SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________.
Commission File Number 0-1349
Stanhome Inc.
___________________________________________________________________________
(Exact name of registrant as specified in its charter)
Massachusetts 04-1864170
____________________________________ ______________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 Western Avenue, Westfield, Massachusetts 01085
___________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 413-562-3631
___________________________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
March 31,
1997 1996
____ ____
Shares Outstanding:
Common Stock with
Associated Rights 17,910,333 18,403,186
Total number of pages
contained herein 23
Index to Exhibits is
on page 22
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
STANHOME INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1997 and DECEMBER 31, 1996
(Unaudited)
(In Thousands)
<CAPTION>
March 31, December 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and certificates of deposit $ 13,439 $ 10,308
Notes and accounts receivable, net 110,405 127,987
Inventories 84,361 84,018
Prepaid expenses 4,862 3,500
-------- --------
Total current assets 213,067 225,813
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost 79,367 80,813
Less - Accumulated depreciation and
amortization 43,242 43,626
-------- --------
36,125 37,187
-------- --------
OTHER ASSETS:
Goodwill and other intangibles, net 95,343 101,327
Other 13,091 13,053
-------- --------
108,434 114,380
-------- --------
NET RECEIVABLES FROM DISCONTINUED OPERATIONS 31,175 26,463
-------- --------
NET ASSETS OF DISCONTINUED OPERATIONS 38,127 74,866
-------- --------
$426,928 $478,709
========= ========
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
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<PAGE>
<TABLE>
STANHOME INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1997 and DECEMBER 31, 1996
(Unaudited)
(In Thousands)
<CAPTION>
March 31, December 31,
1997 1996
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes and loans payable $ 87,597 $ 78,577
Accounts payable 26,701 33,916
Federal, state and foreign taxes
on income 18,393 16,676
Accrued expenses--
Royalties 6,915 9,725
Vacation, sick and postretirement benefits 4,147 4,241
Pensions and profit sharing 3,957 7,716
Payroll and commissions 2,608 8,843
Other 25,292 25,803
-------- --------
Total current liabilities 175,610 185,497
-------- --------
LONG-TERM LIABILITIES:
Postretirement benefits 14,666 14,384
-------- --------
Total long-term liabilities 14,666 14,384
-------- --------
SHAREHOLDERS' EQUITY:
Common stock 3,154 3,154
Capital in excess of par value 45,007 44,862
Retained earnings 367,032 403,805
Cumulative translation adjustments ( 26,697) ( 21,121)
-------- --------
388,496 430,700
Less - Shares held in treasury, at cost 151,844 151,872
-------- --------
Total shareholders' equity 236,652 278,828
-------- --------
$426,928 $478,709
======== ========
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
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<PAGE>
<TABLE>
STANHOME INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 and 1996 (Unaudited)
(In thousands, except per share amounts)
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
NET SALES $102,060 $ 99,612
COST OF SALES 52,633 54,196
-------- --------
GROSS PROFIT 49,427 45,416
SELLING, DISTRIBUTION, GENERAL
AND ADMINISTRATIVE EXPENSES 43,225 39,831
-------- --------
OPERATING PROFIT 6,202 5,585
Interest expense ( 1,886) ( 1,940)
Other expense, net ( 399) ( 410)
-------- --------
INCOME BEFORE INCOME TAXES
FROM CONTINUING OPERATIONS 3,917 3,235
Income taxes 1,724 1,423
-------- --------
INCOME OF CONTINUING OPERATIONS, NET OF TAXES 2,193 1,812
INCOME OF DISCONTINUED OPERATIONS, NET OF TAXES 1,048 2,258
NET LOSS ON SALE OF DIRECT RESPONSE ( 35,000) -
-------- --------
NET INCOME (LOSS) ( 31,759) 4,070
RETAINED EARNINGS, beginning of period 403,805 385,008
Cash dividends, $.28 per share in
1997 and $.265 per share in 1996 ( 5,014) ( 4,873)
-------- --------
RETAINED EARNINGS, end of period $367,032 $384,205
======== ========
EARNINGS (LOSS) PER COMMON SHARE
(Primary and fully diluted):
CONTINUING OPERATIONS $ .12 $ .10
DISCONTINUED OPERATIONS .06 .12
SALE OF DIRECT RESPONSE ( 1.95) -
----- -----
TOTAL EARNINGS (LOSS) PER COMMON SHARE ($1.77) $ .22
===== =====
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
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<PAGE>
<TABLE>
STANHOME INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 and 1996 (Unaudited)
(In Thousands)
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ($31,759) $ 4,070
Less- Net income discontinued operations ( 1,048) ( 2,258)
- Loss on sale of Direct Response 35,000 -
Adjustments to reconcile continuing operations net
income to net cash provided by operating activities ( 3,672) ( 11,880)
Operating activities of discontinued operations 2,291 ( 13,837)
------- -------
Net cash provided (used) by operating activities 812 ( 23,905)
------- -------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment ( 1,221) ( 1,021)
Proceeds from sales of property, plant and equipment 661 469
Payments for acquisition of businesses,
net of cash acquired ( 51) ( 1,200)
Investing activities of discontinued operations ( 524) 810
------- -------
Net cash used by investing activities ( 1,135) ( 942)
------- -------
FINANCING ACTIVITIES:
Cash dividends ( 5,014) ( 4,874)
Notes and loans payable 9,085 16,252
Exercise of stock options - 1,429
Other common stock issuance 173 192
Financing activities of discontinued operations ( 76) ( 207)
------- -------
Net cash provided by financing activities 4,168 12,792
------- -------
Effect of exchange rate changes on cash
and cash equivalents ( 714) 214
------- -------
Increase/(decrease) in cash and cash equivalents 3,131 ( 11,841)
Cash and cash equivalents,
beginning of year 10,306 12,871
------- -------
Cash and cash equivalents, end of quarter $13,437 $ 1,030
======= =======
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
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<PAGE>
STANHOME INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The consolidated condensed financial statements and related notes
included herein have been prepared by the Company, without audit except for
the December 31, 1996 condensed balance sheet, which was derived from the
Company's Annual Report on Form 10-K for the year ended December 31, 1996,
pursuant to the rules and regulations of the Securities and Exchange
Commission. The audited balance sheet has been reclassified to reflect
certain subsequently discontinued operations described in Note 2. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. The information
furnished reflects all normal recurring adjustments which are, in the
opinion of management, necessary to a fair statement of the results for the
interim periods. It is suggested that these condensed financial statements
be read in conjunction with the financial statements and related notes to
consolidated financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996.
1. ACCOUNTING POLICIES:
The Company's financial statements for the three months ended March
31, 1997 have been prepared in accordance with the accounting policies
described in Note 1 to the December 31, 1996 consolidated financial
statements included in the Company's 1996 Annual Report on Form 10-K. The
Company considers all highly liquid securities, including certificates of
deposit with maturities of three months or less, when purchased, to be cash
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<PAGE>
equivalents. Notes and accounts receivable were net of reserves for
uncollectible accounts, returns and allowances of $10,243,000 at March 31,
1997 and $9,891,000 at December 31, 1996.
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.
Continuing operations cash paid is as follows (in thousands):
Three Months Ended
March 31
------------------
1997 1996
---- ----
Interest $ 1,512 $ 1,115
Income taxes $ 3,953 ($ 1,119)
2. DISCONTINUED OPERATIONS:
On April 22, 1997, the Company signed a definitive stock purchase
agreement to sell the Company's United States Hamilton Direct Response
businesses to The Crestley Collection, Ltd., an affiliate of The Bradford
Group, for approximately $46 million, including repayment of intercompany
debt, subject to certain conditions. The purchase price for the stock is
$17.5 million, which approximates book value. The stock purchase and sale
agreement provides for a long-term worldwide license agreement for
Bradford to sell products under license from the Company's Enesco Giftware
Group through the direct response channel. The Hamilton Group is a direct
marketer of collectible dolls, plates and figurines primarily in the
United States and in Canada, Germany and the United Kingdom. The sale is
expected to be completed during the second quarter. In connection with
the sale, the Company recorded, in the first quarter, a $35 million after
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<PAGE>
tax charge or $1.95 per share. Bradford will not be acquiring the
operating businesses in Canada, Germany and the United Kingdom, but they
will be facilitating the closure of these businesses by the Company.
Immediately after the sale, the Company will close these businesses by
selling the assets and paying closing costs. The approximate components
of the charge were as follows (in thousands):
Write down of goodwill $23,000
Write down of international current
assets due to anticipated proceeds
being less than carrying value 3,000
Anticipated before tax loss until closing 1,000
Closing costs of international operations
and termination indemnities 8,000
Transaction fees 2,000
-------
Before tax charge 37,000
Anticipated tax benefit 2,000
-------
After tax charge $35,000
=======
The anticipated income tax benefit is limited, since most of the
international closing costs will not receive a tax benefit and the loss
will be primarily capital in nature and the Company is unable to quantify
the portion of such capital loss benefit which may ultimately be realized.
The charge reflects the Company's best estimate at this time.
In late April 1997, the Company's Board approved a plan to actively
seek the sale or other disposition of the Company's Direct Selling business
segment during the next twelve months. The Direct Selling Group is a
manufacturer and distributor of home care and cosmetic items in Europe and
Latin America. The disposition of the Direct Selling business segment is
not anticipated to result in a loss.
In accordance with the above, the applicable financial statements and
related notes have been reclassified to present these two business segments
as discontinued operations. Therefore, the net assets and operating
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<PAGE>
results of these two business segments have been segregated and reported as
discontinued operations in the Consolidated Balance Sheets, Statements of
Income and Statements of Cash Flows.
Operating results of discontinued operations are summarized as follows
(in thousands):
Three Months Ended
March 31
------------------
1997 1996
---- ----
Net sales of discontinued operations $75,977 $84,335
======= =======
Income before income taxes from
discontinued operations $ 2,204 $ 4,514
Income taxes 1,156 2,256
------- -------
Net income of discontinued operations $ 1,048 $ 2,258
======= =======
Loss on sale of Hamilton before income taxes ($37,000) $ -
Income taxes (benefits) ( 2,000) -
------- -------
Net loss on sale of Hamilton ($35,000) $ -
======= =======
Net assets of discontinued operations were as follows (in thousands):
March 31, December 31,
1997 1996
-------- -----------
Cash and certificates of deposit $23,626 $17,154
Notes and accounts receivable, net 40,973 44,237
Inventories 37,262 37,382
Prepaid expenses 29,783 32,885
Net property, plant and equipment 19,480 21,468
Other assets 1,161 24,046
Notes and loans payable ( 23) ( 107)
Net intercompany payables ( 31,175) ( 26,463)
All other current liabilities ( 71,412) ( 62,994)
Long-term liabilities ( 11,548) ( 12,742)
------- -------
Net assets of discontinued operations $38,127 $74,866
======= =======
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<PAGE>
3. INVENTORY CLASSES:
The major classes of inventories at March and December 3l were as
follows (in thousands):
March 31, December 31,
1997 1996
---- ----
Raw materials and supplies $ 1,753 $ 1,678
Work in process 806 959
Finished goods in transit 12,702 14,299
Finished goods 69,100 67,082
-------- --------
$ 84,361 $ 84,018
======== ========
4. OTHER EXPENSE, NET:
Other expense, net for the three months ended March 31, 1997 and 1996
consists of the following (in thousands):
1997 1996
---- ----
Interest income $ 691 $ 687
Amortization of other assets ( 957) ( 986)
Other, net ( 133) ( 111)
------ ------
($ 399) ($ 410)
====== ======
5. EARNINGS PER COMMON SHARE (BASIS OF CALCULATION):
Earnings per common share are based on the average number of common
shares outstanding and common share equivalents for the period covered.
For both years, there was no difference in earnings per share between
primary and fully diluted earnings per share computations. For the first
quarter fully diluted computations, the average numbers of shares utilized
were 17,926,000 and 18,480,000 shares for 1997 and 1996, respectively,
including common share equivalents of 21,000 in 1997 and 123,000 in 1996.
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<PAGE>
The lower average number of shares for the first quarter of 1997 primarily
resulted from the repurchase of shares in the second quarter of 1996 as
part of the Company's repurchase program.
In February 1997, the Financial Accounting Standards Board adopted a
new standard on accounting for earnings per share (EPS). This new
standard replaces the presentation of primary EPS with a presentation of
basic EPS and changes the fully diluted terminology to diluted. It also
requires dual presentation of basic and diluted EPS on the face of the
income statement. Basic EPS excludes dilution and is computed by using
the average number of common shares outstanding. The standard will become
effective for the Company in December 1997. The pro-forma average shares
and EPS for the first quarter would be as follows (in thousands, except
per share amounts):
First Three Months
------------------
1997 1996
---- ----
Earnings per common share
basic $.18 $.22
diluted $.18 $.22
Average common shares
basic 17,905 18,357
diluted 17,926 18,480
6. 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.
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<PAGE>
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.
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
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<PAGE>
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 March 31, 1997, 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 March
31, 1997, net deferred amounts on outstanding agreements were not material.
The outstanding agreement amounts (notional value) at March 31, 1997, are
as follows (in thousands):
Canada $ 5,793
U.S. 4,300
Germany 2,400
-------
Total $12,493
=======
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
STANHOME INC.
THREE MONTHS ENDED MARCH 31, 1997
DISCONTINUED OPERATIONS:
In late April 1997, the Company signed a definitive agreement to sell
the Company's United States Hamilton Direct Response businesses to The
Crestley Collection, Ltd., an affiliate of The Bradford Group, for
approximately $46 million, including repayment of intercompany debt,
subject to certain conditions. The sale is scheduled to be completed
during the second quarter. In connection with the sale, the Company
recorded in the first quarter 1997 a $35 million after tax charge
consisting mainly of the write down of goodwill, current assets and
associated transaction and severance costs. Also, during April 1997, the
Company's Board approved a plan to actively seek the sale or other
disposition of the Company's Direct Selling business segment during the
next twelve months. The disposition of the Direct Selling business segment
is not anticipated to result in a loss.
Accordingly, the applicable financial statements and related notes
have been reclassified to present these two business segments as
discontinued operations. Therefore, the net assets and operating results
of these two business segments have been segregated and reported as
discontinued operations in the Consolidated Balance Sheets, Statements of
Income, and Statements of Cash Flows.
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<PAGE>
Cash proceeds from the disposition of these two business segments will
be used for share repurchases, debt repayment and acquisitions in the
giftware industry. Note 2, Discontinued Operations, to the Consolidated
Condensed Financial Statements provides additional information on the two
discontinued operations.
CONTINUING OPERATIONS:
NET SALES increased 2.5% in the first quarter of 1997 due primarily to
unit volume growth in international markets. International sales
represented 18.4% of total 1997 first quarter sales compared to 15.8% in
1996. Sales from a new business acquired in France at the end of the first
quarter last year accounted for approximately 48% of the sales increase.
Sales in the United States decreased from lower volume, primarily
attributable to the soft retail environment, increased numbers of customers
at their credit limit and lower Precious Moments sales. The Precious
Moments line represented 36.3% of the 1997 first quarter sales compared to
42.8% in 1996 and the Cherished Teddies line represented 23.7% of 1997
first quarter sales compared to 16% in 1996. During the past few years the
Company has been able to increase the available supply of the Precious
Moments line to retailers. Consequently, retailers have not ordered as
much product in advance. This trend is expected to continue.
Gross profit increased 8.8% in the first quarter of 1997 and amounted
to 48.4% of sales, compared to 45.6% of sales in the first quarter of 1996.
Gross profit improved principally due to improved margins on the sale of
slow moving inventory, less sales discounting and improved international
manufacturing margins from higher volumes.
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<PAGE>
Selling, distribution, general and administrative expenses increased
8.5% in the first quarter of 1997 and amounted to 42.4% of sales, compared
to 40% of sales in the first quarter of 1996. The 1997 expenses were a
higher percentage of sales principally due to a higher level of spending,
inflationary cost increases exceeding the sales increase and a higher
provision for bad debts to reflect the exposure from the company's program
of extended accounts receivable.
Operating profit increased 21.1% in the first quarter of 1997 and
amounted to 6.1% of sales compared to 5.6% of sales in the first quarter of
1996. The improvement was due to a higher gross profit which was partially
offset by higher selling, distribution, general and administrative
expenses.
In connection with the sale of Hamilton, the Company announced that
it would downsize Corporate Headquarters and eventually sell its
Westfield, Massachusetts facility. This will be accomplished after the
disposal of the discontinued operations. The facility has a book value of
approximately $.8 million. The Company has not established a formal
downsizing plan for Corporate Headquarters.
INTERNATIONAL ECONOMIES AND CURRENCY
The value of the U.S. dollar versus international currencies where the
Company conducts business impacts the results of these businesses. In
addition to the currency risks, the Company's international operations,
including sources of imported products, are subject to other risks of doing
business abroad, including import or export restrictions and changes in
economic and political climates.
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<PAGE>
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.
INTEREST EXPENSE decreased slightly in the first quarter of 1997
compared to 1996 due to lower borrowing levels in 1997 compared to 1996.
Other expense, net is principally the amortization of goodwill and was
approximately the same amount for 1997 and 1996.
THE PROVISION FOR INCOME TAXES was 44% in the first quarter of 1997
and 1996.
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 in the first quarter of 1997 from operating
activities for continuing operations were from net income, depreciation,
amortization and lower levels of accounts receivable. Due to seasonal
sales volume, accounts receivable were down from year-end 1996. Accounts
receivable in the first quarter of 1997 increased 11% compared to the first
quarter of 1996. The increase exceeded the 2.5% first quarter 1997 sales
increase due to the impact of the expansion of the Company's program of
extended accounts receivable during 1996. Inventories decreased
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<PAGE>
compared to the first quarter of 1996 due to timing. Total 1997 current
liabilities, excluding loans payable, decreased from year-end 1996 levels
due to lower seasonal volumes, but were higher than 1996 first quarter
levels due to timing of payments.
The major use of cash in investing activities in the first quarter of
1997 was for capital expenditures. The Company has an acquisition program,
and may utilize funds for this purpose in the future. Capital expenditure
commitments for $11 million are forecasted for 1997. Proceeds in 1997 from
the sale of property, plant and equipment are primarily from the sale of a
plant in Easthampton, Massachusetts. The level of changes of marketable
securities from period to period principally represents investment
alternatives versus certificates of deposit, time deposits, and
intercompany loans.
The major use of cash in financing activities in the first quarter of
1997 was for dividends to shareholders. The Company has an authorized
program to purchase shares of stock for the Company treasury from time to
time in the open market, depending on market conditions, and may utilize
funds for this purpose in the future. As of March 31, 1997, .8 million
shares remained available for purchase under the program. The Company's
earnings, cash flow, and available debt capacity have made and make stock
repurchases, in the Company's view, one of its best investment
alternatives. The major source of funds from financing activities was from
higher seasonal borrowings. The aggregate exercise price of the total
number of stock options outstanding was $84 million at March 31, 1997, and
the Company could receive some or all of these funds in the future if the
options are exercised.
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<PAGE>
Net receivables from discontinued operations in the first quarter of
1997 increased from year-end levels due to higher intercompany seasonal
loans and trading activity. Net assets of discontinued operations
decreased from year-end due principally to the expected $35 million loss of
the disposition of the Direct Response business segment.
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 $5,576,000 increased the cumulative translation component
of shareholders' equity which contributed to the shareholders' equity
decrease in the first three months of 1997. The translation adjustments to
the March 31, 1997 balance sheet that produced the 1997 change in the
cumulative translation component of shareholders' equity were decreases in
working capital by $2,281,000; decreases in net property, plant and
equipment by $1,774,000 and other assets by $2,627,000; and a decrease in
long-term liabilities by $1,106,000. The Company depends upon its
international operations to pay dividends and to make other payments to the
Company. The Company's international operations are subject to the risks of
doing business abroad including currency, economic and political.
The Company currently believes that cash from operations and available
financing alternatives are adequate to meet anticipated requirements for
working capital, dividends, capital expenditures, the stock repurchase
program and other needs. No liquidity problems are anticipated.
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders was held on April 24, 1997.
(c) The first matter voted upon at the meeting was the election of
Directors. The members of Class II were standing for election
to a three-year term expiring at the Annual Meeting in 2000.
Upon motion duly made and seconded, it was voted to elect
Janet M. Clarke, Charles W. Elliott and Allan G. Keirstead as
Class II Directors for a three-year term expiring at the Annual
Meeting in 2000 and until their successors are elected and
qualified. The votes for each of the candidates were reported
as follows:
Janet M. Clarke For: 15,257,312
Withheld: 272,373
Charles W. Elliott For: 15,277,070
Withheld: 252,615
Allan G. Keirstead For: 15,274,873
Withheld: 254,812
The second matter voted upon at the meeting was the
ratification of the Board's appointment of Arthur Andersen LLP
as independent accountants for 1997. Upon motion duly made and
seconded, it was voted that the appointment by the Board of
Directors at its March 5, 1997 meeting of Arthur Andersen LLP,
independent certified public accountants, as independent
accountants for the Company for its fiscal year ending December
31, 1997 be ratified and approved. The votes for the
independent accountants were reported as follows:
Arthur Andersen LLP For: 15,454,555
Against: 36,494
Abstain: 38,636
The third matter voted upon at the meeting was a stockholder
proposal recommending the utilization of investment bankers to
enhance shareholder value. Upon motion duly made and seconded,
it was voted that the stockholder proposal not be approved.
The votes for the above referenced stockholder proposal were
reported as follows:
Stockholder Proposal For: 5,861,018
Against: 7,913,644
Abstain: 509,749
Broker Non-Votes: 1,245,274
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
- Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
Quarter for which this report is filed.
All other items hereunder are omitted because either such item is
inapplicable or the response to it is negative.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STANHOME INC.
(Registrant)
Date: May 14, 1997 /s/G. William Seawright
_____________________________________
G. William Seawright
President and Chief Executive Officer
Date: May 14, 1997 /s/Allan G. Keirstead
_____________________________________
Allan G. Keirstead
Chief Administrative and Financial
Officer
-21-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Reg. S-K
Item 601 Exhibit 10-Q Page No.
_________ _______ _____________
<S> <C> <C>
27 Financial Data Schedule 23
</TABLE>
-22-
<TABLE> <S> <C>
<ARTICLE> 5 EXHIBIT 27
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 13,439
<SECURITIES> 0
<RECEIVABLES> 120,648
<ALLOWANCES> 10,243
<INVENTORY> 84,361
<CURRENT-ASSETS> 213,067
<PP&E> 79,367
<DEPRECIATION> 43,242
<TOTAL-ASSETS> 426,928
<CURRENT-LIABILITIES> 175,610
<BONDS> 0
0
0
<COMMON> 3,154
<OTHER-SE> 233,498
<TOTAL-LIABILITY-AND-EQUITY> 426,928
<SALES> 102,060
<TOTAL-REVENUES> 102,060
<CGS> 52,633
<TOTAL-COSTS> 52,633
<OTHER-EXPENSES> 42,873
<LOSS-PROVISION> 352
<INTEREST-EXPENSE> 1,886
<INCOME-PRETAX> 3,917
<INCOME-TAX> 1,724
<INCOME-CONTINUING> 2,193
<DISCONTINUED> (33,952)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (31,759)
<EPS-PRIMARY> (1.77)
<EPS-DILUTED> (1.77)
</TABLE>
