition of the remaining Shares and the surrender of the Options,
assuming acceptance by all of the respective option holders, will total
(Pounds)2,340,990.
The principle followed in determining the amount of the consideration to be
paid per Share was a business judgment as to the value of Lilliput's existing
assets and income potential based on its historic business and its future
interrelationship with Stanhome's business.
It is anticipated that the aggregate total of (Pounds)37,334,356 of cash
consideration for all of the Shares and the Options will be provided by
short term bank loans from a group of banks. To date Stanhome has borrowed
(Pounds)9,000,000 from Banca Popolare di Milano-London Branch and
(Pounds)1,620,000 from Mellon Bank, N.A.-London Branch. The balance of the
borrowings to fund the acquisition will be sourced by means of facilities
Stanhome has with banks under short term loan arrangements and in amounts yet to
be determined.
(b) Lilliput manufactures and distributes collectibles and other gift-
ware products. Its business is primarily the manufacturing and marketing of
high quality, hand-painted miniature cottages sold under the "Lilliput Lane"
brand name, and to a lesser extent the marketing of other collectible giftware
products. Lilliput's business is carried on by Lilliput and its subsidiaries
through retail outlets in the United Kingdom and the U.S. and through export to
some 48 countries. In general, the assets of Lilliput consist of its plant and
real property, machinery and equipment, inventories, product designs and mold
making systems, accounts receivable, cash and cash equivalents, rights under
various copyrights and trademarks, customer and collectors' club member lists,
and goodwill. Stanhome Inc. intends for Lilliput to continue to use such assets
in its business.
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<PAGE>
Item 7. Financial Statements and Exhibits.
Listed below are the financial statements, pro forma financial information
and exhibits to be filed as a part of this report.
(a) Financial statements of businesses acquired.
It is impracticable at this time to provide the required financial statements of
the business acquired. The required financial statements will be filed under
cover of Form 8-K/A as soon as practicable, but not later than December 17, 1994
which is 60 days after the report on this Form 8-K must be filed.
(b) Pro forma financial information.
It is impracticable at this time to provide the required pro forma financial
information relative to the business acquired. The required pro forma financial
information will be filed under cover of Form 8-K/A as soon as practicable, but
not later than December 17, 1994 which is 60 days after the report on this Form
8-K must be filed.
(c) Exhibits.
Recommended Cash Offer announced September 1, 1994 and made on September 9, 1994
by Goldman Sachs International on behalf of Stanhome for Lilliput; Form of
Acceptance in respect of the Recommended Cash Offer made on September 9, 1994 by
Goldman Sachs International on behalf of Stanhome for Lilliput; Notice of
Unconditional Acceptance of Recommended Cash Offer made on September 9, 1994
dated as of October 3, 1994; Notice to Non-Assenting Shareholders and related
Letter dated as of October 11, 1994; Notice and Recommended Cash Offer to the
holders of options under the Lilliput Savings-Related Share Option Scheme made
on October 11, 1994; Form of Acceptance and Surrender relating to the Proposal
by Stanhome made to the holders of options under the Lilliput Savings-Related
Share Option Scheme;
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<PAGE>
Notice and Recommended Cash Offer to the holders of options under the Lilliput
Executive Share Option Scheme made on October 11, 1994; and Form of Acceptance
and Surrender relating to the Proposal by Stanhome made to the holders of
options under the Lilliput Executive Share Option Scheme.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STANHOME INC.
-------------------------------
(Registrant)
Date: October 14, 1994 /s/ G. William Seawright
-------------------------------
G. William Seawright, President
and Chief Executive Officer
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Reg. S-K
Item 601 8-K Page No.
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<S> <C>
2(a) Recommended Cash Offer announced 7
September 1, 1994 and made on
September 9, 1994 by Goldman Sachs
International on behalf of Stanhome
for Lilliput.
2(b) Form of Acceptance in respect of the 62
Recommended Cash Offer made on September
9, 1994 by Goldman Sachs International
on behalf of Stanhome for Lilliput.
2(c) Notice of Unconditional Acceptance 66
of Recommended Cash Offer made on
September 9, 1994 dated as of October
3, 1994.
2(d) Notice to Non-Assenting Shareholders 67
and related Letter dated as of October
11, 1994.
2(e) Notice and Recommended Cash Offer to the 69
holders of options under the Lilliput
Savings-Related Share Option Scheme made
on October 11, 1994.
2(f) Form of Acceptance and Surrender relating 77
to the Proposal by Stanhome made to the
holders of options under the Lilliput
Savings-Related Share Option Scheme.
2(g) Notice and Recommended Cash Offer to the 79
holders of options under the Lilliput
Executive Share Option Scheme made on
October 11, 1994.
2(h) Form of Acceptance and Surrender relating 87
to the Proposal by Stanhome made to the
holders of options under the Lilliput
Executive Share Option Scheme.
</TABLE>
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<PAGE>
Exhibit 2(a)
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
WHEN CONSIDERING WHAT ACTION YOU SHOULD TAKE, YOU ARE RECOMMENDED TO SEEK YOUR
OWN FINANCIAL ADVICE IMMEDIATELY FROM YOUR STOCKBROKER, BANK MANAGER,
SOLICITOR, ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL ADVISER DULY AUTHORISED
UNDER THE FINANCIAL SERVICES ACT 1986.
IF YOU HAVE SOLD OR TRANSFERRED ALL YOUR SHARES IN LILLIPUT, PLEASE FORWARD
THIS DOCUMENT AND THE ACCOMPANYING FORM OF ACCEPTANCE AT ONCE TO THE PURCHASER
OR TRANSFEREE OR TO THE STOCKBROKER, BANK OR OTHER AGENT THROUGH WHOM THE SALE
OR TRANSFER WAS EFFECTED, FOR TRANSMISSION TO THE PURCHASER OR TRANSFEREE.
HOWEVER, SUCH DOCUMENTS SHOULD NOT BE FORWARDED OR TRANSMITTED IN OR INTO THE
UNITED STATES OR CANADA.
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RECOMMENDED CASH OFFER
BY
GOLDMAN SACHS INTERNATIONAL
ON BEHALF OF
STANHOME PLC
A SUBSIDIARY OF
STANHOME INC.
FOR
LILLIPUT GROUP PLC
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A LETTER FROM THE CHAIRMAN & CHIEF EXECUTIVE OF LILLIPUT CONTAINING THE
RECOMMENDATION OF THE DIRECTORS OF LILLIPUT IS SET OUT ON PAGES 5 TO 7.
ACCEPTANCES SHOULD BE DESPATCHED AS SOON AS POSSIBLE, AND IN ANY EVENT SO AS TO
BE RECEIVED NOT LATER THAN 3.00 P.M. ON 30TH SEPTEMBER, 1994. THE PROCEDURE FOR
ACCEPTANCE IS SET OUT IN SECTION 11 OF THE LETTER FROM GOLDMAN SACHS ON PAGES
11 AND 12.
GOLDMAN SACHS IS ACTING FOR STANHOME INC. AND STANHOME AND FOR NO ONE ELSE IN
CONNECTION WITH THE OFFER AND WILL NOT BE RESPONSIBLE TO ANYONE OTHER THAN
STANHOME INC. AND STANHOME FOR THE PROTECTIONS PROVIDED TO CUSTOMERS OF GOLDMAN
SACHS OR FOR GIVING ADVICE IN RELATION TO THE OFFER.
NATWEST MARKETS IS ACTING FOR LILLIPUT AND NO ONE ELSE IN CONNECTION WITH THE
OFFER AND WILL NOT BE RESPONSIBLE TO ANYONE OTHER THAN LILLIPUT FOR THE
PROTECTIONS PROVIDED TO CUSTOMERS OF NATWEST MARKETS OR FOR GIVING ADVICE IN
RELATION TO THE OFFER.
THE OFFER REFERRED TO IN THIS DOCUMENT IS NOT BEING MADE DIRECTLY OR INDIRECTLY
IN, AND THIS DOCUMENT IS NOT BEING, AND MUST NOT BE, MAILED OR OTHERWISE
DISTRIBUTED OR SENT, IN WHOLE OR IN PART, IN OR INTO, THE UNITED STATES OR
CANADA. ALL LILLIPUT SHAREHOLDERS (INCLUDING NOMINEES, TRUSTEES OR CUSTODIANS)
WHO WOULD, OR OTHERWISE INTEND TO, FORWARD THIS DOCUMENT AND THE ACCOMPANYING
FORM OF ACCEPTANCE SHOULD READ THE FURTHER DETAILS IN THIS REGARD WHICH ARE
CONTAINED IN PARAGRAPH 6 OF PART B OF APPENDIX I TO THIS DOCUMENT BEFORE TAKING
ANY ACTION.
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<PAGE>
DEFINITIONS
In this document and the accompanying Form of Acceptance the following
definitions apply, unless the context requires otherwise:
"Canada" Canada, its territories, provinces and all areas
subject to its jurisdiction or any political sub-
division thereof
"Code" the City Code on Takeovers and Mergers
"Company" Stanhome Inc.
"dollars" or "$" US dollars
"Form of Acceptance" the form of acceptance to be used in connection
with the Offer
"Goldman Sachs" Goldman Sachs International
"Lilliput" Lilliput Group plc
"Lilliput Group" Lilliput and its subsidiaries
"Lilliput Shareholders" holders of Lilliput Shares
"Lilliput Share Option the Lilliput Group plc Executive Share Option
Schemes" Scheme and the Lilliput Group plc Savings Related
Share Option Scheme
"Lilliput Shares" or existing issued and fully-paid ordinary shares of
"Shares" 5 pence each in Lilliput and any further such
shares which are allotted or issued after the
date hereof pursuant to the Lilliput Share Option
Schemes or otherwise, while the Offer remains
open for acceptance or up to such earlier date as
Stanhome may decide
"NatWest Markets" NatWest Markets Corporate Finance Limited
"Offer" the recommended offer by Goldman Sachs on behalf
of Stanhome contained in this document to acquire
all the Lilliput Shares not already owned by the
Stanhome Group
"Panel" the Panel on Takeovers and Mergers
"Receiving Agent" or "The The Royal Bank of Scotland plc, Registrar's
Royal Bank of Scotland Department, New Issues Section, P.O. Box 859,
plc" Consort House, East Street, Bedminster, Bristol,
BS99 1XZ
"Registrars of Lilliput" The Royal Bank of Scotland plc, Securities
Services--Registrars, Owen House, 8 Bankhead
Crossway North, Edinburgh, EH11 4BR
"Stanhome" Stanhome plc
"Stanhome Group" Stanhome Inc. and its subsidiaries
"Stock Exchange" The International Stock Exchange of the United
Kingdom and the Republic of Ireland Limited
"United States" or "US"
the United States of America (including the
States thereof and the District of Columbia), its
territories, its possessions and other areas
subject to its jurisdiction.
2
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
LETTER FROM G. WILLIAM SEAWRIGHT, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF
STANHOME INC. ........................................................... 4
LETTER FROM J A RUSSELL, CHAIRMAN & CHIEF EXECUTIVE OF LILLIPUT........... 5
LETTER FROM GOLDMAN SACHS
1. Introduction......................................................... 8
2. The Offer............................................................ 8
3. Terms and Conditions................................................. 9
4. Financial effects of acceptance...................................... 9
5. UK taxation.......................................................... 10
6. Information regarding Stanhome Inc. ................................. 10
7. Information regarding Stanhome....................................... 10
8. Information regarding Lilliput....................................... 10
9. Reasons for the Offer................................................ 11
10. Management and employees............................................. 11
11. Procedure for acceptance............................................. 11
12. Settlement........................................................... 12
13. Further information.................................................. 12
APPENDICES
I. Conditions and Further Terms of the Offer............................ 13
II. Financial and Other Information on Stanhome Inc. .................... 21
III. Financial and Other Information on Stanhome.......................... 34
IV. Financial and Other Information on Lilliput.......................... 35
V. Additional Information............................................... 50
</TABLE>
3
<PAGE>
[LETTERHEAD OF G. WILLIAM SEAWRIGHT, PRESIDENT
AND CEO, OF STANHOME INC. APPEARS HERE]
9th September, 1994
To Lilliput Shareholders and, for information only, to participants in the
Lilliput Share Option Schemes
Dear Sir or Madam,
RECOMMENDED CASH OFFER FOR LILLIPUT
I am delighted that the Boards of Stanhome Inc. and Lilliput were able to
announce an agreed offer for Lilliput on 1st September, 1994. Stanhome Inc. has
been developing its interests in the United Kingdom for some time and believes
that the acquisition will be beneficial to both groups.
The reasons for the Offer are explained in detail in the accompanying letters
from your Chairman & Chief Executive, John Russell, and from Goldman Sachs, but
I would like to emphasise the following points:
. The two groups' activities are highly complementary. Lilliput's strength in
distribution and brand name is here in the United Kingdom, whereas that of
Stanhome's giftware operations is concentrated in the Americas.
. Each group will obtain better access to the other's markets, at little
incremental cost.
. Lilliput will benefit from Stanhome Inc.'s financial resources.
. Lilliput's senior management will be involved in developing Stanhome Inc.'s
European giftware and collectibles group.
The combination of Lilliput and Enesco will create one of the largest giftware
and collectibles groups in Europe.
I look forward to welcoming Lilliput's management and employees to the Stanhome
Group.
Yours faithfully
for the Board of Stanhome Inc.
[SIGNATURE OF G. WILLIAM SEAWRIGHT APPEARS HERE]
G. William Seawright
President and Chief Executive Officer
333 Western Ave., Westfield, MA 01085, Telephone 413-562-3631, Fax 413-568-2820
4
<PAGE>
[LOGO OF LILLIPUT GROUP PLC APPEARS HERE]
Directors: Registered Office:
John A Russell (Chairman & Chief Executive) Skirsgill
Andrew R Dunning Penrith
Robert E Freestone Cumbria
Jane M Hill CA11 0DP
David J Tate
Paul G Thomas
Peter J Folkman*
Anthony J J Simonds-Gooding*
*Non-Executive
9th September, 1994
To Lilliput Shareholders and, for information only, to participants in the
Lilliput Share Option Schemes
Dear Sir or Madam,
RECOMMENDED CASH OFFER FROM STANHOME
On 1st September, 1994, it was announced that your Board and the Board of
Stanhome Inc. had reached agreement on the terms of a recommended cash offer to
be made by Goldman Sachs on behalf of Stanhome to acquire the whole of the
issued and to be issued share capital of Lilliput. I am now writing to you to
explain the reasons for and benefits of the Offer and why your Directors
recommend you to accept it. Details of the Offer are set out in the
accompanying letter from Goldman Sachs.
REASONS FOR AND BENEFITS OF THE OFFER
The Board of Lilliput believes that there are substantial benefits that can be
derived from the acquisition of Lilliput by Stanhome Inc., one of the world's
leading distributors of giftware and collectibles. Although your Directors are
confident that Lilliput would continue to trade successfully as an independent
company, they firmly believe that the future prospects of Lilliput will be
greatly enhanced as part of the enlarged Stanhome Group. In particular, they
believe that Lilliput will be able to grow more rapidly as part of the enlarged
Stanhome Group than as an independent company. Stanhome has assured the
Directors that Lilliput will retain its identity and will continue to be run
from its head office in Penrith.
There is a strong complementary fit between the products sold by Stanhome
Inc.'s Enesco Giftware Group and Lilliput's product range and, following the
Offer being successfully completed, Lilliput will be involved in the marketing
and distribution of Enesco's products in Europe.
The combination of the proven management, manufacturing and marketing skills of
Lilliput and those of the Enesco Giftware Group, together with the financial
resources of the Stanhome Group, should result in a business that is well
positioned to compete successfully both in the US and continental Europe. The
acquisition of Lilliput should enhance the Stanhome Group's presence in the US
collectibles market and accelerate its expansion into the European market.
5
<PAGE>
INTERIM RESULTS OF LILLIPUT FOR THE SIX MONTHS ENDED 30TH JUNE, 1994
Lilliput's unaudited interim results for the six months ended 30th June, 1994
were announced on 1st September, 1994 and showed an increase in profit before
taxation to (Pounds)1.13 million from (Pounds)1.08 million on sales of
(Pounds)7.50 million, up by 6 per cent. compared with the same period last
year. As at 30th June, 1994, shareholders' funds stood at (Pounds)5.06 million
(1993: (Pounds)2.77 million).
Lilliput's profit before taxation was (Pounds)3.1 million for the year ended
31st December, 1993 on turnover of (Pounds)16.5 million. Further financial
information on Lilliput, including the unaudited interim results for the six
months ended 30th June, 1994, is set out in Appendix IV to this document.
THE OFFER
You will find set out on pages 8 to 12 a letter from Goldman Sachs, containing
the Offer on behalf of Stanhome to acquire your shares on the basis of 160p in
cash for each Lilliput Share. In addition, Lilliput Shareholders on the
register at the close of business on 29th September, 1994 will be entitled to
receive and retain the interim dividend in respect of the year ending 31st
December, 1994 of 1.65p (net) per share declared on 1st September, 1994.
Acceptance of the Offer will not prevent Lilliput Shareholders from receiving
and retaining this interim dividend.
The Offer values the fully diluted share capital of Lilliput at approximately
(Pounds)38.2 million and the Offer price of 160p per share represents a premium
of approximately 74 per cent. to the closing middle market quotation of 92p per
Lilliput Share on 31st August, 1994 (the day prior to the announcement of the
Offer).
If the Offer is declared or becomes unconditional in all respects, Stanhome
intends to offer a cash cancellation proposal, in due course, to those
optionholders who have not exercised their options during the Offer Period.
Under such proposal, optionholders will be offered the difference between the
exercise price of the option and the Offer price of 160p in cash, for each
option. In the case of the Lilliput Group plc Savings Related Share Option
Scheme, the cash cancellation proposal will be limited to the number of
Lilliput Shares that can be purchased with the repayment under the related
savings contract at the date of the proposal.
The conditions and further terms of the Offer are set out in Appendix I to this
document.
Details of the financial effects on Lilliput Shareholders of accepting the
Offer are shown on page 9 of this document.
MANAGEMENT AND EMPLOYEES
All of the Lilliput executive Directors will remain as Directors of Lilliput.
Stanhome Inc. has given assurances to your Board that the existing employment
rights of all the Lilliput Group's management and employees, including pension
rights, will be fully safeguarded. Your Board believes that the career
opportunities of Lilliput Group employees will be enhanced within the enlarged
Stanhome Group.
ACTION TO BE TAKEN
Your attention is drawn to pages 11 and 12 of this document in which is set out
the procedure for acceptance of the Offer.
FURTHER INFORMATION
Your attention is drawn to the further information contained in Appendices II
to V to this document.
TAXATION
Your attention is drawn to section 5 of the letter from Goldman Sachs, headed
"UK taxation", on page 10 of this document. If you are in any doubt as to your
own tax position, you should consult your independent professional adviser
immediately.
RECOMMENDATION
YOUR BOARD, WHICH HAS BEEN SO ADVISED BY NATWEST MARKETS, CONSIDERS THE TERMS
OF THE OFFER TO BE FAIR AND REASONABLE AND IN THE BEST INTEREST OF LILLIPUT
SHAREHOLDERS. ACCORDINGLY, YOUR DIRECTORS UNANIMOUSLY RECOMMEND YOU TO ACCEPT
THE OFFER. THE DIRECTORS AND THEIR WIVES HAVE IRREVOCABLY UNDERTAKEN TO ACCEPT
THE OFFER IN RESPECT OF THEIR BENEFICIAL SHAREHOLDINGS AMOUNTING TO 4,981,039
LILLIPUT SHARES, REPRESENTING 21.4 PER CENT. OF THE CURRENT ISSUED SHARE
CAPITAL OF LILLIPUT.
Funds managed by North of England Ventures and Lazard Ventures, have
irrevocably undertaken to accept the Offer in respect of a further 5,356,176
Lilliput Shares, representing 23.0 per cent. of the current issued share
capital of Lilliput.
6
<PAGE>
Since the announcement of the Offer, Stanhome has purchased 3,145,331 Lilliput
Shares in the market. Consequently, Stanhome either owns or has received
irrevocable undertakings to accept the Offer in respect of a total of
13,482,546 Lilliput Shares, representing 57.9 per cent. of the current issued
share capital of Lilliput.
Yours faithfully,
[SIGNATURE OF JOHN A RUSSELL APPEARS HERE]
J A Russell
Chairman & Chief Executive
Registered in England No. 2137296
7
<PAGE>
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Goldman Sachs International, Peterborough Court, 133 Fleet Street, London EC4A
2BB, England
Tel: 071-774 1000, Telex: 94015777, Cable: GOLDSACHS LONDON
Member of The Securities and Futures Authority
[LOGO OF GOLDMAN SACHS APPEARS HERE]
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9th September, 1994
To Lilliput Shareholders and, for information only, to participants in the
Lilliput Share Option Schemes
Dear Sir or Madam,
RECOMMENDED CASH OFFER ON BEHALF OF STANHOME FOR LILLIPUT
1. INTRODUCTION
It was announced on 1st September, 1994 that the Boards of
Stanhome Inc. and Lilliput had reached agreement on the terms
of a recommended cash offer to be made by Goldman Sachs on
behalf of Stanhome, a wholly-owned subsidiary of Stanhome
Inc., to acquire the whole of the issued and to be issued
share capital of Lilliput.
This document contains the formal Offer. The Form of
Acceptance to be used in connection with the Offer is
enclosed.
The Directors of Lilliput and their wives and funds managed
by North of England Ventures and Lazard Ventures have
irrevocably undertaken to accept the Offer in respect of
their holdings of Lilliput Shares, representing in aggregate
10,337,215 shares or 44.4 per cent. of Lilliput's current
issued share capital. In addition, Stanhome currently owns
3,145,331 Lilliput Shares representing 13.5 per cent. of
Lilliput's current issued share capital.
YOUR ATTENTION IS DRAWN TO THE LETTER FROM YOUR CHAIRMAN &
CHIEF EXECUTIVE, JOHN RUSSELL, SET OUT ON PAGES 5 TO 7 OF
THIS DOCUMENT, FROM WHICH YOU WILL SEE THAT YOUR BOARD, WHICH
HAS BEEN SO ADVISED BY NATWEST MARKETS, CONSIDERS THE TERMS
OF THE OFFER TO BE FAIR AND REASONABLE AND THAT YOUR
DIRECTORS UNANIMOUSLY RECOMMEND YOU TO ACCEPT THE OFFER, AS
THEY HAVE IRREVOCABLY UNDERTAKEN SO TO DO IN RESPECT OF THEIR
OWN BENEFICIAL HOLDINGS.
INSTRUCTIONS ON HOW TO ACCEPT THE OFFER ARE SET OUT IN
SECTION 11 OF THIS LETTER, "PROCEDURE FOR ACCEPTANCE", ON
PAGES 11 AND 12.
2. THE OFFER On behalf of Stanhome, we hereby offer to acquire, on the
terms and subject to the conditions set out or referred to in
this document and in the Form of Acceptance, all the Lilliput
Shares, not already owned by the Stanhome Group, on the
following basis:
FOR EACH LILLIPUT SHARE 160p IN CASH
8
<PAGE>
The Offer values the fully-diluted share capital of Lilliput
at approximately (Pounds)38.2 million and the Offer price of
160p per Lilliput Share represents a premium of approximately
74 per cent. to the closing middle market quotation of 92p per
Lilliput Share on 31st August, 1994 (the day prior to the
announcement of the Offer).
ACCEPTANCES OF THE OFFER SHOULD BE DESPATCHED AS SOON AS
POSSIBLE AND IN ANY EVENT SO AS TO BE RECEIVED BY 3.00 P.M. ON
30TH SEPTEMBER, 1994.
3. TERMS AND The Lilliput Shares which are the subject of the Offer will be
CONDITIONS acquired by Stanhome free from all liens, charges, equitable
interests and encumbrances and together with all rights now or
hereafter attaching thereto, including the right to receive
all dividends and other distributions declared, made or paid
after 1st September, 1994, save that Lilliput Shareholders
will retain the right to receive the interim dividend of 1.65p
(net) per Lilliput Share declared on 1st September, 1994.
The conditions and further terms of the Offer are set out in
Appendix I.
If the Offer is declared or becomes unconditional in all
respects, Stanhome intends to offer a cash cancellation
proposal, in due course, to those participants in the Lilliput
Share Option Schemes who have not exercised their options
during the Offer Period. Under such a proposal, optionholders
will be offered the difference between the exercise price of
their options and 160p in cash, for each option. In the case
of the Lilliput Group plc Savings Related Share Option Scheme,
the cash cancellation proposal will be limited to the number
of Lilliput Shares that can be purchased with the repayment
under the related savings contract at the date of the
proposal.
4. FINANCIAL (A) CAPITAL
EFFECTS OF
ACCEPTANCE The table below shows the effect on capital value for a holder
of 100 Lilliput Shares accepting the Offer:
<TABLE>
<CAPTION>
(Pounds)
--------
<S> <C>
Consideration................................. 160
Market value of Lilliput Shares (i).......... 92
---
Change in value............................... 68
===
This represents an increase of................ 74%
===
</TABLE>
(B) INCOME
The table below shows the effect on gross income for a holder
of 100 Lilliput Shares accepting the Offer:
<TABLE>
<CAPTION>
(Pounds)
--------
<S> <C>
Gross income on (Pounds)160 cash (ii)........ 14
Gross dividend income from 100 Lilliput
Shares (iii)................................ 6
---
Change in gross income........................ 8
===
This represents an increase of................ 147%
===
</TABLE>
Notes:
The financial comparisons set out above have been made on the
following bases:
(i) The market value of 100 Lilliput Shares of (Pounds)92 is
based on the middle market quotation as derived from The
Stock Exchange Daily Official List for 31st August, 1994
(being the last day on which the Lilliput Shares were
dealt in on the Stock Exchange before the announcement of
the Offer).
(ii) The gross income on the cash consideration has been
calculated on the assumption that the cash is reinvested
to yield approximately 9 per cent., being the yield on
the 2008 Treasury 9 per cent. gilt, on 8th September,
1994 (the latest practicable date prior to the posting of
this document).
(iii) The gross dividend from Lilliput Shares is based on the
notional dividend of 2.90p (net) per share that would
have been paid as a final dividend in respect of the
year ended 31st December, 1993 had the Lilliput Shares
been listed on the Stock Exchange for the whole of the
financial year ended 31st December, 1993 and the interim
dividend of 1.65p (net) per share in respect of the
financial year ending 31st December, 1994, together with
the associated tax credits of 20/80ths of the amounts
paid.
(iv) No account has been taken of any liability to taxation.
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5. UK The following paragraphs, which are intended as a general
TAXATION guide only and are based on current legislation and Inland
Revenue practice, summarise advice received by Stanhome
regarding the position of Lilliput Shareholders, who are
resident or ordinarily resident in the UK for tax purposes and
who hold their Lilliput Shares as an investment, in respect of
UK taxation.
To the extent that a Lilliput Shareholder receives cash under
the Offer, this will constitute a disposal of shares for the
purposes of UK taxation of capital gains which may give rise
to a liability to taxation. Liability to UK taxation of
capital gains will depend upon the particular circumstances of
the individual Lilliput Shareholder.
Lilliput Shareholders who acquired or acquire their Lilliput
Shares by exercising options under the Lilliput Share Option
Schemes are reminded that they may incur a charge to UK income
tax upon exercising their options.
IF YOU ARE IN ANY DOUBT AS TO YOUR TAXATION POSITION, YOU
SHOULD CONSULT YOUR INDEPENDENT PROFESSIONAL ADVISER WITHOUT
DELAY.
6. INFORMATION (A) BUSINESS DESCRIPTION
REGARDING Stanhome Inc. is a worldwide marketer and distributor of high-
STANHOME quality consumer products. Key activities include the sale to
INC. independent retailers of giftware and collectibles (figurines,
musical boxes, dolls and ornaments) through its Enesco
Giftware Group, the direct-response sale of dolls, plates and
figurines through its Hamilton Direct Response Group, and the
direct selling of home care and personal care products,
cosmetics and giftware through its Stanhome Direct Selling
Group.
Stanhome Inc. is a Fortune 500 company and operates primarily
in North America, Europe, Australasia and Latin America.
Giftware and direct-response products are principally sourced
from third parties, primarily Far Eastern. Home and personal
care products are manufactured at Stanhome's own facilities,
as well as being sourced from third parties. In 1993,
international operations accounted for 36 per cent. of total
sales and Stanhome Inc. employed 4,200 people worldwide.
Stanhome Inc. has a market capitalisation of approximately
$690 million and is listed on the New York Stock Exchange.
(B) CONSOLIDATED FINANCIALS
For the year ended 31st December, 1993, Stanhome Inc. recorded
a profit before tax of (Pounds)44 million (1992: (Pounds)58
million) on net sales of (Pounds)507 million (1992:
(Pounds)493 million). Shareholders' funds amounted to
(Pounds)172 million (1992: (Pounds)170 million).
Notes: The results above are converted from US Dollars at the
following exchange rates: Financial year ended 31st
December, 1993--US$1.48:(Pounds)1, Financial year ended
31st December, 1992-- US$1.51:(Pounds)1.
Further information relating to Stanhome Inc. is set out in
Appendix II.
7. INFORMATION Stanhome is a newly-incorporated, wholly-owned subsidiary of
REGARDING Stanhome Inc. established for the purposes of the Offer.
STANHOME Further information relating to Stanhome is set out in
Appendix III.
8. INFORMATION (A) BUSINESS DESCRIPTION
REGARDING The business of Lilliput was founded in 1982 and the Lilliput
LILLIPUT Group has become one of the UK's leading collectibles groups.
The Lilliput Group manufactures and markets high-quality,
hand-painted miniature cottages under the "Lilliput Lane"
brand name. There are approximately 210 pieces in Lilliput's
product range which are marketed in a number of different
collections to both the collectibles and giftware markets.
Lilliput has successfully developed what its Directors believe
to be one of the largest collectors' clubs of any UK giftware
or collectibles manufacturer. The Lilliput Collectors' Club
currently has over 72,000 members worldwide and allows
Lilliput direct access to its end customers.
The Lilliput Group operates primarily in the UK, through more
than 2,000 retail outlets and exports its products to some 48
countries. Lilliput also has a
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marketing and distribution subsidiary in Columbia, Maryland,
US which markets the products of other collectibles and
giftware companies in addition to Lilliput's own products. In
the year ended 31st December, 1993, sales to international
markets accounted for approximately 38.6 per cent. of the
Lilliput Group's total sales and the Lilliput Group employed
an average of 565 people.
(B) CONSOLIDATED FINANCIALS
In the year ended 31st December, 1993, the Lilliput Group
reported profit before tax of (Pounds)3.1 million (1992:
(Pounds)2.0 million) on sales of (Pounds)16.5 million (1992:
(Pounds)13.6 million). As at 31st December, 1993,
shareholders' funds stood at (Pounds)4.7 million (1992:
(Pounds)2.3 million). On 1st September, 1994, Lilliput
reported unaudited interim results for the six months ended
30th June, 1994, of profit before tax of (Pounds)1.13 million
(1993: (Pounds)1.08 million) on sales of (Pounds)7.5 million
(1993 (Pounds)7.1 million). As at 30th June, 1994,
shareholders' funds stood at (Pounds)5.06 million (1993:
(Pounds)2.77 million).
Further information relating to Lilliput and its interim
statement are set out in Appendix IV.
9. REASONS Stanhome Inc.'s intention is to strengthen its position as a
FOR THE leader in the marketing and distribution of giftware and to
OFFER expand further its geographical presence outside North
America. The acquisition of Lilliput, a manufacturer and
distributor of giftware and collectibles, is directly in line
with Stanhome Inc.'s strategy of increased access to European
markets through on-the-ground presence and represents the
addition of a strong brand to the Enesco Giftware Group's
existing product lines.
The board of Stanhome Inc. believes that the acquisition of
Lilliput should allow the Enesco Giftware Group to benefit
from synergies, including the leveraging of resources with
Enesco's European operations in the UK and Germany and other
distributorships in Europe. In addition, the combination of
Lilliput's and Enesco's strong management teams and efficient
production, marketing and financial organisations should
assist in the successful growth of the two organisations.
Stanhome Inc. believes that the prospects for the management
10. MANAGEMENT and employees of the Lilliput Group will be enhanced by the
AND merger. The financial resources and geographical spread of the
EMPLOYEES Stanhome Group will help Lilliput capitalise on its strong
brand name and facilitate expansion. Lilliput has been assured
by Stanhome Inc. that the existing employment rights of all
employees of the Lilliput Group, including their existing
pension rights, will be fully safeguarded.
11. PROCEDURE TO ACCEPT THE OFFER, YOU SHOULD COMPLETE BOXES 1 AND 3 AND
FOR SIGN BOX 2 OF THE ENCLOSED FORM OF ACCEPTANCE IN ACCORDANCE
ACCEPTANCE WITH THE INSTRUCTIONS CONTAINED THEREIN, WHICH INSTRUCTIONS
SHALL BE DEEMED TO FORM PART OF THE TERMS OF THE OFFER.
THE SIGNED AND COMPLETED FORM OF ACCEPTANCE SHOULD BE RETURNED
WITH THE RELEVANT SHARE CERTIFICATE(S) AND/OR OTHER
DOCUMENT(S) OF TITLE EITHER BY POST OR BY HAND TO THE ROYAL
BANK OF SCOTLAND PLC, REGISTRAR'S DEPARTMENT, NEW ISSUES
SECTION, P.O. BOX 859, CONSORT HOUSE, EAST STREET, BEDMINSTER,
BRISTOL, BS99 1XZ, OR BY HAND ONLY TO THE ROYAL BANK OF
SCOTLAND PLC, REGISTRAR'S DEPARTMENT, NEW ISSUES SECTION, 15
FEATHERSTONE STREET, LONDON EC1Y 8QS AS SOON AS POSSIBLE AND
IN ANY EVENT SO AS TO BE RECEIVED NOT LATER THAN 3.00 P.M. ON
30TH SEPTEMBER, 1994.
The enclosed pre-paid envelope, addressed to The Royal Bank of
Scotland plc, Registrar's Department, New Issues Section, P.O.
Box 859, Consort House, East Street, Bedminster, Bristol, BS99
1XZ may be used by Lilliput Shareholders currently resident in
the UK to return the Form of Acceptance. No acknowledgment of
receipt of documents will be given.
If your share certificate(s) and/or other document(s) of title
are not readily available or have been lost, the Form of
Acceptance should nevertheless be completed, signed and
returned as indicated above.
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You should also write to the Registrars of Lilliput advising
them of the loss and requesting them to send a letter of
indemnity to you for completion. The share certificate(s)
and/or other document(s) of title should then be forwarded to
The Royal Bank of Scotland plc, Registrar's Department, New
Issues Section, P.O. Box 859, Consort House, East Street,
Bedminster, Bristol, BS99 1XZ as soon as possible thereafter,
although no payment will be made until the share
certificate(s) and/or other document(s) of title, or an
acceptable letter of indemnity in lieu thereof, is/are
received. Stanhome and Goldman Sachs reserve the right,
subject to the provisions of the Code, to treat acceptances of
the Offer as valid even if not complete in all respects or not
accompanied by the relevant certificate(s) and/or other
document(s) of title.
THE ATTENTION OF LILLIPUT SHAREHOLDERS WHO ARE CITIZENS OR
RESIDENTS OF JURISDICTIONS OUTSIDE THE UK IS DRAWN TO
PARAGRAPH 6 OF PART B OF APPENDIX I AND TO THE RELEVANT
PROVISIONS OF THE FORM OF ACCEPTANCE.
12. SETTLEMENT Subject to the Offer becoming or being declared unconditional
in all respects and to compliance with the procedure for
acceptance as set out above, cheques drawn on a branch of The
Royal Bank of Scotland plc within the town clearing system
will be despatched to each accepting Lilliput Shareholder, or
as may be directed in the Form of Acceptance, promptly, but in
any event within 21 days of the Offer becoming or being
declared wholly unconditional or within 21 days of receipt of
a valid and complete acceptance, whichever is the later.
Unless other instructions are given in the Form of Acceptance,
all cheques will be sent to accepting Lilliput Shareholders
(or to the first-named Lilliput Shareholder in the case of
joint holders) at the address indicated in the Form of
Acceptance.
If the Offer does not become or is not declared unconditional
in all respects, Forms of Acceptance, share certificates
and/or other documents of title will be returned by post or by
any other method approved by the Panel as promptly as
practicable but in any event within 14 days of the Offer
lapsing. All documents or remittances sent by or to Lilliput
Shareholders or their designated agents will be sent at their
risk.
13. FURTHER Your attention is drawn to the following Appendices which form
INFORMATION part of this document.
Appendix I Conditions and Further Terms of the Offer
Appendix II Financial and Other Information on
Stanhome Inc.
Appendix III Financial and Other Information on
Stanhome
Appendix IV Financial and Other Information on
Lilliput
Appendix V Additional Information
Yours faithfully,
for GOLDMAN SACHS INTERNATIONAL
Richard A. Sapp
Managing Director
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APPENDIX I
CONDITIONS AND FURTHER TERMS OF THE OFFER
PART A
CONDITIONS OF THE OFFER
The Offer is conditional on:
(i) valid acceptances being received (and not, where permitted, withdrawn) by
3.00 p.m. on 30th September, 1994, (or such later times(s) and/or date(s)
as Stanhome may decide), in respect of not less than 90 per cent. (or such
lesser percentage as Stanhome may decide) of the Lilliput Shares to which
the Offer relates, provided that this condition will not be satisfied
unless Stanhome has acquired or agreed to acquire (pursuant to the Offer
or otherwise) Lilliput Shares carrying in aggregate over 50 per cent. of
the voting rights exercisable at general meetings of Lilliput on such
basis as may be required by the Panel (including for this purpose, to the
extent (if any) required by the Panel, any voting rights attaching to any
Lilliput Shares which are unconditionally allotted or issued before the
Offer becomes or is declared unconditional as to acceptances, whether
pursuant to the exercise of conversion or subscription rights, including
options under the Lilliput Share Option Schemes, or otherwise); and for
this purpose, the expression "Lilliput Shares to which the Offer relates"
means the aggregate of: (a) Lilliput Shares which have been allotted on or
prior to the date of the Offer; and (b) any Lilliput Shares allotted after
the date of the Offer but on or prior to the first closing date of the
Offer (or such later time(s) and/or date(s) as Stanhome may decide) but
excluding Lilliput Shares which are at the date of the Offer held by
Stanhome or any associate (within the meaning of Section 430E of the
Companies Act 1985) of Stanhome or which, at that date, Stanhome or any
such associate has contracted to acquire (within the meaning of Section
428(5) of the Companies Act 1985);
(ii) the Office of Fair Trading indicating, in terms satisfactory to Stanhome,
that it is not the intention of the Secretary of State for Trade and
Industry to refer the proposed acquisition of Lilliput by Stanhome, or any
matters arising therefrom, to the Monopolies and Mergers Commission;
(iii) all filings having been made and all or any applicable waiting periods
under the United States Hart-Scott-Rodino Antitrust Improvements Act of
1976 and the regulations thereunder having expired or been terminated as
appropriate in respect of the proposed acquisition of Lilliput by Stanhome
or any matters arising therefrom;
(iv) no government or governmental, quasi-governmental, supranational,
statutory or regulatory body, or any court, professional association or
trade agency, or any other person or body in any jurisdiction having
instituted, implemented or threatened any action, proceedings, suit,
investigation or enquiry or enacted, made or proposed any statute or
regulation or order or taken any other step that would or might:
(a) prohibit or materially restrict, restrain or impose additional
material conditions or obligations with respect to, or otherwise
materially interfere with the implementation of, the Offer or the
acquisition of Lilliput Shares by Stanhome or any matters arising
therefrom,
(b) result in a material delay in the ability of Stanhome, or render
Stanhome unable, to acquire some or all of the Lilliput Shares,
(c) require or prevent the divestiture by any member of the Stanhome
Group or any partnership, joint venture, firm or company in which any
of them is materially interested (together the "wider Stanhome Group")
or any member of the Lilliput Group or any partnership, joint venture,
firm or company in which any of them is materially interested
(together the "wider Lilliput Group") of all or any material or
substantial portion of their businesses, assets or property or impose
any limitation on the ability of any of them to conduct their
respective businesses or own their respective assets or properties,
(d) impose any material limitation on the ability of the Stanhome Group to
acquire or hold or exercise effectively all rights of Lilliput Shares
(whether acquired pursuant to the Offer or otherwise),
(e) make the Offer or the proposed acquisition of Lilliput illegal, void
or unenforceable,
(f) otherwise materially adversely affect any or all of the businesses,
assets, prospects or profits of the wider Stanhome Group or the wider
Lilliput Group or the exercise of rights of shares of any company in
the Lilliput Group, or
(g) require any member of the wider Stanhome Group or the wider Lilliput
Group to offer to acquire any shares in any member of the wider
Lilliput Group owned by any third party;
and all applicable waiting periods during which such government or
governmental, quasi-governmental, supranational, statutory or regulatory
body, or any court, professional association or trade agency, or any other
person or body in any jurisdiction could institute, implement or threaten
any such action, proceedings, suit, investigation or enquiry having
expired, lapsed or terminated;
(v) all authorisations, orders, grants, consents, permissions and approvals
necessary or appropriate for or in respect of the Offer and the proposed
acquisition of Lilliput by Stanhome or any matters arising therefrom being
obtained in terms satisfactory to Stanhome from appropriate governments or
governmental, quasi-governmental, supranational, statutory or regulatory
bodies, or any courts, professional associations or trade agencies, or any
other persons or bodies in any jurisdiction and such authorisations,
orders, grants, consents, permissions and approvals remaining in full
force and effect and all necessary filings having been made, all
appropriate waiting periods having expired, lapsed or been terminated and
all necessary statutory or regulatory obligations in any jurisdiction in
respect of the Offer and the proposed acquisition of Lilliput by Stanhome
or any matters arising therefrom having been complied with;
(vi) there being no indication from the relevant authorities or any party with
whom any member of the wider Lilliput Group has any contractual or other
relationship that the interests held by any member of the wider Lilliput
Group under licences, leases, consents, permits and other rights will be
adversely amended or otherwise affected (in any such case to the extent
material in the context of the wider Lilliput Group, taken as a whole) by
the proposed acquisition or any matters arising therefrom, that such
licences, leases, consents, permits and other rights are not in full force
and effect and that there is any intention to revoke or amend any of the
same (in each case to an extent material in the context of the wider
Lilliput Group);
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(vii) there being no provision of any agreement, instrument or other
arrangement to which any member of the wider Lilliput Group is a party
or by or to which any of its assets may be bound or subject which as a
consequence of the Offer or the acquisition of the Lilliput Group by
Stanhome or any matters arising therefrom would or might to an extent
which is material in the context of the wider Lilliput Group taken as a
whole have the result that:
(a) any indebtedness of any member of the wider Lilliput Group becomes
or is capable of being declared repayable immediately or earlier
than the repayment date stated in such agreement, instrument or
other arrangement,
(b) any mortgage, charge or other security interest is created over the
whole or any part of the business, property or assets of any member
of the wider Lilliput Group,
(c) any such agreement, instrument or other arrangement is terminated or
modified or any action is taken or onerous obligation arises
thereunder,
(d) the value of any member of the wider Lilliput Group or its financial
or trading position is prejudiced or adversely affected,
(e) any asset or, other than in the ordinary course of business, any
asset of the wider Lilliput Group is disposed of,
(f) the interest or business of any member of the wider Lilliput Group
in or with any other person, firm or company (or any arrangement
relating to such interest or business) is terminated or adversely
affected, or
(g) any member of the wider Lilliput Group ceases to be able to carry on
business under any name under which it currently does so;
(viii) since 1st September, 1994 no material litigation, arbitration,
prosecution or other legal proceedings having been instituted or
threatened or become pending against any member of the wider Lilliput
Group or to which any member of the wider Lilliput Group is a party and
no investigation by any government or quasi-governmental, supranational,
regulatory or investigative body against or in respect of any member of
the wider Lilliput Group having been threatened, announced, or instituted
or remaining outstanding by, against, or in respect of any member of the
wider Lilliput Group;
(ix) no material adverse change having occurred in the business or financial
or trading position or prospects of any member of the wider Lilliput
Group since 1st September, 1994;
(x) Stanhome not having discovered that any business, financial or other
information of any member of the Lilliput Group publicly disclosed by or
on behalf of any member of the Lilliput Group either contains a material
misrepresentation of fact or omits to state a fact necessary to make the
information contained therein not materially misleading;
(xi) save as disclosed in Lilliput's published report and audited accounts for
the year ended 31st December, 1993 or in any public announcement
released to the Stock Exchange prior to or at the same time as the
announcement of the Offer, no member of the Lilliput Group having since
31st December, 1993:
(a) issued or authorised or proposed the issue of additional shares of
any class, other than pursuant to options granted under the Lilliput
Share Option Schemes,
(b) issued or authorised or proposed the issue of or granted securities
convertible into or rights, warrants or options to acquire such
shares (referred to in subparagraph (a) above) or convertible
securities,
(c) recommended, declared, paid or made or proposed to recommend,
declare, pay or make any dividend, bonus or other distribution,
other than the interim dividend of 1.65p per Lilliput Share declared
on 1st September, 1994,
(d) authorised or proposed or announced its intention to propose any
merger or acquisition or disposal or transfer of material assets
(save in the ordinary course of business) or shares or any change in
its share or loan capital,
(e) (save in the ordinary course of business) incurred any indebtedness
in aggregate amount which is material in the context of the Lilliput
Group,
(f) (save in the ordinary course of business) disposed of or transferred,
mortgaged or encumbered any asset or right, title or interest in any
asset or entered into any contract, commitment or arrangement
(whether in respect of capital expenditure or otherwise) which is of
a long term or unusual nature or which involves or could involve any
obligation of a nature or magnitude which is material in the context
of the Lilliput Group,
(g) entered into any contract, reconstruction, amalgamation, arrangement
or other transaction otherwise than in the ordinary course of
business,
(h) entered into, or varied the terms of, any service agreements with
any of the directors of Lilliput,
(i) taken any corporate action or had any legal proceedings started or
threatened against it for its winding-up, dissolution or
reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of all or any of
its assets and revenues, or
(j) entered into any contract, commitment or agreement with respect to
any of the transactions or events referred to in this condition
(xi); and
(xii) no contingent liability having arisen or been incurred which might be
expected materially adversely to affect a member of the Lilliput Group.
Stanhome reserves the right to waive all or any of conditions (ii) to (xii)
(inclusive) above, in whole or in part. Conditions (ii) to (xii) (inclusive)
must be satisfied as at, or waived on or before, the 21st day after the later of
30th September, 1994 and the date on which condition (i) is fulfilled (or in
each case such later date as the Panel may agree) provided that Stanhome shall
be under no obligation to waive or treat as satisfied any of conditions (ii) to
(xii) (inclusive) by a date earlier than the latest date specified above for the
satisfaction thereof notwithstanding that the other conditions of the Offer may
at such earlier date have been waived or fulfilled and that there are at such
earlier date no circumstances indicating that any of such conditions may not be
capable of fulfilment.
If Stanhome is required by the Panel to make an offer for Lilliput Shares under
the provisions of Rule 9 of the Code, Stanhome may make such alterations to the
conditions as are necessary to comply with the provisions of that Rule.
The Offer will lapse if it is referred to the Monopolies and Mergers Commission
or if the European Commission in respect thereof either initiates proceedings
under Article 6(1)(c) of Council Regulation (EEC) 4064/89 or makes a referral to
a competent authority of the United Kingdom under Article 9(1) of that
Regulation, before (in any such case) the later of 30th September, 1994 and the
date when the Offer becomes or is declared unconditional as to acceptances.
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PART B
FURTHER TERMS OF THE OFFER
Except where the context requires otherwise, any reference in this Part B of
Appendix 1 and in the Form of Acceptance to:
(i) "the Offer" shall mean the Offer and any revision thereof or
extension thereto and shall include any election available in
connection with it;
(ii) "the Offer becoming unconditional" shall include the Offer being
declared unconditional;
(iii) "the Offer being or becoming unconditional" shall be construed as a
reference to the Offer being or becoming unconditional as to
acceptances, whether or not any other condition of the Offer remains
to be fulfilled;
(iv) the "acceptance condition" shall mean the condition as to acceptances
set out in paragraph (i) of Part A of this Appendix I;
(iv) an extension of the Offer shall, in relation to the Offer, include an
extension of the date by which the acceptance condition has to be
fulfilled; and
(v) "the Offer document" shall mean any document containing the Offer.
1. ACCEPTANCE PERIOD
(a) The Offer will initially remain open for acceptance until 3.00 p.m. on 30th
September, 1994. Although no revision is envisaged, if the Offer is revised
it will remain open for acceptance for a period of at least 14 days from
the date of posting of written notification of the revision to Lilliput
Shareholders. Except with the consent of the Panel, no such written
notification of the revised Offer may be posted to Lilliput Shareholders
after 25th October, 1994 or, if later, the date falling 14 days prior to
the last date on which the Offer can become unconditional.
(b) The Offer, whether revised or not, shall not (except with the consent of
the Panel) be capable of becoming or being declared unconditional after
midnight on 8th November (or any earlier time and/or date beyond which
Stanhome has stated that the Offer will not be extended and in respect of
which it has not withdrawn that statement) nor of being kept open after
that time and/or date unless it has previously become unconditional.
However, Stanhome reserves the right, with the consent of the Panel, to
extend the Offer to a later time(s) and/or date(s). Stanhome may not, for
the purpose of determining whether the acceptance condition has been
satisfied, take into account acceptances received, or purchases of Lilliput
Shares made, after 1.00 p.m. on 8th November, 1994 (or on any earlier date
beyond which Stanhome has stated that the Offer will not be extended and in
respect of which it has not withdrawn that statement) or such later time
and/or date as Stanhome may with the permission of the Panel decide. If the
Offer is extended beyond midnight on 8th November, 1994 acceptances
received and purchases made in respect of which relevant documents have
been received by The Royal Bank of Scotland plc after 1.00 p.m. on the
relevant date may (except where the Code otherwise permits) only be taken
into account with the consent of the Panel.
(c) If the Offer becomes unconditional, it will remain open for acceptance for
not less than 14 days after the date on which it would otherwise have
expired. If the Offer has become unconditional and it is stated that the
Offer will remain open until further notice, then not less than 14 days'
notice will be given prior to the closing of the Offer.
(d) If a competitive situation arises after Stanhome has given a no extension
statement or a no increase statement, Stanhome may (if it has specifically
reserved the right to do so at the time such statement was made) withdraw
such statement provided that notice is given to that effect within 4
business days after the day of the announcement of the competing offer and
Lilliput Shareholders are informed in writing thereof. Stanhome may (if it
has reserved the right to do so) choose not to be bound by the terms of a
no increase statement or a no extension statement, if it would otherwise
prevent the posting of an increased or improved Offer which is recommended
for acceptance by the Board of Lilliput, or in other circumstances
permitted by the Panel.
(e) For the purpose of determining at any particular time whether the
acceptance condition has been satisfied, Stanhome shall not be bound
(unless otherwise required by the Panel) to take into account any Lilliput
Shares which have been unconditionally allotted or issued before such
determination takes place, unless The Royal Bank of Scotland plc on behalf
of Stanhome has received written notice of the relevant details of such
allotment or issue (including the price thereof) before that time. Telex or
facsimile transmission will not be sufficient for this purpose.
2. ANNOUNCEMENTS
(a) By 8.30 a.m. on the business day ("the relevant day") following the day on
which the Offer is due to expire or becomes unconditional or is revised or
extended, or such later time and/or date as the Panel may agree, Stanhome
will make an appropriate announcement and simultaneously inform the Stock
Exchange of the position. Such announcement will also state (unless
otherwise permitted by the Panel) the total number of Lilliput Shares and
rights over Lilliput Shares (as nearly as practicable) (i) for which
acceptances of the Offer have been received (showing the extent, if any, to
which such acceptances have been received from persons acting in concert
with Stanhome), (ii) acquired or agreed to be acquired by or on behalf of
Stanhome or any person acting in concert with Stanhome during the Offer
Period and (iii) held by or on behalf of Stanhome or any person acting in
concert with Stanhome prior to the Offer Period, and will specify the
percentage of the share capital of Lilliput represented by these figures.
Any decision to extend the time and/or date by which the acceptance
condition has to be fulfilled may be made at any time up to, and will be
announced not later than, 8.30 a.m. on the relevant day (or such later time
and/or date as the Panel may agree) and the announcement will state the
next expiry date. In computing the number of Lilliput Shares represented by
acceptances and purchases, there may, at the discretion of Stanhome, be
included or excluded for announcement purposes acceptances and purchases
which are not complete in all respects or are subject to verification where
such acceptances or purchases of Lilliput Shares could be counted towards
fulfilling the acceptance condition in accordance with paragraph 5(k)
below.
(b) References in this Part B of Appendix I to the making of an announcement by
Stanhome include the release of an announcement by public relations
consultants or by Goldman Sachs to the press, and the delivery or
telephone, telex or facsimile or other electronic transmission of an
announcement to the Stock Exchange. An announcement made otherwise than to
the Stock Exchange will be notified simultaneously to the Stock Exchange.
15
<PAGE>
3. RIGHTS OF WITHDRAWAL
(a) If Stanhome, having announced the Offer to be unconditional, fails to
comply by 3.30 p.m. on the relevant day (or such later time and/or date as
the Panel may agree) with any of the other requirements specified in
paragraph 2(a) above, an accepting Lilliput Shareholder may immediately
thereafter withdraw his acceptance by written notice (signed by the
accepting shareholder or his agent duly appointed in writing and evidence
of whose appointment is produced with the notice) given to The Royal Bank
of Scotland plc, Registrar's Department New Issues Section, P.O. Box 859,
Consort House, East Street, Bedminster, Bristol BS99 1XZ on behalf of
Stanhome. Subject to paragraph 1(b) above, this right of withdrawal may be
terminated not less than 8 days after the relevant day by Stanhome
confirming, if that be the case, that the Offer is still unconditional and
complying with the other requirements specified in paragraph 2(a) above. If
any such confirmation is given, the first period of 14 days referred to in
paragraph 1(c) above will run from the date of such confirmation and
compliance.
(b) If by 3.00 p.m. on 21st October, 1994 (or such later time and/or date as
the Panel may agree) the Offer has not become unconditional, an accepting
Lilliput Shareholder may withdraw his acceptance at any time thereafter at
the address and in the manner referred to in paragraph 3(a) above before
the earlier of (i) the time that the Offer becomes unconditional and (ii)
the final time for lodgement of acceptances which can be taken into account
in accordance with paragraph 1(b) above. If Stanhome withdraws a no
extension statement or a no increase statement in accordance with paragraph
1(d) above, any Lilliput Shareholder who accepts the Offer after the date
of such statement may withdraw his acceptance thereafter at the address and
in the manner referred to in paragraph 3(a) above for a period of 8 days
after the date of posting of written notice to that effect by Stanhome to
the relevant Lilliput Shareholders.
(c) Except as provided by this paragraph 3, acceptances and elections shall be
irrevocable. In this paragraph 3, "written notice" (including any letter of
appointment, direction or authority) means notice in writing bearing the
original signature(s) of the relevant accepting Lilliput Shareholders or
his/their agent(s) duly appointed in writing (evidence of whose appointment
is produced with the notice) and telex or facsimile transmissions or copies
will not be sufficient. No notice which appears to Stanhome, its agents or
advisers, to have been sent from the United States or Canada or by a North
American person will be treated as valid.
4. REVISED OFFER
(a) Although no such revision is envisaged, if the Offer (in its original or
any previously revised form(s)) is revised (either in its terms or
conditions or otherwise) and such revision represents on the date on which
such revision is announced (on such basis as Goldman Sachs may consider
appropriate) no diminution in the value of the consideration previously
offered, the benefit of the revised Offer (subject to this paragraph 4 and
paragraph 6 below) will be made available to Lilliput Shareholders who have
accepted the Offer in its original or any previously revised form(s))
(hereinafter called "Previous Acceptor(s)"). The acceptance by or on behalf
of a Previous Acceptor of the Offer (in its original or any previously
revised form(s)) shall, subject as provided in this paragraph 4 and
paragraph 6 below, be deemed an acceptance of the Offer as so revised and
shall also constitute an appointment of any director of Stanhome or of
Goldman Sachs as his attorney and/or agent with authority to accept any
such revised Offer on behalf of such Previous Acceptor.
(b) Although no such revision is envisaged, if any revised Offer provides for
Lilliput Shareholders who accept it to elect for (or accept) alternative
forms of consideration, the acceptance by or on behalf of a Previous
Acceptor of the Offer (in its original or any previously revised form(s))
shall, subject as provided below, also constitute an appointment of any
director of Stanhome or of Goldman Sachs as his attorney and/or agent to
make on his behalf elections for and/or to accept such alternative forms of
consideration on his behalf as such attorney and/or agent in his absolute
discretion thinks fit and to execute on behalf of and in the name of such
Previous Acceptor all further documents (if any) as may be required to give
effect to such acceptances and/or elections. In making such acceptance or
any such election, such attorney and/or agent shall take into account the
nature of any previous acceptances and/or elections made by the Previous
Acceptor and such other facts or matters as he may reasonably consider
relevant.
(c) The deemed acceptances referred to in paragraphs 4(a) and (b) above shall
not apply and the authorities conferred by paragraphs 4(a) and (b) above
shall not be exercised if as a result thereof a Previous Acceptor would
receive less in aggregate in cash than he would have received as a result
of his acceptance of the Offer in the form in which it was originally
accepted by him.
(d) The deemed acceptances referred to in paragraphs 4(a) and (b) above shall
not apply and the authorities conferred by paragraphs 4(a) and (b) above
shall be ineffective to the extent that a Previous Acceptor shall lodge,
within 14 days of the posting of the document pursuant to which the
revision of the Offer referred to in paragraphs 4(a) and (b) above is made
available to the Lilliput Shareholders (or such later date as Stanhome may
determine), a form in which he validly elects to receive the consideration
receivable by him under that revised Offer in some other manner.
(e) The authorities referred to in this paragraph 4 and any acceptance of a
revised Offer and/or election pursuant thereto shall be irrevocable unless
and until the Previous Acceptor becomes entitled to withdraw his acceptance
under paragraph 3 above and duly does so.
(f) Stanhome reserves the right to treat an executed Form of Acceptance
relating to the Offer (in its original or any previously revised form(s))
which is received after the announcement or the issue of the Offer in any
revised form as a valid acceptance of the revised Offer and such acceptance
shall constitute an authority in the terms of this paragraph 4 mutatis
mutandis on behalf of the relevant Lilliput Shareholders.
5. GENERAL
(a) Except with the consent of the Panel, the Offer will lapse unless all the
conditions to the Offer have been fulfilled by or (if capable of waiver)
waived by or (where appropriate) satisfied as at midnight on 21st October,
1994 or within 21 days after the date on which the Offer becomes
unconditional, (whichever is the later), or such later date as Stanhome
may, with the consent of the Panel, decide. If the Offer is referred to the
Monopolies and Mergers Commission before 30th September, 1994 or the date
when the Offer becomes unconditional (whichever is the later) the Offer
will lapse. References in this paragraph 5(a) to the Offer lapsing mean
that the Offer will thereupon cease to be capable of further acceptance and
Lilliput Shareholders who have accepted the Offer and Stanhome will cease
to be bound by acceptances effected on or before the date on which the
Offer so lapses.
16
<PAGE>
(b) No acknowledgement of receipt of any Form of Acceptance, share
certificate(s) or other document(s) of title will be given. All
communications, notices, certificates, documents of title and remittances
to be delivered by or to or sent to or from Lilliput Shareholders or as
otherwise directed will be delivered by or to or sent to or from them (or
their designated agents) at their risk.
(c) The expression "Offer Period" when used in this document means the period
commencing on 1st September, 1994 and ending on whichever of the following
dates shall be the latest:-
(i) 30th September, 1994;
(ii) the date on which the Offer lapses; and
(iii) the date on which the Offer becomes unconditional.
(d) All references in this document and in the Form of Acceptance to 30th
September, 1994, shall (except in paragraph 5(c) above and where the
context otherwise requires), if the expiry date of the Offer shall be
extended, be deemed to refer to the expiry date of the Offer as so
extended.
(e) Except with the consent of the Panel, settlement of the consideration to
which any Lilliput Shareholder is entitled under the Offer will be
implemented in full in accordance with the terms of the Offer without
regard to any lien, right of set-off, counterclaim or other analogous right
to which Stanhome may otherwise be, or claim to be, entitled as against
such Lilliput Shareholder.
(f) Subject to paragraph 5(k) of this Part B, notwithstanding that no share
certificate(s) is/are delivered in respect of it, a duly completed Form of
Acceptance (i) executed as a deed by SEPON Limited and endorsed on behalf
of the Stock Exchange to the effect that the shares to which it refers are
the whole or part of a holding registered in the name of SEPON Limited
and/or are Lilliput Shares to which SEPON Limited is unconditionally
entitled immediately to become the registered holder or (ii) executed by
any other person(s) and endorsed on behalf of the Stock Exchange to the
effect that such person(s) is/are unconditionally entitled immediately to
become the registered holder(s) of the Lilliput Shares to which it refers
and that one or more Talisman transfer(s) in favour of such person(s) in
respect thereof is/are in the course of registration shall (if otherwise in
order) be treated by Stanhome and Goldman Sachs as an acceptance valid in
all respects on the date of its actual receipt provided that, on its
presentation to the Registrars of Lilliput, it is unconditionally accepted
for registration.
(g) The instructions, terms, provisions and authorities contained in or deemed
to be incorporated in the Form of Acceptance constitute part of the terms
of the Offer. Words and expressions defined in this document shall, unless
the context otherwise requires, have the same meanings when used in the
Form of Acceptance.
(h) The Offer, the Form of Acceptance and all acceptances thereof and all
elections thereunder or pursuant thereto and all contracts made pursuant
thereto and action taken or made or deemed to be taken or made under any of
the foregoing shall be governed by and construed in accordance with English
law. Execution by or on behalf of a Lilliput Shareholder of a Form of
Acceptance constitutes his submission, in relation to all matters arising
out of the Offer and Form of Acceptance, to the jurisdiction of the Courts
of England.
(i) Any omission to despatch this document or the Form of Acceptance or any
notice required to be given under the terms of the Offer to, or any failure
to receive the same by, any person to whom the Offer is made or should be
made shall not invalidate the Offer in any way or create any implication
that the Offer has not been made to any such person.
(j) Stanhome and Goldman Sachs reserve the right to treat acceptances of the
Offer and/or elections pursuant thereto as valid if received by or on
behalf of either of them at any place or places determined by them
otherwise than as stated herein or in the Form of Acceptance.
(k) Notwithstanding the right reserved by Stanhome and Goldman Sachs to treat a
Form of Acceptance as valid even though not entirely in order or not
accompanied by the relevant share certificate(s) and/or other document(s)
of title, except with the consent of the Panel an acceptance of the Offer
will only be counted towards fulfilling the acceptance condition if the
requirements of Note 4 and, if applicable, Note 6 on Rule 10 of the Code
are satisfied in respect of it. Except with the consent of the Panel, a
purchase of Lilliput Shares by Stanhome or its nominee(s) (or, if Stanhome
is required to make an offer or offers under the provisions of Rule 9 of
the Code, by a person acting in concert with Stanhome for the purpose of
such offer(s) or its nominee(s)) will only be counted towards fulfilling
the acceptance condition if the requirements of Note 5 and, if applicable,
Note 6 on Rule 10 of the Code are satisfied in respect of it. The Offer may
not be accepted otherwise than by means of a Form of Acceptance.
(l) Except with the consent of the Panel, the Offer will not become
unconditional until The Royal Bank of Scotland plc has issued a certificate
to Stanhome or Goldman Sachs (or their respective agents) which states the
number of Lilliput Shares in respect of which acceptances have been
received which meet the requirements of Note 4 on Rule 10 of the Code and
the number of Lilliput Shares otherwise acquired (whether before or during
the Offer Period) which meet the requirements of Note 5 on Rule 10 of the
Code and, in each case, if applicable, Note 6 on Rule 10 of the Code.
Copies of such certificate will be sent to the Panel as soon as possible
after it is issued.
(m) All mandates and other instructions to Lilliput given by Lilliput
Shareholders or in force relating to holdings of Lilliput Shares will,
unless and until revoked, continue in force in relation to such
shareholders.
(n) All powers of attorney, appointments of agents and authorities on the terms
conferred by or referred to in this Part B of Appendix 1 or in the Form of
Acceptance are given by way of security for the performance of the
obligations of the Lilliput Shareholders concerned and are irrevocable in
accordance with Section 4 of the Powers of Attorney Act 1971, except in the
circumstances where the donor of such power of attorney or authority is
entitled to withdraw his acceptance in accordance with paragraph 3 above
and duly does so.
(o) The Offer extends to any Lilliput Shareholders not resident in the UK to
whom this document, the Form of Acceptance and any related documents may
not have been despatched and such Lilliput Shareholders may collect copies
of those documents from The Royal Bank of Scotland plc, Registrar's
Department, New Issues Section, P.O. Box 859, Consort House, East Street,
Bedminster, Bristol BS99 1XZ. Stanhome and Goldman Sachs reserve the right
to notify any matter, including the making of
17
<PAGE>
the Offer, to all or any Lilliput Shareholders with a registered address
outside the UK (or whom Stanhome knows to be nominees, trustees or
custodians for such persons) by announcement or paid advertisement in a
daily newspaper published and circulated in the UK, in which event such
notice shall be deemed to have been sufficiently given notwithstanding any
failure by a Lilliput Shareholder to receive such notice and all references
in this document to notice, or the provision of information in writing, by
Stanhome, Goldman Sachs and/or their respective agents and/or public
relations consultants shall be construed accordingly.
(p) The Offer is made at 11.59 p.m. on 9th September, 1994 and is capable of
acceptance from and after that time. Forms of Acceptance are available for
collection from Goldman Sachs, Peterborough Court, 133 Fleet Street, London
EC4A 2BB from that time. The Offer is being made by means of this document
and by means of an advertisement in the London edition of the Financial
Times dated 10th September, 1994.
(q) If the Offer does not become unconditional in all respects, Forms of
Acceptance, share certificate(s) and other document(s) of title will be
returned by post (or by such other method as may be approved by the Panel)
within 14 days of the Offer lapsing to the person or agent whose name and
address is set out in the relevant box on the Form of Acceptance or, if
none is set out, to the first-named holder at his registered address
outside the United States or Canada. No such documents will be sent to an
address in the United States or Canada.
(r) If sufficient acceptances are received, Stanhome intends to apply the
provisions of Sections 428 to 430F of the Companies Act 1985 to acquire
compulsorily any outstanding Lilliput Shares.
6. LILLIPUT OVERSEAS SHAREHOLDERS
(a) The making of the Offer in, or to certain persons resident in,
jurisdictions outside the UK or to certain persons who are citizens,
residents or nationals of jurisdictions outside the UK may be affected by
the laws of the relevant overseas jurisdiction. Lilliput Shareholders who
are citizens, residents or nationals of jurisdictions outside the UK should
inform themselves about and observe any applicable legal requirements. It
is the responsibility of any such person wishing to accept the Offer to
satisfy himself as to the full observance of the laws of the relevant
jurisdiction in connection therewith, including the obtaining of any
governmental or other consents which may be required, or the compliance
with other necessary formalities and the payment of any issue, transfer or
other taxes due in such territory. Any such Lilliput Shareholder will be
responsible for any issue, transfer or other taxes by whomsoever payable
and Stanhome shall be entitled to be fully indemnified and held harmless by
such shareholder for any such issue, transfer or other taxes as Stanhome
may be required to pay.
(b) In particular, the Offer is not being made directly or indirectly in, or by
the use of the mails of, or by any means or instrumentality of interstate
or foreign commerce of, or any facilities of a national securities exchange
of, the United States or Canada. This includes, but is not limited to,
facsimile transmission, telex and telephone. Stanhome will not (unless
otherwise determined by Stanhome in its sole discretion and save as
provided for in paragraph 6(c) below) mail or deliver, or authorise the
mailing or delivery of, this document, the Form of Acceptance or any
related offering document in or into the United States or Canada, including
to Lilliput Shareholders with registered addresses in the United States or
Canada or to persons whom Stanhome knows to be nominees holding Lilliput
Shares for such persons. Persons receiving such documents should not
distribute or send them in or into the United States or Canada or use such
mails or any such means or instrumentality for any purpose directly or
indirectly in connection with the Offer and so doing may invalidate any
proposed acceptance. Persons wishing to accept the Offer should not use
such mails or any such means or instrumentality for any purpose directly or
indirectly related to acceptance of the Offer. Envelopes containing Form(s)
of Acceptance should not be postmarked in the United States or Canada or
otherwise despatched from the United States or Canada for the receipt of
the remittance of cash or for the return of Form(s) of Acceptance,
certificate(s) for Lilliput Shares and/or other document(s) of title.
(c) The provisions of this paragraph 6 and/or any other terms of the Offer
relating to citizens, residents or nationals of jurisdictions outside the
UK may be waived, varied or modified as regards specific Lilliput
Shareholder(s) or on a general basis by Stanhome in its absolute
discretion. Subject as aforesaid, the provisions of this paragraph 6 shall
have precedence over any terms of the Offer which are inconsistent
therewith.
7. FORM OF ACCEPTANCE
Each Lilliput Shareholder by whom, or on whose behalf, a Form of Acceptance is
executed irrevocably undertakes, represents, warrants and agrees to and with
Stanhome and Goldman Sachs (so as to bind him, his personal representatives
and his heirs, successors and assigns) that:
(a) the execution of a Form of Acceptance shall constitute an acceptance of the
Offer in respect of the number of Lilliput Shares inserted or deemed to be
inserted in Box 1 of the Form of Acceptance on and subject to the terms and
conditions set out or referred to in this document and the Form of
Acceptance and that, subject to the rights of withdrawal set out in
paragraph 3 above, each such acceptance shall be irrevocable;
(b) the Lilliput Shares in respect of which the Offer is accepted or deemed to
be accepted are sold free from all liens, charges, encumbrances, equities,
rights of pre-emption and any other third party rights of whatsoever nature
and together with all rights now or hereafter attaching thereto, including
the right to receive all dividends or other distributions declared, paid or
made after 1st September, 1994, except that Lilliput Shareholders will be
entitled to receive and retain the recommended interim
18
<PAGE>
dividend of 1.65p (net) per Lilliput Share in respect of the year ending
31st December, 1994 proposed to be paid on 14th October, 1994 to
shareholders on the register at the close of business on 29th September,
1994;
(c) such Lilliput Shareholder has not received or sent copies of this document,
the Form of Acceptance or any related offering documents in, into or from
the United States or Canada, has not utilised in connection with the Offer,
directly or indirectly, the mails of, or any means or instrumentality
(including, without limitation, facsimile transmission, telex and
telephone) of interstate or foreign commerce of, or any facilities of a
national securities exchange of, the United States or Canada, was outside
the United States or Canada when the Form of Acceptance was delivered, and
not an agent or fiduciary acting on a non-discretionary basis for a
principal, unless such agent or fiduciary is an authorised employee of such
principal or such principal has given any instructions with respect to the
Lilliput Shares from outside the United States or Canada;
(d) the execution of the Form of Acceptance constitutes, subject to the Offer
becoming unconditional in all respects in accordance with its terms and to
the accepting Lilliput Shareholder not having validly withdrawn his
acceptance, the irrevocable appointment of any director of Stanhome or any
director of Goldman Sachs as such shareholder's attorney and/or agent, and
an irrevocable instruction to the attorney and/or agent, to complete and
execute all or any form(s) of transfer and/or other document(s) at the
discretion of the attorney and/or agent in relation to the Lilliput Shares
referred to in paragraph 7(a) in respect of which the accepting Lilliput
Shareholder has not validly withdrawn his acceptance in favour of Stanhome
or such other person or persons as Stanhome may direct and to deliver such
form(s) of transfer and/or other document(s) at the discretion of the
attorney and/or agent, together with the share certificate(s) and/or other
documents relating to the Lilliput Shares, for registration within 6 months
of the Offer becoming unconditional in all respects and to do all such
other acts and things as may in the opinion of such attorney and/or agent
be necessary or expedient for the purpose of, or in connection with, the
acceptance of the Offer and to vest in Stanhome or its nominee(s) the
Lilliput Shares as aforesaid;
(e) the execution of the Form of Acceptance constitutes, subject to the Offer
becoming unconditional in all respects in accordance with its terms and to
the accepting Lilliput Shareholder not having validly withdrawn his
acceptance, separate irrevocable authorities and requests:
(i) to Lilliput or its agents, to procure the registration of the
transfer of the Lilliput Shares pursuant to the Offer and the
delivery of the share certificate(s) and/or other document(s) of
title in respect thereof to Stanhome or as it may direct;
(ii) to Stanhome or its agents, to procure the despatch by post (or by such
other method as may be approved by the Panel) of a town clearing
cheque for any cash to which an accepting Lilliput Shareholder becomes
entitled pursuant to his acceptance of the Offer (and at the risk of
such person) to the person whose name and address is set out in Box 4
of the Form of Acceptance or, if none is set out, to the person whose
name and address (outside the United States or Canada) is set out in
Box 3 of the Form of Acceptance or to the first-named holder at his
registered address (outside the United States or Canada);
(f) the execution of the Form of Acceptance constitutes a separate authority to
any director of Stanhome and to any director of Goldman Sachs and/or their
respective agents and the irrevocable appointment of any such director
and/or agent as such shareholder's attorney and/or agent within the terms
of paragraph 4 above;
(g) after the Offer becomes or is declared unconditional in all respects (or if
the Offer would become or be declared unconditional in all respects or
lapse immediately upon the outcome of the resolution in question) and
pending registration:
(i) Stanhome shall be entitled to direct the exercise of any votes
attaching to any Lilliput Shares in respect of which the Offer has
been accepted or is deemed to have been accepted (and in respect of
which such acceptance has not been validly withdrawn) and any other
rights and privileges attaching to such Lilliput Shares, including the
right to requisition a general meeting or separate class meeting of
Lilliput, such votes (where relevant) to be cast so far as possible to
satisfy any outstanding condition of the Offer; and
(ii) the execution of the Form of Acceptance by a Lilliput Shareholder
constitutes, with regard to the Lilliput Shares comprised in such
acceptance and in respect of which such acceptance has not been
validly withdrawn:
(a) an authority to Lilliput from such Lilliput Shareholder to send
any notice, warrant, document or other communication (save in
relation to the interim dividend) which may be required to be
sent to him as a member of Lilliput to Stanhome at its
registered office;
(b) an authority to Stanhome to sign any consent to short notice of
a general or separate class meeting on his behalf and/or to
execute a form of proxy in respect of such Lilliput Shares
appointing any person nominated by Stanhome to attend general or
separate class meetings of Lilliput or its members or any of them
and to exercise the votes attaching to such Lilliput Shares on
his behalf, such votes (where relevant) to be cast so far as
possible to satisfy any outstanding condition of the Offer; and
(c) the agreement of such Lilliput Shareholder not to exercise any
of such rights without the consent of Stanhome and the
irrevocable undertaking of such shareholder not to appoint a
proxy or representative for or to attend any such meetings;
(h) he will deliver to The Royal Bank of Scotland plc, Registrar's Department,
New Issues Section, P.O. Box 859, Consort House, East Street, Bedminster,
Bristol BS99 1XZ, (or alternatively by hand only to The Royal Bank of
Scotland plc, Registrar's Department, New Issues Section, 15 Featherstone
Street, London EC1Y 8QS), his share certificate(s) and/or other document(s)
of title in respect of the Lilliput Shares referred to in paragraph 7(a)
above, or an indemnity acceptable to Stanhome in lieu thereof, as soon as
possible and in any event within 6 months of the Offer becoming
unconditional in all respects;
(i) the terms and conditions of the Offer contained in this document shall be
deemed to be incorporated in and form part of the Form of Acceptance, which
shall be read and construed accordingly;
(j) if he accepts the Offer, he shall do all such acts and things as shall be
necessary or expedient to vest in Stanhome or its nominees or such other
persons as it may decide the Lilliput Shares as aforesaid;
19
<PAGE>
(k) he agrees to ratify each and every act or thing which may be done or
effected by Stanhome or Goldman Sachs and any director or either of them or
their respective agents, or Lilliput or its agents, as the case may be, in
the proper exercise of any of his or its powers and/or authorities
conferred by or referred to in this Part B;
(l) if any provision of this Part B shall be unenforceable or invalid or shall
not operate so as to afford Stanhome and Goldman Sachs and/or any director
of either of them or their agent the full benefit of the authorities and
powers of attorney expressed to be given therein, he shall with all
practicable speed do all such acts and things and execute all such
documents as may be required or desirable to enable Stanhome and Goldman
Sachs and/or any director of either of them or their agents to secure the
full benefit of such authorities and powers of attorney.
On execution the Form of Acceptance shall take effect as a deed.
References in this Part B to Lilliput Shareholders shall include reference
to the person or persons executing a Form of Acceptance and, in the event
of more than one person executing a Form of Acceptance, the provisions of
this Part B shall apply to them jointly and to each of them. References to
the masculine gender shall include the feminine.
20
<PAGE>
APPENDIX II
FINANCIAL AND OTHER INFORMATION ON STANHOME INC.
1. DIRECTORS OF STANHOME INC.
The Directors of Stanhome Inc. are:
<TABLE>
<S> <C>
H. L. Tower............. Chairman of the Board
G. William Seawright.... President and Chief Executive Officer
Allan G. Keirstead...... Executive Vice President and Chief Administrative and Financial Officer
John F. Cauley, Jr. .... Director
Janet M. Clarke......... Director
Alejandro Diaz Vargas... Director
Judith R. Haberkorn..... Director
Thomas R. Horton........ Director
Alla O'Brien............ Director
Homer G. Perkins........ Director
Anne-Lee Verville....... Director
</TABLE>
2. PRINCIPAL AND REGISTERED OFFICE OF STANHOME INC.
The principal and registered office of Stanhome Inc. is at 333 Western Avenue,
Westfield, Massachusetts 01085.
3. FINANCIAL STATEMENTS
(A) CONSOLIDATED PROFIT AND LOSS ACCOUNTS
A summary of the consolidated profit and loss account of Stanhome Inc. for the
three years ended 31st December, 1993, extracted from the published audited
accounts of Stanhome Inc., on which the audit opinion was unqualified, is set
out below:
<TABLE>
<CAPTION>
Years ended 31st December,
----------------------------
1993 1992 1991
-------- -------- --------
US$ millions
<S> <C> <C> <C>
NET SALES......................................... 750.7 744.0 710.2
Cost of Sales..................................... 304.7 295.1 281.7
-------- -------- --------
Gross Profit...................................... 446.0 448.9 428.5
Selling, General and Administrative Expense....... 363.5 365.5 349.4
Restructuring Charge.............................. 17.0 -- --
-------- -------- --------
OPERATING PROFIT.................................. 65.5 83.4 79.1
Interest Expense.................................. (2.0) (3.4) (5.0)
Other Income, net................................. 2.6 6.9 7.0
-------- -------- --------
INCOME BEFORE INCOME TAXES........................ 66.1 86.9 81.1
Income Taxes...................................... 33.0 40.3 36.1
NET INCOME........................................ 33.1 46.6 45.0
======== ======== ========
EARNINGS PER COMMON SHARE
Primary........................................... $1.68 $2.32 $2.22
Fully Diluted..................................... 1.67 2.32 2.21
</TABLE>
(B) CONSOLIDATED STATEMENT OF RETAINED EARNINGS
A summary of the consolidated statement of retained earnings of Stanhome Inc.
for the three years ended 31st December, 1993, extracted from Stanhome's
published audited accounts is set out below:
<TABLE>
<CAPTION>
Years ended 31st December,
----------------------------
1993 1992 1991
-------- -------- --------
US$ millions
<S> <C> <C> <C>
BALANCE, BEGINNING OF YEAR....................... 325.2 297.5 270.6
Net Income....................................... 33.1 46.7 45.1
Cash dividends, $1.00 per share in 1993, $0.96
per share in 1992 and $0.92 per share in 1991... (19.6) (18.9) (18.1)
BALANCE, END OF YEAR............................. 338.7 325.3 297.6
-------- -------- --------
</TABLE>
21
<PAGE>
(C) CONSOLIDATED BALANCE SHEET
The consolidated balance sheet of Stanhome Inc. as at 31st December, 1993,
extracted from the published audited accounts of Stanhome Inc. as at that
date, is set out below:
<TABLE>
<CAPTION>
31st December,
1993
--------------
US$ millions
<S> <C>
ASSETS
CURRENT ASSETS:
Cash (including interest bearing demand deposits).............. 20.9
Certificates of deposit and time deposits...................... 32.5
Marketable securities, at cost (which approximates market val-
ue)........................................................... 7.4
Notes and accounts receivable, net............................. 123.0
Inventories.................................................... 94.9
Prepaid advertising............................................ 30.9
Other prepaid expenses......................................... 4.8
-----
TOTAL CURRENT ASSETS........................................... 314.4
-----
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land and improvements.......................................... 6.9
Buildings and improvements..................................... 42.1
Machinery and equipment........................................ 26.9
Furniture and fixtures......................................... 28.3
Transportation equipment....................................... 3.6
-----
107.8
Less Accumulated depreciation and amortization................. 63.2
-----
TOTAL PROPERTY, PLANT AND EQUIPMENT............................ 44.6
-----
OTHER ASSETS:
Intangibles....................................................
Goodwill, net.................................................. 43.0
Product lines and other, net................................... 18.7
Other.......................................................... 9.0
-----
TOTAL OTHER ASSETS............................................. 70.7
-----
429.7
=====
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes and loans payable........................................ 0.8
Accounts payable............................................... 51.2
Federal, state and foreign taxes on income..................... 21.6
Accrued expenses--Payroll and commissions...................... 12.8
Restructuring.................................................. 10.8
Acquisitions................................................... 9.1
Vacation, sick leave, retirement insurance..................... 9.1
Royalties...................................................... 7.3
Pensions and profit sharing.................................... 5.1
Other.......................................................... 27.2
-----
TOTAL CURRENT LIABILITIES...................................... 155.0
-----
LONG-TERM LIABILITIES:
Foreign employee severance obligations......................... 12.9
Pensions....................................................... 7.4
-----
TOTAL LONG-TERM LIABILITIES.................................... 20.3
-----
SHAREHOLDERS' EQUITY:
Common stock, par value $.125
Authorised 80,000,000 shares
Issued 25,228,240 shares....................................... 3.2
Capital in excess of par value................................. 34.0
Retained earnings.............................................. 338.8
Cumulative translation adjustments............................. (27.4)
-----
348.6
-----
Less Shares held in treasury, at cost -- common stock,
5,836,617 shares.............................................. 94.2
-----
TOTAL SHAREHOLDERS' EQUITY..................................... 254.4
-----
429.7
=====
</TABLE>
22
<PAGE>
(D) CONSOLIDATED STATEMENT OF CASH FLOWS
A summary of the consolidated statement of cash flows of Stanhome Inc. for the
year ended 31st December, 1993, extracted from Stanhome's published audited
accounts as at that date, is set out below:
<TABLE>
<CAPTION>
Year ended
31st December,
1993
--------------
<S> <C>
US$ millions
OPERATING ACTIVITIES:
Net Income..................................................... 33.1
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Depreciation and amortization of property, plant and equipment. 8.4
Allowance for losses on accounts receivable.................... 3.3
Amortization of other assets................................... 2.3
(Gain )/loss on sale of capital assets......................... (0.01)
Changes in assets and liabilities, net of effects from acquisi-
tion of businesses:
Notes and accounts receivable.................................. (22.6)
Inventories.................................................... 21.8
Prepaid expenses............................................... (7.4)
Other assets................................................... (0.7)
Accounts payable, accrued expenses and other current liabili-
ties.......................................................... 20.8
Taxes on income................................................ (0.4)
Foreign employee severance obligations......................... 0.004
Long-term pensions............................................. 0.7
------------
Net cash provided by operating activities...................... 59.3
INVESTING ACTIVITIES:
Purchase of property, plant and equipment...................... (6.5)
Acquisition of businesses, net of cash acquired, including ad-
ditional contingent cash payments............................. (0.2)
Proceeds from sale of property, plant and equipment............ 0.6
Other, principally marketable securities....................... (0.0008)
------------
Net cash used in investing activities.......................... (6.1)
FINANCING ACTIVITIES:
Cash dividends................................................. (19.6)
Exchanges and purchases of common stock........................ (12.2)
Notes and loans payable........................................ (0.3)
Exercise of stock options...................................... 0.9
Other common stock issuance.................................... 0.3
------------
Net cash used in financing activities.......................... (30.9)
Effect of exchange rate changes on cash and cash equivalents... (2.7)
------------
Increase/(decrease) in cash and cash equivalents............... 19.6
Cash and cash equivalents, beginning of year................... 33.8
------------
Cash and cash equivalents, end of year......................... 53.4
============
</TABLE>
(E) SELECTED NOTES EXTRACTED FROM THE PUBLISHED AUDITED ACCOUNTS OF STANHOME
INC. FOR THE THREE YEARS ENDED 31ST DECEMBER, 1993.
(I) ACCOUNTING POLICIES:
(a) Basis of consolidation
The accompanying consolidated financial statements include the
accounts of Stanhome Inc. and its subsidiaries. All significant
intercompany transactions have been eliminated in the consolidated
financial statements. Certain reclassifications have been made to
the prior years' financial statements to make them comparable to the
1993 presentation.
(b) Cash
The carrying amount of cash and certificates of deposit and notes
and loans payable approximate fair value.
The Company considers all highly liquid securities with maturities
of three months or less, when purchased, to be cash equivalents.
Marketable securities consist primarily of treasury bills and
commercial paper maturing as follows:
<TABLE>
<CAPTION>
1993
------------
US$ millions
<S> <C>
Three months or less.......................................... --
Over three months............................................. 7.4
---
7.4
===
</TABLE>
23
<PAGE>
(c) Direct selling
Sales by certain international direct selling subsidiaries are
transacted at retail prices. However, these sales are reflected in
the consolidated financial statements at equivalent wholesale
selling prices.
(d) Notes and accounts receivable
Notes and accounts receivable were net of allowance for doubtful
accounts of $15.7 million at 31st December, 1993.
(e) Inventories
Inventories are valued at the lower of cost or market. Cost
components include labour, manufacturing overhead and amounts paid
to suppliers of materials. The Company values raw materials and
certain manufactured and purchased items in the United States and
Italy utilising the last-in, first-out method while the first-in,
first-out method is used for substantially all other inventories.
The cost, on a first-in, first-out basis over the carrying amount of
inventories as reflected in the accompanying consolidated balance
sheet was $1.2 million at 31st December, 1993.
The major classes of inventories were as follows:
<TABLE>
<CAPTION>
1993
------------
US$ millions
<S> <C>
Raw materials and supplies.................................... 6.7
Work in process............................................... 0.6
Finished good in transit...................................... 8.8
Finished goods................................................ 78.8
----
94.9
====
</TABLE>
(f) Pre-paid expenses
The Company incurs prepaid advertising expense in connection with
the marketing of certain of its direct response products. Such
expense is amortised over the life of the associated product
programs which is generally less than one year.
(g) Depreciation
Depreciation is provided over the estimated useful lives of the
assets utilising straight-line and declining balance methods. The
methods for financial statement and income tax purposes differ in
some circumstances, resulting in deferred income taxes.
The estimated useful lives of the various classes of assets are:
<TABLE>
<CAPTION>
Class of asset Range in years
-------------- --------------
<S> <C>
Land improvements........................................... 10-15
Buildings and improvements.................................. 15-40
Machinery and equipment..................................... 5-12
Furniture and fixtures...................................... 5-10
Transportation equipment.................................... 3-8
</TABLE>
(h) Amortisation of goodwill
Intangible assets result from the allocation of the excess cost of
acquisitions over net tangible assets acquired. Intangibles were net
of accumulated amortisation of $19.1 million at 31st December, 1993.
Product lines, not resulting from the acquisition of Enesco in 1983
were $18.3 million in 1993 and are being amortised over the shorter
of actual life or 33 years. Other items are being amortised over 5
years. Goodwill is being amortised over 20 to 40 years. Product
lines and other amortisation amounted to $1.0 million for 1993.
Goodwill amortisation was $1.3 million for 1993.
(i) Interest paid
Total Company interest paid was $2.0 million in 1993, $3.4 million
in 1992 and $5.0 million in 1991.
(j) Income from foreign subsidiaries
The Company accrues appropriate US and foreign income taxes on
earnings of subsidiary companies which are intended to be remitted
to the parent company in the near future. The cumulative amount of
unremitted earnings of subsidiaries which has been, or is intended
to be, permanently reinvested, aggregated approximately $16.6 million
at 31st December, 1993. Had such reinvested unremitted earnings been
distributed during 1993, applicable income taxes would have amounted
to approximately $3.6 million representing primarily taxes which
would be withheld by foreign countries.
(k) Earnings per share
Primary earnings per common share are based on the average number of
common shares outstanding and common share equivalents during the
year. Common share equivalents represent dilutive stock options
using the treasury stock method. Fully diluted earnings per common
share assumes, in addition to the above, an additional dilutive
effect of stock options.
24
<PAGE>
The number of shares used in the earnings per common share
computation for 1993, 1992 and 1991 were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
PRIMARY
Average common shares outstanding........ 19,634,230 19,753,290 19,681,026
Stock options............................ 114,621 398,976 613,681
---------- ---------- ----------
Average shares primary................... 19,748,851 20,152,266 20,294,707
FULLY DILUTED
Additional dilutive effect of stock op-
tions................................... 41,729 8,125 60,577
---------- ---------- ----------
Average shares fully diluted............. 19,790,580 20,160,391 20,355,284
</TABLE>
(II) EMPLOYEE BENEFIT PLANS:
The Company and some of its subsidiaries have several employee benefit
plans covering most of their full time US employees. The benefits
under these plans are based primarily on years of service and
compensation rates near retirement. The plans are funded in conformity
with Federal tax and actuarial regulations. The prior year figures for
the domestic plans have been adjusted to include nonqualified
supplemental plans.
Pension expense for the domestic plans includes the following
components:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
US$ millions
<S> <C> <C> <C>
Service cost during the period............................ 1.2 1.6 1.5
Interest cost on the projected benefit obligation......... 2.5 2.3 2.1
Actual return on plan assets.............................. (1.3) (0.9) (1.9)
Net amortization of prior service cost, net transition li-
ability and net loss..................................... 0.05 (0.4) 0.6
---- ---- ----
PENSION EXPENSE........................................... 2.5 2.6 2.3
==== ==== ====
</TABLE>
The following table sets forth the plans' funded status and amounts
recognized in the Company's balance sheet at 31st December, 1993:
<TABLE>
<CAPTION>
1993
------------
US$ millions
<S> <C>
Actuarial present value of benefit obligations:
Vested benefits............................................... 28.6
Nonvested benefits............................................ 1.6
-----
Accumulated benefit obligation................................ 30.2
Additional obligation for future salary increases............. 7.1
-----
Projected benefit obligation.................................. 37.3
-----
Fair value of plan assets, primarily marketable securities.... (22.2)
-----
Unfunded excess of projected benefit obligation over plan as-
sets......................................................... 15.1
Unrecognized net transition asset/(liability), being recog-
nized over 15 years.......................................... (1.2)
Unrecognized prior service costs.............................. 0.2
Unrecognized net gain/loss.................................... (4.8)
-----
PENSION LIABILITY RECOGNIZED IN THE BALANCE SHEET............. 9.3
=====
</TABLE>
The weighted average discount rate used to measure the projected
benefit obligation ranges from 5% to 8%, the rate of increase in
future compensation levels ranges from 5% to 7% and the expected long-
term rate of return on assets is 8%.
Certain foreign subsidiaries are required to pay a severance allowance
to eligible employees upon voluntary or involuntary separation.
Provision is made annually for all eligible employees. Generally, such
payments are based upon years of service and level of compensation.
Severance expense for the combined foreign subsidiary severance
allowance programs includes the following components:
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
US$ millions
<S> <C> <C> <C>
Service cost during the period...................... 1.6 1.9 1.8
Interest cost on the projected benefit obligation... 1.7 1.8 1.8
Actual return on plan assets........................ (0.03) (0.05) (0.04)
Net amortization of prior service cost, net transi-
tion liability and net loss........................ 0.3 0.1 0.1
------ ------ ------
SEVERANCE EXPENSE................................... 3.6 3.8 3.7
====== ====== ======
</TABLE>
25
<PAGE>
The following table sets forth the programs' funded status and amounts
recognized in the subsidiaries' balance sheets at 31st December, 1993:
<TABLE>
<CAPTION>
1993
------------
US$ millions
<S> <C>
Actuarial present value of benefit obligations:
Vested benefits...................................................... 9.6
Nonvested benefits................................................... 1.9
----
Accumulated benefit obligation....................................... 11.5
Additional obligation for future salary increases.................... 7.3
----
PROJECTED BENEFIT OBLIGATION......................................... 18.8
----
Fair value of plan assets,........................................... (0.2)
----
Unfunded excess of projected benefit obligation over plan assets..... 18.6
Unrecognized net transition asset/(liability), being recognized
over 17 years....................................................... (1.1)
Unrecognized net gain/loss........................................... (4.5)
----
SEVERANCE LIABILITY RECOGNIZED IN THE BALANCE SHEET.................. 13.0
====
</TABLE>
The discount rates used to measure the projected benefit obligation
range from 8% to 13.5%, the rate of increase in future compensation
levels ranges from 5.5% to 11.5% and funding is not significant.
In addition to providing pension benefits, the Stanhome Group sponsors
a single-employer defined benefit post retirement health care and life
insurance plan. Substantially all of the US direct selling and
corporate employees may become eligible for the benefits under this
plan if they reach allowable retirement age while working for the
Company or its subsidiaries. Those benefits are provided principally
through insurance companies whose premiums are based on the
anticipated benefits to be paid. The total costs for such retired
employee benefits were principally accrued during their active
employment.
Effective January 1993, the Company adopted Statement No. 106 of the
Financial Accounting Standards Board and formalized its funding policy
for the plan. Under that policy, the Company pays premiums to
insurance companies who provide the post retirement benefits. The
effect of adopting the statement in 1993 was not material to the
Company.
Net periodic post retirement benefit expense for 1993 includes the
following components (in thousands):
<TABLE>
<CAPTION>
1993
--------
US$ '000
<S> <C>
Service cost......................................................... 310
Interest cost on accumulated post retirement benefit obligation...... 180
Actual return on plan assets......................................... --
Amortization of net transition liability............................. --
Net amortization and deferral........................................ --
--------
NET PERIODIC POST RETIREMENT BENEFIT EXPENSE......................... 490
</TABLE>
The following table sets forth the funded status of the plan
reconciled with the amount shown in the Company's balance sheet at
31st December, 1993 (in thousands):
<TABLE>
<CAPTION>
1993
--------
US$ '000
<S> <C>
Accumulated post retirement benefit obligation:
Retirees............................................................. 1,762
Fully eligible active plan participants.............................. 933
Other active plan participants....................................... 2,657
--------
5,352
Plan assets at fair value............................................ --
--------
Accumulated post retirement benefit obligation in excess of plan
assets.............................................................. 5,352
Unrecognized net gain/(loss) from differences between past experience
and that assumed.................................................... --
Unrecognized prior service cost...................................... --
Unrecognized net transition asset/(liability)........................ --
--------
ACCRUED POST RETIREMENT BENEFIT LIABILITY RECOGNIZED IN THE BALANCE
SHEET............................................................... 5,352
</TABLE>
A 25% annual rate of increase in the per capita cost of covered health
care benefits was assumed for 1994. The cost trend rate was assumed to
decrease gradually but still remain at double digit rates until 2020.
After 2020, the rate was assumed to drop to and stabilize at 8%.
Increasing the assumed health care expense trend rates by one
percentage point in each year would increase the accumulated post
retirement benefit obligation as of 31st December, 1993 by $500,000
and the aggregate of the service and interest cost components of the
net post retirement benefit expense for the year then ended by
$150,000.
The weighted-average discount rate used in determining the accumulated
post retirement benefit obligation was 6%.
In addition, provisions have been made for unfunded anticipated
retirement benefits for certain Officers. Also, certain subsidiaries
have established funded profit sharing and defined contribution
retirement plans. Total consolidated pension, severance allowance,
profit sharing and retirement plan expense amounted to $9,561,000 in
1993, $9,614,000 in 1992 and $8,579,000 in 1991.
26
<PAGE>
(III) SHAREHOLDERS' EQUITY:
In 1988, the Company's Board of Directors adopted a Stockholder Rights
Plan in which common stock purchase rights were distributed to
shareholders at the rate of one right for each share of common stock
creating common stock together with the associated common stock
purchase rights ("common stock"). The rights are exercisable at $85
per share and will expire on 19th September, 1998.
In 1991, the shareholders approved a new Stock Option Plan previously
adopted by the Board of Directors which provides for both incentive
and nonqualified stock options. Options for up to 2,000,000 shares of
common stock may be granted under the 1991 Plan. The plan provides
that nonqualified options for 1,500 shares of common stock be granted
annually from 1991 through 1995 to each non-employee Director then
serving. The Company also has a 1984 Stock Option Plan, which provides
for both incentive and nonqualified stock options, under which options
for up to 3,000,000 shares of common stock may be granted. Both plans
provide for the granting to selected key employees, and non-employee
Directors in the case of the 1991 Plan, of options to acquire shares
of such stock at a price not less than their fair market value at the
time of grant. Other option terms are determined at the time of grant,
but normally options are exercisable only after a one year waiting
period in four equal annual instalments, and expire ten years from the
date of grant.
In 1993, the Board of Directors approved a Special Interim Chief
Executive Officer Stock Option Plan which provided for a special one-
time grant of nonqualified stock options to the Company's Interim
Chief Executive Officer in lieu of cash compensation. These options
vested fully in increments of 10,000 during each month in which he
served in that capacity, are exercisable six months after the date of
grant, and expire ten years from the date of grant.
Stock option activity under all plans is summarised as follows:
<TABLE>
<CAPTION>
Number of
Shares Option Price
--------- ------------
<S> <C> <C>
OUTSTANDING AT 31ST DECEMBER, 1990.................. 1,698,719 $4.47--30.88
Granted............................................. 19,500 33.62--41.12
Exercised........................................... (301,229) 4.97--27.13
Cancelled........................................... (35,230) 11.13--27.13
OUTSTANDING AT 31ST DECEMBER, 1991.................. 1,381,760 $4.47--41.12
Granted............................................. 378,000 33.75--33.88
Exercised........................................... (245,583) 4.47--28.50
Cancelled........................................... (114,700) 20.13--33.75
OUTSTANDING AT 31ST DECEMBER, 1992.................. 1,399,477 $4.97--41.12
Granted............................................. 499,200 26.88--33.25
Exercised........................................... (50,713) 4.97--27.13
Cancelled........................................... (97,350) 26.88--33.88
OUTSTANDING AT 31ST DECEMBER, 1993.................. 1,750,614 $8.94--41.12
</TABLE>
At 31st December, 1993, there were 968,474 options vested and
exercisable and 1,442,425 shares available for future grants.
An analysis of treasury stock transactions for the three years ended
31st December, 1991, 1992 and 1993 is as follows:
<TABLE>
<CAPTION>
Common
Shares Cost
--------- ------
US$ millions
<S> <C> <C>
BALANCE, 31ST DECEMBER, 1990.............................. 5,678,082 72.4
Purchases................................................. -- --
Stock option exchanges.................................... 66,964 2.3
Exercise of stock options................................. (301,229) (0.9)
Issue of PAYSOP shares.................................... (3,407) (0.01)
Investment Savings Plan--401(k) issues.................... (2,964) (0.009)
BALANCE, 31ST DECEMBER, 1991.............................. 5,437,446 73.8
Purchases................................................. 163,200 5.3
Stock option exchanges.................................... 107,998 3.8
Exercise of stock options................................. (245,583) (0.8)
Issue of PAYSOP shares.................................... (5,596) (0.02)
Investment Savings Plan--401(k) issues.................... (3,041) (0.01)
BALANCE, 31ST DECEMBER, 1992.............................. 5,454,424 82.1
Purchases................................................. 435,800 12.0
Stock option exchanges.................................... 7,336 0.2
Exercise of stock options................................. (50,713) (0.2)
Issue of PAYSOP shares.................................... (5,790) (0.02)
Investment Savings Plan--401(k) issues.................... (4,440) (0.02)
BALANCE, 31ST DECEMBER, 1993.............................. 5,836,617 94.1
</TABLE>
In 1985, the Company approved a Payroll-Based Stock Ownership Plan
("PAYSOP") which provides common stock to eligible employees and
allows the Company a Federal income tax deduction equal to the market
value of the issued stock. In 1987, the Company introduced an
Investment Savings Plan in accordance with Section 401(k) of the
Internal Revenue Code. One of the features of this retirement savings
plan provides common stock to eligible employees and allows the
Company a Federal income tax deduction equal to the market value of
the issued stock.
The change in capital in excess of par value resulted from the
exercise of stock options, including the related income tax benefit
($0.7 million, $5.0 million and $4.7 million in 1993, 1992 and 1991,
respectively), issuance of PAYSOP shares ($0.2 million, $0.2 million
and $0.1 million in 1993, 1992 and 1991, respectively) and issuance of
401(k) Plan shares ($0.1 million, $0.1 million and $0.1 million in
1993, 1992 and 1991, respectively) noted above.
27
<PAGE>
An analysis of the change in shareholders' equity from the cumulative
translation adjustment component for the years ended 31st December,
1993, 1992 and 1991 is as follows:
<TABLE>
<CAPTION>
Cumulative
Translation
Adjustments
------------
US$ millions
<S> <C>
BALANCE, 31ST DECEMBER, 1990.................................... 12.6
Adjustment for 1991............................................. 0.8
----
BALANCE, 31ST DECEMBER, 1991.................................... 13.4
Adjustment for 1992............................................. 8.9
----
BALANCE, 31ST DECEMBER, 1992.................................... 22.3
Adjustment for 1993............................................. 5.1
----
BALANCE, 31ST DECEMBER, 1993.................................... 27.4
----
</TABLE>
(IV) OTHER INCOME, NET
Other income, net consists of the following:
<TABLE>
<CAPTION>
1993 1992 1991
----- ---- -----
US$ millions
<S> <C> <C> <C>
Investment income........................................ 4.2 6.7 8.2
Gains/(losses) on the sale of capital assets, net........ (0.01) 1.3 (0.03)
Exchange transaction/translation gains, net.............. 0.6 0.7 0.5
Other assets amortization................................ (2.3) (2.2) (2.0)
Other items, net......................................... 0.04 0.4 0.3
----- ---- -----
OTHER INCOME............................................. 2.5 6.9 7.0
===== ==== =====
</TABLE>
(V) GEOGRAPHICAL AND PRODUCT ANALYSIS
The Company operates predominantly in two major geographic areas and
three business segments. The direct selling segment is engaged in the
manufacture, sale and distribution of household cleaning, personal
grooming and related products. The giftware segment imports and
distributes creatively designed giftware and collectibles to a diverse
group of retailers. The direct response segment markets collectibles
and giftware to consumers and retailers.
Transfers between geographic areas and segments are made at the market
value of the merchandise transferred. The eliminations in the
identifiable assets are for intercompany receivables and profit in
inventory. Corporate assets have consisted principally of certificates
of deposit, time deposits, marketable securities and corporate
receivables.
The following tables summarise the Company's operations by geographic
area and business segment for 1991, 1992 and 1993:
<TABLE>
<CAPTION>
1993 1992 1991
----- ----- -----
US$ millions
<S> <C> <C> <C>
GEOGRAPHIC AREA
Net Sales
United States........................................... 480.3 427.7 388.7
Europe.................................................. 205.3 250.9 245.2
Other International and Eliminations.................... 65.1 65.5 76.4
----- ----- -----
TOTAL CONSOLIDATED...................................... 750.7 744.1 710.3
===== ===== =====
Operating Profit (a)
United States........................................... 50.9 54.8 47.6
Europe.................................................. 17.8 32.7 32.8
Other International and Eliminations.................... 4.5 3.7 5.8
----- ----- -----
Operating profit before corporate expense............... 73.2 91.2 86.2
General corporate expense............................... (7.6) (7.7) (7.1)
----- ----- -----
TOTAL CONSOLIDATED...................................... 65.6 83.5 79.1
===== ===== =====
IDENTIFIABLE ASSETS
United States........................................... 298.0 276.0 247.7
Europe.................................................. 81.6 108.8 132.0
Other International and Eliminations.................... 18.8 24.3 33.5
----- ----- -----
Identifiable assets..................................... 398.4 409.1 413.2
Corporate assets........................................ 31.3 6.5 6.1
----- ----- -----
TOTAL CONSOLIDATED...................................... 429.7 415.6 419.3
===== ===== =====
</TABLE>
(a) Operating profit for 1993 includes restructuring charges of $10,110,000
for the United States, $5,140,000 for Europe and $1,750,000 for other
international locations
28
<PAGE>
<TABLE>
<CAPTION>
1993 1992 1991
------ ----- -----
US$ millions
<S> <C> <C> <C>
PRODUCT AREA
Net Sales
Giftware............................................... 367.5 349.3 329.5
Direct Response........................................ 129.4 95.5 79.4
Direct Selling......................................... 255.1 300.1 301.4
Elimination............................................ (1.4) (0.8) (0.1)
------ ----- -----
TOTAL CONSOLIDATED..................................... 750.6 744.1 710.2
====== ===== =====
Operating Profit(a)
Giftware............................................... 52.6 52.1 48.7
Direct Response........................................ 10.4 7.3 6.1
Direct Selling......................................... 10.2 31.7 31.4
------ ----- -----
Operating profit before corporate expense.............. 73.2 91.1 86.2
General corporate expense.............................. (7.6) (7.7) (7.1)
------ ----- -----
TOTAL CONSOLIDATED..................................... 565.6 83.4 79.1
====== ===== =====
Depreciation and Amortisation
Giftware............................................... 5.3 5.2 4.5
Direct Response........................................ 1.4 1.1 0.9
Direct Selling......................................... 3.8 4.0 4.4
------ ----- -----
Depreciation and Amortisation.......................... 10.5 10.3 9.8
Corporate Depreciation and Amortisation................ 0.3 0.2 0.2
------ ----- -----
TOTAL CONSOLIDATED..................................... 10.8 10.5 10.0
====== ===== =====
Capital Expenditures
Giftware............................................... 2.3 2.5 3.5
Direct Response........................................ 1.1 0.9 0.9
Direct Selling......................................... 2.8 3.2 3.4
------ ----- -----
Capital Expenditures................................... 6.2 6.6 7.8
Corporate Capital Expenditures......................... 0.3 0.3 0.09
------ ----- -----
TOTAL CONSOLIDATED..................................... 6.5 6.9 7.9
====== ===== =====
Identifiable Assets
Giftware............................................... 346.3 315.1 301.3
Direct Response........................................ 90.9 69.2 55.9
Direct Selling......................................... 91.2 119.6 150.1
Eliminations........................................... (130.0) (94.8) (94.1)
------ ----- -----
Identifiable Assets.................................... 398.4 409.1 413.2
Corporate Assets....................................... 31.3 6.5 6.1
------ ----- -----
TOTAL CONSOLIDATED..................................... 429.7 415.6 419.3
====== ===== =====
</TABLE>
(a) Operating profit for 1993 includes restructuring charges of $4,000,000
for Giftware, $13,000,000 for Direct Selling
(VI) INCOME TAXES
Effective January 1993, the Company adopted Statement No. 109 of the
Financial Accounting Standards Board. Prior year financial statements
have not been restated for the effect of this statement. The effect of
adopting the statement in 1993 on income before income taxes was not
material.
<TABLE>
<CAPTION>
Deferred Tax
Benefit
(Liability) 1993
----------------
US$ millions
<S> <C>
UNITED STATES
FEDERAL
Prepaid advertising....................................... (9.7)
Acquisition step-up amortization adjustment............... (4.2)
Accelerated depreciation.................................. (1.5)
Inventory reserve......................................... 4.2
Deferred compensation..................................... 2.8
Bad debt reserve.......................................... 1.9
Retirement insurance...................................... 1.7
Returns and allowances reserve............................ 1.0
Other items, net.......................................... 2.0
------------
(1.8)
------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Deferred Tax
Benefit
(Liability) 1993
----------------
US$ millions
<S> <C>
STATE
Prepaid advertising........................................ (1.8)
Acquisition step-up amortization adjustment................ (.9)
Accelerated depreciation................................... (.3)
Inventory reserve.......................................... .9
Deferred compensation...................................... .6
Bad debt reserve........................................... .4
Retirement insurance....................................... .4
Returns and allowances reserve............................. .2
Other items, net........................................... .5
----
0.0
----
FOREIGN
Accelerated depreciation................................... (2.7)
Other items, net........................................... 1.0
----
(1.7)
----
TOTAL...................................................... (3.5)
====
</TABLE>
The domestic and foreign components of income before income taxes are
as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
US$ millions
<S> <C> <C> <C>
Domestic...................................................... 46.2 55.4 44.4
Foreign....................................................... 19.9 31.6 36.8
---- ---- ----
66.1 87.0 81.2
==== ==== ====
</TABLE>
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
US$ millions
<S> <C> <C> <C>
CURRENTLY PAYABLE:
United States Federal......................................... 15.7 15.3 14.7
United States State........................................... 4.6 4.1 3.8
Foreign....................................................... 13.5 21.0 18.9
---- ---- ----
TOTAL CURRENTLY PAYABLE....................................... 33.8 40.4 37.4
==== ==== ====
</TABLE>
<TABLE>
<S> <C> <C> <C>
DEFERRED:
United States Federal................................... 0.3 1.0 (1.7)
United States State..................................... (0.009) 0.1 (0.1)
Foreign................................................. (1.0) (1.2) 0.5
------- ---- ----
TOTAL DEFERRED.......................................... (0.7) (0.1) (1.3)
------- ---- ----
33.1 40.3 36.1
======= ==== ====
</TABLE>
A reconciliation of the total effective tax rate to the statutory
Federal income tax rate is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Statutory income tax rate................................. 35.0% 34.0% 34.0%
State taxes, net of Federal income tax effect............. 5.0 3.2 3.0
Impact of foreign tax rates and credits................... 4.4 5.6 5.2
Restructuring impact...................................... 3.6 -- --
Foreign subsidiaries in loss position receiving little or
no tax benefit........................................... 1.1 1.9 0.9
Impact of non-deductible expenses......................... 1.0 1.7 1.5
Other items, net.......................................... (0.2) (0.1) (0.2)
TOTAL EFFECTIVE INCOME TAX RATE........................... 49.9% 46.3% 44.4%
</TABLE>
The Company made income tax payments of $33.4 million in 1993, $41.6
million in 1992 and $37.5 million in 1991.
(VII) COMMITMENTS AND CONTINGENCIES
(a) Rentals
The Company and its subsidiaries incurred rental expense under
operating leases of $6.0 million in 1993, $7.6 million in 1992 and
$7.3 million in 1991.
30
<PAGE>
The minimum rental commitments under non-cancellable operating
leases as of 31st December, 1993 are as follows:
<TABLE>
<CAPTION>
Aggregate Amount
----------------
US$ millions
<S> <C>
1994..................................................... 6.2
1995..................................................... 4.4
1996..................................................... 3.6
1997..................................................... 2.6
1998..................................................... 2.5
Later years.............................................. 4.2
----
TOTAL MINIMUM FUTURE RENTALS............................. 23.5
====
</TABLE>
(b) Royalties
The Company and its subsidiaries have entered into various licensing
agreements requiring royalty payments ranging from 0.5% to 15.5% of
specified product sales. Royalty payments under these licensing
agreements totalled $28.1 million in 1993, $23.9 million in 1992 and
$21.3 million in 1991. Pursuant to the various licensing agreements,
the future minimum guaranteed royalty payments due as of 31st
December, 1993 were $13.9 million in 1994, $12.4 million in 1995 and
$12.0 million in 1996.
(c) Lines of Credit
At 31st December, 1993 the Company had formal and informal unused
lines of credit of approximately $100.0 million.
(d) FOREX Hedging
The Company enters into foreign exchange contracts as a hedge
against receivables from international subsidiaries. Market value
gains and losses are recognised and the resulting credit or debit
offsets foreign exchange gains or losses on those receivables. At
31st December, 1993 the Company had approximately $22.0 million
(notional amount) of foreign exchange hedge contracts outstanding.
(e) Legal Proceedings
There are various legal proceedings pending against the Company and
its subsidiaries which have arisen during the normal course of
business. Management does not believe that the ultimate outcome of
those legal proceedings will have a material adverse impact upon the
consolidated financial condition of the Company.
4. RECENT RESTRUCTURING
In the second quarter of 1993, the Company incurred a restructuring charge of
$17 million pre-tax, $11.5 million after tax, or $0.58 per share. The
restructuring program takes advantage of consolidation opportunities
principally in the distribution and administrative functions within the
Company to achieve future operating efficiencies and savings. It is expected
to include a reduction of approximately 10% of the Company's worldwide work
force of 4,500. The program is expected to be virtually completed by the end
of 1994. When completed, future annual cost savings are expected to be
approximately $11 million pre-tax, $7 million after tax, or $0.35 per share.
Part of the savings generated by the program will be used to build the
Company's profitability, as well as enhance the Company's flexibility to
capitalise on attractive growth opportunities. The charge includes $9.7
million for severance, $4.8 million for facilities closing and moving, $1.7
million write down of current assets, and $0.8 million write down of net fixed
assets.
5. SECOND-QUARTER RESULTS
Set out below are extracts from the text of the unaudited statement of second-
quarter results for Stanhome Inc. for the three months ended 30th June, 1994.
CHAIRMAN'S STATEMENT
"Stanhome is building momentum to achieve long-term profitable growth
and, in turn, enhanced shareholder value. Over a year ago, we
commenced a program to increase our Company's operating efficiencies
to achieve important cost savings, and to allocate our resources more
effectively. The effect of this effort is being realized in our
enhanced financial performance. Stanhome is now positioned to take
advantage of increasing growth opportunities on a global basis.
Stanhome's successful second quarter, ended June 30, 1994, reflects
the more efficient cost structure the Company is putting in place, and
a particularly strong record performance by Enesco, the Company's
Worldwide Giftware operation. Stanhome achieved operating profit of
$20,834,000 and net income of $11,608,000 or $.59 per share fully
diluted, on revenues of $188,592,000. This represents a strong
turnaround from the 1993 second quarter ended June 30, when, inclusive
of a $17,000,000 pre-tax restructuring charge for the implementation
of a two year cost savings program, Stanhome incurred a net loss of
$1,223,000, or $.06 per share, on revenues of $187,236,000. The
restructuring charge amounted to $11,500,000 after tax, or $.58 per
share. Operating profit for the 1993 second quarter, exclusive of the
restructuring charge, was $18,719,000.
Both our Worldwide Giftware and Worldwide Direct Response operations
had record revenue and earnings performances for the second quarter.
Our Worldwide Direct Selling operation, even with a lower sales base
than a year ago, produced increased profits and was consistent with
management's expectations.
31
<PAGE>
Worldwide Giftware's record performance reflected a firming of the US
retail marketplace, with strong demand for its Precious Moments and
Cherished Teddies collectible product lines. The success of Enesco
Giftware demonstrates the Group's expertise with respect to
identifying consumer preferences, product design and sourcing. Sound
management of inventories, consistent with demand, also contributed to
the Group's profitability.
Worldwide Direct Response's performance was achieved against an
exceptionally strong 1993 second quarter. In 1993, the Hamilton Group
experienced a sizable increase in volume relating to expanded shipment
of products to consumers on credit, and to expanded use of Enesco
product lines. Hamilton is proceeding with its strategy of broadening
its product offerings.
Worldwide Direct Selling's enhanced profitability on lower revenues is
testimony to the cost efficiencies now being realized in that
operation. Lower sales in the US, due in part to the economy and in
part to cost efficiencies, combined with the sluggish business
environment in Europe and unfavourable foreign currency exchange
rates, were primarily responsible for the Group's lower revenues.
Stanhome's enhanced profitability is indicative of how we are
positioning the Company for profitable growth long-term as a worldwide
marketing and distribution enterprise. Each of Stanhome's three
businesses--Worldwide Giftware, Worldwide Direct Response and
Worldwide Direct Selling--has a strong presence in its respective
market. Each has attractive potential to grow globally. With the
appropriate cost structures in place, we are achieving greater
operating efficiencies and, in turn, greater profit margin potential
which should result in building Stanhome's inherent value to you, the
shareholder.
The Company is continuing to purchase its stock under the repurchase
program authorized by the Board of Directors; 1,149,000 shares remain
to be purchased in this approved program following the purchase of
252,000 shares during the second quarter."
<TABLE>
<CAPTION>
Second quarter ended 30th June,
--------------------------------------
Percent
1994 1993 Change
----------- ----------- ------------
US$ millions
<S> <C> <C> <C>
Net Sales
Worldwide Giftware.................. 91.0 82.3 11%
Worldwide Direct Response........... 32.8 31.4 4
Worldwide Direct Selling............ 65.7 74.2 (11)
Eliminations........................ (0.9) (0.7)
----------- ----------- --------
TOTAL NET SALES..................... 188.6 187.2 1
Cost of Sales....................... 74.5 72.9 2
----------- ----------- --------
Gross profit........................ 114.1 114.3 --
Selling, general and administrative
expense............................ 93.3 112.6 (17)
----------- ----------- --------
Operating profit
Worldwide Giftware.................. 12.9 10.9 19
Worldwide Direct Response........... 2.3 2.2 1
Worldwide Direct Selling............ 8.0 7.6 5
Corporate........................... (2.3) (2.0) (14)
----------- ----------- --------
20.9 18.7 11
Restructuring....................... -- (17.0)
----------- ----------- --------
TOTAL OPERATING PROFIT ............. 20.9 1.7
Net interest income................. 1.0 0.8
Sale of idle assets................. 0.03 --
Other assets amortization........... (0.6) (0.6)
Net other items..................... 0.02 0.2
----------- -----------
TOTAL OTHER INCOME.................. 0.4 0.4
Income before taxes................. 21.2 2.1 892
Income taxes........................ 9.6 3.4
----------- -----------
NET INCOME.......................... 11.6 (1.2)
=========== ===========
Effective tax rate.................. 45% 157%
Earnings per share.................. $ .59 $ .06
Average shares fully diluted........ 19,688 19,909
Dividends paid or provided for...... $ 4.8 $ 4.9 (2)
Dividends per share................. 0.25 0.25
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
First six months ended 30th June,
-----------------------------------------
Percent
1994 1993 Change
------------ ------------ -------------
US$ millions
<S> <C> <C> <C>
Net Sales
Worldwide Giftware................ 177.8 158.8 12%
Worldwide Direct Response......... 58.9 55.0 7
Worldwide Direct Selling.......... 125.1 138.7 (10)
Eliminations...................... (1.4) (0.8)
------------ ------------ --------
Total net sales................... 360.4 351.7 2
COST OF SALES..................... 144.3 138.1 5
------------ ------------
Gross profit...................... 216.1 213.7 1
Selling, general and administra-
tive expense..................... 180.3 200.1 (10)
------------ ------------
Operating profit
Worldwide Giftware................ 23.2 18.7 24
Worldwide Direct Response......... 3.8 3.6 6
Worldwide Direct Selling.......... 13.3 12.1 10
Corporate......................... (4.5) (3.8) (17)
------------ ------------ --------
35.8 30.6 17
Restructuring..................... -- (17.0)
------------ ------------
TOTAL OPERATING PROFIT............ 35.8 13.6 163
Net interest income............... 1.7 1.5
Sale of idle assets............... 0.5 0.001
Other assets amortization......... (1.2) (1.1)
Net other items................... (0.04) 0.3
------------ ------------
TOTAL OTHER INCOME................ 0.9 0.7
Income before taxes............... 36.7 14.3 157
Income taxes...................... 17.0 9.2
------------ ------------
NET INCOME........................ 19.7 5.0 291
============ ============
Effective tax rate................ 46% 65%
Earnings per share................ $ 1.00 $ .25 300
Average shares fully diluted...... 19,691 19,919 --
Dividends paid or provided for.... $ 9.7 $ 9.9 (2)
Dividends per share............... 0.50 0.50
</TABLE>
<TABLE>
<CAPTION>
30th June
-----------
1994 1993
----- -----
US$ millions
<S> <C> <C>
ASSETS
Cash and marketable securities.................................. 57.7 50.0
Receivables..................................................... 128.4 115.9
Inventories..................................................... 96.7 112.8
Prepaid expenses................................................ 47.7 42.3
----- -----
TOTAL CURRENT ASSETS............................................ 330.5 321.0
Property, plant and equipment, net.............................. 44.4 46.4
Other assets.................................................... 69.9 66.2
----- -----
444.8 433.6
===== =====
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and loans payable......................................... $ 0.8 $ 3.3
Accounts payable................................................ 56.5 63.1
Federal, state and foreign taxes on income...................... 30.6 22.8
Accrued expenses................................................ 74.4 75.4
----- -----
TOTAL CURRENT LIABILITIES....................................... 162.3 164.6
Foreign employee severance obligations.......................... 13.6 14.3
Pensions........................................................ 7.9 7.1
----- -----
TOTAL LONG-TERM LIABILITIES..................................... 21.5 21.4
SHAREHOLDERS' EQUITY............................................ 260.8 247.4
----- -----
444.6 433.4
===== =====
</TABLE>
6. MATERIAL CHANGES
Save as disclosed in this Appendix II there have been no material changes in
the financial or trading position of Stanhome Inc. since 31st December, 1993,
the date to which the latest published audited accounts were made up.
33
<PAGE>
APPENDIX III
FINANCIAL AND OTHER INFORMATION ON STANHOME
1. INCORPORATION AND REGISTERED OFFICE
Stanhome was incorporated in England and Wales on 16th June, 1994 under the
Companies Act 1985 as a public company. The registered office of Stanhome is
Broadwalk House, 5 Appold Street, London EC2A 2HA.
2. DIRECTORS
The directors of Stanhome are G. William Seawright and Allan G. Keirstead.
3. SHARE CAPITAL
The authorised share capital of Stanhome is (Pounds)100,000 divided into
100,000 ordinary shares of (Pounds)1 each, 50,000 of which are issued and
quarter paid up. All the shares are beneficially owned by Stanhome Inc.
4. BALANCE SHEET
Set out below is the balance sheet of Stanhome as at 31st August, 1994.
<TABLE>
<S> <C>
CURRENT ASSETS
Cash at bank.................................................... (Pounds)12,500
--------------
Net assets...................................................... (Pounds)12,500
==============
SHARE CAPITAL
Called up share capital......................................... (Pounds)12,500
==============
</TABLE>
Notes:
(i) Stanhome has not traded since incorporation (save for the purchase of
3,145,331 Lilliput Shares on 1st September, 1994).
(ii) No directors received remuneration from Stanhome for the period.
(iii) The auditors received no remuneration for the period.
5. ACCOUNTS
The financial information contained in paragraph 4 of this Appendix III does
not comprise statutory accounts of Stanhome within the meaning of Section 240
of the Companies Act 1985.
34
<PAGE>
APPENDIX IV
FINANCIAL AND OTHER INFORMATION ON LILLIPUT
1. FINANCIAL STATEMENTS
(A) CONSOLIDATED PROFIT AND LOSS ACCOUNTS
A summary of the consolidated profit and loss account of Lilliput for the
three financial periods ended 31st December, 1993, extracted from Lilliput's
published audited accounts, is set out below:
<TABLE>
<CAPTION>
Years ended 66 weeks ended
31st December, 5th January,
1993 1992 1992
------------ ------------ --------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
TURNOVER........................... 16,506 13,581 15,162
Cost of Sales...................... (8,117) (6,960) (9,003)
------ ------ ------
Gross Profit....................... 8,389 6,621 6,159
Distribution costs................. (2,940) (2,576) (2,452)
Administrative expenses............ (2,398) (1,916) (2,280)
------ ------ ------
(5,338) (4,492) (4,732)
------ ------ ------
OPERATING PROFIT................... 3,051 2,129 1,427
------ ------ ------
Interest receivable................ 95 24 23
Interest payable................... (71) (145) (528)
------ ------ ------
24 (121) (505)
------ ------ ------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION................... 3,075 2,008 922
Tax on profit on ordinary activi-
ties.............................. (1,094) (630) (284)
------ ------ ------
PROFIT ON ORDINARY ACTIVITIES AFTER
TAXATION.......................... 1,981 1,378 638
Preference dividends............... (156) (115) (29)
------ ------ ------
PROFIT ATTRIBUTABLE TO EQUITY
SHAREHOLDERS...................... 1,825 1,263 609
Ordinary dividends................. (413) (203) (73)
------ ------ ------
RETAINED PROFIT FOR THE YEAR....... 1,412 1,060 536
====== ====== ======
EARNINGS PER ORDINARY SHARE........ 9.5p 6.7p 3.2p
</TABLE>
(B) STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
The statement of recognised gains and losses of Lilliput for the year ended
31st December, 1993, extracted from Lilliput's published audited accounts is
set out below:
<TABLE>
<CAPTION>
31st December,
1993
--------------
(Pounds)'000
<S> <C>
Profit on ordinary activities after taxation.................... 1,981
Exchange difference on retranslation of net assets of subsidiary
undertaking.................................................... 13
-----
TOTAL RECOGNISED GAINS AND LOSSES RELATING TO THE YEAR.......... 1,994
=====
</TABLE>
Reconciliation of shareholders' funds:
<TABLE>
<CAPTION>
31ST DECEMBER,
1993
--------------
(Pounds)'000
<S> <C>
Total recognised gains and losses............................... 1,994
Dividends....................................................... (569)
Other movements:
New shares issued.............................................. 3,082
Share issue costs.............................................. (603)
Shares redeemed................................................ (1,519)
------
2,385
Shareholders' funds at 4th January, 1993........................ 2,339
------
SHAREHOLDERS' FUNDS AT 31ST DECEMBER, 1993...................... 4,724
======
</TABLE>
35
<PAGE>
(C) CONSOLIDATED BALANCE SHEET
The consolidated balance sheet of Lilliput as at 31st December, 1993,
extracted from Lilliput's published audited accounts as at that date, is set
out below:
<TABLE>
<CAPTION>
31ST DECEMBER,
1993
--------------
(Pounds)'000
<S> <C>
FIXED ASSETS
Tangible assets............................................. 1,801
CURRENT ASSETS
Stocks...................................................... 858
Debtors..................................................... 2,145
Cash at bank and in hand.................................... 4,021
-----
TOTAL CURRENT ASSETS........................................ 7,024
CREDITORS: amounts falling due within one year.............. 3,439
-----
NET CURRENT ASSETS.......................................... 3,585
-----
TOTAL ASSETS LESS CURRENT LIABILITIES....................... 5,386
CREDITORS: amounts falling due after more than one year..... (641)
Provision for liabilities and charges....................... (21)
-----
4,724
=====
CAPITAL AND RESERVES
Called up share capital..................................... 1,163
Share premium account....................................... 2,286
Profit and loss account..................................... 1,275
-----
4,724
=====
</TABLE>
(D) CONSOLIDATED STATEMENT OF CASHFLOWS
The consolidated statement of cashflows of Lilliput for the year ended 31st
December, 1993, extracted from Lilliput's published audited accounts, is set
out below:
<TABLE>
<CAPTION>
YEAR ENDED
31ST DECEMBER,
1993
--------------
(Pounds)'000
<S> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES.................. 3,383
RETURNS ON INVESTMENT AND SERVICING OF FINANCE
Interest received.......................................... 95
Interest paid.............................................. (71)
Dividends paid............................................. (631)
------
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING
OF FINANCE................................................ (607)
------
TAXATION
Corporation tax paid....................................... (612)
INVESTING ACTIVITIES
Payments to acquire tangible fixed assets.................. (319)
Receipts from sales of tangible fixed assets............... 23
------
NET CASH OUTFLOW FROM INVESTING ACTIVITIES................. (296)
------
NET CASH INFLOW BEFORE FINANCING........................... 1,868
======
FINANCING
Issue of ordinary share capital............................ (3,082)
Redemption of share capital................................ 1,519
Share issue costs.......................................... 603
Repayment of long term loans............................... 1
Repayments of capital element of finance lease rentals..... 51
------
NET CASH INFLOW FROM FINANCING............................. (908)
INCREASE IN CASH AND CASH EQUIVALENTS...................... 2,776
------
1,868
======
</TABLE>
(E) SELECTED NOTES EXTRACTED FROM LILLIPUT'S PUBLISHED AUDITED ACCOUNTS FOR
THE THREE FINANCIAL PERIODS ENDED 31ST DECEMBER, 1993.
(I) ACCOUNTING POLICIES
(a) Basis of preparation
The accounts are prepared under the historical cost convention and
in accordance with applicable accounting standards.
36
<PAGE>
(b) Basis of consolidation
The group accounts consolidate the accounts of Lilliput and all its
subsidiary undertakings drawn up to 31 December each year. The 1992
accounts were drawn up to 3rd January, 1993. No profit and loss
account is presented for Lilliput as provided by Section 230 of the
Companies Act 1985.
(c) Research and development
Research and development expenditure is written off as it is
incurred.
(d) Depreciation
Depreciation is provided on all tangible fixed assets, other than
freehold land, at rates calculated to write off the cost or
valuation, less residual value, of each asset on a straight line
basis over its expected useful life. The expected useful lives are:
<TABLE>
<S> <C>
Freehold buildings............... 50 years
Leasehold land and buildings..... the term of the lease in equal
annual instalments
Plant, machinery and equipment... 4 to 5 years
Motor vehicles................... 4 years
</TABLE>
(e) Leased Assets
Assets held under hire purchase contracts and finance leases, which
are those where substantially all the risks and rewards of ownership
of the asset have passed to the Lilliput Group, are capitalised in
the balance sheet and are depreciated over their useful lives.
The interest element of the rental obligations is charged to the
profit and loss account over the period of the contract or lease and
represents a constant proportion of the balance of capital
repayments outstanding.
Rentals paid under operating leases are charged to income on a
straight line basis over the term of the lease.
(f) Stocks
Stocks are stated at the lower of cost and net realiseable value.
Cost comprises amounts incurred in bringing each product to its
present location and condition as follows:
<TABLE>
<S> <C>
Raw materials................................ purchase cost on a first-in, first-out basis
Work in progress and finished goods.......... cost of direct materials and labour plus
attributable overheads based on the
normal level of activity
</TABLE>
Net realiseable value is based on estimated selling price less
further costs expected to be incurred to completion and disposal.
(g) Deferred Taxation
Deferred taxation is provided using the liability method on all
timing differences to the extent that they are expected to reverse
in the future without being replaced, calculated at the rate at
which it is anticipated the timing differences will reverse.
(h) Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling
at the date of the transaction or at the contracted rate if the
transaction is covered by a forward exchange contract. Monetary
assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the balance sheet
date or, if appropriate, at the forward contract rate. Investments
in overseas subsidiary undertakings are translated at the rate of
exchange ruling at the date of the investment. All differences are
taken to the profit and loss account.
On consolidation, the accounts of overseas subsidiary undertakings
are translated at the rate of exchange ruling at the balance sheet
date. The exchange difference arising on the retranslation of
opening net assets is taken directly to reserves. All other
translation differences are taken to the profit and loss account.
(II) PENSIONS
The Lilliput Group operates a defined contribution pension scheme.
Contributions are charged to the profit and loss account as they become
payable in accordance with the rules of the scheme.
(III) TURNOVER AND SEGMENTAL ANALYSIS
Turnover represents the amounts derived from the provision of goods and
services which fall within the Lilliput Group's ordinary activities,
stated net of value added tax.
37
<PAGE>
All of the turnover, operating profit and net operating assets
(i.e., excluding those assets and liabilities on which interest is
earned or paid respectively) relate to the manufacture and sale of
miniature cottages as collectibles and giftware, and are analysed as
follows:
(a) Turnover by geographical location
<TABLE>
<CAPTION>
Years ended 66 weeks ended
31st December, 5th January,
1993 1992 1992
------------ ------------ --------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
United Kingdom.................... 12,074 9,538 11,468
United States of America.......... 4,432 4,043 3,694
------ ------ ------
16,506 13,581 15,162
====== ====== ======
</TABLE>
(b) Turnover by destination
<TABLE>
<CAPTION>
Years ended 66 weeks ended
31st December, 5th January,
1993 1992 1992
------------ ------------ --------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
United Kingdom.................... 10,131 8,132 10,250
United States of America.......... 4,432 4,043 3,694
Continental Europe................ 1,313 906 888
Rest of World..................... 630 500 330
------ ------ ------
16,506 13,581 15,162
====== ====== ======
</TABLE>
(c) Profit
<TABLE>
<CAPTION>
Years ended 66 weeks ended
31st December, 5th January,
1993 1992 1992
------------ ------------ --------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
United Kingdom................. 2,854 1,923 1,233
United States of America....... 197 206 194
----- ----- -----
Operating profit............... 3,051 2,129 1,427
Net interest................... 24 (121) (505)
----- ----- -----
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION............... 3,075 2,008 922
===== ===== =====
</TABLE>
(d) Operating assets
<TABLE>
<CAPTION>
Year ended
31st December,
1993
--------------
(Pounds)'000
<S> <C>
United Kingdom............................................. 2,061
United States of America................................... 511
2,572
Unallocated net assets/(liabilities)....................... 2,152
TOTAL NET ASSETS........................................... 4,724
Unallocated net assets/(liabilities) comprise:.............
Cash at bank and in hand................................... 4,021
Loans...................................................... (672)
Corporation tax liabilities................................ (1,036)
Proposed dividend.......................................... (140)
Provision for deferred tax................................. (21)
-------
2,152
=======
</TABLE>
(IV) OPERATING PROFIT IS STATED AFTER CHARGING/(CREDITING):
<TABLE>
<CAPTION>
Years ended 66 weeks ended
31st December, 5th January,
1993 1992 1992
------------ ------------ --------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
Auditors' remuneration
--audit services.............. 36 25 24
--non-audit services.......... 12 7 6
Depreciation of tangible fixed
assets
--owned....................... 303 193 219
--leased...................... 65 42 102
--Amortization of intangible
fixed assets................. -- -- 58
Operating lease rentals
--plant and machinery......... 12 8 5
--and buildings............... 172 169 123
--other....................... 119 132 189
Profit on disposal of tangible
fixed assets................. (11) (9) (5)
==== ==== ===
</TABLE>
In addition to the above, the auditors received (Pounds)80,000
during the year ended 31st December 1993 in respect of services
associated with the share issue.
38
<PAGE>
Reconciliation of operating profit to net cash inflow from operating
activities
<TABLE>
<CAPTION>
Year ended
31st December,
1993
------------
(Pounds)'000
<S> <C>
Operating profit..................................... 3,051
Depreciation and amortisation charges................ 368
Profit on sale of tangible fixed assets.............. (11)
-----
3,408
(Increase)/decrease in stocks........................ (441)
Increase in debtors.................................. (108)
Increase in creditors................................ 524
-----
NET CASH INFLOW FROM OPERATING ACTIVITIES............ 3,383
=====
</TABLE>
(IV) DIRECTORS' REMUNERATION
<TABLE>
<CAPTION>
Years ended 66 weeks ended
31st December, 5th January,
1993 1992 1992
------------ ------------ --------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
Fees.............................. 6 -- --
Other emoluments (including pen-
sion contributions)
Basic salaries.................... 365 289 324
Benefits.......................... 52 21 30
Performance related bonuses....... 6 121 94
Pension contributions............. 40 36 39
--- --- ---
469 467 487
=== === ===
</TABLE>
Benefits in kind comprise fully expensed cars which are stated at the
Inland Revenue scale charge and medical cover stated at cost.
For the year ended 31st December, 1992, performance related bonuses
were payable to executive directors based on the achievement of
targets set for return on operating assets. Five of the UK based
directors waived their entitlement to performance related bonuses for
the year ended 31st December, 1993. Had they not done so, they would
have received bonuses totalling (Pounds)50,000. The bonus payable for
that year relates to the achievement of targets set for profit before
taxation at Lilliput's US subsidiary undertaking.
On 26th August, 1993, J A Russell, A R Dunning, R E Freestone, D J
Tate and P G Thomas were each granted options over 10,000 'B' ordinary
shares at an exercise price of 50p per share. These options were
exercised on 11th November, 1993.
The emoluments of the chairman, who is also the highest paid UK
director, are as follows:
<TABLE>
<CAPTION>
Years ended 66 weeks ended
31st December, 5th January,
1993 1992 1992
------------ ------------ --------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
Salary............................. 83 58 62
Benefits........................... 13 5 6
--- --- ---
96 63 68
Performance related bonus.......... -- 29 25
--- --- ---
96 92 93
Pension contributions.............. 15 15 9
--- --- ---
111 107 102
=== === ===
The emoluments (excluding pension contributions) of
the directors, fell within the following ranges:
<CAPTION>
Number Number Number
<S> <C> <C> <C>
Nil-(Pounds)5,000 .............. 2 1 2
(Pounds)20,001-(Pounds)25,000..... 1 -- --
(Pounds)45,001-(Pounds)50,000..... 3 -- --
(Pounds)55,001-(Pounds)60,000..... -- 3 --
(Pounds)60,001-(Pounds)65,000..... 1 -- 3
(Pounds)70,001-(Pounds)75,000..... -- 1 1
(Pounds)80,000-(Pounds)85,000..... -- -- --
(Pounds)90,001-(Pounds)95,000..... -- 1 1
(Pounds)95,001-(Pounds)100,000.... 2 -- --
(Pounds)100,001-(Pounds)105,000.... -- 1 --
</TABLE>
39
<PAGE>
(v) Employee information
<TABLE>
<CAPTION>
Years ended 66 weeks ended
31st December, 5th January,
1993 1992 1992
------------ ------------ --------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
Wages and salaries.................. 5,571 4,880 5,849
Social security costs .............. 436 402 433
Other pension costs ................ 112 90 98
------------ ------------ ------------
6,119 5,372 6,380
============ ============ ============
</TABLE>
The average weekly number of employees during the year was made up as
follows:
<TABLE>
<CAPTION>
Years ended 66 weeks ended
31st December, 5th January,
1993 1992 1992
------- ------- --------------
Number Number Number
<S> <C> <C> <C>
Manufacturing........................... 491 434 537
Office and management................... 74 61 61
------- ------- ---
565 495 598
======= ======= ===
</TABLE>
(vi) Interest payable
<TABLE>
<CAPTION>
Years ended 66 weeks ended
31st December, 5th January,
1993 1992 1992
------------ ------------ --------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
Bank loans, overdrafts and other
loans wholly repayable within five
years............................. 6 36 219
Bank loans not wholly repayable
within five years................. 60 87 259
Finance charges payable under
finance leases and hire purchase
contracts......................... 5 22 50
------------ ------------ ------------
71 145 528
============ ============ ============
</TABLE>
(vii) Tax on profit on ordinary activities
<TABLE>
<CAPTION>
Years ended 66 weeks ended
31st December, 5th January,
1993 1992 1992
------------ ------------ --------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
Based on the profit for the period:
Corporation tax at 33% (1991:
33.4%).......................... 1,041 545 255
Overseas taxation................ 62 94 12
Deferred taxation................ (7) 10 6
----- --- ---
1,096 649 273
Adjustments in respect of previ-
ous years....................... (2) (19) 11
----- --- ---
1,094 630 284
===== === ===
</TABLE>
(viii) Profit attributable to members of the parent company
The profit dealt with in the accounts of the parent company was
(Pounds)1,224,000 (1992: (Pounds)354,000).
(ix) Dividends
<TABLE>
<CAPTION>
Years ended 66 weeks ended
31st December, 5th January,
1993 1992 1992
------------ ------------ --------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C> <C>
Preference --paid............ 156 115 28
=== === ===
Preferred ordinary--paid............ 273 -- --
--proposed........ -- 203 --
Ordinary --final proposed.. 140 -- 73
--- --- ---
413 203 73
=== === ===
</TABLE>
(x) Earnings per share
Earnings per ordinary share are based on the profit for the year after
deducting preference dividends and on 19,286,503 (1992: 18,867,970)
ordinary shares, being the weighted average number of ordinary shares
in issue, as adjusted, during the year.
40
<PAGE>
(xi) Tangible fixed assets
<TABLE>
<CAPTION>
Plant
Land and Buildings machinery
Short and Motor
Freehold Leasehold equipment vehicles Total
------------ ------------ ------------ ------------ ------------
(Pounds)'000 (Pounds)'000 (Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C> <C> <C>
COST:
At 4th January, 1993.... 1,133 103 1,501 154 2,891
Exchange adjustment..... -- -- 4 -- 4
Additions............... 1 29 148 141 319
Disposals............... -- -- (15) (37) (52)
----- --- ----- --- -----
AT 31ST DECEMBER, 1993.. 1,134 132 1,638 258 3,162
----- --- ----- --- -----
DEPRECIATION:
At 4th January, 1993.... 88 30 814 97 1,029
Exchange adjustment..... -- -- 4 -- 4
Provided during the
year................... 23 15 292 38 368
Disposals............... -- -- (10) (30) (40)
----- --- ----- --- -----
AT 31ST DECEMBER, 1993.. 111 45 1,100 105 1,361
----- --- ----- --- -----
NET BOOK VALUE:
At 31st December, 1993.. 1,023 87 538 153 1,801
===== === ===== === =====
AT 4TH JANUARY, 1993.... 1,045 73 687 57 1,862
===== === ===== === =====
</TABLE>
Included in fixed assets above are the following amounts relating to
assets acquired under finance leases and hire purchase contracts:
<TABLE>
<CAPTION>
(Pounds)'000
------------
<S> <C>
Net book value
At 31st December, 1993.......................................... 14
===
At 4th January, 1993............................................ 96
===
</TABLE>
(xii) Investment in subsidiary undertakings
<TABLE>
<CAPTION>
1993
------------
(Pounds)'000
<S> <C>
At 4th January,................................................ 1,843
Amount received from subsidiary undertakings................... (418)
-----
AT 31ST DECEMBER,.............................................. 1,425
=====
</TABLE>
Details of the investments in which Lilliput holds more than 10% of
the nominal value of any class of share capital are as follows:
<TABLE>
<CAPTION>
COUNTRY OF PROPORTION
REGISTRATION (OR OF VOTING
Subsidiary INCORPORATION) RIGHTS AND
undertaking AND OPERATION HOLDING SHARES HELD Nature of business
----------- ---------------- ------- ----------- ------------------
<S> <C> <C> <C> <C>
Lilliput Lane Limited England and Ordinary shares 100% Manufacture of miniature cottages for sale as
Wales collectibles and giftware
Lilliput Inc US Common stock 100% Distribution of Lilliput Lane and other collectible/
giftware products
Lilliput Creations England and Ordinary Shares 100% Dormant
Limited Wales
</TABLE>
(xiii) Stocks
<TABLE>
<CAPTION>
31st December,
1993
--------------
(Pounds)'000
<S> <C>
Raw materials and consumables................................. 101
Work in progress.............................................. 79
Finished goods................................................ 678
---
858
===
</TABLE>
The difference between purchase price or production cost of stocks and
their replacement cost is not material.
(xiv) Debtors
<TABLE>
<CAPTION>
31st December,
1993
--------------
(Pounds)'000
<S> <C>
Trade debtors................................................. 1,868
Other debtors................................................. 76
Prepayments and accrued income ............................... 201
-----
2,145
=====
</TABLE>
41
<PAGE>
(xv) Cash and cash equivalents
Analysis of balances as shown in the Lilliput Group balance sheet and
changes during the current and previous year:
<TABLE>
<CAPTION>
31st December,
1993 1992 Change in Year
------------ ------------ --------------
(Pounds)'000 (Pounds)'000 (Pounds),000
<S> <C> <C> <C>
Cash at bank and in hand........... 4,021 1,244 2,777
===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
1993
--------
(Pounds)'000
<S> <C>
Balance at 4th January,............................................. 1,244
Net cash inflow before adjustments for the effect of foreign
exchange rates..................................................... 2,776
Effect of foreign exchange rate changes............................. 1
-------
Balance at 31st December............................................ 4,021
=======
</TABLE>
(xvi) Creditors: amounts falling due within one year
<TABLE>
<CAPTION>
31st December,
1993
--------------
(Pounds)'000
<S> <C>
Current instalments due on loans............................. 33
Obligations under finance leases and hire purchase contracts. 31
Trade creditors.............................................. 414
Corporation tax.............................................. 1,036
Other taxes and social security.............................. 598
Accruals(a).................................................. 825
Deferred income.............................................. 362
Dividends.................................................... 140
-----
3,439
=====
</TABLE>
(a) Included within accruals is (Pounds)19,000 relating to outstanding
contributions payable to the pension scheme.
(xvii) Creditors: amounts falling due after more than one year
<TABLE>
<CAPTION>
31st December,
1993
--------------
(Pounds)'000
<S> <C>
Bank loans................................................... 639
Obligations under finance leases and hire purchase
contracts................................................... 2
---
641
===
</TABLE>
(xviii) Bank loans
<TABLE>
<CAPTION>
31st December,
1993
--------------
(Pounds)'000
<S> <C>
Not wholly repayable within five years....................... 672
Amounts due within one year.................................. (33)
---
639
===
Instalments not due within five years........................ 502
===
</TABLE>
Details of loans not wholly repayable within 5 years are as follows:
<TABLE>
<CAPTION>
31st December,
1993
--------------
(Pounds)'000
<S> <C>
Bank loan repayable over 15 years from 30th September, 1990
in monthly instalments of (Pounds)2,730 at an interest rate
of 2% above base rate...................................... 256
Bank loan repayable over 20 years from 30th September, 1990
in monthly instalments of (Pounds)3,852 at an interest rate
of 7.81%................................................... 416
---
672
===
</TABLE>
42
<PAGE>
Amounts due at 31st December, 1993 are repayable as follows:
<TABLE>
<CAPTION>
31st December,
1993
--------------
(Pounds)'000
<S> <C>
After five years............................................. 502
Between two and five years................................... 107
Between one and two years.................................... 30
---
639
Within one year.............................................. 33
---
672
===
</TABLE>
The bank loans are secured by a fixed charge over freehold properties
and book debts and a floating charge over all other assets.
Analysis of changes in group loan financing during the year:
<TABLE>
<CAPTION>
(Pounds)'000
<S> <C>
At 4th January,................................................ 673
Net cash outflow from financing................................ (1)
---
AT 31ST DECEMBER,.............................................. 672
===
</TABLE>
(xix) Obligations under leases and hire purchase contracts
<TABLE>
<CAPTION>
31st December,
1993
--------------
(Pounds)'000
<S> <C>
Amounts payable..............................................
Within one year.............................................. 31
Between one and two years.................................... 3
---
34
Less: finance charges allocated to future periods............ (1)
---
33
===
</TABLE>
Finance leases and hire purchase contracts are analysed as follows:
<TABLE>
<CAPTION>
31st December,
1993
--------------
(Pounds)'000
<S> <C>
Current obligations........................................... 31
Non-current obligations....................................... 2
---
33
===
</TABLE>
Analysis of changes in finance leasing during the year:
<TABLE>
<CAPTION>
1993
------------
(Pounds)'000
<S> <C>
At 4th January,................................................ 84
Capital element of finance lease rental payments............... (51)
----
AT 31ST DECEMBER,.............................................. 33
====
</TABLE>
Annual commitment of the Lilliput Group under non-cancellable
operating leases are as follows:
<TABLE>
<CAPTION>
31st December,
1993
Land and buildings Other
------------------ --------------
(Pounds)'000 (Pounds)'000
<S> <C> <C>
OPERATING LEASES WHICH EXPIRE
Within one year............................ -- 18
Between two and five years................. 112 78
Over five years............................ 74 --
--- ---
186 96
=== ===
</TABLE>
43
<PAGE>
(xx) Provisions
Deferred taxation provided in the accounts and the amounts not
provided are as follows:
<TABLE>
<CAPTION>
31st December,
1993
Provided Not provided
------------ --------------
(Pounds)'000 (Pounds)'000
<S> <C> <C>
Capital allowances in advance of depreciation... 25 241
Short term timing differences................... (4) --
--- ---
21 241
=== ===
</TABLE>
(xxi) Share capital
<TABLE>
<CAPTION>
31st December,
1993
--------------
(Pounds)'000
<S> <C>
AUTHORISED
Ordinary shares of 5p each.................................... 3,000
</TABLE>
<TABLE>
<CAPTION>
31st December, 1993
-----------------------------
No. in thousands (Pounds)'000
<S> <C> <C>
ALLOTTED, CALLED UP AND FULLY PAID
Ordinary shares of 5p each..................... 23,269 1,163
====== =====
</TABLE>
On 8th April, 1993, Lilliput purchased 100,000 of the 'A' ordinary
shares in issue at a price of 50p per share.
On 26th August, 1993 the authorised share capital was increased from
(Pounds)1,757,245 to (Pounds)1,759,745 by the creation of 50,000 new
'B' ordinary shares.
On 11th November, 1993:
. 1,057,000 'B' ordinary shares were issued at par;
. 50,000 'B' ordinary shares were issued at 50p per share;
. 82,618 'A' ordinary shares were issued at par;
. the authorised share capital of Lilliput was increased from
(Pounds)1,759,745 to (Pounds)2,030,762 by the creation of 542,033,625 new
preferred ordinary shares;
. (Pounds)240,267 of the amount standing to the credit of the share premium
account and reserves was capitalised by the issue of 480,533,625 preferred
ordinary shares credited as fully paid at par, on the basis of 99 new
preferred ordinary shares for every one such share held;
. every 100 preferred ordinary shares were consolidated into one preferred
ordinary share of 5p;
. all of the preferred ordinary shares, "A' ordinary shares and "B' ordinary
shares were converted into and redesignated as ordinary shares;
. the authorised share capital of Lilliput was increased from
(Pounds)2,030,762 to (Pounds)4,468,767 by the creation of 48,760,109 new
ordinary shares; and
. 2,222,214 ordinary shares were issued at a price of 135p per share.
(Pounds)526,180 of the amount standing to the credit of reserves was
capitalised and applied in paying up in full at par 10,523,603 ordinary
shares. All of the redeemable preference shares and deferred shares were
redeemed at par and the authorised share capital was reduced by
(Pounds)1,468,767.
On 25th November, 1993, all of the ordinary shares were listed on the
Stock Exchange, issued as fully paid at a price of 135p per share.
Analysis of changes in share capital during the year:
<TABLE>
<CAPTION>
1993
------------
(Pounds)'000
<S> <C>
At 4th January................................................. 1,700
Net cash outflow from financing................................ (1,304)
Capitalisation of reserves..................................... 767
------
At 31st December............................................... 1,163
======
</TABLE>
44
<PAGE>
(xxii) Reserves
<TABLE>
<CAPTION>
Share Capital
premium redemption Profit & loss
account account account
------------ ------------ -------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
At 4th January 1993............................................................ 140 -- 499
Exchange difference on retranslation of net assets of subsidiary undertaking... -- -- 13
Shares redeemed................................................................ -- 5 (50)
Arising on share issues........................................................ 2,912 -- --
Share issue costs.............................................................. (603) -- --
Capitalisation of reserves..................................................... (163) (5) (599)
Retained profit for the year................................................... -- -- 1,412
----- --- -----
AT 31ST DECEMBER, 1993......................................................... 2,286 -- 1,275
===== === =====
</TABLE>
(xxiii) Net cash inflow from share movements
<TABLE>
<CAPTION>
Year ended
31st December,
1993
--------------
(Pounds)'000
<S> <C>
Nominal value of shares issued.............................................................................. 170
Share premium............................................................................................... 2,912
-------
3,082
Share issue costs........................................................................................... (603)
Shares redeemed............................................................................................. (1,519)
-------
960
=======
</TABLE>
(xxiv) Capital commitments
<TABLE>
<CAPTION>
31st December,
1993
--------------
(Pounds)'000
<S> <C>
Contracted for but not provided in the accounts............................................................. 3
===
AUTHORISED BY THE DIRECTORS BUT NOT CONTRACTED FOR.......................................................... 349
===
</TABLE>
(xxv) Pension commitments
The Lilliput Group operates a defined contribution scheme for all
qualifying employees. The assets of the scheme are held separately
from those of the Lilliput Group in an independently administered
fund.
2. INTERIM RESULTS
Set out below is the unaudited interim statement of Lilliput for the six months
ended 30th June, 1994.
CHAIRMAN'S STATEMENT
TRADING RESULTS
Turnover in the six months ended 30th June, 1994 increased to
(Pounds)7.5 million (1993: (Pounds)7.1 million) and pre-tax profits
were (Pounds)1.13 million (1992: (Pounds)1.08 million). Earnings per
share remain unchanged at 3.2p.
The Board has declared an interim dividend of 1.65p (net) per share,
an increase of 14 per cent. over the notional interim dividend of
1.45p (net) per share for the same period last year. This dividend
will be paid to shareholders on the register on 29th September, 1994.
Sales in the US have continued to be affected by the difficult trading
conditions in the US collectibles market that I referred to in my
Chairman's statement accompanying the preliminary announcement of the
Group's 1993 results. US sales for the period were 16 per cent. below
1993 levels and this has reduced profits by approximately
(Pounds)150,000. The Board has thoroughly reviewed the product
offering and special requirements of the American market over the last
six months. New product concepts are expected to be launched in early
1995 that should widen the appeal of the Lilliput Lane brand and open
up new channels of distribution.
Sales elsewhere have continued to improve at a steady rate with sales
in the UK 7 per cent. ahead of the same period last year and sales in
other export markets 25 per cent. ahead.
At the end of 1993 the Board took steps to increase production levels
in order to meet the peak demand experienced at Christmas. These
increased levels of production have been maintained as part of a
specific strategy to ensure an adequate supply of product for
Lilliput's retailers and to provide them with higher levels of
service. This has resulted in an increase in the level of stocks held
by Lilliput and a consequent one-off reduction in the level of stocks
held by retailers. However this does provide us with the ability to
respond quickly to the expected increased demand in the second half of
this year.
45
<PAGE>
Membership of the Collectors' Club has continued to grow and worldwide
membership now stands at 72,400 compared to 68,539 at 31st December,
1993.
CURRENT TRADING AND PROSPECTS
Although there are signs that the UK economy is strengthening we are
finding, in common with many businesses, that the strength of the
recovery is fragile. The second half is the seasonally more important
half of Lilliput's year both in terms of sales and profits and the
Board remains optimistic about the outcome for the full year.
GROUP PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
Half year ended Half year ended Year ended
30th June, 1994 30th June, 1993 31st Dec., 1993
--------------- --------------- ---------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
Turnover................................................................ 7,500 7,106 16,506
Cost of sales........................................................... (3,782) (3,543) (8,117)
------ ------ ------
Gross profit............................................................ 3,718 3,563 8,389
Distribution costs...................................................... (1,477) (1,320) (2,940)
Administrative expenses................................................. (1,183) (1,161) (2,398)
------ ------ ------
(2,660) (2,481) (5,338)
------ ------ ------
Operating profit........................................................ 1,058 1,082 3,051
------ ------ ------
Interest receivable..................................................... 97 38 95
Interest payable........................................................ (29) (38) (71)
------ ------ ------
68 -- 24
------ ------ ------
Profit on ordinary activities before taxation........................... 1,126 1,082 3,075
Tax on profit on ordinary activities.................................... (377) (404) (1,094)
------ ------ ------
Profit on ordinary activities after taxation............................ 749 678 1,981
Preference dividends.................................................... -- (87) (156)
------ ------ ------
Profit attributable to equity shareholders.............................. 749 591 1,825
Ordinary dividends...................................................... (384) (108) (413)
------ ------ ------
RETAINED PROFIT FOR THE PERIOD.......................................... 365 483 1,412
====== ====== ======
Earnings per ordinary share (note 3).................................... 3.2p 3.2p 9.5p
</TABLE>
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
<TABLE>
<CAPTION>
Half year ended Half year ended Year ended
30th June, 1994 30th June, 1993 31st Dec., 1993
--------------- --------------- ---------------
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
Profit on ordinary activities after taxation ............................. 749 678 1,981
Exchange differences on retranslation of net assets of subsidiary
undertaking.............................................................. (25) -- 13
----- ----- ------
Total recognised gains and losses relating to the period ................. 724 678 1,994
===== ===== ======
Reconciliation of shareholders' funds
Total recognised gains and losses ........................................ 724 678 1,994
Dividends ................................................................ (384) (195) (569)
Other movements
New shares issued ....................................................... -- -- 3,082
Share issue costs ....................................................... -- -- (603)
Shares redeemed ......................................................... -- (50) (1,519)
----- ----- ------
340 433 2,385
Shareholders' funds at beginning of period................................ 4,724 2,339 2,339
----- ----- ------
SHAREHOLDERS' FUNDS AT END OF PERIOD...................................... 5,064 2,772 4,724
===== ===== ======
</TABLE>
46
<PAGE>
GROUP BALANCE SHEET
<TABLE>
<CAPTION>
30TH JUNE, 1994 30TH JUNE, 1993 31ST DEC., 1993
--------------- --------------- ---------------
<S> <C> <C> <C>
(Pounds)'000 (Pounds)'000 (Pounds)'000
Fixed assets
Tangible assets......................................................... 1,885 1,881 1,801
Current assets
Stocks.................................................................. 1,208 748 858
Debtors................................................................. 2,494 2,356 2,145
Cash at bank and in hand................................................ 3,724 993 4,021
------------ ------------ ------------
7,426 4,097 7,024
Creditors: amounts falling due within one year........................... 3,600 2,531 3,439
------------ ------------ ------------
Net current assets....................................................... 3,826 1,566 3,585
------------ ------------ ------------
Total assets less current liabilities.................................... 5,711 3,447 5,386
Creditors: amounts falling due after more than one year.................. (626) (673) (641)
Provision for liabilities and charges.................................... (21) (2) (21)
------------ ------------ ------------
5,064 2,772 4,724
============ ============ ============
Capital and reserves
Called up share capital................................................. 1,163 1,695 1,163
Share premium account................................................... 2,286 140 2,286
Capital redemption reserve.............................................. -- 5 --
Profit and loss account................................................. 1,615 932 1,275
------------ ------------ ------------
5,064 2,772 4,724
============ ============ ============
</TABLE>
GROUP STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
HALF YEAR ENDED HALF YEAR ENDED YEAR ENDED
30TH JUNE, 1994 30TH JUNE, 1993 31ST DEC., 1993
--------------- --------------- ---------------
<S>...................................................................... <C> <C> <C>
(Pounds)'000 (Pounds)'000 (Pounds)'000
Net cash inflow from operating activities (note 2)....................... 149 408 3,383
Returns on investment and servicing of finance
Interest received........................................................ 97 38 95
Interest paid............................................................ (29) (38) (71)
Dividends paid........................................................... (140) (289) (631)
------------ ------------ ------------
Net cash outflow from returns on investments and servicing of
finance................................................................. (72) (289) (607)
------------ ------------ ------------
Taxation
Corporation tax paid..................................................... (114) (153) (612)
Investing activities
Payments to acquire tangible fixed assets................................ (257) (161) (319)
Receipts from sales of tangible fixed assets............................. 25 6 23
------------ ------------ ------------
Net cash outflow from investing activities............................... (232) (155) (296)
------------ ------------ ------------
Net cash (outflow)/inflow before financing............................... (269) (189) 1,868
============ ============ ============
Financing
Issue of ordinary share capital.......................................... -- -- (3,082)
Redemption of share capital.............................................. -- 50 1,519
Share issue costs........................................................ -- -- 603
Repayment of long term loans............................................. 15 (10) 1
Repayments of capital element of finance lease rentals................... 30 22 51
------------ ------------ ------------
Net cash outflow/(inflow) from financing................................. 45 62 (908)
(Decrease)/increase in cash and cash equivalents......................... (314) (251) 2,776
------------ ------------ ------------
(269) (189) 1,868
============ ============ ============
</TABLE>
47
<PAGE>
NOTES TO THE INTERIM ACCOUNTS AS AT 30TH JUNE, 1994
1. BASIS OF PREPARATION
The interim accounts have been prepared on the basis of the accounting
policies set out in the Group's 1993 Annual Report. Fixed annual
charges are apportioned to the interim period on the basis of time
elapsed. Other expenses are accrued in accordance with the same
principles used in the preparation of the annual accounts. The
taxation charge is calculated by applying the directors' best estimate
of the annual effective tax rate to the profit for the period.
2. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
<TABLE>
<CAPTION>
HALF YEAR ENDED HALF YEAR ENDED YEAR ENDED
30TH JUNE, 1994 30TH JUNE, 1993 31ST DEC., 1993
--------------- --------------- ---------------
<S> <C> <C> <C>
(Pounds)'000 (Pounds)'000 (Pounds)'000
Operating profit................................................. 1,058 1,082 3,051
Depreciation charges............................................. 148 138 368
Profit on sale of tangible fixed assets.......................... -- (2) (11)
------------ ------------ ------------
1,206 1,218 3,408
(Increase)/decrease in stocks.................................... (370) (332) (441)
(Increase)/decrease in debtors................................... (424) (336) (108)
(Decrease)/increase in creditors................................. (263) (142) 524
------------ ------------ ------------
149 408 3,383
============ ============ ============
</TABLE>
3. EARNINGS PER ORDINARY SHARE
Earnings per ordinary share are based on the profit attributable to
equity shareholders for the period and on 23,269,420 (1993:
18,716,189) ordinary shares, being the weighted average number of
ordinary shares in issue, as adjusted, during the period.
4. PAYMENT OF DIVIDEND
The interim dividend of 1.65p per share will be paid on 14th October,
1994 to holders of ordinary shares on the register at the close of
business on 29th September, 1994.
5. CIRCULATION
This statement will be available from Lilliput's registered office at
Skirsgill, Penrith, Cumbria, CA11 0DP.
6. REPORT OF THE AUDITORS
To the members of Lilliput Group plc
We have reviewed the interim financial information for the six months
ended 30th June, 1994 set out on pages 45 to 48 which is the
responsibility of, and has been approved by, the Directors. Our
responsibility is to report on the results of our review.
Our review was carried out having regard to the Bulletin "Review of
Interim Financial Information", issued by the Auditing Practices
Board. This review consisted principally of obtaining an understanding
of the process for the preparation of the interim financial
information, applying analytical procedures to the underlying
financial data, assessing whether accounting policies have been
consistently applied, and making enquiries of Group management
responsible for financial and accounting matters. The review excluded
audit procedures such as tests of controls and vertification of assets
and liabilities, and was therefore substantially less in scope than an
audit performed in accordance with Auditing Standards. Accordingly, we
do not express an audit opinion on the interim financial information.
On the basis of our review:
In our opinion the interim financial information has been prepared
using accounting policies consistent with those adopted by Lilliput
Group plc in its financial statements for the year ended 31st
December, 1993; and
We are not aware of any material modifications that should be made to
the interim financial information as presented.
Ernst & Young
Chartered Accountants
Registered Auditor
Manchester
1st September, 1994
48
<PAGE>
3. MATERIAL CHANGES
Save as disclosed in this Appendix IV and the letter from the Chairman & Chief
Executive of Lilliput set out on pages 5 to 7 of this document, there have
been no material changes in the financial or trading position of Lilliput
since 31st December, 1993, the date to which the latest published audited
accounts were made up.
4. STATUTORY INFORMATION
The above financial information relating to the Lilliput Group does not
constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985. Statutory accounts for the three financial periods ended
31st December, 1993, all of which carry unqualified audit reports, have been
delivered to the Registrar of Companies.
49
<PAGE>
APPENDIX V
ADDITIONAL INFORMATION
1. RESPONSIBILITY
The Directors of Lilliput, whose names appear in paragraph 2 below, accept
responsibility for the information contained in this document relating to
Lilliput and its subsidiaries, themselves and their immediate families. The
Directors of Stanhome Inc., whose names appear in paragraph 1 of Appendix II,
and the Directors of Stanhome, whose names appear in paragraph 2 of Appendix
III, accept responsibility for all the other information contained in this
document. To the best of the knowledge and belief of the Directors of Stanhome
Inc. and the Directors of Lilliput (who have taken all reasonable care to
ensure that such is the case) the information contained herein for which they
are respectively responsible is in accordance with the facts and does not omit
anything likely to affect the import of such information.
2. DIRECTORS
The Directors of Lilliput are as follows:
<TABLE>
<S> <C>
J A Russell FCA............................................... Chairman & Chief Executive
R E Freestone FCA, ATII....................................... Finance Director
D J Tate MBE.................................................. Technical Director
A R Dunning................................................... Sales Director
J M Hill MBA.................................................. Marketing Director
P G Thomas.................................................... Production Director
A J J Simonds-Gooding......................................... Non-executive Director
P J Folkman MBA............................................... Non-executive Director
</TABLE>
3. DISCLOSURE OF INTERESTS AND DEALINGS
In this document "disclosure period" means the period commencing on 1st
September, 1993 being the date 12 months prior to the commencement of the
Offer Period and ending on 8th September, 1994, being the latest practicable
date prior to the posting of this document.
(A) SHAREHOLDINGS AND DEALINGS IN STANHOME OR STANHOME INC. SHARES
Neither Lilliput, nor any person acting in concert with Lilliput, nor any of
the Directors of Lilliput, nor any member of their immediate families owns or
controls or is interested in (beneficially or otherwise), nor has any
arrangement in relation to any Stanhome or Stanhome Inc. shares or in any
securities convertible into, rights to subscribe for or options (including
traded options) for such shares nor has any such person dealt for value
therein during the disclosure period.
(B) SHAREHOLDINGS AND DEALINGS IN LILLIPUT SHARES
(i) As at the close of business on 8th September, 1994 (the latest practicable
date prior to the posting of this document), Stanhome held 3,145,331
Lilliput Shares.
(ii)During the disclosure period dealings for value by Stanhome and persons
deemed to be acting in concert with Stanhome in Lilliput Shares were as
follows:
<TABLE>
<CAPTION>
Number of
Lilliput Price Per
Date Party Transaction Shares Share(p)
---- ------------------------ ----------- --------- ---------
<C> <S> <C> <C> <C>
1st September, 1994 Goldman Sachs Equity Securities (U.K.)....... Purchase 3,145,331 158
1st September, 1994 Goldman Sachs Equity Securities (U.K.)....... Sale 3,145,331 158
1st September, 1994 Stanhome..................................... Purchase 3,145,331 158
</TABLE>
(iii)Irrevocable undertakings to accept the Offer have been received as
follows, representing in each case the entire holding of Lilliput Shares of
the relevant person:
<TABLE>
<CAPTION>
NUMBER OF LILLIPUT SHARES
Name IRREVOCABLY COMMITTED
---- -------------------------
<S> <C>
David John Tate.................................... 2,646,659
Robert Edward Freestone............................ 15,000
Paul Goring Thomas................................. 90,000
Andrew Reginald Dunning............................ 15,000
Anthony JJ Simonds-Gooding......................... 9,135
The North of England Venture Fund Limited.......... 2,963,705
John Alan Russell.................................. 300,000
Lazard Funds (Nominees) Limited.................... 755,059
Coutts Corporate Trustee Nominees Limited.......... 1,056,966
Midland Bank Trust Company Limited................. 580,446
Sandra Tate........................................ 1,185,245
Karen Elaine Freestone............................. 165,000
Lucinda Petrie Dunning............................. 165,000
Karen Elizabeth Thomas............................. 90,000
Heather M Russell.................................. 300,000
</TABLE>
50
<PAGE>
(iv) Irrevocable undertakings to accept the Offer in respect of options held
under the Lilliput Share Option Schemes have been received as follows:
<TABLE>
<CAPTION>
NUMBER OF LILLIPUT SHARES
HELD UNDER OPTION AND
Name IRREVOCABLY COMMITTED
---- -------------------------
<S> <C>
Jane M Hill........................................ 25,000
Robert Edward Freestone............................ 76,785
Paul Goring Thomas................................. 76,428
Andrew Reginald Dunning............................ 75,714
John Alan Russell.................................. 251,785
</TABLE>
(v) During the disclosure period the persons referred to in paragraphs (iii)
and (iv) above have dealt for value in Lilliput Shares as follows:
<TABLE>
<CAPTION>
Number of
Lilliput Price per
Date Party Transaction Shares Share(p)
---- ------------------------ ------------ --------- ---------
<C> <S> <C> <C> <C>
24th November, 1993 J A Russell............. Subscription 407,000 5
24th November, 1993 J A Russell............. Subscription 10,000 50
24th November, 1993 A R Dunning............. Subscription 150,000 5
24th November, 1993 A R Dunning............. Subscription 10,000 50
24th November, 1993 R E Freestone........... Subscription 150,000 5
24th November, 1993 R E Freestone........... Subscription 10,000 50
24th November, 1993 D J Tate................ Subscription 10,000 50
24th November, 1993 P G Thomas.............. Subscription 150,000 5
24th November, 1993 P G Thomas.............. Subscription 10,000 50
24th November, 1993 D J Tate................ Purchase 512,953 2
25th November, 1993 J A Russell............. Sale 614,800 135
25th November, 1993 A R Dunning............. Sale 235,200 135
25th November, 1993 R E Freestone........... Sale 235,200 135
25th November, 1993 P G Thomas.............. Sale 235,200 135
25th November, 1993 D J Tate................ Sale 302,642 135
25th November, 1993 D J Tate and S Tate..... Sale 1,319,580 135
The North of England
25th November, 1993 Venture Fund Limited.... Sale 2,222,223 135
Midland Bank Trust
25th November, 1993 Company Limited......... Sale 690,952 135
Lazard Funds (Nominees)
25th November, 1993 Limited................. Sale 898,815 135
Coutts Corporate Trustee
25th November, 1993 Nominees Limited........ Sale 1,258,198 135
25th November, 1993 A J J Simonds-Gooding... Purchase 9,135 135
28th March, 1994 J A Russell............. Sale 14,666 130
28th March, 1994 A R Dunning............. Sale 17,824 130
28th March, 1994 R E Freestone........... Sale 17,824 130
28th March, 1994 P G Thomas.............. Sale 17,824 130
29th March, 1994 J A Russell............. Purchase 14,666 130
29th March, 1994 A R Dunning............. Purchase 17,824 130
29th March, 1994 R E Freestone........... Purchase 17,824 130
29th March, 1994 P G Thomas.............. Purchase 17,824 130
</TABLE>
The dealings shown above represent all dealings for value in Lilliput
Shares of the Directors of Lilliput and their immediate families
during the disclosure period.
(vi) The interests, all of which are beneficial unless otherwise stated, of the
Directors of Lilliput and their immediate families in Lilliput Shares (as
shown in the register required to be kept under Section 325 of the
Companies Act 1985) at 8th September, 1994 were as follows:
<TABLE>
<CAPTION>
Director Lilliput Shares Lilliput Shares under option**
-------- --------------- ------------------------------
<S> <C> <C>
J A Russell................... 600,000 251,785
A R Dunning................... 180,000 75,714
R E Freestone................. 180,000 76,785
J M Hill...................... -- 25,000
D J Tate...................... 3,831,904 --
P G Thomas.................... 180,000 76,428
P J Folkman*.................. 2,963,705 --
A J J Simonds-Gooding......... 9,135 --
</TABLE>
--------
* By virtue of being connected with The North of England Venture Fund
Limited ("NEV"), P J Folkman is treated as being interested in the
2,963,705 Lilliput Shares in which NEV is interested.
** As provided in paragraphs (vii) and (viii) below.
(vii) The options granted under the terms of the Lilliput Group plc Executive
Share Option Scheme are exercisable at a price of 135p per share normally
between 24th November, 1996 and 24th November, 2003.
<TABLE>
<CAPTION>
Director Total
-------- -------
<S> <C>
J A Russell.......................................................... 250,000
A R Dunning.......................................................... 75,000
R E Freestone........................................................ 75,000
J M Hill............................................................. 25,000
P G Thomas........................................................... 75,000
</TABLE>
51
<PAGE>
(viii)There are currently options outstanding over 316,096 Lilliput Shares
under the Lilliput Group plc Savings Related Share Option Scheme, which in
normal circumstances would be exercisable at a price of 98p per share
between 1st March, 1999 and 31st August, 1999. In the light of the Offer,
only options over approximately 35,000 Lilliput Shares will rank for the
cash cancellation proposal referred to in the letter from Goldman Sachs on
page 9 of this document.
(ix) During the Offer Period Albert E. Sharp & Co have dealt for value in
Lilliput Shares on behalf of discretionary clients as follows:
<TABLE>
<CAPTION>
Lilliput Price per
Date Transaction Shares Share(p)
---- ----------- -------- ---------
<S> <C> <C> <C>
1st September, 1994........................... Sale 21,000 157
1st September, 1994........................... Sale 42,500 158
1st September, 1994........................... Sale 60,000 158.5
2nd September, 1994........................... Sale 80,000 158
</TABLE>
On 7th September, 1994, Albert E. Sharp & Co held 44,257 Lilliput
Shares on behalf of discretionary clients.
(C) GENERAL
(i) Save as disclosed in this paragraph 3, neither Stanhome nor Stanhome Inc.,
nor any of the Directors of Stanhome or Stanhome Inc., nor any members of
their immediate families, nor any person acting in concert with Stanhome
Inc., nor any person who has irrevocably undertaken to accept the Offer,
owned or controlled or (in the case of Directors of Stanhome, Stanhome
Inc. and their immediate families) was interested in any relevant
securities on 8th September, 1994 (the last possible date prior to the
posting of this document) nor has any such person dealt for value therein
during the disclosure period.
(ii) Save as disclosed in this paragraph 3, none of the Directors of Lilliput
nor any member of their immediate families was interested in any relevant
securities on 8th September, 1994 nor has any such person dealt for value
therein during the disclosure period and no bank, stockbroker, financial
or other professional adviser (other than an exempt market-maker) to
Lilliput (nor any person controlling, controlled by, or under the same
control as such bank, stockbroker, financial or other professional
adviser) nor any subsidiary of Lilliput nor any pension fund of Lilliput
or of any of its subsidiaries, nor any person whose investments are
managed on a discretionary basis by a fund manager (other than an exempt
fund manager) which is controlled by, controls or is under the same
control as Lilliput or any bank, stockbroker, financial or other
professional adviser, to Lilliput, owned or controlled any relevant
securities on 8th September, 1994 nor has any such person dealt for value
therein during the period from 1st September, 1994 to 8th September, 1994
(being the last possible date prior to the posting of this document).
(iii) Neither Stanhome, Stanhome Inc. nor any of their associates nor any person
acting in concert with Stanhome Inc. nor Lilliput nor any of its
associates has any arrangement in relation to relevant securities. For
these purposes "arrangement" includes any indemnity or option arrangements
and any agreement or understanding, formal or informal, of whatever
nature, relating to relevant securities which may be an inducement to deal
or refrain from dealing.
(iv) References in this paragraph 3 to:
(a) an "associate" are to:-
(1) subsidiaries and associated companies of Stanhome or Stanhome Inc.
or Lilliput and companies of which any such subsidiaries or
associated companies are associated companies;
(2) banks, financial and other professional advisers (including
stockbrokers) to Stanhome or Stanhome Inc. or Lilliput or a
company covered in (1) above, including persons controlling,
controlled by or under the same control as such banks, financial
or other professional advisers;
(3) the Directors of Stanhome or Stanhome Inc. or Lilliput and the
directors of any company covered in (1) above (together in each
case with their close relatives and related trusts);
(4) the pension funds of Stanhome or Stanhome Inc. or Lilliput or a
company covered in (1) above; and
(5) (in relation to Stanhome or Stanhome Inc.) an investment company,
unit trust or other person whose investments an associate (as
otherwise defined in this paragraph (a)) manages on a
discretionary basis, in respect of the relevant investment
accounts;
(b) a "bank" does not apply to a bank whose sole relationship with
Stanhome or Stanhome Inc. or Lilliput or a company covered in
paragraph (a)(1) above is the provision of normal commercial banking
services or such activities in connection with the Offer as handling
acceptances and other registration work; and
(c) "relevant securities" means Lilliput Shares and securities convertible
into, rights to subscribe for and options (including traded options)
in respect thereof.
(v) For the purposes of this paragraph 3, ownership or control of 20 per cent.
or more of the equity share capital of a company is regarded as the test
of associated company status and "control" means a holding, or aggregate
holdings, of shares carrying 30 per cent. or more of the voting rights
attributable to the share capital of a company which are currently
exercisable at a general meeting, irrespective of whether the holding or
aggregate holding gives de facto control.
4. MARKET QUOTATIONS
The following table shows the middle market quotations for Lilliput Shares, as
derived from the Stock Exchange Daily Official List, on the first dealing day
of each month from April 1994 to September 1994 inclusive, on 31st August,
1994 (being the last business day before the commencement of the Offer Period)
and on 8th September, 1994, (being the last possible date before the posting
of this document):
<TABLE>
<CAPTION>
Date Middle Market Quotation(p)
- ---- --------------------------
<S> <C>
5th April............................................ 131
3rd May.............................................. 120
1st June............................................. 106
1st July............................................. 90
1st August........................................... 91
31st August.......................................... 92
1st September........................................ 160
8th September........................................ 160
</TABLE>
52
<PAGE>
5. SERVICE AGREEMENTS
(a) The following are particulars of the current service agreements, all dated
11th November 1993, between the Directors of Lilliput and Lilliput or any of
its subsidiaries which do not expire, or cannot be terminated by the
employing company, within twelve months:
<TABLE>
<CAPTION>
Annual Employing
Name Notice Period Salary Company
---- ------------- --------------- ---------
<S> <C> <C> <C>
J A Russell.......................... 2 years (Pounds)100,000 Lilliput
A R Dunning.......................... 1 year (Pounds)50,000 Lilliput
R E Freestone........................ 1 year (Pounds)50,000 Lilliput
J M Hill............................. 1 year (Pounds)45,000 Lilliput
D J Tate............................. 2 years (Pounds)60,000 Lilliput
P G Thomas........................... 1 year (Pounds)50,000 Lilliput
</TABLE>
There is a bonus arrangement in place for the executive Directors of
Lilliput in respect of the current financial year (the "Relevant Year"). The
bonus, payable to each such Director, will be a percentage of his/her annual
salary (as set out above) related to the percentage increase in earnings per
Lilliput Share for the Relevant Year in excess of the aggregate of (a) the
percentage increase in the retail prices index for the Relevant Year and (b)
3 per cent. Whether or not a bonus is payable calculated as aforesaid, the
Remuneration Committee of the Lilliput Board of Directors may in its sole
discretion approve the payment of a limited bonus in accordance with the
bonus arrangement to the executive Directors or any of them. The total bonus
paid for the Relevant Year for each relevant Director shall not exceed 50
per cent of his/her annual salary. Any bonus arrangements for subsequent
years are to be determined by the Remuneration Committee.
(b) Save as disclosed herein:
(i) there are no service agreements in force between any Director or
proposed Director of Lilliput and Lilliput or any of its subsidiaries
which do not expire or cannot be terminated by Lilliput or its relevant
subsidiary within the next 12 months without payment of compensation
(other than statutory compensation);
(ii) none of the service agreements described above were entered into during
the 6 months preceding the date of this document nor have any amendments
been made to any of such service agreements during that period.
6. MATERIAL CONTRACTS
The following contracts (not being contracts entered into in the ordinary
course of business) have been entered into by members of the Lilliput Group
since 1st September, 1992 and are or may be material:
(i) an agreement dated 11th November, 1993 between Lilliput, the executive
Directors of Lilliput, W D Dodd, The North of England Venture Fund
Limited, Coutts & Co and Lazard Venture Funds (Managers) Limited,
whereby a subscription agreement dated 22nd August, 1990 (pursuant to
which an equity investment of (Pounds)1.2 million was made in Lilliput)
was terminated; and
(ii) an agreement dated 12th November, 1993 between Lilliput, the
shareholders of Lilliput, the Directors of Lilliput and NatWest Markets
whereby, in connection with the admission of Lilliput Shares to the
Official List of the Stock Exchange, NatWest Markets, as agent for
National Westminster Bank Plc, underwrote the sale of 9,814,823 existing
Lilliput Shares and the issue of 2,222,214 new Lilliput Shares, in each
case at 135p per share, by way of a placing and an intermediaries offer.
Lilliput paid commissions in respect of the new Lilliput Shares so
issued and advisory fees to NatWest Markets and the brokers.
7. FINANCING
The Offer is to be financed by means of facilities made available to Stanhome
by Mellon Bank, N.A., Banca Popolare di Milano, Chemical Connecticut
Corporation and The First National Bank of Boston. By a facility advisement
letter agreement dated 30th August 1994 Mellon Bank, N.A. agreed to make
available to Stanhome an aggregate facility amount of $25,000,000 on the terms
and conditions therein described. Stanhome Inc. has entered into a guarantee
agreement dated 6th September, 1994 in favour of Mellon Bank, N.A. in respect
of this facility. The other three banks have confirmed to Goldman Sachs by
means of letters dated 30th August, 1994, that facilities have been made
available to Stanhome. Those facilities are as follows:
<TABLE>
<S> <C>
Banca Popolare di Milano............................................ $15,000,000
Chemical Connecticut Corporation.................................... $15,000,000
The First National Bank of Boston................................... $25,000,000
</TABLE>
Neither repayment of, nor security for, any liability (contingent or
otherwise) of Stanhome will depend to any significant extent on the business
of Lilliput, although the payment of interest by Stanhome in respect of the
above facilities will depend upon the receipt by Stanhome of income from
Lilliput or upon finance being received by Stanhome from elsewhere in the
Stanhome Group.
Goldman Sachs is satisfied that Stanhome has the necessary financial resources
for it to implement the Offer in full. Full acceptance of the Offer would
involve the payment of approximately (Pounds)38.2 million in cash by Stanhome
(assuming exercise of all outstanding options under the Lilliput Share Option
Schemes).
8. OTHER INFORMATION
(a) The expenses of, and incidental to, the preparation and circulation of the
Offer will be paid by Stanhome.
(b) No proposal exists in connection with the Offer whereby any payment or
other benefit shall be made or given to any Director of Lilliput as
compensation for loss of office or as consideration for or in connection
with his loss of office.
(c) (i) Save as disclosed herein, no agreement, arrangement or understanding
exists between Stanhome or any party acting in concert with Stanhome and any
of the directors or recent directors, shareholders or recent shareholders of
Lilliput having any connection with or dependence on the Offer.
53
<PAGE>
(ii) Stanhome Inc. has entered into an arrangement with John Russell,
Chairman & Chief Executive of Lilliput, dated 30th August, 1994 whereby,
assuming the Offer becomes or is declared wholly unconditional, Mr Russell
will become President and Chief Executive Officer of the European Giftware
Group and Managing Director of Stanhome, for a period of up to 5 years, at a
salary of (Pounds)120,000, subject to annual review. Mr Russell would
continue on his current bonus scheme during 1994 and would move, in 1995, to
the worldwide Stanhome Inc. Management Incentive Plan.
(d) There is no agreement, arrangement or understanding whereby the beneficial
ownership of any of the Lilliput Shares acquired by Stanhome in pursuance of
the Offer will be transferred to any other person, save that Stanhome
reserves the right to transfer any such shares to any member of the Stanhome
Group.
(e) NatWest Markets has given and has not withdrawn its written consent to the
issue of this document with the inclusion herein of the references to its
name in the form and context in which it appears.
(f) The contents of this document, for which the Directors of Stanhome Inc., the
Directors of Stanhome and the Directors of Lilliput are responsible on the
basis stated in paragraph 1 of this Appendix, have been approved by Goldman
Sachs for the purposes of section 57 of the Financial Services Act 1986, a
member of The Securities and Futures Authority.
9. SOURCES
Unless otherwise stated, financial information concerning Stanhome Inc. and
Lilliput has been derived from the annual report and amounts for the relevant
company for the relevant periods. The financial information concerning
Stanhome has been derived from its statutory books and bank records.
10. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection during
normal business hours on any weekday (Saturdays and public holidays excepted)
at the offices of Ashurst Morris Crisp, Broadwalk House, 5 Appold Street,
London EC2A 2HA throughout the period during which the Offer remains open for
acceptance:
(a) the Memorandum and Articles of Association of Stanhome and the Restated
Articles of Organisation (as amended) and By-Laws of Stanhome Inc.;
(b) the Memorandum and Articles of Association of Lilliput;
(c) the audited consolidated accounts of Stanhome Inc. for the two years ended
31st December, 1993 and the interim results for the six months ended 30th
June, 1994;
(d) the audited consolidated accounts of Lilliput for the two years ended 31st
December, 1993 and the interim results for the six months ended 30th June,
1994;
(e) the service agreements of the Directors of Stanhome Inc. of more than one
year's duration and the Directors' service agreements referred to in
paragraph 5 above;
(f) the material contracts referred to in paragraph 6 above;
(g) the financing documents referred to in paragraph 7 above;
(h) a letter recording the arrangements between Stanhome Inc. and John Russell
referred to in paragraph 8(c) above;
(i) the letter of consent referred to in paragraph 8(e) above;
(j) the irrevocable undertakings to accept the Offer referred to in paragraph 3
above; and
(k) this document and the Form of Acceptance.
54
<PAGE>
Printed by RR Donnelley Financial, 16077
<PAGE>
Exhibit 2(b)
THIS FORM IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
WHEN CONSIDERING WHAT ACTION YOU SHOULD TAKE, YOU ARE RECOMMENDED TO SEEK YOUR
OWN FINANCIAL ADVICE IMMEDIATELY FROM YOUR STOCKBROKER, BANK MANAGER,
SOLICITOR, ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL ADVISER DULY AUTHORISED
UNDER THE FINANCIAL SERVICES ACT 1986.
This Form should be read in conjunction with the accompanying Offer Document
dated 9th September, 1994 (the "Offer Document"). The expressions used in this
Form shall, unless the context otherwise requires, bear the same meanings as in
the Offer Document. The terms and conditions of the Offer, as contained or
referred to in the Offer Document, are deemed to be incorporated in and form
part of this Form.
- -------------------------------------------------------------------------------
FORM OF ACCEPTANCE
IN RESPECT OF THE
RECOMMENDED CASH OFFER
BY
GOLDMAN SACHS INTERNATIONAL
ON BEHALF OF
STANHOME PLC
A SUBSIDIARY OF
STANHOME INC.
FOR
LILLIPUT GROUP PLC
- -------------------------------------------------------------------------------
ACCEPTANCES SHOULD BE DESPATCHED AS SOON AS POSSIBLE BUT IN ANY EVENT SO AS TO
BE RECEIVED NOT LATER THAN 3.00 P.M. ON 30TH SEPTEMBER, 1994.
The Offer referred to in this Form is not being made directly or indirectly in,
and neither the Offer Document nor this Form is being, and must not be, mailed
or otherwise distributed or sent, in whole or in part, into or from the United
States or Canada.
- -------------------------------------------------------------------------------
ACTION TO BE TAKEN
Please read pages 2 and 4 of this Form, where detailed instructions on how
to complete the Form are set out, and complete and sign, where indicated,
on page 3. Send the completed and signed Form (accompanied by your share
certificate(s) and/or other document(s) of title) by post or by hand to The
Royal Bank of Scotland plc, Registrar's Department, New Issues Section,
P.O. Box 859, Consort House, East Street, Bedminster, Bristol BS99 1XZ
using the enclosed reply-paid envelope or by hand only to The Royal Bank of
Scotland plc, Registrar's Department, New Issues Section, 15 Featherstone
Street, London EC1Y 8QS, as soon as possible, and in any event so as to be
received not later than 3.00 p.m. on 30th September, 1994.
If your share certificate(s) and/or other document(s) of title is/are not
readily available or is/are lost, the Form should nevertheless be
completed, signed and returned as stated above and the certificate(s)
and/or other document(s) of title forwarded as soon as possible thereafter.
Do not detach any part of this Form.
If you have any questions as to how to complete this Form, please contact
The Royal Bank of Scotland plc, Registrar's Department, New Issues Section
by telephoning 0272 370666.
- -------------------------------------------------------------------------------
<PAGE>
PAGE 2
HOW TO COMPLETE THIS FORM
TO ACCEPT THE OFFER COMPLETE BOXES [1] AND [3]
AND SIGN BOX [2]
- --------------------------------------------------------------------------------
+++ +++
+ + To accept the Offer insert If no number, or a number
+ 1 + in Box [1] the number of greater than your entire
+ + Lilliput Shares in respect holding of Lilliput Shares,
+++ +++ of which you wish to accept is inserted in Box [1], and
the Offer. you have signed Box [2],
you will be deemed to have
YOU MUST THEN ALSO SIGN BOX accepted the Offer in
[2] IN THE PRESENCE OF AN respect of your entire
INDEPENDENT WITNESS AND holding of Lilliput Shares.
COMPLETE BOX [3].
- --------------------------------------------------------------------------------
+++ +++
+ + You must sign Box [2] UK CORPORATIONS--A UK
+ 2 + regardless of which other corporation must execute the
+ + Box(es) you complete. Form of Acceptance as a
+++ +++ deed, by the signatures of
INDIVIDUALS--Each signature two Directors or a Director
by an individual must be and the Secretary who should
made in the presence of one state the capacity in which
independent witness who must they sign.
also sign Box [2] where
indicated. The witness must FOREIGN CORPORATIONS--A
be 18 years of age or over. foreign corporation must
The witness must not be execute the Form of
another joint holder. The Acceptance as a deed by the
witness should state his or signature or signatures of a
her name and sign where person or persons who, in
indicated. The same witness accordance with the laws of
may witness each signature the territory in which the
of joint holders. foreign corporation was
incorporated, act under the
authority (express or
implied) of that foreign
corporation.
- --------------------------------------------------------------------------------
+++ +++
+ + To accept the Offer complete
+ 3 + Box [3] in BLOCK CAPITALS
+ + with the full name and
+++ +++ address of the registered
holder and in the case of
Lilliput Shares jointly
held, the full name and
address of the first-
registered holder together
with the names and addresses
of all joint holders.
Please enter a daytime
telephone number in the box
provided where you may be
contacted in the event of a
query regarding the
completion of this Form.
- --------------------------------------------------------------------------------
+++ +++
+ + If you want the
+ 4 + consideration and/or other
+ + documents to be sent to
+++ +++ someone other than the
first-registered holder at
the address set out in Box
[3] (e.g. your bank manager
or stockbroker), you should
also complete Box [4].
- --------------------------------------------------------------------------------
<PAGE>
PAGE 3
+++ +++
+ For Stock Exchange or +
+ Registrar's use +
+++ +++
PLEASE COMPLETE THIS FORM AS EXPLAINED ON PAGE 2
The provisions of the Offer Document are incorporated in
and form part of this Form of Acceptance.
TO ACCEPT THE OFFER COMPLETE BOXES [1] AND [3] AND SIGN BOX [2]
- ------------------------------------------------------------------------
+++ +++ Please insert the number +++ +++
+ + of Lilliput Shares in respect + Number of +
+ 1 + of which you wish to accept + Lilliput +
+ + the Offer. + Shares +
+++ +++ +++ +++
- ------------------------------------------------------------------------
+++ +++ SIGN BELOW TO ACCEPT THE OFFER
+ +
+ 2 + Signed as a deed by: In the presence of:
+ + -------------------- -------------------
+++ +++
1. ................. ................ ................
Signature of Signature of Name of
individual witness witness
2. ................. ................ ................
Signature of Signature of Name of
individual witness witness
3. ................. ................ ................
Signature of Signature of Name of
individual witness witness
4. ................. ................ ................
Signature of Signature of Name of
individual witness witness
Executed as a deed by:
----------------------
................... ................ ................
Name of Signature of Name of
corporation Director Director
................ ................
Signature of Name of second
second Director/Secretary
Director/Secretary (delete as
(delete as appropriate)
appropriate)
- ------------------------------------------------------------------------
+++ +++ FULL NAME(S) AND ADDRESS(ES) (TO BE COMPLETED IN BLOCK
+ + CAPITALS)
+ 3 +
+ + First holder
+++ +++ ------------
1. Forename(s)............ 3. Forename(s)..............
Surname Surname
(Mr/Mrs/Miss/Title)....... (Mr/Mrs/Miss/Title).........
Full address.............. Full address................
.......................... ............................
.......................... ............................
Postcode.................. Postcode....................
Joint holders
-------------
2. Forename(s)............ 4. Forename(s)..............
Surname Surname
(Mr/Mrs/Miss/Title)....... (Mr/Mrs/Miss/Title).........
Full address.............. Full address................
.......................... ............................
.......................... ............................
Postcode.................. Postcode....................
+++ +++
+ +
+ PLEASE INSERT YOUR DAYTIME TELEPHONE +
+ NUMBER IN CASE OF QUERY: +
+++ +++
- ------------------------------------------------------------------------
+++ +++ +++ +++
+ + + Please complete this Box if you wish the consideration +
+ 4 + + and/or other documents to be sent to someone other +
+ + + than the first-registered holder at the address set +
+++ +++ + out in Box [3] +
+ +
+ Name................................................... +
+ Address................................................ +
+ ......................................Postcode......... +
+++ +++
(TO BE COMPLETED IN BLOCK CAPITALS)
FOR OFFICE
USE ONLY
- -------------
H
- -------------
C
- -------------
Q
- -------------
ACCEPTANCE
NO.
- -------------
SHARES
ACCEPTED
- -------------
CASH
CONSIDERATION
(POUNDS)
- -------------
CHEQUE
NO.
- -------------
<PAGE>
Page 4
ADDITIONAL NOTES REGARDING THE COMPLETION OF THIS FORM.
IN ORDER TO BE EFFECTIVE THIS FORM MUST, EXCEPT AS MENTIONED BELOW, BE SIGNED
AS A DEED BY THE REGISTERED HOLDER OR, IN THE CASE OF A JOINT HOLDING, BY ALL
THE JOINT HOLDERS, OR UNDER A POWER OF ATTORNEY AND IN ACCORDANCE WITH THE
NOTES ON PAGE 2. A CORPORATION MUST EXECUTE THIS FORM AS A DEED IN ACCORDANCE
WITH THE NOTES ON PAGE 2.
In order to avoid delay and inconvenience to yourself, the following points may
assist you:-
1.IF A HOLDER IS AWAY FROM HOME (E.G. ABROAD OR ON HOLIDAY)
Send this Form by the quickest means (e.g. air mail), but not into the
United States or Canada, to the holder for execution or, if he has
executed a power of attorney, have this Form signed by the attorney. In
the latter case, the power of attorney should be lodged with this Form
for noting. NO OTHER SIGNATURES ARE ACCEPTABLE.
2.IF YOU HAVE SOLD ALL YOUR HOLDING
You should at once send this Form and the Offer Document to the
stockbroker, bank or other agent through whom the sale was effected for
transmission to the purchaser.
3.IF THE SOLE HOLDER HAS DIED
If probate or letters of administration have been registered with
Lilliput, this Form must be signed by the personal representative(s) of
the deceased.
If probate or letters of administration have been granted but have not
been registered with Lilliput, the personal representative(s) should
sign this Form and forward it to The Royal Bank of Scotland plc,
Registrar's Department, New Issues Section at one of the addresses given
below with the share certificate(s) and with a sealed copy of the
probate or letters of administration as soon as possible.
If probate or letters of administration have not been granted, the
personal representative(s) should sign this Form and forward it to The
Royal Bank of Scotland plc, Registrar's Department, New Issues Section
at one of the addresses given below with the share certificate(s).
However, a sealed copy of the probate or letters of administration must
be lodged with The Royal Bank of Scotland plc, Registrar's Department,
New Issues Section at one of the addresses given below before the
consideration due under the Offer can be forwarded to the personal
representative(s).
4.IF ONE OF THE JOINT HOLDERS HAS DIED
This Form is valid if signed by all the surviving joint holders and
lodged with the death certificate, probate or letters of administration
of the deceased.
5.IF THE SHARE CERTIFICATE(S) IS/ARE HELD BY YOUR STOCKBROKER OR OTHER AGENT
If your share certificate(s) and/or other document(s) of title are with
your stockbroker or other agent, you should complete this Form and
arrange for it to be lodged by such agent with the relevant document(s).
If the share certificate(s) is/are not readily obtainable, lodge this
Form duly completed together with a note saying e.g. "certificate(s) to
follow", and arrange for the certificate(s) to be forwarded as soon as
possible thereafter. It is helpful for your agent to be informed of the
full terms of the Offer.
6.IF THE SHARE CERTIFICATE HAS BEEN LOST
Complete and lodge this Form together with a letter of explanation and
any certificate(s) available, with The Royal Bank of Scotland plc,
Registrar's Department, New Issues Section at one of the addresses given
below. You should then write to the Registrars of Lilliput, The Royal
Bank of Scotland plc, Securities Services--Registrars, Owen House, 8
Bankhead Crossway North, Edinburgh EH11 4BR for a letter of indemnity
which should be completed in accordance with the instructions given.
When completed, the letter of indemnity must be lodged with The Royal
Bank of Scotland plc, Registrar's Department, New Issues Section at one
of the addresses given below.
7.IF YOUR NAME OR OTHER PARTICULARS ARE SHOWN INCORRECTLY ON THE SHARE
CERTIFICATE, E.G.:
(a) name on the certificate...................................James Smith
correct name.............................................James Smythe
complete and lodge this Form with the correct name and accompanied by a
letter from your stockbroker, bank or solicitor confirming that the
person described on the certificate and the person who has signed this
Form are one and the same;
(b)incorrect address
write the correct address on this Form;
(c)change of name
lodge your Marriage Certificate or the deed poll with this Form for noting.
THE CONSIDERATION DUE TO YOU UNDER THE OFFER CANNOT BE SENT TO YOU UNTIL ALL
RELEVANT DOCUMENTS HAVE BEEN PROPERLY COMPLETED AND LODGED EITHER BY POST WITH
THE ROYAL BANK OF SCOTLAND PLC, REGISTRAR'S DEPARTMENT, NEW ISSUES SECTION, PO
BOX 859, CONSORT HOUSE, EAST STREET, BEDMINSTER, BRISTOL BS99 1XZ OR BY HAND
ONLY WITH THE ROYAL BANK OF SCOTLAND PLC, REGISTRAR'S DEPARTMENT, NEW ISSUES
SECTION, 15 FEATHERSTONE STREET, LONDON EC1Y 8QS.
Printed by RR Donnelley Financial--16078
<PAGE>
Exhibit 2(c)
- --------------------------------------------------------------------------------
[LETTERHEAD OF GOLDMAN SACHS APPEARS HERE]
- --------------------------------------------------------------------------------
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR PART IN OR INTO THE
UNITED STATES OF AMERICA OR CANADA
3rd October, 1994
Stanhome plc
("Stanhome")
RECOMMENDED CASH OFFER
for
Lilliput Group plc
("Lilliput")
Acceptances of the Offer
On 31st August, 1994, the day before the announcement of the Offer, neither
Stanhome, nor any person acting in concert with Stanhome, owned, controlled or
held any options to purchase any Lilliput shares. As at 3.00pm on Friday, 30th
September, 1994, the first closing date of the Offer, Stanhome had purchased
6,504,219 Lilliput shares representing 28.0 per cent. of the issued ordinary
share capital of Lilliput and had received acceptances in respect of 15,239,746
Lilliput shares representing 65.5 per cent. of the issued ordinary share
capital.
In aggregate, as at 3.00pm on Friday, 30th September, 1994, Stanhome therefore
owned or had received acceptances over 21,743,965 Lilliput shares, representing
93.4 per cent. of the issued ordinary share capital of Lilliput. In addition,
Stanhome has purchased a further 170,000 shares representing 0.7 per cent. of
Lilliput's issued ordinary share capital which are still awaiting settlement.
The Offer has been declared fully unconditional and will remain open until
further notice.
Enquiries
Stanhome Tel: 0101 413 562 3631
G. William Seawright - President and Chief Executive
Goldman Sachs International Tel: 071 774 4366
Richard Gnodde
Goldman Sachs International ("GSI"), which is a member of the Securities and
Futures Authority, is acting for Stanhome Inc. and its subsidiaries and no one
else in connection with the Offer and will not be responsible to anyone other
than Stanhome Inc. and its subsidiaries for providing the protections offered to
customers of GSI nor for providing advice in relation to the Offer.
<PAGE>
Exhibit 2(d)
Stanhome plc
+++ +++
+ +
+ +
To:
+ +
+ +
+++ +++
THE COMPANIES ACT 1985
NOTICE TO NON-ASSENTING SHAREHOLDERS
Pursuant to section 429(4) of the Companies Act 1985 as inserted by
Schedule 12 to the Financial Services Act 1986.
A takeover offer ("the Offer") was made on 9th September, 1994 by Goldman
Sachs International on behalf of Stanhome plc ("Stanhome") for the whole of
the issued and to be issued ordinary share capital of Lilliput Group plc
("the Company").
Stanhome has, within 4 months of making the Offer, acquired or contracted
to acquire not less than nine-tenths in value of the shares of the Company
to which the Offer relates. Stanhome gives notice that it now intends to
exercise its right under section 429 Companies Act 1985 to acquire shares
held by you in the Company.
The terms of the Offer are 160p in cash for each ordinary share of 5p of
the Company and so in proportion for any other number of ordinary shares of
the Company.
NOTE: You are entitled under section 430C of the Companies Act 1985 to make
application to the Court within 6 weeks of the date of this notice
for an order either that Stanhome shall not be entitled and bound to
acquire your shares or that different terms to those of the Offer
shall apply to the acquisitions. If you are contemplating such an
action you may wish to seek legal advice.
Signed ..............................
Secretary of Stanhome plc
Date: 11th October, 1994
All enquiries or communications in connection with the above notice should
be addressed to The Royal Bank of Scotland plc, Registrar's Department, New
Issues Section, P.O. Box 859, Consort House, East Street, Bedminster
Bristol, BS99 1XZ. Telephone number: 0117 937 0666.
<PAGE>
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. WHEN
CONSIDERING WHAT ACTION YOU SHOULD TAKE, YOU ARE RECOMMENDED TO SEEK YOUR OWN
FINANCIAL ADVICE IMMEDIATELY FROM YOUR STOCKBROKER, BANK MANAGER, SOLICITOR,
ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL ADVISER DULY AUTHORISED UNDER THE
FINANCIAL SERVICES ACT 1986.
STANHOME PLC
11th October, 1994
To the holders of Lilliput shares who have not accepted the Offer
Dear Sir or Madam,
OFFER BY STANHOME PLC ("STANHOME") TO ACQUIRE THE ENTIRE
ISSUED AND TO BE ISSUED ORDINARY SHARE CAPITAL OF LILLIPUT GROUP PLC
("LILLIPUT")
The offer made by Goldman Sachs International on behalf of Stanhome on 9th
September, 1994 ("the Offer") to acquire all the issued and to be issued
ordinary shares of 5p each in Lilliput not already owned by the Stanhome Group
was declared unconditional in all respects on Monday, 3rd October, 1994. At
that time acceptances from the holders of approximately 65.49 per cent. of
Lilliput's issued ordinary share capital had been received, and Stanhome had
purchased approximately 27.95 per cent. Stanhome therefore owns or controls
approximately 93.4 per cent. of Lilliput's issued ordinary share capital.
The terms of the offer were 160p in cash for each Lilliput ordinary share.
According to our records we have not received your acceptance of the Offer and
we therefore enclose the statutory notice under section 429 of the Companies
Act 1985 informing you that Stanhome will apply the procedure under that
section compulsorily to acquire your ordinary shares in Lilliput. Upon
completion of the compulsory acquisition Stanhome intends to institute
proceedings to remove Lilliput's listing on the London Stock Exchange.
If you have lost or mislaid your Form of Acceptance, further copies can be
obtained from The Royal Bank of Scotland plc, Registrar's Department, New
Issues Section, P.O Box 859, Consort House, East Street, Bedminster, Bristol,
BS99 1XZ. If you do not accept the Offer in the normal way your shares will in
any event be compulsorily acquired pursuant to section 429 of the Companies Act
1985.
Yours faithfully
[SIGNATURE OF G. WILLIAM SEAWRIGHT APPEARS HERE]
For and on behalf of Stanhome
REGISTERED IN ENGLAND NO. 2939658
Broadwalk House, 5 Appold Street, London EC2A 2HA
<PAGE>
Exhibit 2(e)
NOTICE TO OPTIONHOLDERS
UNDER THE
LILLIPUT GROUP PLC SAVINGS-RELATED SHARE OPTION SCHEME
(THE "SAYE SCHEME")
+++ +++
+ +
+ +
To:
+ +
+ +
+++ +++
A takeover offer ("the Offer") was made on 9th September, 1994 by Goldman
Sachs International on behalf of Stanhome plc ("Stanhome") for the whole of
the issued and to be issued ordinary share capital of Lilliput Group plc
("the Company").
Stanhome has, within 4 months of making the Offer, acquired or contracted to
acquire not less than nine-tenths in value of the shares of the Company to
which the Offer relates. Stanhome gives notice under rule 7.2 of the SAYE
Scheme that it now intends to exercise its right under section 429 Companies
Act 1985 compulsorily to acquire shares in the Company.
Pursuant to Rule 7.2 of the SAYE Scheme your option will remain exercisable
until 12th November, 1994 and shall thereafter lapse and cease to be of any
further value.
Signed [SIGNATURE OF G. WILLIAM SEAWRIGHT APPEARS HERE]
Director of Stanhome plc
Date: 11th October, 1994
All enquiries or communications in connection with the above notice should
be addressed to The Royal Bank of Scotland plc, Registrar's Department, New
Issue Section, P.O. Box 859, Consort House, East Street, Bedminster, Bristol
BS99 1XZ. Telephone number: 0117 937 0666.
<PAGE>
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. WHEN
CONSIDERING WHAT ACTION YOU SHOULD TAKE, YOU ARE RECOMMENDED IMMEDIATELY TO
SEEK YOUR OWN FINANCIAL ADVICE FROM YOUR STOCKBROKER, BANK MANAGER, SOLICITOR,
ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL ADVISER AUTHORISED UNDER THE
FINANCIAL SERVICES ACT 1986. THIS DOCUMENT SHOULD BE READ IN CONJUNCTION WITH
THE ACCOMPANYING FORM OF ACCEPTANCE AND SURRENDER AND THE OFFER DOCUMENT, A
COPY OF WHICH HAS ALREADY BEEN SENT TO YOU.
NEITHER THIS DOCUMENT NOR THE OFFER DOCUMENT NOR ANY DOCUMENT IN CONNECTION
WITH EITHER MAY BE DISTRIBUTED OR SENT IN, INTO OR FROM, THE UNITED STATES AND
DOING SO MAY RENDER INVALID ANY PURPORTED ACCEPTANCE.
LILLIPUT GROUP plc,
SKIRSGILL, PENRITH, CUMBRIA CA11 0DP
TO THE HOLDERS OF OPTIONS UNDER THE
LILLIPUT GROUP PLC SAVINGS-RELATED OPTION SCHEME
11th October, 1994
DEAR OPTIONHOLDER,
RECOMMENDED CASH OFFER ON BEHALF OF STANHOME PLC ("STANHOME")
A SUBSIDIARY OF STANHOME INC.
FOR
LILLIPUT GROUP PLC ("LILLIPUT")
I refer to the offer (the "Offer") which has been made on behalf of Stanhome to
acquire the whole of the issued and to be issued share capital of Lilliput. A
copy of the Offer Document was sent to you on 9th September, 1994 and the Offer
was declared unconditional in all respects on 3rd October, 1994.
Appendix I to this document sets out the courses of action available to you and
Appendix II summarises the tax implications of those courses of action.
In the accompanying letter to you from Stanhome you will find details of a
separate offer to you by Stanhome under which you may surrender your options
for a cash payment (the "Proposal"). You will also find a notice of Stanhome's
intention to exercise rights of compulsory acquisition pursuant to section 429
of the Companies Act 1985 indicating what will happen to the shares acquired if
you choose to exercise your option and do not take up the Proposal.
If you have any questions in respect of the Offer as it affects your options
please contact Rob Freestone the Company Secretary on 01768 212 670.
THE BOARD OF LILLIPUT, WHICH HAS BEEN SO ADVISED BY NATWEST MARKETS, CONSIDERS
THE TERMS OF THE PROPOSAL TO BE FAIR AND REASONABLE.
The decision as to which course of action to take is a matter for you alone.
However, failure to take any action may result in your options lapsing and
becoming worthless.
YOURS SINCERELY,
[SIGNATURE OF JOHN A. RUSSELL APPEARS HERE]
J A RUSSELL
CHAIRMAN
<PAGE>
STANHOME PLC
11th October, 1994
To participants in The Lilliput Group plc Savings-Related Share Option Scheme
(the "SAYE Scheme")
DEAR OPTIONHOLDER,
RECOMMENDED CASH OFFER ON BEHALF OF STANHOME PLC ("STANHOME")
A SUBSIDIARY OF STANHOME INC.
FOR
LILLIPUT GROUP PLC ("LILLIPUT")
You will have received a copy of the Offer Document in which it was stated
that a cash cancellation proposal would in due course be put to Optionholders
under the Lilliput Share Option Schemes who have not exercised their options
during the Offer Period. On 3rd October, 1994 the Offer was declared wholly
unconditional and Stanhome now controls over 90 per cent. of the issued and to
be issued shared capital of Lilliput which is the subject of the Offer. You
will see from Appendix I to this document on page 4 of this document, the
alternative courses of action available to holders of options under the SAYE
Scheme. We are writing to propose to you the separate offer under which you
may surrender your option for a cash payment (the "Proposal").
THE PROPOSAL
Under the Proposal, you may elect to surrender your option in return for a
cash payment.
We hereby offer to pay you a cash payment in consideration of the surrender of
any option held by you. The cash sum will be calculated by multiplying the
number of Lilliput Shares that can be purchased with the proceeds of your
related share save account with the Halifax Building Society ("the Sharesave
Account") standing to the credit of that account at the close of business on
11th October, 1994 by 160p and deducting therefrom the total subscription
price which would have been payable on exercise of the option.
If you accept the Proposal you will avoid the two-stage process of having to
exercise your option and subsequently being required to sell your shares to
Stanhome.
HALIFAX BUILDING SOCIETY SHARESAVE ACCOUNT
You should note that acceptance of the Proposal does not require you to close
your Sharesave Account nor for any amounts to be deducted from your Sharesave
Account. If you wish, your Sharesave Account can be continued until maturity
of the related savings contract or, as the case may be, closed in accordance
with any instructions you may give to the Halifax Building Society. The
ability to continue the Sharesave Account may be of particular significance
for those Optionholders who wish to take advantage of the tax reliefs
available in relation to the bonus payable upon maturity of the savings
contract underlying the Sharesave Account.
WORKED EXAMPLE OF THE PROPOSAL
An Optionholder has an option over Lilliput Shares exercisable at 98p per
Lilliput Share. On the date of the Proposal the balance of the Optionholder's
Sharesave Account is (Pounds)196. This amount would allow the
2
<PAGE>
Optionholder to acquire 200 Lilliput Shares. The Optionholder may therefore
accept the Proposal in respect of options over 200 Lilliput Shares and would
receive the following consideration under the Proposal:-
<TABLE>
<CAPTION>
(Pounds)
<S> <C>
Cash sum 200 X 160p 320
less 200 X 98p (196)
-----
Net cash sum 124
=====
</TABLE>
No account has been taken of any liability to taxation in the above example.
TAXATION
You should note that by electing to surrender your option in accordance with
the Proposal you will be subject to income tax in the current year of
assessment at your highest marginal rate on the proceeds of surrender of your
options (that is, on the net cash sum which you receive). If you were to
exercise your option in accordance with the terms of the SAYE Scheme, to the
extent that such exercise is permitted by the rules of the SAYE Scheme, rather
than accept the Proposal, the tax consequences are likely to be essentially the
same.
IF YOU ARE IN ANY DOUBT ABOUT YOUR TAX POSITION YOU ARE ADVISED TO CONSULT AN
INDEPENDENT PROFESSIONAL ADVISER IMMEDIATELY.
PROCEDURE FOR ACCEPTANCE OF THE PROPOSAL
To accept the Proposal you must ascertain from Rob Freestone, the Company
Secretary of Lilliput, the number of shares you could subscribe for as at 11th
October, 1994. To accept the Proposal you should complete the accompanying
Form. This should be signed and returned with the relevant option certificate
as soon as possible, but in any event so as to reach Rob Freestone at Lilliput
Group plc, Skirsgill, Penrith, Cumbria CA11 0DP no later than close of business
on 12th November, 1994. The Proposal will close at close of business on 12th
November, 1994 unless Stanhome has previously agreed to extend this time limit.
SETTLEMENT
SETTLEMENT WILL NOT BE MADE UNTIL AFTER RECEIPT OF A VALID COMPLETED FORM AND
YOUR OPTION CERTIFICATE.
IF YOU ACCEPT THE PROPOSAL AND YOUR VALIDLY COMPLETED FORM AND OPTION
CERTIFICATE ARE RECEIVED NOT LATER THAN 14TH OCTOBER, 1994, A CHEQUE WILL BE
DESPATCHED TO YOU ON OR BEFORE 21ST OCTOBER, 1994. OTHERWISE, CHEQUES WILL BE
DESPATCHED NOT LATER THAN 21 DAYS AFTER RECEIPT OF A VALID AND COMPLETED FORM
TOGETHER WITH YOUR OPTION CERTIFICATE.
COMPULSORY ACQUISITION
You will find enclosed a notice of our intention to exercise rights of
compulsory acquisition pursuant to section 429 of the Companies Act 1985 as
regards all Lilliput Shares. Pursuant to Rule 7.2 of the SAYE Scheme your
option shall remain exercisable until 12th November, 1994 and shall thereafter
lapse and cease to be of any further value. The extent to which you may
exercise your option under the SAYE Scheme will depend on the amount of savings
you have made. No interest will be payable and in order to exercise you will
have to close your Sharesave Account, which you could otherwise have continued
to maturity as explained above.
To the extent that an option is exercisable under the rules of the SAYE Scheme,
the Lilliput Shares issued pursuant to such exercise will be compulsorily
acquired under section 429 of the Companies Act 1985.
The tax consequences of this course of action are set out in Appendix II to
this document.
Yours faithfully
[SIGNATURE OF G. WILLIAM SEAWRIGHT APPEARS HERE]
for Stanhome plc
Broadwalk House, 5 Appold Street, London EC2A 2HA
3
<PAGE>
APPENDIX I
1. INTRODUCTION
The definitions set out in Appendix III are used in this description of your
rights.
The Offer made on behalf of Stanhome for Lilliput is to pay 160 pence in cash
for each Lilliput Share.
The following courses of action are open to you under and subject to the Rules
of the SAYE Scheme:-
(i) you may take up the Proposal set out in the accompanying letter from
Stanhome; or
(ii) you may exercise your option and become a Lilliput Shareholder. The
Lilliput Shares issued pursuant to such exercise will then be compulsorily
acquired by Stanhome. You have a limited period in which to exercise your
option if you are permitted to do so under the rules of the SAYE Scheme.
This is explained in paragraph 3 below; or
(iii) you may do nothing in which case your option will lapse on 12th November,
1994 and cease to be of any further value.
The taxation consequences of these courses of action are set out in Appendix II.
2. THE PROPOSAL
Stanhome is offering you a cash sum in consideration of the cancellation of
your option. The terms and conditions of the Proposal are set out in the
accompanying letter.
For each option to acquire a Lilliput Share which would be capable of being
exercised and in respect of which you validly accept the Proposal, you will be
paid 160p less the exercise price per share of that option.
You need not close your Sharesave Account and if you maintain it you will
continue to obtain favourable tax treatment in respect of it.
3. EXERCISE OF OPTIONS
To the extent that you are permitted to exercise your option and become a
Lilliput Shareholder, you should be aware that pursuant to Rule 7.2 of the SAYE
Scheme your right to exercise your option will cease on 12th November, 1994, as
Stanhome has exercised its rights under section 429 of the Companies Act 1985
compulsorily to acquire any remaining Lilliput Shares. Any option not exercised
by 12th November, 1994 will lapse and cease to be of any further value.
You may not exercise your option with a sum exceeding the total repayment due
to you under your Sharesave Account.
If you exercise your option the Lilliput Shares issued pursuant to such
exercise will be compulsorily acquired on the terms set out in the Offer
Document by Stanhome under section 429 of the Companies Act 1985.
Further details of the Offer are given in the Offer Document.
4. IF YOU TAKE NO ACTION
If you take no action, your option will lapse on 12th November, 1994.
5. TAXATION
A summary of the tax implications of the courses of action described above is
set out in Appendix II. The precise implications for you will, however, depend
on your particular circumstances. If you are in any doubt, you should consult a
professional tax adviser.
6. GENERAL
If you have any questions concerning the proposals set out in this document,
you should refer them to Rob Freestone at Lilliput.
4
<PAGE>
APPENDIX II
TAXATION
The following is a summary of the likely United Kingdom taxation implications
of the courses of action described in this letter for optionholders resident
for tax purposes in the United Kingdom. The precise implications for you will,
however, depend on your particular circumstances and, if you are in any doubt
as to your tax position, you should consult a professional adviser. This
applies in particular to any optionholder not resident nor ordinarily resident
for tax purposes in the United Kingdom.
You should also refer to the taxation paragraphs of the Offer Document for
general taxation information relating to the Offer.
1. ACCEPTANCE OF THE PROPOSAL (I.E. CASH CANCELLATION OF OPTIONS)
If you accept the Proposal you will be subject to income tax on the value of
the consideration you receive (that is, the cash sum) in return for cancelling
your option.
2. EXERCISE OF OPTIONS AND COMPULSORY ACQUISITION
If you exercise your option you will be subject to income tax on the amount by
which the market value of the Lilliput Shares acquired on exercise of your
option exceeds the option exercise price.
If you exercise your option, the Lilliput Shares issued pursuant to such
exercise will be compulsorily acquired by Stanhome on the terms set out in the
Offer Document. You may, depending on your personal circumstances, be liable
for Capital Gains Tax ("CGT").
The amount of any gain chargeable to CGT will be based on the proceeds of sale
of your Lilliput Shares less your allowable acquisition costs of those shares.
The allowable acquisition cost of your shares will equal the market value of
the shares on the date of exercise.
Liability to CGT is particularly dependent on your personal circumstances. You
should be aware that, if you already hold Lilliput Shares, the disposal of
those shares may trigger an overall CGT liability even though some of the
shares forming part of the pool have been acquired at full market value.
You will only be liable to CGT to the extent that your total chargeable gains
(less allowable capital losses) for the entire tax year 1994/95 exceed the
annual exempt amount which is, for individuals, (Pounds)5,800 for the tax year
1994/95.
3. TAX RETURNS
IF YOU HAVE TO PAY INCOME TAX ON MONEY RECEIVED WHEN YOU EXERCISE YOUR OPTION
OR ACCEPT THE PROPOSAL YOU MUST GIVE DETAILS OF THE MONEY RECEIVED ON YOUR
INCOME TAX RETURN FOR THE TAX YEAR ENDING 5TH APRIL, 1995. IF YOU DO NOT
NORMALLY COMPLETE AN INCOME TAX RETURN IT IS INCUMBENT UPON YOU TO DO SO IN
RESPECT OF THIS ADDITIONAL INCOME.
YOU ARE STRONGLY ADVISED TO PUT ASIDE SUFFICIENT MONEY TO ENABLE YOU TO MEET
THE INCOME TAX WHICH YOU MAY BE REQUIRED TO REPAY IN DUE COURSE.
5
<PAGE>
APPENDIX III
1. In this document and the accompanying Form, the following expressions have
the following meanings unless the context requires otherwise:
"Lilliput Share Option together, the SAYE Scheme and The Lilliput
Schemes" Group plc Executive Share Option Scheme;
"Form" the Form of Acceptance and Surrender enclosed
with this document;
"Lilliput" Lilliput Group plc;
"Lilliput Shares" the fully-paid ordinary shares of 5 pence each
in Lilliput;
"Offer Document" the offer document dated 9th September 1994
containing the Recommended Cash Offer;
"Optionholders" holders of options under the SAYE Scheme;
"Recommended Cash Offer" the recommended cash offer made by Goldman
Sachs on behalf of Stanhome to acquire Lilliput
Shares as set out in the Offer Document;
"Stanhome" Stanhome plc, a wholly owned subsidiary of
Stanhome Inc.
Save as aforesaid, the definitions used in the Offer Document also apply in
this document and the Form.
2. The Form, including the instructions and notes thereon, shall be deemed an
integral part of the Proposal.
3. Accidental omission to despatch this document to, or any failure to receive
the same by, any person to whom the Proposal is made or should be made shall
not invalidate the Proposal in any way.
4. Acceptances will not be acknowledged. All documents or remittances sent by or
to an acceptor, or as he may direct, will be sent through the post at his
risk.
5. The Proposal and acceptance shall be governed by and construed in accordance
with English law.
6. All acceptances of the Proposal will be irrevocable.
7. NatWest Markets has given and not withdrawn its consent to the issue of this
document with the reference to its name in the form and context in which it
appears.
8. The issue of this document has been approved by a duly authorised committee
of the Board of Stanhome. The directors of Stanhome accept responsibility for
the information contained in this document (other than that relating to
Lilliput) and, to the best of the knowledge and belief of such directors (who
have taken all reasonable care to ensure that such is the case), the
information contained in this document for which they take responsibility is
in accordance with the facts and does not omit anything likely to affect the
import of such information.
9. The issue of this document has been approved by a duly authorised committee
of the Board of Lilliput. The directors of Lilliput accept responsibility for
the information contained in this document regarding Lilliput and, to the
best of the knowledge and belief of such directors (who have taken all
reasonable care to ensure that such is the case), the information contained
in this document for which they take responsibility is in accordance with the
facts and does not omit anything likely to affect the import of such
information.
10.So far as the directors of Stanhome and the directors of Lilliput are aware,
there has been no material change to the information contained in the Offer
Document.
11.The copy of the Rules of the Lilliput Share Option Schemes will be available
for inspection at Ashurst Morris Crisp Broadwalk House, 5 Appold Street,
London EC2A 2HA during normal business hours on all weekdays (Saturdays and
public holidays excepted) until 12th November, 1994.
12.Goldman Sachs International, a member of The Securities and Futures
Authority has approved the contents of this letter for the purposes of
Section 57 of the Financial Services Act 1986.
6
<PAGE>
Printed by RR Donnelley Financial, 39234
<PAGE>
Exhibit 2(f)
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
It should be read in conjunction with the accompanying document dated 11th
October, 1994 containing the Proposal (the "Document"). If you are in any
doubt about the action you should take, you should consult an independent
financial adviser authorised under the Financial Services Act 1986.
The definitions which apply in the Document also apply where relevant in
this Form.
- --------------------------------------------------------------------------------
FORM OF ACCEPTANCE AND SURRENDER
RELATING TO
THE PROPOSAL
BY
STANHOME PLC
A SUBSIDIARY OF
STANHOME INC.
MADE TO
THE HOLDERS OF OPTIONS UNDER
THE LILLIPUT GROUP PLC
SAVINGS-RELATED SHARE OPTION SCHEME
- --------------------------------------------------------------------------------
HOW TO COMPLETE THIS FORM
1. To accept the Proposal you must sign and date the Form in the place
indicated.
2. Having completed this Form, duly signed, it should be forwarded with
your option certificate to Rob Freestone at Lilliput Group plc, Skirsgill,
Penrith, Cumbria CA11 0DP. Acceptances may not be treated as valid unless
this Form is received properly completed together with your option
certificate by not later than close of business on 12th November, 1994
(unless Stanhome has previously agreed to extend the time limit).
3. If you accept the Proposal and your validly completed Form and option
certificate are received not later than 14th October, 1994, a cheque will
be despatched to you on or before 21st October, 1994. Otherwise, cheques
will be despatched not later than 21 days after receipt of a valid and
completed Form and your option certificate.
4. If you are in any doubt about how to fill in this Form please telephone
Rob Freestone the Company Secretary, at Lilliput on 01768 212 670.
<PAGE>
FORM OF ACCEPTANCE AND SURRENDER
To: Stanhome plc
Lilliput Group plc
I (full name)...............................................................
of (address)................................................................
............................................................................
being a participant in The Lilliput Group plc Savings-Related Share Option
Scheme hereby accept the Proposal contained in the Document and accordingly
agree to surrender the option listed below in consideration of a cash payment,
calculated in accordance with the formula set out in the Proposal. I also agree
that I have no further rights under the SAYE Scheme in respect of such option.
Option granted on 5th January, 1994 at an exercise price of 98p per
Lilliput Share.
Signed .................................
Date ...................................
Printed by RR Donnelley Financial--39240
<PAGE>
Exhibit 2(g)
NOTICE TO OPTIONHOLDERS
UNDER THE
LILLIPUT GROUP PLC EXECUTIVE SHARE OPTION SCHEME
(THE "EXECUTIVE SCHEME")
+++ +++
+ +
+ +
To:
+ +
+ +
+++ +++
A takeover offer ("the Offer") was made on 9th September, 1994 by Goldman
Sachs International on behalf of Stanhome plc ("Stanhome") for the whole of
the issued and to be issued ordinary share capital of Lilliput Group plc
("the Company").
Stanhome has, within 4 months of making the Offer, acquired or contracted
to acquire not less than nine-tenths in value of the shares of the Company
to which the Offer relates. Stanhome gives notice under rule 6.2 of the
Executive Scheme that it now intends to exercise its right under section
429 Companies Act 1985 compulsorily to acquire shares in the Company.
Pursuant to Rule 6.2 of the Executive Scheme your option will remain
exercisable until 12th November, 1994 and shall thereafter lapse and cease
to be of any further value.
Signed [SIGNATURE OF G. WILLIAM SEAWRIGHT APPEARS HERE]
Director of Stanhome plc
Date: 11th October, 1994
All enquiries or communications in connection with the above notice should
be addressed to The Royal Bank of Scotland plc, Registrar's Department, New
Issues Section, P.O. Box 859, Consort House, East Street, Bedminster,
Bristol BS99 1XZ. Telephone number: 0117 937 0666.
<PAGE>
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. WHEN
CONSIDERING WHAT ACTION YOU SHOULD TAKE, YOU ARE RECOMMENDED IMMEDIATELY TO
SEEK YOUR OWN FINANCIAL ADVICE FROM YOUR STOCKBROKER, BANK MANAGER, SOLICITOR,
ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL ADVISER AUTHORISED UNDER THE
FINANCIAL SERVICES ACT 1986. THIS DOCUMENT SHOULD BE READ IN CONJUNCTION WITH
THE ACCOMPANYING FORM OF ACCEPTANCE AND SURRENDER AND THE OFFER DOCUMENT, A
COPY OF WHICH HAS ALREADY BEEN SENT TO YOU.
NEITHER THIS DOCUMENT NOR THE OFFER DOCUMENT NOR ANY DOCUMENT IN CONNECTION
WITH EITHER MAY BE DISTRIBUTED OR SENT IN, INTO OR FROM, THE UNITED STATES AND
DOING SO MAY RENDER INVALID ANY PURPORTED ACCEPTANCE.
LILLIPUT GROUP plc,
SKIRSGILL, PENRITH, CUMBRIA CA11 0DP
TO THE HOLDERS OF OPTIONS UNDER THE
LILLIPUT GROUP PLC EXECUTIVE SHARE OPTION SCHEME
11th October, 1994
DEAR OPTIONHOLDER,
RECOMMENDED CASH OFFER ON BEHALF OF STANHOME PLC ("STANHOME")
A SUBSIDIARY OF STANHOME INC.
FOR
LILLIPUT GROUP PLC ("LILLIPUT")
I refer to the offer (the "Offer") which has been made on behalf of Stanhome to
acquire the whole of the issued and to be issued share capital of Lilliput. A
copy of the Offer document was sent to you on 9th September, 1994 and the Offer
was declared unconditional in all respects on 3rd October, 1994.
Appendix I to this document sets out the courses of action available to you and
Appendix II summarises the tax implications of those courses of action.
In the accompanying letter to you from Stanhome, you will find details of a
separate offer to you by Stanhome under which you may surrender your option for
a cash payment (the "Proposal"). You will also find a notice of Stanhome's
intention to exercise rights of compulsory acquisition pursuant to section 429
of the Companies Act 1985 indicating what will happen to the shares acquired if
you choose to exercise your option and do not take up the Proposal.
If you have any questions in respect of the Offer as it affects your option
please contact Rob Freestone, the Company Secretary, on 01768 212 670.
THE BOARD OF LILLIPUT, WHICH HAS BEEN SO ADVISED BY NATWEST MARKETS, CONSIDERS
THE TERMS OF THE PROPOSAL TO BE FAIR AND REASONABLE.
The decision as to which course of action to take is a matter for you alone.
However, failure to take any action may result in your option lapsing and
becoming worthless.
YOURS SINCERELY,
[SIGNATURE OF JOHN A. RUSSELL APPEARS HERE]
J A RUSSELL
CHAIRMAN
<PAGE>
STANHOME PLC
11th October, 1994
To participants in The Lilliput Group plc Executive Share Option Scheme (the
"Executive Scheme")
DEAR OPTIONHOLDER,
RECOMMENDED CASH OFFER ON BEHALF OF STANHOME PLC ("STANHOME")
A SUBSIDIARY OF STANHOME INC.
FOR
LILLIPUT GROUP PLC ("LILLIPUT")
You will have received a copy of the Offer Document in which it was stated that
a cash cancellation proposal would in due course be put to Optionholders under
the Lilliput Share Option Schemes who have not exercised their options during
the Offer Period. On 3rd October, 1994 the Offer was declared wholly
unconditional and Stanhome now controls over 90 per cent. of the issued and to
be issued shared capital of Lilliput which is the subject of the Offer. You
will see from Appendix I to this document, on page 4 of this document, the
alternative courses of action available to holders of options under the
Executive Scheme. We are writing to propose to you the separate offer under
which you may surrender your option for a cash payment (the "Proposal").
THE PROPOSAL
Under the Proposal, you may elect to surrender your option in return for a cash
payment. This may assist Optionholders who do not wish to raise the funds
necessary to pay for the exercise of their options to the extent that such
exercise is permitted by the rules of the Executive Scheme.
We hereby offer to pay you a cash payment in consideration of the surrender of
any option held by you. The cash sum will be calculated by multiplying the
number of Lilliput Shares over which such option would be exercisable, were it
to be validly exercised on the date upon which the completed Form relating to
your option is received, by 160p and deducting therefrom the total subscription
price which would have been payable on exercise of the option.
If you accept the Proposal you will avoid the two-stage process of having to
exercise your option and subsequently having to sell your shares to Stanhome.
WORKED EXAMPLE OF THE PROPOSAL
An Optionholder who surrenders an option over 10,000 Lilliput Shares
exercisable at 135p per Lilliput Share would receive the following
consideration under the Proposal:-
<TABLE>
<CAPTION>
(Pounds)
<S> <C>
Cash sum 10,000 X 160p 16,000
less 10,000 X 135p (13,500)
------
Net cash sum 2,500
======
</TABLE>
No account has been taken of any liability to taxation in the above example.
2
<PAGE>
TAXATION
You should note that by electing to surrender your option in accordance with
the Proposal you will be subject to income tax in the current year of
assessment at your highest marginal rate on the proceeds of surrender of your
option (that is, on the net cash sum which you receive). If you were to
exercise your option in accordance with the terms of the Executive Scheme, to
the extent that such exercise is permitted by the Rules of the Executive
Scheme, rather than accept the Proposal, the tax consequences are likely to be
essentially the same.
IF YOU ARE IN ANY DOUBT ABOUT YOUR TAX POSITION YOU ARE ADVISED TO CONSULT A
PROFESSIONAL TAX ADVISER IMMEDIATELY.
PROCEDURE FOR ACCEPTANCE OF THE PROPOSAL
To accept the Proposal you must complete the accompanying Form. This should be
signed and returned with the relevant option certificate as soon as possible,
but in any event so as to reach Rob Freestone at Lilliput Group plc, Skirsgill,
Penrith, Cumbria CA11 0DP not later than close of business on 12th November,
1994. The Proposal will close at close of business on 12th November, 1994
unless Stanhome has previously agreed to extend this time limit.
SETTLEMENT
SETTLEMENT WILL NOT BE MADE UNTIL AFTER RECEIPT OF A VALID COMPLETED FORM AND
YOUR OPTION CERTIFICATE.
IF YOU ACCEPT THE PROPOSAL AND YOUR VALIDLY COMPLETED FORM AND OPTION
CERTIFICATE ARE RECEIVED NOT LATER THAN 14TH OCTOBER, 1994 A CHEQUE WILL BE
DESPATCHED TO YOU ON OR BEFORE 21ST OCTOBER, 1994. OTHERWISE, CHEQUES WILL BE
DESPATCHED NOT LATER THAN 21 DAYS AFTER RECEIPT OF A VALID AND COMPLETED FORM
AND YOUR OPTION CERTIFICATE.
COMPULSORY ACQUISITION
You will find enclosed a notice of our intention to exercise rights of
compulsory acquisition pursuant to section 429 of the Companies Act 1985 as
regards all Lilliput Shares. Pursuant to Rule 6.2 of the Executive Scheme your
option will remain exercisable until 12th November, 1994 and shall thereafter
lapse and cease to be of any further value.
To the extent that options are exercisable under the rules of the Executive
Scheme, the Lilliput Shares issued pursuant to such exercise will be
compulsorily acquired under section 429 of the Companies Act 1985.
The tax consequences of this course of action are set out in Appendix II to
this document.
YOURS FAITHFULLY
[SIGNATURE OF G. WILLIAM SEAWRIGHT APPEARS HERE]
FOR STANHOME PLC
Broadwalk House, 5 Appold Street, London EC2A 2HA
3
<PAGE>
APPENDIX I
1. INTRODUCTION
The definitions set out in Appendix III are used in this description of your
rights.
The Offer made on behalf of Stanhome for Lilliput is to pay 160 pence in cash
for each Lilliput Share over which an option is held by you.
The following courses of action are open to you under and subject to the Rules
of the Executive Scheme:-
(i) you may take up the Proposal set out in the accompanying letter from
Stanhome; or
(ii) you may exercise your option and become a Lilliput Shareholder. The
Lilliput Shares issued pursuant to such exercise will then be compulsorily
acquired by Stanhome. You have a limited period in which to exercise your
option if you are permitted to do so under the rules of the Executive
Share Scheme. This is explained in paragraph 3 below; or
(iii) you may do nothing in which case your options will lapse on 12th November,
1994 and cease to be of any further value.
The taxation consequences of these courses of action are set out in Appendix
II.
2. THE PROPOSAL
Stanhome is offering you a cash sum in consideration of the cancellation of
your option. The terms and conditions of the Proposal are set out in the
accompanying letter.
For each Lilliput Share over which an option is held by you in respect of which
you accept the Proposal, you will be paid 160p less the exercise price per
share of your option.
3. EXERCISE OF OPTIONS
To the extent that you are permitted to exercise your options and become a
Lilliput Shareholder, you should be aware that pursuant to Rule 6.2 of the
Executive Scheme your right to exercise your options will cease on 12th
November, 1994, as Stanhome has exercised its rights under section 429 of the
Companies Act 1985 compulsorily to acquire any remaining Lilliput Shares. Any
option not exercised by then will lapse and cease to be of any further value.
If you exercise your option the Lilliput Shares issued pursuant to such
exercise will be compulsorily acquired on the terms set out in the Offer
Document by Stanhome under section 429 of the Companies Act 1985.
Further details of the Offer are given in the Offer Document.
4. IF YOU TAKE NO ACTION
If you take no action, your option will lapse on 12th November, 1994.
5. TAXATION
A summary of the tax implications of the courses of action described above is
set out in Appendix II. The precise implications for you will, however, depend
on your particular circumstances. If you are in any doubt, you should consult a
professional tax adviser.
6. GENERAL
If you have any questions concerning the proposals set out in this document,
you should refer them to Rob Freestone at Lilliput.
4
<PAGE>
APPENDIX II
TAXATION
The following is a summary of the likely United Kingdom taxation implications
of the courses of action described in this letter for optionholders resident
for tax purposes in the United Kingdom. The precise implications for you will,
however, depend on your particular circumstances and, if you are in any doubt
as to your tax position, you should consult a professional adviser. This
applies in particular to any optionholder not resident or ordinarily resident
for tax purposes in the United Kingdom.
You should also refer to the taxation paragraphs of the Offer Document for
general taxation information relating to the Offer.
1. ACCEPTANCE OF THE PROPOSAL (IE CASH CANCELLATION OF OPTIONS)
If you accept the Proposal you will be subject to income tax on the value of
the consideration you receive (that is, the cash sum) in return for cancelling
your option.
2. EXERCISE OF OPTIONS AND COMPULSORY ACQUISITION
If you exercise your option you will be subject to income tax on the amount by
which the market value of the Lilliput Shares acquired on exercise of your
options exceeds the option exercise price.
If you exercise your option, the Lilliput Shares issued pursuant to such
exercise will be compulsorily acquired by Stanhome on the terms set out in the
Offer Document. You may, depending on your personal circumstances, be liable
for Capital Gains Tax, ("CGT").
The amount of any gain chargeable to CGT will be based on the proceeds of sale
of your Lilliput Shares less your allowable acquisition costs of those shares.
The allowable acquisition cost of your shares will equal the market value of
the shares on the date of exercise.
Liability to CGT is particularly dependent on your personal circumstances. You
should be aware that if you already hold Lilliput Shares, the disposal of
those shares may trigger an overall CGT liability even though some of the
shares forming part of the pool have been acquired at full market value.
You will only be liable to CGT to the extent that your total chargeable gains
(less allowable capital losses) for the entire tax year 1994/95 exceed the
annual exempt amount which is, for individuals, (Pounds)5,800 for the tax year
1994/95.
3. TAX RETURNS
IF YOU HAVE TO PAY INCOME TAX ON MONEY RECEIVED WHEN YOU EXERCISE YOUR OPTION
OR ACCEPT THE PROPOSAL YOU MUST GIVE DETAILS OF THE MONEY RECEIVED ON YOUR
INCOME TAX RETURN FOR THE TAX YEAR ENDING 5TH APRIL, 1995. IF YOU DO NOT
NORMALLY COMPLETE AN INCOME TAX RETURN IT IS INCUMBENT UPON YOU TO DO SO IN
RESPECT OF THIS ADDITIONAL INCOME.
YOU ARE STRONGLY ADVISED TO PUT ASIDE SUFFICIENT MONEY TO ENABLE YOU TO MEET
THE INCOME TAX WHICH YOU MAY BE REQUIRED TO REPAY IN DUE COURSE.
5
<PAGE>
APPENDIX III
1. In this document and the accompanying Form, the following expressions have
the following meanings unless the context requires otherwise:-
"Lilliput Share Option together, the Executive Scheme and The Lilliput
Schemes" Group plc Savings-Related Share Option Scheme;
"Form" the Form of Acceptance and Surrender enclosed
with this document;
"Lilliput" Lilliput Group plc;
"Lilliput Shares" the fully-paid ordinary shares of 5 pence each
in Lilliput;
"Offer Document" the offer document dated 9th September, 1994
containing the Recommended Cash Offer;
"Optionholders" holders of options under the Executive Scheme;
"Recommended Cash Offer" the recommended cash offer made by Goldman
Sachs on behalf of Stanhome to acquire Lilliput
Shares as set out in the Offer Document;
"Stanhome" Stanhome plc, a wholly owned subsidiary of
Stanhome Inc.
Save as aforesaid, the definitions used in the Offer Documents also apply in
this document and the Form.
2. The Form, including the instructions and notes thereon, shall be deemed an
integral part of the Proposal.
3. Accidental omission to despatch this document to, or any failure to receive
the same by, any person to whom the Proposal is made or should be made,
shall not invalidate the Proposal in any way.
4. Acceptances will not be acknowledged. All documents or remittances sent by
or to an acceptor, or as he may direct, will be sent through the post at his
risk.
5. The Proposal and acceptance shall be governed by and construed in accordance
with English law.
6. All acceptances of the Proposal will be irrevocable.
7. NatWest Markets has given and not withdrawn its consent to the issue of this
document with the reference to its name in the form and context in which it
appears.
8. The issue of this document has been approved by a duly authorised committee
of the Board of Stanhome. The directors of Stanhome accept responsibility
for the information contained in this document (other than that relating to
Lilliput) and, to the best of the knowledge and belief of such directors
(who have taken all reasonable care to ensure that such is the case), the
information contained in this document, for which they take responsibility
is in accordance with the facts and does not omit anything likely to affect
the import of such information.
9. The issue of this document has been approved by a duly authorised committee
of the Board of Lilliput. The directors of Lilliput accept responsibility
for the information contained in this document regarding Lilliput and, to
the best of the knowledge and belief of such directors (who have taken all
reasonable care to ensure that such is the case), the information contained
in this document for which they take responsibility is in accordance with
the facts and does not omit anything likely to affect the import of such
information.
10. So far as the directors of Stanhome and the directors of Lilliput are aware,
there has been no material change to the information contained in the Offer
Document.
11. The copy of the Rules of the Lilliput Share Option Schemes will be available
for inspection at Ashurst Morris Crisp, Broadwalk House, 5 Appold Street,
London EC2A 2HA during normal business hours on all weekdays (Saturdays and
public holidays excepted) until 12th November, 1994.
12. Goldman Sachs International, a member of The Securities and Futures
Authority, has approved the contents of this letter for the purposes of
Section 57 of the Financial Services Act 1986.
6
<PAGE>
Printed by RR Donnelley Financial, 39238
<PAGE>
Exhibit 2(h)
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
It should be read in conjunction with the accompanying document dated 11th
October, 1994 containing the Proposal (the "Document"). If you are in any
doubt about the action you should take, you should consult an independent
financial adviser authorised under the Financial Services Act 1986.
The definitions which apply in the Document also apply, where relevant, in
this Form.
- --------------------------------------------------------------------------------
FORM OF ACCEPTANCE AND SURRENDER
RELATING TO
THE PROPOSAL
BY
STANHOME PLC
A SUBSIDIARY OF
STANHOME INC.
MADE TO
THE HOLDERS OF OPTIONS UNDER
THE LILLIPUT GROUP PLC
EXECUTIVE SHARE OPTION SCHEME
- --------------------------------------------------------------------------------
HOW TO COMPLETE THIS FORM
1. To accept the Proposal you must sign and date the Form in the place
indicated.
2. Having completed this Form, duly signed, it should be forwarded with
your option certificate to Rob Freestone at Lilliput Group plc, Skirsgill,
Penrith, Cumbria CA11 0DP. Acceptances may not be treated as valid unless
this Form is received, properly completed together with your option
certificate by not later than close of business on 12th November, 1994
(unless Stanhome has previously agreed to extend the time limit).
3. If you accept the Proposal and your validly completed Form and option
certificate are received not later than 14th October, 1994, a cheque will
be despatched to you on or before 21st October, 1994. Otherwise, cheques
will be despatched not later than 21 days after receipt of a valid and
completed Form and your option certificate.
4. If you are in any doubt about how to fill in this Form please telephone
Rob Freestone the Company Secretary at Lilliput on 01768 212 670.
<PAGE>
FORM OF ACCEPTANCE AND SURRENDER
To: Stanhome plc
Lilliput Group plc
I (full name)...............................................................
of (address)................................................................
............................................................................
being a participant in The Lilliput Group Executive Share Option Scheme
hereby accept the Proposal contained in the Document and accordingly agree
to surrender the option listed below in consideration of a cash payment,
calculated in accordance with the formula set out in the Proposal. I also
agree that I have no further rights under the Executive Scheme in respect
of such option.
Option granted on 24th November, 1993 at an exercise price of 135p per
Lilliput Share.
Signed .................................
Date ...................................
Printed by RR Donnelley Financial -- 39241
