SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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)
413-562-3631
___________________________________________________________________________
(Registrant's telephone number, including area code)
N/A
___________________________________________________________________________
(Former name or former address, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
June 30,
1997 1996
____ ____
Shares Outstanding:
Common Stock with
Associated Rights 17,458,993 17,898,467
Total number of pages
contained herein 71
Index to Exhibits is
on page 24
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
STANHOME INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
JUNE 30, 1997 and DECEMBER 31, 1996
(Unaudited)
(In Thousands)
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and certificates of deposit $ 7,016 $ 10,308
Notes and accounts receivable, net 150,285 127,987
Inventories 91,259 84,018
Prepaid expenses 3,615 3,500
-------- --------
Total current assets 252,175 225,813
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost 80,292 80,813
Less - Accumulated depreciation and
amortization 44,727 43,626
-------- --------
35,565 37,187
-------- --------
OTHER ASSETS:
Goodwill and other intangibles, net 91,059 101,327
Other 17,094 13,053
-------- --------
108,153 114,380
-------- --------
NET RECEIVABLES FROM DISCONTINUED OPERATIONS - 26,463
-------- --------
NET ASSETS OF DISCONTINUED OPERATIONS 32,194 74,866
-------- --------
$428,087 $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
JUNE 30, 1997 and DECEMBER 31, 1996
(Unaudited)
(In Thousands)
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes and loans payable $ 70,609 $ 78,577
Accounts payable 37,460 33,916
Federal, state and foreign taxes
on income 20,664 16,676
Accrued expenses--
Royalties 10,062 9,725
Payroll and commissions 6,174 8,843
Pensions and profit sharing 4,156 7,716
Vacation, sick and postretirement benefits 3,951 4,241
Other 24,803 25,803
-------- --------
Total current liabilities 177,879 185,497
-------- --------
LONG-TERM LIABILITIES:
Postretirement benefits 14,949 14,384
-------- --------
Total long-term liabilities 14,949 14,384
-------- --------
NET PAYABLES TO DISCONTINUED OPERATIONS 10,036 -
-------- --------
SHAREHOLDERS' EQUITY:
Common stock 3,154 3,154
Capital in excess of par value 45,575 44,862
Retained earnings 373,706 403,805
Cumulative translation adjustments ( 30,888) ( 21,121)
-------- --------
391,547 430,700
Less - Shares held in treasury, at cost 166,324 151,872
-------- --------
Total shareholders' equity 225,223 278,828
-------- --------
$428,087 $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
FOR THE QUARTERS ENDED JUNE 30, 1997 and 1996 (Unaudited)
(In thousands, except per share amounts)
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
NET SALES $137,002 $130,823
COST OF SALES 73,203 69,103
-------- --------
GROSS PROFIT 63,799 61,720
SELLING, DISTRIBUTION, GENERAL
AND ADMINISTRATIVE EXPENSES 43,901 42,456
-------- --------
OPERATING PROFIT 19,898 19,264
Interest expense ( 1,804) ( 1,862)
Other expense, net ( 667) ( 758)
-------- --------
INCOME BEFORE INCOME TAXES
FROM CONTINUING OPERATIONS 17,427 16,644
Income taxes 7,668 7,324
-------- --------
INCOME OF CONTINUING OPERATIONS, NET OF TAXES 9,759 9,320
INCOME OF DISCONTINUED OPERATIONS, NET OF TAXES 1,810 1,631
NET LOSS ON SALE OF DIRECT RESPONSE - -
-------- --------
NET INCOME (LOSS) $ 11,569 $ 10,951
======== ========
EARNINGS (LOSS) PER COMMON SHARE
(Primary and fully diluted):
CONTINUING OPERATIONS $ .55 $ .51
DISCONTINUED OPERATIONS .10 .09
SALE OF DIRECT RESPONSE - -
----- -----
TOTAL EARNINGS (LOSS) PER COMMON SHARE $ .65 $ .60
===== =====
<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 SIX MONTHS ENDED JUNE 30, 1997 and 1996 (Unaudited)
(In thousands, except per share amounts)
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
NET SALES $239,062 $230,435
COST OF SALES 125,836 123,299
-------- --------
GROSS PROFIT 113,226 107,136
SELLING, DISTRIBUTION, GENERAL
AND ADMINISTRATIVE EXPENSES 87,126 82,287
-------- --------
OPERATING PROFIT 26,100 24,849
Interest expense ( 3,690) ( 3,802)
Other expense, net ( 1,066) ( 1,168)
-------- --------
INCOME BEFORE INCOME TAXES
FROM CONTINUING OPERATIONS 21,344 19,879
Income taxes 9,392 8,747
-------- --------
INCOME OF CONTINUING OPERATIONS, NET OF TAXES 11,952 11,132
INCOME OF DISCONTINUED OPERATIONS, NET OF TAXES 2,858 3,889
NET LOSS ON SALE OF DIRECT RESPONSE ( 35,000) -
-------- --------
NET INCOME (LOSS) ( 20,190) 15,021
RETAINED EARNINGS, beginning of period 403,805 385,008
Cash dividends, $.56 per share in
1997 and $.53 per share in 1996 ( 9,909) ( 9,616)
-------- --------
RETAINED EARNINGS, end of period $373,706 $390,413
======== ========
EARNINGS (LOSS) PER COMMON SHARE
(Primary and fully diluted):
CONTINUING OPERATIONS $ .67 $ .61
DISCONTINUED OPERATIONS .15 .21
SALE OF DIRECT RESPONSE ( 1.95) -
----- -----
TOTAL EARNINGS (LOSS) PER COMMON SHARE ($1.13) $ .82
===== =====
<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 SIX MONTHS ENDED JUNE 30, 1997 and 1996 (Unaudited)
(In Thousands)
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ($20,190) $15,021
Less- Net income discontinued operations ( 2,858) ( 3,889)
- Loss on sale of Direct Response 35,000 -
Adjustments to reconcile continuing operations net
income to net cash provided by operating activities ( 40,110) ( 33,265)
Operating activities of discontinued operations 59,587 ( 13,118)
------- -------
Net cash provided (used) by operating activities 31,429 ( 35,251)
------- -------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment ( 2,177) ( 1,945)
Proceeds from sales of property, plant and equipment 658 637
Payments for acquisition of businesses,
net of cash acquired ( 36) ( 1,484)
Investing activities of discontinued operations ( 892) ( 28)
------- -------
Net cash used by investing activities ( 2,447) ( 2,820)
------- -------
FINANCING ACTIVITIES:
Cash dividends ( 9,909) ( 9,617)
Exchanges and purchases of common stock ( 14,636) ( 15,178)
Notes and loans payable ( 7,872) 49,930
Exercise of stock options 667 1,691
Other common stock issuance 230 267
Financing activities of discontinued operations ( 97) ( 280)
------- -------
Net cash provided (used) by financing activities ( 31,617) 26,813
------- -------
Effect of exchange rate changes on cash
and cash equivalents ( 657) ( 132)
------- -------
Increase/(decrease) in cash and cash equivalents ( 3,292) ( 11,390)
Cash and cash equivalents,
beginning of year 10,306 12,871
------- -------
Cash and cash equivalents, end of quarter $ 7,014 $ 1,481
======= =======
<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 six months ended June 30,
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, prompt payment discounts, returns and allowances of
$12,754,000 at June 30, 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):
Six Months Ended
June 30
------------------
1997 1996
---- ----
Interest $ 3,243 $ 2,569
Income taxes $ 9,780 $ 5,783
2. DISCONTINUED OPERATIONS:
On May 22, 1997, the Company completed the previously announced sale
of the Company's United States Hamilton Direct Response businesses to The
Crestley Collection, Ltd., an affiliate of The Bradford Group, for
approximately $48 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. In
connection with the sale, the Company recorded, in the first quarter, a
$35 million after tax charge or $1.95 per share. Bradford will not be
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<PAGE>
acquiring the operating businesses in Canada, Germany and the United
Kingdom, but they will be facilitating the closure of these businesses by
the Company. The Company is in the process of closing 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):
Six Months Ended
June 30
------------------
1997 1996
---- ----
Net sales of discontinued operations $122,631 $171,711
======= =======
Income before income taxes from
discontinued operations $ 6,122 $ 7,602
Income taxes 3,264 3,713
------- -------
Net income of discontinued operations $ 2,858 $ 3,889
======= =======
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):
June 30, December 31,
1997 1996
-------- -----------
Cash and certificates of deposit $18,763 $17,154
Notes and accounts receivable, net 21,927 44,237
Inventories 21,161 37,382
Prepaid expenses 2,684 32,885
Net property, plant and equipment 16,617 21,468
Other assets 800 24,046
Net intercompany receivables/(payables) 10,036 ( 26,463)
Notes and loans payable - ( 107)
All other current liabilities ( 48,597) ( 62,994)
Long-term liabilities ( 11,197) ( 12,742)
------- -------
Net assets of discontinued operations $32,194 $74,866
======= =======
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<PAGE>
3. INVENTORY CLASSES:
The major classes of inventories at June 30 and December 3l were as
follows (in thousands):
June 30, December 31,
1997 1996
---- ----
Raw materials and supplies $ 1,444 $ 1,678
Work in process 848 959
Finished goods in transit 14,517 14,299
Finished goods 74,450 67,082
-------- --------
$ 91,259 $ 84,018
======== ========
4. OTHER EXPENSE, NET:
Other expense, net for the quarters and six months ended June 30,
1997 and 1996 consists of the following (in thousands):
Quarters Ended June 30
----------------------
1997 1996
---- ----
Interest income $ 366 $ 157
Amortization of other assets ( 1,062) ( 1,029)
Other, net 29 114
------ ------
($ 667) ($ 758)
====== ======
Six Months Ended June 30
------------------------
1997 1996
---- ----
Interest income $1,057 $ 844
Amortization of other assets ( 2,019) ( 2,015)
Other, net ( 104) 3
------ ------
($1,066) ($1,168)
====== ======
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 periods covered.
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<PAGE>
For both years, there was no difference in earnings per share between
primary and fully diluted earnings per share computations. For the second
quarter, the average number of shares utilized in the fully diluted
computation was 17,781,000 and 18,219,000 shares for 1997 and 1996,
respectively. The average number of shares utilized in the fully diluted
computation for the six months ended June 30 was 17,897,000 for 1997 and
18,300,000 for 1996. Both 1997 computations included common share
equivalents of 146,000 and both 1996 computations included common share
equivalents of 66,000. The lower average number of shares for the second
quarter and first six months of 1997 primarily resulted from the
repurchase of shares 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 second quarter and first six months would be as follows
(in thousands, except per share amounts):
Second Quarter First Six Months
-------------- ----------------
1997 1996 1997 1996
---- ---- ---- ----
Pro forma:
Earnings per common share
basic $.66 $.60 $.82 $.82
diluted $.65 $.60 $.82 $.82
Average common shares
basic 17,635 18,153 17,751 18,234
diluted 17,781 18,219 17,897 18,300
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<PAGE>
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.
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
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<PAGE>
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 June 30, 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. If
anticipated foreign currency requirements would disappear, the Company
would record any gain or loss in income. As of June 30, 1997, net deferred
amounts on outstanding agreements were not material. The outstanding
agreement amounts (notional value) at June 30, 1997, are as follows (in
thousands):
Canada $ 5,802
U.S. 5,050
Germany 2,292
-------
Total $13,144
=======
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
STANHOME INC.
QUARTER AND SIX MONTHS ENDED JUNE 30, 1997
DISCONTINUED OPERATIONS:
On May 22, 1997, the Company completed the previously announced sale
of the Company's United States Hamilton Direct Response businesses to The
Crestley Collection, Ltd., an affiliate of The Bradford Group, for
approximately $48 million, including repayment of intercompany debt,
subject to certain conditions. 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.
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
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<PAGE>
Condensed Financial Statements provides additional information on the two
discontinued operations.
CONTINUING OPERATIONS:
NET SALES in 1997 increased 4.7% in the second quarter and 3.7% for
the first six months due primarily to unit volume growth in the United
States and in international markets. International sales increased 17.8%
and represented 16.5% of year-to-date sales compared to 14.5% in 1996.
Sales from a new business acquired in France at the end of the first
quarter last year accounted for approximately 15% of the year-to-date sales
increase. Year-to-date sales in the United States increased 1.4% in a soft
retail environment, with increased numbers of customers at their credit
limit. The Precious Moments line sales decreased and represented 40.5% of
the 1997 year-to-date sales compared to 43.9% in 1996, while the Cherished
Teddies line sales increased and represented 21.7% of 1997 year-to-date
sales compared to 16.7% in 1996. During the past few years the Company has
been able to increase the available supply and accelerate delivery of the
products, particularly the Precious Moments line, to retailers.
Consequently, retailers have not ordered as much product in advance.
Principally reflecting the improved supply and delivery of products, total
unfilled orders as of June 30, 1997 were down approximately $15 million or
11% compared to June 30, 1996. This trend is expected to continue.
Gross profit in 1997 increased for the second quarter and first six
months due to higher sales and a lower cost of sales percentage. For the
first six months of 1997 cost of sales represented 52.6% of sales compared
to 53.5% of sales in 1996. The lower cost of sales percentage was due to
improved margins on the sale of slow moving inventories, less sales
discounting and sales mix.
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<PAGE>
Selling, distribution, general and administrative expenses for 1997
increased for the second quarter and first six months and year-to-date
amounted to 36.4% of sales, compared to 35.7% of sales in the first six
months of 1996. The 1997 expenses were a higher percentage of sales
principally due to a higher level of spending, inflationary cost increases,
and a higher provision for bad debts to reflect the exposure from the
company's program of extended accounts receivable.
Operating profit increased in the second quarter and first six months
due to the factors described above. The year-to-date improvement in
operating profit as a percentage of sales 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 Direct Selling discontinued operation. 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 second quarter and first
six months 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 second quarter and
first six months 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 six months of 1997 from
operating activities for continuing operations were from net income,
depreciation and amortization. The major uses of funds were increased
accounts receivable which increased due to the higher sales volume, timing
of sales in the quarter and extended credit programs; increased inventories
to support the higher sales volume; increased other assets reflecting the
addition of a long-term escrow deposit related to the sale of Hamilton
U.S.; and lower accounts payable and accrued expenses due principally to
timing and the payment of year-end payrolls and benefits. Accounts
receivable in the second quarter of 1997 increased 9% compared to the
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<PAGE>
second quarter of 1996. The increase exceeded the 4.7% second quarter 1997
sales increase due to the impact of the expansion of the Company's program
of extended accounts receivable terms.
The major use of cash in investing activities in the first six months
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 uses of cash in financing activities in the first six months
of 1997 were for dividends to shareholders, purchases of common stock and
reduced borrowings. Purchases of common stock principally included shares
repurchased by the Company. During the first six months this year, the
Company repurchased 487 thousand shares for $14.6 million. 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 June 30, 1997, .3
million shares remained available for purchase under the program. On July
23, 1997, the Company's Board of Directors authorized the repurchase of up
to 2.5 million shares of the Company's outstanding common stock under its
ongoing stock repurchase program, to be used for general corporate purposes
or employee benefit plans. Share purchases will be made from time to time
in the open market or in private transactions, depending
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<PAGE>
on market and business conditions. 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 aggregate
exercise price of the total number of stock options outstanding was $83
million at June 30, 1997, and the Company could receive some or all of
these funds in the future if the options are exercised.
Loans payable were reduced by the proceeds from the sale of the
Company's United States Hamilton Direct Response businesses. Net payables
to discontinued operations on the balance sheet are principally
intercompany loans from the Direct Selling Group. Net receivables from
discontinued operations and net assets of discontinued operations decreased
principally due to the impact from the sale of the Company's United States
Hamilton business and net loss on disposition.
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 $9,767,000 increased the cumulative translation component
of shareholders' equity which contributed to the shareholders' equity
decrease in the first six months of 1997. The translation adjustments to
the June 30, 1997 balance sheet that produced the 1997 change in the
cumulative translation component of shareholders' equity were decreases in
net discontinued operations by $3,135,000; and continuing operations
decreases in working capital by $291,000, decreases in net property, plant
-20-
<PAGE>
and equipment by $185,000 and other assets by $6,156,000. 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.
-21-
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
- Amendment of G. William Seawright Employment Agreement
- Amendment of G. William Seawright Retirement Agreement
- Amendment of Allan G. Keirstead Supplemental Retirement
Contract
- Second Amendment to the Supplemental Retirement Contract
with Ronald R. Jalbert
- Thomas E. Evangelista Agreement
- Carmen J. Mascaro Agreement
- Bruce H. Wyatt Retirement Agreement
- John J. Dur Separation Letter Agreement
- Form of Retention Benefits Plan as described in the
Estimated Termination Benefits Summary Letters for Stanhome
Inc. Corporate Headquarters Exempt Employees (Similar plans
exist with Allan G. Keirstead, Bruce H. Wyatt, Ronald R.
Jalbert, Thomas E. Evangelista, and Carmen J. Mascaro)
- Second Amendment to Stanhome Inc. Supplemental Pension
Plan
- Stanhome Supplemental Investment Savings Plan, as amended
and restated
- Financial Data Schedule
(b) Reports on Form 8-K
- A Current Report on Form 8-K dated May 22, 1997 was filed
by Stanhome Inc. with the Securities and Exchange Commission on
June 5, 1997 reporting under Item 2 and Item 7 regarding the
disposition of the Company's U.S. Hamilton Direct Response
Group together with the associated pro forma condensed
consolidated balance sheet dated March 31, 1997 and pro forma
condensed consolidated statements of income for the three
months ended March 31, 1997 and for the year ended December 31,
1996.
All other items hereunder are omitted because either such item is
inapplicable or the response to it is negative.
-22-
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STANHOME INC.
(Registrant)
Date: August 12, 1997
/s/G. William Seawright
G. William Seawright
President and Chief Executive Officer
Date: August 12, 1997
/s/Allan G. Keirstead
Allan G. Keirstead
Chief Administrative and Financial
Officer
-23-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Reg. S-K
Item 601 Exhibit 10-Q Page No.
_________ _______ _____________
<S> <C> <C>
10(a) Amendment of G. William Seawright 25
Employment Agreement
10(b) Amendment of G. William Seawright 26
Retirement Agreement
10(c) Amendment of Allan G. Keirstead 28
Supplemental Retirement Contract
10(d) Second Amendment to the Supplemental 29
Retirement Contract with
Ronald R. Jalbert
10(e) Thomas E. Evangelista Agreement 31
10(f) Carmen J. Mascaro Agreement 35
10(g) Bruce H. Wyatt Retirement Agreement 39
10(h) John J. Dur Separation Letter Agreement 48
10(i) Form of Retention Benefits Plan as 51
described in the Estimated Termination
Benefits Summary Letters for
Stanhome Inc. Corporate Headquarters
Exempt Employees (Similar plans exist
with Allan G. Keirstead, Bruce H. Wyatt,
Ronald R. Jalbert, Thomas E. Evangelista,
and Carmen J. Mascaro)
10(j) Second Amendment to Stanhome Inc. 52
Supplemental Pension Plan
10(k) Stanhome Supplemental Investment 53
Savings Plan, as amended and
restated
27 Financial Data Schedule 71
</TABLE>
-24-
<PAGE> EXHIBIT 10(a)
AMENDMENT OF EMPLOYMENT AGREEMENT
WITH G. WILLIAM SEAWRIGHT
Agreement made as of April 21, 1997 by Stanhome Inc. (the "Company"),
a Massachusetts corporation with its principal place of business at 333
Western Avenue, Westfield, Massachusetts 01085 ("Stanhome") and G. William
Seawright of 22 Gale Road, Bloomfield, CT 06002-1508 ("Seawright").
WHEREAS, the Company and Seawright have previously entered into an
Employment Agreement dated November 9, 1993 (the "Agreement"); and
WHEREAS, the Company and Seawright now wish to amend the Employment
Agreement in certain respects;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, the parties do hereby amend the Agreement
as follows:
1. Paragraph 1 of the Agreement is amended to change the second sentence
thereof and to replace with the following:
"Unless sooner terminated as hereinafter provided, the initial term
of this employment shall be five (5) years, with an automatic
extension of (i) one (1) year upon the end of the third year of the
initial term and (ii) of one day at the end of each day thereafter
while Seawright remains employed by the Company (so that the
remaining term as of the end of the third year of the initial term
and at the end of every day thereafter shall be three years).
2. Paragraph 2 of the Agreement is amended to delete in its entirety the
last sentence thereof, which reads: "Although it is contemplated that
Seawright will undertake some travel as part of performing the
foregoing duties, Seawright's principal place of employment shall be
in the Westfield, Massachusetts area."
3. Subparagraph 4(e) of the Agreement is amended to add a new
penultimate sentence to read:
"In the event that (i) the Board of Directors should decide to change
Seawright's principal place of employment, presently at 333 Western
Avenue, Westfield, Massachusetts, to a location that is (a) further
than fifty miles from Westfield, Massachusetts and (b) further in
distance from Seawright's principal residence than the distance from
such residence to the Company's current offices in Westfield,
Massachusetts, and (ii) Seawright notifies the Board in writing that
he does not consent to such relocation within 30 days from receiving
written notice from the Board of such relocation, then such action
shall be construed to be a termination by the Company other than for
cause or total disability under Subparagraph 4(e) of the Agreement
effective as of the date of his notice."
4. Subparagraph 3(g) of the Agreement is hereby deleted in its entirety.
IN WITNESS WHEREOF, the parties have executed this Amendment
effective as of the date first written above.
STANHOME INC.
By:/s/Anne Lee Verville
/s/G. William Seawright
G. William Seawright
<PAGE> EXHIBIT 10(b)
AMENDMENT OF RETIREMENT AGREEMENT
WITH G. WILLIAM SEAWRIGHT
Agreement made as of April 21, 1997 by Stanhome Inc., a Massachusetts
corporation with its principal place of business at 333 Western Avenue,
Westfield, Massachusetts 01085 (the "Company") and G. William Seawright of
22 Gale Road, Bloomfield, Connecticut 06002-1508 ("Seawright").
WHEREAS, the Company and Seawright have previously entered into a
Retirement Agreement dated November 9, 1993 ("the Retirement Agreement");
and
WHEREAS, the Stanhome Inc. Supplemental Pension Plan (the "Plan") is being
amended to provide for certain additional benefits to the Company's non-
Director key executives in the event of termination of employment under
certain circumstances; and
WHEREAS, Seawright is excluded from participation in the Plan and the
Company desires to provide for such benefits under the Retirement
Agreement; and
WHEREAS, the Company and Seawright wish to amend the Retirement Agreement
in a manner consistent with the Plan and in certain other respects as well;
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter contained, the parties do hereby amend the Agreement as set
forth below, effective as of the date hereof:
1. Subparagraph 2(b) of the Retirement Agreement is amended in its
entirety to read:
"Notwithstanding any provision of Paragraph 2 to the contrary, if
Seawright's employment terminates involuntarily at any time
(including before August 28, 1998) for any reason other than cause,
he shall be entitled to receive the benefit determined under
Subparagraph 2(a) as if his age on termination were his actual age
plus five years; but such benefit shall not be payable before his
(actual) fifty-seventh (57th) birthday."
2. Paragraph 7 of the Retirement Agreement is amended to designate the
existing paragraph as subparagraph (a) thereof and to add a new
subparagraph (b) to read as follows:
"(b) Notwithstanding any otherwise applicable provision of this
agreement to the contrary, the retirement benefits due to Seawright
(or his beneficiary) under this Agreement, if any, shall be paid in a
lump sum upon the occurrence of (i) a termination of Seawright's
employment under circumstances that entitle Seawright to payment of a
severance benefit under Paragraph 1 of the "Change in Control
Agreement" dated November 9, 1993 between the Company and Seawright
(or, if at the time of such termination the Change in Control
Agreement is no longer in effect, under circumstances that would
entitle Seawright to such payment if such Agreement were in effect),
or (ii) a Change in Control (as defined in the Change in Control
Agreement) at any time following Seawright's termination of
employment from the Company. Such lump-sum payment shall be the
present value of the benefit payable to Seawright hereunder using the
Pension Benefit Guaranty Corporation immediate annuity interest rate
as is in effect for the month in which the payment is made and the
mortality table based on the UP-1984 Table, all as in accordance with
generally acceptable actuarial principles."
3. The third Subparagraph under Paragraph 5 of the Retirement Agreement
("Annual Compensation") is replaced by the following Subparagraph:
<PAGE>
"In the event that benefits become payable under Subparagraph 2(b) or
4(a) and Seawright's employment is terminated involuntarily for any
reason other than cause prior to completion of five years of service,
the "average annual compensation" used in determining benefits
payable thereunder shall be the product of (a) the sum of the
compensation received during his employment by the Company to the
date of death, or termination, divided by the number of full months
(and giving a proportionate effect to any partial month) of
employment used to determine the sum of the compensation and (b)12."
IN WITNESS WHEREOF, the parties have executed this Amendment effective as
of the date first written above.
STANHOME INC.
By:/s/Anne Lee Verville
/s/G. William Seawright
G. William Seawright
<PAGE> AMENDMENT OF RETIREMENT AGREEMENT EXHIBIT 10(c)
WITH ALLAN G. KEIRSTEAD
Agreement made as of June 5, 1997 by Stanhome Inc., a Massachusetts
corporation with its principal place of business at 333 Western Avenue,
Westfield, Massachusetts 01085 (the "Company") and Allan G. Keirstead, 26
Longfellow Road, Holyoke, Massachusetts 01040 ("Keirstead").
WHEREAS, the Company and Keirstead have previously entered into a
Supplemental Retirement Contract made May 23, 1985, (the "Contract"), as
amended January 2, 1987, January 17, 1988 and February 8, 1988;
WHEREAS, the Stanhome Inc. Supplemental Pension Plan is being amended
to provide for certain additional benefits to the Company's non-Director
key executives in the event of termination of employment under certain
circumstances; and
WHEREAS, Keirstead is excluded from participation in the Stanhome
Inc. Supplemental Pension Plan and the Company desires to provide for such
benefits under the Contract;
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties do hereby amend the Contract
as set forth below, effective as of the date hereof:
1. Subparagraph 2(b) is amended in its entirety to read:
Notwithstanding any provision of Paragraph 2 to the contrary, if
Keirstead's employment terminates involuntarily at any time for any
reason other than cause, he shall be entitled to receive the benefit
determined under Subparagraph 2(a) as if his age on termination were
his actual age plus five years; but such benefit shall not be payable
before his (actual) fifty-fifth (55th) birthday.
2. Paragraph 7 of the Contract is amended to designate the existing
paragraph as subparagraph (a) thereof and to add a new subparagraph
(b) to read as follows:
"(b) Notwithstanding any otherwise applicable provision of this
agreement to the contrary, the retirement benefits due to Keirstead
(or his beneficiary) under this Agreement, if any, shall be paid in a
lump sum upon the occurrence of (i) a termination of Keirstead's
employment under circumstances that entitle Keirstead to payment of a
severance benefit under Paragraph 1 of the "Change in Control
Agreement" dated January 1, 1992 between the Company and Keirstead
(or, if at the time of such termination the Change in Control
Agreement is no longer in effect, under circumstances that would
entitle Keirstead to such payment if such Agreement were in effect),
or (ii) a Change in Control (as defined in the Change in Control
Agreement) at any time following Keirstead's termination of
employment from the Company. Such lump-sum payment shall be the
present value of the benefit payable to Keirstead hereunder using the
Pension Benefit Guaranty Corporation immediate annuity interest rate
as is in effect for the month in which the payment is made and the
mortality table based on the UP-1984 Table, all as in accordance with
generally acceptable actuarial principles."
IN WITNESS WHEREOF, the parties have executed this Amendment
effective as of the date first written above.
STANHOME INC.
By: /s/G.William Seawright
/s/Allan G. Keirstead
Allan G. Keirstead
ATTEST:/s/Bruce H. Wyatt
Secretary
<PAGE> EXHIBIT 10(d)
SUPPLEMENTAL RETIREMENT CONTRACT
SECOND AMENDMENT
Amendment made as of June 5, 1997 by Stanhome Inc., a Massachusetts
corporation with its principal place of business at 333 Western Avenue,
Westfield, Massachusetts 01085 ("Stanhome") and Ronald R. Jalbert of 253
Via Perignon, Naples, Florida 34119 ("Jalbert").
WHEREAS, Stanhome and Jalbert have previously entered into a
Supplemental Retirement Contract dated March 5, 1986 as amended on March
28, 1988 (the "Contract"); and
WHEREAS, Stanhome is amending its Supplemental Retirement Plan for
certain of the Company's non-Director key executives in the event of
termination of employment under certain circumstances; and
WHEREAS, the full benefit intended for Jalbert would not be available
through the amended Pension Plan and Supplemental Pension Plan in which
(together with the Stanhome Pension Plan) he is an active participant;
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties do hereby amend the Contract
as set forth below, effective as of the date hereof:
1. Section 1(b) is amended in its entirety to read:
If Jalbert's employment terminates involuntarily for any reason other
than Cause, he or his wife shall be entitled to receive the benefit
determined under subparagraph 1(a) as if his age on termination were
his actual age plus five years.
2. Section 1(c) is amended to delete the phrase "or if he dies before
reaching age 55" in the second line thereof.
3. Section 2 is amended to designate the existing paragraph as
subsection 2(a) and to add a new subsection (b) to read as follows:
"(b) Notwithstanding any otherwise applicable provision of this
agreement to the contrary, the retirement benefits due to Jalbert (or
his beneficiary) under this Agreement, if any, shall be paid in a
lump sum upon the occurrence of (i) a termination of Jalbert's
employment under circumstances that entitle Jalbert to payment of a
severance benefit under Paragraph 1 of the "Change in Control
Agreement" dated January 1, 1992 between the Company and Jalbert (or,
if at the time of such termination the Change in Control Agreement is
no longer in effect, under circumstances that would entitle Jalbert
to such payment if such Agreement were in effect), or (ii) a Change
in Control (as defined in the Change in Control Agreement) at any
time following Jalbert's termination of employment from the
Company. Such lump-sum payment shall be the present value of the
benefit payable to Jalbert hereunder using the Pension Benefit
Guaranty Corporation immediate annuity interest rate as is in effect
for the month in which the payment is made and the mortality table
based on the UP-1984 Table, all as in accordance with generally
acceptable actuarial principles."
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment effective as
of the date first written above.
STANHOME INC.
By: /s/G. William Seawright
/s/Ronald R. Jalbert
Ronald R. Jalbert
ATTEST:
/s/Bruce H. Wyatt
Secretary
-4-
<PAGE> EXHIBIT 10(e)
AGREEMENT
AGREEMENT made June 5, 1997 between Stanhome Inc., a Massachusetts
corporation with its principal place of business at 333 Western Avenue,
Westfield, Massachusetts 01085 (the "Company") and THOMAS E. EVANGELISTA of
51 Wyngate, Simsbury, Connecticut 06070 ("Employee").
In consideration of the mutual agreements hereinafter contained, the
parties agree as follows:
1. Retirement Benefits
(a) Subject to the provisions of subsection 1(c) below, if
and when Employee or his wife becomes entitled to receive
payments from the Stanhome Inc. Pension Plan, Stanhome
will pay him or her an additional retirement benefit
equal to the difference between (i) the benefits
otherwise payable to Employee or his wife under the
Stanhome Pension Plan and (ii) the benefits that would
have been payable under that Plan if his years of benefit
service had been equal to the sum of his actual years of
benefit service plus 7.75 additional years.
(b) If Employee's employment terminates involuntarily for any
reason other than Cause before April 23, 2004, he shall
be entitled to receive the benefit determined under
subparagraph 1(a) as if he had reached age fifty-five
(55) and was entitled to receive payments from the
Stanhome Inc. Pension Plan on the date of his
termination, but such benefit shall not be payable until
his (actual) fifty-fifth (55th) birthday. If Employee's
employment terminates involuntarily for any reason other
than cause after April 22, 2004, he shall be entitled to
receive the benefit determined under subparagraph 1(a) as
if his age on retirement were his actual age on the date
of his termination plus five years, but such benefit
shall not be payable before his (actual) fifty-fifth
(55th) birthday.
<PAGE>
(c) If Employee's employment terminates by reason of
discharge for Cause, neither he nor his wife shall be
entitled to receive payment of any kind under this
Agreement. "Cause" shall mean dishonesty, misconduct, or
insubordination.
(d) Payment of such additional retirement benefit will begin
at the same time as payments begin under the Stanhome
Inc. Pension Plan. If the Stanhome Inc. Pension Plan (as
in effect on December 31, 1988) is amended or terminated
prior to the time such payments begin, the amount payable
under section 1(a) above shall be calculated as if such
amendment or termination had not occurred.
2. Payment. (a) Amounts payable under the above paragraphs
will be paid on or about the end of the month to which the payment relates.
Payment will be made for the full month in which Employee's death occurs.
(b) Notwithstanding any otherwise applicable
provision of this agreement to the contrary, the retirement benefits due to
Evangelista (or his beneficiary) under this Agreement, if any, shall be
paid in a lump sum upon the occurrence of (i) a termination of
Evangelista's employment under circumstances that entitle Evangelista to
payment of a severance benefit under Paragraph 1 of the "Change in
Control Agreement" dated January 1, 1992 between the Company and
Evangelista (or, if at the time of such termination the Change in Control
Agreement is no longer in effect, under circumstances that would entitle
Evangelista to such payment if such Agreement were in effect), or (ii) a
Change in Control (as defined in the Change in Control Agreement) at any
time following Evangelista's termination of employment from the Company.
Such lump-sum payment shall be the present value of the benefit payable to
Evangelista hereunder using the Pension Benefit Guaranty Corporation
immediate annuity interest rate as is in effect for the month in which the
payment is made and the mortality table based on the UP-1984 Table, all as
in accordance with generally acceptable actuarial principles.
3. Assignment. Neither Employee nor his wife shall have any right
to commute, encumber, or dispose of the right to receive payments
hereunder; such payments and the right thereto being hereby declared to be
<PAGE>
non-assignable and non-transferable. All rights under the Contract are
merely unsecured contractual rights of Employee or Employee's spouse
against Stanhome. Employee and Employee's spouse are, therefore, merely
unsecured general creditors of Stanhome in this regard.
4. Trust. Stanhome intends to set aside certain assets in a
Trust for the payment of benefits under this Contract. To the extent any
payment required to be made by Stanhome under the Contract is instead made
by the Trust, Stanhome's obligation under the Contract will to such extent
be deemed satisfied. If the Trust for any reason fails to make a payment
required to be made by Stanhome under the Contract, Stanhome remains fully
liable for such payment under the terms of the Contract. In the event of
the insolvency or bankruptcy of Stanhome, any assets set aside in the Trust
shall at all times be subject to the claims of Stanhome's general creditors
as if such assets were general assets of Stanhome.
5. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of any successor of Stanhome and any such successor
shall be deemed substituted for Stanhome under the terms of this Agreement.
As used in this Agreement, the term "successor" shall include any person,
firm, corporation, or other business entity which at any time, whether by
merger, purchase, or otherwise, acquires all or substantially all of the
assets or business of Stanhome.
6. Not an Employment Agreement. This Agreement is not an
employment agreement and Stanhome reserves the right to discharge Employee
with or without cause. The Agreement in no way affects his rights under
the Stanhome Pension Plan, or under any Stanhome group or other insurance
policy.
7. Notices. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing, and if sent by postage
prepaid certified mail, or delivered, in the case of Employee to his
residence at 51 Wyngate, Simsbury, Connecticut 06070, or, in the case of
Stanhome to its principal office at 333 Western Avenue, Westfield,
Massachusetts 01085, Attention: Secretary. Either party may change the
address to which notices are to be addressed by notice in writing given to
the other in accordance with the terms hereof.
<PAGE>
8. Waiver of Breach. The waiver by Stanhome of a breach of any
provision of this Agreement by Employee shall not operate or be construed
as a waiver of any subsequent breach by Employee.
9. Governing Law. This Agreement shall be deemed made in the
Commonwealth of Massachusetts, and its form, execution, validity,
construction and performance shall be construed in accordance with the laws
of said Commonwealth.
10. Entire Agreement. This Agreement constitutes the entire
agreement of the parties. It may not be changed orally but only by an
agreement in writing signed by Employee and for Stanhome by an officer duly
authorized to enter into said amendment by the Board of Directors.
11. Severability. In the event that any of the terms or provisions of
this Agreement or any portion of such terms or provisions shall be
determined to be invalid or inoperative, such determination shall not
affect the efficacy of the balance of the Agreement and any such invalid or
inoperative term or provision shall be deemed severable.
IN WITNESS WHEREOF, this Agreement has been executed by a duly
authorized officer of Stanhome and by Employee on this 5th day of June,
1997.
STANHOME INC.
By: /s/G. William Seawright
President and CEO
/s/Thomas E. Evangelista
Thomas E. Evangelista
ATTEST:
/s/Bruce H. Wyatt
Secretary
-4-
<PAGE> AGREEMENT EXHIBIT 10(f)
AGREEMENT made June 5, 1997 between Stanhome Inc., a Massachusetts
corporation with its principal place of business at 333 Western Avenue,
Westfield, Massachusetts 01085 (the "Company") and CARMEN J. MASCARO of 23
Harvest Hill Road, West Simsbury, Connecticut 06092 ("Employee").
In consideration of the mutual agreements hereinafter contained, the
parties agree as follows:
1. Retirement Benefits
(a) Subject to the provisions of subsection 1(c) below, if
and when Employee or his wife becomes entitled to receive
payments from the Stanhome Inc. Pension Plan, Stanhome
will pay him or her an additional retirement benefit
equal to the difference between (i) the benefits
otherwise payable to Employee or his wife under the
Stanhome Pension Plan and (ii) the benefits that would
have been payable under that Plan if his years of benefit
service had been equal to the sum of his actual years of
benefit service plus 3.75 additional years.
(b) If Employee's employment terminates involuntarily for any
reason other than Cause, he or his wife shall be entitled
to receive the benefit determined under subparagraph 1(a)
as if his age on termination were his actual age plus
five years.
(c) If Employee's employment terminates by reason of
discharge for Cause, neither he nor his wife shall be
entitled to receive payment of any kind under this
Agreement. "Cause" shall mean dishonesty, misconduct, or
insubordination.
(d) Payment of such additional retirement benefit will begin
at the same time as payments begin under the Stanhome
Inc. Pension Plan. If the Stanhome Inc. Pension Plan (as
in effect on December 31, 1988) is amended or terminated
prior to the time such payments begin, the amount payable
<PAGE>
under section 1(a) above shall be calculated as if such
amendment or termination had not occurred.
2. Payment. (a) Amounts payable under the above paragraphs
will be paid on or about the end of the month to which the payment relates.
Payment will be made for the full month in which Employee's death occurs.
(b) Notwithstanding any otherwise applicable
provision of this agreement to the contrary, the retirement benefits due to
Mascaro (or his beneficiary) under this Agreement, if any, shall be paid in
a lump sum upon the occurrence of (i) a termination of Mascaro's employment
under circumstances that entitle Mascaro to payment of a severance benefit
under Paragraph 1 of the "Change in Control Agreement" dated January 1,
1992 between the Company and Mascaro (or, if at the time of such
termination the Change in Control Agreement is no longer in effect, under
circumstances that would entitle Mascaro to such payment if such Agreement
were in effect), or (ii) a Change in Control (as defined in the Change in
Control Agreement) at any time following Mascaro's termination of
employment from the Company. Such lump-sum payment shall be the present
value of the benefit payable to Mascaro hereunder using the Pension Benefit
Guaranty Corporation immediate annuity interest rate as is in effect for
the month in which the payment is made and the mortality table based on the
UP-1984 Table, all as in accordance with generally acceptable actuarial
principles.
3. Assignment. Neither Employee nor his wife shall have any right
to commute, encumber, or dispose of the right to receive payments
hereunder; such payments and the right thereto being hereby declared to be
non-assignable and non-transferable. All rights under the Contract are
merely unsecured contractual rights of Employee or Employee's spouse
against Stanhome. Employee and Employee's spouse are, therefore, merely
unsecured general creditors of Stanhome in this regard.
4. Trust. Stanhome intends to set aside certain assets in a
Trust for the payment of benefits under this Contract. To the extent any
payment required to be made by Stanhome under the Contract is instead made
by the Trust, Stanhome's obligation under the Contract will to such extent
be deemed satisfied. If the Trust for any reason fails to make a payment
required to be made by Stanhome under the Contract, Stanhome remains fully
<PAGE>
liable for such payment under the terms of the Contract. In the event of
the insolvency or bankruptcy of Stanhome, any assets set aside in the Trust
shall at all times be subject to the claims of Stanhome's general creditors
as if such assets were general assets of Stanhome.
5. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of any successor of Stanhome and any such successor
shall be deemed substituted for Stanhome under the terms of this Agreement.
As used in this Agreement, the term "successor" shall include any person,
firm, corporation, or other business entity which at any time, whether by
merger, purchase, or otherwise, acquires all or substantially all of the
assets or business of Stanhome.
6. Not an Employment Agreement. This Agreement is not an
employment agreement and Stanhome reserves the right to discharge Employee
with or without cause. The Agreement in no way affects his rights under
the Stanhome Pension Plan, or under any Stanhome group or other insurance
policy.
7. Notices. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing, and if sent by postage
prepaid certified mail, or delivered, in the case of Employee to his
residence at 23 Harvest Hill Road, West Simsbury, Connecticut 06092, or, in
the case of Stanhome to its principal office at 333 Western Avenue,
Westfield, Massachusetts 01085, Attention: Secretary. Either party may
change the address to which notices are to be addressed by notice in
writing given to the other in accordance with the terms hereof.
8. Waiver of Breach. The waiver by Stanhome of a breach of any
provision of this Agreement by Employee shall not operate or be construed
as a waiver of any subsequent breach by Employee.
9. Governing Law. This Agreement shall be deemed made in the
Commonwealth of Massachusetts, and its form, execution, validity,
construction and performance shall be construed in accordance with the laws
of said Commonwealth.
10. Entire Agreement. This Agreement constitutes the entire
agreement of the parties. It may not be changed orally but only by an
<PAGE>
agreement in writing signed by Employee and for Stanhome by an officer duly
authorized to enter into said amendment by the Board of Directors.
11. Severability. In the event that any of the terms or
provisions of this Agreement or any portion of such terms or provisions
shall be determined to be invalid or inoperative, such determination shall
not affect the efficacy of the balance of the Agreement and any such
invalid or inoperative term or provision shall be deemed severable.
IN WITNESS WHEREOF, this Agreement has been executed by a duly
authorized officer of Stanhome and by Employee on this 5th day of
June, 1997.
STANHOME INC.
By: /s/G. William Seawright
President and CEO
/s/Carmen J. Mascaro
Carmen J. Mascaro
ATTEST:
/s/Bruce H. Wyatt
Secretary
<PAGE> EXHIBIT 10(g)
RETIREMENT AGREEMENT
AGREEMENT made June 5, 1997 between Stanhome Inc., a Massachusetts
corporation with its principal place of business at 333 Western Avenue,
Westfield, Massachusetts (the "Company") and Mr. Bruce H. Wyatt of 11
Bittersweet Lane, Wilbraham, Massachusetts 01095 ("Wyatt").
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
contained, the parties agree as follows:
l. Normal Retirement.
(a) Subject to the provisions of paragraph 9 below, if Wyatt retires
or his employment is involuntarily terminated on or after May 12, 2011, the
Company will pay him each month for the duration of his life deferred
compensation equal to 1/12 of (i) 50% of the average annual compensation
received by him in the 5 most highly compensated years of his final l0
years of employment, as determined under paragraph 5 below, less (ii) 50%
of his annual Primary Social Security Benefit, as hereinafter defined.
(b) The monthly benefit determined under subparagraph (a) above
shall be reduced by the value of the monthly retirement benefit, in the
form of a life annuity payable for Wyatt's life, which Wyatt is entitled to
receive from any other qualified or non-qualified plan maintained by the
Company (excluding (i) the portion, if any, of such benefit based on
Wyatt's contributions to such plan, and (ii) employer contributions to any
40l(k) Plan) commencing at such time as Wyatt first becomes eligible to
receive such benefit; provided, however, that any such reduction
attributable to the Stanhome Inc. Pension Plan (the "Pension Plan") shall
be in an amount such that Employee and his spouse, if she survives him,
will each receive no less benefit under this Contract and the Pension Plan
in combination than he or she would have received under the Pension Plan.
For purposes hereof, the value of the monthly retirement benefit of
any amount which Wyatt is entitled to receive from a defined contribution
plan based on the Company's contributions thereto shall be determined as of
the time of Wyatt's termination by reference to the annuity table set forth
in Exhibit A attached. It is recognized by the parties that prior to
Employee's termination there may be changes of sufficient importance in one
or more of the assumptions upon which this table is based to make
appropriate the use of an alternative table. In such case, Stanhome may
substitute an alternative table but only upon the written recommendation of
an independent nationally recognized firm of compensation consultants, as
may be selected by it, and after written notice to the Employee.
<PAGE>
(c) The benefit otherwise calculated under this paragraph 1 shall be
reduced as provided in subsection (a), (b), or (c) of Exhibit A of the
Stanhome Inc. Pension Plan (as currently in effect), depending on the
option chosen by Wyatt.
2. Early Retirement. Subject to the provisions of subparagraph 2(c)
and paragraph 9 below:
(a) If Wyatt's employment terminates voluntarily on or after May 12,
2001 and before May 12, 2011, the Company will pay him each month for the
duration of his life the benefit which would be payable if the provisions
of paragraph l above were applied as of the date of such termination,
provided that the portion of the benefit determined under paragraph l(a)
shall be reduced by the following percentages based on Wyatt's age at his
termination date (to be adjusted on a daily pro-rata basis if Wyatt retires
on a day other than his birthday):
Age at Termination Percentage
62-64 0%
6l 2%
60 4%
59 9%
58 14%
57 19%
56 24%
55 29%
(b) If Wyatt's employment terminates involuntarily before May 12,
2011 for any reason other than cause, he shall be entitled to receive the
benefit determined under subparagraph 2(a) as if his age on such
termination were his actual age on the date of his termination plus five
years, but such benefit shall not be payable until his actual fifty-fifth
(55th) birthday.
(c) If Wyatt's employment terminates by reason of discharge for
cause, neither he nor his wife shall be entitled to receive payment of any
kind under this agreement; "cause" hereunder shall mean dishonesty,
misconduct, insubordination or any activity which would cause a forfeiture
of rights under paragraph 9 below if it occurred following termination of
employment.
3. Disability.
In the event Wyatt becomes disabled after reaching age 55 but
while still employed by the Company, he shall receive, commencing with the
month following the commencement of his disability, a monthly amount
determined under paragraph l that would have been payable to him if he had
remained employed until retirement at age 65 at the annual rate of
compensation in effect at the time of his disability, provided that the
amount payable hereunder shall be reduced by the monthly value of any
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<PAGE>
benefit paid to Wyatt under a sick leave policy or long-term disability
income plan maintained by the Company for so long as such benefits remain
payable.
For purposes hereof, Wyatt shall be deemed to be disabled when he is
rendered incapable of performing the work for which he was employed by a
medically determinable physical or mental condition which is likely to
result in death or to be of long-continued and indefinite duration.
4. Survivors Benefit.
(a) In the event that Wyatt dies while employed by the Company prior
to reaching age fifty-five (55), or in the event that Wyatt's employment by
the Company is involuntarily terminated prior to age fifty-five (55) for
any reason other than cause, and he dies subsequent to such termination,
the Company will pay his surviving spouse, subject to subparagraph (d)
below, commencing on the date that Wyatt would have been fifty-five (55)
had he lived, a monthly amount for the remainder of her life equal to fifty
percent (50%) of the benefit which would have been paid to Wyatt commencing
on his fifty-fifth (55th) birthday pursuant to subparagraph 2(b).
(b) In the event that Wyatt dies after age fifty-five (55) while
still employed by the Company, the Company will pay his surviving spouse,
subject to subparagraph (d) below, a monthly amount for the remainder of
her life equal to fifty percent (50%) of the monthly benefit that would
have been paid to Wyatt under paragraph 1 or subparagraph 2(a), whichever
is applicable, had he retired on the day immediately prior to the date of
his death.
(c) In the event that Wyatt's employment by the Company terminates
after age fifty-five (55) and he subsequently dies while receiving payments
hereunder, the Company will pay his surviving spouse, subject to
subparagraph (d) below, a monthly amount for the remainder of her life
based upon the form of pension elected by Wyatt under Article 6.2 (as
currently in effect) of the Stanhome Inc. Pension Plan. In the event Wyatt
was disabled and had been receiving a benefit under paragraph 3, the
surviving spouse shall be entitled to receive fifty percent (50%) of the
benefit payable under paragraph 3 without reduction thereunder for any
benefits being paid to Wyatt under a sick leave policy or a long-term
disability income plan maintained by the Company except to the extent such
benefits remain payable to such spouse following Wyatt's death.
(d) No amounts shall be paid a surviving spouse under subparagraph
(a), (b) or (c) above unless she shall have survived Wyatt for a period of
30 days and shall have been married to him throughout the l year period
ending on Wyatt's date of death. Wyatt may, by written notice to the
Company, and with the Company's consent which will not be unreasonably
withheld, substitute a trust for the benefit of his surviving spouse as
the recipient entitled to payments otherwise payable to his surviving
spouse under this Agreement, but in such case the foregoing limitations
shall continue to apply.
-3-
<PAGE>
(e) If the sum of $20,000 exceeds the total amount paid to the
surviving spouse at time of her death, such excess shall be paid to a
beneficiary to be designated by Wyatt, or in the absence of his
designation, by his surviving spouse, in writing to the Company, provided
that in the event no beneficiary has been designated or the designated
beneficiary does not survive such spouse for a period of 30 days, such
excess shall be paid to the personal representative of the surviving
spouse.
5. Annual Compensation. For purposes hereof, Wyatt will be deemed
to have been employed for the entire calendar month during which his
employment terminates and his annual compensation shall be measured on the
basis of twelve month periods ending with the last day of such month.
"Compensation" for purposes hereunder shall be the total earnings
paid in cash to Wyatt by the Company and properly reportable on IRS Form W-
2, including base pay, bonuses, car and financial planning allowances, but
not including Company contributions under any group life insurance or other
qualified or non-qualified employee retirement or benefit plan or any
payment designated by the Company as an allowance for Wyatt's business
expenses. Compensation shall not be reduced by the amount of any elective
contributions by Wyatt under any 40l(k), Flexible Spending Account or Group
Medical Insurance plan of the Company. Management Incentive Plan bonuses
which are normally awarded in the first half of March of each year if the
Plan criteria are met, shall be deemed to have been received, whether or
not payment is deferred, in the calendar year with respect to which such
bonus is earned, allocated thereto on a monthly basis. Other compensation
whose receipt is deferred by Wyatt shall be deemed to have been received
for the purposes hereof at the time such compensation would have been
received, if there had been no such deferral.
In the event Wyatt's compensation for the last twelve-month period
cannot be determined by the time the first payment becomes due hereunder,
e.g., due to a bonus payable on the results of the Company's operations for
a year in which Wyatt retires prior to the end of such year, then the first
payments due hereunder shall be based on the estimated amount that Wyatt
will be entitled to actually receive. The exact amount due Wyatt shall be
determined as soon as practicable, provided that following such
determination and corresponding adjustment in the monthly payment to Wyatt
the Company shall pay Wyatt an additional lump sum to adjust for any
underpayment to Wyatt and Wyatt shall refund to Company any overpayment.
6. Primary Social Security Benefit. An Employee's Primary Social
Security Benefit shall be determined on the day prior to the date on which
Wyatt's employment with the Company terminates and shall be equal to the
estimated old age retirement benefit Wyatt will be entitled to receive
under the federal Social Security Act at age 65 (or if different by law
such other age as may then entitle a person to receive his social security
retirement benefits based on his unreduced "primary insurance amount" under
the Social Security Act as then in effect) based on his earnings up to the
day preceding his termination date.
-4-
<PAGE>
7. Payment. (a) Amounts payable under the above paragraphs
will be paid on or about the end of the month to which the payment relates.
Payment will be made for the full month in which Wyatt's death occurs.
(b) Notwithstanding any otherwise applicable provision
of this agreement to the contrary, the retirement benefits due to Wyatt (or
his beneficiary) under this Agreement, if any, shall be paid in a lump sum
upon the occurrence of (i) a termination of Wyatt's employment under
circumstances that entitle Wyatt to payment of a severance benefit under
Paragraph 1 of the "Change in Control Agreement" dated January 1, 1992
between the Company and Wyatt (or, if at the time of such termination the
Change in Control Agreement is no longer in effect, under circumstances
that would entitle Wyatt to such payment if such Agreement were in effect),
or (ii) a Change in Control (as defined in the Change in Control Agreement)
at any time following Wyatt's termination of employment from the Company.
Such lump-sum payment shall be the present value of the benefit payable to
Wyatt hereunder using the Pension Benefit Guaranty Corporation immediate
annuity interest rate as is in effect for the month in which the payment is
made and the mortality table based on the UP-1984 Table, all as in
accordance with generally acceptable actuarial principles.
8. Confidential Information, Covenant Not to Compete and Non-
Solicitation.
(a) Wyatt agrees that he will not use or disclose to anyone (other
than for the benefit of the Company) either during the term of his
employment or at any time thereafter, any Confidential Information obtained
by him or made known to him while employed by the Company, and will make
all reasonable, necessary and appropriate efforts to safeguard all such
Confidential Information from disclosure to anyone other than as permitted
hereby. As used herein "Confidential Information" includes, but is not
limited to, trade secrets, business and sales policies, methods, plans and
customer lists, including any lists written or other of such persons or
entities, whether of the Company or any other organization associated or
affiliated with or owned by or owning the Company, but shall not include
information which becomes generally available to the public other than as a
result of disclosure by Wyatt's act or default or the acts or default of
Wyatt's agents or representatives.
(b) Provided the Company is making the payments to Wyatt as required
pursuant to this Agreement following his termination of employment, Wyatt
agrees that he will not during his life, either alone or in conjunction
with any individual, firm, corporation, association or other entity (except
for the benefit of the Company), either as principal, agent, officer,
employee, director, investor, consultant, shareholder, associate or in any
other capacity whatsoever:
(i) carry on, participate in, or be engaged in, concerned with,
or interested in, directly or indirectly, any undertaking which
is in whole or in part competitive with any of the businesses
carried on by the Company within the respective territories in
which such businesses are then carried on (except for any equity
share investment in a public company whose shares are listed on a
recognized stock exchange where such share investment does not in
the
-5-
<PAGE>
aggregate exceed 5% of the issued equity shares of such company);
(ii) attempt to solicit any suppliers, customers, employees or
independent dealers away from the Company;
(iii) carry on, participate in, or be engaged in, concerned
with, or interested in, directly or indirectly, any undertaking
which bears any name similar to that of the Company; or
(iv) take any act as a result of which the relations between
the Company and its suppliers, customers, employees or others may be
impaired or which may otherwise be detrimental to the business of
the Company.
Competition shall be deemed to include (i) any dealings with the Company's
employees or independent dealers, and (ii) the use in any way of the
Company's customer or mailing lists. The reference to Company in this
Paragraph 8 shall include all subsidiaries and affiliated entities of the
Company. Wyatt agrees that the remedy at law for breach by him of the
foregoing covenant will be inadequate and that the Company shall be
entitled to injunctive relief.
(c) Wyatt's obligations under the foregoing subparagraphs of this
paragraph 8 shall continue notwithstanding the termination of his rights to
receive any payments hereunder.
9. Forfeiture of Payments. The Company may discontinue payments
hereunder and have no further liability under this agreement in the event
that Wyatt fails to observe any of the terms of this agreement, provided,
however, that if his failure to observe is limited to the terms of
subparagraph 8(b) above and is his first failure, the Company shall give
him written notice thereof and if, within l5 days of such notice, Wyatt
gives the Company written notice of his discontinuance of the activity
complained of, payments hereunder shall be reinstituted.
10. Assignment. Neither Wyatt nor his wife shall have any right to
commute, encumber, or dispose of the right to receive payments hereunder,
which payments and the right thereto are expressly declared to be
nonassignable and nontransferable, except as provided in Paragraph 4(d).
All rights under this agreement are merely unsecured contractual
rights of Wyatt or Wyatt's spouse against the Company. Wyatt and Wyatt's
spouse are unsecured general creditors of the Company. The Company agrees
to set aside certain assets in a trust for the payment of benefits under
this agreement. In the event of the insolvency or bankruptcy of the
Company, any assets set aside in such trust shall at all times be subject
to the claims of the Company's general creditors as if such assets were
general assets of the Company.
-6-
<PAGE>
11. Binding Effect. This agreement shall be binding upon and inure
to the benefit of any successor of the Company and any such successor shall
be deemed substituted for the Company under the terms of this agreement.
As used in this agreement, the term "successor" shall include any person,
firm, corporation, or other business entity which at any time, whether by
merger, purchase, or otherwise, acquires all or substantially all of the
assets or business of the Company. To the extent any payment required to
be made by the Company under this agreement is instead made by the Trust
created by the Company for that purpose, the Company's obligation under
this agreement will to such extent be deemed satisfied. If the Trust for
any reason fails to make a payment required to be made by the Company under
this agreement, the Company remains fully liable for such payment under the
terms of the agreement.
12. Not an Employment Agreement. This agreement is not an
employment agreement and the Company reserves the right to discharge Wyatt
with or without cause. The agreement in no way affects his rights under
the Stanhome Inc. Employees' Profit-Sharing Plans or Pension Plans or under
any Stanhome group or other insurance policy.
13. Notices. Any notice required or permitted to be given under this
agreement shall be sufficient if in writing, and if sent by registered
mail, or delivered, to his residence in the case of Mr. Wyatt, at 11
Bittersweet Lane, Wilbraham, Massachusetts 01095, or in the case of the
Company, to its principal office at 333 Western Avenue, Westfield,
Massachusetts, Attn: Assistant Secretary. Either party may change the
address to which notices are to be addressed by notice in writing given to
the other in accordance with the terms hereof.
14. Waiver of Breach. The waiver by the Company of a breach of any
provision of this agreement by Wyatt shall not operate or be construed as a
waiver of any subsequent breach by Wyatt.
15. Governing Law. This agreement shall be deemed made in the
Commonwealth of Massachusetts, and its form, execution, validity,
construction and performance shall be construed in accordance with the laws
of said Commonwealth.
16. Entire Agreement. This agreement constitutes the entire agreement
of the parties. It may not be changed orally but only by an agreement in
writing signed by Wyatt and for the Company by an officer duly authorized
by the Company's Board of Directors.
17. Severability. In the event that any of the terms or provisions of
this agreement or any portion of such terms or provisions shall be
determined to be invalid or inoperative, such determination shall not
affect the efficacy of the balance of the agreement and any such invalid or
inoperative term or provision shall be deemed severable.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement.
ATTEST: STANHOME INC.
/s/Mark I. Cohen BY:/s/G.William Seawright
Mark I. Cohen G. William Seawright
Assistant Secretary President and CEO
/s/Bruce H. Wyatt
Bruce H. Wyatt
-8-
<PAGE>
EXHIBIT "A"
Life Annuity Value
<TABLE>
<CAPTIONS>
Age Value of $1. payable annually
for life, with first payment
Male Female at age shown on left
<S> <C> <C>
49 55 11.7932
50 56 11.6405
51 57 11.4831
52 ` 58 11.3209
53 59 11.1537
54 60 10.9814
55 61 10.8037
56 62 10.6203
57 63 10.4301
58 64 10.2325
59 65 10.0274
60 66 9.8156
61 67 9.5977
62 68 9.3737
63 69 9.1434
64 70 8.9066
65 71 8.6649
66 72 8.4198
67 73 8.1739
68 74 7.9286
69 75 7.6846
70 76 7.4421
</TABLE>
<PAGE>
[LOGO] Stanhome, Inc. EXHIBIT 10(h)
PERSONAL AND CONFIDENTIAL
July 9, 1997
Mr. John J. Dur
Stanhome Worldwide Direct Selling Group, Inc.
Tour Cofonca
6, rue Jean Jaures
92807 Puteaux, France
Dear John:
This letter constitutes the entire agreement between you and Stanhome Inc.
(the "Company") and its affiliates with respect to the wind-up of your
assignment in Paris as President and CEO of Worldwide Direct Selling, and
your efforts on behalf of the Company for the sale of this Business Group
("WWDSGroup"). It covers all regular plus incentive compensation pertain-
ing to your employment plus the ongoing effort to sell the business,
including the possibility of a management led buyout ("MBO"), and including
your eventual repatriation to the USA on or about December 31, 1997.
The payments to you described in this letter are made in recognition of
your efforts on behalf of the Company up to the earlier of closing or
December 31, 1997 and shall not be reduced in the event you are paid any
compensation by a purchaser.
This letter supersedes all other agreements, discussions and
representations, whether oral or written, regarding any payments and
benefits on separation and/or upon sale of the business to any party,
including those benefits set out in our July 3, 1996 and December 9, 1996
letters.
Please read this agreement carefully and seek appropriate advice of an
attorney.
1. Employment
You will continue as an employee until December 31, 1997 (the "Termination
Date"). If you voluntarily resign from your employment without our
agreement or are earlier terminated for cause, you will not participate in
the special severance program and special 200% Management Incentive Plan
("MIP") outlined following. Cause is defined as fraud, gross negligence or
gross willful misconduct. If, however, a sale of the business or MBO led
by you or others is completed and closed prior to December 31, 1997, your
WWDSGroup position would cease with the sale closing. As of the
Termination Date, your salary will cease and any entitlement you may have
under any Stanhome-provided benefit programs will terminate except as
required by applicable law and regulation or as set forth below. Should a
Stanhome Inc. change in control situation occur before your Termination
Date, you would be entitled to applicable benefits under your Stanhome Inc.
Change in Control Agreement dated April 30, 1996 to the extent that they
are greater than those outlined in this letter.
2. Consideration
Even if the sale closing is earlier, we will pay you your base salary and
applicable allowances and benefits through December 31, 1997. During the
twenty-four (24) month period immediately following December 31, 1997, you
or your estate will receive by direct deposit into your designated bank
account(s) 24 severance payments from the Company of $26,033.33 per month,
less standard deductions. Such severance payments are in addition to
anything of value to which you are already entitled (other than any
severance payments mandated under any and all applicable laws or payable
<PAGE>
under the Company's Severance Policy), including, without limitation,
additional consideration as set forth in Paragraphs A through G below, and
are not intended to replace any accrued but unpaid compensation under any
plan which the Company or any of its affiliates has and to which you might
be otherwise entitled. The Company also agrees to provide to you, if
required, within twelve months from the Termination Date and at its cost
the services of an outplacement consultant firm appropriate to your
position that is selected by the Company. In addition, after the
Termination Date, the Company will promptly deliver to you an appropriate
amendment to your Certificate of Grant relating to the Company's 1991 Stock
Option Plan which will effect a three-year extension of the vesting period
for any stock options granted to you thereunder. Any unused vacation for
1997 will be paid out at the time of your termination. Because your
severance benefits are being made on a repatriated basis, all payments made
to you or your estate following your termination will not be tax equalized
in accordance with the Company's Expatriate Policy and the above referenced
July 3, 1996 and December 9, 1996 letters and Paragraph B) below.
A) Special MIP
For 1997, the special MIP will be at 200% of target (in your case it is
2 x 50% or 100% of base pay) earned upon completion of a Board approved
sale of the business, even if the actual closing occurs at a later date.
If Board approval of a sale is not achieved in 1997, your regular MIP
target at 50% of base pay will be based solely on achievement of 1997
financial targets for the WWDSGroup outlined in my March 28, 1997
letter, which are:
Sales $177,000,000 @ 15%
Operating Income $13,000,000 @ 70%
Cash Component $40,709,000 @ 15%
Because the special MIP is being offered to you as incentive in
conjunction with the anticipated sale, and if the sale is approved by
the Board in 1997 and subsequently closes, the MIP bonus will be fully
credited toward the calculation of your pension benefits as if earned
and payment received in 1997 and shall be paid by March 31, 1998. And
regardless of the exact payment date, if the 1997 MIP is considered part
of 1997 compensation for French tax purposes, such French taxes will be
covered by the Company's Expatriate Policy.
B) Tax Related Matters and Equalization
All Expatriate tax issues, originating while employed, will be the
responsibility of the Company in accordance with the Company's
Expatriate Policy. The Company will pay for your tax preparation and
advice for calendar 1997 and 1998.
Tax equalization, with no avoidance of obligations to U.S. or French
authorities, will continue to be our policy. The Company will be
responsible for dealing with the applicable taxing authorities regarding
all tax equalization questions. You will be entitled to any foreign tax
credits that remain unused after the final tax equalization payment is
made.
C) MBO Advice
You are authorized to spend up to $50,000 for professional and expert
advice surrounding your MBO initiative. These funds can be used as you
see fit with professionals of your choosing. As a matter of
administration, these funds should be processed and paid by Stanhome
Worldwide Direct Selling Group, Inc., with the understanding that they
will be added back to the above figures for WWDSGroup MIP calculation
purposes should the sale not occur in 1997. You are also authorized
reasonable travel and entertainment expenses directly associated with
your pursuit of an MBO. You will track all expenses in connection with
this activity in a separate, easily auditable account.
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<PAGE>
D) MBO Bonus
In addition, to assist your MBO bid, and in consideration of the special
circumstances surrounding the Company's sale of this Business via your
MBO initiative, an "MBO bonus" of $100,000 after tax is offered should
your MBO proposal be the winning bid, the Board accepts the offer, and
the transaction closes with you in the buyout group. This $100,000
bonus is offered in lieu of and supersedes any prior express or implied
offer of help discussed in conjunction with any third party or other
potential financial bidder making an offer that might be or have been --
with or without your participation.
E) Repatriation
You will continue to be eligible for the Company Relocation Program for
up to eighteen months following December 31, 1997. Reimbursement will
be based on actual expenses incurred in returning to your origination
point from Paris or other move of equivalent costs.
F) Pension
Your pension will be calculated as of your Termination Date and will
include the additional five years of service and five years of age as
part of the previously announced Stanhome restructuring initiative. The
Final Average Earnings on which your pension will be determined will
include your 1997 MIP award, but it will not include the "MBO Bonus", if
paid. The incremental pension benefit generated by the inclusion of the
1997 MIP award will be made a part of your non-qualified pension.
G) Insurance Benefits
We will continue to make current employer contributions for your
continued medical and life insurance benefits during the period of the
severance payments. If, however, you should be re-employed before the
severance and medical benefits lapse, the medical and life insurance
benefits will terminate upon your becoming eligible for coverage under a
new employer's medical plan.
3. Releases
The attached Release Agreement will be required to be effective and
enforceable upon the actual termination of your employment.
STANHOME INC.
By: /s/G. William Seawright /s/John J. Dur
G. William Seawright John J. Dur
President and Chief Executive
Officer
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<PAGE> EXHIBIT 10(i)
FORM OF RETENTION BENEFITS PLAN AS DESCRIBED IN THE ESTIMATED TERMINATION
BENEFITS SUMMARY LETTERS FOR STANHOME INC. CORPORATE HEADQUARTERS EXEMPT
EMPLOYEES
Retention Benefits
Since you have been designated as an Associate who the Company will need to
help effect the sale of, or other alternative transaction relating to, the
Direct Selling business and the transition of pertinent corporate
responsibilities to Enesco, we will be extending to you certain
supplemental benefits which would provide you with an additional __ weeks
of payments totaling $_______. These Retention Benefit payments will not
be doubled in connection with termination following any Change in Control
as defined under the Company's Severance Policy. Additionally, you will be
eligible for extended medical coverage. The purpose of these extended
benefits is to compensate you for your commitment to provide continued
service to Stanhome at this critical time for Stanhome and without the
knowledge of exactly how long your services will be needed going forward.
<PAGE> EXHIBIT 10(j)
SECOND AMENDMENT TO
STANHOME INC. SUPPLEMENTAL PENSION PLAN
WHEREAS, Stanhome Inc., a Massachusetts corporation (the "Company"),
has heretofore adopted and maintains a supplemental pension plan for the
benefit of certain of its employees designated the "Stanhome Inc.
Supplemental Pension Plan" (the "Plan"); and
WHEREAS, the Company desires to amend in certain respects;
NOW, THEREFORE, pursuant to the power of amendment contained in
Section 5 of the Plan, Section 3 of the Plan is amended, effective January
1, 1997, to add a new paragraph at the end thereof to read as follows:
Notwithstanding any provision of this Section 3 to the
contrary, the retirement benefits payable to a Participant (or his
beneficiary) under the Plan shall be paid in a lump sum upon the
occurrence of (i) a termination of Participant's employment under
circumstances that entitle Participant to payment of a severance
benefit under Paragraph 1 of the "Change in Control Agreement"
between the Company and the Participant (or, if at the time of such
termination the Change in Control Agreement is no longer in effect,
under circumstances that would entitle the Participant to such
payment if such Agreement were in effect), or (ii) a Change in
Control (as defined in the Change in Control Agreement) at any time
following the Participant's termination of employment from the
Company. Such lump-sum payment shall be the present value of the
Supplemental Pension benefit payable to the Participant under the
Plan using the Pension Benefit Guaranty Corporation immediate annuity
interest rate as is in effect for the month in which the payment is
made and the mortality table based on the UP-1984 Table, all as in
accordance with generally acceptable actuarial principles.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officers this 5th day of June, 1997.
STANHOME INC.
By:/s/G. William Seawright
Title:President & CEO
ATTEST:
/s/Bruce H. Wyatt
Title:Secretary
<PAGE> EXHIBIT 10(k)
STANHOME SUPPLEMENTAL INVESTMENT SAVINGS PLAN
(As Amended and Restated
Effective January 1, 1997)
Preamble. Stanhome Inc., a Massachusetts corporation (the
"Company"), adopted the Stanhome Supplemental Investment Savings Plan to
provide benefits to "a select group of management or highly compensated
employees," within the meaning of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") effective May 1, 1994. This document is
an amendment and restatement of the Plan effective January 1, 1997. The
Plan, as amended and restated, is intended to provide the opportunity for
eligible employees of the Company and certain of its subsidiaries to earn
retirement benefits not otherwise provided under the Stanhome Investment
Savings Plan (the "Qualified Plan") on account of their exclusion from
continued participation in the Qualified Plan, without regard to the
limitations imposed by sections 401(a)(17), 401(k)(3), 401(m), 402(g) and
415 of the Internal Revenue Code of 1986, as amended (the "Code"). The
terms of this restated Plan shall apply with respect to each Eligible
Employee who terminates employment with an Employer on or after January 1,
1997. Nothing in this amended and restated Plan document shall adversely
affect the rights of such employees to their account balances hereunder as
determined in accordance with the terms of the Plan as in effect on
December 31, 1996.
<PAGE>
Section 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 the Plan
or below:
(a) Plan. The Stanhome Supplemental Investment Savings Plan,
as from time to time amended.
(b) Eligible Employee. For any Plan Year, an Employee who (i)
is excluded from participation in the Qualified Plan for such Plan
Year because he or she is a "highly compensated employee" within the
meaning of section 414(q) of the Code for such Plan Year and (ii) has
entered into an agreement with the Company which provides for
payments by the Company to the Employee if a "change in control" of
the Company occurs.
(c) Participant. An Eligible Employee who elects to
participate in the Plan. An election to participate in the Plan for
a Plan Year shall be made by December 31 of the preceding Plan Year;
provided that, with respect to an employee who first becomes an
Eligible Employee on or after January 1, 1997, such election shall be
made within 30 days after the date on which the employee becomes an
Eligible Employee.
(d) Account. An account established on behalf of a
Participant pursuant to the Plan.
(e) Compensation. "Compensation" as determined under the
Qualified Plan, but determined without regard to the limitations
prescribed by section 401(a)(17) of the Code.
(f) Valuation Date. The date as of which earnings (or losses)
are credited to an Account pursuant to Section 3 of the Plan.
(g) Trust. A trust entered into between the Company (acting
on behalf of the Employers) and a trustee for the purpose of
administering assets of the Company to be used for the purpose of
satisfying the obligations of the Company and the Employers under the
Plan. Any such trust shall be established in such manner so as to be
a "grantor trust" of which the Company and the Employers are the
grantors, within the meaning of section 671 et. seq. of the Code.
-2-
<PAGE>
Section 2. Accounts. (a) Establishment of Accounts. There
shall be established on the books of the Company and of each Employer an
Account in the name and on behalf of each Eligible Employee thereof who
elects to participate in the Plan. Such Account shall be credited with
amounts credited thereto on behalf of the Eligible Employee under the terms
of the Plan as in effect on December 31, 1996, plus any amounts credited
thereto pursuant to this Section on or after January 1, 1997.
(b) Elective Credits. An Eligible Employee shall elect to
participate in the Plan in accordance with Section 1(c) of the Plan for a
Plan Year by electing, on a form provided by the Committee, to reduce his
or her Compensation for such Plan Year by a specified whole percentage not
less than 1 nor more than 15 percent, and to have such amount credited to
the Participant's Account under the Plan. The Participant's Compensation
shall be reduced in accordance with such election, and the Participant's
Account shall be credited by the amount of such reduction, at the same time
that salary reduction contributions of participants under the Qualified
Plan are delivered to the trustee under the Qualified Plan.
Prior to the first day of a Plan Year, a Participant may change
or suspend the amount to be credited to his or her Account for such Plan
Year, subject to such rules and procedures as may be prescribed by the
-3-
<PAGE>
Committee with respect to the Plan. Notwithstanding the foregoing, the
amount of salary reduction under the Plan shall in no event be subject to
the limitations similar to those contained in Sections 4.2, 4.4 and 7.5 of
the Qualified Plan (relating to limitations prescribed by sections
401(k)(3), 402(g) and 415 of the Code).
(c) Matching Credits. An amount shall be credited to each
Participant's Account under the Plan equal to the amount of matching
contributions that would be made by the Participant's Employer on the
Participant's behalf under Section 4.3 of the Qualified Plan as if the
amounts credited to the Participant's Account pursuant to subsection (b) of
this Section for the period to which such matching contributions relate had
been made under Section 4.1 of the Qualified Plan; provided that the amount
of matching credits under the Plan shall be determined without regard to
Sections 4.4 and 7.5 of the Qualified Plan (relating to limitations
prescribed by sections 401(m) and 415 of the Code). Such amount shall be
credited under the Plan as of the date matching contributions made on
behalf of participants under the Qualified Plan are delivered to the
trustee under the Qualified Plan. Notwithstanding the terms of the
Qualified Plan, matching contributions shall not be made under the Plan in
the form of Company stock.
-4-
<PAGE>
Section 3. Earnings on Accounts. As of the close of each
business day, the Company and each Employer shall credit to or charge
against, as the case may be, each Account established on its books pursuant
to Section 2 of the Plan, an amount representing investment gains or losses
in respect of the balance of such Account. The amount of such gains or
losses in respect of the Account of any Participant shall be determined by
the Committee to be equal to the net gain or loss that would have been
earned on an amount equal to the balance of such Participant's Account as
of the close of the preceding business day, as adjusted for any credits,
withdrawals or distributions, based on the hypothetical investment
elections made by the Participant, as described below. Each Participant
shall be entitled to elect to have the earnings in respect of his or her
Plan Account determined as if an amount equal to the balance thereof were
invested among the investment funds available from time to time under the
Qualified Plan other than the Stanhome Stock Fund and the Putnam Stable
Value Fund, or such other investment funds designated for this purpose by
the Committee. Such elections shall be subject to the same provisions
regarding the time, manner and portion of the account subject to such
election as are applicable from time to time under the Qualified Plan.
-5-
<PAGE>
Section 4. Vesting. Amounts credited to a Participant's Account
pursuant to the terms of the Plan shall be fully vested and not subject to
forfeiture for any reason.
Section 5. Hardship Withdrawals. If a Participant experiences
an "unforeseeable financial emergency," as defined below, he or she may
request the Committee to (i) suspend any further reductions in Compensation
pursuant to Section 2 above, (ii) receive a complete or partial distribution of
the Participant's Account under the Plan or (iii) do both (i) and
(ii) above. The amount of any distribution pursuant to this Section 5
shall not exceed the lesser of (i) the balance of the Participant's Account
under the Plan, determined as of the Valuation Date next following the date
of such request, and (ii) the amount reasonably necessary to satisfy such
unforeseeable financial emergency. For purposes of this Section 5,
"unforeseeable financial emergency" shall mean an unanticipated emergency
that is caused by an event beyond the control of the Participant that would
result in severe financial hardship to the Participant resulting from (i) a
sudden and unexpected illness or accident of the Participant or a dependent
of the Participant, (ii) a loss of the Participant's property due to
casualty or (iii) such other extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant, all as
determined in the sole discretion of the
-6-
<PAGE>
Committee.
Section 6. Distributions. The distribution of a Participant's
Account under the Plan shall be made in the form of five annual
installments commencing as soon as practicable after the first day of the
calendar year which follows the calendar year in which the Participant
terminates employment, unless the Participant elects, in the time
prescribed by the Company, but in no event later than December 31 of the
calendar year prior to the calendar year in which the Participant
terminates employment, to receive payment of such account in the form of a
lump sum as soon as administratively practicable after the date of the
Participant's termination of employment. An election to receive payment in
the form of a lump sum may be revoked by the Participant in the time period
prescribed by the Company, but in no event later than December 31 of the
calendar year prior to the calendar year in which the Participant
terminates employment. Notwithstanding the foregoing, in the event the
Participant's employment is terminated by an Employer, the Company, in its
sole discretion, may cause the Participant's Account to be paid in a lump
sum distribution as soon as practicable after such termination of
employment.
-7-
<PAGE>
The amount of each annual installment payment to be made under
this Section shall be determined by multiplying the balance of the
Participant's Account as of the last day of the prior calendar year (or
such other date determined by the Company) by a fraction, the numerator of
which is one and the denominator of which is the number of installments
remaining to be made. The amount of any lump sum payment to be made under
this Section shall be determined as of the Valuation Date coinciding with
or next following the valuation date used to determine the amount to be
distributed to or on behalf of a similarly situated participant under the
Qualified Plan (or such other date determined by the Company).
Notwithstanding the foregoing, in the event of the occurrence
of a Change in Control (as defined in Appendix A hereto) prior to the
complete distribution of a Participant's Account, the remaining balance of
such Participant's Account shall be paid to the Participant (or the
Participant's beneficiary) in a single lump sum upon the occurrence of (i)
such Change in Control, in the case of a Participant who terminated
employment prior thereto or (ii) the Participant's termination of
employment, if such termination of employment occurs during the two-year
period beginning on the date of such Change in Control, for any reason
other than death, Disability (as defined in Appendix A hereto), retirement,
termination for Substantial Cause (as defined in Appendix A hereto) or
-8-
<PAGE>
voluntary termination without Good Reason (as defined in Appendix A
hereto).
Section 7. Beneficiaries. If a Participant shall die while
any amount remains credited to the Account established on his or her behalf
pursuant to Section 2 of the Plan, such amount shall be distributed at the
time and in the manner prescribed by Section 6 of the Plan to the
beneficiary or beneficiaries as the Participant may, from time to time,
designate in writing delivered to the Committee. A Participant may revoke
or change his or her beneficiary designation at any time in writing
delivered to the Committee. If a Participant does not designate a
beneficiary under the Plan, or if no designated beneficiary survives the
Participant, the balance of his or her Account shall be distributed to the
person or persons entitled to his or her account under Section 8.5 of the
Qualified Plan (or who would be so entitled if there were then an amount
remaining unpaid under the Qualified Plan).
Section 8. Amendment and Termination. The 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 their
-9-
<PAGE>
beneficiaries in respect of amounts credited to their Accounts as of the
date of such amendment or termination.
Section 9. Application of ERISA. The Plan is intended to be
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. The 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 the Plan. Any payments hereunder shall be made out of the
general assets of the Company and the Employers.
Section 10. Administration. The Committee shall be charged
with the administration of the 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 10 of the Qualified Plan
(other than Section 10.3 relating to qualified domestic relations orders)
are hereby incorporated herein by reference, and shall be applicable as if
such provisions were set forth herein.
Section 11. Nonassignment of Benefits. Notwithstanding
anything contained in the Qualified Plan to the contrary, it shall be a
-10-
<PAGE>
condition of the payment of benefits under the 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.
Section 12. No Guaranty of Employment. Nothing contained in
the 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.
Section 13. Adoption By Employers. Any corporation which is
or becomes an "Employer" under the Qualified Plan may, with the consent of
the Company, become a participating Employer in the 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 for which the Plan shall be effective in respect of the employees of
such corporation.
-11-
<PAGE>
Section 14. Trust. The Company (acting on behalf of 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 liabilities
created with respect to the amounts credited to the Accounts established
hereunder. The existence of the Trust shall not relieve the Employers of
their liabilities under the Plan, but the Employers' obligations under the
Plan shall be deemed satisfied to the extent paid from the Trust.
Section 14. Miscellaneous. (a) Certain Qualified Plan
Provisions. Except as otherwise provided herein, the miscellaneous
provisions contained in Sections 13.6 (relating to gender and plurals),
13.7 (relating to applicable law) and 13.8 (relating to severability) 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 charged against the Accounts in such amounts and at such
time and in such manner as the Committee, in its sole discretion, shall
determine.
-12-
<PAGE>
(c) FICA Taxes. For each calendar year in which a
Participant's Compensation is reduced pursuant to the Plan, his or her
Employer shall withhold from that portion of the Participant's payments of
compensation the taxes imposed upon the Participant pursuant to section
3121 of the Code in respect of the amount by which the Participant's
Compensation is reduced.
(d) Successors and Assigns. The provisions of the Plan shall
bind and inure to the benefit of each Employer and its successors and
assigns, as well as each Participant and his or her beneficiaries and
successors.
-13-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be executed by its duly authorized officers this 5th day of August, 1997.
STANHOME INC.
By: /s/G. William Seawright
Title: President & CEO
ATTEST:
/s/Bruce H. Wyatt
Title: Secretary
-14-
<PAGE>
APPENDIX A
For purposes of this Plan:
1. The term "Change in Control" means a change in control of a
nature that would, in the opinion of Company counsel, be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); provided that, without limitation, such a Change in
Control shall be deemed to have occurred if
(i) any "Person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) (other than the Company or any subsidiary
of the Company, any trustee or fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries or a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
the stock of the Company) becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities; or
(ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board and any new
director (other than a director designated by a Person who has
entered into an agreement with the Company to effect a transaction
described in clause (i), (iii) or (iv) of this paragraph) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds 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
-15-
<PAGE>
(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.
2. The term "Disability" means a medically determinable physical
or mental condition which renders an Employee incapable of performing the
work for which he was employed at his normal place of employment for at
least six consecutive months. A termination by reason of Disability shall
not be effective unless the Employee fails to return to work at his normal
place of employment within thirty (30) days after receiving written notice
of termination from the Company.
3. The term "Substantial Cause" means (i) the willful and
continued failure by an Employee to substantially perform the Employee's
duties with the Company (other than any such failure resulting from the
Employee's incapacity due to physical or mental illness or any such actual
-16-
<PAGE>
or anticipated failure after the issuance of a notice of termination for
Good Reason by the Employee) after a written demand for substantial
performance is delivered to the Employee by the board of directors of the
Company, which demand specifically identifies the manner in which the board
of directors believes that the Employee has not substantially performed the
Employee's duties, or (ii) the willful engaging by the Employee 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 Employee's part
shall be deemed "willful" unless done, or omitted to be done, by the
Employee not in good faith and without reasonable belief that the
Employee's act, or failure to act, was in the best interest of the Company.
4. For the purposes of this Plan, a voluntary termination under
any of the following circumstances shall be considered to be for "Good
Reason":
(i) assignment to the Employee of duties or title inconsistent
with his status as an officer, or removal of the Employee from
involvement in management decision-making functions consistent with
his prior experience with the Company;
(ii) failure to continue the Employee's participation in the
Company's Management Incentive Plan or in any successor or substitute
plan or policy equivalent to the Management Incentive Plan as in
effect immediately prior to the Change in Control;
-17-
<PAGE>
(iii) failure to pay when due the Employee's base salary, or
any installment of deferred compensation when due, or a reduction in
the Employee's base salary, or a failure to continue in effect for
the Employee's benefit fringe benefits in which he now participates,
including retirement plans, health and insurance plans, vacation
plans, and automobile programs, or the taking of any action which
materially reduces such benefits; provided that, unless such
reduction in base salary or failure to continue benefits occurs
within two years after a Change in Control, it will not be considered
Good Reason if taken in connection with a general reduction
applicable to all officers;
(iv) assignment of the Employee to any location other than
within 50 miles of his present office location; or
(v) a requirement that the Employee travel away from his
office location more than 25% of the working days in the year,
provided that the Employee may be required to increase his travel by
10% of his working days if the Employee had been traveling more than
15% of his working days at the time of the Change in Control.
Working days for these purposes shall exclude vacation days.
-18-
<TABLE> <S> <C>
<ARTICLE> 5 EXHIBIT 27
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 7,016
<SECURITIES> 0
<RECEIVABLES> 163,039
<ALLOWANCES> 12,754
<INVENTORY> 91,259
<CURRENT-ASSETS> 252,175
<PP&E> 80,292
<DEPRECIATION> 44,727
<TOTAL-ASSETS> 428,087
<CURRENT-LIABILITIES> 177,879
<BONDS> 0
0
0
<COMMON> 3,154
<OTHER-SE> 222,069
<TOTAL-LIABILITY-AND-EQUITY> 428,087
<SALES> 239,062
<TOTAL-REVENUES> 239,062
<CGS> 125,836
<TOTAL-COSTS> 125,836
<OTHER-EXPENSES> 84,263
<LOSS-PROVISION> 2,863
<INTEREST-EXPENSE> 3,690
<INCOME-PRETAX> 21,344
<INCOME-TAX> 9,392
<INCOME-CONTINUING> 11,952
<DISCONTINUED> (32,142)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,190)
<EPS-PRIMARY> (1.13)
<EPS-DILUTED> (1.13)
</TABLE>
