<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 September 30, 1995
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-8714
TAMBRANDS INC.
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(Exact name of registrant as specified in its charter)
Delaware 13-1366500
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
777 Westchester Avenue, White Plains, New York 10604
- ---------------------------------------------- -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number,
including area code (914) 696-6000
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x . No .
----- ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, par value $.25 per share: 36,685,538 shares
as of October 31, 1995
Index to Exhibits is set forth at page 9.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
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TAMBRANDS INC. AND SUBSIDIARIES
Consolidated Statements of Earnings and Retained Earnings
Three and Nine Months Ended September 30, 1995 and 1994
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
---------------------------- ----------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $178,116 $175,336 $521,401 $480,133
Cost of products sold 61,288 57,733 175,020 154,244
------------ ------------ ------------ ------------
Gross profit 116,828 117,603 346,381 325,889
Selling, administrative and general expenses:
Marketing, selling and distribution 57,892 62,581 183,180 172,154
Administrative and general 13,701 12,690 41,323 40,262
------------ ------------ ------------ ------------
71,593 75,271 224,503 212,416
------------ ------------ ------------ ------------
Operating income 45,235 42,332 121,878 113,473
Interest, net and other (2,301) (2,613) (7,329) (7,005)
Litigation charge -- -- (11,396) --
------------ ------------ ------------ ------------
Earnings before provision for income taxes 42,934 39,719 103,153 106,468
Provision for income taxes 16,228 14,695 40,588 39,393
------------ ------------ ------------ ------------
Net earnings 26,706 25,024 62,565 67,075
Retained earnings at beginning of period 460,740 441,392 457,071 430,822
------------ ------------ ------------ ------------
487,446 466,416 519,636 497,897
------------ ------------ ------------ ------------
Dividends 16,125 15,397 48,381 46,581
Net issuance of treasury stock 639 400 573 697
------------ ------------ ------------ ------------
16,764 15,797 48,954 47,278
------------ ------------ ------------ ------------
Retained earnings at end of period $470,682 $450,619 $470,682 $450,619
============ ============ ============ ============
Net earnings per share $0.73 $0.68 $1.71 $1.81
============ ============ ============ ============
Dividends per share $0.44 $0.42 $1.32 $1.26
============ ============ ============ ============
Average shares of Common Stock
outstanding during the period 36,640 36,645 36,661 37,090
</TABLE>
See accompanying notes to consolidated financial statements on page 5.
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<PAGE>
TAMBRANDS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, 1995 and December 31, 1994
(in thousands)
<TABLE>
<CAPTION>
1995
(Unaudited) 1994
------------ ------------
<S> <C> <C>
ASSETS
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Current assets:
Cash and cash equivalents $17,553 $13,876
Accounts receivable, less allowance
for doubtful accounts of $1,478
in 1995 and $1,456 in 1994 114,081 80,593
Inventories:
Raw materials 17,706 12,967
Finished goods 27,462 24,990
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45,168 37,957
Deferred taxes on income 16,750 18,892
Prepaid expenses and other current assets 26,720 25,818
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Total current assets 220,272 177,136
Property, plant and equipment 340,591 314,457
Less accumulated depreciation (135,733) (120,142)
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204,858 194,315
Intangible and other assets 6,171 7,624
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Total assets $431,301 $379,075
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Short-term borrowings $78,171 $70,517
Accounts payable 35,991 31,530
Accrued expenses 90,991 80,381
Taxes on income 24,212 20,732
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Total current liabilities 229,365 203,160
Medium-term obligations 71,302 59,983
Deferred taxes on income 21,892 21,450
Postemployment benefits 12,003 12,468
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Total liabilities 334,562 297,061
Shareholders' equity:
Common Stock 10,887 10,887
Retained earnings 470,682 457,071
Cumulative foreign currency translation adjustment (12,574) (13,621)
Treasury stock (371,015) (371,016)
Unamortized value of restricted stock and pension costs (1,241) (1,307)
------------ ------------
Total shareholders' equity 96,739 82,014
------------ ------------
Total liabilities and shareholders' equity $431,301 $379,075
============ ============
</TABLE>
See accompanying notes to consolidated financial statements on page 5.
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<PAGE>
TAMBRANDS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1995 and 1994
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings $62,565 $67,075
Adjustments to reconcile Net earnings to Net
Cash Provided by Operating Activities:
Depreciation and amortization 18,652 17,166
Deferred income taxes 2,518 (114)
Litigation charge 7,803 --
Restructuring and other (2,496) (9,082)
Change in:
Accounts receivable (24,680) (9,691)
Inventories (6,516) 724
Prepaid expenses and other current assets 899 3,028
Taxes on income 6,043 7,603
Accounts payable and accrued expenses 69 21,909
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Net Cash Provided by Operating Activities 64,857 98,618
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Cash Flows from Investing Activities:
Capital expenditures (30,631) (24,452)
Proceeds from sales of property, plant
and equipment 541 1,952
Proceeds from sales of marketable securities -- 639
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Net Cash Used in Investing Activities (30,090) (21,861)
------------ ------------
Cash Flows from Financing Activities:
Payment of dividends (48,381) (46,581)
Purchase of shares for treasury (4,326) (71,118)
Short-term debt 7,654 19,940
Medium-term obligations 11,338 29,981
Proceeds from exercise of stock options and other 3,567 1,866
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Net Cash Used in Financing Activities (30,148) (65,912)
------------ ------------
Effect of Exchange Rate Changes on Cash (942) 227
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Net Increase in Cash and Cash Equivalents 3,677 11,072
Cash and Cash Equivalents at Beginning of Period 13,876 15,298
------------ ------------
Cash and Cash Equivalents at End of Period $17,553 $26,370
============ ============
</TABLE>
See accompanying notes to consolidated financial statements on page 5.
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<PAGE>
Notes to Consolidated Financial Statements
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1. The financial statements reflect all adjustments that, in the opinion of
management, are necessary for a fair presentation of the information
contained therein, and are subject to audit and adjustment at the end of
the fiscal year, with the exception of the Consolidated Balance Sheet at
December 31, 1994, which has been derived from the audited financial
statements at that date.
2. In the second quarter, the Company provided $11.4 million ($8.7 million
after tax) for expenses related to several legal proceedings related to
previously divested non-tampon businesses and for a securities class action
filed in 1993.
While it is not feasible to predict the outcome of pending legal
proceedings and claims with certainty, management is of the belief that any
ultimate liabilities in excess of provisions therefor will not individually
or in the aggregate have a material adverse effect on the Company's
financial position or results of operations.
Item 2. Management's Discussion and Analysis of Financial
- ------- -------------------------------------------------
Condition and Results of Operations
-----------------------------------
Results of Operations
- ---------------------
Net sales for the third quarter were $178.1 million, an increase of 2% over the
same period in 1994. The increase was primarily due to higher unit sales
principally in the CIS and Asia/Pacific partially offset by lower volume in
Europe. This overall volume increase was augmented by favorable foreign exchange
translations and partially offset by lower average prices in the United States
due to changes in sales mix. For the nine months ended September 30, Net sales
were up 9% from the first nine months of the preceding year. Principal reasons
were strong worldwide sales volumes and the continuing benefit of a weakened
U.S. dollar, being partially offset by lower average prices in the United States
due to changes in sales mix.
Gross profit as a percentage of Net sales was 65.6% and 66.4% for the third
quarter and nine months of 1995, respectively, versus 67.1% and 67.9% for the
corresponding periods of 1994. The lower margin in the current year is primarily
due to a change in the mix of product and package sizes, the increasing costs
for raw and packaging materials, and manufacturing start-up costs associated
with the relaunch of the Tampax flushable line in the United States. This
reduction is partially offset by continuing productivity improvements.
-5-
<PAGE>
Marketing, selling and distribution expenses were 7% below the third quarter of
1994 primarily due to the phasing of promotional spending. For the nine months
ended September 30, Marketing, selling and distribution expenses were 6% above
the comparable period of 1994. The increase is primarily due to the elevated
promotional spending in the United States and unfavorable foreign exchange
translations. During the quarter and nine months ended September 30, both the
tampon category and the Tampax market share in the United States exhibited
improvements over the comparable periods of the prior year.
Administrative and general expenses increased 8% in the third quarter versus the
same period in the prior year. This is primarily due to increased costs
associated with the International division management transition and support for
the developing CIS market. For the nine months ended September 30,
Administrative and general expenses were up 3% from the comparable period of
1994. The increase is primarily due to support of business expansion in the CIS.
Operating income was 7% above the third quarter in the prior year primarily due
to the phasing of promotional expenditures. For the nine months ended September
30, Operating income was 7% higher than the corresponding period of 1994
principally due to higher unit sales. The increases for both the third quarter
and nine month periods were partially offset by the factors reducing gross
profit discussed earlier.
Interest, net and other were aproximately equal with the prior year. Realized
foreign exchange gains were partially offset by an increase in interest expense
resulting from a rise in average interest rates coupled with higher borrowing
levels.
In the second quarter of 1995, the Company provided $11.4 million for several
legal proceedings related to previously divested non-tampon businesses and for
settlement of a securities class action filed in 1993.
The effective tax rate was 37.8% and 39.3%, respectively, for the third quarter
and nine month periods of the current year versus 37.0% for both periods of
1994. The higher effective tax rates in 1995 were primarily due to the
litigation charge, the cost of which is not fully deductible for tax purposes.
Exclusive of the litigation charge, the current effective tax rate would have
been 37.8% for the nine month period. The increase, exclusive of the litigation
charge, is principally attributable to the mix of domestic and foreign taxable
income, at varying rates.
Earnings per share were $.73 and $1.71 for the three and nine month periods,
respectively, compared to $.68 and $1.81 in the corresponding periods of the
prior year. Exclusive of the litigation charge, earnings per share for the nine
month period would have been $1.94.
-6-
<PAGE>
Outlook
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The worldwide market for consumer products will continue to be highly
competitive and sensitive to price. However, the Company will continue to
evaluate price increase opportunities as appropriate. The Company expects the
current high level of advertising and promotional activities and new product
introductions from competitors to persist, along with continued activity in the
private label sector.
In the United States, the Company is relaunching an upgraded version of its
original Tampax tampon line in the fourth quarter of 1995. On October 2, the
Company announced the introduction of a new product, Tampax Naturals, the only
U.S. nationally available tampon or pad to be made from 100% cotton, in the
first quarter of 1996. The Company intends to proceed with its aggressive
support of the Tampax tampon franchise with highly competitive levels of
advertising and promotional activities and product line innovations in the
United States and Europe.
The cost of manufacturing will continue to be impacted by escalating raw
material and packaging costs. Management intends to continue with productivity
initiatives to help mitigate the effect of these cost increases.
Financial Condition
- -------------------
At September 30, 1995, there was a working capital deficit of $9.1 million
compared to a deficit of $26.0 million at the prior year end. Cash flows from
operating activities for the nine months of the current year were $64.9 versus
$98.6 million in 1994. The net increase in working capital and reduction in cash
flows from operating activities are primarily attributable to higher accounts
receivable resulting from higher sales in markets where the collection periods
are longer and the build up of inventory for both the relaunch of the flushable
line and the launch of Naturals.
Capital expenditures of $30.6 million represent the Company's continued
investment in equipment to improve product quality and productivity, modernize
production facilities, reduce costs and support new products. Due to
management's focus on product innovations, the spending levels in 1995 are
expected to be somewhat higher than those of 1994.
The Company anticipates that its future cash requirements will be met by its
cash flows from operations and the ability to borrow from a variety of sources.
At September 30, 1995, total Shareholders' equity was $96.7 million compared
with $82.0 million at December 31, 1994. The net increase in Shareholders'
equity is primarily due to the $13.6 million growth of Retained earnings.
-7-
<PAGE>
PART II - OTHER INFORMATION
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Item 1. Legal Proceedings
- ------- -----------------
The Company or a subsidiary is a defendant in a small number of product
liability lawsuits based on allegations that toxic shock syndrome ("TSS") was
contracted through the use of tampons. A small number of pre-suit claims
involving similar TSS allegations have also been asserted. The damages alleged
vary from case to case and often include claims for punitive damages. One TSS
lawsuit, served on the Company in July 1994, purports to be a class action on
behalf of all women who have contracted TSS through the use of tampons. The
Company is vigorously contesting the plaintiffs' motion for class certification,
as well as the allegations contained in the plaintiffs' complaint.
The Company and three of its former officers were named as defendants in certain
shareholder lawsuits filed in 1993 in the United States District Court for the
Southern District of New York and consolidated under the caption In Re Tambrands
---------------
Inc. Securities Litigation. The parties stipulated to the certification of the
- --------------------------
consolidated lawsuit as a class action on behalf of all purchasers of the
Company's common stock during the period December 14, 1992 through April 28,
1993. The complaint alleged that the Company's disclosures during the class
period contained material misstatements and omissions concerning its anticipated
future earnings and thereby allegedly violated Section 10(b) and Rule 10b-
5 of the Securities Exchange Act of 1934. As announced on July 14, 1995,
plaintiffs and defendants in this litigation have reached agreement on
settlement, subject to court approval.
The Company was a nominal defendant in three purported shareholder derivative
lawsuits filed in the Supreme Court of the State of New York for Westchester
County and consolidated into a single action. Named collectively in the
consolidated complaint as individual defendants were the Company's directors
(other than Mr. Fogarty), certain former directors and three of its former
officers. The complaint alleged that the officer-defendants exposed the Company
to liability in the shareholder class action described in the preceding
paragraph and misappropriated corporate opportunities by trading in the
Company's stock on the basis of nonpublic information. One of the former
officers was also alleged to have received improper reimbursements from the
Company for alleged personal expenses. The director-defendants were alleged to
have acquiesced in the aforesaid alleged violations. The complaint sought to
recover on behalf of the Company an unspecified amount of damages from the
individual defendants. No relief was sought against the Company. In September
1994, the Court granted defendants' motion to dismiss the complaint for failure
to make a demand upon the Board of Directors. Plaintiffs have appealed the
dismissal.
- 8 -
<PAGE>
The Company is involved, either as a named defendant or as the result of
contractual indemnities, in certain litigation arising out of the operations of
certain divested subsidiaries.
There are certain other legal proceedings pending against the Company arising
out of its normal course of business in which claims for monetary damages are
asserted.
While it is not feasible to predict the outcome of these legal proceedings and
claims with certainty, management is of the belief that any ultimate liabilities
in excess of provisions therefor will not individually or in the aggregate have
a material adverse effect on the Company's financial position or results of
operations.
Items 2, 3, 4 and 5 of Part II have been omitted since either the Company's
response to the Item would be negative or the Item is inapplicable.
Item 6. Exhibits and Reports On Form 8-K
- ------- --------------------------------
a) Exhibits
--------
Exhibit
Number Description
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3(1) Certificate of Incorporation of the Company, as amended
through April 28, 1987, filed April 30, 1987 as Exhibit
4(a) to the Company's Form S-8 Registration Statement
(Reg. No. 33-13902), incorporated herein by reference.
3(2) Certificate of Amendment of Certificate of Incorporation
of the Company, dated April 24, 1990, filed May 15, 1990
as Exhibit 4(2) to the Company's Report on Form 10-Q for
the quarter ended March 31, 1990, incorporated herein by
reference.
3(3) Certificate of Amendment of Certificate of Incorporation
of the Company, dated April 28, 1992, filed May 15, 1992
as Exhibit 4(2) to the Company's Report on Form 10-Q for
the quarter ended March 31, 1992, incorporated herein by
reference.
- 9 -
<PAGE>
Exhibit
Number Description
------ -----------
3(4) By-Laws of the Company, as amended, filed March 31, 1995
as Exhibit 3(4) to the Company's Report on Form 10-K for
the year ended December 31, 1994, incorporated herein by
reference.
4(1) Description of the rights of security holders set forth in
the Certificate of Incorporation of the Company, as
amended through April 28, 1987, filed April 30, 1987 as
Exhibit 4(a) to the Company's Form S-8 Registration
Statement (Reg. No. 33-13902), incorporated herein by
reference.
4(2) Description of the rights of security holders set forth in
the Certificate of Amendment of Certificate of
Incorporation of the Company, dated April 28, 1992, filed
May 15, 1992 as Exhibit 4(2) to the Company's Form 10-Q
Report for the quarter ended March 31, 1992, incorporated
herein by reference.
4(3) Rights Agreement between the Company and First Chicago
Trust Company of New York, as Rights Agent, dated as of
October 24, 1989, which includes the Form of Right
Certificate as Exhibit A and the Summary of Rights to
Purchase Common Shares as Exhibit B, filed October 27,
1989 as Exhibit 1 to the Company's Form 8-A Registration
Statement, incorporated herein by reference.
4(4)(a) Indenture dated as of December 1, 1993 between the Company
and Citibank, N.A., as trustee, relating to the Company's
Medium-Term Note Program, filed March 31, 1994 as Exhibit
4(4) (a) to the Company's Form 10-K Report for the year
ended December 31, 1993, incorporated herein by reference.
4(4)(b) Form of Floating Rate Debt Security, filed December 16,
1993 as Exhibit 4-a to the Company's Report on Form 8-K,
incorporated herein by reference.
4(4)(c) Form of Fixed Rate Debt Security, filed December 16, 1993
as Exhibit 4-b to the Company's Report on Form 8-K,
incorporated herein by reference.
- 10 -
<PAGE>
Exhibit
Number Description
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10(1) Employment Agreement between the Company and Michael S.
Krause, dated as of July 5, 1995, filed herewith.
10(2) Early Retirement Agreement between the Company and Raymond
F. Wright, dated as of August 1, 1995, filed herewith.
12 Computation of Ratio of Earnings to Fixed Charges, filed
herewith.
27 Financial Data Schedules, filed herewith (in electronic
format only).
EXHIBITS 2, 11, 15, 18, 19, 22, 23, 24 and 99 have been omitted as inapplicable.
b) Reports On Form 8-K
- -- -------------------
The Company filed a Report under Item 5 of Form 8-K on July 14, 1995 in
order to file a press release, issued by the Company on July 14, 1995, which
announced that the Company was taking a charge of $11.4 million to provide for
several legal proceedings related to previously divested non-tampon businesses
and for settlement of a securities class action filed in 1993.
The Company filed a Report under Item 5 of Form 8-K on July 27, 1995 in
order to file a press release, issued by the Company on July 26, 1995, which
contained the Company's second-quarter 1995 results.
- 11 -
<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.
TAMBRANDS INC.
______________________
(Registrant)
/s/ Raymond F. Wright
________________________
Raymond F. Wright
Senior Vice President -
Chief Financial Officer
and Authorized Signatory
Date: November 13, 1995
- 12 -
<PAGE>
EXHIBIT 10.1
July 5, 1995
Mr. Michael S. Krause
Gables Court #V-211
1000 Stevens Entry
Peachtree City, GA 30269
Dear Mr. Krause:
We are pleased to confirm the terms of your employment with Tambrands Inc.
(the "Company").
1. Duties. You will become an employee of the Company on July 5,
------
1995 (the "Commencement Date").
You will be placed on the Company payroll at the rate of $1.00 per
month until you physically report for duty, which will be no later than the 1st
of August, 1995, at which time your base salary will be treated in accordance
with item 2 below. Effective as of such date, you will be the Senior Vice
President - Global Operations of the Company. You shall report directly to the
Company's President and Chief Executive Officer. All other terms and conditions
of this agreement will be in effect as of the "Commencement Date."
Immediately upon your appointment as Senior Vice President - Global
Operations of the Company, you will devote all of your skill, knowledge and full
working time (reasonable vacation time and absence for sickness or disability
excepted) solely and exclusively to the performance of your duties hereunder.
2. Base Salary. As compensation for the duties to be performed by
-----------
you under the terms of this letter agreement, the Company will pay you a base
salary in the amount of $200,000 per annum, payable in semi-monthly installments
at the same time as the Company pays salary to its other executive employees and
subject to all applicable deductions or reductions therein made pursuant to your
elections under the Company's compensation plans or programs. It is
contemplated that the Company will review your base salary from time to time
and, at the discretion of the Compensation Committee of the Board of Directors,
may increase your base salary based upon your performance, then generally
prevailing industry salary scales and other relevant factors, including, without
limitation, the Company's general compensation practices for its executive
officers. (Such annual base salary, as it may hereafter be increased, will be
referred to as your "Base Salary").
<PAGE>
3. Incentive Bonus. While you are providing services pursuant to
---------------
this letter, you will be entitled to participate in the Company's Annual
Incentive Plan (the "AIP") as in effect from time to time. Your annual bonus
opportunity under the AIP at the target level of performance will be equal to
42% of your Base Salary. Under the terms of the AIP, you may receive more or
less than 42% of your Base Salary if performance exceeds or falls short of
target levels. Any bonus payable to you under the AIP will be paid to you at the
same time as bonuses are paid to other executives under the AIP and subject to
the terms and conditions of the AIP.
Notwithstanding the foregoing, in no event shall the amount payable to you
as an annual bonus in respect of 1995 services be less than 42% of the base
salary payable to you for 1995 services. In addition, contingent on forfeiture
of your annual incentive at The Quaker Oats Company, the Company will provide a
cash payment equal to the prorated target incentive you would have received for
the portion of 1995 you worked at The Quaker Oats Company. The sum of the
bonuses payable in accordance with the two preceding sentences, if the 1995
Quaker Oats Company annual incentive is forfeited, or the annualized bonus
payable in accordance with the second preceding sentence, if the 1995 Quaker
annual incentive is not forfeited, is referred to in this agreement as the "1995
Targeted Bonus".
4. Stock Options. Effective as of the Commencement Date, you will
-------------
be granted a stock option having a ten-year term for 25,000 shares of the
Company's common stock (the "Option") under the terms of the Company's 1991
Stock Option Plan (the "1991 Plan"). The Option will be exercisable in three
approximately equal annual installments on each of the first three anniversaries
of the Commencement Date, but will become exercisable earlier upon the date, if
any, on which a Change of Control (as defined in the 1991 Plan) occurs or on
which your employment terminates due to your (i) death, (ii) Disability (as
- --
defined in the 1991 Plan), (iii) retirement prior to age 65 with the consent of
---
the committee responsible for administering the 1991 Plan or (iv) retirement at
--
age 65. The per share exercise price for the shares subject to the Option will
be determined in accordance with the following schedule:
Number of Shares Exercise Price
- ---------------- --------------
12,500 Fair market value of a share on July 5, 1995 as
determined under the 1991 Plan (hereafter referred to
as the "Fair Market Value").
4,167 Fair Market Value plus $5.00
4,167 Fair Market Value plus $10.00
4,166 Fair Market Value plus $15.00
2
<PAGE>
All other terms of the Option will be as provided in the 1991 Plan and the
agreement relating to such grant, which terms shall be no less favorable than
the terms that would apply under the 1991 Plan if there were no limitation upon
their scope under the option agreement.
You shall be eligible to receive future awards under the 1991 Plan (or
any successor thereto) at a level commensurate with your position and in
accordance with the Company's compensation practices and policies generally
applicable to the Company's executive officers as in effect from time to time.
You will also be eligible to participate in any amended or newly developed cash
or equity-based executive compensation plans on the same basis as described in
the preceding sentence. At current Company stock prices and under the Company's
current executive compensation practices, the level of option award for the
Senior Vice President - Global Operations position is approximately 8,100 shares
per year.
5. Restricted Stock. You shall be eligible to receive an award of
----------------
600 restricted shares of the Company's common stock (the "Award") under the 1989
Restricted Stock Plan (or any successor thereto) (the "1989 Plan") in February
1996. You shall be eligible to receive future awards under the 1989 Plan at a
level commensurate with your position and in accordance with the Company's
compensation practices and policies generally applicable to the Company's
executive officers as in effect from time to time. At current Company stock
prices and under the Company's current executive compensation practices, the
level of restricted shares awarded for the Senior Vice President - Global
Operations is approximately 600 shares per year. All terms and conditions of
your Award will be as provided in the 1989 Plan and the agreement relating to
the Award.
6. Change of Control Agreement. As of the date hereof and
---------------------------
effective as of the Commencement Date, you and the Company will enter into an
"Employment Protection Agreement" substantially in the form attached hereto as
Exhibit A. If there is a Change in Control prior to August 1, 1995 or prior to
payment of a 1995 annual bonus, the Base Salary and 1995 Targeted Bonus shall be
used in determining the level of salary and bonus under your Employment
Protection Agreement, notwithstanding any contrary provisions of such agreement.
7. Employee Benefits. From and after the Commencement Date, you
-----------------
will be eligible to participate in the employee benefit plans and programs
generally available to the Company's U.S. employees (including, but not limited
to, coverage under the Company's medical, dental, life and disability insurance
plans and participation in the Company's Pension Plan and Savings Plan) as in
effect from time to time on the same basis as the Company's other employees,
subject to the terms and provisions of such plans and programs. You will
receive four weeks paid vacation per annum.
3
<PAGE>
You will at all times during your employment by the Company be
designated as an Executive Participant for purposes of the Company's
Supplemental Executive Retirement Plan as amended and restated effective July 1,
1994 (the "SERP"). As such, your SERP benefit will be calculated under the
"Mid-Career Formula" of the SERP. You will be eligible to participate in the
SERP to the extent that the benefits that you may accrue, or the compensation
that may be taken into account in calculating the benefits that you may accrue,
under the Company's Pension Plan are affected by any limitation required for the
Pension Plan to satisfy the applicable requirements of the Internal Revenue
Code. Your SERP benefits will be payable in accordance with the terms of the
SERP such that in the event that your employment with the Company is
"Involuntarily Terminated" within two years following the occurrence of a
"Change of Control" (as each such term is defined in the SERP) your benefits
accrued thereunder shall be calculated as though you had two additional years of
service and you shall be deemed to be fully vested in your entire such benefits.
For purposes of determining "Actuarial Equivalence" under the SERP, the
actuarial assumptions used shall be no less favorable than (i) the actuarial
assumptions in effect for funding purposes on the date of determination under
the Pension Plan for Employees of Tambrands Inc., as amended from time to time
(the "Pension Plan"), or any successor thereto which is a tax-qualified plan
under the applicable provisions of the Internal Revenue Code of 1986, as
amended, or (ii) the actuarial assumptions in effect for funding purposes under
the Pension Plan as of the date of such Plan's termination, if the Pension Plan
is no longer in effect and there is no such successor plan.
8. Executive Perquisites. You will be eligible to receive the
---------------------
perquisites and other personal benefits made available to the Company's senior
executives from time to time, including, without limitation, payment of or
reimbursement for up to $10,000 per annum for personal tax and financial
planning.
9. Expenses. The Company will reimburse you for all reasonable
--------
expenses incurred by you in connection with your performance of services under
this letter agreement in accordance with the Company's policies, practices and
procedures.
10. Termination of Employment. If the Company terminates your
-------------------------
employment prior to age 65 for any reason other than Cause or Disability or you
terminate your employment as a result of a Termination for Good Reason, the
Company will pay you severance benefits in an aggregate amount equal to one and
one-half (1.5) times your then current annual Base Salary in one lump sum
payment, unless you specifically request and the Company agrees to make the
payment of all or any portion of this payment over time, not to exceed 18
months. In addition, you will be paid a bonus for the year of termination equal
to the target bonus for the year of termination, if
4
<PAGE>
one has been established, or for the preceding year, if such target has not yet
been established; provided, however, that in calculating the amount of such
-------- -------
bonus, performance objectives which relate to individual performance shall be
assumed to have been fully attained and performance objectives which relate to
corporate performance shall take into account actual corporate performance; and
further provided, that the bonus so determined shall be prorated for the number
- ------- --------
of months worked during the year of termination.
In the event your employment terminates (i) due to your death or Disability
-
or after age 65, (ii) is terminated by the Company for Cause or (iii) is
-- ---
terminated by you other than as a result of a Termination for Good Reason, you
will be entitled to receive the compensation and benefits payable to you under
the Company's otherwise applicable employee benefit plans or programs.
Any benefits payable to you pursuant to this Section 10 will be in full
satisfaction of all liabilities to you under this agreement and with respect to
any other claim you may have in conjunction with your termination of employment
(excluding any rights you may have under the 1991 Plan or this letter with
respect to options, under the 1989 Restricted Stock Plan with respect to
restricted stock, any vested benefits you may have under the terms of the
Company's SERP, Pension Plan or Savings Plan, but including, without limitation,
any claim for benefits under the Company's Executive Severance Program). These
benefits will not be subject to any offset, mitigation or other reduction as a
result of your receiving salary or other benefits by reason of your securing
other employment.
For purposes of this agreement, the following terms will have the
meanings set forth below:
"Cause" means (i) your willful failure to perform substantially your
-
duties as an officer and employee of the Company (other than due to
physical or mental illness) that results in material economic damage to the
Company, (ii) your engaging in serious misconduct that results in material
--
economic damage to the Company, (iii) your having been convicted of, or
---
entered a plea of nolo contendere to, a crime that constitutes a felony, or
---- ----------
(iv) your unauthorized disclosure of confidential information (unless such
--
disclosure was believed by you to be appropriate in the course of properly
carrying out your duties under this agreement, and other than to the extent
required by an order of a court having competent jurisdiction or under
subpoena from an appropriate government agency) that has resulted or is
likely to result in material economic damage to the Company. For purposes
of this definition, no act, or failure to act on your part, shall be
considered "willful" unless done, or omitted to be done, by you not in good
faith and without reasonable belief that such action or omission was in the
best interest of the Company. Prior to terminating your employment for
Cause, the Company shall deliver to you reasonable advance written notice
of any proposed action by the
5
<PAGE>
Board of Directors of the Company (the "Board") relating to your
termination for Cause specifying the particulars in detail sufficient to
give you an informed opportunity to be heard before the Board, together
with your counsel. No termination for Cause shall be effective without the
Board having decided after such hearing, by the affirmative vote of a
majority of its members at a meeting of the Board, that you were guilty of
conduct constituting Cause, as defined herein.
"Disability" means that, as a result of your incapacity due to
physical or mental illness, you have been absent from your duties to the
Company on a substantially full-time basis for 180 days in any twelve-month
period.
"Termination for Good Reason" means a voluntary termination of your
employment which occurs within 90 days following the occurrence of any of
the following events without your prior written consent: (i) any assignment
-
to you of any duties or authorities which are different from, and result in
a diminution of, the duties and authorities you are to perform or possess
as Senior Vice President - Global Operations of the Company pursuant to
this letter agreement, (ii) your removal from or any failure to reelect or
--
redesignate you to the position of Senior Vice President - Global
Operations of the Company, except in connection with a termination of your
employment by the Company for Cause, (iii) any reduction in your Base
---
Salary or (iv) any action which results in your ceasing to report directly
to the Company's President and Chief Executive Officer.
11. Binding Effect.
--------------
(a) This letter agreement will inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If
you should die while any amounts would still be payable to you
under this letter agreement if you had continued to live, all
such amounts, unless otherwise provided herein, will be paid in
accordance with the terms of this letter agreement to your
personal or legal representatives, executors, administrators,
heirs, distributees, devisees, legatees or estate, as the case
may be.
(b) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to you,
to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a
6
<PAGE>
breach of this Agreement. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 11(b) or
which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
12. Indemnification. The Company agrees to indemnify you to the
---------------
fullest extent permitted under its By-laws as in effect from time to time. The
Company shall advance to you all reasonable costs and expenses incurred by you
in connection with any Proceeding within 20 days after receipt by the Company of
a written request for such advance. Such request shall include an itemized list
of the costs and expenses and an undertaking by you to repay the amount of such
advance if it shall ultimately be determined that you are not entitled to be
indemnified against such costs and expenses. For purposes of this Section 12, a
"Proceeding" shall mean any action, suit or proceeding, whether civil, criminal,
administrative or investigative, in which you are made, or are threatened to be
made, a party to, or a witness in, such action, suit or proceeding by reason of
the fact that you are or were an officer, director or employee of the Company or
are or were serving as an officer, director, member, employee, trustee or agent
of any other entity at the request of the Company. The Company shall not settle
any proceeding or claim in any manner which would impose on you any penalty or
limitation without your prior written consent. You agree that you will not
unreasonably withhold your consent to any proposed settlement.
13. General Provisions. No provisions of this letter agreement may
------------------
be modified, waived or discharged unless such modification, waiver or discharge
is agreed to in a writing signed by you and such Company officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time.
Except as set forth in the Employment Protection Agreement referenced
in Section 6 of this letter, no agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this letter
agreement. The invalidity or unenforceability of any one or more provisions of
this letter agreement will not affect the validity or enforceability of any
other provision of this letter agreement, which will remain in full force and
effect. This letter agreement may be executed in one or more counterparts, each
of which will be deemed to be an original but all of which together will
constitute one and the same instrument.
7
<PAGE>
All amounts payable to you hereunder will be paid net of any and all
applicable income or employment taxes required to be withheld therefrom under
applicable Federal, State or local laws or regulations.
The validity, interpretation, construction and performance of this
letter agreement will be governed by the laws of the State of New York, without
giving effect to its conflict of laws provisions.
14. Due Authorization. The Company represents and warrants to you
-----------------
that (i) the Company has all requisite corporate power and authority to enter
into this agreement and the agreements referenced in Sections 6 and 7 of this
agreement, (ii) the execution and delivery of all such agreements and the
performance of the Company's obligations under all such agreements have been
duly authorized by all necessary corporate action on the part of the Company and
(iii) all such agreements have been duly executed by the Company and constitute
the Company's valid and binding obligations, enforceable against it in
accordance with their terms.
15. Notice. For the purpose of this agreement, notices and all other
------
communications provided for in the agreement shall be in writing and shall be
deemed to have been duly given on the third business day following the mailing
of such notice or communication by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to you:
Mr. Michael S. Krause
Gables Court #V-211
1000 Stevens Entry
Peachtree City, GA 30269
If to the Company:
Tambrands Inc.
777 Westchester Avenue
White Plains, NY 10604
Attn: Corporate Counsel
or to such other address as the party to be notified shall have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
* * * *
8
<PAGE>
If the foregoing accurately sets forth the terms of your employment
with the Company, please so indicate by signing below and returning one signed
copy of this letter agreement to me.
Sincerely,
TAMBRANDS INC.
/s/ Edward T. Fogarty
_____________________________
Edward T. Fogarty
President & CEO
ACCEPTED AND AGREED
as of this 5th day
of July, 1995
/s/ Michael S. Krause
____________________________
Michael S. Krause
9
<PAGE>
EXHIBIT 10.2
EARLY RETIREMENT AGREEMENT
--------------------------
EARLY RETIREMENT AGREEMENT, dated as of August 1, 1995, by and between
TAMBRANDS INC., a Delaware corporation (the "Company"), and Raymond F. Wright
("Employee").
WHEREAS, Employee has expressed his intention to retire from employment
with the Company;
WHEREAS, Employee holds a position of significant importance to the
Company;
WHEREAS, Employee has provided loyal and valuable service to the Company
and the Company recognizes Employee's significant contribution to the Company
and its shareholders;
WHEREAS, the Company believes that it is in its best interest to retain the
services of Employee until the end of 1995; and
WHEREAS, Employee is willing to delay his early retirement and to remain
employed by the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of their mutual promises, the Company and
Employee agree as follows:
1. Employment Period. Employee shall remain in the Company's employ from
-----------------
the date hereof until December 31, 1995 (the "Retirement Date"), at which time
he shall voluntarily retire from the Company. The period during which Employee
remains an employee hereunder shall be referred to as the "Employment Period".
2. Title and Responsibilities. During the Employment Period, Employee
--------------------------
shall retain the title of Senior Vice President, Chief Financial Officer and
Chief Information Officer and shall have the responsibilities associated with
such title and his position as in effect immediately prior to the date hereof.
1
<PAGE>
3. Salary. During the Employment Period, the Company shall pay Employee a
------
base salary at the same rate as was in effect immediately prior to the date
hereof, payable in installments at the same time and in the same manner as the
Company pays salary to executive employees located at its headquarters and
subject to all applicable deductions or reductions therein made pursuant to
Employee's elections under the Company's compensation plans or programs (the
"Applicable Reductions").
4. Bonus. If the Employee is employed on the Retirement Date, he shall
-----
be eligible to receive a bonus for 1995 services, as determined by the
Compensation Committee of the Board of Directors in accordance with the
applicable terms and conditions of the Annual Incentive Plan (the "AIP"). Any
such bonus shall be paid to Employee at the same time as bonuses are paid to
other executives under the AIP.
5. Employee Benefits. (a) Benefits as an Employee. Until the end of the
----------------- -----------------------
Employment Period, the Company will provide Employee with coverage under the
employee benefit plans, policies and arrangements generally available to its
employees, including, but not limited to, participation in the Company's
qualified retirement plan and coverage under the Company's medical, dental, life
and disability insurance plans. Accrued vacation days which are unused as of
the end of the Employment Period shall be paid to Employee as soon as
practicable thereafter. Except as expressly provided in paragraph 5(b) below,
all other benefits shall, unless otherwise expressly provided herein or in the
relevant plan, policy or arrangement, cease as of December 31, 1995.
(b) Retirement Benefits. Following the Retirement Date, Employee shall be
-------------------
entitled to receive his accrued vested benefit under the Pension Plan for
Employees of Tambrands Inc. (the "Pension Plan") and under the formula in the
Company's Supplemental Executive Retirement Plan (the "SERP") which replicates
that formula contained in the Pension Plan but without regard to the limits
imposed under the Internal Revenue Code or ERISA on the amount of compensation
that may be taken into account in determining a participant's benefits (the
"Excess Formula"). Payment of any benefit under the Pension Plan or the SERP
shall be made in accordance with their respective terms (but based on the
assumption in the preceding sentence), and Employee shall have all rights of a
participant under the Pension Plan and the SERP, including all elections as to
the form of benefit, provided that if Employee is employed on the Retirement
-------------
Date, solely for purposes of determining his eligibility to qualify for early
retirement with respect to the timing of payment of his benefits under the
2
<PAGE>
Excess Formula (and not for any other purpose), he shall also be deemed to have
completed 10 Years of Service and will therefore become a retiree of the
Company. If Employee remains in the Company's employ through the Retirement
Date, Employee shall also be eligible to receive the benefits made available to
retirees under the Company's retiree medical and retiree life insurance
programs, and subject to the generally applicable terms and conditions of each
such program (including, without limitation, the requirement to make
contributions toward such coverage).
6. Stock Options. Subject to the execution of this Agreement by Employee,
-------------
and compliance by Employee with its terms, the committee responsible for
administering the 1991 Stock Option Plan (the "1991 Plan") and the 1981 Long
Term Incentive Plan (the "1981 Plan") has consented to Employee's retirement
from the Company as of the Retirement Date. As a result, any options held by
Employee pursuant to the terms of either the 1991 Plan or the 1981 Plan which
are exercisable as of the Retirement Date shall continue to remain exercisable
under the terms of each such Plan relating to retirees; provided that Employee
-------------
agrees that, as part of the consideration for the Company entering into this
Agreement, the expiration date of each such option shall be reduced from ten
years from the date of its initial grant to the second anniversary of the
Retirement Date. Any options held by Employee pursuant to the terms of either
the 1991 Plan or the 1981 Plan which are not exercisable as of the Retirement
Date shall lapse as of such date and shall not become exercisable.
Notwithstanding the provisions of Section 5, Employee shall not be eligible for
any additional stock option grants to be made after the date hereof. Except as
otherwise expressly provided in this Section 6, all of the terms and conditions
of the 1991 Plan and 1981 Plan and the grants made thereunder to Employee
(including, without limitation, the expiration date of such options) shall
continue to be applicable to him.
7. Restricted Stock. Notwithstanding anything else contained herein to
----------------
the contrary, Employee shall not be eligible for any additional restricted stock
grants to be made after the date hereof.
8. Termination by Company. Notwithstanding anything else contained
----------------------
herein to the contrary, if the Company terminates Employee's employment
hereunder at any time before the Retirement Date, other than due to Employee's
conviction of a felony or willful misconduct or gross negligence, Employee shall
be entitled to receive the benefits and annual bonus amount which would have
been payable to Employee had he voluntarily terminated his
3
<PAGE>
employment on the Retirement Date, and an amount as salary continuation equal to
the salary which would have been paid to Employee from the date of such
termination to such Retirement Date. In no event shall Employee be or become
entitled to receive any other severance or termination benefits by reason of
such termination under any plan, policy or program of the Company or any of its
subsidiaries.
9. Non-competition. During the Employment Period and for one year after
---------------
the Retirement Date, Employee shall not engage directly or indirectly in or
become employed by, serve as an agent or consultant to, become a partner,
principal or stockholder of any partnership, corporation or other entity (a
"Competitor") which is engaged in a business which is competitive in any
geographical area with any business that accounts for a material portion of the
revenues of the Company or any of its subsidiaries; provided that Employee's
-------------
ownership of less than 1% of the issued and outstanding stock of any corporation
whose stock is traded on an established securities market shall not constitute
competition with the Company.
10. Non-cooperation. During the Employment Period and for two years after
---------------
the Retirement Date, Employee will not become associated with (whether through
an investment of capital or otherwise), provide services to or otherwise
solicit, aid, assist or cooperate with any person, group or entity (an
"Acquiror") in any effort to effect a change of ownership in, or otherwise gain
control of, the Company, whether through a stock purchase, merger, asset
acquisition, proxy solicitation or any other means. Nothing in this Section 10
shall be construed to preclude Employee from owning less than 1% of the
outstanding Common Stock of the Company or an Acquiror, whether acquired
pursuant to the terms of any employee benefit plan or otherwise.
11. Non-solicitation. During the Employment Period and for two years
----------------
after the Retirement Date, Employee will not solicit or otherwise induce any
employee of the Company or its subsidiaries to leave the employ of the Company
or such subsidiaries or to become associated, whether as an employee, officer,
partner, director, consultant or otherwise, with any business organization,
including, but not limited to, a Competitor or Acquiror.
12. Non-disclosure. Without the prior written consent of the Company,
--------------
except to the extent required by an order of a court having competent
jurisdiction or under subpoena from an appropriate government agency, Employee
shall not disclose any trade secrets, customer lists, drawings,
4
<PAGE>
designs, product development and related information, marketing plans and
related information, sales plans and related information, manufacturing plans
and related information, management organization and related information
(including data and other information related to members of the Board and
management), operating policies and manuals, business plans and related
information, financial records and related information, packaging design and
related information or other financial, commercial, business or technical
information related to the Company or any of its subsidiaries to any third
person unless such information has been previously disclosed to the public by
the Company or has become public knowledge other than by a breach of this
Agreement.
13. Intention of the Parties. If any provision of Sections 9, 10, 11 or
------------------------
12 is determined by a court of competent jurisdiction not to be enforceable in
the manner set forth in this Agreement, the Company and Employee agree that it
is the intention of the parties that such provision should be enforceable to the
maximum extent possible under applicable law and that such court shall reform
such provision to make it enforceable in accordance with the intent of the
parties.
14. Release. In consideration of the benefits provided to Employee
-------
hereunder, Employee hereby releases and absolves the Company from any and all
claims that Employee may now have or may hereafter have against the Company or
any of its subsidiaries arising out of or in connection with Employee's
employment with, or service as an officer or a director of, the Company or any
of its subsidiaries, other than any claim for the benefits to be provided to
Employee under this Agreement.
15. Indemnity. The Company or one of its subsidiaries, as appropriate,
---------
shall indemnify Employee for any claim arising out of or in connection with
Employee's service as an officer of the Company or as an officer or director of
any of the Company's subsidiaries in the same manner and to the same extent as
the Company or such subsidiary, as the case may be, indemnifies its then current
directors, officers or employees, as the case may be.
16. Remedies. Employee acknowledges that a material part of the
--------
inducement for the Company to enter into this Agreement is Employee's covenants
with respect to non-competition, non-disclosure, non-cooperation and non-
solicitation set forth in Sections 9 through 12 hereof. Employee agrees that if
Employee shall breach any of those covenants, the Company shall have no
5
<PAGE>
further obligation to pay Employee any benefits otherwise payable hereunder
(except as may otherwise be required at law) and shall be entitled to such other
legal and equitable relief as a court or arbitrator shall reasonably determine
unless such breach is an inadvertent breach that does not result in any
significant harm to the Company. Employee further agrees and acknowledges that a
remedy at law for any breach or threatened breach of the provisions of Sections
9, 10, 11 or 12 hereof would be inadequate and therefore agrees that the Company
shall be entitled to injunctive relief in addition to any other available rights
and remedies in case of any such breach or threatened breach; provided, however,
-----------------
that nothing contained in this sentence shall be construed as prohibiting the
Company from pursuing any other remedies available for any such breach or
threatened breach.
17. Withholding. All cash payments to be made under this Agreement shall
-----------
be made net of all applicable income and employment taxes required to be
withheld from such payments. To the extent any compensation is payable to
Employee in accordance with this Agreement other than as a payment in cash,
Employee shall be required to pay the Company an amount equal to all applicable
income and employment taxes required to be withheld with respect thereto.
18. Miscellaneous. This Agreement may be amended only by a written
-------------
instrument signed by the Company and Employee. Except with respect to any other
agreement between the Company and Employee that is specifically referenced
herein and intended to continue beyond the execution of this Agreement, this
Agreement shall constitute the entire agreement between the Company and Employee
with respect to the subject matter hereof. The obligations of the Company to
Employee and the covenants of Employee in favor of the Company shall survive the
termination of the Employment Period. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs (in the case of Employee) and assigns. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Any notices to be given
and any payments to be made hereunder shall be delivered in hand or sent by
registered mail, return receipt requested, to the respective party at the
address noted above for such party or to such other address as either such party
shall direct in accordance with this Section 18.
6
<PAGE>
19. Governing Law. This Agreement shall be governed by the laws of the
-------------
State of New York, without reference to the principles of conflict of laws.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day first written above.
TAMBRANDS INC.
By:/s/ Edward T. Fogarty
__________________________
Title: Chief Executive Officer
Witness:
/s/ Thomas Soper
__________________
/s/ Raymond F. Wright
______________________________
Raymond F. Wright
Witness:
/s/ Thomas Soper
__________________
7
<PAGE>
Tambrands Inc.
FORM 10-Q
PART II, Item 6., Exhibit 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
The following table sets forth the Company's ratio of earnings to fixed charges
for the periods indicated.
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
------------------------ ----------------------
(in thousands, except ratios) 1995 1994 1995 1994
------------------------ ----------------------
<S> <C> <C> <C> <C>
Earnings:
Income before income taxes $103,153 $106,468 $42,934 $39,719
Fixed charges 8,581 7,397 3,107 2,497
----------------------- ----------------------
Earnings $111,734 $113,865 $46,041 $42,216
======================= ======================
Fixed charges:
Interest portion of operating
lease expense:
Operating lease expense $4,549 $2,971 $1,730 $942
Assumed interest factor 0.33 0.33 0.33 0.33
----------------------- ----------------------
Interest portion of operating
lease expense 1,501 980 571 311
Interest expense 7,080 $6,417 2,536 2,186
----------------------- ----------------------
Fixed charges $8,581 $7,397 $3,107 $2,497
======================= ======================
Ratio of earnings to fixed charges 13.0 15.4 14.8 16.9
======================= ======================
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JUL-01-1995 JAN-01-1995
<PERIOD-END> SEP-30-1995 SEP-30-1995
<CASH> 17,553 17,553
<SECURITIES> 0 0
<RECEIVABLES> 115,559 115,559
<ALLOWANCES> (1,478) (1,478)
<INVENTORY> 45,168 45,168
<CURRENT-ASSETS> 220,272 220,272
<PP&E> 340,591 340,591
<DEPRECIATION> (135,733) (135,733)
<TOTAL-ASSETS> 431,301 431,301
<CURRENT-LIABILITIES> 229,365 229,365
<BONDS> 71,302 71,302
<COMMON> 10,887 10,887
0 0
0 0
<OTHER-SE> 85,852 85,852
<TOTAL-LIABILITY-AND-EQUITY> 431,301 431,301
<SALES> 178,116 521,401
<TOTAL-REVENUES> 178,116 521,401
<CGS> 61,288 175,020
<TOTAL-COSTS> 61,288 175,020
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 97
<INTEREST-EXPENSE> 2,536 7,080
<INCOME-PRETAX> 42,934 103,153
<INCOME-TAX> 16,228 40,588
<INCOME-CONTINUING> 26,706 62,565
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 26,706 62,565
<EPS-PRIMARY> .73 1.71
<EPS-DILUTED> .73 1.71
</TABLE>
