STANHOME INC, 10-K405, 1997-03-26

STANHOME INC
10-K405, 1997-03-26
MISCELLANEOUS NONDURABLE GOODS

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UNITED STATES
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

For the fiscal year ended December 31, 1996

[_] 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 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: $434,631,768 on January 31, 1997.

The number of shares outstanding of the registrant's Common Stock as
of March 17, 1997 was 17,910,161 Shares.

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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, 1996. Part III of this Form 10-K
incorporates by reference certain information from the registrant's
definitive Proxy Statement dated March 14, 1997, for its Annual Meeting of
Stockholders to be held on April 24, 1997.

P A R T I

ITEM 1. BUSINESS.

Through its subsidiaries' or licensed distributors' operations, the
Company sells two primary categories of quality products worldwide using
three distinct distribution channels: (1) designed and licensed
collectible figurines and ornaments, action musicals, decorative home
accents, and other giftware are sold at wholesale to independent retailers;
(2) collectible plates, dolls, figurines, and other giftware and non-
giftware consumer products are sold directly to consumers through direct
response marketing; and (3) manufactured or purchased home and personal
care products, giftware, cosmetics, and other items are sold and
distributed principally through party plan and catalog direct selling
methods.

Giftware and Collectible Products

Wholesale sales of giftware and collectible products are principally
effected through the Company's Enesco Giftware Group which is led by Enesco
Corporation ("Enesco"), a subsidiary of the Company, with its headquarters
offices located in Itasca, Illinois and its principal showroom, large
warehouse and distribution center complex located in nearby Elk Grove
Village, Illinois. In January 1997, Enesco announced an immediate senior
management transition with the naming of Jeffrey A. Hutsell as the new
President and Chief Operating Officer which is intended to augment the
Giftware Group's worldwide management team. Enesco is a leading importer
and distributor of creatively designed giftware items, including
proprietary and licensed lines and collectibles. Its products include
diverse lines of porcelain and cold cast figurines, cottages, musicals and
music boxes, dolls, ornaments, waterballs, miniatures, tableware and
general home accessories, and other giftware primarily produced by
independent manufacturers in the Far East, with total production capacity
in several cases being exclusively devoted to Enesco products.

Enesco sells its products through a nationwide sales organization
comprised of independent sales representatives. Approximately 575
independent sales representatives service defined territories with their
giftware lines. Enesco displays the Giftware Group products in fifteen
showrooms located in the U.S. 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 and gift shops, national
chains, mail order houses, and department stores. Consumer Appreciation,
Inc., an Enesco affiliate, administers the Group's collectors clubs and
promotional advertising. Foreign affiliates and distributors of the Enesco
Giftware Group are presently located in Australia, Brazil, Canada, Chile,
France, Germany, Hong Kong, Italy, Japan, Mexico, The Netherlands, People's
Republic of China, Philippines, Singapore, South Korea, Taiwan, Thailand,
and the United Kingdom.

The product lines of the Giftware Group are based partially on
Enesco's collection of proprietary designs and partially on licenses Enesco
has with independent creative designers. Most of its products, whether or
not produced under license, are protected by trademark and/or copyright
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registrations in the U.S. and many foreign countries. Principal product
trademarks of the Enesco Giftware Group include ENESCO, GROWING UP, THE
ENESCO ARTISTS GALLERY, MARY'S HEN HOUSE, THIS LITTLE PIGGY, SMALL
WORLD OF MUSIC, THE ENESCO TREASURY OF CHRISTMAS ORNAMENTS, CHERISHED
TEDDIES, CALICO KITTENS, VIA VERMONT, SPORTS IMPRESSIONS, TEDDY TOMPKINS,
MOOSE CREEK CROSSING, FRIENDS OF THE FEATHER, CUTE AS A BUTTON, CORAL
KINGDOM, HEAVENLY KINGDOM, MARY'S MOO MOOS, LILLIPUT LANE, and BORDER FINE
ARTS. Among its important licensed lines are PRECIOUS MOMENTS, CHERISHED
TEDDIES, MEMORIES OF YESTERDAY, LUCY & ME, CHAPEAU NOELLE, CALICO KITTENS,
BARBIE, MY BLUSHING BUNNIES, THE HUNCHBACK OF NOTRE DAME, MICKEY &
CO./DISNEY, COCA COLA, GNOMES, PRISCILLA'S MOUSE TALES, McDONALD'S, COW
KISSES, PRETTY AS A PICTURE, HOGS & KISSES, WIZARD OF OZ, PUREBRED PUPS,
ALL THAT JAZZ, IN HIS NAME, MAHOGANY PRINCESS, and GONE WITH THE WIND.

The internal development and licensing of innovative new product
designs lessens Enesco's dependency on existing trademarks or copyrighted
designs. Protection of all of the intellectual property 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 registered trademarks and 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 and CHERISHED TEDDIES product lines which accounted for
approximately 26.5% and 12.5% of the Company's consolidated revenue during
1996, respectively.

Giftware and collectible products sold within the Via Vermont,
Lilliput, and Border Fine Arts branded lines are supplied by manufacturing
plants owned by Stanhome's subsidiaries operating in Mexico, England, and
Scotland, respectively. Manufacturing and distribution operations in
Europe, both affiliates and distributors, are managed by Enesco European
Giftware Group Limited, a subsidiary of the Company, with its headquarters
located in Carlisle, Cumbria, England. Enesco Giftware Group operations
are supplied by these manufacturing plants and Enesco's affiliate in Hong
Kong, Enesco International (H.K.) Limited, which assists Enesco by ordering
and overseeing the production of collectibles and giftware products by
independent manufacturers, which are located principally in China, Hong
Kong, and Taiwan, and to a lesser extent in the Philippines, Indonesia, and
Thailand. In addition, this affiliate assists the Company's direct selling
operations in Europe and Latin America by sourcing premium items and
giftware manufactured in the Far East. The Company presently plans no
changes to this affiliate's operations, although Hong Kong is expected to
revert to Chinese sovereignty in mid-1997. N.C. Cameron & Sons Limited, a
subsidiary of the Company and a member of the Enesco Giftware Group located
in Mississauga, Ontario, Canada, sources its products not only through
Enesco's manufacturing subsidiaries and Enesco International (H.K.) Limited
but also from other Far Eastern, European, and Canadian manufacturers.
Enesco and its affiliates require all manufacturing sources, whether
Company affiliates or contract manufacturers, to comply with quality
standards established and enforced by the Company and its subsidiaries.

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, sourcing
marketing ability, customer service, and price. The Company believes that
Enesco 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, Cast
Art, and Midwest Imports, among others. Enesco European Giftware Group
Limited, which manages businesses under the brand names of Lilliput Lane,
Border Fine Arts, Enesco, and Hamilton Collection, is the third largest
quality giftware distributor in the U.K., behind only Wedgwood and Royal
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Doulton. It underwent a transition in senior management during 1996. It
maintains an employed sales organization based in the United Kingdom along
with a network of distributors and multiple independent sales agents
throughout continental Europe. In 1996, the Company enlarged its presence
in France through the acquisition of the Gault manufacturing and
distribution operations which are now doing business under the name Enesco
France. The Enesco Giftware Group's sales tend to peak in the third and
fourth quarters. As of the end of 1996, the Enesco Giftware Group had a
backlog of firm orders totaling $80,000,000, as compared to $78,400,000 as
of the end of 1995. The Company expects that substantially all of the
existing order backlog will be fulfilled during 1997. 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 Enesco Giftware Group plans to utilize various sales promotions
in 1997 similar to those it employed in prior years.

There has been a long-standing issue in the U.S. as to the
appropriate classification of sales representatives 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 periodically have expressed interest in this area in general, and
some states have challenged from time to time the classification of
positions within the Enesco sales organization, successfully in one recent
case, as well as other contracted service providers. The federal
government is reviewing this issue as well and management expects increased
attention on the status of workers from both federal and state governments
in the future.

Sales of giftware and collectible products through direct mail
marketing and print advertising are made directly to U.S. and Canadian
consumers by The Hamilton Collection, Inc., a subsidiary of the Company,
with its headquarters and warehouse facilities located in Jacksonville,
Florida, and to European collectors by the Hamilton Collection division of
Enesco European Giftware Group Limited (collectively "Hamilton"). The
Hamilton business in the U.K. continued as part of Enesco European Giftware
Group Limited during 1996 but is planned to be closed down within the first
half of 1997.

Hamilton's direct mail promotions and media advertisements offered
approximately 300 new programs during 1996, primarily involving collectible
figurines, plates, and dolls. 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 1995, limited-edition dolls
accounted for approximately 28% of Hamilton's sales. In 1996, its
collectible plates, hand-painted figurines and sculptures, and other non-
doll product categories continued to grow in the aggregate as a percentage
of sales and accounted for 82% of total Hamilton sales. The principal
trademark of Hamilton is THE HAMILTON COLLECTION.

Most of Hamilton's products are advertised and sold increasingly to
targeted audiences as part of a collection series. Generally, the consumer
is offered the opportunity to purchase a single item (often limited
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edition) for which the Company has anticipated a program of related follow-
up items. After the initial purchase, the collector may be offered
additional products within the program over a period of time based upon the
same theme and often utilizing the same artist as the first product
purchased. Advertising costs for 1996 totaled approximately 47% of all
Hamilton sales, and this lowered ratio was principally due to Hamilton
soliciting more to predetermined, target audiences by mail and further
reducing its general media advertising. A key factor in direct response
sales success for Hamilton, especially in the growing sculpture and
figurine category, has been the sale of product with no down payment and,
particularly in the case of dolls and other higher price point items, sales
on installment payments and subsequent shipments in a collection series.
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 Enesco International (H.K.) Limited and
numerous contract manufacturers that comply with quality standards
established and enforced by the Company and its subsidiaries. It has a
current North American customer mailing list of over 1,120,000 buyers and
collectors. Hamilton's principal licensed properties include: PRECIOUS
MOMENTS, SPORTS IMPRESSIONS, CHERISHED TEDDIES, STAR WARS, I LOVE LUCY,
DREAMSICLES, CHEVROLET, NASCAR, 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.

Hamilton is faced with substantial competition in its North American
markets. Competition in direct response marketing exists with respect to
price, product design and innovation, licensing, quality, advertising and
marketing ability, and customer service. The Company believes that
Hamilton is among the handful of prominent U.S. giftware and manufactured
collectibles companies whose products are sold to the public through direct
response mail and media. These industry leaders include Bradford Exchange,
Danbury Mint, Franklin Mint, and Lenox Collection, three of which have
significantly larger sales volumes than Hamilton. The volume of sales of
Hamilton peaks in the third and fourth quarters.

Financial results from Hamilton's new business ventures in 1996,
including multiple catalog promotions and telephone response initiatives,
were well below expectations due to substantially lower response rates from
customers than expected. The Company anticipates significant reductions in
Hamilton's new business development costs in 1997 because of planned scaled
back funding for such investment.

Home and Personal Care Products

Sales of home and personal care products are made directly to
consumers by the Company's Stanhome Direct Selling Group which is now
composed of direct selling operations conducted by subsidiaries of the
Company in Colombia, France, Italy, Mexico, Slovenia, Spain, and Venezuela
and managed out of the Stanhome Worldwide Direct Selling Group, Inc.
offices in Paris, France. These operations distribute and sell, and some
manufacture as well, a broad line of home care items and personal care and
other products, including specialty chemical products for household use,
cleaning equipment, cosmetics, toiletries, lingerie, and general giftware.
For its North American direct selling operations, known as Stanley Home
Products, the Company has licensed the products, trademarks, and business
to CPAC, Inc. for continued selling activity until 2010. The Group's local
direct selling operations in Venezuela and Mexico were affected by highly
inflationary economies in those countries during 1996.
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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 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, 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 Direct Selling Group has proven adaptable in most
of the foreign jurisdictions in which the Company conducts its direct
selling business. Government efforts to broaden social benefit coverage as
well as to claim and impose additional taxes due from the dealers, as
previously reported in Italy, affects the local affiliates' recruiting and
marketing approach and results, in some cases, in additional expense for
them. As a recent example, newly enacted social benefit taxes and
registration requirements implemented by the Italian government in 1996
unfavorably impacted the ability of the Company's Italian subsidiary, among
other direct selling companies in Italy, to recruit and retain dealers. In
April 1996, management introduced new compensation plans and other
incentive programs to counter these effects.

Wholesale products sold in Mexico, Spain, and Venezuela are largely
supplied by manufacturing plants owned by Stanhome's subsidiaries operating
in those countries. The remaining foreign operations are supplied by these
manufacturing plants, and, in Colombia, France, Italy, and Venezuela,
partially by independent suppliers and other local manufacturing licensees.
All products of the Stanhome Direct Selling Group, whether manufactured by
Company affiliates or by contract manufacturers, comply with quality
standards established and enforced by the Company and its subsidiaries.

The Stanhome Direct Selling Group also has license arrangements in
the U.S., Canada, Puerto Rico, and Brazil. Distribution arrangements are
currently in effect with independent distributors of the Company's home and
personal care products in the Caribbean area, Cyprus, Portugal, and
Thailand.

The direct selling operations of the Company are faced with
substantial competition in all markets in which they are engaged.
Competition in direct selling worldwide exists not only with respect to
price and product performance, 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.
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While adequate figures are not available for precise comparisons, the
Company believes that the Stanhome Direct Selling Group is a major factor
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 Group are doing business. This is particularly the case
in Italy, where the Company's local subsidiary is considered a major direct
selling organization. While this operation accounted for less than half of
the Direct Selling Group's total 1996 sales, it produced more than half of
the Group's 1996 operating profits. Sales for the direct selling
subsidiaries tend to peak in the fourth quarter and, to a lesser degree, in
the second quarter.

The Company's direct selling 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. The 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 December 31, 1996, the Company and its U.S. subsidiaries
employed approximately 1,525 persons on a full-time basis. There were also
approximately 575 Enesco sales representatives engaged in selling the
Company's products in the U.S., all of whom are independent contractors.
As of the same date, the Company's foreign subsidiaries employed
approximately 3,025 persons on a full-time basis. Additionally, there were
approximately 54,800 Stanhome Direct Selling Group unit sales leaders and
dealers, most of whom are recognized in their respective foreign countries
as independent contractors.

For financial information about industry segments, including
financial information regarding foreign and domestic operations, see Note 6
of "Notes to Consolidated Financial Statements" included on pages 29, 30
and 31 of the 1996 Annual Report to Stockholders, which is incorporated
herein by reference.

See also "Management's Discussion and Analysis of Financial Condition
and Results of Operations" commencing on page 5 of the 1996 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 within each business segment.

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; headquarters offices of Enesco in Itasca,
Illinois; and showroom, warehouse, and distribution facilities for Enesco's
giftware business in Elk Grove Village, Illinois. Enesco also leases
showrooms in various other locations in the U.S. for the display of its
products. The Hamilton Collection, Inc. leases office headquarters and
warehouse space in Jacksonville, Florida. In addition, the vacated former
manufacturing, office, and warehouse facilities of Stanley Home Products
(U.S.) located in Easthampton, Massachusetts are still owned but are
currently being offered for sale as part of the Company's ongoing worldwide
restructuring.
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Outside of the U.S., the principal physical properties of the
Company's Direct Selling Group subsidiaries, all of which are owned unless
otherwise noted, consist of 9 major manufacturing and/or distribution
facilities located in Colombia (leased), France, Italy, Mexico, Spain, and
Venezuela. Some of these foreign manufacturing plants had, and continue to
have, additional capacity available. In addition, the various direct
selling foreign subsidiaries maintain numerous sales and administrative
offices as well as smaller distribution facilities, most of which are
leased. The principal physical properties relating to the foreign
subsidiaries of the Enesco Giftware Group are for the most part owned.
These include Via Vermont, S.A. de C.V., which owns an assembly and
distribution facility in San Miguel de Allende, Guanajuato, Mexico; and
Enesco European Giftware Group Limited, which owns manufacturing plants and
warehouse facilities in Penrith, Workington, and Carlisle, Cumbria,
England, and in Langholm, Dumfriesshire, Scotland. These manufacturing
facilities are generally operating at or near to capacity.

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.

<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF THE REGISTRANT
Date First
Name Age Positions Elected
<S> <C> <C> <C>
G. William Seawright 55 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.

Allan G. Keirstead 52 Director 4/25/85
Executive Vice President
and Chief Administrative
Officer 4/28/88
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 72 Executive Vice President 4/28/88
Chairman and CEO of Enesco
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Giftware Group 9/06/89

Mr. Freedman previously served as a Vice President of the Company
from January, 1984 to April, 1988. He also has served for many years as
President and Chief Executive Officer of Enesco Corporation, a subsidiary
of the Company, of which Mr. Freedman was a founder in 1959.

Michael W. Burgess 46 Vice President 9/06/95
President and CEO of Hamilton
Direct Response Group 8/01/95

Prior to Mr. Burgess joining the Company in and serving as President
and Chief Executive Officer of The Hamilton Collection, Inc., a subsidiary
of the Company, since August, 1995, he was a founding partner of Stratos
Consulting, a direct response industry consultant, in Destin, Florida since
1994. Previously, Mr. Burgess was General Manager of Franklin Mint -
Europe since 1992, after having earlier served as Corporate Vice President
of Sales Administration and Vice President, U.S. Media Management of
Franklin Mint since 1989 and 1987, respectively.

John J. Dur 45 Vice President 2/01/95
President and CEO of Stanhome
Direct Selling Group 1/16/95

Prior to Mr. Dur joining the Company in January, 1995, he was the
founding principal of Tozai Strategists, a consulting company specializing
in Asian market development. Previously, Mr. Dur served as President and
Chief Executive Officer for both Gilbey Canada, Inc. and Heublein Japan
from 1990 to 1994 and from 1981 to 1989, respectively, both of which are
indirect subsidiaries of Grand Metropolitan plc.

Jeffrey A. Hutsell 43 Vice President 1/22/97
President and COO of Enesco
Giftware Group 1/20/97

Prior to Mr. Hutsell's elections as Vice President and as President
and Chief Operating Officer of Enesco Corporation, a subsidiary of the
Company, he served as Enesco's Executive Vice President, Worldwide Creative
from January, 1992 to January, 1997, Vice President, Creative from January,
1989 until December, 1991, as Vice President, Art from April, 1986 until
December, 1988, and as Vice President, Product Development from August,
1985 to April, 1986.

Bruce H. Wyatt 50 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.

Thomas E. Evangelista 47 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. From December, 1988
until January, 1995 he served as Vice President, Strategic Planning and
Development. Since January, 1995, he has served as Vice President,
Corporate Development and Communications.

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Ronald R. Jalbert 58 Vice President 8/29/79

Mr. Jalbert joined the Company in August, 1979 as its Vice President
of Personnel and from April, 1982 until January, 1995 he served as Vice
President, Human Resources and Public Affairs. Since January, 1995, he has
served as Vice President, Human Resources.

Carmen J. Mascaro 61 Treasurer 2/01/93

Prior to Mr. Mascaro's election as Treasurer, he served as Assistant
Treasurer from January, 1986 to February, 1993.

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 Section
entitled "Stock Market, Dividend and Shareholder Information" appearing on
page 1 of the 1996 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 38 and
39 of the 1996 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 5 through 12 of the 1996 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 Financial
Statements together with Notes and the Report of Independent Public
Accountants appearing on pages 14 through 37 of the 1996 Annual Report to
Stockholders, and is incorporated herein by reference. Also incorporated
herein by reference are the Quarterly results (unaudited) during 1996,
1995 and 1994 set forth on page 13 of the 1996 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
-10-
<PAGE>
"Information as to Board of Directors and Nominees" in the Company's proxy
statement dated March 14, 1997, 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) of Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K.
Information required by this item regarding reporting compliance is
included under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's proxy statement dated March 14, 1997, and is
incorporated herein by reference.

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", "Performance Graph", and "Remuneration of Non-
Employee Directors" in the Company's proxy statement dated March 14, 1997,
and is incorporated herein by reference.

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 14, 1997, and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Information required by this item is set forth under the caption
"Compensation Committee Interlocks and Insider Participation" in the
Company's proxy statement dated March 14, 1997, 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 17 - 19 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(v) in the
Exhibit Index.

(b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Company during the fourth quarter of 1996.

-11-
<PAGE>

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
26th day of March, 1997.

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 26th day of March, 1997 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/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/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

/s/Janet M. Clarke *
Janet M. Clarke Director

/s/Charles W. Elliott *
Charles W. Elliott Director

*By:/s/G. William Seawright
G. William Seawright
Attorney-In-Fact

-13-

<PAGE>
STANHOME INC.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - Incorporated herein by
reference to "Report of Independent Public Accountants" on page 37
of Stanhome's 1996 Annual Report to Stockholders.

FINANCIAL STATEMENTS - All of which are incorporated herein by reference
to Stanhome's 1996 Annual Report to Stockholders.

Consolidated Balance Sheet - December 31, 1996 and 1995

Consolidated Statement of Income For the Years Ended December
31, 1996, 1995 and 1994

Consolidated Statement of Retained Earnings For the Years Ended
December 31, 1996, 1995 and 1994

Consolidated Statement of Cash Flows For the Years Ended December
31, 1996, 1995 and 1994

Notes to Consolidated Financial Statements - December 31, 1996,
1995 and 1994

Quarterly results (unaudited)

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE

SCHEDULE SUPPORTING FINANCIAL STATEMENTS:

<TABLE>
<CAPTION>
Schedule
Number Description
<S> <C>
II Valuation and Qualifying Accounts and Reserves For
the Three Years Ended December 31, 1996

</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 SCHEDULE
----------------------------------------------------

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 20, 1997. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
schedule listed in the accompanying index is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in
our opinion, fairly states 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 LLP

Hartford, Connecticut
February 20, 1997

-15-

<PAGE>
SCHEDULE II
STANHOME INC.
-------------
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
----------------------------------------------
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
--------------------------------------------
<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, 1994
- ------------------------------------
Reserves which are deducted in the
balance sheet from assets to which
they apply -
Reserves for uncollectible
accounts, returns and allowances $15,730,525 $17,887,421(b) $200,619(a) $18,569,751(b) $15,248,814
=========== =========== ======== =========== ===========
Accumulated amortization of
other assets $19,112,842 $ 2,782,503 $ - $ 56,984 $21,838,361
=========== =========== ======== =========== ===========
Other reserves $ 627,416 $ 548,594
=========== ===========

For the year ended December 31, 1995
- ------------------------------------
Reserves which are deducted in the
balance sheet from assets to which
they apply -
Reserves for uncollectible
accounts, returns and allowances $15,248,814 $24,375,167 $ - $18,883,384 $20,740,597
=========== =========== ======== =========== ===========
Accumulated amortization of
other assets $21,838,361 $ 4,201,643 $ - $ 43,356 $25,996,648
=========== =========== ======== =========== ===========
Other reserves $ 548,594 $ 606,192
=========== ===========

For the year ended December 31, 1996
- ------------------------------------
Reserves which are deducted in the
balance sheet from assets to which
they apply -
Reserves for uncollectible
accounts, returns and allowances $20,740,597 $28,736,419 $ 17,277(a) $27,163,243 $22,331,050
=========== =========== ======== =========== ===========
Accumulated amortization of
other assets $25,996,648 $ 4,518,342 $ - $ 23,273 $30,491,717
=========== =========== ======== =========== ===========
Other reserves $ 606,192 $ 679,529
=========== ===========

</TABLE>
Note:
(a) Represents recorded reserves at dates of acquisitions.
(b) Revised to include returns and allowances.

-16-

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(ii) to Form 10-Q filed
for the period ended March 31, 1994.)

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
December 4, 1996.

10(b) 1991 Stock Option Plan, as amended and restated through
December 4, 1996.

10(c)* Special Interim Chief Executive Officer Stock Option
Plan. (Exhibit 10(c) to Form 10-K filed for the period
ended December 31, 1993.)

10(d)* 1996 Stock Option Plan, as amended and restated through
June 4, 1996. (Exhibit 10 to Form 10-Q filed for the
period ended June 30, 1996.)

10(e)* Non-Employee Director Stock Plan. (Exhibit 10 to Form
10-Q filed for the period ended March 31, 1995.)

10(f)* 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(g)* Management Incentive Plan, as amended and restated
effective January 1, 1996. (Exhibit 10(f) to Form 10-K
filed for the period ended December 31, 1995.)

10(h)* 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(i)* Employment Agreement with G. William Seawright. (Exhibit
10(h) to Form 10-K filed for the period ended December
31, 1993.)

10(j)* Retirement Agreement with G. William Seawright. (Exhibit
10(j) to Form 10-K filed for the period ended December
31, 1993.)

-17-

<PAGE>
10(k)* Supplemental Retirement Plan, as amended, with Allan G.
Keirstead. (Exhibit 10(l) to Form 10-K filed for the
period ended December 31, 1994.)

10(l)* Agreement under Supplemental Pension Plan, as amended,
with Ronald R. Jalbert. (Exhibit 10(n) to Form 10-K
filed for the period ended December 31, 1993.)

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 filed for the period ended December 31, 1992.)

10(n)* Description of Severance Arrangement for John J. Dur,
as amended and restated through May 7, 1996. (Exhibit
10(c) to Form 10-Q filed for the period ended March 31,
1996.)

10(o) Description of Severance Agreement for Michael W.
Burgess.

10(p)* Form of Change in Control Agreement. Similar agreements
exist with Allan G. Keirstead, Bruce H. Wyatt, John J.
Dur, Michael W. Burgess, Ronald R. Jalbert, and Thomas E.
Evangelista. (Exhibit 19(c) to Form 10-K filed for the
period ended December 31, 1992.)

10(q)* Change in Control Agreement with G. William Seawright.
(Exhibit 10(r) to Form 10-K filed for the period ended
December 31, 1993.)

10(r)* Change in Control Agreement with certain corporate and
subsidiary executive officers and non-executive officers.
(Exhibit 19(c) to Form 10-K filed for the period ended
December 31, 1991.)

10(s) Stanhome Inc. Supplemental Pension Plan, as amended and
restated through December 16, 1996.

10(t)* Enesco Corporation Supplemental Profit Sharing Plan
effective January 1, 1994. (Exhibit 10 to Form 10-Q filed
for the period ended September 30, 1996.)

10(u)* Stanhome Supplemental Investment Savings Plan, as
amended and restated through April 23, 1996. (Exhibit
10(a) to Form 10-Q filed for the period ended March
31, 1996.)

10(v)* Hamilton Supplemental Investment Savings Plan effective
April 1, 1994. (Exhibit 10(t) to Form 10-K filed for the
period ended December 31, 1994.)

10(w)* 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 1996 Annual Report to the Stockholders of
Stanhome Inc.

-18-

<PAGE>
21 Subsidiaries of Stanhome Inc.

23 Consent of Arthur Andersen LLP

24 Power of Attorney

27 Financial Data Schedule

*Incorporated Herein By Reference

</TABLE>

-19-

<PAGE> EXHIBIT 10(a)

STANHOME INC.
1984 Stock Option Plan, as amended
Through December 4, 1996

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 or any of Stanhome's affiliates, other than any
grant or award of options or other equity securities of Stanhome pursuant
to Section 9 of the Stanhome Inc. 1991 Stock Option Plan or any other plan
of Stanhome that would not result in such Committee member failing to
qualify as a 'disinterested person' under Rule 16b-3 of the Securities
Exchange Act of 1934, as amended, as in force from time to time. 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").

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.
-1-
<PAGE>
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
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

-2-
<PAGE>
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
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 three-year period following such termination as
to the number of Shares which the optionee was entitled to purchase on the
day preceding such termination and, if specified in the certificate of
grant or other instrument evidencing a Non-qualified Stock Option, such
additional number of Shares which the optionee would have become entitled
to purchase during such three-year period (including by reason of Section
10 below) if the optionee's employment had not so terminated, except
further 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's full-time
employment by the Company or any of its subsidiaries shall terminate by
reason of 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 such options shall
be exercisable by the optionee or his or her guardian or legal
representative(s) during the three-year period following any such
termination of employment as to the number of Shares which the optionee was
entitled to purchase on the day preceding such termination and, if
specified in the certificate of grant or other instrument evidencing a Non-
qualified Stock Option, such additional number of Shares which the optionee
would have become entitled to purchase during such three-year period
(including by reason of Section 10 below) if the optionee's employment had
not so terminated, except further that in the case of Incentive Stock
Options the period for such exercise following such termination shall be
limited to twelve months. If the optionee's full-time employment by the
Company or any of its subsidiaries shall terminate by reason of death, 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 such options shall be exercisable, as
of the time of such optionee's death, to the extent such options were
granted to such optionee on or prior to the date which is one year prior to
the date of such optionee's death and any such options shall be exercisable
during the twelve-month period following any such termination of employment
by the optionee's legal representative(s). 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

-3-
<PAGE>
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
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

-4-
<PAGE>
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
(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

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<PAGE>
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.

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<PAGE> EXHIBIT 10(b)
STANHOME INC.
1991 Stock Option Plan, as amended
through December 4, 1996

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.

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
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<PAGE>
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
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.

(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

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<PAGE>
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 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.

(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, 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 such options shall
be exercisable by the optionee or his or her guardian or legal
representative(s) during the three-year period following any such
termination of employment as to the number of Shares which the optionee was
entitled to purchase on the day preceding such termination and, if
specified in the certificate of grant or other instrument evidencing a Non-
qualified Stock Option, such additional number of Shares which the optionee
would have become entitled to purchase during such three-year period
(including by reason of Section 10 below) if the optionee's employment had
not so terminated, 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 a termination of employment by
reason of disability, to twelve months. If the optionee's full-time
employment by the Company or any of its subsidiaries shall terminate by
reason of death, 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 such options shall
be exercisable, as of the time of such optionee's death, to the extent such
options were granted to such optionee on or prior to the date which is one
year prior to the date of such optionee's death and any such options shall
be exercisable during the two-year period following any such termination of
employment by the optionee's legal representative(s). 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.

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<PAGE>
(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
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

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<PAGE>
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
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

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<PAGE>
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 (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.

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<PAGE>
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
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.

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<PAGE> EXHIBIT 10(o)

MICHAEL W. BURGESS SEVERANCE ARRANGEMENT

Michael W. Burgess has an agreement with the Company which provides
for the payment of from twelve months up to twenty-four months of
severance, based upon his then current base annual salary, depending upon
the particular circumstances of his termination of employment at that time
and various subsequent events following the completion or other conclusion
of his present assignment.

<PAGE> EXHIBIT 10(s)

STANHOME INC.
SUPPLEMENTAL PENSION PLAN, AS
AMENDED AND RESTATED THROUGH DECEMBER 16, 1996

WHEREAS, Stanhome Inc., a Massachusetts corporation

(the "Company"), has for many years maintained the Stanhome Inc.

Pension Plan (the "Qualified Plan") for the benefit of its

employees and employees of certain of its subsidiaries which

have, with the consent of the Company, elected to participate in

the Qualified Plan (the "Employers");

WHEREAS, section 401(a)(17) of the Internal Revenue

Code of 1986, as amended (the "Code") limits the amount of annual

compensation which may be taken into account under the Qualified

Plan to $150,000 (as adjusted for increases in the cost of

living) (the "Compensation Limit");

WHEREAS, section 415 of the Code requires that the

maximum pension payable to a participant be limited to $90,000,

subject to adjustment for increases in the cost of living and in

certain other respects (the "Section 415 Limit"); and

WHEREAS, the Company and the Employers desire to adopt

an "excess benefit plan" as defined in section 3(36) of the

Employee Retirement Income Security Act of 1974, as amended

("ERISA") and to provide benefits to "a select group of

management or highly compensated employees," within the meaning

of ERISA, equal to the benefits which, but for sections

401(a)(17) and 415 of the Code, would have been payable to such

participants under the Qualified Plan.

NOW, THEREFORE, the Company and the Employers hereby

agree as follows:

<PAGE>
1. Definitions. All capitalized terms used herein

shall have the respective meanings assigned to such terms by the

Qualified Plan, except as otherwise set forth in the preamble to

or text of this Plan or below:

(a) Plan. This Stanhome Inc. Supplemental Pension
Plan, as from time to time amended.

(b) Trust. A trust entered into between the Employers
and the trustee for the purpose of administering assets
of the Company to be used for the purpose of satisfying
the Employers' obligations under the Plan. Any such
trust shall be established in such manner so as to be a
"grantor trust" of which the Employers are the
grantors, within the meaning of section 671 et. seq. of
the Code.

(c) Cause. (i) The willful and continued failure by a
Participant to substantially perform the Participant's
duties with the Company or an Employer (other than any
such failure resulting from the Participant's
incapacity due to physical or mental illness) after a
written demand for substantial performance is delivered
to the Participant, by his or her employer, which
demand specifically identifies the manner in which the
Participant has not substantially performed his or her
duties, or (ii) the willful engaging by the Participant
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 the Participant's part shall be deemed "willful"
unless done, or omitted to be done, by the Participant
not in good faith and without reasonable belief that
such act, or failure to act, was in the best interest
of the Company or an Employer.

2. Amount of Benefits. If upon the termination of

employment of any Participant, (a) the Pension payable under

Section 5.2 (relating to normal or deferred retirement), 5.3

(relating to early retirement) or 5.6 (relating to vested

termination) of the Qualified Plan, as the case may be, is less

than (b) the Pension so determined but without regard to

(i) the penultimate three sentences of subdivision
(11) of Article 2 of the Qualified Plan, relating to
the Compensation Limit, and

(ii) Section 8.1 of the Qualified Plan, relating to
the Section 415 Limit,

then such Participant shall be entitled to receive from his or

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<PAGE>
her Employer a Pension (the "Supplemental Pension") in an amount

determined as follows:

(A) in the case of a Participant whose employment with
his Employer is terminated for reasons other than
voluntary termination, the Participant's Supplemental
Pension shall be an amount equal to (I) minus (II)
where

(I) equals the Pension determined under the
Qualified Plan determined without regard to

(i) the penultimate three sentences of
subdivision (11) of Article 2 of the
Qualified Plan, relating to the Compensation
Limit,

(ii) Section 8.1 of the Qualified Plan,
relating to the Section 415 Limit,

(iii) clause (i) of Section 4 of Supplement
Three to the Qualified Plan which limits the
application of such Section to participants
who are not "highly compensated employees"
within the meaning of section 414(q) of the
Code; and

(iv) any provision of the Qualified Plan
providing for the cessation of accruals of
any Participant who is a "highly compensated
employee" within the meaning of section
414(q) of the Code; and

(II) equals the Pension payable to the Participant
under the Section 5.2, 5.3 or 5.6 of the Qualified
Plan, as the case may be;

and

(B) in the case of a Participant whose employment with
an Employer is voluntarily terminated by such
Participant, the Participant's Supplemental Pension
shall be an amount equal to (I) minus (II) where

(I) equals the Pension determined under the
Qualified Plan determined without regard to

(i) the penultimate three sentences of
subdivision (11) of Article 2 of the
Qualified Plan, relating to the Compensation
Limit,

(ii) Section 8.1 of the Qualified Plan,
relating to the Section 415 Limit,

(iii) Supplement Three of the Qualified
Plan, relating to certain benefit
enhancements provided to Participants
thereunder as of December 31, 1996, and

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<PAGE>
(iv) any provision of the Qualified Plan
providing for the cessation of accruals of
any Participant who is a "highly compensated
employee" within the meaning of section
414(q) of the Code; and

(II) equals the Pension payable to the Participant
under the Section 5.2, 5.3 or 5.6 of the Qualified
Plan, as the case may be;

provided that in no event shall such Participant's
Pension under the this clause (B) be less than the
Supplemental Pension determined under Section 2 of this
Plan as in effect on December 31, 1996 prior to the
amendment of the Qualified Plan to include Supplement
Three thereto.

Notwithstanding any provision of this Section to the

contrary, a Participant shall not be entitled to a

Supplemental Pension if the Participant's employment was

terminated involuntarily for Cause.

3. Time and Manner of Payment. If the Participant's

Pension under the Qualified Plan is payable in a form of Pension

other than the Pension described in Section 5.2 (a single life

annuity) of the Qualified Plan, the Supplemental Pension shall be

paid in the same form and at the same time, with any survivor's

benefit payable to the same Beneficiary, as the Pension payable

to the Participant under the Qualified Plan. A Pension payable

in a form other than that described in Section 5.2 (describing a

single life annuity) of the Qualified Plan shall be the actuarial

equivalent thereof, computed using the actuarial methods and

factors then in effect under the Qualified Plan. Notwithstanding

the foregoing, in any case in which the lump sum Actuarial

Equivalent of the benefit payable to or on behalf of a

Participant would be less than $3,500, the Committee may, in its

discretion, direct payment of such benefit in a lump sum.

4. Survivors' Benefits. If a Participant who at the

time of his or her termination of employment, including

termination of employment on account of his or her death, is

-4-
<PAGE>
entitled to receive a Pension under Section 5.2, 5.3 or 5.6 of

the Qualified Plan shall die prior to his Pension Starting Date,

and if such Participant would have been entitled to a

Supplemental Pension pursuant to Section 2 of this Plan had such

Participant retired and elected to have his or her Pension

commence immediately before his or her death, then the

Participant's spouse, if such spouse was married to the

Participant on the date of his or her death, shall be entitled to

receive a Pension (the "Supplemental Survivor's Pension") from

the Participant's Employer. The amount of such Supplemental

Survivor's Pension shall be equal to:

(a) in the case of (i) a Participant who dies after his
or her termination of employment or (ii) who dies while
employed by an Employer but before attaining age 55,
the amount which would have been payable to such
surviving spouse had the Participant terminated
employment immediately before his or her death and
elected to have his or her Pension begin as of the date
such Supplemental Survivor's Pension is to commence (as
described below), in the form described in Section
6.1(b) of the Qualified Plan (relating to a 50% joint
and survivor's annuity); or

(b) in the case of a Participant who dies while in the
employ of an Employer and after attaining age 55, one-
half of the Supplemental Pension that would have been
payable to such Participant under Section 2 determined
as if the Participant had terminated his or her
employment immediately before his or her death and
elected to have his or her Pension begin as of the date
such Supplemental Survivor's Pension is to commence (as
described below), in the form of Option 1 set forth in
Section 6.2 of the Qualified Plan (relating to single
life annuities).

The Supplemental Survivor's Pension shall commence on the first

day of any month following the Participant's death as the

surviving spouse shall designate by 30 days advance written

notice, but not before the date on which the Participant would

have attained age 55, nor after April 1 of the year following the

year in which the Participant would have attained age 70-1/2, had

he or she survived. Notwithstanding the foregoing, no

Supplemental Survivor's Benefit shall be payable in respect of a

-5-
<PAGE>
Participant whose Pension under the Qualified Plan would have

been payable under Section 5.6 thereof (relating to vested

termination) and whose employment was involuntarily terminated

for Cause.

5. Amendment and Termination. This Plan shall be

subject to the same reserved powers of amendment and termination

as the Qualified Plan (without regard to any limitations imposed

on such powers by the Code or ERISA), except that no such

amendment or termination shall reduce or otherwise adversely

affect the rights of Participants or Beneficiaries in respect of

amounts accrued hereunder as of the date of such amendment or

termination.

6. Application of ERISA. This Plan is intended to be

an "excess benefit plan" within the meaning of section 3(36) of

ERISA and an unfunded plan maintained primarily for the purpose

of providing deferred compensation to a select group of

management or highly compensated employees within the meaning of

sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and Department

of Labor Regulation Section 2520.104-23. This Plan shall not be a

funded plan, and the Company and the Employers shall be under no

obligation to set aside any funds for the purpose of making

payments under this Plan. Any payments hereunder shall be made

out of the general assets of the Company and the Employers.

7. Administration. The Committee shall be charged

with the administration of this Plan and shall have the same

powers and duties, and shall be subject to the same limitations,

as are described in the Qualified Plan. The provisions of

Article 11 of the Qualified Plan (other than Section 11.3,

relating to qualified domestic relations orders) are hereby

incorporated herein by reference, and shall be applicable as if

-6-
<PAGE>
such provisions were set forth herein.

8. Nonassignment of Benefits. Notwithstanding

anything contained in the Qualified Plan to the contrary, it

shall be a condition of the payment of benefits under this Plan

that neither such benefits nor any portion thereof shall be

assigned, alienated or transferred to any person voluntarily or

by operation of any law, including any assignment, division or

awarding of property under state domestic relations law

(including community property law). If any person shall endeavor

or purport to make any such assignment, alienation or transfer,

the amount otherwise provided hereunder which is the subject of

such assignment, alienation or transfer shall cease to be payable

to any person.

9. No Guaranty of Employment. Nothing contained in

this Plan shall be construed as a contract of employment between

any Employer and any employee or as conferring a right on any

employee to be continued in the employment of any Employer.

10. Adoption By Employers. Any corporation which is

or becomes an "Employer" under the Qualified Plan may, with the

consent of the Company, become an Employer in this Plan by

delivery to the Company of a resolution of its board of directors

or duly authorized committee to such effect, which resolution

shall specify the first Plan Year under the Qualified Plan for

which this Plan shall be effective in respect of the employees of

such corporation.

11. Trust. The Company (and the Employers) shall

establish the Trust and shall at least annually contribute to the

Trust such assets as the Committee determines, in its sole

discretion, are necessary to provide for the Employers' future

-7-
<PAGE>
liabilities created with respect to the amounts credited to the

Accounts established hereunder. The existence of the Trust shall

not relieve the Company or the Employers of their liabilities

under the Plan, but the obligations of the Company and the

Employers under the Plan shall be deemed satisfied to the extent

paid from the Trust.

12. Miscellaneous. (a) Certain Qualified Plan

Provisions. Except as otherwise provided herein, the

miscellaneous provisions contained in Sections 14.5 (relating to

gender and plurals) and 14.6 (relating to applicable law) are

hereby incorporated herein by reference, and shall be applicable

as if such provisions were set forth herein.

(b) Expenses. All costs and expenses incurred in

administering the Plan, including the expenses of the Committee,

the fees of counsel and any agents of the Committee and other

administrative expenses shall be paid by the Company and the

Employers. The Committee, in its sole discretion, having regard

to the nature of a particular expense, shall determine the

portion of such expense which is to be borne by the Company or a

particular Employer.

Participant accrues a benefit hereunder, the Participant's

employer shall withhold from the payments of compensation to the

Participant the taxes imposed upon such Participant pursuant to

section 3121 of the Code in respect of the amount of such

accrual.

(d) Successors and Assigns. The provisions of this

Plan shall bind and inure to the benefit of the Company and each

Employer and its successors and assigns, as well as each

Participant and his or her Beneficiaries and successors.

-8-

<PAGE> EXHIBIT 13
<TABLE>
<CAPTION>

Percentage
Increase
FINANCIAL HIGHLIGHTS 1995 1996 (Decrease)
(In millions, except per share amounts)
<S> <C> <C> <C>
Net sales $830 $845 2%
Operating profit 86 81 (6%)
Net income before taxes 76 69 (9%)
Net income after taxes 42 38 (8%)
Working capital 100 109 9%
Total assets 534 555 4%
Shareholders' equity 267 279 5%
Return on average shareholders' equity 16% 15%
Per share data:
Net income fully diluted $2.22 $2.12 (5%)
Dividends declared $1.06 $1.09 3%
Shareholders' equity at December 31 $14.55 $15.57 7%
Average number of shares fully diluted 18.90 18.12 (4%)
Number of shares outstanding at December 31 18.33 17.90 (2%)
</TABLE>

<TABLE>
<CAPTION>
Stock Market, Dividend and Shareholder Information
1995
Market Price
------------
Quarter Dividend High Low
- -------------------------------------------
<S> <C> <C> <C>
First $.265 $31.50 $26.88
Second .265 33.00 27.13
Third .265 33.38 30.38
Fourth .265 32.38 28.50
</TABLE>

<TABLE>
<CAPTION>
1996
Market Price
------------
Quarter Dividend High Low
- --------------------------------------------
<S> <C> <C> <C>
First $.265 $32.63 $26.25
Second .265 32.00 26.50
Third .28 29.00 25.38
Fourth .28 29.50 25.63
</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. (Source: New York Stock
Exchange Composite Tape.) As of December 31, 1996, there were 3,401 record
holders of the Common Stock.

-1-

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

STANHOME INC.

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.

Segment Sales and Operating Profit
- ----------------------------------

Giftware
- --------
1996 Compared with 1995
- -----------------------
Giftware Group sales increased 5% in 1996 primarily due to unit volume
growth in the United States. Sales from a new business acquired in France
during the first quarter of 1996 accounted for approximately .7% of the sales
increase for the year and the fourth quarter of 1996. The Precious Moments
line represented 40.0% of the 1996 sales compared to 44.3% in 1995 and the
Cherished Teddies line represented 17.8% of 1996 sales compared to 14.4% in
1995. Sales for 1996 in North America benefited from an expansion of the
Company's program of extended accounts receivable terms. The increased
accounts receivable are not expected to have a material impact on bad debts.
International sales increased slightly, including the new French acquisition,
and amounted to 16.4% of 1996 sales compared to 16.5% in 1995. The Group's
backlog of orders at year-end 1996 was approximately at the same level as
1995. Total Group operating profit increased 1.9% for 1996 due to increased
margins from North America on the higher sales volume. European operating
profit and margins decreased due to higher cost of sales and operating
expenses including costs for a key management change. Total Group cost of
sales in 1996 increased to 52.8% of sales versus 52.1% in 1995 due principally
to product mix, and lower margins in Europe due to the overall soft retail
environment. Selling, distribution, general and administrative expenses
amounted to 31.8% of sales in 1996 compared to 32.1% in 1995 and decreased due
to improvement in North America from the benefit on the sales increase on
fixed costs. Partially offsetting this improvement was higher spending in
Europe. The fourth quarter Giftware percentage increase in sales and
operating profit was greater than the full year due to seasonality and timing
of delivery of products from the Far East.

1995 Compared with 1994
- -----------------------
Giftware Group sales increased 18% in 1995 due to new businesses acquired
in the fourth quarter 1994 and to continued unit volume growth from the
Precious Moments line in North America and the Cherished Teddies line
internationally. The new businesses accounted for 1% of the fourth quarter 2%
increase in sales and 8% of the full year 18% increase in sales. The Precious
Moments line represented 44.3% of 1995 sales compared to 44.8% in 1994 and the
Cherished Teddies line represented 14.4% of 1995 sales compared to 14.8% in
1994. Sales for 1995 in North America benefited from an expansion of the
Company's program of extended accounts receivable terms. This facilitated the
shipment of orders for available goods sooner in 1995 versus 1994.
Principally reflecting the impact of earlier shipments in 1995, and an
increase in order frequencies for collectible lines, the Group's backlog of
orders as of year-end 1995 was down approximately 16% or $15 million compared
to 1994. International results increased and, including new businesses,
international sales represented 16.5% of 1995 sales compared to 12% in 1994.

-5-
<PAGE>

Total Group operating profit increased for 1995 led by North America and
benefited from a lower percentage of selling, distribution, general and
administrative expenses (32.1% in 1995 versus 32.6% in 1994) principally due
to the favorable impact of the sales increase on fixed costs. Total Group
cost of sales in 1995 increased to 52.1% of sales versus 51.9% in 1994 due
principally to product mix. The increased operating margins were partially
reduced by low margins from the new businesses. The fourth quarter Giftware
percentage increase in sales and operating profit was less than the nine
months year-to-date due to seasonality, timing of delivery of products from
the Far East and weaker general business conditions.

Direct Response
- ---------------
1996 Compared with 1995
- -----------------------
Direct Response Group sales decreased 4% in very competitive markets with
decreases in both North America and Europe. International sales amounted to
10.8% of sales in 1996 compared to 10.4% in 1995. Doll sales accounted for
19% of 1996 sales compared to 30% in 1995 while plate sales accounted for 29%
of 1996 sales compared to 40% in 1995. All other categories of sales which
are primarily figural increased to 52% of sales in 1996 compared to 30% in
1995. The Precious Moments line represented 11.4% of sales in 1996 compared
to 11.6% of sales in 1995 and the Cherished Teddies line represented 9.6% of
1996 sales compared to 11.7% in 1995. Group operating profit increased to
$389 thousand compared to a $2.1 million loss in 1995. The 1996 North
American operating profit was reduced by operating losses in Europe. The
return to profitability in North America in 1996 was due primarily to a lower
advertising expense compared to 1995 as sales programs were more focused with
a higher percentage of sales from existing customer lists that have a much
higher rate of advertising productivity. European operating losses increased
to $2.8 million. The 1996 loss reflects much higher spending, very poor
market conditions and responses to product offerings as well as severance
costs and write-downs. The European operations are scheduled to be closed
during 1997 and the losses in 1997 are expected to be below the 1996 levels.
Total Group cost of sales increased .6% to 33.2% due to sales mix. Total
selling, distribution, general and administrative expenses decreased to 66.5%
of sales in 1996 compared to 68.8% in 1995, due primarily to lower advertising
expenses in North America. Total Group advertising expenses amounted to 47%
of sales in 1996 compared to 53% of sales in 1995. In addition to the
seasonality of the business, the fourth quarter sales decrease and profit
improvement for the Group reflects a continued focus on more profitable sales
from existing customers, but with lower total overall sales.

Direct Response - New Businesses

Direct Response New Businesses represent the cost in the United States to
develop and test existing products and new product offerings in the
potentially profitable catalog and telephone response markets. The catalog
tests were targeted for the fourth quarter and, in total, were expected to be
unprofitable due to the development costs. The financial results of the tests
were below expectations and substantially less losses for tests are expected
for 1997.

-6-
<PAGE>

1995 Compared with 1994
- -----------------------
Direct Response Group sales increased 11% in very competitive market
conditions due principally to increased product offerings. International
sales and operating losses increased and international sales represented 10%
of total sales. Doll sales accounted for 30% of 1995 sales compared to 31% in
1994, while plate sales accounted for 40% of sales in 1995 compared to 51% in
1994. All other categories of sales, which are primarily figural, increased
to 30% of sales in 1995 compared to 18% in 1994. The Precious Moments line
represented 11.6% of 1995 sales compared to 5.8% in 1994 and the Cherished
Teddies line represented 11.7% of 1995 sales compared to 6.2% in 1994. Market
conditions for the direct response businesses for the Company's products
continued to be soft and very competitive with many product offerings with a
lower success rate and ads going against weakness in consumer spending. Total
Group cost of sales increased to 32.6% of sales in 1995 compared to 30.8% in
1994 principally due to the costs associated with lower success rates for
product offerings. Selling, distribution, general and administrative expenses
increased to 68.8% of sales in 1995 compared to 63.2% in 1994, reflecting the
market conditions. Advertising expenses increased to 53% of sales in 1995
compared to 49% in 1994 due to reduced response rates to ads, a significantly
lower success rate for product introductions which have increased over 1994,
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 expense increases in postage, paper
and advertising rates, and the cost to replace some members of the key
management team, the Group recorded an operating loss for the year.

In the United States, sales taxes are only collected in those states
where Hamilton has a physical presence. Following a 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 there have been U.S. Congress legislative efforts 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
- --------------
1996 Compared with 1995
- -----------------------
Total Direct Selling sales in 1996 decreased 3% and operating profit
decreased 27%. Cost of sales increased as a percentage of sales to 27.7% in
1996 compared to 27.1% in 1995 due primarily to sales mix. Selling,
distribution, general and administrative expenses increased and amounted to
64.1% of sales in 1996 compared to 62.0% in 1995. The percentage increased
due to the impact of lower sales volume on fixed costs and higher levels of
spending that did not result in increased sales. Operating results were down
in both Europe and Latin America.

-7-
<PAGE>

European sales decreased 4% due to local currency declines and
represented 88% of total Group sales. European operating profit decreased 28%
for the year due to higher selling, distribution, general and administrative
expenses and represented 89% of total Group operating profit. The decrease
was due principally to higher levels of selling, distribution, general and
administrative expenses in Italy and the impact of lower European sales volume
on fixed costs. Also contributing was the impact of a full year of expenses
of the European headquarters. A principal cause of decreased sales and lower
margins from Italy, the Group's largest operation, has been the unfavorable
impact on the activity of the Italian independent Dealers of the previously
reported tax assessments made against them and resulting tax litigation with
the Italian government, and a higher tax burden in general. This tax burden
and new social benefit taxes and registration requirements enacted in 1996 are
expected to continue to unfavorably impact the Company's independent Dealer
force and its ability to recruit and retain Dealers. European local currency
sales and operating profit translated at 1995 average exchange rates would
have resulted in a 4% sales decrease and a 29% operating profit decrease.
Sales for the Latin American Group, Colombia (new in 1996), Mexico and
Venezuela increased 3% but operating profit decreased 38%. Colombia incurred
start-up losses of $300 thousand and Venezuelan results decreased due to the
currency devaluations. Fourth quarter Direct Selling results vary from the
total year due to the seasonality of the business.

1995 Compared with 1994
- -----------------------
Comparable Direct Selling results for the fourth quarter and year
excluding the United States and Puerto Rico operations, which in 1995 were
licensed to a third party, are as follows (in thousands):

Fourth Quarter w/o U.S. and Puerto Rico
---------------------------------------
1995 1994 % Change
---- ---- --------
Sales $ 58,841 $ 63,700 ( 8)
Operating Profit 7,932 8,558 ( 7)

Total Year w/o U.S. and Puerto Rico
-----------------------------------
1995 1994 % Change
---- ---- --------
Sales $192,429 $204,462 ( 6)
Operating Profit 21,006 24,032 (13)

The comparable 1995 operating margins decreased .9% versus 1994 primarily
from a higher percentage of selling, distribution, general and administrative
expenses, due to the impact of lower sales on fixed costs. The comparable
cost of sales was 27.1% in 1995 versus 27.0% in 1994.

European sales decreased 5% for the fourth quarter and l% for the year
due to local currency declines, and represented 89% of total 1995 Direct
Selling sales. European operating profit, due to higher selling,
distribution, general and administrative expenses, decreased 8% for the year
and represented 91% of total Direct Selling operating profit for 1995. Lower
sales and margins from Italy, the Group's largest operation, was principally
the cause of the lower total results. Results from Italy for the past several
years have been on a downward trend. A principal cause has been the
unfavorable impact on the activity of the Italian independent Dealers of the

-8-
<PAGE>

previously reported tax assessments made against them and resulting tax
litigation with the Italian government, and a higher tax burden in general.
European local currency sales and operating profit translated at 1994 average
exchange rates would have resulted in a 6% sales decrease and an 11% operating
profit decrease. Sales for the Mexican and Venezuelan group decreased 30% for
the quarter and 33% for the year. Operating profit for this Group decreased
42% for the quarter and 51% for the year. The decreases were primarily due to
the Mexican Peso devaluations during 1995, the Venezuelan Bolivar devaluation
in December 1995, and the resulting unfavorable local economic impacts. In
1995, the United States and Puerto Rico direct selling operations were
licensed to a third party. The assets of these businesses to be disposed, not
transferred to that third party as of December 31, 1995, amounted to $2.0
million in inventories and $l.0 million of net property, plant and equipment.

UNALLOCATED EXPENSES increased for 1996 due to higher general expenses,
primarily outside consultant fees, consistent with the Company's programs.

Unallocated Expenses decreased in 1995 compared to 1994 principally due
to a 1994 $3.5 million charge for contract obligations for officers leaving
the Company. However, compensation, benefits and general expenses have
increased consistent with the Company's programs. Unallocated expenses are
total Company expenses that are not directly allocable to the Group segments.

Interest Expense and Other Income, Net
- --------------------------------------
Interest expense increased due to higher borrowing levels for general
working capital and for stock buybacks. Notes and loans payable going into
1996 were approximately $35.9 million higher than at the start of 1995. Other
assets amortization of goodwill increased due to the continuing impact from
recent acquisitions. The amortization for Giftware in 1996 was $3.8 million
compared to $3.5 million in 1995 and the amortization for Direct Response was
$.7 million in 1996 and 1995, respectively.

Net interest expense in 1995 increased due to higher borrowing levels
principally for the 1994 acquisitions and the stock buyback program. Other
assets amortization of goodwill increased due to the impact from the 1994
acquisitions. The amortization for Giftware in 1995 was $3.5 million compared
to $2.1 million in 1994 and the amortization for Direct Response was $.7
million in 1995 and 1994, respectively.

Income Taxes
- ------------
The effective tax rate for 1996 of 45% was the same as 1995 despite
higher nondeductible goodwill in 1996. This was due principally to earnings
mix with a lower ratio of foreign income to United State income, which has a
lower rate.

The effective tax rate for 1995 of 45% was the same as 1994 despite
international rate increases and higher nondeductible goodwill amortization 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. The effective tax
rate for 1994 was lower than 1993, excluding the impact of the restructuring
charge, due to a favorable earnings mix with a lower ratio of foreign income
to United States income, which has a lower rate.

-9-
<PAGE>

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 1996
and 1995 income statement results compared to prior years for operations in
Europe and North America. Operations in Venezuela and Mexico 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 favorably impacted by translation
rates in total for 1996 and 1995. 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. 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.

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
and lowest at the beginning of the first quarter.

The major sources of funds from operating activities were from net
income, depreciation, and amortization. The major uses were increased
accounts receivable which increased 9% in 1996 and 13% in 1995 due to higher
sales volumes and marketing programs including the expansion of the Company's
Giftware program of extended accounts receivable in 1995 and 1996. Direct
Response net accounts receivable decreased $10 million in 1996 but increased
$6 million in 1995 due primarily to the level of sales in the fourth quarter
and in 1995 to a higher level of products sold on credit. The allowance for
losses on accounts receivable increased in 1995 and 1996 reflecting higher
provisions for bad debts and returns on the increased accounts receivable.
The allowance for losses on accounts receivable decreased in 1994 primarily
due to the deletion of non-paying accounts sooner in 1994 compared to 1993.
Extended credit terms to customers has been a very effective means to improve
service and increase sales and profits and will continue to be utilized in the
future. Inventories increased 6% in 1996. Giftware inventories increased due
to the higher sales volumes. Direct Selling and Direct Response inventories
increased due to sales below anticipated levels. Inventories decreased in
1995 due to lower levels of remaining inventory for the United States Direct
Selling business which was licensed to a third party in 1995. The December
31, 1995 remaining inventory of approximately $2.0 million, net was sold in
1996. Inventories increased 22% in 1994 due to the inventories of businesses
acquired, to support the higher level of sales, product mix in Giftware and
lower than expected sales from Direct Selling. Prepaid expenses decreased in
1996 due to less media spending by the Direct Response Group since the focus
for sales generation has been toward existing customers, that have a much
higher rate of advertising productivity. Total future estimated sales

-10-
<PAGE>

supporting the prepaid advertising amounts have also decreased. Prepaid
expenses in 1995 were at the same level as 1994 which reflected product mix
and the slower growth rate in the Direct Response business. Prepaid expenses
increased 30% in 1994 due to higher advertising in support of sales growth for
the Direct Response Group. The increase in other assets in 1995 and 1996
reflects higher levels of funded retirement benefits and on the balance sheet
to higher levels of goodwill from acquisitions and, in 1996, to currency
fluctuations. Total 1996 current liabilities, excluding loans payable,
increased less than 2% due to timing differences of payments, primarily taxes,
and to less accrued expenses for year-end bonuses. Accrued royalties in 1996
increased due primarily to product sales mix in the fourth quarter. Total
current liabilities excluding loans in 1995 decreased 8% compared to 1994 due
to the payment of severance and termination benefits, lower liabilities from
the U.S. and Puerto Rico businesses, and timing differences of payments,
principally taxes, versus 1994. Total current liabilities excluding loans
increased 17% in 1994 due principally to the liabilities of the businesses
acquired, higher level of sales, and timing difference of payments versus
1993. Long-term liabilities have increased due to higher provisions for
retirement plans.

A major use of cash in investing activities has been for capital
expenditures for capacity expansion for the Giftware Group, information
systems, equipment and office replacements. Also, new acquisitions and
subsequent payments for acquisitions have been a major use of cash in
investing activities. The total purchase provision for the French acquisition
in 1996 was $2.3 million with payments of $1.4 million in 1996. The major use
of cash in investing activities for 1994 was for the acquisition of businesses
which included $9.5 million for the final earn out payment for The Hamilton
Group Limited, Inc. All of the acquisitions were accounted for using the
purchase method. The allocation to goodwill in 1994 from acquisitions was $63
million and is being amortized on a straight-line basis over forty years. The
assets of the three businesses acquired were accounts receivable $10.7
million, inventories $6.2 million, property, plant and equipment $4.8 million
and other $.4 million. The sources of funds for all expenditures were from
cash and investments, and short-term loans. Capital expenditures of $15
million are planned for 1997. The Company has an acquisition program and may
utilize funds for this purpose in the future. Proceeds from the sales of
property, plant and equipment were primarily from sales in the United States
of assets of businesses licensed to a third party in 1995. As of December 31,
1996, one facility, with a net book value of $.3 million, remained to be sold
in the United States. Marketable securities have principally consisted 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.

The major uses of cash in financing activities were 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 4 to the Financial Statements
provides a detailed summary of treasury stock activity. The Company has an
authorized program to purchase shares of common 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, 1996, .8 million shares remained available for purchase under the

-11-
<PAGE>

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. A 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 $85 million at December 31, 1996
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 postretirement 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.

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 are expected to have an adverse effect on the Company's
ability to operate in the future. The Company currently believes that funds
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. No liquidity problems are
anticipated.

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
$6.3 million for 1996 reduced the cumulative translation component which
contributed to the shareholders' equity increase in 1996. The translation
adjustments to the December 31, 1996 balance sheet that produced the 1996
change in the cumulative translation component of shareholders' equity were an
increase in working capital by $.2 million; an increase in net property, plant
and equipment by $.4 million and other assets by $6.3 million; and an increase
in long-term liabilities by $.6 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.

-12-
<PAGE>

Quarterly results (unaudited):
- ------------------------------
(In thousands, except per share amounts)

STANHOME INC.

The following table sets forth information with respect to the
consolidated quarterly results of operations for 1996, 1995 and 1994. 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.

For the Three Months Ended
-------------------------------------------
March 31, June 30, Sept. 30, Dec. 3l,
1996 1996 1996 1996
-------- -------- -------- --------
Net sales...................... $183,040 $217,724 $209,931 $234,297
Cost of sales.................. 78,093 95,095 96,589 100,401
-------- -------- -------- --------
Gross profit................... 104,947 122,629 113,342 133,896
Selling, distribution, general
and administrative expenses.. 94,552 100,009 89,747 109,041
-------- -------- -------- --------
Operating profit............... $ 10,395 $ 22,620 $ 23,595 $ 24,855
======== ======== ======== ========
Net income..................... $ 4,070 $ 10,951 $ 11,453 $ 11,963
======== ======== ======== ========
Earnings per common share:
Primary and fully diluted.... $ .22 $ .60 $ .64 $ .67
======== ======== ======== ========

For the Three Months Ended

-------------------------------------------
March 31, June 30, Sept. 30, Dec. 3l,
1995 1995 1995 1995
-------- -------- -------- --------
Net sales...................... $184,869 $209,490 $205,706 $230,124
Cost of sales.................. 77,426 88,568 92,268 95,622
-------- -------- -------- --------
Gross profit................... 107,443 120,922 113,438 134,502
Selling, distribution, general
and administrative expenses.. 93,673 97,920 90,038 108,178
-------- -------- -------- --------
Operating profit............... $ 13,770 $ 23,002 $ 23,400 $ 26,324
======== ======== ======== ========
Net income..................... $ 6,450 $ 11,169 $ 11,868 $ 12,413
======== ======== ======== ========
Earnings per common share:
Primary and fully diluted.... $ .34 $ .59 $ .63 $ .67
======== ======== ======== ========

For the Three Months Ended

-------------------------------------------
March 31, June 30, Sept. 30, Dec. 3l,
1994 1994 1994 1994
-------- -------- -------- --------
Net sales...................... $171,769 $188,592 $193,255 $236,560
Cost of sales.................. 69,806 74,486 85,032 95,664
-------- -------- -------- --------
Gross profit................... 101,963 114,106 108,223 140,896
Selling, distribution, general
and administrative expenses.. 86,983 93,272 86,245 118,136
-------- -------- -------- --------
Operating profit............... $ 14,980 $ 20,834 $ 21,978 $ 22,760
======== ======== ======== ========
Net income..................... $ 8,133 $ 11,608 $ 13,117 $ 11,198
======== ======== ======== ========
Earnings per common share:
Primary and fully diluted.... $ .41 $ .59 $ .67 $ .58
======== ======== ======== ========

-13-
<PAGE>
CONSOLIDATED BALANCE SHEET

December 31, 1996 and 1995

STANHOME INC.

<TABLE>
<CAPTION>
ASSETS
1996 1995
<S> <C> <C>
CURRENT ASSETS:
Cash (including interest bearing
demand deposits)........................ $ 25,691,205 $ 18,144,308

Certificates of deposit and time deposits. 1,771,224 4,909,618

Notes and accounts receivable, net........ 172,223,624 158,572,959

Inventories............................... 121,400,277 114,294,928

Prepaid advertising....................... 27,420,031 39,665,306

Other prepaid expenses.................... 8,965,056 6,784,465
------------ ------------
Total current assets............ 357,471,417 342,371,584
------------ ------------

PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and improvements..................... 8,024,350 6,891,746
Buildings and improvements................ 55,944,343 56,968,647
Machinery and equipment................... 27,655,576 26,923,110
Furniture and fixtures.................... 40,304,701 37,219,499

Transportation equipment.................. 3,378,271 3,792,139
------------ ------------
135,307,241 131,795,141

Less - Accumulated depreciation
and amortization.................... 76,652,720 70,947,871
------------ ------------
58,654,521 60,847,270
------------ ------------

OTHER ASSETS:
Goodwill and other intangibles, net....... 124,142,092 119,826,382
Other..................................... 14,283,639 11,420,987
------------ ------------
138,425,731 131,247,369
------------ ------------
$554,551,669 $534,466,223
============ ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

-14-
<PAGE>
<TABLE>

LIABILITIES AND SHAREHOLDERS' EQUITY
1996 1995
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Notes and loans payable...................... $ 78,683,814 $ 74,864,065
Accounts payable............................. 66,335,183 64,880,028
Federal, state and foreign taxes on income... 34,320,714 28,758,277
Accrued expenses -
Payroll and commissions.................... 11,745,165 13,658,026
Royalties.................................. 10,320,037 8,587,986
Pensions and profit sharing................ 7,961,482 8,610,616
Vacation, sick and postretirement benefits. 6,866,952 6,979,623
Other...................................... 32,364,910 36,106,020
------------ ------------
Total current liabilities........... 248,598,257 242,444,641
------------ ------------
LONG-TERM LIABILITIES:
Postretirement benefits...................... 14,383,585 12,749,258
Foreign employee severance obligations....... 12,741,670 12,482,097
------------ ------------
Total long-term liabilities......... 27,125,255 25,231,355
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 11)

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............... 44,862,257 43,098,856
Retained earnings............................ 403,805,261 385,008,394
Cumulative translation adjustments........... ( 21,120,631) ( 27,409,482)
------------ ------------
430,700,417 403,851,298
Less - Shares held in treasury, at cost-
Common stock, 7,324,702 shares in
1996 and 6,897,901 in 1995............... 151,872,260 137,061,071
------------ ------------
Total shareholders' equity.......... 278,828,157 266,790,227
------------ ------------
$554,551,669 $534,466,223
============ ============
</TABLE>

-15-
<PAGE>
<TABLE>

CONSOLIDATED STATEMENT OF INCOME

For the Years Ended December 31, 1996, 1995 and 1994

STANHOME INC.
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
NET SALES........................ $844,991,649 $830,189,446 $790,176,497

COST OF SALES.................... 370,177,495 353,884,092 324,988,902
------------ ------------ ------------
GROSS PROFIT..................... 474,814,154 476,305,354 465,187,595

SELLING, DISTRIBUTION, GENERAL
AND ADMINISTRATIVE EXPENSES.... 393,348,851 389,809,785 384,635,879
------------ ------------ ------------
OPERATING PROFIT................. 81,465,303 86,495,569 80,551,716

Interest expense............... ( 8,683,859) ( 7,751,347) ( 2,019,272)
Other income (expense), net.... ( 3,502,594) ( 2,405,707) 2,206,760
------------ ------------ ------------
INCOME BEFORE INCOME TAXES....... 69,278,850 76,338,515 80,739,204

Income taxes................... 30,841,551 34,438,941 36,683,643
------------ ------------ ------------
NET INCOME....................... $ 38,437,299 $ 41,899,574 $ 44,055,561
============ ============ ============
EARNINGS PER COMMON SHARE:
Primary........................ $ 2.12 $ 2.22 $ 2.26
Fully diluted.................. $ 2.12 $ 2.22 $ 2.25
</TABLE>

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF RETAINED EARNINGS

For the Years Ended December 31, 1996, 1995 and 1994

<S> <C> <C> <C>
BALANCE, beginning of year....... $385,008,394 $362,946,840 $338,753,939
Net income..................... 38,437,299 41,899,574 44,055,561
Cash dividends, $1.09 per share
in 1996, $1.06 per share in
1995 and $1.03 per share in
1994.......................... ( 19,640,432) ( 19,838,020) ( 19,862,660)
------------ ------------ ------------
BALANCE, end of year............. $403,805,261 $385,008,394 $362,946,840
============ ============ ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

-16-

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Years Ended December 31, 1996, 1995 and 1994

STANHOME INC.

<CAPTION>
<S> <C> <C> <C>
1996 1995 1994
---- ---- ----
OPERATING ACTIVITIES:
Net income..................... $38,437,299 $41,899,574 $44,055,561
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization
of property, plant
and equipment............... 9,463,445 8,937,501 7,657,414
Allowance for losses on
accounts receivable......... 1,590,453 5,491,783 ( 481,711)
Amortization of other assets. 4,518,342 4,201,643 2,782,503
(Gains)/losses on sale of
capital assets............. 74,842 177,856 ( 1,270,990)
Changes in assets and
liabilities, net of
effects from acquisition
of businesses:
Notes and
accounts receivable....... ( 13,567,856) ( 22,316,617) ( 5,967,513)
Inventories................ ( 5,509,933) 2,213,590 ( 14,922,629)
Prepaid expenses........... 10,266,365 263,199 ( 10,422,429)
Other assets............... ( 2,477,908) ( 1,820,831) ( 603,181)
Accounts payable
and accrued expenses...... ( 7,733,607) ( 10,101,632) 9,596,362
Taxes on income............ 5,673,851 ( 8,268,815) 14,774,597
Foreign employee
severance obligations..... ( 296,534) ( 1,000,530) ( 185,798)
Long-term postretirement
benefits................... 1,634,327 3,447,019 1,859,895
----------- ----------- -----------
Net cash provided by
operating activities.......... 42,073,086 23,123,740 46,872,081
----------- ----------- -----------
INVESTING ACTIVITIES:
Purchase of property,
plant and equipment........... ( 9,266,816) ( 13,464,138) ( 16,755,519)
Payments for acquisition
of businesses,
net of cash acquired........... ( 1,563,039) ( 1,860,670) ( 78,674,108)
Proceeds from sales of property,
plant and equipment............ 4,048,719 4,100,911 4,022,600
Other, principally
marketable securities.......... - ( 3,072) 7,816,024
----------- ----------- -----------
Net cash used by
investing activities........... ( 6,781,136) ( 11,226,969) ( 83,591,003)
----------- ----------- -----------
FINANCING ACTIVITIES:
Cash dividends.................. ( 19,640,432) ( 19,838,020) ( 19,862,660)
Exchanges and purchases
of common stock................ ( 15,178,033) ( 31,648,862) ( 12,884,838)
Notes and loans payable......... 1,824,220 36,533,007 31,647,562
Exercise of stock options....... 1,814,174 6,314,736 3,668,231
Other common stock issuance..... 316,071 415,778 308,849
----------- ----------- -----------
Net cash provided/(used) by
financing activities........... ( 30,864,000) ( 8,223,361) 2,877,144
----------- ----------- -----------
Effect of exchange rate changes
on cash and cash equivalents... ( 19,447) 28,677 ( 142,137)
----------- ----------- -----------
Increase/(decrease) in cash and
cash equivalents............... 4,408,503 3,702,087 ( 33,983,915)
Cash and cash equivalents,
beginning of year.............. 23,051,926 19,349,839 53,333,754
----------- ----------- -----------
Cash and cash equivalents,
end of year.................... $27,460,429 $23,051,926 $19,349,839
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

-17-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1996, 1995 and 1994

1. ACCOUNTING POLICIES:
-------------------
The accompanying consolidated financial statements include the accounts
of Stanhome Inc. and its subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated in the consolidated financial
statements. The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of Management's
estimates. Actual results could differ from those estimates.

Assets and liabilities of the Company's foreign subsidiaries, other than
those located in highly inflationary countries, are translated at the exchange
rate on the balance sheet date, while statement of income items are translated
at the average exchange rates for the year. Translation gains and losses are
reported as a component of shareholders' equity. Transaction gains and losses
are reported in the statement of income. For foreign subsidiaries in highly
inflationary countries, a combination of current and historical rates is used
to determine foreign currency gains and losses resulting from financial
statement translation. These gains or losses are reported directly in the
statement of income.

The carrying amount of cash and certificates of deposit and notes and
loans payable approximate fair value.

The Company considers all highly liquid securities, including
certificates of deposit, with maturities of three months or less, when
purchased, to be cash equivalents, except for $2,000 of deposits in 1996 and
1995, respectively, with terms in excess of three months.

The Company recognizes revenue as merchandise is turned over to the
shipper and a provision for anticipated merchandise returns and allowances is
recorded based upon historical experience. Amounts billed to customers for
shipping and handling orders are netted against the associated costs. 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 reserves for uncollectible
accounts, returns and allowances of $22,331,000 and $20,741,000 at December
31, 1996 and 1995, respectively.

Inventories are valued at the lower of cost or market. Cost components
include labor, manufacturing overhead and amounts paid to suppliers of
materials and products. 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 $171,000 and $783,000 at December 31, 1996 and
1995, respectively.

-18-
<PAGE>

The major classes of inventories were as follows (in thousands):

1996 1995
---- ----
Raw materials and supplies........... $ 8,259 $ 7,312
Work in process...................... 1,141 1,237
Finished goods in transit............ 17,028 16,215
Finished goods....................... 94,972 89,531
-------- --------
$121,400 $114,295
======== ========

The Company prepays advertising expenses in connection with the marketing
of certain of its direct response products. Such expense is amortized over
the estimated life of the associated product programs. Some programs extended
over one year. Prepaid advertising as a percentage of total advertising
expenditures for the year amounted to 50% and 51% at December 31, 1996 and
1995, respectively. Management periodically evaluates the estimated lives
used to amortize the prepaid advertising costs and adjusts the amortization
accordingly.

Concentration of risk for the Company exists in revenue from major
product lines, particularly in the Giftware segment, sources of supply of
inventory, markets and geographic areas, and trade receivables. The majority
of product sales for the Giftware and Direct Response Groups are under
licensed rights from third parties. The two largest licensed lines
represented approximately 39% of the Company's total sales for 1996. A large
portion of acquired inventory is sourced from the Far East, principally China.
A significant portion of the Company's operations is located in Europe. The
Giftware and Direct Response segments offer extended credit terms to their
customers. Prepaid advertising is recorded based on future estimated sales
from product programs. The Company continually monitors and manages the risks
associated with all these activities.

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:

Range in Years
--------------
Land improvements.................... 10-15
Buildings and improvements........... 15-40
Machinery and equipment.............. 5-12
Furniture and fixtures............... 5-10
Transportation equipment............. 3-8

-19-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1996, 1995 and 1994

Intangible assets, primarily goodwill, result from the allocation of the
excess cost of acquisitions over the value of net tangible assets acquired.
Intangible assets are amortized using the straight-line method principally
over 20 to 40 years. The Company periodically evaluates whether events or
circumstances have occurred indicating that the net book value of goodwill has
been impaired. When factors indicate that goodwill should be evaluated for
possible impairment, the Company uses an estimate of the acquired business'
undiscounted future net cash flows compared to the carrying value of goodwill
to determine if a write-off is necessary. Intangible assets were net of
accumulated amortization of $30,492,000 and $25,997,000 at December 31, 1996
and 1995, respectively. Business segment amortization was as follows (in
thousands):

1996 1995 1994
---- ---- ----
Giftware......................... $3,843 $3,527 $2,108
Direct Response.................. 666 666 666
Direct Selling................... 9 9 9
------ ------ ------
Total Consolidated............... $4,518 $4,202 $2,783
====== ====== ======

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 $22,040,000 at December 31, 1996. Had such
reinvested unremitted earnings been distributed during 1996, applicable income
taxes would have amounted to approximately $4,743,000 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 1996, 1995 and 1994 were as follows (in thousands):

1996 1995 1994
Primary ---- ---- ----
Average common shares outstanding.... 18,080 18,773 19,323
Stock options........................ 12 78 202
------ ------ ------
Average shares primary............... 18,092 18,851 19,525

Fully diluted
Additional dilutive effect of
stock options....................... 28 46 17
------ ------ ------
Average shares fully diluted......... 18,120 18,897 19,542

-20-
<PAGE>

2. NOTES AND LOANS PAYABLE:
-----------------------
Notes and loans payable and weighted-average interest rates at December
31, 1996 and 1995 are as follows (in thousands):

1996 1995
---- ----
Interest Interest
Balance Rate Balance Rate
------- -------- ------- --------
Notes under uncommitted
bank lines............... $28,684 6.3% $60,364 6.9%

Notes under committed
bank lines............... 50,000 5.9% 14,500 5.7%
------- ---- ------- ----
Total................. $78,684 6.1% $74,864 6.6%
======= ==== ======= ====

Total interest paid was $8,296,000 in 1996, $7,339,000 in 1995 and
$1,860,000 in 1994.

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. At December
31, 1996 the Company was in compliance with and there were $50 million of open
borrowings under the revolving credit agreement.

At December 31, 1996, the Company had formal and informal unused lines of
credit of approximately $325,000,000.

3. EMPLOYEE BENEFIT PLANS:
----------------------
The Company and one of its subsidiaries have an employee defined benefit
plan covering most of their full-time 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 Company has various non-qualified supplemental retirement plans.
Benefits from these supplemental plans will be paid from the Company's assets.
The Company has established grantor trusts to provide funding for some of
these benefits. The trusts are irrevocable and assets contributed can only be
used to pay such benefits with certain exceptions. The assets held in these
trusts at December 31, 1996 and 1995 amounted to $12.4 million and $9.1
million, respectively. These assets are included in other assets.

-21-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1996, 1995 and 1994

Pension expense for the domestic plans includes the following components
(in thousands):

1996 1995 1994
---- ---- ----
Service cost during the period........... $ 818 $ 2,263 $ 2,151
Interest cost on the projected
benefit obligation..................... 2,382 2,639 2,620
Actual return on plan assets............. ( 2,855) ( 4,601) ( 48)
Net amortization of prior service cost,
net transition liability and net loss.. 715 2,751 ( 1,675)
Special termination benefits enhancement. - 888 -
------- ------- -------
Pension expense.......................... $ 1,060 $ 3,940 $ 3,048
======= ======= =======

The following table sets forth the plans' funded status and amounts
recognized in the Company's balance sheet at December 31, 1996 and 1995 (in
thousands):

1996 1995
---- ----
Actuarial present value of benefit obligations:
Vested benefits................................... $35,393 $31,962
Nonvested benefits................................ - 446
------- -------
Accumulated benefit obligation.................... 35,393 32,408
Additional obligation for future salary increases... 5,286 7,447
------- -------
Projected benefit obligation........................ 40,679 39,855
Fair value of plan assets, primarily
marketable securities............................. ( 27,541) ( 25,244)
------- -------
Unfunded excess of projected benefit obligation
over plan assets.................................. 13,138 14,611
Unrecognized net transition asset/(liability),
being recognized over 15 years.................... ( 103) ( 123)
Unrecognized prior service costs.................... ( 1,502) 122
Unrecognized net gain/(loss)........................ 2,078 ( 643)
------- -------
Pension liability recognized in the balance sheet... $13,611 $13,967
======= =======

The above schedules include various non-qualified supplemental retirement
plans. The weighted-average discount rate used to measure the projected
benefit obligation and the rate of increase in future compensation levels both
range from 5% to 7.25% and the expected long-term rate of return on assets is
9%.

In January 1995, the Company entered into an agreement with a third party
to license the domestic operations of its Direct Selling Group (See Note 10).
As a result, 336 participants of the qualified pension plan either retired or
were terminated in 1995. The impact of the plan curtailment was an
approximate gain of $477,000 which was offset by certain enhanced retirement
benefits provided to affected participants amounting to approximately
$900,000.

-22-
<PAGE>

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):

1996 1995 1994
---- ---- ----
Service cost during the period......... $ 997 $ 1,102 $ 1,213
Interest cost on the projected benefit
obligation........................... 1,050 989 1,129
Actual return on plan assets........... ( 106) ( 25) ( 44)
Net amortization of prior service cost,
net transition liability and net loss ( 207) ( 234) 344
------- ------- -------
Severance expense...................... $ 1,734 $ 1,832 $ 2,642
======= ======= =======

The following table sets forth the programs' funded status and amounts
recognized in the subsidiaries' balance sheets at December 31, 1996 and 1995
(in thousands):
1996 1995
---- ----
Actuarial present value of benefit obligations:
Vested benefits............................... $ 8,627 $ 7,085
Nonvested benefits............................ 1,554 1,085
------- -------
Accumulated benefit obligation................ 10,181 8,170
Additional obligation for future
salary increases.............................. 2,804 2,552
------- -------
Projected benefit obligation.................... 12,985 10,722
Fair value of plan assets....................... ( 312) ( 224)
------- -------
Unfunded excess of projected benefit obligation
over plan assets.............................. 12,673 10,498
Unrecognized net transition asset/(liability),
being recognized over 17 years................ - ( 23)
Unrecognized net gain/(loss).................... ( 425) 1,450
------- -------
Severance liability recognized in the
balance sheet................................. $12,248 $11,925
======= =======

The discount rates used to measure the foreign projected benefit
obligation range from 5% to 15.5%, the rate of increase in future compensation
levels ranges from 1.2% to 12.5% and funding is not significant.

In addition to providing pension benefits, the Company sponsors a defined
benefit postretirement health care and life insurance plan. Employees may
become eligible for the benefits under this plan if they reach allowable
retirement age while working for the Company. 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.

-23-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1996, 1995 and 1994

Net periodic postretirement benefit expense includes the following
components (in thousands):

1996 1995 1994
---- ---- ----
Service cost........................ $ 100 $ 90 $ 280
Interest cost on accumulated
postretirement benefit obligation. 70 60 170
------- ------- -------
Net periodic postretirement
benefit expense.................. $ 170 $ 150 $ 450
======= ======= =======

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, 1996 and
1995 (in thousands):

1996 1995
---- ----
Accumulated postretirement benefit obligation:
Retirees.................................... $ 2,252 $ 2,560
Fully eligible active plan participants..... 83 103
Other active plan participants.............. 1,117 837
------- -------
3,452 3,500
Plan assets at fair value..................... - -
------- -------
Accumulated postretirement benefit obligation
in excess of plan assets.................... 3,452 3,500
Unrecognized net loss, prior service cost
and net transition liability................ - -
------- -------
Accrued postretirement benefit liability
recognized in the balance sheet............. $ 3,452 $ 3,500
======= =======

A 25% annual rate of increase in the per capita cost of covered health
care benefits was assumed for 1997. 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 postretirement benefit obligation as of
December 31, 1996 by $170,000 and the aggregate of the service and interest
cost components of the net postretirement benefit expense for the year then
ended by $50,000.

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 6%.

In addition, 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
$8,889,000 in 1996, $10,766,000 in 1995 and $10,846,000 in 1994.

-24-
<PAGE>

4. 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 1996, the shareholders approved a new Stock Option Plan previously
adopted by the Board of Directors which provides for both incentive and non-
qualified stock options. Options for up to 1,500,000 shares of common stock
may be granted under the 1996 Plan. The plan provides that non-qualified
options for 1,500 shares of common stock be granted annually from 1996 through
1998 to each non-employee Director then serving. The Company also has 1991
and 1984 Stock Option Plans, which provide for both incentive and non-
qualified stock options, under which options for up to 2,000,000 and 3,000,000
shares of common stock, respectively, may be granted. No further options may
be granted under the 1984 Plan. All three plans provide for the granting to
selected key employees, and non-employee Directors in the case of the 1996 and
1991 Plans, of options to acquire shares of common 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 under the 1984 and 1991 Plans
options have been exercisable only after a one year waiting period with
vesting in four equal annual installments, and expire ten years from the date
of grant. Under the 1996 Plan, options become exercisable only after a six
month waiting period and upon the Company's achievement of certain stock value
performance criteria at any time during the first eight years after the date
of the grant. On the eighth anniversary of the grant, all outstanding options
granted under the 1996 Plan will become exercisable. Options granted under
the 1996 Plan will 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 non-qualified 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.

At December 31, 1996, the Company has four stock-based compensation (fixed
option) plans, which are described above. The Company applies the intrinsic
value based method allowed under APB Opinion No. 25 and related Interpretations
in accounting for its plans. Accordingly, no compensation cost has been
recognized for its fixed stock option plans. Had compensation cost for the
Company's four stock-based compensation plans been determined applying the fair
value based method provided for in FASB Statement No. 123, which became
effective in 1996, the Company's net income and earnings per common share for
1996 and 1995 would have been reduced to the pro forma amounts indicated below
(in thousands, except per share amounts):

-25-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1996, 1995 and 1994

1996 1995
---- ----
Net income................. As reported $38,437 $41,900
................. Pro forma $37,690 $41,444
Earnings per common share
fully diluted............ As reported $2.12 $2.22
............ Pro forma $2.08 $2.19

The options granted in 1996 were under the 1996 and 1991 Plans and all
options granted in 1995 were under the 1991 Plan. The fair value of each option
grant in 1996 and 1995 was estimated at the time of grant using the Black-
Scholes option pricing model with the following weighted-average assumptions:

1996 1995
---- ----
Dividend yield yearly 4.0% 4.0%
Expected volatility 20% 23%
Risk free interest rate 6.43% 6.97%
Expected life (years) 7.2 4.0
Weighted-average grant-date
fair value of options granted
during the year, per share $6.21 $5.56

Stock option status and activity under the Company's four stock-based
compensation (fixed option) plans is summarized as follows:

Weighted-
Average
Shares Exercise
Fixed Options (000's) Price
------------- ------- --------
Outstanding at December 31, 1993............ 1,751 $28.55
Granted................................... 744 35.37
Exercised................................. ( 140) 23.88
Forfeited................................. ( 52) 33.49
-----
Outstanding at December 31, 1994............ 2,303 30.93
Granted................................... 825 27.96
Exercised................................. ( 230) 26.16
Forfeited................................. ( 245) 33.29
-----
Outstanding at December 31, 1995............ 2,653 30.20
Granted................................... 395 29.50
Exercised................................. ( 78) 21.18
Forfeited................................. ( 155) 30.60
-----
Outstanding at December 31, 1996............ 2,815 $30.33
=====

-26-
<PAGE>

1996 1995 1994
Shares Shares Shares
Fixed Options (000's) (000's) (000's)
------------- ------- ------- -------
Options exercisable at year-end......... 1,862 1,213 1,104

A summary of information about fixed stock options outstanding at December
31, 1996 is as follows:

Options Outstanding Options Exercisable
----------------------------------- ----------------------
Weighted-
Number Average Weighted- Number Weighted-
Range of Outstanding Remaining Average Exercisable Average
Exercise at 12/31/96 Contractual Exercise at 12/31/96 Exercise
Prices (000's) Life Price (000's) Price
- -------- ----------- ----------- -------- ----------- --------
$11 to $12........ 18 .8 years $11.13 18 $11.13
$20 to $21........ 46 1.6 20.13 46 20.13
$26 to $30........ 1,616 6.9 28.01 1,014 28.03
$31 to $36........ 1,135 6.6 34.34 784 34.24
$11 to $36........ 2,815 6.7 30.33 1,862 30.29

An analysis of treasury stock transactions for the years ended December
31, 1996, 1995 and 1994 is as follows (in thousands):

Common
Shares Cost
------ ----
Balance, December 31, 1993......................... 5,837 $ 94,151
Purchases.......................................... 385 12,731
Stock option exchanges............................. 4 154
Exercise of stock options.......................... ( 140) ( 578)
Issue of PAYSOP shares............................. ( 6) ( 23)
Investment Savings Plan - 401(k) issues............ ( 3) ( 14)
----- --------
Balance, December 31, 1994......................... 6,077 106,421
Purchases.......................................... 1,061 31,544
Stock option exchanges............................. 4 105
Exercise of stock options.......................... ( 230) ( 949)
Issue of PAYSOP shares............................. ( 6) ( 27)
Investment Savings Plan - 401(k) issues............ ( 6) ( 26)
Non-employee Director Stock Plan issues............ ( 2) ( 7)
----- --------
Balance, December 31, 1995......................... 6,898 137,061
Purchases.......................................... 515 15,160
Stock option exchanges............................. 1 18
Exercise of stock options.......................... ( 78) ( 321)
Issue of PAYSOP shares............................. ( 6) ( 24)
Investment Savings Plan - 401(k) issues............ ( 3) ( 15)
Non-employee Director Stock Plan issues............ ( 2) ( 7)
----- --------
Balance, December 31, 1996......................... 7,325 $151,872
===== ========

-27-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1996, 1995 and 1994

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. In 1995, the shareholders approved a Non-
Employee Director Stock Plan previously recommended by the Board of Directors
which provides an annual grant of 200 shares of common stock to each then
serving non-employee Director over a five year period ending December 31,
1999. The maximum number of shares reserved for this plan is 15,000.

The change in capital in excess of par value resulted from the exercise
of stock options, including the related income tax benefit ($1,493,000,
$5,366,000 and $3,090,000 in 1996, 1995 and 1994, respectively), issuance of
PAYSOP shares ($141,000 in 1996, $154,000 in 1995 and $173,000 in 1994),
issuance of 401(k) Plan shares ($90,000, $163,000 and $99,000 in 1996, 1995
and 1994, respectively) and issuance of Non-Employee Director Stock Plan
shares ($39,000 each in 1996 and 1995) noted above.

An analysis of the change in shareholders' equity from the cumulative
translation adjustment component for the years ended December 31, 1996, 1995
and 1994 is as follows (in thousands):

Cumulative Translation Adjustments
----------------------------------
Balance, December 31, 1993......................... $27,405
Adjustment for 1994................................ 256
-------
Balance, December 31, 1994......................... 27,661
Adjustment for 1995................................ ( 252)
-------
Balance, December 31, 1995......................... 27,409
Adjustment for 1996................................ ( 6,288)
-------
Balance, December 31, 1996......................... $21,121
=======

-28-
<PAGE>

5. OTHER INCOME (EXPENSE), NET:
---------------------------
Other income (expense), net consists of the following (in thousands):

1996 1995 1994
---- ---- ----
Investment income................. $ 2,301 $ 2,836 $ 3,738
Other assets amortization......... ( 4,518) ( 4,202) ( 2,783)
Other items, net.................. ( 1,285) ( 1,040) 1,251
------- ------- -------
($ 3,502) ($ 2,406) $ 2,206
======= ======= =======

6. GEOGRAPHIC INFORMATION AND BUSINESS SEGMENTS:
--------------------------------------------
The Company operates predominately in two major geographic areas and
three business segments. The major segment is giftware which imports and
distributes creatively designed giftware and collectibles to a diverse group
of retailers throughout the world. The next largest segment, based on sales,
is direct selling which is engaged in the manufacture, sale and distribution
of household cleaning, personal grooming and related products in international
markets. The smallest segment, based on sales, is direct response which
markets collectibles and giftware to consumers and retailers in domestic and
international markets.

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. Unallocated
assets have consisted principally of certificates of deposit, time deposits
and unallocated receivables.

-29-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1996, 1995 and 1994

The following tables summarize the Company's operations by geographic
area and business segment for 1996, 1995 and 1994 (in thousands):

GEOGRAPHIC AREAS
1996 1995 1994
---- ---- ----
Net sales
United States................ $551,791 $538,502 $519,997
Europe....................... 232,271 233,605 204,418
Other International and
Eliminations............... 60,930 58,082 65,761
-------- -------- --------
Total consolidated....... $844,992 $830,189 $790,176
======== ======== ========
Operating profit
United States................ $ 71,065 $ 65,645 $ 62,377
Europe....................... 13,867 24,245 22,711
Other International and
Eliminations............... 7,630 6,718 8,246
-------- -------- --------
Operating profit before
unallocated expense...... 92,562 96,608 93,334
Unallocated expense....... ( 11,097) ( 10,112) ( 12,782)
-------- -------- --------
Total consolidated....... $ 81,465 $ 86,496 $ 80,552
======== ======== ========
Identifiable assets
United States................ $330,060 $333,505 $324,802
Europe....................... 192,985 175,806 173,460
Other International and
Eliminations............... 19,430 16,165 6,084
-------- -------- --------
Identifiable assets....... 542,475 525,476 504,346
Corporate assets.......... 12,077 8,990 7,777
-------- -------- --------
Total consolidated....... $554,552 $534,466 $512,123
======== ======== ========

Foreign net assets
Europe....................... $ 21,816 $ 19,390 $ 14,690
Other........................ 11,501 8,500 5,250
-------- -------- --------
Total foreign............ $ 33,317 $ 27,890 $ 19,940
======== ======== ========

-30-
<PAGE>

BUSINESS SEGMENTS
- -----------------
1996 1995 1994
---- ---- ----
Net sales
Giftware.......................... $515,448 $491,196 $417,685
Direct Response - Core............ 143,601 149,597 134,389
- New Businesses.. 1,349 - -
Direct Selling.................... 186,790 192,429 240,996
Eliminations...................... ( 2,196) ( 3,033) ( 2,894)
-------- -------- --------
Total consolidated................ $844,992 $830,189 $790,176
======== ======== ========
Operating profit
Giftware.......................... $ 79,209 $ 77,705 $ 64,800
Direct Response - Core............ 389 ( 2,103) 7,996
- New Businesses.. ( 2,462) - -
Direct Selling.................... 15,426 21,006 20,538
-------- -------- --------
Operating profit before
unallocated expense.............. 92,562 96,608 93,334
Unallocated expense............... ( 11,097) ( 10,112) ( 12,782)
-------- -------- --------
Total consolidated................ $ 81,465 $ 86,496 $ 80,552
======== ======== ========
Depreciation and amortization
Giftware.......................... $ 9,453 $ 8,627 $ 5,330
Direct Response................... 1,892 1,795 1,605
Direct Selling.................... 2,502 2,529 3,248
-------- -------- --------
Depreciation and amortization..... 13,847 12,951 10,183
Corporate depreciation and
amortization..................... 135 188 257
-------- -------- --------
Total consolidated................ $ 13,982 $ 13,139 $ 10,440
======== ======== ========
Capital expenditures
Giftware.......................... $ 5,006 $ 9,738 $ 12,032
Direct Response................... 1,721 1,275 1,192
Direct Selling.................... 2,451 2,360 3,326
-------- -------- --------
Capital expenditures.............. 9,178 13,373 16,550
Corporate capital expenditures.... 89 91 206

Total consolidated................ $ 9,267 $ 13,464 $ 16,756
======== ======== ========
Identifiable assets
Giftware.......................... $609,801 $535,138 $474,174
Direct Response................... 97,676 113,926 108,688
Direct Selling.................... 90,947 90,605 92,719
Eliminations...................... ( 255,949) ( 214,193) ( 171,235)
-------- -------- --------
Identifiable assets............... 542,475 525,476 504,346
Corporate assets.................. 12,077 8,990 7,777
-------- -------- --------
Total consolidated................ $554,552 $534,466 $512,123
======== ======== ========

-31-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1996, 1995 and 1994

7. INCOME TAXES (in thousands):
------------
The domestic and foreign components of the net deferred tax
benefit/(liability) on income consist of the following:

Deferred Tax Benefit(Liability)
------------------------------
1996 1995
---- ----
United States
Federal--
Prepaid advertising.......................... ($ 8,556) ($12,066)
Acquisition step-up amortization adjustment.. ( 4,135) ( 4,165)
Accelerated depreciation..................... ( 1,375) ( 1,441)
Deferred compensation........................ 5,391 5,062
Inventory reserve............................ 5,041 5,622
Bad debt reserve............................. 3,952 3,772
Postretirement benefits...................... 1,188 1,204
Returns and allowances reserve............... 1,169 1,174
Other items, net............................. 2,023 2,145
------- -------
4,698 1,307
------- -------
State--
Prepaid advertising.......................... ( 1,560) ( 2,200)
Acquisition step-up amortization adjustment.. ( 889) ( 896)
Accelerated depreciation..................... ( 293) ( 307)
Deferred compensation........................ 1,154 1,082
Inventory reserve............................ 1,046 1,155
Bad debt reserve............................. 761 717
Postretirement benefits...................... 256 259
Returns and allowances reserve............... 251 252
Other items, net............................. 456 470
------- -------
1,182 532
------- -------
Foreign
Accelerated depreciation....................... ( 3,549) ( 3,145)
Other items, net............................... 978 1,387
------- -------
( 2,571) ( 1,758)
------- -------
Total $ 3,309 $ 81
======= =======

The United States net deferred tax benefits would become realizable in
future years with future United States taxable income exclusive of reversing
temporary differences, consistent with the Company's history.

The domestic and foreign components of income before income taxes are as
follows:
1996 1995 1994
---- ---- ----
Domestic....................... $49,704 $48,201 $50,039
Foreign........................ 19,575 28,138 30,700
------- ------- -------
$69,279 $76,339 $80,739
======= ======= =======

-32-
<PAGE>

The provision for income taxes consists of the following:

1996 1995 1994
---- ---- ----
Currently payable:
United States Federal............ $22,676 $19,740 $18,733
United States State.............. 5,368 4,306 4,963
Foreign.......................... 6,026 11,708 15,259
------- ------- -------
34,070 35,754 38,955
------- ------- -------
Deferred:
United States Federal............ ( 3,391) ( 1,975) ( 1,082)
United States State.............. ( 650) ( 307) ( 320)
Foreign.......................... 813 967 ( 870)
------- ------- -------
( 3,228) ( 1,315) ( 2,272)
------- ------- -------
$30,842 $34,439 $36,683
======= ======= =======

A reconciliation of the total effective tax rate to the statutory Federal
income tax rate is as follows:

1996 1995 1994
---- ---- ----
Statutory income tax rate...................... 35.0% 35.0% 35.0%
State taxes, net of Federal income tax effect.. 4.4 3.4 3.7
Impact of foreign tax rates and credits........ 1.6 4.0 4.2
Foreign subsidiaries in loss position receiving
little or no tax benefit..................... .8 .6 .5
Impact of nondeductible expenses............... 2.7 2.3 2.3
Other items, net............................... - ( .2) ( .3)
---- ---- ----
Total effective income tax rate................ 44.5% 45.1% 45.4%
==== ==== ====

The Company made income tax payments of $25,168,000 in 1996, $42,708,000
in 1995 and $21,909,000 in 1994.

8. FINANCIAL INSTRUMENTS:
---------------------
The Company operates globally with various manufacturing and
distribution facilities and product sourcing locations around the world. The
Company may reduce its exposure to fluctuations in foreign interest rates and
exchange rates by creating offsetting positions through the use of derivative
financial instruments. The Company currently does not use derivative
financial instruments for trading or speculative purposes.

The notional amount of forward exchange contracts and options is the
amount of foreign currency bought or sold at maturity. The notional amount of
interest rate swaps is the underlying principal amount used in determining the
interest payments exchanged over the life of the swap. The notional amounts
are not a direct measure of the Company's exposure through its use of
derivatives.

-33-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1996, 1995 and 1994

The Company periodically uses interest rate swaps to hedge portions of
interest payable on debt. In addition, the Company may periodically employ
interest rate caps to reduce exposure, if any, to increases in variable
interest rates. In October 1996, the Company entered into a three year
interest rate swap with a notional amount of $50 million to effectively
convert variable interest on debt to a fixed rate of 6.12%.

The Company may periodically hedge foreign currency royalties, net
investments in foreign subsidiaries, firm purchase commitments, contractual
foreign currency cash flows or obligations, including third-party and
intercompany foreign currency transactions. The Company regularly monitors
its foreign currency exposures and ensures that hedge contract amounts do not
exceed the amounts of the underlying exposures.

The Company enters into various short-term foreign exchange agreements
during the year. The purpose of the Company's foreign currency hedging
activities is to protect the Company from 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 December 31, 1996, deferred amounts were not material. The Company makes
short-term foreign 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 December 31, 1996, net deferred amounts on outstanding agreements were
not material. The outstanding agreement amounts (notional value) at December
31, 1996, are as follows (in thousands):

U.S. $ 7,500
Canada 5,837
Germany 2,598
Spain 1,912
France 771
-------
Total $18,618
=======

-34-
<PAGE>

9. ACQUISITION:
-----------
In September 1994, the Company announced an all cash tender offer to
acquire 100% of the shares of Lilliput Group plc ("Lilliput"), a U.K.-based
manufacturer and distributor of family giftware. Lilliput's products are sold
to a diverse group of retailers in the U.K. and United States, and through
export to 48 countries. Its primary product line is hand-painted miniature
cottages sold under the "Lilliput Lane" brand name.

By December 31, 1994, the Company acquired all of the outstanding shares
of Lilliput. The acquisition was accounted for as a purchase, with the
purchase price amounting to $62.5 million including broker and related
acquisition costs. Funds used for the purchase were provided from the
liquidation of the Company's short-term investments and incurrence of short-
term bank loans.

The purchase price was allocated to net assets acquired based upon their
fair values. The excess of the aggregate purchase price over the fair value
of net assets acquired of $54.8 million has been assigned to goodwill and is
being amortized on a straight-line basis over 40 years.

The Company's consolidated financial statements for 1994 reflected the
acquisition and the operating results of Lilliput starting with October.

10. LICENSE AGREEMENT:
-----------------
In January 1995, the Company entered into an agreement with a third
party to license the domestic operations of its Direct Selling Group. The
business that was licensed, known as Stanley Home Products ("SHP"), marketed
home care, personal care and cosmetic items to consumers through direct
selling programs. The agreement called for the third party to license the
trademarks and formulas of SHP for use in the U.S., Puerto Rico and Canada,
and remit to the Company royalties based on sales of the related products.
The licensed areas in 1994 recorded net sales of approximately $36 million and
operating losses of approximately $3.5 million. These 1994 sales represented
approximately 14% of the Direct Selling Group's net sales and less than 5% of
the Company's consolidated net sales. 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.

-35-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1996, 1995 and 1994

11. COMMITMENTS AND CONTINGENCIES:
-----------------------------
The Company and its subsidiaries incurred rental expense under operating
leases of $11,006,000 in 1996, $9,081,000 in 1995 and $8,010,000 in 1994.

The minimum rental commitments under noncancelable operating leases as of
December 31, 1996 are as follows (in thousands):

Period Aggregate Amount
------ ----------------
1997.............................. $ 7,985
1998.............................. 6,625
1999.............................. 5,112
2000.............................. 2,840
2001.............................. 2,147
Later years.......................... 3,131
-------
Total minimum future rentals................. $27,840
=======

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 expense under these licensing agreements totaled
$39,300,000 in 1996, $36,400,000 in 1995 and $31,100,000 in 1994. Pursuant to
the various licensing agreements, the future minimum guaranteed royalty
payments are $14,300,000 in 1997, $13,200,000 in 1998 and $12,800,000 in 1999.

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 or results of operations of the Company.

-36-
<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, 1996 and 1995, and the related consolidated statements of
income, retained earnings and cash flows for each of the three years in
the period ended December 31, 1996. 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, 1996 and 1995, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1996 in conformity with generally accepted
accounting principles.

/s/ Arthur Andersen LLP

Hartford, Connecticut
February 20, 1997

-37-

<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS LAST TEN YEARS

STANHOME INC.
(In thousands, except per share amounts)

1996 1995 1994
<S> <C> <C> <C>
Net sales...................................... $844,992 $830,189 $790,176
Cost of sales.................................. 370,178 353,884 324,988
-------- -------- --------
Gross profit................................... 474,814 476,305 465,188
Selling, distribution, general
and administrative expenses................... 393,349 389,809 384,636
-------- -------- --------
Operating profit............................... 81,465 86,496 80,552
Interest expense............................... ( 8,684) ( 7,751) ( 2,019)
Other income (expense), net.................... ( 3,502) ( 2,406) 2,206
-------- -------- --------
Income before income taxes..................... 69,279 76,339 80,739
Income taxes................................... 30,842 34,439 36,683
-------- -------- --------
Net income..................................... $ 38,437 $ 41,900 $ 44,056
======== ======== ========

Earnings per common share fully diluted:
Net income.................................... $ 2.12 $ 2.22 $ 2.25
======== ======== ========

Average shares of common stock fully diluted... 18,120 18,897 19,542
Shares of common stock outstanding at year end. 17,904 18,330 19,151
Market value per common share at year end...... $ 26.50 $ 29.13 $ 31.63
Cash dividends paid or provided for............ $ 19,640 $ 19,838 $ 19,863
Dividends per common share..................... $ 1.09 $ 1.06 $ 1.03
Capital expenditures........................... $ 9,267 $ 13,464 $ 16,756
Depreciation................................... $ 9,463 $ 8,938 $ 7,657
Working capital................................ $108,873 $ 99,927 $102,460
Total assets................................... $554,552 $534,466 $512,123
Total long-term liabilities.................... $ 27,125 $ 25,231 $ 22,509
Shareholders' equity........................... $278,828 $266,790 $269,396
Book value per common share.................... $ 15.57 $ 14.55 $ 14.07
Return on average shareholders' equity......... 15% 16% 17%
</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.

-38-

1993a. 1992 1991 1990 1989 1988 1987
<C> <C> <C> <C> <C> <C> <C>
$750,663 $744,072 $710,208 $675,665 $571,380 $480,374 $433,154
304,660 295,118 281,668 264,609 222,612 187,095 165,645
-------- -------- -------- -------- -------- -------- --------
446,003 448,954 428,540 411,056 348,768 293,279 267,509

380,451 365,521 349,404 323,547 268,478 219,094 202,774
-------- -------- -------- -------- -------- -------- --------
65,552 83,433 79,136 87,509 80,290 74,185 64,735
( 2,011) ( 3,351) ( 5,016) ( 5,394) ( 5,945) ( 8,142) ( 6,146)
2,599 6,910 7,019 8,143 5,305 5,756 3,847
-------- -------- -------- -------- -------- -------- --------
66,140 86,992 81,139 90,258 79,650 71,799 62,436
33,007 40,276 36,086 39,191 35,026 31,159 29,725
-------- -------- -------- -------- -------- -------- --------
$ 33,133 $ 46,716 $ 45,053 $ 51,067 $ 44,624 $ 40,640 $ 32,711
======== ======== ======== ======== ======== ======== ========

$ 1.67 $ 2.32 $ 2.21 $ 2.54 $ 2.23 $ 1.96 $ 1.58
======== ======== ======== ======== ======== ======== ========

19,791 20,160 20,355 20,112 20,037 20,710 20,677
19,392 19,774 19,791 19,550 19,365 19,953 19,585
$ 33.88 $ 34.75 $ 37.00 $ 33.75 $ 25.88 $ 18.38 $ 15.00
$ 19,620 $ 18,950 $ 18,134 $ 16,172 $ 13,727 $ 11,994 $ 9,106
$ 1.00 $ .96 $ .92 $ .83 $ .71 $ .605 $ .47
$ 6,511 $ 6,873 $ 7,821 $ 10,925 $ 5,067 $ 5,137 $ 6,741
$ 8,354 $ 8,396 $ 7,940 $ 7,649 $ 6,725 $ 6,660 $ 5,771
$159,299 $160,977 $138,913 $112,716 $ 71,508 $ 76,290 $ 46,993
$429,731 $415,618 $419,319 $391,822 $335,154 $275,525 $244,267
$ 20,312 $ 21,393 $ 23,506 $ 21,691 $ 17,682 $ 11,319 $ 11,743
$254,366 $256,956 $241,074 $211,457 $170,399 $158,169 $130,755
$ 13.12 $ 12.99 $ 12.18 $ 10.82 $ 8.80 $ 7.93 $ 6.68
13% 19% 20% 27% 29% 29% 28%
</TABLE>

-39-

<PAGE>
EXHIBIT 21

SUBSIDIARIES OF STANHOME INC.

Other Names
Jurisdiction Under Which
Name of Organization Business is Conducted
<S> <C> <C>
Collector Appreciation, Inc. Delaware

Consumer Products Group, Inc. Florida

Cosmhogar, S.A. Spain

Enesco Corporation Ohio The Back Door Store
Via Vermont

Enesco European Giftware Group
Limited England

Enesco France, S.A. France

Enesco Import GmbH Germany

Enesco International Ltd. Delaware

Enesco International (H.K.)
Limited Hong Kong

Enesco Worldwide Holdings, Inc. Delaware

Hamilton Collection (Deutschland)
GmbH Germany

Hamilton Worldwide Holdings, Inc. Delaware

Julie Paradis S.A.R.L. France

N.C. Cameron & Sons Limited Ontario, Canada

Nuova Lunaria S.r.L. Italy

Rivershore Studios, Inc. Florida

Stanesco Holding S.A. France

Stanhome Capital, Inc. Delaware

Stanhome de Colombia Ltda. Colombia

Stanhome de Mexico, S.A. de C.V. Mexico

Stanhome European Development
Center, S.A. Spain

Stanhome Financial ATC Limited Ireland

Stanhome Panamericana, C.A. Venezuela

Stanhome plc England

<PAGE>
Stanhome S.A. France

Stanhome, S.A. Spain

Stanhome S.p.A. Italy

Stanhome Trading Company d.o.o. Slovenia

Stanhome Worldwide Direct
Selling Group, Inc. Delaware

The Hamilton Collection, Inc. Florida The Hamilton Group
Sports Impressions

Via Vermont, S.A. de C.V. Mexico

</TABLE>

All of the above-listed subsidiaries are included in the Company's
consolidated financial statements for all of both 1995 and 1996, except for
Enesco France, S.A. (previously Permis de Construire S.A.), which was
acquired in March, 1996; Hamilton Collection (Deutschland) GmbH, which was
organized in March, 1996; Hamilton Worldwide Holdings, Inc., which was
incorporated in November, 1995; Julie Paradis S.A.R.L., which was acquired
in March, 1996; Nuova Lunaria S.r.L., which was incorporated in May, 1995;
Rivershore Studios, Inc., which began operations in March, 1996; Stanesco
Holding S.A., which was incorporated in February, 1996; Stanhome de
Colombia Ltda., which was incorporated in October, 1995; and Stanhome
Worldwide Direct Selling Group, Inc., which began operations in March,
1995.

<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,
No. 33-50723, No. 33-58633 and No. 333-11501.

/s/ Arthur Andersen LLP

Hartford, Connecticut
March 26, 1997

<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 or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her
and in his or 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, 1996
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 5, 1997 By: /s/H.L. Tower
H.L. Tower
Director, Chairman of the Board

March 5, 1997 By: /s/Homer G. Perkins
Homer G. Perkins
Director

March 26, 1997 By: /s/Allan G. Keirstead
Allan G. Keirstead
Director, Executive Vice President and
Chief Administrative & Financial Officer

March 5, 1997 By: /s/John F. Cauley
John F. Cauley
Director

March 26, 1997 By: /s/G. William Seawright
G. William Seawright
Director, President and Chief Executive
Officer

March 5, 1997 By: /s/Thomas R. Horton
Thomas R. Horton
Director

March 5, 1997 By: /s/Anne-Lee Verville
Anne-Lee Verville
Director

March 5, 1997 By: /s/Judith R. Haberkorn
Judith R. Haberkorn
Director

March 5, 1997 By: /s/Janet M. Clarke
Janet M. Clarke
Director

March 5, 1997 By: /s/Charles W. Elliott
Charles W. Elliott
Director

<ARTICLE> 5 EXHIBIT 27

<S> <C> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 27,462,429
<SECURITIES> 0
<RECEIVABLES> 194,554,674
<ALLOWANCES> 22,331,050
<INVENTORY> 121,400,277
<CURRENT-ASSETS> 357,471,417
<PP&E> 135,307,241
<DEPRECIATION> 76,652,720
<TOTAL-ASSETS> 554,551,669
<CURRENT-LIABILITIES> 248,598,257
<BONDS> 0
0
0
<COMMON> 3,153,530
<OTHER-SE> 275,674,627
<TOTAL-LIABILITY-AND-EQUITY> 554,551,669
<SALES> 844,991,649
<TOTAL-REVENUES> 844,991,649
<CGS> 370,177,495
<TOTAL-COSTS> 370,177,495
<OTHER-EXPENSES> 393,348,851
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,683,859
<INCOME-PRETAX> 69,278,850
<INCOME-TAX> 30,841,551
<INCOME-CONTINUING> 38,437,299
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,437,299
<EPS-PRIMARY> 2.12
<EPS-DILUTED> 2.12

</TABLE>