SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________.
Commission File Number 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 No.)
333 Western Avenue, Westfield, Massachusetts 01085
___________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 413-562-3631
___________________________________________________________________________
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 [_]
June 30,
1995 1994
____ ____
Shares Outstanding:
Common Stock with
Associated Rights 18,791,638 19,260,150
Total number of pages
contained herein 23
Index to Exhibits is
on page 22
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
------------------------------
STANHOME INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
JUNE 30, 1995 and DECEMBER 31, 1994
(Unaudited)
<CAPTION>
June 30, December 31,
1995 1994
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and certificates of deposit $ 26,055,350 $ 19,349,839
Marketable securities, at cost (which
approximates market value) 13,457,919 2,000
Notes and accounts receivable, net 160,293,130 140,696,603
Inventories 115,757,019 116,015,060
Prepaid advertising 45,168,386 40,099,913
Other prepaid expenses 11,069,909 6,513,723
------------ ------------
Total current assets 371,801,713 322,677,138
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, at cost 131,088,621 125,995,626
Less - Accumulated depreciation and
amortization 72,352,609 68,036,607
------------ ------------
58,736,012 57,959,019
------------ ------------
OTHER ASSETS:
Goodwill and other intangibles, net 123,040,663 121,586,984
Other 9,914,861 9,899,491
------------ ------------
132,955,524 131,486,475
------------ ------------
$563,493,249 $512,122,632
============ ============
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
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<PAGE>
<TABLE>
STANHOME INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
JUNE 30, 1995 and DECEMBER 31, 1994
(Unaudited)
<CAPTION>
June 30, December 31,
1995 1994
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes and loans payable $105,075,616 $ 39,022,890
Accounts payable 61,166,883 63,072,000
Federal, state and foreign taxes
on income 28,690,364 37,062,510
Accrued expenses--
Payroll and commissions 18,109,465 17,423,516
Vacation, sick and postretirement
benefits 10,325,043 9,435,495
Royalties 8,396,091 7,974,606
Pensions and profit sharing 6,451,204 9,055,259
Other 35,573,797 37,171,244
------------ ------------
Total current liabilities 273,788,463 220,217,520
------------ ------------
LONG-TERM LIABILITIES:
Foreign employee severance obligations 12,116,836 13,207,097
Pensions 9,759,993 9,302,239
------------ ------------
Total long-term liabilities 21,876,829 22,509,336
------------ ------------
SHAREHOLDERS' EQUITY
Common stock 3,153,530 3,153,530
Capital in excess of par value 38,316,680 37,376,690
Retained earnings 370,561,291 362,946,840
Cumulative translation adjustments ( 26,190,667) ( 27,660,727)
------------ ------------
385,840,834 375,816,333
Less - Shares held in treasury, at cost 118,012,877 106,420,557
------------ ------------
Total shareholders' equity 267,827,957 269,395,776
------------ ------------
$563,493,249 $512,122,632
============ ============
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
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<PAGE>
<TABLE>
STANHOME INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED JUNE 30, 1995 and 1994 (Unaudited)
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
NET SALES $209,489,366 $188,592,017
COST OF SALES 88,567,476 74,485,471
------------ ------------
GROSS PROFIT 120,921,890 114,106,546
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE 97,920,280 93,273,122
------------ ------------
OPERATING PROFIT 23,001,610 20,833,424
Interest expense ( 1,936,735) ( 146,944)
Other income, net ( 438,711) 522,987
------------ ------------
INCOME BEFORE INCOME TAXES 20,626,164 21,209,467
Income taxes 9,457,068 9,601,186
------------ ------------
NET INCOME $ 11,169,096 $ 11,608,281
============ ============
EARNINGS PER COMMON SHARE,
primary and fully diluted $ .59 $ .59
===== =====
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
-4-
<PAGE>
<TABLE>
STANHOME INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 and 1994 (Unaudited)
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
NET SALES $394,358,528 $360,361,022
COST OF SALES 165,993,464 144,291,592
------------ ------------
GROSS PROFIT 228,365,064 216,069,430
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE 191,593,349 180,255,669
------------ ------------
OPERATING PROFIT 36,771,715 35,813,761
Interest expense ( 3,279,032) ( 303,864)
Other income, net ( 596,178) 1,187,315
------------ ------------
INCOME BEFORE INCOME TAXES 32,896,505 36,697,212
Income taxes 15,277,068 16,955,999
------------ ------------
NET INCOME 17,619,437 19,741,213
RETAINED EARNINGS, beginning of
period 362,946,840 338,753,939
Cash dividends, $.53 per share in
1995 and $.50 per share in 1994 ( 10,004,986) ( 9,695,350)
------------ ------------
RETAINED EARNINGS, end of period $370,561,291 $348,799,802
============ ============
EARNINGS PER COMMON SHARE:
Primary and fully diluted $ .93 $1.00
===== =====
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
-5-
<PAGE>
<TABLE>
STANHOME INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 and 1994 (Unaudited)
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net cash provided/(used) by
operating activities ($18,802,821) $21,765,885
----------- -----------
INVESTING ACTIVITIES:
Purchase of property, plant
and equipment ( 5,294,924) ( 2,662,229)
Payments for acquisitions ( 1,429,057) ( 9,481,217)
Proceeds from sale of property,
plant and equipment 741,402 892,077
Other, principally marketable
securities 114,243 7,707,883
----------- -----------
Net cash used by investing activities ( 5,868,336) ( 3,543,486)
----------- -----------
FINANCING ACTIVITIES:
Cash dividends ( 10,004,986) ( 9,695,350)
Exchanges and purchases of common stock ( 11,800,149) ( 8,678,204)
Notes and loans payable 65,075,904 ( 132,738)
Exercise of stock options 805,307 2,927,692
Other common stock issuance 342,512 259,105
----------- -----------
Net cash provided/(used) by
financing activities 44,418,588 ( 15,319,495)
----------- -----------
Effect of exchange rate changes on
cash and cash equivalents 391,717 1,442,758
----------- -----------
Increase/(decrease) in cash and
cash equivalents 20,139,148 4,345,662
Cash and cash equivalents,
beginning of year 19,349,839 53,333,754
----------- -----------
Cash and cash equivalents,
end of quarter $39,488,987 $57,679,416
=========== ===========
SUPPLEMENTAL CASH FLOW DATA
Cash paid for:
Interest $ 2,646,470 $ 369,888
Income taxes $23,768,333 $ 8,319,711
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
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<PAGE>
STANHOME INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The consolidated condensed financial statements and related notes
included herein have been prepared by the Company, without audit except for
the December 31, 1994 condensed balance sheet, which was derived from the
Annual Report on Form 10-K, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. The information furnished reflects all normal
recurring adjustments which are, in the opinion of management, necessary to
a fair statement of the results for the interim periods. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and related notes to consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
1. ACCOUNTING POLICIES:
The Company's financial statements for the three and six months ended
June 30, 1995 have been prepared in accordance with the accounting policies
described in Note 1 to the December 31, 1994 consolidated financial
statements included in the Company's 1994 Annual Report on Form 10-K.
Marketable securities with maturities of three months or less are
considered to be cash equivalents and amounted to $13,434,000 at June 30,
1995 versus none at December 31, 1994. Except for $24,000 of other
investments with terms in excess of 90 days, the cash flows' cash and cash
-7-
<PAGE>
equivalents at June 30, 1995 are equal to the cash and certificates of
deposit and the marketable securities on the June 30, 1995 balance sheet.
Notes and accounts receivable were net of allowance for doubtful accounts
of $18,494,000 at June 30, 1995 and $15,249,000 at December 31, 1994.
The Company recognizes revenue as merchandise is turned over to the
shipper.
2. INVENTORY CLASSES:
The major classes of inventories at June 30 and December 31 were as
follows (in thousands):
June 30, December 3l,
1995 1994
---- ----
Raw materials and supplies $ 9,458 $ 7,071
Work in process 1,116 818
Finished goods in transit 10,676 9,949
Finished goods 94,507 98,177
-------- --------
$115,757 $116,015
======== ========
3. OTHER INCOME, NET:
Other income, net for the quarters and six months ended June 30, 1995
and 1994 consists of the following (in thousands):
Quarters Ended June 30
----------------------
1995 1994
---- ----
Interest income $ 761 $1,124
Other assets amortization ( 1,008) ( 604)
Other items, net ( 191) 2
------ ------
($ 438) $ 522
====== ======
Six Months Ended June 30
------------------------
1995 1994
---- ----
Interest income $1,506 $1,970
Other assets amortization ( 2,017) ( 1,202)
Other items, net ( 85) 419
------ ------
($ 596) $1,187
====== ======
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<PAGE>
4. EARNINGS PER COMMON SHARE (BASIS OF CALCULATION):
Earnings per common share are based on the average number of common
shares outstanding and common share equivalents for the periods covered.
For both years, there was no difference in earnings per share between
primary and fully diluted earnings per share computations. For the second
quarter, the average number of shares utilized in the fully diluted
computation was 18,913,987 and 19,687,813 shares for 1995 and 1994,
respectively. The average number of shares utilized in the fully diluted
computation for the six months ended June 30 was 19,034,754 for 1995 and
19,691,266 for 1994. Both 1995 computations included common share
equivalents of 112,814 and both 1994 computations included common share
equivalents of 289,239. The lower average number of shares for the second
quarter and first six months of 1995 primarily resulted from the
repurchase of shares as part of the Company's repurchase program.
5. FINANCIAL INSTRUMENTS:
The Company enters into various short-term foreign exchange
agreements during the year, all of which are held for purposes other than
trading. The purpose of the Company's foreign currency hedging activities
is to reduce the risk that the eventual settlement of foreign currency
transactions will be adversely affected by changes in exchange rates. The
Company's various subsidiaries import products in foreign currencies and
from time to time will enter into agreements or build foreign currency
deposits as a partial hedge against currency fluctuations on inventory
purchases. Gains and losses on these agreements are deferred and recorded
as a component of cost of sales when the related inventory is sold. At
June 30, 1995, there were no open inventory purchase agreements and
deferred amounts were not material. The Company makes short-term foreign
-9-
<PAGE>
currency intercompany loans to various international subsidiaries and
utilizes agreements to fully hedge these transactions against currency
fluctuations. The cost of these agreements is included in the interest
charged to the subsidiaries and expensed monthly as the interest is
accrued. The intercompany interest eliminates upon consolidation and any
gains and losses on the agreements are recorded as a component of other
income. The Company receives dividends, technical service fees, royalties
and other payments from its subsidiaries and licensees. From time to time,
the Company will enter into foreign currency forward agreements as a
partial hedge against currency fluctuations on these current receivables.
Gains and losses are recognized or the credit or debit offsets the foreign
currency payables. As of June 30, 1995, net deferred amounts on
outstanding agreements were not material and all current agreements have
expiration dates in 1995. The outstanding agreement amounts (notional
value) at June 30, 1995, are as follows (in thousands):
Germany $ 5,073
Canada 4,737
U.S. 1,579
Italy 1,540
France 1,241
-------
Total $14,170
=======
6. LICENSE AGREEMENT:
In January 1995, the Company entered into an agreement with a third
party to license the domestic operations of its Worldwide Direct Selling
Group. The business licensed, known as Stanley Home Products ("SHP"),
marketed home care, personal care and cosmetic items to consumers through
direct selling programs. The agreement calls for the third party to
license the trademarks and formulas of SHP for use in the U.S., Puerto Rico
-10-
<PAGE>
and Canada, and remit to the Company royalties based on sales of the
related products. The licensed areas recorded net sales of approximately
$10 million and $19 million in the second quarter and first six months of
1994, respectively, and operating losses of approximately $.3 million and
$1.1 million in the second quarter and first six months of 1994,
respectively. These sales represented approximately 15% of the Worldwide
Direct Selling Group's first six months 1994 net sales and 5% of the
Company's consolidated net sales for the same period.
The transfer of the businesses was completed in the second quarter of
1995. In connection with this agreement, the Company closed administrative
and distribution facilities in the U.S. and Puerto Rico during the first
quarter of 1995. Management believes that the total costs to exit the SHP
operations, including employee severance benefits, will be offset in 1995
by a comparable amount of gains, approximately $6 million, primarily from
the sale of SHP's distribution facilities. The costs to exit the SHP
operations therefore have not had and are not expected to have a material
adverse impact on the Company's future operating results or financial
condition.
-11-
<PAGE>
STANHOME INC.
QUARTER AND SIX MONTHS ENDED JUNE 30, 1995
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
BUSINESS SEGMENTS of the Company's operations are summarized on Page
20. A discussion and analysis of the segments follows:
GIFTWARE
Giftware Group sales increased for the second quarter and first six
months primarily due to unit volume growth from existing lines and from new
businesses acquired in 1994. The new businesses accounted for 11% of the
year-to-date 28% increase in sales. Sales in the second quarter in the
United States benefited from an expansion of the Company's program of
extended accounts receivable terms on Christmas related merchandise. This
facilitated the shipment of Christmas related orders sooner this year
versus last year. Consequently, the rate of sales increase achieved in the
second quarter is not expected to be maintained for the balance of the
year. International results increased and, including the new businesses,
international sales represented 15% of year-to-date 1995 sales compared to
10% in 1994. Year-to-date 1995 sales of the Precious Moments line
represented 48% of total sales compared to 50% in 1994 and the Cherished
Teddies line represented 10% of year-to-date sales in 1995 compared to 16%
in 1994. For the second quarter and first six months, operating profit
increased greater than the sales increase, as a result of a lower
percentage of selling, general and administrative expenses principally due
to the favorable impact of the sales increase on fixed costs.
-12-
<PAGE>
DIRECT RESPONSE
Direct Response Group sales increased in the second quarter and first
six months due principally to unit volume growth in dolls and figurines.
International sales and operating losses increased for the quarter and year-
to-date. International sales represented 10% of the first six months sales
compared to 9% in 1994. Year-to-date total Group doll sales accounted for
33% of 1995 sales compared to 27% in 1994, while plate sales accounted for
43% of sales in 1995 compared to 58% in 1994. All other categories of
sales, which are primarily figurines, increased to 24% of sales in 1995
compared to 15% in 1994. Market conditions for the direct response
businesses for the Company's products continue to be soft and very
competitive with many product offerings and ads going against weakness in
consumer spending. These conditions have significantly increased
advertising expense to sales due to reduced response rates to ads, a lower
success rate for product introductions, and a resistance by customers to
higher prices. Additionally, product returns and bad debts on installment
billing programs have increased. Reflecting these poor market conditions
combined with postage, paper and advertising rate increases, the Group
recorded an operating loss for the second quarter and first six months.
Advertising expenses increased to 51% of sales in 1995 versus 46% in 1994.
If the market conditions do not improve, it is expected that the Group's
operating performance will not improve for the balance of the year.
DIRECT SELLING
Comparable Direct Selling results for the second quarter and first
six months excluding the United States and Puerto Rico operations, which
in 1995 have been licensed to a third party, are as follows:
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<PAGE>
Second Quarter
--------------
1995 1994 % Change
---- ---- --------
Sales $52,114 $ 56,113 ( 7)
Operating profit 6,586 8,246 ( 20)
First Six Months
----------------
1995 1994 % Change
---- ---- --------
Sales $99,873 $105,974 ( 6)
Operating profit 11,335 14,384 ( 21)
European sales for the quarter decreased 1%, were even with 1994 for the
first six months, and represented 90% of total 1995 sales. Operating
profit decreased 12% for the second quarter and 16% for the first six
months, and represented 93% of total 1995 operating profit. For the
quarter and year-to-date, lower sales in Italy combined with higher
selling, general and administrative expenses in Italy reduced operating
margins. First six months 1995 European local currency sales and
operating profit translated at 1994 average exchange rates would have
resulted in a 5% sales decrease and a 21% operating profit decrease.
Sales for the Mexican and Venezuelan group decreased 42% and 41%,
respectively, for the second quarter and first six months resulting
primarily from the devaluation of the Mexican peso compared to 1994. The
group's second quarter and year-to-date operating profit decreased 70% and
59%, respectively, due to the peso devaluation and the resulting
unfavorable economic impact. The United States and Puerto Rico direct
selling operations in 1995 have been assumed by a third party. The assets
of these businesses, not assumed by the third party, have been and are
being disposed during 1995 and, as of June 30, 1995, amounted to $5.8
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<PAGE>
million in inventories and $1.7 million of net property plant and
equipment. The severance and other exit costs are expected to approximate
$6 million, which should be offset by gains on the sale of assets of the
business.
GENERAL CORPORATE EXPENSE increased for the quarter and first six
months due to higher compensation and benefits consistent with the Company
programs.
INTERNATIONAL ECONOMIES AND CURRENCY
The Latin American operations in Mexico and 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 consistent 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 favorably impacted by higher currency translation rates in 1995
compared to 1994. 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 other risks of doing business abroad, including import or
export restrictions and changes in economic and political climates.
The fluctuations in net sales and operating profit margins from
quarter to quarter are partially due to the seasonal characteristics of the
Company's business segments.
-15-
<PAGE>
INTEREST EXPENSE AND OTHER INCOME, NET
Net interest expense increased due to higher borrowing levels
principally for the 1994 acquisitions and the stock buy back program.
Other assets amortization of goodwill increased due to the impact from the
1994 acquisitions. The year-to-date amortization for Giftware in 1995 was
$1.7 million compared to $.9 million in 1994 and the amortization for
Direct Response was $.3 million in 1995 and $.3 million in 1994. Year-to-
date other income, net last year includes a $.4 million gain on the sale
of a U.S. distribution center.
THE EFFECTIVE TAX RATE year-to-date of 46% was the same as 1994
despite international rate increases, and higher non deductible goodwill
in 1995. This was due principally to earnings mix with a lower ratio of
foreign income to United States income, which has a lower rate.
FINANCIAL CONDITION
The Company has historically satisfied its capital requirements with
internally generated funds and short-term loans. Working capital
requirements have seasonal variations during the year and are generally
greatest during the third quarter.
The major sources of funds from operating activities in the first six
months of 1995 were from net income, depreciation, amortization and lower
inventory levels. The major uses were increased accounts receivable which
increased due to the higher sales volume and marketing programs
(particularly the expansion of the Company's Giftware program of extended
accounts receivable terms on Christmas related merchandise); increased
prepaid expenses from higher advertising in direct response; lower
accounts payable and accrued expenses due principally to timing and the
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<PAGE>
payment of year end payrolls and benefits; and lower accrued taxes due to
timing of payments. The first six months 1995 working capital increases
in receivables, inventories and prepaids compared to 1994 reflect
increases to support higher levels of sales.
The major uses of cash in investing activities in the first six
months of 1995 were for capital expenditures and payments related to
acquisition liabilities. Capital expenditure commitments for $15 million
are forecasted for 1995. Due to the Company's exit from the United States
direct selling business, the Company has for sale four United States
distribution facilities with a total appraised value of approximately $7
million. The Company has an acquisition program, and may utilize funds
for this purpose in the future. 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
from period to period principally represents investment alternatives
versus certificates of deposit, time deposits, and intercompany loans.
The major uses of cash in financing activities were for dividends to
shareholders and purchases of common stock. Purchases of common stock
principally included shares repurchased by the Company. During the first
six months this year, the Company repurchased 406,500 shares for
$11,711,000. 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 conditions, and may utilize funds for this purpose in
the future. On June 6, 1995, the repurchase of up to 2,000,000 shares was
newly authorized and, at June 30, 1995, 1,991,000 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
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<PAGE>
source of funds for the seasonal working capital requirements, investing
activities and financing activities was an increase in borrowings, which
also increased due to reduced intercompany loans which fluctuate depending
on market condition rates. Total stock options outstanding at the
exercise price amounted to $86 million at June 30, 1995 and the Company
could receive these funds in the future if the options are exercised.
In August 1995 the Company entered into a five year $200 million
multicurrency revolving credit agreement with various banks which can be
used for working capital, investing and financing activities. The
agreement has an annual facility and agency fee as well as a margin
supplement for Eurocurrency rate loans where more than one third of the
commitment is utilized. The agreement contains financial covenants that
include requirements, as defined, for minimum net worth, interest coverage
and maximum borrowings. None of these covenants is expected to have an
adverse effect on the Company's ability to operate in the future. The
Company currently believes that cash from operations and available
financing alternatives are adequate to meet anticipated requirements for
working capital, dividends, capital expenditures, the stock repurchase
program and other needs.
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. International currency
fluctuations of $1,470,000 reduced the cumulative translation component
which reduced the shareholders' equity decrease in the first six months of
1995. The translation adjustments to the balance sheet that produced the
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1995 change in the cumulative translation component of shareholders' equity
were decreases in working capital by $802,000; increases in net property,
plant and equipment and other assets by $2,271,000; and decreases in long-
term liabilities by $1,000. 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.
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<PAGE>
STANHOME INC.
SALES AND OPERATING PROFIT BY BUSINESS SEGMENT
FOR THE SECOND QUARTER AND FIRST SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Second Quarter First Six Months
----------------------------- ------------------------------
1995 1994 Percent 1995 1994 Percent
Actual Actual Change Actual Actual Change
------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Net Sales:
Giftware $122,126 $ 91,027 34% $228,081 $177,772 28%
Direct Response 37,019 32,794 13 68,825 58,868 17
Direct Selling 52,114 65,658 (21) 99,873 125,097 (20)
Eliminations ( 1,769) ( 887) ( 2,420) ( 1,376)
-------- -------- -------- --------
Total Net Sales $209,490 $188,592 11% $394,359 $360,361 9%
======== ======== ======== ========
Operating Profit:
Giftware $ 19,913 $ 12,888 55% $ 31,412 $ 23,176 36%
Direct Response ( 852) 2,252 ( 868) 3,801
Direct Selling 6,586 7,973 (17) 11,335 13,288 (15)
Corporate ( 2,645) ( 2,279) (16) ( 5,107) ( 4,451) (15)
-------- -------- -------- --------
Total Operating Profit $ 23,002 $ 20,834 10% $ 36,772 $ 35,814 3%
======== ======== ======== ========
</TABLE>
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
- Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during
the Quarter for which this report is filed.
All other items hereunder are omitted because either such item is
inapplicable or the response to it is negative.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STANHOME INC.
(Registrant)
Date: August 9, 1995 /s/ G. William Seawright
_____________________________________
G. William Seawright
President and Chief Executive Officer
Date: August 9, 1995 /s/ Allan G. Keirstead
_____________________________________
Allan G. Keirstead
Chief Administrative and Financial
Officer
-21-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Reg. S-K
Item 601 Exhibit 10-Q Page No.
_________ _______ _____________
<S> <C> <C>
27 Financial Data Schedule 23
</TABLE>
-22-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 26,055,350
<SECURITIES> 13,457,919
<RECEIVABLES> 178,787,488
<ALLOWANCES> 18,494,358
<INVENTORY> 115,757,019
<CURRENT-ASSETS> 371,801,713
<PP&E> 131,088,621
<DEPRECIATION> 72,352,609
<TOTAL-ASSETS> 563,493,249
<CURRENT-LIABILITIES> 273,788,463
<BONDS> 0
0
0
<COMMON> 3,153,530
<OTHER-SE> 264,674,427
<TOTAL-LIABILITY-AND-EQUITY> 563,493,249
<SALES> 394,358,528
<TOTAL-REVENUES> 394,358,528
<CGS> 165,993,464
<TOTAL-COSTS> 165,993,464
<OTHER-EXPENSES> 188,347,805
<LOSS-PROVISION> 3,245,544
<INTEREST-EXPENSE> 3,279,032
<INCOME-PRETAX> 32,896,505
<INCOME-TAX> 15,277,068
<INCOME-CONTINUING> 17,619,437
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,619,437
<EPS-PRIMARY> .93
<EPS-DILUTED> .93
</TABLE>
