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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________ to ____________.
Commission File Number: 0-1349
STANHOME INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-1864170
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
333 Western Avenue, Westfield, Massachusetts 01085
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (413) 562-3631
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $.125 New York Stock Exchange
per share, together with the The Pacific Stock Exchange
Associated Common Stock Purchase Rights
("Common Stock")
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No[_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant: $616,067,303 on January 31, 1994.
The number of shares outstanding of the registrant's Common Stock as of
March 16, 1994 was 19,453,746 Shares.
Parts I, II, and IV of this Form 10-K incorporate by reference
certain information from the registrant's Annual Report to Stockholders for
fiscal year ended December 31, 1993. Part III of this Form 10-K
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incorporates by reference certain information from the registrant's
definitive Proxy Statement dated March 18, 1994, for its Annual Meeting of
Stockholders to be held on April 28, 1994.
P A R T I
ITEM 1. BUSINESS.
The Company and its subsidiaries are engaged in three primary lines
of business worldwide: (1) the design and sale through independent
retailers of collectible figurines and ornaments, action musicals, and
other giftware, (2) the direct response marketing and sale of collectible
plates and dolls, jewelry, and other giftware, and (3) the manufacture or
purchase, sale, and distribution through the direct selling method known as
the "Famous Stanley Hostess Party Plan" of home and personal care products
and giftware.
Giftware
The Company's Enesco Worldwide Giftware Group is led by Enesco
Corporation ("Enesco"), a subsidiary of the Company, with its headquarters,
principal showroom, and large warehouse and distribution center complex
located in Elk Grove Village, Illinois. Enesco is a leading importer and
distributor of creatively designed giftware items, including licensed lines
and collectibles. Its products include diverse lines of porcelain and cold
cast figurines, musicals and music boxes, dolls, ornaments, waterballs,
decoupage, miniatures, jack-in-the-boxes, tinware, gift bags, and other
giftware primarily produced by independent manufacturers in the Far East,
with production in some cases being exclusively devoted to Enesco products.
As part of a previously announced restructuring, Enesco has consolidated
the assets of its Tomorrow-Today Corporation subsidiary into its warehouse
and distribution facility, and is in the process of closing its retail
store at the Gurnee Mills Mall in Gurnee, Illinois and converting its
Australian operations into a distributorship. Enesco's domestic affiliates
within the Worldwide Giftware Group now include Sports Impressions, Inc.
which sells sports memorabilia and other licensed sports-oriented giftware,
and Via Vermont Ltd. which produces a line of etched glass and brass
ornaments, picture frames, jewelry boxes, and other giftware. Enesco
displays the Worldwide Giftware Group products continuously in ten
showrooms located in the United States as well as at periodic trade and
private shows held in major U.S. and foreign cities. These products are
marketed principally in the U.S. through more than 30,000 independent
retail outlets, including gift stores, greeting card shops, national
chains, mail order houses, and department stores, each of which is
typically serviced by representatives of one or both of Enesco's sales
organizations that are comprised of independent sales representatives who
cover established sales territories. Foreign affiliates and distributors
of the Worldwide Giftware Group are located in Australia, Brazil, Canada,
Germany, Hong Kong, Italy, Japan, The Netherlands, Taiwan, and the United
Kingdom.
The product lines of the Worldwide Giftware Group are based partially
on Enesco's collection of proprietary designs and partially on products
produced under license from independent creative designers. Many of its
products, whether proprietary or produced under license, are protected by
trademark and/or copyright registrations in the U.S. and many foreign
countries. Principal product trademarks of members of the Worldwide
Giftware Group include ENESCO, COUNTRY COUSINS, TREASURED MEMORIES, GROWING
UP, PINE HOLLOW, LAURA'S ATTIC, SUN SHELLS, ENESCO SMALL WONDERS, SMALL
WORLD OF MUSIC, ELUSIVE LEGEND, THE ENESCO TREASURY OF CHRISTMAS ORNAMENTS,
CHERISHED TEDDIES, MAGNAMARKER, VIA VERMONT, and SPORTS IMPRESSIONS. Among
its important licensed lines are PRECIOUS MOMENTS, GARFIELD, MEMORIES OF
YESTERDAY, LUCY AND ME, CALICO KITTENS, PADDINGTON BEAR, BARBIE,
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PENNYWHISTLE LANE, A CELEBRATION OF LIFE, SISTERS & BEST FRIENDS, MICKEY &
CO./DISNEY, THE NORTH POLE VILLAGE, COCA COLA, FROSTY THE SNOWMAN, CURRIER
& IVES, THE WORLD OF SINTERKLAAS, THE GOLDEN LEAGUE, SESAME STREET,
McDONALD'S, RUDOLPH THE RED NOSED REINDEER, IVORY CATS, CHERISHED TEDDIES,
MAUD HUMPHREY BOGART, BESSIE PEASE GUTMANN, LOUIS ICART, ROSE O'NEIL KEWPIE
COLLECTION, ELVIS PRESLEY, THE BEATLES, SATURDAY NIGHT LIVE, STAR TREK, and
WIZARD OF OZ.
While the development and innovation of new product designs lessens
Enesco's dependency on existing trademark or copyright protection, such
protection is important to the Company's business, and Enesco has
maintained an aggressive and visible program to identify and challenge
companies and individuals who infringe its copyrighted designs. The rights
with respect to the licensed lines are materially important to Enesco
because of the substantial volume of sales represented by these products,
especially the PRECIOUS MOMENTS product line which accounted for
approximately 24% of the Company's consolidated revenue during 1993.
The Enesco affiliate in Hong Kong, Enesco International (H.K.)
Limited, assists Enesco by overseeing the ordering and production of Enesco
products by independent manufacturers, which are located for the most part
in China, as well as in Hong Kong and Taiwan and, to a lesser extent, in
Indonesia and Thailand. In addition, this affiliate assists the Company's
direct selling operations in the U.S. and Europe by sourcing premium items
and giftware manufactured in the Far East. N.C. Cameron & Sons Limited, a
subsidiary of the Company and a member of the Worldwide Giftware Group
located in Ontario, Canada, sources its products not only through Enesco
International (H.K.) Limited but also from other Far Eastern, European, and
Canadian manufacturers. Enesco and its affiliates require all
manufacturing sources to comply with the Company's established quality
standards.
Competition in the giftware business in North America, Europe, and
the Far East is highly fragmented among a diversity of collectible and
giftware product categories. The principal factors affecting success in
the marketplace are originality of product design, quality, marketing
ability, customer service, and price. The Company believes that Enesco,
together with its U.S.-based affiliated companies, is a significant factor
in the U.S. giftware business among a small number of sizable, and largely
privately-held, competitors within the industry, which businesses include
Hallmark, Department 56, Lladro, Silvestri, and Schmid, among others. The
Worldwide Giftware Group sales tend to peak in the third and fourth
quarters. As of the end of 1993, the Worldwide Giftware Group had a
backlog of firm orders totaling $91,800,000, as compared to $93,000,000 as
of the end of 1992. The Company expects that substantially all of the
existing order backlog will be fulfilled during 1994. It is a standard
practice within the giftware industry, however, that orders are subject to
amendment or cancellation by customers prior to shipment. Because of the
multiplicity of external factors that can impact the status of unshipped
orders at any particular time, the comparison of backlog orders in a given
year with those at the same date in a prior year is not necessarily
indicative of sales performance for that year or for prospective sales
results in future years. Backlog orders can also be affected by various
programs employed by the Company to induce its customers to place orders
and accept shipments at specified times in the year. In addition, extended
credit and payment terms have been and will continue to be key marketing
tools. The Worldwide Giftware Group plans to utilize similar sales
promotions in 1994 to those it employed in 1993 and 1992.
Direct Response
The Company's Hamilton Worldwide Direct Response Group consists of
The Hamilton Collection, Inc. ("Hamilton"), a subsidiary of the Company,
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which has its headquarters and warehouse facilities located in
Jacksonville, Florida along with its parent, The Hamilton Group Limited,
Inc. Hamilton sells giftware and manufactured collectibles directly to
consumers through print advertising and direct mail marketing in the U.S.,
Canada, and the United Kingdom.
Hamilton's direct mail promotions and media advertisements offer
approximately sixty new products each year, primarily collectible plates,
dolls, and porcelain figurines. The artwork incorporated in these items
is, for the most part, licensed from well known artists and many feature
television and motion picture properties. In 1992, limited-edition dolls
accounted for 49% of Hamilton's worldwide sales. In 1993, however, its
collectible plates, hand-painted sculptures, and other non-doll product
categories grew substantially and accounted for over 62% of total sales of
the Worldwide Direct Response Group. The principal trademarks of Hamilton
include THE HAMILTON COLLECTION, RIVERSHORE, CHILDREN SERIES, and HAMLITE.
Most of Hamilton's products are advertised and sold as part of a
collection series. Generally, the consumer is offered the opportunity to
purchase a single limited-edition item for which the Company has planned or
anticipated related follow-up items. After the initial purchase, the
collector may be offered additional products over a period of time based
upon the same theme as the first product purchased. Advertising costs
total approximately 46% of all Worldwide Direct Response Group sales. A
key factor in achieving continued sales growth for Hamilton, especially in
the collectible plate category during 1993, has been the sale of product
with no down payment and, particularly in the case of dolls, on installment
payments. The collector may typically purchase a product with either
little or no down payment and a small number of interest-free installment
payments, depending on the price of the product.
Hamilton sources its products in the U.S., Great Britain, Germany,
Italy, and the Far East from numerous manufacturers that comply with the
Company's established quality standards. It has an expanding customer
mailing list of over 1,000,000 buyers and collectors. Hamilton's principal
licensed properties include: PRECIOUS MOMENTS, THE WIZARD OF OZ, CHERISHED
TEDDIES, STAR WARS, ELVIS PRESLEY, I LOVE LUCY, HONEYMOONERS, THE GIFTED
LINE, and STAR TREK. Well known artists include Chuck Ren, Chuck Dehaan,
Connie Walser Derek, Donald Zolan, Sandra Kuck, Thomas Blackshear, Jim
Lamb, Helen Kish, Samuel J. Butcher, and Ted Xaras.
The Worldwide Direct Response Group is faced with substantial
competition in all its North American and United Kingdom markets.
Competition in direct response marketing exists with respect to price,
product design and innovation, quality, advertising and marketing ability,
and customer service. The Company believes that Hamilton is a growing
factor in the U.S. among the handful of prominent giftware and manufactured
collectibles companies whose products are sold to the public through direct
response media and mail. These industry leaders include Danbury Mint,
Franklin Mint, Bradford Exchange, and Lenox Collection, most of which have
significantly larger sales volumes than Hamilton. The volume of sales of
the Worldwide Direct Response Group peaks in the third and fourth quarters.
Traditionally, mail order companies, such as Hamilton, have not been
obligated to collect states sales taxes on the sales of their products to
customers located in the various states unless they had a physical presence
sufficient to permit the state to impose this obligation under the
previously accepted guidelines established by the U.S. Supreme Court in the
National Bellas Hess case decided in 1967. Over the past few years various
states have sought to interpret these guidelines in such a way as to permit
them to impose the obligation to collect those taxes on mail order
companies based upon economic presence and in certain cases have even
enacted special legislation to such effect. As a result, these companies,
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including Hamilton, would face a significant administrative burden in
complying with the position of these states. Some states have also
asserted a retroactive liability for uncollected taxes for past periods.
In response to a particular challenge by the State of North Dakota, the
U.S. Supreme Court reviewed and upheld National Bellas Hess in 1992 based
on the Commerce Clause of the U.S. Constitution. However, in this new
decision the Court noted that its continuing application of the Commerce
Clause - to a situation which in fact went beyond that of National Bellas
Hess - could be modified by the U.S. Congress. In view of the subsequent
failure of an industry trade association to reach a practical resolution of
this matter with representatives of two state tax organizations, it is
generally expected that this issue will be pursued by both sides before the
U.S. Congress. In fact, legislation has been introduced in the U.S. Senate
to override the prior U.S. Supreme Court decisions.
Direct Selling
The Company's Stanhome Worldwide Direct Selling Group is composed of
direct selling operations conducted by subsidiaries of the Company in
France, Italy, Mexico, Puerto Rico, Slovenia, Spain, and Venezuela and the
Stanley Home Products Division in the United States. Some of these
operations manufacture, as well as distribute and sell, a broad line of
home care items and personal care and other products, including specialty
chemical products for household use, mops, brooms, brushes, and other
similar household cleaning equipment, pesticides for domestic use, air
deodorants, cosmetics and toiletries, and general giftware. The Company is
presently undergoing a major restructuring of its direct selling operations
which commenced in the latter half of 1993 and will result in the closing
and consolidation of several domestic and foreign facilities and
operations, including Germany and Portugal, and the elimination of
approximately ten percent of its worldwide work force upon its substantial
completion in 1994. Among the impacts were the termination of the Gift
Gallery Division in the U.S., the planned sale of certain Industrial
Division assets, and the planned cessation of manufacturing at the
Company's Easthampton, Massachusetts plant.
Worldwide sales of home care items and personal care products to
consumers generally result from the direct selling method known as the
"Famous Stanley Hostess Party Plan". Under this method a homemaker, or
hostess, invites her friends and neighbors to her home to view a
demonstration of Stanhome products by an independent Stanhome dealer, in
return for which she usually receives premium prizes or gifts. After the
demonstration, the dealer solicits orders from those present. In Italy and
France, the local affiliate of the Company sells the ordered products
directly to the consumer, pays a commission to the dealer on those sales,
and distributes the premiums to the hostess. In the U.S. and other
countries, the dealer purchases products at wholesale from the local
affiliate of the Company to fill her orders and resells the products at
retail to the consumers who placed the orders either at the home
demonstration or through catalog solicitations, door-to-door and other non-
party sales, or over the telephone. The dealer may also purchase premiums
from the local affiliate to distribute to the hostess as prizes or gifts
for hosting the demonstration. These premium prizes or gifts generally
consist of cookware and other useful or decorative household items that are
purchased from multiple independent suppliers located around the world.
The independent contractor relationship between the independent
Stanhome dealers and the Worldwide Direct Selling Group has proven
adaptable in most of the foreign jurisdictions in which the Company
conducts its direct selling business and in the past has been well
established in the U.S., where the Company has not been subject to either
social security or unemployment compensation tax with respect to them. In
some overseas countries, for example Italy, there is proposed legislation
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and government efforts to broaden social benefit coverage as well as the
prior imposition of a registration tax and minimum income taxes on
occupations including dealers, which affects the local affiliates'
recruiting and marketing approach and results, in some cases, in additional
expense for them. In Italy, the Company has previously reported that
independent dealers have received personal tax assessments in connection
with the distribution of hostess gifts as a part of the Stanhome Party Plan
Sales System. Some dealers have elected to use an amnesty settlement
procedure to resolve their pending claims, a procedure made available to
taxpayers by the Italian government for certain years up to and including
1990. Because of the effect on dealer recruitment and retention, Stanhome
Italy is continuing to assist dealers in the defense of their individual
tax claims by making payments of legal expenses, advancing amounts for tax
deposits, and making payments of settlements where this is more cost
effective than potential litigation costs. These payments have not been
material. This continued to be a problem for the Italian subsidiary in
1993 and into 1994.
Wholesale products sold in Mexico, Spain, and Venezuela are largely
supplied by manufacturing plants owned by subsidiaries operating in those
countries. The remaining foreign operations are supplied by these
manufacturing plants or by the Company's Easthampton, Massachusetts plant,
which is scheduled to discontinue its manufacturing operations by mid-1994
as part of the Company's worldwide restructuring effort, and, in France,
Italy, and Venezuela, partially by independent local manufacturing
licensees. Most wholesale products in the direct selling line sold in the
U.S. which have been manufactured in the Company's Easthampton,
Massachusetts plant are now planned to be produced by independent U.S.
third-party manufacturers. The remainder will continue to be purchased
from foreign subsidiary operations or from other independent sources. All
wholesale products sold in the U.S., and the premium items used as prizes
and gifts for U.S. hostesses, are distributed through four regional
Customer Care Centers.
The Worldwide Direct Selling Group also has arrangements with
independent distributors in Brazil, Canada, the Caribbean area, Chile,
Cyprus, Peru, Portugal, Singapore, and Thailand. The Company's products
are manufactured under license by its distributors in Brazil and Jamaica.
The direct selling operations of the Company are faced with
substantial competition in all markets in which they are engaged. In the
U.S., the Company has further segmented its market into Hispanic and Anglo
sales territories. The Hispanic territories traditionally cover the
southwestern U.S. border regions, southern Florida, New York City and other
metropolitan areas having high percentages of Hispanic population, which
have been actively growing sales territories for the Company's Hispanic
sales organization over the past few years. Competition in direct selling
worldwide exists not only with respect to price, warranty, product
performance, and parties or demonstrations, but also with respect to
obtaining and retaining an adequate number of dealers, which is of material
importance to the success of the direct selling business. Like other
direct selling companies, there is a substantial turnover in dealers,
particularly with respect to individuals who engage in this independent
business activity only on a part-time and occasional basis. The recruiting
process is therefore a continuous one. The retention of key sales
personnel is highly dependent on interpersonal relationships and loyalties
as well as on competitive remuneration systems.
While adequate figures are not available for precise comparisons, the
Company believes that the Worldwide Direct Selling Group is a major factor
outside the U.S. among the large group of companies whose products are sold
to the public via the party plan sales method in those principal foreign
markets where affiliates of the Worldwide Direct Selling Group are doing
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business. The Worldwide Direct Selling Group is a lesser factor in the
U.S. among those companies. The party plan companies form one part of the
larger market of all direct selling companies with similar products and
which compete in the recruitment of their sales forces. While there are
several, non-party plan direct selling companies whose worldwide sales are
much greater than the Company, the Company's direct selling subsidiaries
are among the market leading party plan businesses in each of Italy,
France, Spain, Slovenia, Mexico, and Venezuela. The direct selling
operations of the Company and its subsidiaries tend to have seasonal
characteristics with sales that peak in the fourth quarter and, to a lesser
degree, in the second quarter.
All products of the Worldwide Direct Selling Group, whether
manufactured by the Company's foreign subsidiaries, the Stanley Home
Products Division, or by contract manufacturers in the U.S. or abroad,
comply with quality standards established and enforced by the Company and
its subsidiaries. There are no significant problems in the availability of
raw materials, which are purchased from numerous suppliers and which will
be used by the Company's subsidiaries and independent third-party
manufacturers in manufacturing the line of wholesale products for the
Worldwide Direct Selling Group.
The Company's trademarks are generally protected by registrations in
the U.S. and foreign countries where its product line is marketed and by
registrations of its major trademarks in many other countries throughout
the world. A principal trademark is the STANHOME name and design. These
marks play a substantial role in the identification and acceptance of the
Company's products by consumers. The Company's direct selling business is
not materially dependent on patents or patent protection. Similarly, while
the Company owns a large number of formulae and regards many of its
manufacturing processes as secret, it does not believe that its business is
materially dependent upon the maintenance of secrecy with respect to such
formulae or processes.
Other Information
As of March 31, 1994, the Company will have discontinued the
manufacturing and distribution operations of its Industrial Division which
sold cleaning products for commercial use. These products were sold
directly to its customers in the food service, industrial, and
institutional fields, and also indirectly through independent distributors.
As part of the Company's worldwide restructuring, certain assets of the
Industrial Division are planned to be sold.
As of December 31, 1993, the Company and its U.S. subsidiaries,
including Enesco, Hamilton and their affiliates, employed approximately
1,760 persons, and there were approximately 37,900 Stanley dealers, group
leaders, and district managers and Enesco sales representatives engaged in
selling the Company's products in the U.S., all of whom are treated as
independent contractors. As of the same date, the Company's foreign
subsidiaries employed approximately 2,370 persons on a full-time basis.
There were approximately 49,800 Stanhome dealers engaged in direct selling
abroad at the end of 1993, most of whom are recognized as independent
contractors.
Over the years, there has been an ongoing issue in the U.S. as to the
correct classification of workers as employees or independent contractors,
with resulting tax and other legal consequences to the worker and company
involved. The U.S. Internal Revenue Service and Congress have expressed
renewed interest in this area in general, and some states have challenged
from time to time the classification of positions within the Company's
operating Groups. This area will in all likelihood receive increased
attention from the federal and state governments in the future.
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In addition to changes in political climate, foreign operations are
subject to certain other risks inherent in carrying on business abroad,
including the risk of foreign currency fluctuations and restraints,
different rates of inflation and economic growth, and U.S. and foreign
restrictions affecting international trade with, and investment and
operations in, various foreign countries. An example of such risk is the
ongoing economic and political turmoil engendered by the apparent
instability of the existing Italian government as a result of continuing
corruption probes into alleged kickback payments and illegal political
party financing schemes. Moreover, the Italian lire continued to devalue
against the U.S. dollar throughout the year and by approximately 19% in the
fourth quarter of 1993 as compared to the fourth quarter of 1992,
negatively impacting the financial results in the fourth quarter of the
Company's Italian subsidiary when stated in U.S. dollars. This foreign
currency fluctuation and Italy's unsettled political situation is
particularly important for the Company because its Italian subsidiary
accounted for approximately 38% of the Worldwide Direct Selling Group's
total 1993 sales and substantially all of the 1993 operating profits,
inclusive of the restructuring charges of the Worldwide Direct Selling
Group. In the case of both the Worldwide Giftware and Direct Response
Groups, while the vast majority of their respective total 1993 sales and
operating profits resulted from U.S. operations, similar risks associated
with foreign economic conditions exist because of the predominance of
foreign-sourced product in each of their product lines. Much of the
Worldwide Giftware Group, and a substantial portion of the Worldwide Direct
Response Group, lines are produced in the Far East. The last several years
have seen renewed interest by some U.S. government officials in the
imposition of trade sanctions, most notably increased tariffs, on imported
goods from countries located there, such as the People's Republic of China,
where many Enesco and Hamilton products originate.
For financial information about industry segments, including
financial information regarding foreign and domestic operations, see Note 5
of "Notes to Consolidated Financial Statements" included on pages 36 and 37
of the 1993 Annual Report to Stockholders, which is incorporated herein by
reference.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" commencing on page 17 of the 1993 Annual Report to
Stockholders, which is incorporated herein by reference, for a comparison
and discussion of the results of operations and operating profit from
foreign and domestic sources.
ITEM 2. PROPERTIES.
The principal physical properties of the Company and its subsidiaries
in the United States, all of which are owned unless otherwise noted,
consist of the following: Corporate Headquarters - 333 Western Avenue,
Westfield, Massachusetts; office, manufacturing, and warehouse facilities
in Easthampton, Massachusetts and four warehouse and distribution centers
situated across the United States for the direct selling business; and
headquarters, showroom, and distribution facilities for its Enesco giftware
business in Elk Grove Village, Illinois. Enesco also leases or maintains a
retail gift shop and showrooms in various other locations in the United
States for the display of its products. Via Vermont Ltd. leases office and
distribution facilities in Wilder, Vermont. The Hamilton Group Limited,
Inc. leases office headquarters, parking, and warehouse space in
Jacksonville, Florida.
The principal physical properties of the Company's direct selling
subsidiaries outside the U.S. consist of 8 major manufacturing and/or
distribution facilities located in France, Italy, Mexico, Puerto Rico,
Spain, and Venezuela. Two of these facilities are leased. In addition,
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the various foreign subsidiaries maintain numerous sales and administrative
offices as well as smaller distribution facilities, most of which are
leased. Except for Via Vermont, S.A. de C.V., which owns an assembly and
warehouse facility in San Miguel de Allende, Guanajuato, Mexico, all of the
foreign subsidiaries of the Company's Enesco Worldwide Giftware Group and
the Company's Hamilton Worldwide Direct Response Group lease their office
and warehouse space.
The Company's manufacturing plant in Easthampton, Massachusetts,
which is planned to discontinue its manufacturing operations by mid-1994,
and some of the foreign manufacturing plants have additional capacity
available. As part of the Company's worldwide restructuring, one former
U.S. warehouse and distribution center has been sold and one is planned to
be sold.
ITEM 3. LEGAL PROCEEDINGS.
There are various legal proceedings pending against the Company and
its subsidiaries which have arisen during the course of business. While
Management cannot predict the eventual outcome of these proceedings, it
believes that none of these proceedings will have a material adverse impact
upon the consolidated financial statements of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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EXECUTIVE OFFICERS OF THE REGISTRANT
Date First
Name Age Positions Elected
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G. William Seawright 52 Director 3/08/90
President and Chief
Executive Officer 11/09/93
Member of the Executive
Committee 4/22/93
Prior to Mr. Seawright joining the Company in November, 1993, he was
President and Chief Executive Officer of The Paddington Corporation, an
importer of wines and spirits, in Fort Lee, New Jersey since 1990, after
having previously served as the President of Heublein International and a
Senior Vice President of Heublein, Inc. since 1986.
Alejandro Diaz 49 Director 4/28/88
Executive Vice President 8/31/93
Member of the Executive
Committee 4/28/88
Mr. Diaz resigned as President and Chief Executive Officer in August,
1993 after having served since August, 1990. He serves as President and
Chief Executive Officer of the Worldwide Direct Selling Group. He
previously served as Chief Operating Officer of the Company from April,
1989 to August, 1990, and as President of the International Division from
December, 1982 to April, 1988, being appointed Chief Executive Officer of
that Division in January, 1985.
Allan G. Keirstead 49 Director 4/25/85
Executive Vice President
and Chief Administrative
Officer 4/28/88
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Chief Financial Officer 4/28/83
Controller 12/02/81
Member of the Executive
Committee 4/25/85
Prior to Mr. Keirstead's election as Executive Vice President and
Chief Administrative Officer, he served as Financial Vice President from
January, 1983 to April, 1988. He served as Assistant Controller from
April, 1977 to December, 1981.
Eugene Freedman 69 Executive Vice President 4/28/88
Mr. Freedman previously served as a Vice President of the Company
from January, 1984 to April, 1988 and serves as President and Chief
Executive Officer of the Worldwide Giftware Group and President and Chief
Executive Officer of Enesco Corporation.
James P. Smith, Jr. 50 Executive Vice President 1/26/94
Mr. Smith previously served as Senior Vice President of the Company
from April, 1992 until January, 1994 and as a Vice President of the Company
from May, 1989 to April, 1992. He serves as President and Chief Executive
Officer of the Worldwide Direct Response Group and President and Chief
Executive Officer of The Hamilton Collection, Inc. Prior to Mr. Smith
joining the Company, he was the Chairman and Chief Executive Officer of The
Hamilton Group Limited, Inc. and its affiliated companies.
Bruce H. Wyatt 47 Vice President and
General Counsel 9/07/88
Clerk and Secretary 4/28/88
Prior to Mr. Wyatt's elections as Vice President and General Counsel,
and Clerk and Secretary, he served as Assistant General Counsel from April,
1985, Assistant Clerk from April, 1983, and Assistant Secretary from April,
1981.
Ronald R. Jalbert 55 Vice President 8/29/79
Mr. Jalbert joined the Company in August, 1979 as its Vice President
of Personnel and since April, 1982 he has served as Vice President, Human
Resources and Public Affairs.
Thomas E. Evangelista 44 Vice President 12/07/88
Prior to Mr. Evangelista joining the Company in December, 1988, he
was a Marketing Consultant for Marketing Corporation of America in
Westport, Connecticut where he focused on business development strategies
primarily for consumer products and services clients.
John W. Stillwaggon 46 Vice President 6/02/93
Mr. Stillwaggon joined the Company in March, 1993 and serves as the
Senior Vice President of The Americas, in the Worldwide Direct Selling
Group. Prior to Mr. Stillwaggon joining the Company, he was the owner and
President of Yankee Fundraising Inc., a fundraising franchise, in Darien,
Connecticut since 1990 and was Executive Vice President and acting General
Manager of Avon France during 1988 and 1989.
Carmen J. Mascaro 58 Treasurer 2/01/93
Prior to Mr. Mascaro's election as Treasurer, he served as Assistant
Treasurer from January, 1986 to February, 1993.
-10-
<PAGE>
NOTE: All officers are elected for the ensuing year and until their
successors are duly elected and qualified.
</TABLE>
P A R T II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Information required by this item is set forth in the Sections
entitled "Financial Highlights" and "Stock Market, Dividend and
Shareholder Information" appearing on page 1 of the 1993 Annual Report to
Stockholders, and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
Information required by this item is set forth in the Section
entitled "Financial Highlights Last Ten Years" appearing on pages 42 and
43 of the 1993 Annual Report to Stockholders, and is incorporated herein
by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
Information required by this item is set forth in the Section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" appearing on pages 17 through 22 of the 1993 Annual
Report to Stockholders, and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required by this item is set forth in the Report of
Independent Public Accountants and the Financial Statements together with
Notes appearing on pages 24 through 41 of the 1993 Annual Report to
Stockholders, and is incorporated herein by reference. Also incorporated
herein by reference are the Quarterly results (unaudited) during 1993,
1992 and 1991 set forth on page 23 of the 1993 Annual Report to
Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
P A R T III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information required by this item regarding the directors of the
Company is set forth under the captions "Election of Directors" and
"Information as to Board of Directors and Nominees" in the Company's proxy
statement dated March 18, 1994, and is incorporated herein by reference.
Information required by this item regarding the executive officers of the
Company is included under a separate caption in Part I hereof, and is
incorporated herein by reference, in accordance with General Instruction
G(3) to Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this item is set forth under the captions
"Executive Compensation", "Compensation and Stock Option Committee Report
on Executive Compensation", and "Remuneration of Non-Employee Directors"
in the Company's proxy statement dated March 18, 1994, and is incorporated
herein by reference.
-11-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this item is set forth under the caption
"Voting Securities and Principal Holders Thereof" in the Company's proxy
statement dated March 18, 1994, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this item is set forth under the captions
"Compensation Committee Interlocks and Insider Participation" and "Certain
Relationships and Related Transactions" in the Company's proxy statement
dated March 18, 1994, and is incorporated herein by reference.
P A R T IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) and (2) Financial Statements and Schedules. The financial
statements and schedules required by this item are listed in the Index to
Financial Statements and Schedules of Stanhome Inc. on page 14 of this Form
10-K.
(a)(3) Exhibits. The exhibits required by this item are listed in
the Exhibit Index on pages 19 - 20 of this Form 10-K. The management
contracts and compensatory plans or arrangements required to be filed as an
exhibit to this Form 10-K are listed as Exhibits 10(a) to 10(r) in the
Exhibit Index.
(b) No reports on Form 8-K were filed by the Company during the
fourth quarter of 1993.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on the
29th day of March, 1994.
STANHOME INC.
(Registrant)
By: /s/ G. William Seawright
G. William Seawright
President and Chief Executive Officer
By: /s/ Allan G. Keirstead
Allan G. Keirstead
Executive Vice President,
Chief Administrative & Financial Officer
-12-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on the 29th day of March, 1994 by the
following persons on behalf of the registrant and in the capacities
indicated.
Signature Title
/s/ H. L. Tower *
H. L. Tower Director
/s/ Homer G. Perkins *
Homer G. Perkins Director
/s/ Alla O'Brien *
Alla O'Brien Director
/s/ Allan G. Keirstead
Allan G. Keirstead Director, Executive Vice
President, and Chief
Administrative & Financial
Officer
/s/ John F. Cauley, Jr. *
John F. Cauley, Jr. Director
/s/ Janet M. Clarke *
Janet M. Clarke Director
/s/ Alejandro Diaz *
Alejandro Diaz Director, Executive Vice
President
/s/ G. William Seawright
G. William Seawright Director, President, and
Chief Executive Officer
/s/ Thomas R. Horton *
Thomas R. Horton Director
/s/ Anne-Lee Verville *
Anne-Lee Verville Director
/s/ Judith R. Haberkorn *
Judith R. Haberkorn Director
*By: /s/ G. William Seawright
G. William Seawright
Attorney-In-Fact
-13-
<PAGE>
STANHOME INC.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - Incorporated herein by reference
to "Report of Independent Public Accountants" on page 41 of Stanhome's
1993 Annual Report to Stockholders.
FINANCIAL STATEMENTS - All of which are incorporated herein by reference to
Stanhome's 1993 Annual Report to Stockholders.
Consolidated Balance Sheet - December 31, 1993 and 1992
Consolidated Statement of Income For the Years Ended December 31, 1993,
1992 and 1991
Consolidated Statement of Retained Earnings For the Years Ended
December 31, 1993, 1992 and 1991
Consolidated Statement of Cash Flows For the Years Ended December 31,
1993, 1992 and 1991
Notes to Consolidated Financial Statements - December 31, 1993, 1992
and 1991
Quarterly results (unaudited)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
SCHEDULES SUPPORTING FINANCIAL STATEMENTS:
<TABLE>
<CAPTION>
Schedule
Number Description
<S> <C>
VIII Valuation and Qualifying Accounts and Reserves For
the Three Years Ended December 31, 1993
IX Short-Term Borrowings For the Three Years Ended
December 31, 1993
X Supplementary Income Statement Information For the
Three Years Ended December 31, 1993
</TABLE>
NOTES:
(a) All other schedules are not submitted because they are not
applicable, not required or because the required information is
included in the consolidated financial statements or notes
thereto.
(b) Individual financial statements of the Company have been
omitted since (1) consolidated statements of the Company and
its subsidiaries are filed and (2) the Company is primarily an
operating company and all subsidiaries included in the
consolidated financial statements filed are wholly-owned and do
not have a material amount of debt to outside persons.
-14-
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
-----------------------------------------------------
To Stanhome Inc.:
We have audited, in accordance with generally accepted auditing
standards, the financial statements included in Stanhome Inc.'s annual
report to shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated February 18, 1994. Our audit was made
for the purpose of forming an opinion on those statements taken as a whole.
The schedules listed in the accompanying index are the responsibility of
the company's management and are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the
basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly state in all material respects the financial
data required to be set forth therein in relation to the basic financial
statements taken as a whole.
/s/ Arthur Andersen & Co.
Hartford, Connecticut
February 18, 1994
-15-
<PAGE>
SCHEDULE VIII
STANHOME INC.
-------------
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
----------------------------------------------
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
--------------------------------------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Additions
---------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1991
- ------------------------------------
Reserves which are deducted in the
balance sheet from assets to which
they apply -
Allowance for doubtful accounts $ 8,040,517 $7,013,218 $299,642(a) $4,323,588 $11,029,789
=========== ========== ======== ========== ===========
Accumulated amortization of
other assets $12,703,504 $2,072,019 $ - $ 145,302 $14,630,221
=========== ========== ======== ========== ===========
Other reserves $ 970,027 $ 1,001,020
=========== ===========
For the year ended December 31, 1992
- ------------------------------------
Reserves which are deducted in the
balance sheet from assets to which
they apply -
Allowance for doubtful accounts $11,029,789 $8,452,492 $ - $7,077,330 $12,404,951
=========== ========== ======== ========== ===========
Accumulated amortization of
other assets $14,630,221 $2,215,827 $145,000(b) $ 108,116 $16,882,932
=========== ========== ======== ========== ===========
Other reserves $ 1,001,020 $ 576,998
=========== ===========
For the year ended December 31, 1993
- ------------------------------------
Reserves which are deducted in the
balance sheet from assets to which
they apply -
Allowance for doubtful accounts $12,404,951 $7,478,700 $ - $4,153,126 $15,730,525
=========== ========== ======== ========== ===========
Accumulated amortization of
other assets $16,882,932 $2,285,245 $ - $ 55,335 $19,112,842
=========== ========== ======== ========== ===========
Other reserves $ 576,998 $ 627,416
=========== ===========
</TABLE>
Note:
(a) Represents recorded reserves at dates of acquisitions.
(b) Represents balance sheet reclassifications related to prior acquisitions.
-16-
<PAGE>
SCHEDULE IX
STANHOME INC.
-------------
SHORT-TERM BORROWINGS
---------------------
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
-------------------------------------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
Weighted
Maximum Average Average
Weighted Amount Amount Interest
Category of Aggregate Balance at Average Outstanding Outstanding Rate
Short-Term End of Interest During the During the During the
Borrowings Period Rate Period Period Period
--------------------- ---------- -------- ----------- ----------- ----------
For the year ended December 31, 1991
- ------------------------------------
<S> <C> <C> <C> <C> <C>
Bank $10,743,934 6.8% $52,253,518 $36,274,845 7.3%
For the year ended December 31, 1992
- -------------------------------------
Bank $ 1,158,549 11.9% $38,971,570 $24,677,505 6.1%
For the year ended December 31, 1993
- ------------------------------------
Bank $ 834,197 8.1% $21,396,858 $ 6,156,951 5.8%
</TABLE>
The short-term borrowings represent corporate notes payable as well as notes
payable by international subsidiaries. The bank borrowings are under lines of
credit and credit arrangements. The average amounts outstanding and the
weighted average interest rates for the period are based on the average monthly
balances totaled and divided by twelve. Due to reclassifications made in 1993
to the prior years' financial statements, the information for 1992 and 1991 has
been adjusted to be comparable to 1993.
-17-
<PAGE>
SCHEDULE X
<TABLE>
<CAPTION>
STANHOME INC.
-------------
SUPPLEMENTARY INCOME STATEMENT INFORMATION
------------------------------------------
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
-------------------------------------------
Column A Column B
Charged to Costs
and Expenses (a)
----------------
Item 1993 1992 1991
---- ----------- ----------- -----------
<S> <C> <C> <C>
Advertising costs $61,732,970 $43,242,930 $37,208,243
----------- ----------- -----------
$61,732,970 $43,242,930 $37,208,243
=========== =========== ===========
</TABLE>
NOTE:
(a) All other items as called for by Rule 12-11 are less than 1% of net
sales for each year.
-18-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Reg. S-K
Item 601 EXHIBIT
<S> <C>
3(a)* Restated Articles of Organization as amended. (Exhibit 3
to Form 10-Q filed for the period ended March 31, 1988.)
3(b)* By-Laws as amended. (Exhibit 3(b) to Form 10-K filed for
the period ended December 31, 1989.)
4(a)* Rights Agreement dated as of September 7, 1988, between
Stanhome Inc. and The Connecticut Bank and Trust Company,
N.A. as amended. (Exhibit 4(a) to Form 10-Q filed for
the period ended September 30, 1988 and Exhibit 1 to Form
8-K filed on October 1, 1990.)
10(a) 1984 Stock Option Plan, as amended and restated through
October 20, 1993.
10(b) 1991 Stock Option Plan, as amended and restated through
October 20, 1993.
10(c) Special Interim Chief Executive Officer Stock Option
Plan.
10(d)* Outline of Deferred Compensation Plan for Non-employee
Directors, as amended. (Exhibit 10(e) to Form 10-K filed
for the period ended December 31, 1988.)
10(e)* Employment Contract, as amended, with E. Freedman.
(Exhibit 10(e) and 10(i) to Form 10-K filed for the
periods ended December 31, 1983 and December 31, 1986
respectively, Exhibit 19(a) to Form 10-Q filed for the
period ended June 30, 1989, and Exhibit 19(e) to Form
10-K filed for the period ended December 31, 1992.)
10(f)* Employment Agreement with James P. Smith, Jr. (Exhibit
10 to Form 10-Q filed for the period ended September 30,
1993.)
10(g) Employment Agreement with Alejandro Diaz Vargas effective
as of August 31, 1993.
10(h) Employment Agreement with G. William Seawright made as of
November 9, 1993.
10(i) Management Incentive Plan, as amended and restated
effective January 1, 1994.
10(j) Retirement Agreement with G. William Seawright made as of
November 9, 1993.
10(k)* Form of Supplemental Retirement Plan, as amended.
Similar plans exist with Alejandro Diaz Vargas and Allan
G. Keirstead. (Exhibit 19(b) to Form 10-K filed for the
period ended December 31, 1992.)
10(l) Form of Supplemental Retirement Contract Amendment.
Similar amendments exist with Alejandro Diaz Vargas and
Allan G. Keirstead as of February 4, 1994.
-19-
<PAGE>
10(m)* Form of Severance Agreement. Similar agreements exist
with Allan G. Keirstead, Bruce H. Wyatt, Ronald R.
Jalbert, and Thomas E. Evangelista. (Exhibit 19(d) to
Form 10-K for the period ended December 31, 1992.)
10(n) Agreement under Supplemental Pension Plan with Ronald R.
Jalbert made as of March 5, 1986 and amended as of March
28, 1988.
10(o)* Change in Control Agreement made as of January 1, 1992
with certain corporate and subsidiary non-executive
officers. (Exhibit 19(c) to Form 10-K filed for the
period ended December 31, 1991.)
10(p)* Form of Change in Control Agreement. Similar agreements
exist with Alejandro Diaz Vargas, Allan G. Keirstead,
Bruce H. Wyatt, Ronald R. Jalbert, Thomas E. Evangelista,
and John W. Stillwaggon. (Exhibit 19(c) to Form 10-K for
the period ended December 31, 1992.)
10(q) Amendment to Change in Control Agreement with Alejandro
Diaz Vargas effective as of August 31, 1993.
10(r) Change in Control Agreement with G. William Seawright
made as of November 9, 1993.
10(s)* License Agreement between Precious Moments, Inc. and
Enesco Corporation. (Exhibit 10 to Form 10-Q filed for
the period ended June 30, 1993.)
13 Portions of the 1993 Annual Report to the Stockholders of
Stanhome Inc.
21 Subsidiaries of Stanhome Inc.
23 Consent of Arthur Andersen & Co.
24 Power of Attorney
________________________________________
*Incorporated Herein By Reference
</TABLE>
-20-
<PAGE>
GRAPHICS APPENDIX LIST
<TABLE>
<CAPTION>
EDGAR VERSION TYPESET VERSION
<S> <C>
1993 Form 10-K, Exhibit 13-- 1993 Form 10-K, Exhibit 13 --
(Selected Portions of Stanhome's (Selected Portions of Stanhome's
1993 Annual Report to Stockholders) 1993 Annual Report to Stockholders)
Page 1 -- Four bar charts omitted Page 1 -- Four bar charts
depicting Sales, Operating Profit, Earnings Per Share Fully
Diluted Net Income, and Return on Equity, respectively. (The text
and numbers used in these charts appear in the text of the EDGAR
Version.)
</TABLE>
-21-
<PAGE> EXHIBIT 10(a)
STANHOME INC.
1984 Stock Option Plan, as amended
Through October 20, 1993
1. Purpose. The purpose of this 1984 Stock Option Plan (the "Plan")
is to advance the interests of Stanhome Inc. (the "Company") by encouraging
key management employees of the Company and its subsidiaries to acquire a
proprietary interest in the Company through ownership of common stock of
the Company. Such ownership will encourage the employees to remain with
the Company and will help attract other qualified persons to become
employees.
2. Administration. The Plan shall be administered by the
Compensation and Stock Option Committee of the Board of Directors (the
"Committee") which shall be composed of not less than three directors of
the Company elected or to be elected as members of the Committee from time
to time by the Board of Directors of the Company. None of the Committee
members shall be, during service on the Committee, nor shall have been,
during the one year prior to service on the Committee, granted or awarded
Shares or options to acquire Shares under this Plan or any other plan
maintained by Stanhome, other than options granted pursuant to Section 9 of
the Stanhome Inc. 1991 Stock Option Plan, or under any plan maintained by
any of Stanhome's affiliates. Members of the Committee shall be subject to
any additional restrictions necessary to satisfy the requirements for
disinterested administration under Rule 16b-3 of the Securities Exchange
Act of 1934, as amended, as in force from time to time. Subject to the
provisions of the Plan and the approval of the Board of Directors of the
Company, except that the Board of Directors shall have no discretion with
respect to the selection of officers within the meaning of Rule 16a-1(f),
directors or 10% or more shareholders ("Insiders") for participation and
decisions concerning the timing, pricing and amount of a grant or award to
such "Insiders", the Committee is authorized to grant options under the
Plan and to interpret the Plan and such options, to prescribe, amend and
rescind rules and regulations relating to the Plan and the options, and to
make other determinations necessary or advisable for the administration of
the Plan, all of which determinations shall be conclusive. The Committee
shall act pursuant to a majority vote or by unanimous written consent.
3. Types of Option. Options granted pursuant to the Plan may be
either incentive stock options under Section 422A of the Internal Revenue
Code of 1954, as amended, ("Incentive Stock Options") or options not
qualifying under that section ("Non-qualified Stock Options").
4. Eligibility. Options shall be granted under the Plan to such
selected key full-time salaried and commissioned employees (including
officers and directors if they are employees) of the Company or any of its
subsidiaries as the Committee shall determine from time to time.
5. Stock Subject to Options. The aggregate number of shares which
may be issued or sold under options granted pursuant to the Plan (the
"Shares") shall not exceed 1,500,000 shares of the Company's common stock
$0.25 par value each. Such Shares shall be either authorized but unissued
shares of said common stock or issued shares of said common stock which
shall have been reacquired by the Company. Such aggregate number of Shares
may be adjusted under Section 10 below. If any outstanding option under
the Plan expires or is terminated for any reason, the Shares allocated to
the unexercised portion of such option may again be subjected to an option
or options under the Plan.
6. Allotment of Shares. The Committee shall determine the total
number of Shares to be offered to each optionee under the Plan.
7. Option Price. The Shares shall be offered from time to time
under the Plan at a price which shall be not less than 100 percent of their
<PAGE>
fair market value on the date the option is granted, provided, however,
that the price shall be not less than 110 percent of such fair market value
in the case of shares offered under any Incentive Stock Option granted to
an individual who, at the time the option is granted, owns stock possessing
more than 10 percent of the total combined voting power of all classes of
stock of the Company or of its parent or subsidiary corporation.
8. Terms and Conditions of Options. The Committee shall have power,
subject to the limitations contained in the Plan, to prescribe the terms
and conditions of any option granted hereunder. Each such option shall be
evidenced by a certificate in such form as the Committee shall from time to
time determine, which certificate shall prescribe the following terms and
conditions and such other terms and conditions as the Committee may deem
necessary or advisable:
(a) Duration of Option. An Incentive Stock Option shall not be
exercisable after the expiration of ten years from the date it is granted,
provided, however, that any Incentive Stock Option granted to an individual
who, at the time the option is granted, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or of its parent or subsidiary corporation shall by its terms not
be exercisable after the expiration of five years from date of grant.
(b) Exercise of Option. Each option granted under the Plan may be
exercised only after one year of continued employment by the Company or one
of its subsidiaries immediately following the date the option is granted
and only during the continuance of the optionee's employment with the
Company or one of its subsidiaries and such additional period as may be
provided in subsections (e) and (f) below. No option shall be exercised
for less than 10 Shares except as a result of an adjustment under Section
10 below. No option can be exercised at any time by anyone other than the
optionee during his or her lifetime or the optionee's legal
representative(s) after the optionee's death under subsection (f) below.
No Incentive Stock Option granted after January 1, 1987 may be exercised in
any calendar year as to shares having an aggregate fair market value
(determined as of the time the option was granted) in excess of $100,000.
(c) Payment. The purchase price of each Share purchased upon the
exercise of any option shall be paid in full at the time of such purchase,
and a stock certificate representing Shares so purchased shall be delivered
to the person entitled thereto. Until the stock certificate for such
Shares is issued in the optionee's name, he or she shall have none of the
rights of a stockholder. Payment may be made in whole or in part in (i)
cash or (ii) whole shares of the Company's common stock acquired at least
six months previously by the optionee and evidenced by negotiable
certificates, valued at their Fair Market Value on the date preceding the
date the option is exercised. If certificates representing shares of
common stock are used to pay all or part of the purchase price of an
option, separate certificates shall be delivered by the Company
representing the same number of shares as each certificate so used and an
additional certificate shall be delivered representing the additional
shares to which the option holder is entitled as a result of exercise of
the option. It shall be a condition to the performance of the Company's
obligation to issue or transfer Shares upon exercise of an option or
options that the optionee pay, or make provision satisfactory to the
Company for the payment of, any taxes (other than stock transfer taxes)
which the Company is obligated to collect with respect to the issue or
transfer upon such exercise. With respect to the exercise of Non-qualified
Stock Options under this Plan, optionees may elect to have the Company
withhold Shares otherwise issuable upon the exercise of such stock options,
or, in the case of "Insider" optionees, to irrevocably commit at an
acceptable time to surrender to the Company shares of common stock to cover
Federal and State tax obligations incident to such exercise, or such lesser
<PAGE>
amount as may be determined by the Committee.
(d) Nontransferability of Options. No option shall be transferable
by the optionee otherwise than (1) by will or the laws of descent and
distribution or (2) pursuant to a qualified domestic relations order as
defined in Section 414(p) of the Internal Revenue Code of 1986, as amended,
and each option shall be exercisable, during his or her lifetime, only by
the optionee or his or her guardian or legal representative(s), except to
the extent that options granted hereunder are assigned pursuant to a
qualified domestic relations order.
(e) Termination of Options. If the optionee's full-time employment
by the Company or any of its subsidiaries shall terminate for any reason
other than death or disability, his or her options shall terminate
immediately upon such termination, if not sooner terminated pursuant to
their terms, except that, subject to subsection (a) above, any option shall
be exercisable during the twelve-month period following such termination as
to the number of Shares which the optionee was entitled to purchase on the
day preceding such termination except that in the case of Incentive Stock
Options, the period for such exercise following such termination shall be
limited to three months. Cessation of any corporation's relationship with
the Company as a subsidiary shall constitute a "termination of employment"
hereunder as to individuals employed by that corporation, and options held
by such individuals shall be terminated in accordance with this subsection
(e).
(f) Death or Disability of Employee. If the optionee shall die or
become disabled while in the employ of the Company or any of its
subsidiaries, his or her options shall terminate twelve months after the
date of such death or disability, if not sooner terminated pursuant to
their terms, and, subject to subsection (a) above, each option shall be
exercisable during such twelve-month period by the optionee or his or her
legal representative(s) only as to the number of Shares which he or she was
entitled to purchase on the day preceding the optionee's death or
disability. For purposes of subsection (e) above and of this subsection,
the meaning of the words "disability" and "disabled" shall be determined
under the provisions of Section 422A(c)(9) of the Internal Revenue Code of
1954, as amended, or of any successor provisions.
(g) Prior Incentive Stock Options. Each Incentive Stock Option
granted prior to January 1, 1987 shall by its terms not be exercisable
while there is outstanding any Incentive Stock Option which was granted,
before the granting of such option, to the employee to purchase stock in
the Company or in a corporation which (at the time of granting such option)
is a parent or subsidiary corporation of the Company or in a predecessor
corporation of any such corporations. An option shall be deemed
outstanding for purposes of this subsection (g) until such option is
exercised in full or expires by reason of lapse of time.
9. Fair Market Value. For purposes of this Plan, "Fair Market
Value" shall be the applicable day's closing sales price of the Company's
common stock as reflected on the consolidated tape of the principal
exchange on which such stock is traded, or, if there are no sales on such
date, such price on the most recent trading day prior thereto.
10. Changes in Stock. In the event of a stock dividend, split-up or
combination of shares, recapitalization, reclassification or merger in
which the Company is the surviving corporation, or other similar capital or
corporate structure change, the number and kind of shares of stock or
securities of the Company at the time of such change remaining subject to
the Plan and to any option granted or to be granted pursuant to the Plan,
the option price and any other relevant provisions shall be appropriately
adjusted by the Board of Directors of the Company, whose determination
<PAGE>
shall be binding on all persons. In the event of a consolidation or merger
in which the Company is not the surviving corporation, or the complete
liquidation of the Company, (i) each option outstanding hereunder that is
held by an "Insider" optionee shall become immediately exercisable and (ii)
each option outstanding hereunder that is held by an optionee who is not an
"Insider" shall terminate, provided that at least twenty days prior to the
effective date of any such consolidation or merger, the Board of Directors
of the Company shall do one of the following with respect to options held
by optionees who are not "Insiders": (1) make such options immediately
exercisable, (2) arrange to have the surviving or consolidated corporation
grant replacement options to the optionees involved, or (3) pay in cash the
difference between the exercise price of the unpurchased shares under the
options and the value of consideration receivable in the transaction by a
holder of the number of shares of common stock equal to the number subject
to the options. No adjustment provided for in this Section 10 shall
require the Company to issue or sell a fractional share under any option
hereunder and any fractional share resulting from any such adjustment shall
be deleted from the option involved.
Notwithstanding anything herein to the contrary, in the event of a
"Change in Control" as defined below, including certain consolidation or
merger events otherwise giving rise to the adjustments or alternatives
described in the above paragraph, all previously issued and outstanding
options under this Plan shall immediately become exercisable as of the date
of the Change in Control. As used herein, "Change in Control" means a
Change in Control of a nature that would, in the opinion of the Company
counsel, be required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended ("Exchange Act"); provided that, without limitation, such
a Change in Control shall be deemed to have occurred if: (i) any "Person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act
(other than the Company or any subsidiary of the Company, any trustee or
fiduciary holding securities under an employee benefit plan of the Company
or any of its subsidiaries or a corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as
their ownership of the stock of the Company)) becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities; or (ii)
during any period of two consecutive years (not including any period prior
to the effective date of this Plan), individuals who at the beginning of
such period constitute the Board of Directors and any new director (other
than a director designated by a Person who has entered into an agreement
with the Company to effect a transaction described in clause (i), (iii), or
(iv) of this paragraph) whose election by the Board of Directors or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved cease for any reason to
constitute a majority thereof; or (iii) the stockholders of the Company
approve a merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity), in combination
with the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, at least 75% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or (B) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person acquires 25% or more of
the combined voting power of the Company's then outstanding securities; or
<PAGE>
(iv) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company
of all or substantially all the Company's assets.
No Change in Control shall be deemed to have occurred if the optionee
is a member of a management group which first announces a proposal which
constitutes a Potential Change in Control, unless otherwise determined by a
majority of the members of the Board of Directors who are not members of
such management group. A "Potential Change in Control" shall be deemed to
have occurred if the conditions set forth in any one of the following
subsections shall have been satisfied: (i) the Company enters into an
agreement, the consummation of which would result in the occurrence of a
Change in Control; (ii) the Company or any Person publicly announces an
intention to take or to consider taking actions, which if consummated,
would constitute a Change in Control; (iii) any Person who is or becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company's then
outstanding securities, increases such Person's beneficial ownership of
such securities by 5% or more over the percentage so owned by such Person
on the date hereof; or (iv) the Board of Directors adopts a resolution to
the effect that, for purposes of this Plan, a Potential Change in Control
has occurred.
11. Effective Date; Stockholder Approval; Term. The Plan was
adopted by the Board of Directors on March 7, 1984 and shall become
effective on May 1, 1984 if the Plan is approved by the holders of a
majority of the common stock outstanding and entitled to vote at the Annual
Meeting of Stockholders scheduled for April 26, 1984. No option hereunder
shall be granted after March 6, 1994 or the earlier suspension or
termination of the Plan in accordance with its terms. The Plan shall
terminate on March 6, 1994 or on such earlier date as it may be suspended
or terminated under the provisions of Section 12 below or as of which all
shares of stock subject to options authorized to be granted under the Plan
shall have been acquired by exercise of such options.
12. Amendment or Discontinuance of the Plan. The Board of Directors
of the Company may, insofar as permitted by law, at any time or from time
to time, suspend or terminate the Plan or revise or amend it in any respect
whatsoever except that, without appropriate approval of the stockholders of
the common stock, no such revision or amendment shall increase the maximum
number of Shares subject to the Plan, change the designation of the class
of employees eligible to receive options, decrease the price at which
options may be granted or otherwise change the provisions of this Plan to
the extent that approval of the holders of the common stock of the Company
is required under applicable securities laws.
13. Applicable Laws or Regulations and Notification of Disposition.
The Company's obligation to sell and deliver Shares under an option is
subject to such compliance as the Company deems necessary or advisable with
federal and state laws, rules and regulations applying to the
authorization, issuance, listing or sale of securities. The Company may
also require in connection with any exercise of an Incentive Stock Option
that the optionee agree to notify the Company when making any disposition
of the Shares whether by sale, gift, or otherwise, within two years of the
date of grant or within one year of the date of exercise.
14. No Employment Right; No Obligation to Exercise Option. Nothing
contained in the Plan, or in any option granted under it, shall confer upon
any optionee any right to continued employment by the Company or any of its
subsidiaries or limit in any way the right of the Company or any subsidiary
to terminate the optionee's employment at any time. The granting of any
option hereunder shall impose no obligation upon the optionee to exercise
such option.
<PAGE> EXHIBIT 10(b)
STANHOME INC.
1991 Stock Option Plan, as amended
Through October 20, 1993
1. Purpose. The purpose of this 1991 Stock Option Plan (the "Plan")
is to advance the interests of Stanhome Inc. (the "Company") by encouraging
key management employees of the Company and its subsidiaries and non-
employee directors of the Company to acquire a proprietary interest in the
Company through ownership of common stock of the Company. Such ownership
will encourage the optionees to remain with the Company and will help
attract other qualified persons to become employees and directors.
2. Administration. The Plan shall be administered by the
Compensation and Stock Option Committee of the Board of Directors (the
"Committee") which shall be composed of not less than three directors of
the Company elected or to be elected as members of the Committee from time
to time by the Board of Directors of the Company. None of the Committee
members shall be, during service on the Committee, nor shall have been,
during the one year prior to service on the Committee, granted or awarded
Shares or options to acquire Shares under this Plan or any other plan
maintained by Stanhome or any of Stanhome's affiliates, other than options
granted pursuant to Section 9 hereof. Members of the Committee shall be
subject to any additional restrictions necessary to satisfy the
requirements for disinterested administration under Rule 16b-3 of the
Securities Exchange Act of 1934, as amended, as in force from time to time.
Subject to the provisions of the Plan and the approval of the Board of
Directors of the Company, except that the Board of Directors shall have no
discretion with respect to the selection of officers within the meaning of
Rule 16a-1(f), directors or 10% or more shareholders ("Insiders") for
participation and decisions concerning the timing, pricing and amount of a
grant or award to such "Insiders", the Committee is authorized to grant
options under the plan and to interpret the Plan and such options, to
prescribe, amend and rescind rules and regulations relating to the Plan and
the options, and to make other determinations necessary or advisable for
the administration of the Plan, all of which determinations shall be
conclusive. The Committee shall act pursuant to a majority vote or by
unanimous written consent.
3. Types of Options. Options granted pursuant to the Plan may be
either incentive stock options under Section 422 of the Internal Revenue
Code of 1986, as amended, ("Incentive Stock Options") or options not
qualifying under that section of the Code ("Non-qualified Stock Options").
It is the intent of the Company that Non-qualified Stock Options granted
under the Plan not be classified as Incentive Stock Options, that the
Incentive Stock Options granted under the Plan be consistent with and
contain or be deemed to contain all provisions required under Section 422
and the other appropriate provisions of the Code and any implementing
regulations (and any successor provisions thereof), and that any
ambiguities in construction shall be interpreted in order to effectuate
such intent.
4. Eligibility. Options shall be granted under the Plan to such
selected key full-time salaried and commissioned employees (including
officers and directors if they are employees) of the Company or any of its
subsidiaries as the Committee shall determine from time to time. Options
shall also be granted under the Plan to the non-employee directors of the
Company (the "Non-employee Directors") pursuant to Section 9 hereof.
5. Stock Subject to Options. The aggregate number of shares which
may be issued or sold under options granted pursuant to the Plan (the
"Shares") shall not exceed 2,000,000 shares of the Company's common stock
$0.125 par value each. Such Shares shall be either authorized but unissued
shares of said common stock or issued shares of said common stock which
<PAGE>
shall have been reacquired by the Company. Such aggregate number of Shares
may be adjusted under Sections 9 and 10 below. If any outstanding option
under the Plan expires or is terminated for any reason, the Shares
allocated to the unexercised portion of such option may again be subjected
to an option or options under the Plan.
6. Allotment of Shares. Except as provided under Section 9 hereof,
the Committee shall determine the total number of Shares to be offered to
each optionee under the Plan.
7. Option Price. The Shares shall be offered from time to time
under the Plan at a price which shall be not less than the greater of (i)
100 percent of the Fair Market Value of the Company's common stock on the
date the option is granted, or (ii) the par value of the Company's common
stock subject to the option; provided, however, that the price shall be not
less than 110 percent of such Fair Market Value in the case of shares
offered under any Incentive Stock Option granted to an individual who, at
the time the option is granted, owns stock possessing more than 10 percent
of the total combined voting power of all classes of stock of the Company
or of its subsidiaries.
8. Terms and Conditions of Options. The Committee shall have power,
subject to the limitations contained in the Plan, to prescribe the terms
and conditions of any option granted hereunder. Each such option shall be
evidenced by a certificate in such form as the Committee shall from time to
time determine, which certificate shall prescribe the following terms and
conditions and such other terms and conditions as the Committee may deem
necessary or advisable:
(a) Duration of Options. Except as hereinafter otherwise provided,
options granted under the Plan shall be exercisable for such period of time
as the Committee shall determine. An Incentive Stock Option shall not be
exercisable after the expiration of ten years from the date it is granted;
provided, however, that any Incentive Stock Option granted to an individual
who, at the time the option is granted, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or of its subsidiaries shall by its terms not be exercisable after
the expiration of five years from the date of grant.
(b) Exercise of Options. Except as hereinafter otherwise provided,
each option granted under the Plan may be exercised only after one year of
continued employment by the Company or one of its subsidiaries immediately
following the date the option is granted and only during the continuance of
the optionee's employment with the Company or one of its subsidiaries and
such additional period as may be provided in subsection (e) below. No
option shall be exercised for less than 10 Shares except as a result of an
adjustment under Sections 9 or 10 below.
(c) Payment. The purchase price of each Share purchased upon the
exercise of any option granted hereunder shall be paid in full at the time
of such purchase, and a stock certificate representing Shares so purchased
shall be delivered to the person entitled thereto. Until the stock
certificate for such Shares is issued in the optionee's name, he or she
shall have none of the rights of a stockholder. Payment may be made in
whole or in part in (i) cash or (ii) whole shares of the Company's common
stock acquired at least six months previously by the optionee and evidenced
by negotiable certificates, valued at their Fair Market Value on the date
preceding the date the option is exercised. If certificates representing
shares of common stock are used to pay all or part of the purchase price of
an option, separate certificates shall be delivered by the Company
representing the same number of shares as each certificate so used and an
additional certificate shall be delivered representing the additional
shares to which the option holder is entitled as a result of exercise of
<PAGE>
the option. It shall be a condition to the performance of the Company's
obligation to issue or transfer Shares upon exercise of an option or
options that the optionee pay, or make provision satisfactory to the
Company for the payment of, any taxes (other than stock transfer taxes)
which the Company is obligated to collect with respect to the issue or
transfer upon such exercise. With respect to the exercise of Non-qualified
Stock Options granted pursuant to this Section 8, optionees may elect to
have the Company withhold a designated number of Shares otherwise issuable
upon the exercise of such stock options, or, in the case of "Insider"
optionees, to commit irrevocably at a time acceptable under the provisions
of Section 16 of the Securities Exchange Act of 1934, as amended, to
surrender to the Company shares of common stock to cover Federal and State
tax obligations incident to such exercise, or such other maximum amounts as
may be determined by the Committee.
(d) Nontransferability of Options. No option shall be transferable
by the optionee otherwise than (1) by will or the laws of descent and
distribution or (2) pursuant to a qualified domestic relations order as
defined in Section 414(p) of the Internal Revenue Code of 1986, as amended,
and each option shall be exercisable, during his or her lifetime, only by
the optionee or his or her guardian or legal representative(s), except to
the extent that options granted hereunder are assigned pursuant to a
qualified domestic relations order.
(e) Termination of Options. If the optionee's full-time employment
by the Company or any of its subsidiaries shall terminate for any reason,
including death or disability, his or her options shall terminate
immediately upon such termination of employment, if not sooner terminated
pursuant to their terms, except that, subject to subsection (a) above, any
option shall be exercisable during the two year period following the
optionee's death or the three year period following any such other
termination of employment by the optionee or his or her guardian or legal
representative(s) only as to the number of Shares which the optionee was
entitled to purchase on the day preceding such termination, except further
that in the case of Incentive Stock Options the period for such exercise
following such termination shall be limited to three months, or, in the
case of disability, to twelve months, or, in the case of death, to two
years. Cessation of any corporation's relationship with the Company as a
subsidiary shall constitute a "termination of employment" hereunder as to
individuals employed by that corporation, and options held by such
individuals shall be terminated in accordance with this subsection. For
purposes of this subsection, the meaning of the word "disability" shall be
determined under the provisions of Section 422(c)(7) of the Internal
Revenue Code of 1986, as amended, or any successor provisions thereof.
(f) Fair Market Value. For purposes of this Plan, "Fair Market
Value" shall be the applicable day's closing sales price of the Company's
common stock as reflected on the consolidated tape of the principal
exchange on which such stock is traded, or, if there are no sales on such
date, such price on the most recent trading day prior thereto.
9. Non-employee Directors' Options. The Committee shall not have
any discretion with respect to the options granted to the Non-employee
Directors under the provisions of this Section 9. Except as hereinafter
otherwise provided, options granted pursuant to this Section 9 shall be
subject to the terms and conditions set forth in Section 8.
(a) Grant of Options. On the day following each of the 1991 through
and including the 1995 annual stockholders' meetings, each Non-employee
Director on that date shall automatically be granted an option to purchase
1,500 Shares. The maximum number of Shares for which options may be
granted to any Non-employee Director under the Plan shall be 7,500. All
such options shall be Non-qualified Stock Options. The price at which each
<PAGE>
Share covered by such options shall be purchased shall be the greater of
(i) 100 percent of the Fair Market Value of the Company's common stock on
the date the option is granted, or (ii) the par value of the Company's
common stock subject to the option.
(b) Exercise of Options. Twenty-five percent of the total number of
the Shares subject to an option granted to the Non-employee Director shall
become exercisable on the later of (i) the next February 1 following the
date on which the option was granted or (ii) six months after the date on
which the option was granted and twenty-five percent on February 1 of each
of the next three consecutive calendar years. The right to purchase Shares
with respect to an option which has become exercisable shall be cumulative
during the term of the option. The option may be exercised by the Non-
employee Director or his or her guardian or legal representative(s) during
the period that the Non-employee Director remains a member of the Board of
Directors and for a period of three years thereafter, or a period of two
years thereafter in the case of the Non-employee Director's death while
serving as a member of the Board of Directors, provided that only those
options exercisable on the day preceding the date the Non-employee Director
ceases to be a member of the Board of Directors may be exercised during
said applicable period and, provided further, that in no event shall the
option be exercisable more than ten years after the date of grant. All
options that are not exercisable on the day preceding the date the Non-
employee Director ceases to be a member of the Board of Directors shall be
immediately terminated.
(c) Payment. An option granted to the Non-employee Director shall
be exercisable only upon payment to the Company in accordance with the
provisions of Section 8(c) of the full purchase price of the Shares with
respect to which the option is being exercised.
(d) Adjustment of Options. In the event of a stock dividend, split-
up or combination of shares, recapitalization, reclassification or merger
in which the Company is the surviving corporation, or other similar capital
or corporate structure change, the number of Shares at the time of such
change remaining subject to any option granted or to be granted pursuant to
the provisions of this Section 9 shall be increased or decreased, as the
case may be, in direct proportion to the increase or decrease in the number
of shares of common stock of the Company by reason of such change in
corporate structure, provided that the number of Shares shall always be a
whole number with any fractional Shares being deleted therefrom, and the
purchase price per Share of any outstanding options shall, in the case of
an increase in the number of Shares, be proportionately decreased, and in
the case of a decrease in the number of Shares, be proportionately
increased. In the event of a consolidation or merger in which the Company
is not the surviving corporation or of a "Change in Control" as defined in
Section 10, including, but not limited to, "Changes in Control" in which
the Company is the surviving corporation, and notwithstanding the preceding
sentence, each option outstanding under the provisions of this Section 9
shall thereupon terminate, provided that within ten days of the effective
date of any such consolidation, merger, or "Change in Control", the Company
shall pay in cash the difference between the exercise price of the
unpurchased Shares under the options and the value of consideration
receivable in the transaction by a holder of the number of shares of common
stock equal to the number subject to the options.
10. Changes in Stock. In the event of a stock dividend, split-up or
combination of shares, recapitalization, reclassification or merger in
which the Company is the surviving corporation, or other similar capital or
corporate structure change, the number and kind of Shares at the time of
such change remaining subject to the Plan and to any option granted or to
be granted pursuant to the Plan, except for options granted or to be
granted pursuant to Section 9, the option price and any other relevant
<PAGE>
provisions shall be appropriately adjusted by the Board of Directors of the
Company, whose determination shall be binding on all persons. In the event
of a consolidation or merger in which the Company is not the surviving
corporation, (i) each option outstanding hereunder that is held by an
"Insider" optionee and that is not outstanding under the provisions of
Section 9 shall become immediately exercisable and (ii) each option
outstanding hereunder that is held by an optionee who is not an "Insider"
shall terminate, provided that at least twenty days prior to the effective
date of any such consolidation or merger, the Board of Directors of the
Company shall do one of the following with respect to options held by
optionees who are not "Insiders": (1) make such options immediately
exercisable, (2) arrange to have the surviving or consolidated corporation
grant replacement options to the optionees involved, or (3) pay in cash the
difference between the exercise price of the unpurchased Shares under the
options and the value of consideration receivable in the transaction by a
holder of the number of shares of common stock equal to the number subject
to the options. No adjustment provided for in this Section 10 shall
require the Company to issue or sell a fractional share under any option
hereunder and any fractional share resulting from any such adjustment shall
be deleted from the option involved.
Notwithstanding anything herein to the contrary, in the event of a
"Change in Control" as defined below, including certain consolidation or
merger events otherwise giving rise to the adjustments or alternatives
described in the above paragraph, each option outstanding under this Plan
shall thereupon terminate, provided that within ten days of the effective
date of such Change in Control, the Company shall pay in cash the
difference between the exercise price of the unpurchased Shares under the
options and the value of consideration receivable in the transaction by a
holder of the number of shares of common stock equal to the number subject
to the options. As used herein, "Change in Control" means a Change in
Control of a nature that would, in the opinion of the Company counsel, be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended ("Exchange Act"); provided that, without limitation, such a Change
in Control shall be deemed to have occurred if: (i) any "Person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act (other than
the Company or any subsidiary of the Company, any trustee or fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries or a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of the stock of the Company)) becomes the "beneficial owner" (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities; or (ii) during any
period of two consecutive years (not including any period prior to the
effective date of this Plan), individuals who at the beginning of such
period constitute the Board of Directors and any new director (other than a
director designated by a Person who has entered into an agreement with the
Company to effect a transaction described in clause (i), (iii), or (iv) of
this paragraph) whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved cease for any reason to constitute
a majority thereof; or (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other
than (A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, at least 75% of the combined voting
<PAGE>
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (B) a merger
or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person acquires 25% or more of the
combined voting power of the Company's then outstanding securities; or (iv)
the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of
all or substantially all the Company's assets.
With respect to all optionees other than the Non-employee Directors,
no Change in Control shall be deemed to have occurred if the optionee is a
member of a management group which first announces a proposal which
constitutes a Potential Change in Control, unless otherwise determined by a
majority of the members of the Board of Directors who are not members of
such management group. A "Potential Change in Control" shall be deemed to
have occurred if the conditions set forth in any one of the following
subsections shall have been satisfied: (i) the Company enters into an
agreement, the consummation of which would result in the occurrence of a
Change in Control; (ii) the Company or any Person publicly announces an
intention to take or to consider taking actions, which if consummated,
would constitute a Change in Control; (iii) any Person who is or becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company's then
outstanding securities, increases such Person's beneficial ownership of
such securities by 5% or more over the percentage so owned by such Person
on the date hereof; or (iv) the Board of Directors adopts a resolution to
the effect that, for purposes of this Plan, a Potential Change in Control
has occurred.
11. Effective Date; Stockholder Approval; Term. The Plan was
adopted by the Board of Directors on January 23, 1991 and shall become
effective on April 25, 1991 if the Plan is approved by the holders of a
majority of the common stock outstanding and entitled to vote at the Annual
Meeting of Stockholders scheduled for April 25, 1991. No option hereunder
shall be granted after January 23, 2001 or the earlier suspension or
termination of the Plan in accordance with its terms. The Plan shall
terminate on January 23, 2001 or on such earlier date as it may be
suspended or terminated under the provisions of Section 12 below or as of
which all Shares subject to options authorized to be granted under the Plan
shall have been acquired by exercise of such options.
12. Amendment or Discontinuance of the Plan. The Board of Directors
of the Company may, insofar as permitted by law, at any time or from time
to time, suspend or terminate the Plan or revise or amend it in any respect
whatsoever except that, without appropriate approval of the stockholders of
the common stock, no such revision or amendment shall increase the maximum
number of Shares subject to the Plan, change the designation of the class
of employees eligible to receive options, decrease the price at which
options may be granted or otherwise change the provisions of this Plan to
the extent approval of the holders of the common stock of the Company is
required under applicable securities laws. Notwithstanding the preceding
sentence, amendments to change the provisions of Section 9(a) shall not be
made more frequently than once every six months other than to comply with
the Internal Revenue Code or the Employee Retirement Income Security Act.
13. Applicable Laws or Regulations and Notification of Disposition.
The Company's obligation to sell and deliver Shares under an option is
subject to such compliance as the Company deems necessary or advisable with
federal and state laws, rules and regulations applying to the
authorization, issuance, listing or sale of securities. The Company may
also require in connection with any exercise of an Incentive Stock Option
that the optionee agree to notify the Company when making any disposition
of the Shares, whether by sale, gift, or otherwise, within two years of the
<PAGE>
date of grant or within one year of the date of exercise.
14. No Employment Right; No Obligation to Exercise Option. Nothing
contained in the Plan, or in any option granted under it, shall confer upon
any optionee any right to continued employment by the Company or any of its
subsidiaries or to continued membership on the Board of Directors of the
Company or limit in any way the right of the Company or any subsidiary to
terminate the optionee's employment at any time. The granting of any
option hereunder shall impose no obligation upon the optionee to exercise
such option.
<PAGE> EXHIBIT 10(c)
STANHOME INC.
Westfield, Massachusetts
SPECIAL INTERIM CHIEF EXECUTIVE OFFICER
STOCK OPTION PLAN
CERTIFICATE OF GRANT OF NON-QUALIFIED
STOCK OPTION
Date of Grant: September 9, 1993
Total Number of Shares: 60,000
Price per Share: $26.875
To: H. L. Tower
50 Wallace Road
Stony Creek, CT 06405
Dear Bill:
This letter is a certificate formally granting you a Non-qualified
Stock Option with respect to the number of shares of Stanhome Inc. Common
Stock, $0.125 par value each, indicated above and subject to the conditions
set forth below. The stock option exercise price will be $26.875 per
share. Your option will vest in increments of 10,000 shares as of the last
day of each month in which you have served, during any portion thereof, as
the Company's President and Chief Executive Officer beginning with
September, 1993. If you cease serving as the Company's President and Chief
Executive Officer at any time before March, 1994, the incremental shares
under this option for those months following such cessation of service in
those capacities will not vest. All unvested increments of shares under
this option at the time of your cessation of service in those capacities
will be forfeited by you and will terminate forthwith.
Your option is not exercisable during the first six (6) months
following the date of grant. After March 9, 1994, your option will become
exercisable as to all shares vested as of that date. The stock option
granted under this certificate is not to be treated as an incentive stock
option under the Internal Revenue Code of 1986, as amended.
You may exercise your right to purchase all or any of the shares
included in any vested increment after March 9, 1994 but, in any event, not
later than September 8, 2003. In order to exercise, you must forward a
completed Stock Option Exercise Order together with payment in full to the
Treasurer, Stanhome Inc., 333 Western Avenue, Westfield, Massachusetts
01085, for the shares which you elect to purchase. You can elect to make
your purchase in cash, Stanhome stock, or a combination of cash and
Stanhome stock. Please be advised that the Company will accept shares
acquired under a Stock Option program of the Company in payment for new
option shares only if the shares tendered have been held by you for a
period of at least six months.
No purchase can be made of fewer than ten shares at any one time.
Any exercise of the option will be effective on the date when payment is
received in the office of the Treasurer, except that no payment will be
accepted which is received after September 8, 2003. You will receive a
stock certificate representing shares for which you have made payment.
Under existing law, the difference between the price paid for any
shares purchased under this option and their market value on the date or
dates the option is exercised will be subject to federal income tax at
ordinary rates, to social security tax, and to the usual withholding
requirements. The payment of all such taxes is of course your personal
<PAGE>
responsibility. However, the Company is also responsible for meeting the
withholding requirements and in order to do so will retain the required
number of shares purchased under the option unless you elect to deposit
with it an amount equal to any required withholding.
This option is exercisable during your lifetime only by you and is
not transferable by you. In the event of your death, your legal
representatives may, at any time after March 9, 1994 and before September
9, 2003, pay for and receive any shares which were vested as of the date of
your death. Any attempted transfer or other disposition of the option by
you will be void and will constitute valid grounds for its cancellation by
the Company.
The Compensation and Stock Option Committee of the Board of Directors
will administer this grant in its discretion and pursuant to its
interpretation of the changes in stock section and other provisions of the
Company's 1991 Stock Option Plan, a copy of which is attached for your
convenience, deemed by it to be applicable.
This option will be of no force or effect and no rights will exist
under it after September 8, 2003.
We would appreciate your signing the enclosed acknowledgment
confirming your receipt of this Certificate of Grant and returning it in
the enclosed envelope.
STANHOME INC.
/s/ Bruce H. Wyatt
Bruce H. Wyatt
Secretary
Enclosures
<PAGE>
CONFIRMATION OF RECEIPT
OF
NON-QUALIFIED STOCK OPTION
I hereby acknowledge that I have received my Certificate of Grant of
a Non-qualified Stock Option dated September 9, 1993.
_____________________________
(Signature of Optionee)
Date:________________________
Name:________________________
(Printed)
Address:_____________________
<PAGE>
STANHOME INC.
1991 Stock Option Plan, as amended
Through October 20, 1993
1. Purpose. The purpose of this 1991 Stock Option Plan (the "Plan")
is to advance the interests of Stanhome Inc. (the "Company") by encouraging
key management employees of the Company and its subsidiaries and non-
employee directors of the Company to acquire a proprietary interest in the
Company through ownership of common stock of the Company. Such ownership
will encourage the optionees to remain with the Company and will help
attract other qualified persons to become employees and directors.
2. Administration. The Plan shall be administered by the
Compensation and Stock Option Committee of the Board of Directors (the
"Committee") which shall be composed of not less than three directors of
the Company elected or to be elected as members of the Committee from time
to time by the Board of Directors of the Company. None of the Committee
members shall be, during service on the Committee, nor shall have been,
during the one year prior to service on the Committee, granted or awarded
Shares or options to acquire Shares under this Plan or any other plan
maintained by Stanhome or any of Stanhome's affiliates, other than options
granted pursuant to Section 9 hereof. Members of the Committee shall be
subject to any additional restrictions necessary to satisfy the
requirements for disinterested administration under Rule 16b-3 of the
Securities Exchange Act of 1934, as amended, as in force from time to time.
Subject to the provisions of the Plan and the approval of the Board of
Directors of the Company, except that the Board of Directors shall have no
discretion with respect to the selection of officers within the meaning of
Rule 16a-1(f), directors or 10% or more shareholders ("Insiders") for
participation and decisions concerning the timing, pricing and amount of a
grant or award to such "Insiders", the Committee is authorized to grant
options under the plan and to interpret the Plan and such options, to
prescribe, amend and rescind rules and regulations relating to the Plan and
the options, and to make other determinations necessary or advisable for
the administration of the Plan, all of which determinations shall be
conclusive. The Committee shall act pursuant to a majority vote or by
unanimous written consent.
3. Types of Options. Options granted pursuant to the Plan may be
either incentive stock options under Section 422 of the Internal Revenue
Code of 1986, as amended, ("Incentive Stock Options") or options not
qualifying under that section of the Code ("Non-qualified Stock Options").
It is the intent of the Company that Non-qualified Stock Options granted
under the Plan not be classified as Incentive Stock Options, that the
Incentive Stock Options granted under the Plan be consistent with and
contain or be deemed to contain all provisions required under Section 422
and the other appropriate provisions of the Code and any implementing
regulations (and any successor provisions thereof), and that any
ambiguities in construction shall be interpreted in order to effectuate
such intent.
4. Eligibility. Options shall be granted under the Plan to such
selected key full-time salaried and commissioned employees (including
officers and directors if they are employees) of the Company or any of its
subsidiaries as the Committee shall determine from time to time. Options
shall also be granted under the Plan to the non-employee directors of the
Company (the "Non-employee Directors") pursuant to Section 9 hereof.
5. Stock Subject to Options. The aggregate number of shares which
may be issued or sold under options granted pursuant to the Plan (the
<PAGE>
"Shares") shall not exceed 2,000,000 shares of the Company's common stock
$0.125 par value each. Such Shares shall be either authorized but unissued
shares of said common stock or issued shares of said common stock which
shall have been reacquired by the Company. Such aggregate number of Shares
may be adjusted under Sections 9 and 10 below. If any outstanding option
under the Plan expires or is terminated for any reason, the Shares
allocated to the unexercised portion of such option may again be subjected
to an option or options under the Plan.
6. Allotment of Shares. Except as provided under Section 9 hereof,
the Committee shall determine the total number of Shares to be offered to
each optionee under the Plan.
7. Option Price. The Shares shall be offered from time to time
under the Plan at a price which shall be not less than the greater of (i)
100 percent of the Fair Market Value of the Company's common stock on the
date the option is granted, or (ii) the par value of the Company's common
stock subject to the option; provided, however, that the price shall be not
less than 110 percent of such Fair Market Value in the case of shares
offered under any Incentive Stock Option granted to an individual who, at
the time the option is granted, owns stock possessing more than 10 percent
of the total combined voting power of all classes of stock of the Company
or of its subsidiaries.
8. Terms and Conditions of Options. The Committee shall have power,
subject to the limitations contained in the Plan, to prescribe the terms
and conditions of any option granted hereunder. Each such option shall be
evidenced by a certificate in such form as the Committee shall from time to
time determine, which certificate shall prescribe the following terms and
conditions and such other terms and conditions as the Committee may deem
necessary or advisable:
(a) Duration of Options. Except as hereinafter otherwise provided,
options granted under the Plan shall be exercisable for such period of time
as the Committee shall determine. An Incentive Stock Option shall not be
exercisable after the expiration of ten years from the date it is granted;
provided, however, that any Incentive Stock Option granted to an individual
who, at the time the option is granted, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or of its subsidiaries shall by its terms not be exercisable after
the expiration of five years from the date of grant.
(b) Exercise of Options. Except as hereinafter otherwise provided,
each option granted under the Plan may be exercised only after one year of
continued employment by the Company or one of its subsidiaries immediately
following the date the option is granted and only during the continuance of
the optionee's employment with the Company or one of its subsidiaries and
such additional period as may be provided in subsection (e) below. No
option shall be exercised for less than 10 Shares except as a result of an
adjustment under Sections 9 or 10 below.
(c) Payment. The purchase price of each Share purchased upon the exercise
of any option granted hereunder shall be paid in full at the time of such
purchase, and a stock certificate representing Shares so purchased shall be
delivered to the person entitled thereto. Until the stock certificate for
such Shares is issued in the optionee's name, he or she shall have none of
the rights of a stockholder. Payment may be made in whole or in part in
(i) cash or (ii) whole shares of the Company's common stock acquired at
least six months previously by the optionee and evidenced by negotiable
certificates, valued at their Fair Market Value on the date preceding the
date the option is exercised. If certificates representing shares of
common stock are used to pay all or part of the purchase price of an
option, separate certificates shall be delivered by the Company
<PAGE>
representing the same number of shares as each certificate so used and an
additional certificate shall be delivered representing the additional
shares to which the option holder is entitled as a result of exercise of
the option. It shall be a condition to the performance of the Company's
obligation to issue or transfer Shares upon exercise of an option or
options that the optionee pay, or make provision satisfactory to the
Company for the payment of, any taxes (other than stock transfer taxes)
which the Company is obligated to collect with respect to the issue or
transfer upon such exercise. With respect to the exercise of Non-qualified
Stock Options granted pursuant to this Section 8, optionees may elect to
have the Company withhold a designated number of Shares otherwise issuable
upon the exercise of such stock options, or, in the case of "Insider"
optionees, to commit irrevocably at a time acceptable under the provisions
of Section 16 of the Securities Exchange Act of 1934, as amended, to
surrender to the Company shares of common stock to cover Federal and State
tax obligations incident to such exercise, or such other maximum amounts as
may be determined by the Committee.
(d) Nontransferability of Options. No option shall be transferable
by the optionee otherwise than (1) by will or the laws of descent and
distribution or (2) pursuant to a qualified domestic relations order as
defined in Section 414(p) of the Internal Revenue Code of 1986, as amended,
and each option shall be exercisable, during his or her lifetime, only by
the optionee or his or her guardian or legal representative(s), except to
the extent that options granted hereunder are assigned pursuant to a
qualified domestic relations order.
(e) Termination of Options. If the optionee's full-time employment
by the Company or any of its subsidiaries shall terminate for any reason,
including death or disability, his or her options shall terminate
immediately upon such termination of employment, if not sooner terminated
pursuant to their terms, except that, subject to subsection (a) above, any
option shall be exercisable during the two year period following the
optionee's death or the three year period following any such other
termination of employment by the optionee or his or her guardian or legal
representative(s) only as to the number of Shares which the optionee was
entitled to purchase on the day preceding such termination, except further
that in the case of Incentive Stock Options the period for such exercise
following such termination shall be limited to three months, or, in the
case of disability, to twelve months, or, in the case of death, to two
years. Cessation of any corporation's relationship with the Company as a
subsidiary shall constitute a "termination of employment" hereunder as to
individuals employed by that corporation, and options held by such
individuals shall be terminated in accordance with this subsection. For
purposes of this subsection, the meaning of the word "disability" shall be
determined under the provisions of Section 422(c)(7) of the Internal
Revenue Code of 1986, as amended, or any successor provisions thereof.
(f) Fair Market Value. For purposes of this Plan, "Fair Market
Value" shall be the applicable day's closing sales price of the Company's
common stock as reflected on the consolidated tape of the principal
exchange on which such stock is traded, or, if there are no sales on such
date, such price on the most recent trading day prior thereto.
9. Non-employee Directors' Options. The Committee shall not have
any discretion with respect to the options granted to the Non-employee
Directors under the provisions of this Section 9. Except as hereinafter
otherwise provided, options granted pursuant to this Section 9 shall be
subject to the terms and conditions set forth in Section 8.
(a) Grant of Options. On the day following each of the 1991 through
and including the 1995 annual stockholders' meetings, each Non-employee
Director on that date shall automatically be granted an option to purchase
<PAGE>
1,500 Shares. The maximum number of Shares for which options may be
granted to any Non-employee Director under the Plan shall be 7,500. All
such options shall be Non-qualified Stock Options. The price at which each
Share covered by such options shall be purchased shall be the greater of
(i) 100 percent of the Fair Market Value of the Company's common stock on
the date the option is granted, or (ii) the par value of the Company's
common stock subject to the option.
(b) Exercise of Options. Twenty-five percent of the total number of
the Shares subject to an option granted to the Non-employee Director shall
become exercisable on the later of (i) the next February 1 following the
date on which the option was granted or (ii) six months after the date on
which the option was granted and twenty-five percent on February 1 of each
of the next three consecutive calendar years. The right to purchase Shares
with respect to an option which has become exercisable shall be cumulative
during the term of the option. The option may be exercised by the Non-
employee Director or his or her guardian or legal representative(s) during
the period that the Non-employee Director remains a member of the Board of
Directors and for a period of three years thereafter, or a period of two
years thereafter in the case of the Non-employee Director's death while
serving as a member of the Board of Directors, provided that only those
options exercisable on the day preceding the date the Non-employee Director
ceases to be a member of the Board of Directors may be exercised during
said applicable period and, provided further, that in no event shall the
option be exercisable more than ten years after the date of grant. All
options that are not exercisable on the day preceding the date the Non-
employee Director ceases to be a member of the Board of Directors shall be
immediately terminated.
(c) Payment. An option granted to the Non-employee Director shall
be exercisable only upon payment to the Company in accordance with the
provisions of Section 8(c) of the full purchase price of the Shares with
respect to which the option is being exercised.
(d) Adjustment of Options. In the event of a stock dividend, split-
up or combination of shares, recapitalization, reclassification or merger
in which the Company is the surviving corporation, or other similar capital
or corporate structure change, the number of Shares at the time of such
change remaining subject to any option granted or to be granted pursuant to
the provisions of this Section 9 shall be increased or decreased, as the
case may be, in direct proportion to the increase or decrease in the number
of shares of common stock of the Company by reason of such change in
corporate structure, provided that the number of Shares shall always be a
whole number with any fractional Shares being deleted therefrom, and the
purchase price per Share of any outstanding options shall, in the case of
an increase in the number of Shares, be proportionately decreased, and in
the case of a decrease in the number of Shares, be proportionately
increased. In the event of a consolidation or merger in which the Company
is not the surviving corporation or of a "Change in Control" as defined in
Section 10, including, but not limited to, "Changes in Control" in which
the Company is the surviving corporation, and notwithstanding the preceding
sentence, each option outstanding under the provisions of this Section 9
shall thereupon terminate, provided that within ten days of the effective
date of any such consolidation, merger, or "Change in Control", the Company
shall pay in cash the difference between the exercise price of the
unpurchased Shares under the options and the value of consideration
receivable in the transaction by a holder of the number of shares of common
stock equal to the number subject to the options.
10. Changes in Stock. In the event of a stock dividend, split-up or
combination of shares, recapitalization, reclassification or merger in
which the Company is the surviving corporation, or other similar capital or
corporate structure change, the number and kind of Shares at the time of
<PAGE>
such change remaining subject to the Plan and to any option granted or to
be granted pursuant to the Plan, except for options granted or to be
granted pursuant to Section 9, the option price and any other relevant
provisions shall be appropriately adjusted by the Board of Directors of the
Company, whose determination shall be binding on all persons. In the event
of a consolidation or merger in which the Company is not the surviving
corporation, (i) each option outstanding hereunder that is held by an
"Insider" optionee and that is not outstanding under the provisions of
Section 9 shall become immediately exercisable and (ii) each option
outstanding hereunder that is held by an optionee who is not an "Insider"
shall terminate, provided that at least twenty days prior to the effective
date of any such consolidation or merger, the Board of Directors of the
Company shall do one of the following with respect to options held by
optionees who are not "Insiders": (1) make such options immediately
exercisable, (2) arrange to have the surviving or consolidated corporation
grant replacement options to the optionees involved, or (3) pay in cash the
difference between the exercise price of the unpurchased Shares under the
options and the value of consideration receivable in the transaction by a
holder of the number of shares of common stock equal to the number subject
to the options. No adjustment provided for in this Section 10 shall
require the Company to issue or sell a fractional share under any option
hereunder and any fractional share resulting from any such adjustment shall
be deleted from the option involved.
Notwithstanding anything herein to the contrary, in the event of a
"Change in Control" as defined below, including certain consolidation or
merger events otherwise giving rise to the adjustments or alternatives
described in the above paragraph, each option outstanding under this Plan
shall thereupon terminate, provided that within ten days of the effective
date of such Change in Control, the Company shall pay in cash the
difference between the exercise price of the unpurchased Shares under the
options and the value of consideration receivable in the transaction by a
holder of the number of shares of common stock equal to the number subject
to the options. As used herein, "Change in Control" means a Change in
Control of a nature that would, in the opinion of the Company counsel, be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended ("Exchange Act"); provided that, without limitation, such a Change
in Control shall be deemed to have occurred if: (i) any "Person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act (other than
the Company or any subsidiary of the Company, any trustee or fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries or a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of the stock of the Company)) becomes the "beneficial owner" (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities; or (ii) during any
period of two consecutive years (not including any period prior to the
effective date of this Plan), individuals who at the beginning of such
period constitute the Board of Directors and any new director (other than a
director designated by a Person who has entered into an agreement with the
Company to effect a transaction described in clause (i), (iii), or (iv) of
this paragraph) whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved cease for any reason to constitute
a majority thereof; or (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other
than (A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
<PAGE>
voting securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, at least 75% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (B) a merger
or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person acquires 25% or more of the
combined voting power of the Company's then outstanding securities; or (iv)
the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of
all or substantially all the Company's assets.
With respect to all optionees other than the Non-employee Directors,
no Change in Control shall be deemed to have occurred if the optionee is a
member of a management group which first announces a proposal which
constitutes a Potential Change in Control, unless otherwise determined by a
majority of the members of the Board of Directors who are not members of
such management group. A "Potential Change in Control" shall be deemed to
have occurred if the conditions set forth in any one of the following
subsections shall have been satisfied: (i) the Company enters into an
agreement, the consummation of which would result in the occurrence of a
Change in Control; (ii) the Company or any Person publicly announces an
intention to take or to consider taking actions, which if consummated,
would constitute a Change in Control; (iii) any Person who is or becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company's then
outstanding securities, increases such Person's beneficial ownership of
such securities by 5% or more over the percentage so owned by such Person
on the date hereof; or (iv) the Board of Directors adopts a resolution to
the effect that, for purposes of this Plan, a Potential Change in Control
has occurred.
11. Effective Date; Stockholder Approval; Term. The Plan was
adopted by the Board of Directors on January 23, 1991 and shall become
effective on April 25, 1991 if the Plan is approved by the holders of a
majority of the common stock outstanding and entitled to vote at the Annual
Meeting of Stockholders scheduled for April 25, 1991. No option hereunder
shall be granted after January 23, 2001 or the earlier suspension or
termination of the Plan in accordance with its terms. The Plan shall
terminate on January 23, 2001 or on such earlier date as it may be
suspended or terminated under the provisions of Section 12 below or as of
which all Shares subject to options authorized to be granted under the Plan
shall have been acquired by exercise of such options.
12. Amendment or Discontinuance of the Plan. The Board of Directors
of the Company may, insofar as permitted by law, at any time or from time
to time, suspend or terminate the Plan or revise or amend it in any respect
whatsoever except that, without appropriate approval of the stockholders of
the common stock, no such revision or amendment shall increase the maximum
number of Shares subject to the Plan, change the designation of the class
of employees eligible to receive options, decrease the price at which
options may be granted or otherwise change the provisions of this Plan to
the extent approval of the holders of the common stock of the Company is
required under applicable securities laws. Notwithstanding the preceding
sentence, amendments to change the provisions of Section 9(a) shall not be
made more frequently than once every six months other than to comply with
the Internal Revenue Code or the Employee Retirement Income Security Act.
13. Applicable Laws or Regulations and Notification of Disposition.
The Company's obligation to sell and deliver Shares under an option is
subject to such compliance as the Company deems necessary or advisable with
federal and state laws, rules and regulations applying to the
authorization, issuance, listing or sale of securities. The Company may
<PAGE>
also require in connection with any exercise of an Incentive Stock Option
that the optionee agree to notify the Company when making any disposition
of the Shares, whether by sale, gift, or otherwise, within two years of the
date of grant or within one year of the date of exercise.
14. No Employment Right; No Obligation to Exercise Option. Nothing
contained in the Plan, or in any option granted under it, shall confer upon
any optionee any right to continued employment by the Company or any of its
subsidiaries or to continued membership on the Board of Directors of the
Company or limit in any way the right of the Company or any subsidiary to
terminate the optionee's employment at any time. The granting of any
option hereunder shall impose no obligation upon the optionee to exercise
such option.
<PAGE> EXHIBIT 10(g)
EMPLOYMENT AGREEMENT
AGREEMENT effective as of the 31st day of August, 1993 between
STANHOME INC., a Massachusetts corporation ("Corporation"), and Alejandro
Diaz Vargas ("Diaz").
WHEREAS, Diaz has been employed by the Corporation for twenty years,
most recently as its President and Chief Executive Officer;
WHEREAS, the Corporation has asked Diaz to resign his post as
President and Chief Executive Officer in order to devote his full time and
efforts as President and Chief Executive Officer of the Corporation's
Worldwide Direct Selling Group;
WHEREAS, the Corporation desires by this agreement to provide for
Diaz's continued employment by it, and;
WHEREAS, Diaz has agreed to the above upon condition of entering into
this employment agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings set forth below, the parties agree as follows:
1. Employment. The Corporation hereby employs Diaz, and Diaz agrees to be
employed by the Corporation, upon the terms and subject to the conditions
hereinafter set forth. Diaz resigns as President and Chief Executive
Officer effective August 31, 1993.
2. Duties. Diaz shall be employed by the Corporation to serve as an
Executive Vice President with operating responsibility for the Worldwide
Direct Selling Group serving as its President and Chief Executive Officer,
or in such other capacity or capacities connected with the Corporation's
business as the Board of Directors of the Corporation shall determine, and
in connection therewith shall report to the President and Chief Executive
Officer of the Corporation. During his employment, Diaz agrees to
faithfully and diligently perform the duties of his office on a full time
basis in the best interests of the Corporation.
3. Compensation. While employed by the Corporation during the term of this
agreement, Diaz will receive the following compensation for services:
(a) Base Salary. A base annual salary, payable in equal monthly
installments, of $400,000.00 (Four Hundred Thousand Dollars) subject
to increase from time to time in the discretion of the Board of
Directors.
(b) Bonus. Diaz shall continue to participate in the
Corporation's Management Incentive Plan ("MIP") with the same
percentage target bonus of 60% of his base annual salary. His
objectives for the period from September 1, 1993 to December 31, 1993 are
attached hereto as Exhibit A, and his objectives thereafter shall be
determined under the usual procedures of the MIP. All future amendments
and modifications to the MIP shall be applicable to Diaz as well,
provided such amendments and modifications are applicable to all persons
eligible to participate.
<PAGE>
(c) Supplemental Benefits. Diaz shall be entitled to participate
in all standard insurance and other benefit programs maintained by the
Corporation for its employees. In addition, during the period of
employment hereunder, the Corporation shall provide to Diaz a company-
owned or leased automobile of a quality equal to that provided to
Diaz by the Corporation immediately preceding September 1, 1993 and pay
the expenses related to the use and upkeep thereof.
(d) Expenses. The Corporation shall reimburse Diaz for all
ordinary and necessary expenses paid or incurred by him in the course of
the performance of his duties pursuant to this agreement, subject to the
Corporation's requirements with respect to the manner of reporting such
expenses.
(e) Vacation and Sick Days. Diaz shall be entitled to paid sick
and personal leave and paid vacation days in accordance with the general
policies, procedures and guidelines existing at the Corporation.
4. Term of Employment and Termination. The term of employment shall
commence on the date hereof and end on August 31, 1998 unless sooner
terminated as hereinafter provided:
(a) Termination by the Corporation for Cause. The Corporation
may terminate this agreement and Diaz's employment hereunder by giving
ten (10) days' prior written notice to Diaz upon its determination of:
(i) Dishonesty or willful misconduct involving moral
turpitude by Diaz in the performance of his duties under this agreement
(the term "misconduct" includes, without limitation, any material and
willful breach by Diaz of the terms of Paragraph 5 hereof), or
(ii) Material disregard of, and material failure to comply
with, the written instructions, policies or guidelines established by
the Corporation's Board of Directors, or material failure to perform his
duties hereunder.
In the event of termination of this agreement under this Paragraph
4(a), Diaz shall be entitled to all amounts due him under Paragraph 3
accrued to the date of termination, excluding the bonus for the
fractional portion of the year of termination under Paragraph 3(b) above.
(b) Termination Upon Death of Diaz. Upon the death of Diaz
during the term of this agreement, his estate shall be entitled to
receive all amounts due under Paragraph 3 accrued to the date of death,
including, without limitation, the bonus pro-rated for the fractional
portion of the year of death.
(c) Termination Upon Total Disability of Diaz. If, at any time
during the term of this agreement, Diaz becomes unable to perform his
duties hereunder due to illness or physical or mental incapacity for
a continuous period of one hundred and eighty (180) days, the
Corporation, may, at or after the expiration of such one
<PAGE>
hundred and eighty (180) day period and provided that Diaz's
incapacity is then continuing, elect to terminate Diaz's employment
under this agreement. During such one hundred and eighty (180) day
period and until the Corporation so terminates his employment, Diaz shall
be entitled to all amounts payable or accrued under Paragraph 3 above
until the date of termination, including, without limitation, the
bonus pro-rated for the fractional portion of the year of
termination.
(d) Other Benefits Unaffected. Life or disability insurance
benefits which may otherwise be payable are not affected by the
provisions of Paragraphs 4(b) and 4(c) above.
(e) Termination by Corporation Other Than For Cause or Diaz's
Total Disability. If the Corporation shall terminate Diaz's
employment other than for cause under Paragraph 4(a) above or for
Total Disability under Paragraph 4(c) above, and his employment has not
terminated by reason of his death under Paragraph 4(b) above, Diaz
shall receive (at the times such payments would have been made had there
not been a termination) all amounts that would otherwise have been paid to
him for the remaining term of this agreement under Paragraphs 3(a), 3(b)
and 3(c) had Diaz' employment not been terminated except that no
payments will be made for periods following his death. For purposes of
the Bonus payment made for any year under this provision: (i) the
Individual Portion will be 50% of the target bonus (on the expectation
that all individual objectives would have been fully performed), and (ii)
the Corporation's Matching Portion will match the Individual Portion in
accordance with the matching formula in effect for each such year. In
return for payments to be made under this Subparagraph (e), Diaz
agrees to execute and deliver to the Corporation a Release in the form
as deemed appropriate or necessary by the Corporation.
(f) Termination by Diaz. Diaz may terminate this agreement and
his employment hereunder at any time by giving six (6) months' prior
written notice to the Corporation or such lesser notice period as the
Corporation may accept. In the event of a termination of this
agreement under this Paragraph 4(f), Diaz shall be entitled to all
amounts due to him under Paragraph 3 to the date of termination,
including, without limitation, the bonus pro-rated for the fractional
portion of the year of termination.
(g) Change in Control. The amount payable to Diaz under
Paragraph 4(e) of this Agreement shall be reduced on a proportionate
basis (over the remaining term of this Agreement) by any amount paid to
Diaz under the Change in Control Agreement between Diaz and the
Corporation, dated January 1, 1992, without giving effect to the gross-
up payment under Paragraph 1(c) thereof for this purpose.
(h) Survival of Rights and Obligations. Any obligation or right
of either party provided or referred to hereunder, which by its terms may
or is to be performed, exercised or observed after either the expiration
or termination of this Agreement, shall survive such expiration or
termination. Except to such extent,
<PAGE>
neither party shall have any right, claim, or action against, or
obligation or responsibility to, the other party arising out of, or
resulting from termination of employment.
5. Confidential Information, Covenant Not to Compete and Non-Solicitation.
(a) Diaz agrees that he will not use or disclose to anyone (other
than for the benefit of the Corporation) either during the term of his
employment or at any time thereafter, any Confidential Information
obtained by him or made known to him while employed by the
Corporation, and will make all reasonable, necessary and appropriate
efforts to safeguard all such Confidential Information from disclosure
to anyone other than as permitted hereby. As used herein "Confidential
Information" includes, but is not limited to, trade secrets, business and
sales policies, methods, plans and customer lists, including any lists
written or other of such persons or entities, whether of the
Corporation or any other organization associated or affiliated with or
owned by or owning the Corporation, but shall not include information
which becomes generally available to the public other than as a result
of disclosure by Diaz.
(b) In consideration of Diaz's continued employment in accordance
with the terms of this Agreement, Diaz agrees that he will not, for two
years after he ceases to be employed by the Corporation or for such longer
period of time as payments are made pursuant to this Agreement,
either alone or in conjunction with any individual, firm, corporation,
association or other entity (except for the benefit of the
Corporation), either as principal, agent, officer, employee,
director, investor, consultant, shareholder, associate or in any other
capacity whatsoever:
(i) carry on, participate in, or be engaged in, concerned
with, or interested in, directly or indirectly, any undertaking which is
in whole or in part competitive with any of the direct selling
businesses carried on by the Corporation within the respective
territories in which such businesses are then carried on (except for
any equity share investment in a public company whose shares are listed
on a recognized stock exchange or reported in NASDAQ where such
share investment does not in the aggregate exceed 5% of the issued
equity shares of such company);
(ii) attempt to solicit any suppliers, customers, employees
or independent dealers away from the Corporation;
(iii) carry on, participate in, or be engaged in, concerned
with, or interested in, directly or indirectly, any undertaking which
bears any name similar to that of the Corporation; or
(iv) take any act as a result of which the relations
between the Corporation and its suppliers, customers, employees or
others may be impaired or which may otherwise be detrimental to the
business of the Corporation.
Competition shall be deemed to include (i) any dealings with the
<PAGE>
Corporation's direct selling sales employees or independent dealers,
and (ii) the use in any way of the Corporation's customer or mailing
lists. The reference to Corporation in this Paragraph 5 shall include
all subsidiaries and affiliated entities of the Corporation. Diaz
agrees that the remedy at law for breach by him of the foregoing covenant
will be inadequate and that the Corporation shall be entitled to
injunctive relief.
6. Discoveries. Diaz will promptly disclose in writing to the Corporation
when requested, each improvement, discovery, idea and invention relating to
the business of the Corporation made or conceived by him from and after the
date hereof either alone or in conjunction with others and while employed
by the Corporation (whether or not patentable, whether or not made or
conceived (i) at the request of or upon the suggestion of the Corporation,
(ii) during his usual hours of work, or (iii) in or about the premises of
the Corporation and whether or not prior or subsequent to the execution
hereof). He will not disclose any such improvement, discovery, idea or
invention to any person, except the Corporation. Each such improvement,
discovery, idea and invention shall be the sole and exclusive property of,
and is hereby assigned to, the Corporation, and at the request of the
Corporation, Diaz will assist and cooperate with the Corporation and any
person or persons from time to time designated by the Corporation to obtain
for the Corporation the grant of any letters patent in the United States
and/or such other country or countries as may be designated by the
Corporation, covering any such improvement, discovery, idea or invention
and will, in connection therewith, execute such applications, statements,
assignments or other documents, furnish such information and data and take
all such other actions (including, without limitation, the giving of
testimony) as the Corporation may from time to time reasonably request.
7. Applicable Law. This agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts.
8. Notices. Any notice or other writing required or permitted to be given
hereunder or for the purposes hereof (hereinafter in this Paragraph 8
called a "notice") to any party shall be sufficiently given if delivered
personally, if sent by prepaid registered mail or if transmitted by telex
or facsimile communication tested prior to transmission to such party:
(a) in the case of notice to Diaz to him at:
15 Williamsburg Lane
Longmeadow, MA 01106
(b) in the case of a notice to the Corporation to it at:
Stanhome Inc.
333 Western Avenue
Westfield, MA 01085
Attention: General Counsel
or at such other address as the party to whom such writing is to be
given shall have last notified the party giving the same in the manner
provided in this paragraph. Any notice delivered to the party to whom it
is addressed as hereinbefore provided shall be deemed to have been
given and received on the day it is so delivered at such address,
<PAGE>
provided that if such day is not a Business Day (Monday through Friday
excluding federal and state holidays) then the notice shall be deemed to
have been given and received on the Business Day next following such
day. Any notice mailed as aforesaid shall be deemed to have been given
and received on the seventh Business Day next following the date of its
mailing. Any notice transmitted by telex or facsimile communication
shall be deemed given and received on the first Business Day after its
transmission.
9. Entirety of Agreement and Amendment. This agreement supersedes any
severance policies as may be applicable to executives of the Company and
any previous employment arrangements between the parties, (including the
Severance Agreement, effective June 1, 1992, between the Corporation and
Diaz, which is terminated effective as of the date hereof, but not
including the Change in Control Agreement effective January 1, 1992, and
the Supplemental Retirement Agreement dated July 27, 1988, between the
Corporation and Diaz which continue in full force and effect), whether
written or oral, and constitutes the entire agreement between the parties
and no amendment, waiver, alteration or modification of this agreement
shall be valid unless in each instance such amendment, waiver, alteration
or modification is agreed to in writing by all of the parties.
10. Assignment. Neither party may assign this agreement or any of the
rights or duties hereunder, except that the Corporation may assign its
rights, obligations and responsibilities under this agreement to (i) a
successor or assignee of all or substantially all of its business or
assets, or (ii) any corporation with which it merges or with which it may
be consolidated. Subject to the foregoing, this agreement shall inure to
the benefit of and be binding upon the Corporation and Diaz and their
respective successors, assigns, heirs and legal representatives.
11. Invalidity of any Provision. If any provision of this agreement or
the application thereof to any party or circumstance is held invalid or
unenforceable, the remaining provisions of this Agreement and the
application of such provisions to the other party or circumstances will not
be affected thereby, the provisions of this Agreement being severable in
any such instance.
IN WITNESS WHEREOF, this Agreement has been executed on this 24th day
of November, 1993 by a duly authorized Officer of the Corporation and by
Diaz.
STANHOME INC.
By: /s/ G. William Seawright
G. William Seawright
President and CEO
/s/ Alejandro Diaz Vargas
Alejandro Diaz Vargas
<PAGE>
EXHIBIT A
1993 MIP OBJECTIVES
(8/31/93 TO 12/31/93)
ALEK DIAZ VARGAS
A bonus amount to be determined by the Compensation and Stock Option
Committee of the Board of Directors after review of performance in relation
to the following objectives:
<TABLE>
<CAPTION>
% of
Target Bonus
<S> <C>
1. Achieve 4th quarter sales in local currency
for Worldwide Direct Selling Group per
Profit Plan. 33%
2. Achieve 4th quarter operating profit objectives
in local currency for Worldwide Direct Selling
Group per Profit Plan. 33
3. In conjunction with senior sales management,
implement programs in France, Italy and Spain
that address blockages to increasing dealer
count. Achieve significant and sustained increases
over numbers for dealer count in effect as of
January 1993. 33
</TABLE>
09/28/93
<PAGE> EXHIBIT 10(h)
EMPLOYMENT AGREEMENT
AGREEMENT made November 9, 1993, between STANHOME INC., a
Massachusetts corporation (the "Company"), and G. William Seawright of 17
Kira Lane, Englewood, New Jersey ("Seawright").
NOW, THEREFORE, in consideration of the mutual undertakings set forth
below, the parties agree as follows:
1. Employment. The Company hereby employs Seawright, and Seawright
agrees to be employed by the Company, upon the terms and subject to the
conditions hereinafter set forth effective November 9, 1993. Unless
sooner terminated as hereinafter provided, the initial term of this
employment shall be five (5) years, with an automatic extension of one
(1) year upon the end of (i) the third year of the initial term and (ii)
each year thereafter (so that the remaining term as of the end of the
third year of the initial term and at the end of every year thereafter
shall be three years).
2. Duties. Seawright shall be employed as President and Chief Executive
Officer of the Company and continue to serve as a member of its Board of
Directors for the balance of his current term and thereafter as re-
elected by the Shareholders of the Company. During his employment,
Seawright agrees to faithfully and diligently perform the duties of his
office on a full time basis in the best interests of the Company. Nothing
herein shall prohibit Seawright from pursuing personal investments
provided that such activities do not interfere with the performance of
Seawright's duties hereunder. Although it is contemplated that Seawright
will undertake some travel as part of performing the foregoing duties,
Seawright's principal place of employment shall be in the Westfield,
Massachusetts area.
3. Compensation. While employed by the Company during the term of this
agreement, Seawright will receive the following compensation for services:
(a) Base Salary. A base annual salary, payable in equal
monthly installments, of $500,000.00 (Five Hundred Thousand Dollars).
The base salary shall be subject to review and adjustment annually by the
Board of Directors acting in its sole discretion provided that the base
salary shall not be less than $500,000.00 during the term of this
agreement.
(b) Signing Bonus. Seawright shall receive a signing bonus of
$110,000.00 (One Hundred Ten Thousand Dollars) payable in cash
immediately following his first day of employment.
(c) Annual Bonus. Commencing with the year 1994, Seawright
shall be entitled to participate in the Management Incentive Plan
maintained by the Company with a target bonus of 60% of his annual base
salary. His objectives shall be determined under the usual procedures
of such Plan.
(d) Other Benefits. Seawright shall be entitled to
participate in all standard insurance and other benefit programs
maintained by the Company for its employees at not less than the current
coverage in the case of the life and disability insurance. This
includes a $5,000.00 annual supplemental medical bonus. In addition, the
Company shall (i) reimburse Seawright for his relocation expenses in
accordance with Company policy, (ii) reimburse Seawright for his annual
dues to the Colony Club in Springfield, Massachusetts; and
<PAGE>
(iii) provide to Seawright a company-owned or leased automobile
of a quality equal to a top of the line Cadillac and pay the expenses
related to the use and upkeep thereof or provide to Seawright an
automobile allowance of $1,750 per month (subject to increase based on
annual review by the Company's Treasury Department). The Company shall
continue coverage for both Seawright and his spouse under the Company's
Health Plan after retirement until (in the case of each of them) the
earlier of their 65th birthdays, eligibility for Medicare or death.
However, in the case of the death of Seawright before his 65th birthday
or eligibility for Medicare, coverage shall be continued for his spouse
until the earlier of her 65th birthday, eligibility for Medicare or
death.
(e) Stock Options. Following his employment, the Company has
approved the grant to Seawright of an option under Stanhome's 1991
Stock Option Plan (the "Plan") to purchase 100,000 shares of the
Company's Common Stock at a purchase price equal to the fair market
value on the date of grant. The right to exercise this option shall (i)
vest at the annual rate of 25,000 shares over 4 years on the anniversary
date of the granting of the option, with the first installment vesting on
the first anniversary of the grant, and so on, and (ii) otherwise be
subject to the terms of the Plan. Seawright shall also be entitled to
participate in other stock options offered to him in respect of Company
shares from time to time.
(f) Expenses. The Company shall reimburse Seawright for all
ordinary and necessary expenses paid or incurred by him in the course of
the performance of his duties pursuant to this agreement, subject to the
Company's requirements with respect to the manner of reporting such
expenses.
(g) Spouse Death Benefit. The Company agrees at its cost to
obtain and maintain a life insurance policy on Seawright's life for a
policy period expiring the day after his fifty-seventh (57th)
birthday. The benefit under such policy shall be payable to
Seawright's spouse following his death and shall be equal to the
following amounts based on the year of employment during which
Seawright's death occurs while employed by the Company:
<TABLE>
<CAPTION>
Death Benefit Year of Employment
<S> <C>
$2,000,000.00 First
$1,600,000.00 Second
$1,200,000.00 Third
$ 900,000.00 Fourth
$ 500,000.00 Fifth
</TABLE>
The Company's obligation hereunder is subject to Seawright
meeting the insurance company requirements for a non-rated policy. In the
event that Seawright is terminated under subparagraph 4(e) hereof and he
subsequently dies before age fifty-seven (57), the insurance benefit
provided in this subparagraph 3(g) shall be paid to his spouse as if he
had continued to be employed at the time of his death. No benefit
will be due hereunder to the surviving spouse unless she shall
<PAGE>
have survived Seawright for a period of thirty (30) days and
shall have been married to him throughout the one year period ending on
Seawright's date of death.
4. Termination of Employment.
(a) Termination by the Company for Cause. The Company may
terminate this agreement and Seawright's employment hereunder by giving
ten (10) days' prior written notice to Seawright upon its
determination of:
(i Dishonesty or willful misconduct involving moral
turpitude by Seawright in the performance of his duties under this
agreement (the term "misconduct" includes, without limitation, any
material and willful breach by Seawright of the terms of Paragraph 5
hereof), or
(ii) Material disregard of, and material failure to
comply with, the written instructions, policies or guidelines
established by the Company's Board of Directors, or material failure to
perform his duties hereunder.
In the event of termination of this agreement under this
Paragraph 4(a), Seawright shall be entitled to all amounts due him under
Paragraph 3 accrued to the date of termination, excluding the bonus
for the fractional portion of the year of termination under Paragraph
3(c) above.
(b) Termination Upon Death of Seawright. Upon the death of
Seawright during the term of this agreement, his estate shall be
entitled to receive all amounts due under Paragraph 3 accrued to the
date of death, including, without limitation, the bonus pro-rated for the
fractional portion of the year of death.
(c) Termination Upon Total Disability. If, at any time during
the term of this agreement, Seawright becomes unable to perform his
duties hereunder due to illness or physical or mental incapacity for
a continuous period of one hundred and eighty (180) days, the Company,
may, at or after the expiration of such one hundred and eighty (180) day
period and provided that Seawright's incapacity is then continuing,
elect to terminate Seawright's employment under this agreement.
During such one hundred and eighty (180) day period and until the Company
so terminates his employment, Seawright shall be entitled to all
amounts payable or accrued under Paragraph 3 above until the date of
termination, including, without limitation, the bonus pro-rated for
the fractional portion of the year of termination.
(d) Other Benefits Unaffected. Life or disability insurance
benefits which may otherwise be payable are not affected by the
provisions of Paragraphs 4(b) and 4(c) above.
(e) Termination by Company Other Than For Cause or Total
Disability. If the Company shall terminate Seawright's employment
other than for cause under Paragraph 4(a) above or for Total Disability
under Paragraph 4(c) above, and his employment has not terminated by
reason of his death under Paragraph 4(b) above, Seawright shall receive
(at the times such payments would have been made had there not been a
termination) all amounts that would otherwise have been paid to
<PAGE>
him, or benefits provided, for the remaining term of this
agreement under Paragraphs 3(a), 3(c), and 3(d), (except that the
Health Plan coverage provided under Paragraph 3(d) shall continue for
the duration as required in that Paragraph 3(d)) had Seawright's
employment not been terminated, except that no payments will be made for
periods following his death. For purposes of the bonus payment made for
any year under this provision, the target bonus shall be based on the
Profit Plan objectives for such year and any bonus shall be
determined based on the corporate performance versus those Plan
objectives. In return for the payments to be made under this
subparagraph (e), Seawright agrees to execute and deliver to the
Company a Release in the form as deemed appropriate or necessary by
the Company.
(f) Termination by Seawright. Seawright may terminate this
agreement and his employment hereunder at any time by giving six (6)
months' prior written notice to the Company or such lesser notice period
as the Company may accept. In the event of a termination of this
agreement under this Paragraph 4(f), Seawright shall be entitled to
all amounts due to him under Paragraph 3 to the date of termination,
including, without limitation, the bonus pro-rated for the fractional
portion of the year of termination.
(g) Change in Control. The amount payable to Seawright under
Paragraph 4(e) of this agreement shall be reduced on a proportionate
basis (over the remaining term of this agreement) by any amount paid to
Seawright under the Change in Control Agreement between Seawright and
the Company dated November 9, 1993, without giving effect to the
Gross-Up Payment under Paragraph 1(c) thereof for this purpose.
(h) Survival of Rights and Obligations. In the event of
termination of Seawright's employment under either Paragraphs 4(a),
4(b), 4(e) or 4(f), then, except to the extent specifically provided for
in Paragraphs 3, 4, 5 and 6, neither party shall have any right,
claim, or action against, or obligation or responsibility to, the other
party arising out of, or resulting from, such termination of
employment.
5. Confidential Information, Covenant Not to Compete and Non-
Solicitation.
(a) Seawright agrees that he will not use or disclose to
anyone (other than for the benefit of the Company) either during the term
of his employment or at any time thereafter, any Confidential
Information obtained by him or made known to him while employed by the
Company, and will make all reasonable, necessary and appropriate efforts
to safeguard all such Confidential Information from disclosure to anyone
other than as permitted hereby. As used herein "Confidential
Information" includes, but is not limited to, trade secrets, business
and sales policies, methods, plans and customer lists, including any
lists written or other of such persons or entities, whether of the
Company or any other organization associated or affiliated with or owned
by or owning the Company, but shall not include information which becomes
generally available to the public other than as a result of
disclosure by Seawright's act or default or the acts or defaults of
Seawright's agents or representatives.
(b) In consideration of Seawright's continued employment in
<PAGE>
accordance with the terms of this agreement, Seawright agrees
that he will not, during the term hereof and for the period ending
three (3) years (or such lesser period as he is paid hereunder) from the
date he ceases to be employed by the Company, either alone or in
conjunction with any individual, firm, corporation, association or other
entity (except for the benefit of the Company), either as principal,
agent, officer, employee, director, investor, consultant, shareholder,
associate or in any other capacity whatsoever:
(i) carry on, participate in, or be engaged in,
concerned with, or interested in, directly or indirectly, any undertaking
which is in whole or in part competitive with any of the businesses
carried on by the Company within the respective territories in which
such businesses are then carried on (except for any equity
share investment in a public company whose shares are listed on a
recognized stock exchange where such share investment does not in the
aggregate exceed 5% of the issued equity shares of such company);
(ii) attempt to solicit any suppliers, customers,
employees or independent dealers away from the Company;
(iii) carry on, participate in, or be engaged in,
concerned with, or interested in, directly or indirectly, any undertaking
which bears any name similar to that of the Company; or
(iv) take any act as a result of which the relations
between the Company and its suppliers, customers, employees or others
may be impaired or which may otherwise be detrimental to the business of
the Company.
Competition shall be deemed to include (i) any dealings with
the Company's employees or independent dealers, and (ii) the use in
any way of the Company's customer or mailing lists. The reference to
Company in this Paragraph 5 shall include all subsidiaries and affiliated
entities of the Company. Seawright agrees that the remedy at law for
breach by him of the foregoing covenant will be inadequate and that the
Company shall be entitled to injunctive relief.
6. Discoveries. Seawright will promptly disclose in writing to the
Company when requested, each improvement, discovery, idea and invention
relating to the business of the Company made or conceived by him from and
after the date hereof either alone or in conjunction with others and while
employed by the Company or within one (1) year after the termination of
such employment if such improvement, discovery, idea or invention then
results from or was suggested by such employment (whether or not
patentable, whether or not made or conceived (i) at the request of or upon
the suggestion of the Company, (ii) during his usual hours of work, or
(iii) in or about the premises of the Company and whether or not
prior or subsequent to the execution hereof). He will not disclose any
such improvement, discovery, idea or invention to any person, except
the Company. Each such improvement, discovery, idea and invention
shall be the sole and exclusive property of, and is hereby assigned to,
the Company, and at the request of the Company, Seawright will assist
and cooperate with the Company and any person or persons from time to
time designated by the Company to obtain for the Company the grant of
any letters patent in the United States and/or such other country or
countries as may be designated by the Company, covering any such
improvement, discovery,
<PAGE>
idea or invention and will, in connection therewith, execute such
applications, statements, assignments or other documents, furnish
such information and data and take all such other actions (including,
without limitation, the giving of testimony) as the Company may from
time to time reasonably request.
7. Applicable Law. This agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts.
8. Notices. Any notice or other writing required or permitted to be
given hereunder or for the purposes hereof (hereinafter in this Paragraph
8 called a "notice") to any party shall be sufficiently given if
delivered personally, if sent by prepaid registered mail or if
transmitted by telex or other form of recorded communication tested
prior to transmission to such party:
(a) in the case of notice to Seawright to him at:
17 Kira Lane
Englewood, New Jersey 07631
(b) in the case of a notice to the Company to it at:
Stanhome Inc.
333 Western Avenue
Westfield, Massachusetts 01085
Attention: General Counsel
or at such other address as the party to whom such writing is to be
given shall have last notified the party giving the same in the manner
provided in this paragraph. Any notice delivered to the party to whom
it is addressed as hereinbefore provided shall be deemed to have been
given and received on the day it is so delivered at such address,
provided that if such day is not a Business Day (Monday through Friday
excluding federal and state holidays) then the notice shall be deemed
to have been given and received on the Business Day next following such
day. Any notice mailed as aforesaid shall be deemed to have been given
and received on the seventh Business Day next following the date of its
mailing. Any notice transmitted by telex or other form of recorded
communication shall be deemed given and received on the first
Business Day after its transmission.
9. Entirety of Agreement. This agreement constitutes the entire
agreement between the parties and no amendment, waiver, alteration or
modification of this agreement shall be valid unless in each instance
such amendment, waiver, alteration or modification is agreed to in
writing by all of the parties.
10. Assignment. Neither party may assign this agreement or any of the
rights or duties hereunder, except that the Company must assign its
rights, obligations and responsibilities under this agreement to (i) a
successor or assignee of all or substantially all of its business or
assets, or (ii) any corporation with which it merges or with which it
may be consolidated. Subject to the foregoing, this agreement shall
inure to the benefit of and be binding upon the Company and Seawright
and their respective successors, assigns, heirs and legal
representatives.
11. Invalidity of any Provision. If any provision of this agreement or
the application thereof to any party or circumstance is held invalid or
unenforceable, the remaining provisions of this agreement and the
<PAGE>
application of such provisions to the other party or circumstances
will not be affected thereby, the provisions of this agreement being
severable in any such instance.
IN WITNESS WHEREOF, the parties have executed this Agreement.
STANHOME INC.
By: /s/ H. L. Tower
H. L. Tower
Chairman of the Board
/s/ G. William Seawright
G. William Seawright
<PAGE> EXHIBIT 10(i)
STANHOME INC.
MANAGEMENT INCENTIVE PLAN (M.I.P.)
Amended and Restated effective January 1, 1994
I. PURPOSE
The Management Incentive Plan (M.I.P.) is a variable compensation
plan designed to motivate Stanhome management team members in
achieving superior results and to link compensation with the
Company's business objectives.
II. ELIGIBILITY
The M.I.P. is offered to key executives who are in a position to have
an impact on the results of the business. This is normally defined
as executives in labor grades 15 and above.
III. BONUS FORMULA
An executive's Annual Bonus is based on the following:
A. Individual Portion - 40% of Target Bonus
This portion consists of clearly stated and measurable specific
personal objectives, developed and agreed to between the
executive and his or her supervisor.
B. Financial Portion - 60% of Target Bonus
This portion is based on performance of the Company, the
Worldwide Group or the executive's principal business unit in
relation to the Annual Profit Plan. Performance criteria will
vary according to the particular business unit. In cases where
an executive in labor grade 18 and above has responsibilities
that span business units, the Financial Portion will be split
45%/15% between the executive's principal business unit and the
Worldwide Group.
C. Leveraging
Achievement of both Individual and Financial Objectives is
leveraged in accordance with the following formula:
<TABLE>
<CAPTION>
% of Financial Plan Achieved % Award Leverage
<S> <C>
less than 90% 0 (Financial Portion Only)
90% 50% (Financial Portion Only)
100% 100%
105% 120%
115% 160%
125% 200%
</TABLE>
IV. AWARD DETERMINATION
A. Criteria
<PAGE>
Individual Portion: At the beginning of each year,
management reviews all results for the prior year and
arrives at a determination of the extent to which the
participants' individual objectives have been achieved.
Financial Portion: Results are determined based upon the
Company's audited year-end financial statements compared to
the objectives established in the Annual Profit Plan.
Management makes a separate calculation for each of the
applicable financial criteria.
B. Calculation of Bonus Award
If Financial Results are equal to or greater than 100% of
Plan:
The sum of Individual Portion Achieved III(A) plus the
Financial Portion Achieved III(B) is multiplied by the
leveraging formula in III(C) to equal the TOTAL BONUS AWARD.
If Financial Results are between 90% and 100% of Plan:
There is no leveraging on the Individual Portion Achieved
and the Financial Portion Achieved III(B) is reduced by the
leveraging formula outlined in III(C). TOTAL BONUS AWARD
equals the sum of III(A) and III(B X C).
If Financial Results are less than 90% of Plan:
The Bonus Award is based solely on the achievement of the
Individual Portion in III(A) (maximum 40% of target).
V. APPROVALS
A. Individual Objectives: These require the approval of the
immediate supervisor and the Group President. CEO approval is
required for the first two levels of direct reports and for
Worldwide Group Vice Presidents.
B. Financial Objectives: Final numbers and calculations will be
prepared by the Corporate Finance Department and require
approval of the CEO.
C. Final Payments: All final bonus calculations and recommended
payments are submitted to the Compensation and Stock Option
Committee of the Board of Directors for review and final
approval at the March Committee meeting.
<PAGE> EXHIBIT 10(j)
RETIREMENT AGREEMENT
AGREEMENT made November 9, 1993 between Stanhome Inc., a
Massachusetts corporation with its principal place of business at 333
Western Avenue, Westfield, Massachusetts (the "Company") and Mr. G. William
Seawright of 17 Kira Lane, Englewood, New Jersey ("Seawright").
WHEREAS, the Company and Seawright are entering into an Employment
Agreement simultaneously herewith providing for Seawright's employment by
the Company as President and Chief Executive Officer effective November 9,
1993 pursuant to the terms and conditions thereof.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, the parties agree as follows:
l. Normal Retirement.
(a) Subject to the provisions of paragraph 9 below, if Seawright
retires on or after August 28, 2006 the Company will pay him each month for
the duration of his life deferred compensation equal to 1/12 of (i) 50% of
the average annual compensation received by him in the 5 most highly
compensated years of his final l0 years of employment, as determined under
paragraph 5 below, less (ii) 50% of his annual Primary Social Security
Benefit, as hereinafter defined.
(b) The monthly benefit determined under subparagraph (a) above
shall be reduced by the value of the monthly retirement benefit, if any,
which Seawright is entitled to receive from any other qualified or non-
qualified plan maintained by the Company (excluding (i) the portion, if
any, of such benefit based on Seawright's contributions to such plan, and
(ii) employer contributions to any 40l(k) Plan) commencing at such time as
Seawright first becomes eligible to receive such benefit.
For purposes hereof, the value of the monthly retirement benefit of
any amount which Seawright is entitled to receive from a defined
contribution plan based on the Company's contributions thereto, shall be
determined as of the time of Seawright's termination by the written
recommendation of an independent nationally recognized firm of compensation
consultants, as may be selected by the Company, and after written notice to
Seawright.
2. Early Retirement. Subject to the provisions of subparagraph 2(d)
and paragraph 9 below:
(a) If Seawright's employment terminates on or after August 28, 1998
and before August 28, 2006, for any reason other than a discharge for
cause, the Company will pay him each month for the duration of his life the
benefit which would be payable if the provisions of paragraph l above were
applied as of the date of such termination, provided that the portion of
the benefit determined under paragraph l shall be reduced by the following
percentages based on Seawright's age at his termination date (to be
adjusted on a daily pro-rata basis if Seawright retires on a day other than
his birthday):
<TABLE>
<CAPTION>
<PAGE>
Age at Termination Percentage
<S> <C>
62-64 0%
6l 2%
60 4%
59 9%
58 14%
57 19%
</TABLE>
(b) If Seawright's employment terminates involuntarily before August
28, 1998 for any reason other than cause, he shall be entitled to receive
the benefit determined under subparagraph 2(a) as if he had reached age
fifty-seven (57) on the date of his termination, but such benefit shall not
be payable until his fifty-seventh (57th) birthday.
(c) During a period beginning on the later to occur of his 57th
birthday and his termination date and ending on his 65th birthday, or if
different by law such other age as then entitles Seawright to receive his
actual, unreduced Primary Social Security benefit, the Company shall pay
him an additional monthly amount equal to his Primary Social Security
Benefit.
(d) If Seawright's employment terminates by reason of discharge for
cause, neither he nor his wife shall be entitled to receive payment of any
kind under this agreement; "cause" hereunder shall mean dishonesty,
misconduct, insubordination or any activity which would cause a forfeiture
of rights under paragraph 9 below if it occurred following termination of
employment.
3. Disability.
(a) In the event Seawright becomes disabled after reaching age 57
but while still employed by the Company, he shall receive, commencing with
the month following the commencement of his disability, a monthly amount
determined under paragraph l that would have been payable to him if he had
remained employed until retirement at age 65 at the annual rate of
compensation in effect at the time of his disability, provided that the
amount payable hereunder shall be reduced by the monthly value of any
benefit paid to Seawright under a sick leave policy or long-term disability
income plan maintained by the Company for so long as such benefits remain
payable.
(b) If Seawright applies for payment of a social security disability
benefit prior to age 65 and his application is denied, the Company shall
also pay Seawright an additional amount equal to his Primary Social
Security Benefit for as long as Seawright remains ineligible to receive
such social security disability benefit prior to age 65, or if different by
law the then age at which Seawright then becomes entitled to receive his
actual Primary Social Security Benefit.
For purposes hereof, Seawright shall be deemed to be disabled when he
is rendered incapable of performing the work for which he was employed by a
medically determinable physical or mental condition which is likely to
result in death or to be of long-continued and indefinite duration.
<PAGE>
4. Survivors Benefit.
(a) In the event that Seawright dies while employed by the Company
prior to reaching age fifty-seven (57), or in the event that Seawright's
employment by the Company is involuntarily terminated prior to age fifty-
seven (57) for any reason other than cause, and he dies subsequent to such
termination, the Company will pay his surviving spouse, subject to
subparagraph (d) below, commencing on the date that Seawright would have
been fifty-seven (57) had he lived, a monthly amount for the remainder of
her life equal to fifty percent (50%) of the benefit which would have been
paid to Seawright commencing on his fifty-seventh (57th) birthday pursuant
to subparagraphs 2(b) and 2(c) above, provided however that supplemental
social security payments pursuant to subparagraph 2(c) of this agreement to
a spouse shall not be subject to actuarial reduction under subparagraph (d)
below, shall not be payable to her unless or until she reaches the age of
fifty-five (55) and shall only continue until she reaches the age of sixty-
five (65), or if different by law such other age as then entitles her to
receive her actual, unreduced Primary Social Security benefit.
(b) In the event that Seawright dies after age fifty-seven (57)
while still employed by the Company, the Company will pay his surviving
spouse, subject to subparagraph (d) below, a monthly amount for the
remainder of her life equal to fifty percent (50%) of the monthly benefit
that would have been paid to Seawright under paragraph 1 or subparagraphs
2(a) and (c), whichever is applicable, had he retired on the day
immediately prior to the date of his death, provided however that
supplemental social security payments pursuant to paragraph 2(c) of this
agreement to a spouse shall not be subject to actuarial reduction under
subparagraph (d) below, shall not be payable to her unless and until she
reaches the age of fifty-five (55) and shall only continue until she
reaches the age of sixty-five (65), or if different by law such other age
as then entitles her to receive her actual unreduced Primary Social
Security benefit.
(c) In the event that Seawright's employment by the Company
terminates after age fifty-seven (57) and he subsequently dies while
receiving payments hereunder, the Company will pay his surviving spouse,
subject to subparagraph (d) below, a monthly amount for the remainder of
her life equal to fifty percent (50%) of the monthly benefit he was
receiving at the time of his death, provided however that supplemental
social security payments pursuant to paragraph 2(c) of this agreement to a
spouse shall not be subject to actuarial reduction under subparagraph (d)
below, shall not be payable to her unless and until she reaches the age of
fifty-five (55) and shall only continue until she reaches the age of
sixty-five (65), or if different by law such other age as then entitles
her to receive her actual unreduced Primary Social Security benefit.
In the event Seawright was disabled and had been receiving a benefit
under paragraph 3, the surviving spouse shall be entitled to receive
fifty percent (50%) of the benefit payable under paragraph 3 without
reduction thereunder for any benefits being paid to Seawright under a
sick leave policy or a long-term disability income plan maintained by the
Company except to the extent such benefits remain payable to such spouse
following Seawright's death, provided however that supplemental social
security payments, pursuant to subparagraph 3(b) of this agreement to a
spouse shall not be subject to actuarial reduction under subparagraph (d)
below, shall not be payable to her unless and until she reaches the age of
fifty-five (55) and shall only
<PAGE>
continue until she reaches the age of sixty-five (65), or if different by
law, such other age as then entitles her to receive her actual unreduced
Primary Social Security benefit.
(d) No amounts shall be paid a surviving spouse under subparagraph
(a), (b) or (c) above unless she shall have survived Seawright for a period
of 30 days and shall have been married to him throughout the l year period
ending on Seawright's date of death. Further, if the age of Seawright at
the date of his death exceeds the age of his surviving spouse on such date
by more than 5 years, the benefit payable to such spouse hereunder shall be
actuarially reduced in a manner calculated to reflect the difference in her
actual life expectancy at the time of his retirement and her life
expectancy if she were 5 years younger than Seawright. Seawright may, by
written notice to the Company, and with the Company's consent which will
not be unreasonably withheld, substitute a trust for the benefit of his
surviving spouse as the recipient entitled to payments otherwise payable to
his surviving spouse under this Agreement, but in such case the foregoing
limitations shall continue to apply.
(e) If the sum of $20,000 exceeds the total amount paid to the
surviving spouse at time of her death, such excess shall be paid to a
beneficiary to be designated by Seawright, or in the absence of his
designation, by his surviving spouse, in writing to the Company, provided
that in the event no beneficiary has been designated or the designated
beneficiary does not survive such spouse for a period of 30 days, such
excess shall be paid to the personal representative of the surviving
spouse.
5. Annual Compensation. For purposes hereof, Seawright will be
deemed to have been employed for the entire calendar month during which his
employment terminates and his annual compensation shall be measured on the
basis of twelve month periods ending with the last day of such month.
"Compensation" for purposes hereunder shall include total wage,
salary and commission payments received by Seawright from the Company
including base pay, overtime and bonuses but not including Company
contributions under any group life insurance or other qualified or non-
qualified employee retirement or benefit plan or any payment designated by
the Company as an allowance for Seawright's business expenses (except for
the personal use portion of any Company car allowance up to 70% of such
allowance). Compensation shall not be reduced by the amount of any
elective contributions by Seawright under any 40l(k) plan of the Company.
Management Incentive Plan bonuses which are normally awarded in the first
half of March of each year if the Plan criteria are met, shall be deemed to
have been received, whether or not payment is deferred, in the calendar
year with respect to which such bonus is earned, allocated thereto on a
monthly basis. Other compensation whose receipt is deferred by Seawright
shall be deemed to have been received for the purposes hereof at the time
such compensation would have been received, if there had been no such
deferral.
In the event that benefits become payable under subparagraphs 2(b) or
4(a) and Seawright has not been employed for five years, the "average
annual compensation" used in determining the benefits payable thereunder
shall be the sum of the compensation received during his employment by the
Company to the date of death, or termination, divided by five (5).
<PAGE>
In the event Seawright's compensation for the last twelve-month
period cannot be determined by the time the first payment becomes due
hereunder, e.g., due to a bonus payable on the results of the Company's
operations for a year in which Seawright retires prior to the end of such
year, then the first payments due hereunder shall be based on the estimated
amount that Seawright will be entitled to actually receive. The exact
amount due Seawright shall be determined as soon as practicable, provided
that following such determination and corresponding adjustment in the
monthly payment to Seawright the Company shall pay Seawright an additional
lump sum to adjust for any underpayment to Seawright and Seawright shall
refund to Company any overpayment.
6. Primary Social Security Benefit. An Employee's Primary Social
Security Benefit shall be determined on the day prior to the date on which
Seawright's employment with the Company terminates and shall be equal to
the estimated old age retirement benefit Seawright will be entitled to
receive under the federal Social Security Act at age 65 (or if different by
law such other age as may then entitle a person to receive his social
security retirement benefits based on his unreduced "primary insurance
amount" under the Social Security Act as then in effect) based on his
earnings up to the day preceding his termination date.
7. Payment. Amounts payable under the above paragraphs will be paid
on or about the end of the month to which the payment relates. Payment
will be made for the full month in which Seawright's death occurs.
8. Confidential Information, Covenant Not to Compete and Non-
Solicitation.
(a) Seawright agrees that he will not use or disclose to anyone
(other than for the benefit of the Company) either during the term of his
employment or at any time thereafter, any Confidential Information obtained
by him or made known to him while employed by the Company, and will make
all reasonable, necessary and appropriate efforts to safeguard all such
Confidential Information from disclosure to anyone other than as permitted
hereby. As used herein "Confidential Information" includes, but is not
limited to, trade secrets, business and sales policies, methods, plans and
customer lists, including any lists written or other of such persons or
entities, whether of the Company or any other organization associated or
affiliated with or owned by or owning the Company, but shall not include
information which becomes generally available to the public other than as a
result of disclosure by Seawright's act or default or the acts or default
of Seawright's agents or representatives.
(b) Provided the Company is making the payments to Seawright as
required pursuant to this Agreement following his termination of
employment, Seawright agrees that he will not during his life, either alone
or in conjunction with any individual, firm, corporation, association or
other entity (except for the benefit of the Company), either as principal,
agent, officer, employee, director, investor, consultant, shareholder,
associate or in any other capacity whatsoever:
(i) carry on, participate in, or be engaged in, concerned with, or
interested in, directly or indirectly, any undertaking which is in
whole or in part competitive with any of the businesses carried on by
the Company within the respective territories in which such
<PAGE>
businesses are then carried on (except for any equity share
investment in a public company whose shares are listed on a
recognized stock exchange where such share investment does not in
the aggregate exceed 5% of the issued
equity shares of such company);
(ii) attempt to solicit any suppliers, customers, employees or
independent dealers away from the Company;
(iii) carry on, participate in, or be engaged in, concerned with, or
interested in, directly or indirectly, any undertaking which bears
any name similar to that of the Company; or
(iv) take any act as a result of which the relations between the
Company and its suppliers, customers, employees or others may be
impaired or which may otherwise be detrimental to the business of the
Company.
Competition shall be deemed to include (i) any dealings with the Company's
employees or independent dealers, and (ii) the use in any way of the
Company's customer or mailing lists. The reference to Company in this
Paragraph 8 shall include all subsidiaries and affiliated entities of the
Company. Seawright agrees that the remedy at law for breach by him of the
foregoing covenant will be inadequate and that the Company shall be
entitled to injunctive relief.
(c) Seawright's obligations under the foregoing subparagraphs of
this paragraph 8 shall continue notwithstanding the termination of his
rights to receive any payments hereunder.
9. Forfeiture of Payments. The Company may discontinue payments
hereunder and have no further liability under this agreement in the event
that Seawright fails to observe any of the terms of this agreement,
provided, however, that if his failure to observe is limited to the terms
of subparagraph 8(b) above and is his first failure, the Company shall give
him written notice thereof and if, within l5 days of such notice, Seawright
gives the Company written notice of his discontinuance of the activity
complained of, payments hereunder shall be reinstituted.
10. Assignment. Neither Seawright nor his wife shall have any
right to commute, encumber, or dispose of the right to receive payments
hereunder, which payments and the right thereto are expressly declared to
be nonassignable and nontransferable, except as provided in Paragraph
4(d).
All rights under this agreement are merely unsecured contractual
rights of Seawright or Seawright's spouse against the Company. Seawright
and Seawright's spouse are unsecured general creditors of the Company.
The Company agrees to set aside certain assets in a trust for the payment
of benefits under this agreement. In the event of the insolvency or
bankruptcy of the Company, any assets set aside in such trust shall at all
times be subject to the claims of the Company's general creditors as if
such assets were general assets of the Company.
11. Binding Effect. This agreement shall be binding upon and inure
to the benefit of any successor of the Company and any such successor shall
be deemed substituted for the Company under the terms of this agreement.
<PAGE>
As used in this agreement, the term "successor" shall include any person,
firm, corporation, or other business entity which at any time, whether by
merger, purchase, or otherwise, acquires all or substantially all of the
assets or business of the Company. To the extent any payment required to
be made by the Company under this agreement is instead made by the Trust
created by the Company for that purpose, the Company's obligation under
this agreement will to such extent be deemed satisfied. If the Trust for
any reason fails to make a payment required to be made by the Company under
this agreement, the Company remains fully liable for such payment under the
terms of the agreement.
12. Not an Employment Agreement. This agreement is not an
employment agreement and the Company reserves the right to discharge
Seawright with or without cause. The agreement in no way affects his
rights under the Stanhome Inc. Employees' Profit-Sharing Plan or Pension
Plan or under any Stanhome group or other insurance policy.
13. Notices. Any notice required or permitted to be given under
this agreement shall be sufficient if in writing, and if sent by registered
mail, or delivered, to his residence in the case of Mr. Seawright, at 17
Kira Lane, Englewood, New Jersey 07631, or in the case of the Company, to
its principal office at 333 Western Avenue, Westfield, Massachusetts, Attn:
Secretary. Either party may change the address to which notices are to be
addressed by notice in writing given to the other in accordance with the
terms hereof.
14. Waiver of Breach. The waiver by the Company of a breach of any
provision of this agreement by Seawright shall not operate or be construed
as a waiver of any subsequent breach by Seawright.
15. Governing Law. This agreement shall be deemed made in the
Commonwealth of Massachusetts, and its form, execution, validity,
construction and performance shall be construed in accordance with the laws
of said Commonwealth.
16. Entire Agreement. This agreement constitutes the entire
agreement of the parties. It may not be changed orally but only by an
agreement in writing signed by Seawright and for the Company by an officer
duly authorized by the Company's Board of Directors.
17. Severability. In the event that any of the terms or provisions
of this agreement or any portion of such terms or provisions shall be
determined to be invalid or inoperative, such determination shall not
affect the efficacy of the balance of the agreement and any such invalid or
inoperative term or provision shall be deemed severable.
IN WITNESS WHEREOF, the parties have executed this Agreement.
STANHOME INC.
BY /s/ H. L. Tower
H. L. Tower
Chairman of the Board
/s/ G. William Seawright
G. William Seawright
<PAGE> EXHIBIT 10(l)
Supplemental Retirement Contract
Amendment
Agreement made as of ________________ by Stanhome Inc., a
Massachusetts Corporation with its principal place of business at 333
Western Avenue, Westfield, Massachusetts 01085 ("Stanhome") and _________
______ of ____________________, __________, ___________________ ("____").
Whereas, Stanhome and ____ have previously entered into a
Supplemental Retirement Contract dated ____________, ("Contract"); and
Whereas, the parties intend that the Survivors Benefit for ____'s
surviving spouse should be payable by Stanhome in the event that ____ dies
prior to age 55 whether he is employed by Stanhome at such time or, as
presently provided, has been involuntarily terminated for any reason other
than cause,
NOW THEREFORE, the parties do hereby amend the Contract as set forth
below, effective as of the date hereof:
Section 4 of the Contract entitled "Survivors Benefit" shall be
amended by adding language (underlined for emphasis) after the initial
phrase "in the event that" so that the beginning of Subsection (a) reads as
follows:
"In the event that Employee dies while employed by Stanhome prior to
reaching age fifty-five (55), or in the event that Employee's employment by
Stanhome is involuntarily terminated prior to age fifty-five (55) for any
reason other than cause, and he dies subsequent to such termination,
Stanhome will pay .....".
IN WITNESS WHEREOF, Stanhome and ____ have executed this Amendment
effective as of the date first written above.
STANHOME INC.
By:
Attest: President and CEO
Secretary
By:
<PAGE> EXHIBIT 10(n)
AGREEMENT
AGREEMENT made March 5, 1986 between Stanhome Inc., a Massachusetts
corporation with its principal place of business at 333 Western Avenue,
Westfield, Massachusetts ("Stanhome") and RONALD R. JALBERT of 23 Windmill
Drive, Granby, Connecticut ("Jalbert").
In consideration of the mutual agreements hereinafter contained, the
parties agree as follows:
1. Retirement Benefits
(a) Subject to the provisions of subsection 1(c) below, if and when
Jalbert or his wife becomes entitled to receive payments from the
Stanhome Inc. Pension Plan, Stanhome will pay him or her an
additional retirement benefit equal to the difference between (i) the
benefits otherwise payable to Jalbert or his wife under the Stanhome
Pension Plan and (ii) the benefits that would have been payable under
that Plan if his years of benefit service had been equal to the sum
of his actual years of benefit service plus nine and fifty six one
hundredths (9.56) additional years.
(b) If Jalbert's employment terminates involuntarily for any reason
other than Cause before he or his wife becomes entitled to receive
payments from the Stanhome Pension Plan he shall be entitled to
receive the benefit determined under subparagraph 1(a) as if he had
reached age fifty-five (55) and was entitled to receive payments from
the Stanhome Inc. Pension Plan on the date of his termination, but
such benefit shall not be payable until his fifty-fifth (55th)
birthday.
(c) If Jalbert's employment terminates by reason of discharge for
Cause or if he dies before reaching age 55, neither he nor his wife
shall be entitled to receive payment of any kind under this
Agreement. "Cause" shall mean dishonesty, misconduct, or
insubordination.
(d) Payment of such additional retirement benefit will begin at the
same time as payments begin under the Stanhome Inc. Pension Plan. If
the Stanhome Inc. Pension Plan should be amended or terminated prior
to the time such payments begin, the amount payable under section
1(a) above shall be calculated as if such amendment or termination
had not occurred.
2. Payment. Amounts payable under the above paragraphs will be paid
on or about the end of the month to which the payment relates. Payment
will be made for the full month in which Jalbert's death occurs.
3. Assignment. Neither Jalbert nor his wife shall have any right to
commute, encumber, or dispose of the right to receive payments hereunder
which payments and the right thereto are expressly declared to be non-
assignable and nontransferable.
4. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of any successor of Stanhome and any such successor shall be
deemed substituted for Stanhome under the terms of this Agreement. As used
in this Agreement, the term "successor" shall include any person, firm,
corporation, or other business entity which at any time, whether by merger,
purchase, or otherwise, acquires all or substantially all of the assets or
business of Stanhome.
5. Not an Employment Agreement. This Agreement is not an employment
agreement and Stanhome reserves the right to discharge Jalbert with or
<PAGE>
without cause. The Agreement in no way affects his rights under the
Stanhome Pension Plan, or under any Stanhome group or other insurance
policy.
6. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by postage prepaid
certified mail, or delivered, in the case of Jalbert to his residence at 23
Windmill Drive, Granby, Connecticut, or, in the case of Stanhome to its
principal office at 333 Western Avenue, Westfield, Massachusetts,
Attention: Secretary. Either party may change the address to which
notices are to be addressed by notice in writing given to the other in
accordance with the terms hereof.
7. Waiver of Breach. The waiver by Stanhome of a breach of any
provision of this Agreement by Jalbert shall not operate or be construed as
a waiver of any subsequent breach by Jalbert.
8. Governing Law. This Agreement shall be deemed made in the
Commonwealth of Massachusetts, and its form, execution, validity,
construction and performance shall be construed in accordance with the laws
of said Commonwealth.
9. Entire Agreement. This Agreement constitutes the entire
agreement of the parties. It may not be changed orally but only by an
agreement in writing signed by Jalbert and for Stanhome by an officer duly
authorized to enter into said amendment by the Board of Directors.
10. Severability. In the event that any of the terms or provisions
of this Agreement or any portion of such terms or provisions shall be
determined to be invalid or inoperative, such determination shall not
affect the efficacy of the balance of the Agreement and any such invalid or
inoperative term or provision shall be deemed severable.
IN WITNESS WHEREOF, this Agreement has been executed by a duly
authorized officer of Stanhome and by Jalbert on this 5th day of March,
1986.
STANHOME INC.
By /s/ H. L. Tower
President
Attest
/s/ Robert C. Alsop
Secretary
By /s/ Ronald R. Jalbert
Ronald R. Jalbert
<PAGE>
SUPPLEMENTAL RETIREMENT CONTRACT
AMENDMENT
AGREEMENT made as of March 28, 1988 by Stanhome Inc., a Massachusetts
corporation with its principal place of business at 333 Western Avenue,
Westfield, Massachusetts ("Stanhome") and Ronald R. Jalbert of 23 Windmill
Drive, Granby, Connecticut ("Jalbert").
WHEREAS, Stanhome and Jalbert have previously entered into a
Supplemental Retirement contract dated March 5, 1986 ("Contract"); and
WHEREAS, Stanhome has established a Trust ("Trust") to which Stanhome
will make contributions which may pay benefits provided for in the
Contract; and
WHEREAS, the Internal Revenue Service in the course of considering
the issuance of certain tax rulings requested by Stanhome in conjunction
with the establishment of the Trust, has requested that the following
amendment be made to the Contract.
NOW THEREFORE, the parties do hereby amend the Contract as set forth
below, effective as of the date hereof:
1. Section 3 of the Contract entitled "Assignment" shall be amended
by adding the following language at the end thereof:
All rights under the Contract are merely unsecured contractual rights
of Jalbert or Jalbert's spouse against Stanhome. Jalbert and
Jalbert's spouse are unsecured general creditors of Stanhome.
Stanhome intends to set aside certain assets in a trust for the
payment of benefits under this Contract. In the event of the
insolvency or bankruptcy of Stanhome, any assets set aside in such
trust shall at all times be subject to the claims of Stanhome's
general creditors as if such assets were general assets of Stanhome.
2. In all other respects, the Contract shall remain in full force
and effect, provided, however, that to the extent any payment required to
be made by Stanhome under the Contract is instead made by the Trust,
Stanhome's obligation under the Contract will to such extent be deemed
satisfied. If the Trust for any reason fails to make a payment required to
be made by Stanhome under the Contract, Stanhome remains fully liable for
such payment under the terms of the Contract.
IN WITNESS WHEREOF, Stanhome and Jalbert have executed this
Amendment, effective as of the date first written above.
STANHOME INC.
By: /s/ H. L. Tower
Its President
Attest:
/s/ Robert C. Alsop
Secretary
By: /s/ Ronald R. Jalbert
Ronald R. Jalbert
<PAGE> EXHIBIT 10(q)
AMENDMENT
Amendment effective as of August 31, 1993 to the Change in Control
Agreement made as of January 1, 1992 between Alek Diaz Vargas (the
"Employee") and Stanhome Inc., a Massachusetts corporation (the "Company")
(which is hereinafter referred to as the "Agreement").
Whereas, the Company has recently asked Diaz to resign his post as
President and Chief Executive Officer of the Company in order to devote his
full time and efforts as President and Chief Executive Officer of the
Company's Worldwide Direct Selling Group;
Whereas, the Company and the Employee are, simultaneously with the
execution of this Agreement, entering into an Employment Agreement
providing, inter alia, for certain compensation to be paid to Employee upon
the termination of said Employment Agreement.
Now, therefore, in consideration of the premises and of the mutual
undertakings set forth below, the parties agree as follows:
1. Paragraph 1(a) of the Agreement is amended to add (at the end
thereof) the following sentence:
The amounts payable hereunder will be reduced by the present
value of any amounts payable to Employee under the Employment Agreement
between Employee and Company dated August 31, 1993 (the "Employment
Agreement"), with respect to any period following Employee's termination of
employment, unless Employee executes a release in form acceptable to
Company counsel releasing the Company from all liability under the
Employment Agreement.
2. Paragraph 12 of the Agreement is amended to delete the phrase "or
written employment contract between the Employee and the Company" from the
9th and 10th line thereof so that after such amendment it shall read as
follows:
"Other Compensation. The lump sum severance benefit payable
pursuant to this Agreement shall be in addition to and not in substitution
for any amounts of compensation accrued in favor of the Employee up to the
date of termination, including a pro-rated portion of any incentive
compensation to which he is entitled, based upon the number of days of
employment during such year prior to such termination date, and shall also
be in addition to and not in substitution for any amount or benefit to
which the Employee may otherwise be entitled under any insurance policy,
profit sharing plan, stock option plan, or any regular or supplemental
retirement plan or contract maintained by the Company on the Employee's
behalf.
Notwithstanding the foregoing, the benefits payable hereunder
shall be in substitution for any account or benefit to which the Employee
may otherwise be entitled under (i) the Company's regular severance policy;
or (ii) any other severance agreement between the Employee and the
Company."
3. Except as specifically set forth herein, all of the terms and
conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, this Amendment has been executed by a duly
authorized officer of the Company and by the Employee as of the date set
forth above.
<PAGE>
STANHOME INC.
By: /s/ H. L. Tower
H. L. Tower
/s/ Alek Diaz Vargas
Alek Diaz Vargas
<PAGE> EXHIBIT 10(r)
CHANGE IN CONTROL AGREEMENT
AGREEMENT, effective as of November 9, 1993 (the "Effective Date")
between Stanhome Inc., a Massachusetts corporation (the "Company") and G.
William Seawright of 17 Kira Lane, Englewood, New Jersey ("Seawright").
WHEREAS, the Company desires that Seawright serve as its President
and Chief Executive Officer, effective November 9, 1993, and
WHEREAS, Seawright has agreed to serve in such capacity pursuant to
the terms and conditions of an Employment Agreement executed
simultaneously herewith, and in further consideration of a Retirement
Agreement of even date and this Change in Control Agreement; and
WHEREAS, the parties deem it to be in the best interest of both
Seawright and the Company to provide a severance payment in the event his
employment terminates under certain circumstances hereinafter described,
NOW, THEREFORE, in consideration of the mutual premises, covenants
and conditions and of the agreements hereinafter contained, the Company
and Seawright agree as follows:
1. Severance Benefit.
(a) Upon the termination of Seawright's employment for any reason
other than death, Disability, retirement, termination for Substantial
Cause, or voluntary termination without Good Reason, within two years or
less after a "Change in Control" as defined below, the Company will
pay Seawright as a severance benefit an amount equal to three times the
annual rate of Seawright's Total Compensation at the time of such
termination.
(b) Seawright's employment is deemed to be terminated following a
Change in Control if Seawright's employment terminates prior to a
Change in Control at the direction of a Person (as defined in
paragraph 4(a)(i), below) who has entered into an agreement with the
Company to effectuate a Change in Control and such employment
terminates for any other reason other than death, Disability,
retirement, termination for Substantial Cause, or voluntary
termination without Good Reason and the circumstances constituting
Good Reason occur at the direction of such Person.
(c) In the event that Seawright becomes entitled to a severance
benefit under this Agreement or to any other payments or benefits
received or to be received by Seawright in connection with a Change in
Control or Seawright's termination of employment, whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement
with the Company, any Person whose actions result in a Change in
Control or any Person affiliated with the Company or such Person
(all such payments and benefits, including the severance benefit,
being hereinafter called "Total Payments"), if any of the Total
Payments will be subject to the excise tax imposed under section 4999
of the Internal Revenue Code of 1986, as amended (the "Code") (the
"Excise Tax"), the Company shall pay to Seawright an additional amount
(the "Gross-Up Payment") such that the net amount retained by Seawright,
after deduction of any Excise Tax on the Total Payments and any
federal, state and local income
<PAGE>
tax and Excise Tax upon the payment provided for by this subsection
(c), shall be equal to the Total Payments. For purpose of determining
whether any of the Total Payments will be subject to the Excise Tax and
the amount of such Excise Tax, (i) all Total Payments shall be
treated as "parachute payments" within the meaning of section
280G(b) (2) of the Code, and all "excess parachute payments" within
the meaning of section 280G(b) (1) of the Code shall be treated as
subject to the Excise Tax, unless in the opinion of tax counsel
selected by the Company's independent auditors, and reasonably
acceptable to Seawright, such payments or benefits (in whole or in
part) do not constitute parachute payments, including by reason of
Section 280G(b) (4) (A) of the Code, or such excess parachute payments
(in whole or in part) represent reasonable compensation for services
actually rendered, within the meaning of section 280G(b) (4) (B) of the
Code, in excess of the base amount (within the meaning of section 280G(b)
(3) of the Code) allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax, (ii) the amount of the Total
Payments which shall be treated as subject to the Excise Tax shall
be equal to the lesser of (A) the total amount of the Total Payments
or (B) the amount of excess parachute payments within the meaning of
section 280G(b) (1) of the Code (after applying clause (i), above),
and (iii) the value of any non-cash benefits or any deferred payment
or benefit shall be determined by the Company's independent auditors
in accordance with the principles of sections 280G(d) (3) and (4) of
the Code. For purposes of determining the amount of the Gross-Up
Payment, Seawright shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year
in which the Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rate of taxation in the state and locality
of Seawright's residence on the date of Seawright's termination, net of
the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes. In the event that the
Excise Tax is subsequently determined to be less than the amount taken
into account hereunder at the time of termination of Seawright's
employment, Seawright shall repay to the Company, at the time that
the amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction (plus
that portion of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income tax imposed on the Gross-Up Payment
being repaid by Seawright to the extent that such repayment results in
a reduction in Excise Tax and/or a federal, state or local income tax
deduction) plus interest on the amount of such repayment at the rate
provided in section 1274(b) (2) (B) of the Code. In the event that
the Excise Tax is determined to exceed the amount taken into account
hereunder at the time of the termination of Seawright's employment
(including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company
shall make an additional Gross-Up Payment in respect of such excess
(plus any interest, penalties or additions payable by Seawright with
respect to such excess) at the time that the amount of such excess is
finally determined. Seawright and the Company shall each reasonably
cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of liability
for Excise Tax with respect to the Severance Payments.
<PAGE>
2. Payment. The severance benefit shall be payable in a lump sum
on or before the date of Seawright's termination.
3. Term. The term of this Agreement shall be a period beginning
on the Effective Date and ending on the first to occur of (i) Seawright's
death, Disability, retirement, termination for Substantial Cause or
voluntary termination without Good Reason; or (ii) three years after
written notification by the Company of its intention to terminate. All
obligations and rights arising under paragraph 1 at the time of the
termination of this Agreement shall survive such termination.
4. Change In Control: Potential Change In Control
(a) As used herein, a "Change in Control" means a Change in Control
of a nature that would, in the opinion of Company counsel, be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"); provided that, without limitation, such a Change
in Control shall be deemed to have occurred if
(i) any "Person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) (other than the Company or any subsidiary of
the Company, any trustee or fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries or a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of the
stock of the Company) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty-five percent (25%) or
more of the combined voting power of the Company's then outstanding
securities; or
(ii) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Board and any new
director (other than a director designated by a Person who has entered
into an agreement with the Company to effect a transaction described in
Clause (i), (iii) or (iv) of this paragraph) whose election by the
Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved cease for any reason to constitute a majority thereof; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity), in
combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, at least
75% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation
<PAGE>
effected to implement a recapitalization of the Company (or similar
transaction) in which no Person acquires 25% or more of the combined
voting power of the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets.
Notwithstanding the foregoing, no Change in Control shall be deemed
to have occurred with respect to Seawright if he is a member of a
management group which first announces a proposal which constitutes a
Potential Change in Control, unless otherwise determined by a majority
of the members of the Board of Directors who are not members of such
management group.
(b) A "Potential Change in Control" shall be deemed to have occurred
if the conditions set forth in any one of the following paragraphs
shall have been satisfied:
(i) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(ii) the Company or any Person publicly announces an intention
to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(iii) any Person who is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing
10% or more of the combined voting power of the Company's then
outstanding securities, increases such Person's beneficial ownership of
such securities by 5% or more over the percentage so owned by such
Person on the date hereof; or
(iv) the Board of Directors adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control
has occurred.
5. Total Compensation. As used herein, "Total Compensation"
means Seawright's annual base salary rate at the time of termination plus
any bonus to which he is entitled under the Company's Management Incentive
Plan, or its successor or substitute plan or policy. For purposes of the
calculation to be made under paragraph 1(a) above, Seawright's annual base
salary shall be the rate at the time of termination but not less than the
rate in effect immediately prior to the Change in Control, and the bonus
shall be equal to 100% of the target bonus payable to Seawright under the
Management Incentive Plan for the year in which his termination occurs,
but not less than 100% of the target bonus for the year in which the
Change of Control occurred.
6. Disability. As used herein, "Disability" means a medically
determinable physical or mental condition which renders Seawright
incapable of performing the work for which he was employed at his normal
place of employment for at least six consecutive months. A termination by
reason of Disability shall not be deemed to have occurred unless Seawright
fails to return to work at his normal place of employment within thirty
(30) days after receiving written notice of termination from the Company.
<PAGE>
7. Substantial Cause. As used herein, "Substantial Cause" means
(i) the willful and continued failure by Seawright to substantially
perform Seawright's duties with the Company (other than any such failure
resulting from Seawright's incapacity due to physical or mental illness or
any such actual or anticipated failure after the issuance of a notice of
termination for Good Reason by Seawright) after a written demand for
substantial performance is delivered to Seawright by the Board, which
demand specifically identifies the manner in which the Board believes that
Seawright has not substantially performed Seawright's duties, or (ii) the
willful engaging by Seawright in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this definition, no
act, or failure to act, on Seawright's part shall be deemed "willful"
unless done, or omitted to be done, by Seawright not in good faith and
without reasonable belief that Seawright's act, or failure to act, was in
the best interest of the Company.
8. Good Reason. A voluntary termination under any of the
following circumstances shall be considered to be for "Good Reason":
(a) assignment to Seawright of duties or title inconsistent with his
status as President and CEO, or removal of Seawright from involvement in
management decision-making functions consistent with his status as
President and CEO.
(b) failure to continue Seawright's participation in the Management
Incentive Plan or in any successor or substitute plan or policy and, if
such termination follows a Change in Control, equivalent to the
management incentive plan as in effect immediately prior to the Change
in Control;
(c) failure to pay when due Seawright's base salary, or any
installment of deferred compensation when due, or a reduction in
Seawright's base salary, or a failure to continue in effect for
Seawright's benefit fringe benefits in which he now participates,
including retirement plans, health and insurance plans, vacation plans,
and automobile programs, or the taking of any action which materially
reduces such benefits, provided that, unless such reduction in base
salary or failure to continue benefits occurs within two years after a
Change in Control, it will not be considered Good Reason if taken in
connection with a general reduction applicable to all officers;
(d) assignment of Seawright to any location other than within fifty
(50) miles of his present office location, 333 Western Avenue,
Westfield, Massachusetts; or
(e) within two years after a Change in Control, a requirement that
Seawright travel away from his office location more than 25% of the
working days in the year, provided that Seawright may be required to
increase his travel by 10% of his working days if Seawright had been
traveling more than 15% of his working days at the time of the Change
in Control. Working days for these purposes shall exclude vacation days.
9. Fringe Benefits. For a period of thirty-six (36) months (the
"Extended Period") following any termination giving rise to benefits under
<PAGE>
this Agreement, Seawright shall continue to participate fully in those
fringe benefits of the Company in which he is a participant prior to such
termination, including the group insurance programs (i.e. medical
insurance, including dependent coverage; life insurance; accidental death
and dismemberment insurance), but excluding the Company's automobile
program; provided, however, that if Seawright is barred from participating
in a particular plan or arrangement under such program's terms, the
Company shall arrange to provide Seawright for the Extended Period with a
substitute benefit substantially equivalent to the affected plan or
arrangement. The coverage set forth in the preceding sentence shall be
subject only to such periodic review as may be required by the group
insurance carrier to determine whether he has become a participant in a
comparable program of another employer, in which case continuance or
discontinuance of coverage will be determined in accordance with the terms
and conditions of the group insurance policy and the benefits payable
under this provision will be secondary to the comparable program of the
other employer.
All benefits covered by this paragraph 9 shall be provided at no
cost to Seawright and are subject to the tax gross-up provisions of
paragraph 1.
10. Legal Fees. In the event legal fees and expenses must be
incurred by Seawright in seeking to obtain or enforce any right or benefit
provided by this Agreement, the Company shall reimburse Seawright for such
cost, provided, however, that fees and expenses incurred in connection
with that portion of a claim that is determined by a court or arbitrator
to be frivolous shall not be paid by the Company.
11. Mitigation. Seawright will not be required to mitigate the
amount of any payment provided for by this Agreement by seeking other
employment nor shall the amount of any payment so provided be reduced by
any compensation earned by Seawright as the result of employment by
another employer after the date of termination or otherwise.
12. Other Compensation. The lump sum severance benefit payable
pursuant to this Agreement shall be in addition to and not in substitution
for any amounts of compensation accrued in favor of Seawright up to the
date of termination, including a pro-rated portion of any incentive
compensation to which he is entitled, based upon the number of days of
employment during such year prior to such termination date, and shall also
be in addition to and not in substitution for any amount or benefit to
which Seawright may otherwise be entitled under any pension plan, paysop
plan, insurance policy, profit-sharing plan, stock option plan or any
regular or supplemental retirement plan or contract maintained by the
Company on Seawright's behalf. Notwithstanding the foregoing, the
benefits payable hereunder shall be in substitution for any account or
benefit to which Seawright may otherwise be entitled under (i) the
Company's regular severance policy; or (ii) any other severance agreement
between Seawright and the Company. Further, any amounts paid pursuant to
this Agreement shall reduce any payments made to Seawright as a result of
his termination of employment under the Employment Agreement between the
Company and Seawright of even date, as provided in subparagraph 4(g)
thereof.
13. Confidential Information. Seawright agrees that he will not
use or disclose to anyone (other than for the benefit of the Company)
<PAGE>
either during the term of his employment or at any time thereafter, any
confidential information obtained by or made known to him while employed
by the Company. As used herein, "Confidential Information" includes, but
is not limited to, trade secrets of the Company or of any other
organization associated or affiliated with or owned by or owning the
Company.
14. Covenant Not to Proselyte. For a period of thirty-six (36)
months after termination giving rise to benefits under this Agreement,
Seawright agrees that he will not attempt, directly or indirectly, to
induce any employee of the Company to terminate his or her employment with
the Company.
15. Entirety of Agreement and Amendment. This Agreement
constitutes the entire Agreement between the parties and no amendment,
waiver, alteration or modification of this Agreement shall be valid unless
in each instance such amendment, waiver, alteration or modification is
agreed to in writing by both parties. Mere delay by Seawright in
exercising any rights under this Agreement will in no event be deemed a
waiver of such rights. This Agreement supersedes all previous severance
agreements that may have been made between the Company and Seawright.
16. Notices and Statements. All notices and statements hereunder
shall be in writing, and, if directed to the Company, shall be deemed
given if deposited postage prepaid in the U.S. Mail or delivered to the
Company, Attention: General Counsel at 333 Western Avenue, Westfield,
Massachusetts, 01085, or, if directed to Seawright, shall be deemed given
if delivered to him personally or deposited postage prepaid in the U.S.
Mail addressed to him at his then current personal residence as it appears
on the Company records, or to such other addresses as either party may
hereafter designate in writing for the purpose. Written notice of
termination of employment by either party after a Change in Control must
specify the provision(s) in the Agreement relied upon and detail the facts
and circumstances alleged as the basis for termination of employment. Any
such notice shall be effective thirty (30) days after receipt by the
appropriate party (except for termination for Substantial Cause).
17. Applicable Law. To the extent permitted by law, this Agreement
shall be deemed to have been made in the Commonwealth of
Massachusetts, and its validity, construction and performance shall be
determined in accordance with the laws of said Commonwealth.
18. Assignment. Neither party may assign this Agreement or any of
its rights or duties hereunder, except that the Company must assign any of
its rights and duties under this Agreement to (1) a successor or assignee
of all or substantially all of the business or assets of the Company, or
(2) any corporation with which the Company merges or with which the
Company may be consolidated, provided that any such successor or assignee
or surviving entity of a merger or consolidation must expressly assume in
writing such rights, duties and obligations of the Company, and except
further that the rights and obligations of Seawright under this Agreement
shall inure to the benefit of and be enforceable by Seawright's personal
or legal representative, executor, etc.
19. Not an Employment Contract. The parties agree that this
Agreement is not intended as, and is not, an employment contract. The
Company may terminate Seawright's employment at any time during the term
<PAGE>
of this Agreement subject to providing such benefits as may be specified
in the Agreement and the Retirement Agreement and Employment Agreement
between the Company and Seawright of even date.
20. Arbitration. At the election of either the Company or
Seawright, all controversies in connection with, or related to, any
alleged breach of this Agreement or any of its provisions requiring
ongoing action or interpretation, including, without limitation,
injunctive relief, shall be settled by binding arbitration in Boston,
Massachusetts in accordance with the rules of the American Arbitration
Association then in effect. Company or Seawright may demand arbitration
upon ten (10) days notice to the other. The arbitration panel shall
consist of three (3) members, one to be Seawright's nominee, one to be the
Company's nominee and a third to be selected by the other two. In the
event the two arbitrators cannot agree on a third within seven (7) days
after the demand for arbitration, the third shall be chosen by the
American Arbitration Association in Boston, Massachusetts pursuant to its
rules and regulations. In the event of the death or incapacity of
Seawright, his duly authorized executor or representative or its nominee
shall be or choose one arbitrator in his stead. Judgment upon any award,
including injunctive relief, rendered may be entered in any court having
jurisdiction thereof. The fees and expenses of the arbitrators shall be
borne by the parties hereto in proportion to the questions answered
adversely to their several questions and interpretations, as determined by
the arbitrators, and the parties agree that the findings of a majority of
such three (3) arbitrators shall be conclusive on them, and their
respective heirs, successors and assigns, executors, administrators, and
personal representatives.
21. Invalidity of any Provision. If any provision of this
Agreement or the application thereof to any party or circumstance is held
invalid or unenforceable, in whole or in part, the remaining provisions of
this Agreement and the application of such provisions to the other party
or circumstances will not be affected thereby, the provisions of this
Agreement being severable or modifiable in any such instance.
IN WITNESS WHEREOF, the parties have executed this Agreement.
Dated: November 9, 1993
STANHOME INC.
By: /s/ H. L. Tower
H. L. Tower
Chairman of the Board
/s/ G. William Seawright
G. William Seawright
<PAGE> EXHIBIT 13
<TABLE>
<CAPTION>
STANHOME INC.
Percentage
Increase
FINANCIAL HIGHLIGHTS 1992 1993 (Decrease)
(In millions, except per share amounts)
<S> <C> <C> <C>
Net sales $744 $751 1%
Restructuring cost - 17 -
Operating profit 83 66 (21%)
Net income before taxes 87 66 (24%)
Net income after taxes 47 33 (29%)
Working capital 161 159 ( 1%)
Total assets 416 430 3%
Shareholders' equity 257 254 ( 1%)
Return on average shareholders' equity 19% 13%
Per share data:
Net income fully diluted $2.32 $1.67 (28%)
Dividends declared $.96 $1.00 4%
Shareholders' equity at December 31 $12.99 $13.12 1%
Average number of shares fully diluted 20.16 19.79 ( 2%)
Number of shares outstanding at December 31 19.77 19.39 ( 2%)
</TABLE>
<TABLE>
<CAPTION>
SALES
In Million Dollars
(Graphic Material Omitted)
<S> <C> <C>
Year 1989 $571
1990 676
1991 710
1992 744
1993 751
</TABLE>
<TABLE>
<CAPTION>
OPERATING PROFIT
In Million Dollars
(Graphic Material Omitted)
<S> <C> <C>
Year 1989 $ 80
1990 88
1991 79
1992 83
1993 66
</TABLE>
<TABLE>
<CAPTION>
EARNINGS PER SHARE
FULLY DILUTED NET INCOME
In Dollars
(Graphic Material Omitted)
<S> <C> <C>
Year 1989 $2.23
1990 2.54
1991 2.21
1992 2.32
1993 1.67
</TABLE>
<TABLE>
<CAPTION>
RETURN ON EQUITY
Percent
(Graphic Material Omitted)
<S> <C> <C>
Year 1989 29%
1990 27%
1991 20%
1992 19%
1993 13%
</TABLE>
<TABLE>
<CAPTION>
Stock Market, Dividend and Shareholder Information
1992
Market Price
------------
Quarter Dividend High Low
- -------------------------------------------
<S> <C> <C> <C>
First $.23 $42 $32
Second .23 36 32
Third .25 38 30
Fourth .25 36 31
</TABLE>
<TABLE>
<CAPTION>
1993
Market Price
------------
Quarter Dividend High Low
- -------------------------------------------
<S> <C> <C> <C>
First $.25 $35 $31
Second .25 32 27
Third .25 30 26
Fourth .25 35 27
</TABLE>
Stanhome's Common Stock is traded on the New York and Pacific stock
exchanges (Symbol: STH). The table shows for the indicated periods
dividends paid and the high and low price range rounded to the nearest
whole number (half numbers are rounded down). (Source: New York Stock
Exchange Composite Tape.) As of December 31, 1993, there were 3,723 record
holders of the Common Stock.
1
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion gives more depth on Stanhome's financial
condition and results of operations. You will probably find it helpful to
have first read the financial statements, accompanying notes and the
financial highlights of recent years.
RESTRUCTURING PROGRAM: In the second quarter of 1993, the Company
incurred a restructuring charge of $17 million pre-tax, $11.5 million after
tax, or $.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 $.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 capitalize
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 $.8 million write down of net fixed
assets.
SEGMENT SALES AND OPERATING PROFIT
GIFTWARE
Enesco Worldwide Giftware Group sales increased 5% in 1993 due to new
product introductions and continued growth in collectible licensed lines.
The Precious Moments product line continued to be Giftware's most important
line and accounted for 46% of sales in 1993 versus 49% in 1992. A 6% sales
increase in the United States, which represents 88% of total group 1993
sales, was partially reduced by a sales decrease from international
operations, due principally to unfavorable currency translation rates
versus 1992. Excluding the Giftware restructuring charge of $4 million,
operating profit increased 9% and benefited from a lower percentage of
selling, general and administrative expenses in the United States and
Canada. Operating results from Europe and Australia decreased on the lower
sales volume and caused total cost of sales of the Group to increase
slightly as a percentage of sales in 1993 versus 1992. Giftware incurred a
restructuring charge in 1993 to turn the Australian subsidiary (1993 sales
of $2.5 million and operating loss of $1.1 million) into a distributorship
and to consolidate into the Elk Grove Village, Illinois location certain
other U.S. operations in order to improve service and efficiencies. The
fourth quarter Giftware percentage increase in sales and operating profit
was higher than the third quarter due to seasonality and due to delivery of
collectible products from the Far East. Giftware's sales mix has been
shifting to more collectible licensed lines which are generally on back
order and shipped when received versus shipped from existing inventory. As
such, quarterly results can be impacted by delays and/or improvement in
deliveries. Effective July 1, 1993, a new license agreement with Precious
Moments, Inc. commenced, which extended the term of the license and
increased the royalty rates of Precious Moments licensed product sales.
The percentage royalty rate increases between 1993 and 1996 totaling
approximately 3% of licensed sales are expected to be recovered through
price increases and cost reductions.
17
<PAGE>
Enesco Worldwide Giftware Group sales increased 6% in 1992 due to new
product introductions and growth in collectible licensed lines. The
Precious Moments product line continued to be Giftware's most important
line and accounted for 49% of sales in 1992 versus 53% in 1991. The sales
increase combined with a lower percentage of selling, general and
administrative expense resulted in a 7% increase in operating profit.
Total results were reduced, in part, by lower sales and operating
performances in Australia and Canada due to very weak economic conditions
in those markets.
DIRECT RESPONSE
Hamilton Worldwide Direct Response Group sales improved 35% due
principally to unit volume increases in plates in the United States, which
benefited from exceptional response to new licensed lines and to the
expansion of ship-on-credit programs which have a much higher net sales
response rate. Plate sales represented 51% of sales in 1993 and 38% in
1992. The rate of sales increase in 1994 is expected to be less than 1993
as the ship-on-credit plate programs become more comparable with 1993.
Operating profit increased 42% and increased as a percentage of sales due
to a lower percentage of selling, general and administrative expenses which
benefited from the impact of higher sales on fixed costs. Cost of sales
increased as a percentage of sales due to sales mix. International results
which account for 10% of 1993 sales decreased compared to 1992 due
principally to unfavorable currency translation rates versus 1992.
Hamilton Worldwide Direct Response Group sales and operating profit in
1992 increased 20% due to volume increases in all product categories,
principally in the United States. A 2% improvement in gross margin from
higher volumes and product mix was offset by higher provisions for bad
debts resulting from increased ship-on-credit sales.
In the United States, sales taxes are only collected in those states
where Hamilton has a physical presence. Following a recent U.S. Supreme
Court decision supporting this principle, several states have increased
efforts to collect sales tax from their residents on out-of-state mail
order purchases and legislation has been introduced in the U.S. Senate to
override the Supreme Court's decision on this issue. If Hamilton had to
collect sales taxes in all states, it would result in increased
administrative cost of doing business.
DIRECT SELLING
Worldwide Direct Selling Group sales decreased 15% due to lower unit
volumes and unfavorable currency translation rates in 1993 compared to
1992. Excluding the Direct Selling restructuring charge of $13 million,
operating profit decreased 27%, reflecting the impact of lower sales on
fixed costs combined with a higher percentage of selling, general and
administrative expense.
European Direct Selling sales, which represent 71% of the total group
1993 sales, decreased 20% due to local currency declines, reflecting the
poor economic conditions, and to unfavorable currency translation rates in
1993 compared to 1992. European local currency 1993 sales and operating
profit translated at 1992 average exchange rates would have resulted in a
5% sales decrease and a 15% operating profit decrease. Italian value-added
sales tax
18
<PAGE>
and, in some cases, income tax issues concerning the Italian independent
Dealers, as well as registration taxes imposed by the government which
affect the Dealer force, have caused Dealers to leave and potential
recruits to decline to join. During 1993, these conditions persisted as
Dealers continued to receive personal tax assessments. The Company will
continue to assist Dealers in their defense of the claims, by making
payments of legal expenses, advancing amounts for tax deposits, or making
payments of settlements where this is more cost effective than potential
litigation costs, so as to protect its Dealer force and its ability to
recruit and retain future Dealers. These payments have not been material.
The European operations incurred a restructuring charge in 1993 to close
subsidiaries in Germany and Portugal, eliminate three distribution centers
and to reduce work force levels. The 1993 combined sales and operating
losses of Germany and Portugal were $1.1 million and $.9 million,
respectively.
Excluding the 1992 results of the Brazilian subsidiary, which was sold
during the third quarter of 1992, Latin American Direct Selling sales and
operating profit increased during 1993. For 1992, Brazilian sales were
$1.9 million with an operating loss of $1.1 million.
Sales for the U.S. Direct Selling operations decreased and an
operating loss was recorded prior to restructuring. The United States
operations incurred a restructuring charge to close the Industrial
Division, the Gift Gallery Division, two distribution centers, to eliminate
self-manufacturing and to reduce work force levels. The 1993 combined
sales and operating loss of the Gift Gallery and the Industrial Divisions
were $3.9 million and $.9 million, respectively.
Worldwide Direct Selling Group sales for 1992 were level with 1991 and
operating profit increased 1%. Operating profit in 1991 was reduced by a
$2.2 million restructuring charge to reduce future costs. During the third
quarter of 1992, the Brazilian subsidiary was sold due to continued losses.
Total 1992 sales and operating loss for Brazil prior to its sale were $1.9
million and $1.1 million, respectively. In 1991, Brazil had sales of $11.1
million and an operating loss of $.7 million. Comparable 1992 Direct
Selling sales increased 3% and operating profit decreased 5% after
adjusting for the exclusion of the discontinued Brazilian results for both
years and the 1991 restructuring charge. Sales increased from new product
introductions and price increases, while volume decreased. Margin
improvement from the 1991 restructuring in the United States and Italy was
offset by reduced margins from Latin America and other European countries
due to higher selling and marketing expenses that did not produce a
corresponding sales increase.
European Direct Selling 1992 sales increased 2% and operating profit,
excluding the restructuring charge in 1991, decreased 6%. Poor economic
conditions in Europe continued to impact results. Exchange rates for 1992
versus 1991 did not have a material impact on the total year results;
however, fourth quarter 1992 exchange rates reduced fourth quarter 1992
results compared to 1991. Italian value-added sales tax and, in some
cases, income tax issues concerning the Italian independent Dealers, as
well as registration taxes imposed by the government which affect the
Dealer force, have caused Dealers to leave and potential recruits to
decline to join. These conditions were particularly acute during 1991.
Excluding Brazil, Latin American sales were level with 1991 but operating
profit decreased 36% to $1.5 million due to higher selling, general and
administrative expense combined with slowing economic conditions,
particularly in Mexico. Sales for the U.S. direct selling operations
increased 10% from new product introductions, volume growth and price
increases. The 1991 operating loss of $1.3 million, excluding
restructuring, improved to a break-even due to the higher sales and the
benefits from the restructuring in 1991.
19
<PAGE>
GENERAL CORPORATE EXPENSE represented 1% of sales in 1993, 1992 and 1991.
INTEREST EXPENSE AND OTHER INCOME, NET
Interest income and interest expense in 1993 and 1992 both decreased
from the prior year due to lower rates, to lower levels of investments in
Europe and to lower levels of borrowings in the United States. Net
exchange gains in 1992 increased due to fluctuations in currency rates.
Other assets amortization increased in 1993 and 1992 due to higher goodwill
amortization resulting from acquisitions. Net gains on the sale of assets
in 1992 was principally from a gain of $1.7 million, net of anticipated
relocation and restructuring charges, from the sale of the Company's Direct
Selling Brazilian manufacturing, warehouse and distribution facility in the
first quarter of 1992 and the subsequent sale in August of the Brazilian
company's stock for a nominal value but at a loss. The book value of the
sold facility was $1.8 million. On the stock sale, total assets sold
approximated the liabilities. The book value of assets sold was $1.8
million, comprised of $1.3 million of working capital and $.5 million of
net plant and equipment and other assets.
INCOME TAXES
The effective tax rate for 1993 increased to 50% due to the impact of
the restructuring charge. The tax benefit of $5.5 million, or 32% of the
$17 million restructuring charge, was limited by the inability to fully
receive tax benefits for all of the charges in certain international
locations. Excluding the restructuring charge, the effective tax rate was
46%, the same as 1992. Increased statutory rates in 1993 for the United
States and international were offset by a favorable earnings mix with a
higher ratio of United States income which has a lower rate.
The effective tax rates were 46% for 1992 compared to 44% for 1991.
The 1992 effective tax rate increased due to higher taxes imposed by the
Italian government, to subsidiaries in loss positions with no tax benefits
and to earnings mix from the various international business segments.
INFLATION, CHANGING PRICES AND ECONOMIC CONDITIONS
Although the Company's operations are affected by general economic
trends, inflation and changing prices did not have a material impact on
1993 and 1992 results compared to prior years for operations in Europe and
North America. Operations in Latin America, particularly Venezuela, have
experienced highly inflationary economies with rapidly changing prices in
local currencies. These conditions, with the resulting adverse impact on
local economies, have made it difficult for operations in these locations
to achieve adequate operating margins. In addition, the strengthening of
the dollar versus Latin American currencies has resulted in lower U.S.
dollar results for these operations. European operations were unfavorably
impacted by lower currency translation rates in 1993 compared to 1992.
European operations were not significantly impacted by translation rates in
total for 1992, however, fourth quarter currency rates were unfavorable
compared to 1991. The value of the U.S. dollar versus Asian currencies has
resulted in
20
<PAGE>
higher costs of imported products, which resulted in selling price
increases in 1992 and 1991. The value of the U.S. dollar versus
international currencies where the Company conducts business will continue
to impact the future results of these businesses. In addition to the
currency risks, the Company's international operations, including sources
of imported products, are subject to the risks of doing business abroad
including import or export restrictions and changes in economic and
political climates.
FINANCIAL CONDITION
The Company has historically satisfied its capital requirements with
internally generated funds and short-term loans. Working capital
requirements fluctuate during the year and are generally greatest during
the third quarter.
The major source of funds from operating activities was net income.
Net accounts receivable increased 15% in 1993 compared to 1992 due to
increased sales volumes, extended credit in giftware to provide customers
better service and competitive terms, and to a higher percentage of direct
response products, particularly plates, sold on credit. Extended credit
terms to customers has been a very effective means to increase sales and
profits and will continue to be utilized in the future. Net accounts
receivable increased 2% in 1992 following the sales increase. The reserve
for allowance for doubtful accounts was increased 27% in 1993 and 12% in
1992 to provide for the additional exposure. Inventories decreased 21% in
1993 following the Company's effort to improve inventory turns and customer
deliveries. Lower currency translation rates in 1993 versus 1992
represented 3% of the inventory reduction. Inventories increased 4% in
1992 and 3% in 1991 following the sales increase. Prepaid advertising
expense increased 28% in 1993 and 48% in 1992 due to continuing market
efforts in support of higher sales for the Direct Response Group. Total
current liabilities increased 13% in 1993 due principally to the
restructuring accrual and an increase in the acquisition accrual following
the Hamilton Direct Response profit increase. Total current liabilities in
1992 decreased 11% due principally to the reduction of notes and loans
payable, accrued taxes (reflecting the Italian tax amnesty payment) and
lower accounts payable. As announced on June 4, 1992, the Company's
Italian subsidiary decided to settle various tax assessments under a tax
amnesty procedure for amounts totaling approximately $12.5 million. The
amounts were previously reserved and are due in various installments.
Payments totaling approximately 56% of the amount due were made in 1992.
Another 30% was paid in 1993 with the balance due after 1993.
The major use of cash in investing activities for 1993, 1992 and 1991
was for capital expenditures. In 1991 acquisition of companies was also a
major use. The 1991 acquisitions principally consisted of accounts
receivable and inventories and resulted in $6.9 million of goodwill. The
sources of funds for all expenditures were from cash and investments, and
short-term loans. Accruals have been made for additional contingent cash
payments that will be made in 1994 to the sellers of companies purchased
based on pre-tax income performance through 1993. Capital expenditures of
$17 million are planned for 1994. The Company has an acquisition program
and may utilize funds for this purpose in the future. Proceeds from the
sale of property in 1992 were primarily from the sale of the Brazilian
manufacturing, warehouse and distribution facility. Marketable securities
principally consist of Italian treasury bills and commercial paper. The
Italian subsidiary invests excess cash in short-term investments which
change from time to time based on availability and rates. The level of
changes of marketable securities among the years principally represents
investment alternatives versus certificates of deposit and time deposits.
21
<PAGE>
The major use of cash in financing activities was for dividends to
shareholders and purchases of common stock. Purchases of common stock
included shares repurchased by the Company and shares received from
optionees to pay for the exercise price of options. Note 3 to the
Financial Statements provides a detailed summary of treasury stock
activity. The Company has an authorized program to purchase shares of
stock for the Company treasury from time to time in the open market,
depending on market and business conditions, and may utilize funds for this
purpose in the future. As of December 31, 1993, 1.4 million shares
remained available for purchase under the program. The Company's earnings,
cash flow, and available debt capacity have made and make stock
repurchases, in the Company's view, one of its best investment
alternatives. The major source of funds from financing activities
continued to be from the exercise of stock options. Total stock options
outstanding at the exercise price amounted to $49 million at December 31,
1993 and the Company could receive these funds in the future if the options
are exercised.
Annually, the Company makes provisions to record its obligation to
pay, in the future, insurance premiums for post retirement benefits to
eligible employees, and severance allowances to eligible employees of
certain foreign subsidiaries upon their voluntary or involuntary
separation. These obligations are not funded because there is not a
financial benefit to fund them.
Fluctuations in the value of the U.S. dollar versus international
currencies affect the U.S. dollar translation value of international
currency denominated balance sheet items. The changes in the balance sheet
dollar values due to international currency translation fluctuations are
recorded as a component of shareholders' equity. Shareholders' equity in
1993 decreased $5 million due to international currency fluctuations
impacting the cumulative translation component of shareholders' equity.
The translation adjustments to the December 31, 1993 balance sheet that
produced the 1993 change in the cumulative translation component of
shareholders' equity were decreases in working capital by $4 million; net
property, plant and equipment and other assets by $3 million; and long-term
liabilities by $2 million. The Company depends upon its international
operations to pay dividends and to make other payments to the Company. The
Company's international operations are subject to the risks of doing
business abroad including currency, economic and political.
As of December 31, 1993, the Company and its subsidiaries had
approximately $100 million of unused formal and informal lines of credit.
With the level of funds generated from operations, the level of working
capital and the unused lines of credit, no liquidity problems are
anticipated.
22
<PAGE>
QUARTERLY RESULTS (UNAUDITED):
(In thousands, except per share amounts)
The following table sets forth information with respect to the
consolidated quarterly results of operations for 1993, 1992 and 1991. The
amounts are unaudited, but in the opinion of management include all
adjustments necessary to present fairly the results of operations for the
periods indicated.
<TABLE>
<CAPTION>
For the Three Months Ended
------------------------------------------
March 31, June 30, Sept. 30, Dec. 3l,
1993 1993 1993 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales.................. $164,490 $187,236 $182,481 $216,456
Cost of sales.............. 65,200 72,871 77,698 88,891
-------- -------- -------- --------
Gross profit............... 99,290 114,365 104,783 127,565
Selling, general and
administrative expense... 87,407 95,646 83,354 97,044
Restructuring.............. - 17,000 - -
-------- -------- -------- --------
Operating profit........... $ 11,883 $ 1,719 $ 21,429 $ 30,521
======== ======== ======== ========
Net income................. $ 6,267 ($ 1,223) $ 11,900 $ 16,189
======== ======== ======== ========
Earnings per common share:
Primary and fully diluted $ .31 ($ .06) $ .60 $ .83
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ended
------------------------------------------
March 31, June 30, Sept. 30, Dec. 3l,
1992 1992 1992 1992
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales.................. $168,825 $184,817 $182,150 $208,280
Cost of sales.............. 66,710 70,478 76,540 81,390
-------- -------- -------- --------
Gross profit............... 102,115 114,339 105,610 126,890
Selling, general and
administrative expense... 88,142 93,902 85,038 98,439
-------- -------- -------- --------
Operating profit........... $ 13,973 $ 20,437 $ 20,572 $ 28,451
======== ======== ======== ========
Net income................. $ 8,200 $ 11,422 $ 11,718 $ 15,376
======== ======== ======== ========
Earnings per common share:
Primary and fully diluted $ .41 $ .57 $ .58 $ .76
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ended
------------------------------------------
March 31, June 30, Sept. 30, Dec. 3l,
1991 1991 1991 1991
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales.................. $156,920 $171,329 $172,539 $209,420
Cost of sales.............. 61,053 66,889 72,277 81,449
-------- -------- -------- --------
Gross profit............... 95,867 104,440 100,262 127,971
Selling, general and
administrative expense... 84,242 86,831 79,740 98,591
-------- -------- -------- --------
Operating profit........... $ 11,625 $ 17,609 $ 20,522 $ 29,380
======== ======== ======== ========
Net income................. $ 6,845 $ 9,529 $ 11,822 $ 16,857
======== ======== ======== ========
Earnings per common share:
Primary.................. $ .34 $ .47 $ .58 $ .83
Fully diluted............ $ .34 $ .47 $ .58 $ .82
======== ======== ======== ========
</TABLE>
23
<PAGE>
CONSOLIDATED BALANCE SHEET
December 31, 1993 and 1992
STANHOME INC.
<TABLE>
<CAPTION>
ASSETS
1993 1992
------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash (including interest bearing demand deposits) $ 20,870,000 $ 19,753,458
Certificates of deposit and time deposits........ 32,463,754 4,823,406
Marketable securities, at cost
(which approximates market value).............. 7,392,380 17,693,590
Notes and accounts receivable, net............... 123,018,073 107,365,519
Inventories...................................... 94,877,441 119,970,931
Prepaid advertising.............................. 30,946,289 24,237,418
Other prepaid expenses........................... 4,783,884 4,402,154
------------ ------------
Total current assets................... 314,351,821 298,246,476
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and improvements............................ 6,854,447 7,275,850
Buildings and improvements....................... 42,099,109 43,733,476
Machinery and equipment.......................... 26,931,332 27,000,178
Furniture and fixtures........................... 28,348,373 27,408,774
Transportation equipment......................... 3,618,538 4,048,137
------------ ------------
107,851,799 109,466,415
Less - Accumulated depreciation and amortization 63,177,270 59,387,913
------------ ------------
44,674,529 50,078,502
------------ ------------
OTHER ASSETS:
Intangibles
Goodwill, net.................................. 43,028,884 39,497,183
Product lines and other, net................... 18,720,577 19,735,282
Other............................................ 8,954,915 8,060,801
------------ ------------
70,704,376 67,293,266
------------ ------------
$429,730,726 $415,618,244
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
1993 1992
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Notes and loans payable.................... $ 834,197 $ 1,158,549
Accounts payable........................... 51,166,414 54,697,004
Federal, state and foreign taxes on income. 21,598,997 23,070,450
Accrued expenses -
Payroll and commissions.................. 12,844,332 11,318,184
Restructuring............................ 10,840,975 -
Acquisitions............................. 9,125,000 4,200,689
Vacation, sick leave and
retirement insurance.................... 9,074,991 8,850,879
Royalties................................ 7,319,675 3,986,088
Pensions and profit sharing.............. 5,094,628 4,841,775
Other.................................... 27,153,269 25,145,887
------------ -------------
Total current liabilities......... 155,052,478 137,269,505
------------ ------------
LONG-TERM LIABILITIES:
Foreign employee severance obligations..... 12,869,999 14,678,649
Pensions................................... 7,442,344 6,713,939
------------ ------------
Total long-term liabilities....... 20,312,343 21,392,588
------------ ------------
COMMITMENTS AND CONTINGENCIES (Notes 1 and 7)
SHAREHOLDERS' EQUITY:
Common stock, par value $.125--
Authorized 80,000,000 shares
Issued 25,228,240 shares................. 3,153,530 3,153,530
Capital in excess of par value............. 34,015,110 33,041,137
Retained earnings.......................... 338,753,939 325,241,068
Cumulative translation adjustments......... (27,405,455) (22,336,925)
------------ ------------
348,517,124 339,098,810
------------- ------------
Less - Shares held in treasury, at cost-
Common stock, 5,836,617 shares in
1993 and 5,454,424 in 1992............. 94,151,219 82,142,659
------------ ------------
Total shareholders' equity........ 254,365,905 256,956,151
------------ ------------
$429,730,726 $415,618,244
============ ============
</TABLE>
25
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
For the Years Ended December 31, 1993, 1992 and 1991
STANHOME INC.
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
NET SALES.................... $750,662,776 $744,072,178 $710,207,571
COST OF SALES................ 304,659,476 295,118,460 281,667,641
------------ ------------ ------------
GROSS PROFIT................. 446,003,300 448,953,718 428,539,930
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE..... 363,451,535 365,520,560 349,403,840
RESTRUCTURING CHARGE......... 17,000,000 - -
------------ ------------ ------------
OPERATING PROFIT............. 65,551,765 83,433,158 79,136,090
Interest expense........... (2,010,964) (3,351,435) (5,015,975)
Other income, net.......... 2,598,911 6,910,383 7,018,946
------------ ------------ ------------
INCOME BEFORE INCOME TAXES... 66,139,712 86,992,106 81,139,061
Income taxes............... 33,007,035 40,275,836 36,085,961
------------ ------------ ------------
NET INCOME................... $ 33,132,677 $ 46,716,270 $ 45,053,100
============ ============ ============
EARNINGS PER COMMON SHARE:
Primary.................... $ 1.68 $ 2.32 $ 2.22
Fully diluted.............. $ 1.67 $ 2.32 $ 2.21
</TABLE>
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
For the Years Ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
<S> <C> <C> <C>
BALANCE, beginning of year... $325,241,068 $297,474,456 $270,555,352
Net income................. 33,132,677 46,716,270 45,053,100
Cash dividends, $1.00 per
share in 1993, $.96 per
share in 1992 and $.92
per share in 1991.. (19,619,806) (18,949,658) (18,133,996)
------------ ------------ ------------
BALANCE, end of year......... $338,753,939 $325,241,068 $297,474,456
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Years Ended December 31, 1993, 1992 and 1991
STANHOME INC.
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income..................... $33,132,677 $46,716,270 $45,053,100
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization
of property, plant and
equipment.................... 8,354,026 8,396,192 7,940,362
Allowance for losses on
accounts receivable......... 3,325,574 1,375,162 2,689,630
Amortization of other assets. 2,285,245 2,215,827 2,072,019
(Gain)/loss on sale of
capital assets.............. (14,042) (1,348,354) 26,010
Changes in assets and
liabilities, net of effects
from acquisition of
businesses:
Notes and accounts
receivable................ (22,606,637) (9,670,399) (19,483,593)
Inventories................ 21,845,489 (12,020,004) 234,885
Prepaid expenses........... (7,446,253) (8,800,142) (1,326,751)
Other assets............... (708,612) (465,747) (729,758)
Accounts payable, accrued
expenses and other current
liabilities............... 20,834,829 6,043,281 3,991,561
Taxes on income............ (435,117) (1,303,172) (1,397,498)
Foreign employee severance
obligations............... 3,650 975,603 1,124,219
Long-term pensions......... 728,405 827,236 905,725
----------- ----------- -----------
Net cash provided by operating
activities.................... 59,299,234 32,941,753 41,099,911
----------- ----------- -----------
INVESTING ACTIVITIES:
Purchase of property, plant and
equipment..................... (6,511,449) (6,873,397) (7,821,094)
Acquisition of businesses, net
of cash acquired, including
additional contingent cash
payments...................... (199,858) (316,469) (7,002,547)
Proceeds from sale of property,
plant and equipment........... 572,110 3,823,213 665,311
Other, principally marketable
securities................... (811) (4,753) (9,503,607)
----------- ----------- -----------
Net cash used in investing
activities.................... (6,140,008) (3,371,406) (23,661,937)
----------- ----------- -----------
FINANCING ACTIVITIES:
Cash dividends................. (19,619,806) (18,949,658) (18,133,996)
Exchanges and purchases of
common stock.................. (12,232,407) (9,104,261) (2,334,149)
Notes and loans payable........ (260,780) (9,472,177) (11,298,506)
Exercise of stock options...... 870,676 5,812,857 5,597,692
Other common stock issuance.... 327,144 290,768 244,171
----------- ----------- -----------
Net cash used in financing
activities.................... (30,915,173) (31,422,471) (25,924,788)
----------- ----------- -----------
Effect of exchange rate changes
on cash and cash equivalents.. (2,703,535) (5,688,688) (1,254,611)
----------- ----------- -----------
Increase/(decrease) in cash and
cash equivalents.............. 19,540,518 (7,540,812) (9,741,425)
Cash and cash equivalents,
beginning of year............. 33,793,236 41,334,048 51,075,473
----------- ----------- -----------
Cash and cash equivalents,
end of year................... $53,333,754 $33,793,236 $41,334,048
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993, 1992 and 1991
1. ACCOUNTING POLICIES:
-------------------
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.
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 (in thousands):
<TABLE>
<CAPTION>
Maturity Dates 1993 1992
-------------- ---- ----
<S> <C> <C>
Three months or less................. $ - $ 9,217
Over three months.................... 7,392 8,477
------- -------
$ 7,392 $17,694
======= =======
</TABLE>
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.
Notes and accounts receivable were net of allowance for doubtful
accounts of $15,731,000 and $12,405,000 at December 31, 1993 and 1992,
respectively.
Inventories are valued at the lower of cost or market. Cost
components include labor, 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 utilizing
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 $1,232,000 and $681,000 at
December 31, 1993 and 1992, respectively.
The major classes of inventories were as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Raw materials and supplies........... $ 6,710 $ 6,363
Work in process...................... 644 882
Finished goods in transit............ 8,762 12,140
Finished goods....................... 78,761 100,586
-------- --------
$ 94,877 $119,971
======== ========
</TABLE>
The Company incurs prepaid advertising expense in connection with the
marketing of certain of its direct response products. Such expense is
amortized over the life of the associated product programs which is
generally less than one year.
28
<PAGE>
Depreciation is provided over the estimated useful lives of the
assets utilizing 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>
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>
Intangible assets result from the allocation of the excess cost of
acquisitions over net tangible assets acquired. Intangibles were net of
accumulated amortization of $19,113,000 and $16,883,000 at December 31,
1993 and 1992, respectively. Product lines, net resulting from the
acquisition of Enesco in 1983 were $18,275,000 in 1993 and $19,090,000 in
1992 and are being amortized over the shorter of actual life or 33 years.
Other items are being amortized over 5 years. Goodwill is being amortized
over 20 to 40 years. Product lines and other amortization amounted to
$1,010,000 for 1993 and 1992 and $960,000 for 1991, respectively. Goodwill
amortization was $1,275,000 for 1993, $1,206,000 for 1992 and $1,112,000
for 1991.
Total Company interest paid was $2,015,000 in 1993, $3,418,000 in 1992
and $4,955,000 in 1991.
The Company accrues appropriate U.S. 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 $16,576,000 at December 31, 1993. Had
such reinvested unremitted earnings been distributed during 1993,
applicable income taxes would have amounted to approximately $3,609,000
representing primarily taxes which would be withheld by foreign countries.
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.
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 options................... 41,729 8,125 60,577
---------- ---------- ----------
Average shares fully diluted..... 19,790,580 20,160,391 20,355,284
</TABLE>
29
<PAGE>
2. EMPLOYEE BENEFIT PLANS:
----------------------
The Company and some of its subsidiaries have several employee benefit
plans covering most of their full time U.S. 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 (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Service cost during the period......... $ 1,236 $ 1,629 $ 1,528
Interest cost on the projected
benefit obligation................... 2,492 2,250 2,125
Actual return on plan assets........... ( 1,300) ( 894) ( 1,889)
Net amortization of prior service
cost, net transition liability
and net loss........................ 45 ( 407) 569
------- ------- -------
Pension expense........................ $ 2,473 $ 2,578 $ 2,333
======= ======= =======
</TABLE>
The following table sets forth the plans' funded status and amounts
recognized in the Company's balance sheet at December 31, 1993 and 1992 (in
thousands):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits................................ $28,632 $22,041
Nonvested benefits............................. 1,551 1,140
------- -------
Accumulated benefit obligation................. 30,183 23,181
Additional obligation for future
salary increases............................... 7,102 9,376
------- -------
Projected benefit obligation..................... 37,285 32,557
Fair value of plan assets, primarily
marketable securities.......................... ( 22,247) ( 20,560)
------- -------
Unfunded excess of projected benefit obligation
over plan assets............................... 15,038 11,997
Unrecognized net transition asset/(liability),
being recognized over 15 years................. ( 1,190) ( 1,294)
Unrecognized prior service costs................. 216 162
Unrecognized net gain/(loss)..................... ( 4,843) ( 2,263)
------- -------
Pension liability recognized
in the balance sheet........................... $ 9,221 $ 8,602
======= =======
</TABLE>
30
<PAGE>
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 (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Service cost during the period......... $ 1,624 $ 1,911 $ 1,848
Interest cost on the projected benefit
obligation........................... 1,691 1,773 1,755
Actual return on plan assets........... ( 31) ( 50) ( 38)
Net amortization of prior service cost,
net transition liability and net loss 262 132 107
------- ------- -------
Severance expense...................... $ 3,546 $ 3,766 $ 3,672
======= ======= =======
</TABLE>
The following table sets forth the programs' funded status and amounts
recognized in the subsidiaries' balance sheets at December 31, 1993 and 1992
(in thousands):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits............................... $ 9,563 $ 9,422
Nonvested benefits............................ 1,855 2,357
------- -------
Accumulated benefit obligation................ 11,418 11,779
Additional obligation for future
salary increases.............................. 7,254 7,017
------- -------
Projected benefit obligation.................... 18,672 18,796
Fair value of plan assets....................... ( 209) ( 148)
------- -------
Unfunded excess of projected benefit obligation
over plan assets.............................. 18,463 18,648
Unrecognized net transition asset/(liability),
being recognized over 17 years................ ( 1,132) ( 1,168)
Unrecognized net gain/(loss).................... ( 4,461) ( 3,600)
------- -------
Severance liability recognized in the
balance sheet................................. $12,870 $13,880
======= =======
</TABLE>
31
<PAGE>
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 Company and its
subsidiaries sponsor a single-employer defined benefit post retirement health
care and life insurance plan. Substantially all of the U.S. 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>
<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 December 31, 1993 (in
thousands):
<TABLE>
<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>
32
<PAGE>
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
December 31, 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.
3. 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 September 19,
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 installments, 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.
33
<PAGE>
Stock option activity under all plans is summarized as follows:
<TABLE>
<CAPTION>
Number
of Option
Shares Price
------ ------
<S> <C> <C>
Outstanding at December 31, 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 December 31, 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 December 31, 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 December 31, 1993........ 1,750,614 $ 8.94-$41.12
=========
</TABLE>
At December 31, 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 years ended
December 31, 1993, 1992 and 1991 is as follows:
<TABLE>
<CAPTION>
Common
------
Shares Cost
------ ----
<S> <C> <C>
Balance, December 31, 1990............... 5,678,082 $72,429,903
Purchases................................ - -
Stock option exchanges................... 66,964 2,334,149
Exercise of stock options................ ( 301,229) ( 905,473)
Issue of PAYSOP shares................... ( 3,407) ( 10,255)
Investment Savings Plan - 401(k) issues.. ( 2,964) ( 8,903)
--------- -----------
Balance, December 31, 1991............... 5,437,446 73,839,421
Purchases................................ 163,200 5,318,506
Stock option exchanges................... 107,998 3,785,755
Exercise of stock options................ ( 245,583) ( 774,825)
Issue of PAYSOP shares................... ( 5,596) ( 16,732)
Investment Savings Plan - 401(k) issues.. ( 3,041) ( 9,466)
--------- -----------
Balance, December 31, 1992............... 5,454,424 82,142,659
Purchases................................ 435,800 11,984,127
Stock option exchanges................... 7,336 248,280
Exercise of stock options................ ( 50,713) ( 186,853)
Issue of PAYSOP shares................... ( 5,790) ( 20,844)
Investment Savings Plan - 401(k) issues.. ( 4,440) ( 16,150)
--------- -----------
Balance, December 31, 1993............... 5,836,617 $94,151,219
========= ===========
</TABLE>
34
<PAGE>
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
($683,823, $5,038,032 and $4,692,219 in 1993, 1992 and 1991, respectively),
issuance of PAYSOP shares ($173,085, $168,670 and $128,112 in 1993, 1992
and 1991, respectively) and issuance of 401(k) Plan shares ($117,065,
$95,900 and $96,901 in 1993, 1992 and 1991, respectively) noted above.
An analysis of the change in shareholders' equity from the cumulative
translation adjustment component for the years ended December 31, 1993,
1992 and 1991 is as follows (in thousands):
<TABLE>
<CAPTION>
Cumulative Translation Adjustments
----------------------------------
<S> <C>
Balance, December 31, 1990..................... $12,644
Adjustment for 1991............................ 809
-------
Balance, December 31, 1991..................... 13,453
Adjustment for 1992............................ 8,884
-------
Balance, December 31, 1992..................... 22,337
Adjustment for 1993............................ 5,068
-------
Balance, December 31, 1993..................... $27,405
=======
</TABLE>
4. OTHER INCOME, NET:
-----------------
Other income, net consists of the following (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Investment income............ $ 4,207 $ 6,714 $ 8,206
Gains/(losses) on the sale of
capital assets, net........ 14 1,348 ( 26)
Exchange transaction/
translation gains, net..... 623 653 475
Other assets amortization.... ( 2,285) ( 2,216) ( 1,982)
Other items, net............. 40 411 346
------- ------- -------
$ 2,599 $ 6,910 $ 7,019
======= ======= =======
</TABLE>
35
<PAGE>
5. GEOGRAPHIC INFORMATION AND BUSINESS SEGMENTS:
--------------------------------------------
The Company operates predominately 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 summarize the Company's operations by geographic
area and business segment for 1993, 1992 and 1991 (in thousands):
<TABLE>
<CAPTION>
Geographic Areas
----------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Net sales
United States................ $480,258 $427,687 $388,673
Europe....................... 205,326 250,885 245,167
Other International and
Eliminations............... 65,079 65,500 76,368
-------- -------- --------
Total consolidated....... $750,663 $744,072 $710,208
======== ======== ========
Operating profit*
United States................ $ 50,852 $ 54,790 $ 47,582
Europe....................... 17,840 32,670 32,829
Other International and
Eliminations............... 4,455 3,693 5,825
-------- -------- --------
Operating profit before
corporate expense........ 73,147 91,153 86,236
General corporate expense. ( 7,595) ( 7,720) ( 7,100)
-------- -------- --------
Total consolidated....... $ 65,552 $ 83,433 $ 79,136
======== ======== ========
Identifiable assets
United States................ $298,014 $275,989 $247,701
Europe....................... 81,646 108,842 131,992
Other International and
Eliminations............... 18,759 24,313 33,510
-------- -------- --------
Identifiable assets....... 398,419 409,144 413,203
Corporate assets.......... 31,312 6,474 6,116
-------- -------- --------
Total consolidated....... $429,731 $415,618 $419,319
======== ======== ========
</TABLE>
*Operating profit for 1993 includes restructuring charges of $10,110 for the
United States, $5,140 for Europe and $1,750 for other international
locations.
36
<PAGE>
<TABLE>
<CAPTION>
Business Segments
- -----------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Net sales
Giftware........................ $367,531 $349,250 $329,527
Direct Response................. 129,366 95,535 79,394
Direct Selling.................. 255,120 300,058 301,431
Eliminations.................... ( 1,354) ( 771) ( 144)
-------- -------- --------
Total consolidated.............. $750,663 $744,072 $710,208
======== ======== ========
Operating profit*
Giftware........................ $ 52,593 $ 52,140 $ 48,718
Direct Response................. 10,391 7,340 6,103
Direct Selling.................. 10,163 31,673 31,415
-------- -------- --------
Operating profit before
corporate expense.............. 73,147 91,153 86,236
General corporate expense....... ( 7,595) ( 7,720) ( 7,100)
-------- -------- --------
Total consolidated.............. $ 65,552 $ 83,433 $ 79,136
======== ======== ========
Depreciation and amortization
Giftware........................ $ 5,261 $ 5,236 $ 4,527
Direct Response................. 1,354 1,114 912
Direct Selling.................. 3,761 4,048 4,352
-------- -------- --------
Depreciation and amortization... 10,376 10,398 9,791
Corporate depreciation and
amortization................... 263 214 221
-------- -------- --------
Total consolidated.............. $ 10,639 $ 10,612 $ 10,012
======== ======== ========
Capital expenditures
Giftware........................ $ 2,299 $ 2,493 $ 3,485
Direct Response................. 1,105 852 882
Direct Selling.................. 2,787 3,211 3,364
-------- -------- --------
Capital expenditures............ 6,191 6,556 7,731
Corporate capital expenditures.. 320 317 90
-------- -------- --------
Total consolidated.............. $ 6,511 $ 6,873 $ 7,821
======== ======== ========
Identifiable assets
Giftware........................ $346,309 $315,092 $301,272
Direct Response................. 90,890 69,239 55,911
Direct Selling.................. 91,210 119,647 150,131
Eliminations.................... ( 129,990) ( 94,834) ( 94,111)
-------- -------- --------
Identifiable assets............. 398,419 409,144 413,203
Corporate assets................ 31,312 6,474 6,116
-------- -------- --------
Total consolidated.............. $429,731 $415,618 $419,319
======== ======== ========
</TABLE>
*Operating profit for 1993 includes restructuring charges of $4,000 for
Giftware and $13,000 for Direct Selling.
37
<PAGE>
6. INCOME TAXES (in thousands):
------------
Effective January 1993, the Company adopted Statement No. 109 of the
Financial Accounting Standards Board. Prior year financial statements have
not been restated for the effect of this statement. The effect of adopting
the statement in 1993 on income before income taxes was not material.
The domestic and foreign components of the net deferred tax liability on
income consist of the following:
<TABLE>
<CAPTION>
Deferred Tax Benefit(Liability)
------------------------------
1993
----
<S> <C>
United States
Federal--
Prepaid advertising.......................... ($ 9,743)
Acquisition step-up amortization adjustment.. ( 4,213)
Accelerated depreciation..................... ( 1,463)
Inventory reserve............................ 4,170
Deferred compensation........................ 2,844
Bad debt reserve............................. 1,914
Retirement insurance......................... 1,742
Returns and allowances reserve............... 1,006
Other items, net............................. 1,993
-------
( 1,750)
-------
State--
Prepaid advertising.......................... ( 1,759)
Acquisition step-up amortization adjustment.. ( 906)
Accelerated depreciation..................... ( 307)
Inventory reserve............................ 868
Deferred compensation........................ 602
Bad debt reserve............................. 361
Retirement insurance......................... 375
Returns and allowances reserve............... 215
Other items, net............................. 456
-------
( 95)
-------
Foreign
Accelerated depreciation..................... ( 2,686)
Other items, net............................. 1,025
-------
( 1,661)
-------
Total ($ 3,506)
=======
</TABLE>
38
<PAGE>
The domestic and foreign components of income before income taxes are as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Domestic........................ $46,198 $55,404 $44,389
Foreign......................... 19,942 31,588 36,750
------- ------- -------
$66,140 $86,992 $81,139
======= ======= =======
</TABLE>
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Currently payable:
United States Federal............... $15,658 $15,325 $14,710
United States State................. 4,585 4,081 3,797
Foreign............................. 13,459 20,968 18,888
------- ------- -------
33,702 40,374 37,395
------- ------- -------
Deferred:
United States Federal............... 345 959 ( 1,656)
United States State................. ( 9) 118 ( 130)
Foreign............................. ( 1,031) ( 1,175) 477
------- ------- -------
( 695) ( 98) ( 1,309)
------- ------- -------
$33,007 $40,276 $36,086
======= ======= =======
</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 .9
Impact of nondeductible expenses............... 1.0 1.7 1.5
Other items, net............................... ( .2) ( .1) ( .2)
---- ---- ----
Total effective income tax rate................ 49.9% 46.3% 44.4%
==== ==== ====
</TABLE>
The Company made income tax payments of $33,442,000 in 1993, $41,579,000
in 1992 and $37,483,000 in 1991.
39
<PAGE>
7. COMMITMENTS AND CONTINGENCIES:
-----------------------------
The Company and its subsidiaries incurred rental expense under operating
leases of $6,019,000 in 1993, $7,616,000 in 1992 and $7,254,000 in 1991.
The minimum rental commitments under noncancelable operating leases as of
December 31, 1993 are as follows (in thousands):
<TABLE>
<CAPTION>
Period Aggregate Amount
------ ----------------
<S> <C> <C>
1994.......................... $ 6,184
1995.......................... 4,369
1996.......................... 3,640
1997.......................... 2,591
1998.......................... 2,476
Later years...................... 4,235
-------
Total minimum future rentals............... $23,495
=======
</TABLE>
The Company and its subsidiaries have entered into various licensing
agreements requiring royalty payments ranging from .5% to 15.5% of specified
product sales. Royalty payments under these licensing agreements totaled
$28,100,000 in 1993, $23,900,000 in 1992 and $21,300,000 in 1991. Pursuant to
the various licensing agreements, the future minimum guaranteed royalty
payments due as of December 31, 1993 were $13,910,000 in 1994, $12,400,000 in
1995, and $12,000,000 in 1996.
At December 31, 1993, the Company had formal and informal unused lines of
credit of approximately $100,000,000.
The Company enters into foreign exchange contracts as a hedge against
receivables from international subsidiaries. Market value gains and losses
are recognized, and the resulting credit or debit offsets foreign exchange
gains or losses on those receivables. At December 31, 1993, the Company had
approximately $22,000,000 (notional amount) of foreign exchange hedge
contracts outstanding.
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.
40
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Shareholders and Board of Directors of Stanhome Inc.:
We have audited the accompanying consolidated balance sheet of
Stanhome Inc. (a Massachusetts corporation) and subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements of
income, retained earnings and cash flows for each of the three years
in the period ended December 31, 1993. These financial statements are
the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Stanhome Inc. and subsidiaries as of December 31, 1993 and 1992, and
the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993 in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
Hartford, Connecticut
February 18, 1994
41
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS LAST TEN YEARS
STANHOME INC.
(In thousands, except per share amounts)
1993a. 1992 1991
<S> <C> <C> <C>
Net sales...................................... $750,663 $744,072 $710,208
Cost of sales.................................. 304,660 295,118 281,668
-------- -------- --------
Gross profit................................... 446,003 448,954 428,540
Selling, general and administrative expense.... 380,451 365,521 349,404
-------- -------- --------
Operating profit............................... 65,552 83,433 79,136
Interest expense............................... ( 2,011) ( 3,351) ( 5,016)
Other income, net.............................. 2,599 6,910 7,019
-------- -------- --------
Income before income taxes..................... 66,140 86,992 81,139
Income taxes................................... 33,007 40,276 36,086
-------- -------- --------
Net income..................................... $ 33,133 $ 46,716 $ 45,053
======== ======== ========
Earnings per common share fully diluted:
Income exclusive of the sale of capital assets $ 1.67 $ 2.28 $ 2.21
Gain on sale of capital assets................ - .04 -
-------- -------- --------
Net income.................................... $ 1.67 $ 2.32 $ 2.21
======== ======== ========
Average shares of common stock fully diluted... 19,791 20,160 20,355
Shares of common stock outstanding at year end. 19,392 19,774 19,791
Market value per common share at year end...... $ 33.88 $ 34.75 $ 37.00
Cash dividends paid or provided for............ $ 19,620 $ 18,950 $ 18,134
Dividends per common share..................... $ 1.00 $ .96 $ .92
Capital expenditures........................... $ 6,511 $ 6,873 $ 7,821
Depreciation................................... $ 8,354 $ 8,396 $ 7,940
Working capital................................ $159,299 $160,977 $138,913
Total assets................................... $429,731 $415,618 $419,319
Total long-term liabilities.................... $ 20,312 $ 21,393 $ 23,506
Shareholders' equity........................... $254,366 $256,956 $241,074
Book value per common share.................... $ 13.12 $ 12.99 $ 12.18
Return on average shareholders' equity......... 13% 19% 20%
</TABLE>
Note:
a. Includes a restructuring operating charge of $17 million pre-tax,
$11.5 million after tax or $.58 per share.
The financial data set forth above should be read in connection with the
financial statements, accompanying notes and Management's Discussion on
the preceding pages.
42
<PAGE>
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984
<C> <C> <C> <C> <C> <C> <C>
$675,665 $571,380 $480,374 $433,154 $380,501 $327,888 $333,270
264,609 222,612 187,095 165,645 148,029 137,272 144,016
-------- -------- -------- -------- -------- -------- --------
411,056 348,768 293,279 267,509 232,472 190,616 189,254
323,547 268,478 219,094 202,774 180,133 154,732 154,433
-------- -------- -------- -------- -------- -------- --------
87,509 80,290 74,185 64,735 52,339 35,884 34,821
( 5,394) ( 5,945) ( 8,142) ( 6,146) ( 3,378) ( 3,771) ( 4,473)
8,143 5,305 5,756 3,847 1,587 2,630 2,437
-------- -------- -------- -------- -------- -------- --------
90,258 79,650 71,799 62,436 50,548 34,743 32,785
39,191 35,026 31,159 29,725 24,900 16,684 16,526
-------- -------- -------- -------- -------- -------- --------
$ 51,067 $ 44,624 $ 40,640 $ 32,711 $ 25,648 $ 18,059 $ 16,259
======== ======== ======== ======== ======== ======== ========
$ 2.50 $ 2.23 $ 1.96 $ 1.58 $ 1.17 $ .86 $ .73
.04 - - - - - .05
-------- -------- -------- -------- -------- -------- --------
$ 2.54 $ 2.23 $ 1.96 $ 1.58 $ 1.17 $ .86 $ .78
======== ======== ======== ======== ======== ======== ========
20,112 20,037 20,710 20,677 21,841 21,097 20,842
19,550 19,365 19,953 19,585 18,975 21,225 20,843
$ 33.75 $ 25.88 $ 18.38 $ 15.00 $ 11.38 $ 6.88 $ 5.13
$ 16,172 $ 13,727 $ 11,994 $ 9,106 $ 8,367 $ 6,345 $ 5,992
$ .83 $ .71 $ .605 $ .47 $ .40 $ .30 $ .29
$ 10,925 $ 5,067 $ 5,137 $ 6,741 $ 11,051 $ 7,136 $ 11,815
$ 7,649 $ 6,725 $ 6,660 $ 5,771 $ 5,521 $ 4,768 $ 4,862
$112,716 $ 71,508 $ 76,290 $ 46,993 $ 17,990 $ 32,765 $ 21,041
$391,822 $335,154 $275,525 $244,267 $202,200 $186,967 $180,210
$ 21,691 $ 17,682 $ 11,319 $ 11,743 $ 9,163 $ 7,354 $ 11,797
$211,457 $170,399 $158,169 $130,755 $100,768 $109,742 $ 93,510
$ 10.82 $ 8.80 $ 7.93 $ 6.68 $ 5.31 $ 5.17 $ 4.49
27% 29% 29% 28% 23% 18% 18%
</TABLE>
43
<PAGE> EXHIBIT 21
SUBSIDIARIES OF STANHOME INC.
<TABLE>
<CAPTIONS>
Other Names
Jurisdiction Under Which
Name of Organization Business is Conducted
<S> <C> <C>
Consumer Products Group, Inc. Florida
Cosmhogar, S.A. Spain
Enesco Australia Pty. Ltd. Australia
Enesco Corporation Ohio The Back Door Store
Treasure Chest
Enesco Import GmbH Germany
Enesco International Ltd. Delaware
Enesco International (H.K.) Limited Hong Kong
Enesco Limited United Kingdom
Enesco Worldwide Holdings, Inc. Delaware
Hamilton Gifts Limited, Inc. Florida
Heinz Deichert GmbH Germany
N.C. Cameron & Sons Limited Ontario, Canada
Sports Impressions, Inc. Delaware
Stanhome Capital, Inc. Delaware
Stanhome de Mexico, S.A. de C.V. Mexico
Stanhome European Development
Center, S.A. Spain
Stanhome Iberia, S.A. Spain
Stanhome Inter-American Corporation Delaware
Stanhome Panamericana, C.A. Venezuela
Stanhome S.A. France
Stanhome, S.A. Spain
Stanhome S.p.A. Italy
Stanhome Trading Company Ltd. Slovenia
Stanhome West Germany Limited Delaware
The Hamilton Group Limited, Inc. Florida
The Hamilton Collection, Inc. Florida
Via Vermont Ltd. Delaware
Via Vermont, S.A. de C.V. Mexico
<PAGE>
</TABLE>
All of the above-listed subsidiaries are included in the Company's
consolidated financial statements for all of both 1992 and 1993, except for
Consumer Products Group, Inc., which began operations in May, 1993 and
Stanhome European Development Center, S.A. which was incorporated in
October, 1993.
<PAGE> EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
------------------------------------------
As independent public accountants, we hereby consent to the
incorporation of our reports included in this Form 10-K, into the Company's
previously filed Registration Statements File No. 2-97934, No. 33-11415,
No. 33-42974 and No. 33-50723.
/s/ Arthur Andersen & Co.
Hartford, Connecticut
March 28, 1994
<PAGE> EXHIBIT 24
POWER OF ATTORNEY
Each of the undersigned Directors of Stanhome Inc. whose signature
appears below constitutes and appoints G. William Seawright and Bruce H.
Wyatt, and each of them, his/her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him/her and
in his/her name, place and stead, in any and all capacities, to sign an
annual report on Form 10-K for the fiscal year ended December 31, 1993 with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
March 2, 1994 By: /s/ H. L. Tower
H.L. Tower
Director, Chairman of the
Board
March 2, 1994 By: /s/ Homer G. Perkins
Homer G. Perkins
Director
March 2, 1994 By: /s/ Alla O' Brien
Alla O'Brien
Director
March 2, 1994 By: /s/ Allan G. Keirstead
Allan G. Keirstead
Director, Executive Vice
President and Chief
Administrative & Financial
Officer
March 2, 1994 By: /s/ John F. Cauley, Jr.
John F. Cauley, Jr.
Director
March 2, 1994 By: /s/ Alejandro Diaz Vargas
Alejandro Diaz Vargas
Director, Executive Vice
President
<PAGE>
March 2, 1994 By: /s/ G. William Seawright
G. William Seawright
Director, President and Chief
Executive Officer
March 2, 1994 By: /s/ Thomas R. Horton
Thomas R. Horton
Director
March 2, 1994 By: /s/ Anne-Lee Verville
Anne-Lee Verville
Director
March 2, 1994 By: /s/ Judith R. Haberkorn
Judith R. Haberkorn
Director
March 2, 1994 By: /s/ Janet M. Clarke
Janet M. Clarke
Director
