<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 March 31, 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.
--------------
(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
--------------
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: 36,701,701 shares
as of April 30, 1995
Index to Exhibits is set forth at page 10.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
TAMBRANDS INC. AND SUBSIDIARIES
Consolidated Statements of Earnings and Retained Earnings
Three Months Ended March 31, 1995 and 1994
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
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1995 1994
-------- --------
<S> <C> <C>
Net sales $166,947 $139,173
Cost of products sold 55,304 43,921
-------- --------
Gross profit 111,643 95,252
Selling, administrative and general expenses:
Marketing, selling and distribution 58,684 44,322
Administrative and general 13,715 14,015
-------- --------
72,399 58,337
-------- --------
Operating income 39,244 36,915
Interest, net and other (2,434) (1,924)
-------- --------
Earnings before provision for income taxes 36,810 34,991
Provision for income taxes 13,988 12,947
-------- --------
Net earnings 22,822 22,044
Retained earnings at beginning of period 457,071 430,822
-------- --------
479,893 452,866
-------- --------
Dividends 16,144 15,809
Net issuance of treasury stock (12) (55)
-------- --------
16,132 15,754
-------- --------
Retained earnings at end of period $463,761 $437,112
======== ========
Net earnings per share $0.62 $0.58
======== ========
Dividends per share $0.44 $0.42
======== ========
Average shares of common stock
outstanding during the period 36,685 37,715
</TABLE>
See accompanying notes to consolidated financial statements on page 5.
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<PAGE>
TAMBRANDS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1995 and December 31, 1994
(in thousands)
<TABLE>
1995
(Unaudited) 1994
----------- --------
<S> <C> <C>
ASSETS
- ------
Current assets
Cash and cash equivalents $10,894 $13,876
Accounts receivable, less allowance
for doubtful accounts of $1,408
in 1995 and $1,456 in 1994 83,690 80,593
Inventories
Raw materials 15,019 12,967
Finished goods 30,479 24,990
-------- --------
45,498 37,957
Deferred taxes on income 18,349 18,892
Prepaid expenses and other current assets 25,864 25,818
-------- --------
Total current assets 184,295 177,136
Property, plant and equipment 320,885 314,457
Less accumulated depreciation (124,190) (120,142)
-------- --------
196,695 194,315
Intangible and other assets 7,214 7,624
-------- --------
Total assets $388,204 $379,075
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Short-term borrowings $67,513 $70,517
Accounts payable 31,708 31,530
Accrued expenses 73,044 80,381
Taxes on income 29,489 20,732
-------- --------
Total current liabilities 201,754 203,160
Medium-term notes payable 59,985 59,983
Deferred taxes on income 21,721 21,450
Postemployment benefits 12,388 12,468
-------- --------
Total liabilities 295,848 297,061
Shareholders' equity
Common Stock 10,887 10,887
Retained earnings 463,761 457,071
Cumulative foreign currency
translation adjustment (10,609) (13,621)
Treasury stock (370,243) (371,016)
Unamortized value of restricted
stock and pension costs (1,440) (1,307)
-------- --------
Total shareholders' equity 92,356 82,014
-------- --------
Total liabilities and shareholders' equity $388,204 $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
Three Months Ended March 31, 1995 and 1994
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Cash Flows from Operating Activities
Net earnings $22,822 $22,044
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 6,058 5,566
Deferred income taxes 718 190
Restructuring and other (1,429) (937)
Change in:
Accounts receivable (1,232) 2,980
Inventories and other current assets (3,253) (4,011)
Taxes on income 8,558 14,099
Accounts payable and accrued expenses (8,728) (1,118)
------- -------
Net cash provided by operating activities 23,514 38,813
------- -------
Cash Flows from Investing Activities
Capital expenditures (8,034) (10,586)
Proceeds from sales of property, plant
and equipment 580 1,269
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Net cash used in investing activities (7,454) (9,317)
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Cash Flows from Financing Activities
Payment of dividends (16,144) (15,809)
Purchase of shares for treasury - (53,752)
Short-term debt changes (3,004) 22,376
Issuance of medium-term notes - 19,977
Proceeds from exercise of stock options and other 558 351
------- -------
Net cash used in financing activities (18,590) (26,857)
------- -------
Effect of exchange rate changes on cash (452) 21
------- -------
Net (decrease) increase in cash and cash equivalents (2,982) 2,660
Cash and cash equivalents at beginning of period 13,876 15,298
------- -------
Cash and cash equivalents at end of period $10,894 $17,958
======= =======
</TABLE>
See accompanying notes to consolidated financial statements on page 5.
-4-
<PAGE>
Notes to Consolidated Financial Statements
- ------------------------------------------
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.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- ------- -----------------------------------------------------------------------
of Operations
-------------
Results of Operations
- ---------------------
First-quarter Net sales of $166.9 million represent a 20% increase over the
same period in 1994. This was principally due to higher worldwide unit volumes,
particularly in the United States, resulting from positive acceptance of the new
Tampax Satin Touch product, a bonus pack consumer promotion and increased
marketing support levels. The comparative sales volume in the first quarter of
1994 was relatively weak primarily due to reduction in trade customer
inventories. The impact of higher volume was augmented by favorable foreign
exchange translation caused by the weakening of the U.S. dollar.
Gross profit as a percent of Net sales was 66.9% for the first quarter versus
68.4% for the corresponding period of 1994. The lower margin in the current year
is primarily due to a change in the mix of products and package sizes, the bonus
pack consumer promotion and manufacturing inefficiencies caused by the strong
first-quarter volume.
Marketing, selling and distribution expenses were 32.4% above the first quarter
of 1994. The elevated spending levels principally reflect support of the Satin
Touch launch in the United States and overall stronger levels of support in
Europe and Asia/Pacific against a relatively low base in the first quarter of
1994. The tampon category grew in the United States during the current period
and Tampax market shares exhibited improvements over the first quarter in the
prior year.
Operating income for the three months rose 6.3% from 1994 as a result of the
higher unit sales, partially offset by the lower margin and increase in
marketing support levels discussed above.
-5-
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Interest, net and other reflected $.5 million increased expense over the first
quarter of 1994. Higher net interest costs were the result of a rise in average
interest rates.
The three months' effective tax rate was 38% versus 37% in the same period of
1994. The increase is primarily due to changes in the mix of domestic and
foreign taxable income, at varying rates.
Earnings per share for the first quarter were $.62 compared to $.58 in the
corresponding period of 1994. Earnings per share increased at a higher rate than
Net earnings because the Company's share repurchase program reduced the average
number of shares outstanding.
Outlook
- -------
The worldwide market for consumer products will continue to be highly
competitive and disinflationary. The Company expects a heightened level of
advertising and promotional activities and new product introductions from
competitors, along with continued activity in the private label sector. The
Company intends to proceed with its aggressive support of the Tampax tampon
franchise with highly competitive levels of advertising and promotional
activities in the United States and Europe. As consumers continue to focus on
value-priced goods, management expects current pricing pressures to be ongoing.
The cost of manufacturing may be impacted by escalating raw material costs.
Management intends to continue with productivity initiatives to attempt to
mitigate the effect of raw material cost increases.
Financial Condition
- -------------------
At March 31, 1995, there was a working capital deficit of $17.5 million compared
to a deficit of $26.0 million at December 31, 1994. Cash flows from operating
activities in the first quarter were $23.5 million versus $38.8 million in the
prior year. The net increase in working capital and reduction in cash flows
from operating activities are primarily attributable to pension plan funding in
1995, the timing of tax payments and a build up of inventory in preparation for
second-quarter promotions.
-6-
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Capital expenditures of $8.0 million represent the Company's continued
investment in equipment to improve product quality and productivity, modernize
production facilities and reduce costs. Spending levels in 1995 are expected to
approximate 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 March 31, 1995, total Shareholders' equity was $92.4 million compared with
$82.0 million at December 31, 1994. The net increase in Retained earnings of
$6.7 million was augmented by a $3.0 million reduction in cumulative translation
adjustments.
-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 have been named as defendants in
certain shareholder lawsuits that have been filed in the United States District
Court for the Southern District of New York and that have been consolidated
under the caption In Re Tambrands Inc. Securities Litigation. The parties have
------------------------------------------
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 alleges 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.
The complaint seeks an unspecified amount of damages on behalf of the class.
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 the defendants' motion to dismiss the complaint for
failure to make a demand upon the Board of Directors. Plaintiffs have appealed
the dismissal.
-8-
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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
for damages either are covered by insurance, are provided for in the Company's
financial statements or, to the extent not so covered or provided for, should
not individually or in the aggregate have a material adverse effect on the
Company's financial position.
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.
-9-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- ------ --------------------------------
a) Exhibits
--------
Exhibit
Number Description
- ------- -----------
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.
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.
-10-
<PAGE>
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(1) 1981 Annual Incentive Plan of the Company, as amended through
March 30, 1995, filed herewith.
12 Computation of Ratio of Earnings to Fixed Charges, filed
herewith.
-11-
<PAGE>
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 February 3, 1995 in
order to file a press release, issued by the Company on February 1, 1995,
which contained the Company's fourth-quarter 1994 results.
-12-
<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: May 10, 1995
------------
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<PAGE>
EXHIBIT 10.(1)
As amended through March 30, 1995
---------------------------------
Tambrands Inc.
- --------------------------------------------------------------------------------
1981 Annual Incentive Plan
- --------------------------------------------------------------------------------
<PAGE>
Tambrands Inc.
- --------------------------------------------------------------------------------
1981 Annual Incentive Plan
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Section Title Page
- ------- ---------------------------------------- ----
<S> <C> <C>
1. Purposes............................................................. 1
--------
2. Definitions.......................................................... 1
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3. Effective Date....................................................... 2
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4. Administration....................................................... 3
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5. Designation of Participants, Performance Criteria and Goals.......... 6
-----------------------------------------------------------
6. Annual Plan Accrual.................................................. 7
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7. Determination of Awards.............................................. 7
-----------------------
8. Payment of Awards.................................................... 8
-----------------
9. Deferral of Awards................................................... 8
------------------
10. Rights of Participants............................................... 9
----------------------
11. Non-Transferability of Rights under the Plan......................... 9
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12. Agreements with Participants......................................... 10
----------------------------
13. Withholding Taxes.................................................... 10
-----------------
14. No Employment Rights................................................. 11
--------------------
15. Termination, Amendment and Modification.............................. 11
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16. Notices.............................................................. 11
-------
17. Severability of Provisions........................................... 12
--------------------------
18. Headings and Captions................................................ 12
---------------------
19. Controlling Law...................................................... 12
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</TABLE>
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Tambrands Inc.
- --------------------------------------------------------------------------------
1981 Annual Incentive Plan
- --------------------------------------------------------------------------------
1. Purposes
--------
The purposes of the Tambrands Inc. 1981 Annual Incentive Plan (the "Plan")
are to enable Tambrands Inc. ("Tambrands") and its subsidiaries to attract,
retain, motivate, and reward the best qualified executives by providing key
employees with the opportunity to earn competitive compensation directly
linked to results and to create a strong foundation on which to build an
aggressive and forward thinking management of top quality.
2. Definitions
-----------
Unless the context requires otherwise, the following words as used in the
Plan shall have the meanings ascribed to each below, it being understood
that masculine, feminine and neuter pronouns are used interchangeably, and
that each comprehends the others.
(a) "Annual Plan Accrual" shall mean the amount accrued by Tambrands for
payment of awards pursuant to Section 6 of the Plan.
1
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(b) "Board" shall mean the Board of Directors of Tambrands.
(c) "Committee" shall mean the Compensation Committee of the Board.
(d) "Company" shall mean Tambrands and its subsidiaries, any of whose
employees are Participants (as hereinafter defined) in this Plan.
(e) "Participant" shall mean a key employee of the Company (who may be,
but need not be, an officer and/or director) who has been selected by
the Committee as eligible to participate in this Plan.
(f) "Performance Period" shall mean, unless otherwise determined by the
Committee, one (1) fiscal year of Tambrands.
(g) "Termination of Employment" shall mean the discontinuance of
employment of a Participant with the Company for any reason
whatsoever.
3. Effective Date
--------------
The effective date of the Plan shall be June 30, 1981.
2
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4. Administration
--------------
(a) The Plan shall be administered by the Committee. All powers and
functions of the Committee may at any time and from time to time be
exercised by the Board; provided, however, that with respect to
matters relating to employees who are members of the Board, such
powers and functions of the Committee may be exercised by the Board
only if, at the time of such exercise, a majority of the members of
the entire Board, and a majority of directors acting in the matter,
are not employees and have not been employees during the preceding
year.
(b) The Committee shall have full authority to interpret the Plan; to
establish, amend, and rescind rules for carrying out the Plan; to
administer the Plan; to select employees to participate in the Plan;
to determine the terms and provisions of any agreements pertaining to
the Plan (which need not be identical) between Tambrands and
Participants; to determine the amount and manner of payment of awards
and to make all other determinations and to take such steps in
connection with the Plan as the Committee, in its discretion, deems
necessary or desirable. The Committee shall not be bound to any
standards of uniformity or similarity of action, interpretation or
conduct in the discharge of its duties hereunder, regardless of the
apparent similarity of the matters
3
<PAGE>
coming before it. Its determination shall be binding on all parties.
(c) The Committee may designate the Secretary of the Company, other
employees of the Company or competent professional advisors to assist
the Committee in the administration of the Plan and may grant
authority to such persons to execute agreements or other documents on
behalf of the Committee.
(d) The Committee may employ such legal counsel, consultants and agents as
it may deem desirable for the administration of the Plan and may rely
upon any opinion received from any such counsel or consultant or agent
and any computation received from such consultant or agent.
No member or former member of the Committee or of the Board of
Directors of the Company shall be liable for any action or
determination made in good faith with respect to the Plan. To the
maximum extent permitted by applicable law, each member or former
member of the Committee or of the Board of Directors of the Company
shall be indemnified and held harmless by the Company against any cost
or expense (including counsel fees) or liability (including any sum
paid in settlement of a claim with the approval of the Company)
arising out of any act or omission to act in connection with the Plan
unless arising out of such member's or former member's own fraud or
bad faith.
4
<PAGE>
Such indemnification shall be in addition to any rights of
indemnification the members or former members may have as directors or
under the by-laws of the Company. Expenses incurred by the Board or
the Committee in the engagement of such counsel, consultant or agent
shall be paid by the Company.
(e) All costs and expenses involved in administering the Plan as provided
herein, or incident thereto, shall be borne by Tambrands.
(f) The Committee shall select one of its members as a Chairman and shall
adopt such rules and regulations as it shall deem appropriate
concerning the holding of its meetings and the transaction of its
business. Any member of the Committee may be removed at any time
either with or without cause by resolution adopted by the Board; and
any vacancy on the Committee may at any time be filled by resolution
adopted by the Board.
(g) All determinations by the Committee shall be made by the affirmative
vote of a majority of its members. Any such determination may be made
at a meeting duly called and held at which a majority of the members
of the Committee were in attendance in person or through telephonic
communication.
5
<PAGE>
Any determination set forth in writing and signed by all of the
members of the Committee shall be as fully effective as if it had been
made by a majority vote of the members at a meeting duly called and
held.
(h) The Committee may, in its sole discretion, make appropriate
adjustments with respect to the terms of the Plan and its
applicability to Participants in the event of a discontinuance by the
Company of a Participant's employment with the Company resulting from
any event such as the merger, sale or consolidation of the Company.
5. Designation of Participants, Performance Criteria and Goals
-----------------------------------------------------------
For each Performance Period, the Committee shall designate those
Participants who may be entitled to receive incentive awards subject to the
terms and conditions of the Plan. Unless otherwise determined by the
Committee, in its sole discretion prior to the commencement of each
Performance Period, the Committee shall determine the performance criteria
and goals for such Performance Period, determine the relative weight to be
given to the performance criteria, and in accordance with established
criteria and goals, assign minimum, target and maximum award opportunities
to each Participant based upon such Participant's salary, position and
ability to impact Tambrands' annual performance.
6
<PAGE>
At any time designated by the Committee, it may make appropriate
adjustments in the goals (1) to avoid undue windfalls or hardships due to
external conditions outside the control of management and non-recurring or
abnormal items or (2) due to the absence of, or issues concerning the
reliability of data used to measure performance against the goals.
6. Annual Plan Accrual
-------------------
Prior to the commencement of each Performance Period, the Committee shall
determine the amount to be accrued (excluding all costs and expenses
involved in administering the Plan which shall be borne separately by the
Company as provided in Section 4(e) hereof) in each fiscal year of
Tambrands for the payment of awards pursuant to the Plan. The aggregate
awards for any Performance Period may be less than or may exceed the amount
accrued for such Performance Period, in the discretion of the Committee.
7. Determination of Awards
-----------------------
After completion of each Performance Period, overall annual results
attained by the Company, its divisions and Participants shall be evaluated
relative to goals. Based upon such evaluation, the Committee may authorize
the payment to each Participant of an incentive award hereunder. All
awards shall be payable in
7
<PAGE>
immediately available funds unless otherwise determined by the Committee.
If a Participant is selected for Plan participation after the beginning of
a Performance Period, the assigned award will be prorated in accordance
with the salary earned for such portion of the Performance Period in which
he is a Participant. In the event of the Termination of Employment of a
Participant, the Committee, in its sole discretion, may determine not to
pay any awards or to reduce the awards payable to him with regard to any
prior or current Performance Period.
8. Payment of Awards
-----------------
Unless otherwise determined by the Committee, payment shall be made as soon
as practicable following the close of each Performance Period, except as
otherwise provided in Section 9 of this Plan.
9. Deferral of Awards
------------------
Participants, who are selected by the Committee as being eligible to
participate in any deferred compensation plan of Tambrands, may elect to
defer all or a portion of their awards in accordance with the terms of such
plan.
8
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10. Rights of Participants
----------------------
Nothing contained in the Plan and no action taken pursuant to the Plan
shall create or be construed to create a trust of any kind, or a fiduciary
relationship, between the Company and any Participant or his legal
representative or designated beneficiary, or any other persons. Any Annual
Plan Accrual that may be established by the Company in connection with the
Plan shall continue to be a part of the general funds of the Company, and
no individual or entity other than the Company shall have any interest in
such funds until paid to a Participant, his legal representative or
designated beneficiary. If and to the extent that any Participant or his
legal representative or designated beneficiary, as the case may be,
acquires a right to receive any payment from the Company pursuant to the
Plan, such right shall be no greater than the right of an unsecured general
creditor of the Company.
11. Non-Transferability of Rights under the Plan
--------------------------------------------
No amounts payable or other rights under the Plan shall be sold,
transferred, assigned, pledged or otherwise disposed of or encumbered by a
Participant, except as provided herein.
9
<PAGE>
12. Agreements with Participants
----------------------------
Each Participant shall be required to enter into an agreement with
Tambrands which shall contain such provisions, consistent with the
provisions of the Plan, as may be established from time to time by the
Committee, including any provisions which may be advisable to comply with
applicable laws, regulations, rulings, or guidelines of any government
authority.
13. Withholding Taxes
-----------------
The Company shall have the right to deduct withholding taxes from any
payments made pursuant to the Plan, or make such other provisions as it
deems necessary or appropriate to satisfy its obligations to withhold
federal, state or local income or other taxes incurred by reason of
payments pursuant to the Plan. In lieu thereof, the Company shall have the
right to withhold the amount of such taxes from any other sums due or to
become due from the Company to the Participant upon such terms and
conditions as the Committee may prescribe.
10
<PAGE>
14. No Employment Rights
--------------------
Nothing in this Plan or any booklet or other document describing or
referring to this Plan shall be deemed to confer on any Participant the
right to continue in the employ of the Company or his respective employer
or affect the right of such employer to terminate the employment of any
such person with or without cause.
15. Termination, Amendment and Modification
---------------------------------------
The Committee may from time to time amend, modify or discontinue the Plan
or any provision hereof. No amendment to or discontinuance or termination
of the Plan shall, without the written consent of the Participant,
adversely affect any rights of such Participant with respect to amounts
previously awarded. The Plan shall continue until terminated by the
Committee.
16. Notices
-------
Each Participant shall be responsible for furnishing the Committee with the
current and proper address for the mailing of notices and the delivery of
agreements and payments. Any notice required or permitted to be given
shall be deemed given if directed to the person to whom addressed at such
address
11
<PAGE>
and mailed by regular United States mail, first-class and prepaid. If any
item mailed to such address is returned as undeliverable to the addressee,
mailing will be suspended until the Participant furnishes the proper
address.
17. Severability of Provisions
--------------------------
If any provision of the Plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provisions
hereof, and this Plan shall be construed and enforced as if such provisions
had not been included.
18. Headings and Captions
---------------------
The headings and captions herein are provided for reference and convenience
only, shall not be considered part of the Plan, and shall not be employed
in the construction of the Plan.
19. Controlling Law
---------------
This Plan shall be construed and enforced according to the laws of the
State of New York to the extent not preempted by Federal law, which shall
otherwise control.
1981AIP
12
<PAGE>
EXHIBIT 12
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>
Three months Three months
ended ended
(in thousands, except ratios) March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C>
Earnings:
Income before income taxes $36,810 $34,991
Fixed charges 2,567 2,423
------- -------
Earnings $39,377 $37,414
======= =======
Fixed charges:
Interest portion of operating
lease expense:
Operating lease expense $1,447 $924
Assumed interest factor 0.33 0.33
------- -------
Interest portion of operating
lease expense 478 305
Interest expense 2,089 2,118
------- -------
Fixed charges $2,567 $2,423
======= =======
Ratio of earnings to fixed charges 15.3 15.4
======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 10,894
<SECURITIES> 0
<RECEIVABLES> 85,098
<ALLOWANCES> (1,408)
<INVENTORY> 45,498
<CURRENT-ASSETS> 184,295
<PP&E> 320,885
<DEPRECIATION> (124,190)
<TOTAL-ASSETS> 388,204
<CURRENT-LIABILITIES> 201,754
<BONDS> 59,985
<COMMON> 10,887
0
0
<OTHER-SE> 81,469
<TOTAL-LIABILITY-AND-EQUITY> 388,204
<SALES> 166,947
<TOTAL-REVENUES> 166,947
<CGS> 55,304
<TOTAL-COSTS> 55,304
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 97
<INTEREST-EXPENSE> 2,089
<INCOME-PRETAX> 36,810
<INCOME-TAX> 13,988
<INCOME-CONTINUING> 22,822
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,822
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
</TABLE>
