SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________ to ____________.
Commission File Number: 0-1349
STANHOME INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-1864170
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
333 Western Avenue, Westfield, Massachusetts 01085
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (413) 562-3631
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $.125 New York Stock Exchange
per share, together with the The Pacific Stock Exchange
Associated Common Stock Purchase Rights
("Common Stock")
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No[_]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[X]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant: $547,074,947 on January 31, 1995.
The number of shares outstanding of the registrant's Common Stock as
of March 15, 1995 was 18,919,430 Shares.
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Parts I, II, and IV of this Form 10-K incorporate by reference
certain information from the registrant's Annual Report to Stockholders for
fiscal year ended December 31, 1994. Part III of this Form 10-K
incorporates by reference certain information from the registrant's
definitive Proxy Statement dated March 17, 1995, for its Annual Meeting of
Stockholders to be held on April 27, 1995.
P A R T I
ITEM 1. BUSINESS.
Through its subsidiaries' operations, the Company is engaged in three
primary lines of business worldwide: (1) the design and sale to
independent retailers of collectible figurines and ornaments, action
musicals, decorative home accents, and other giftware, (2) the direct
response marketing and sale of collectible plates and dolls, jewelry, and
other giftware and non-giftware consumer products, and (3) the manufacture
or purchase, sale, and distribution principally through the direct selling
method known as the "Famous Stanley Hostess Party Plan" of home and
personal care products, giftware, and other items.
Giftware
The Company's Enesco Worldwide Giftware Group is led by Enesco
Corporation ("Enesco"), a subsidiary of the Company, with its new
headquarters located in Itasca, Illinois and its principal showroom, large
warehouse and distribution center complex located in nearby Elk Grove
Village, Illinois. Enesco is a leading importer and distributor of
creatively designed giftware items, including proprietary and licensed
lines and collectibles. Its products include diverse lines of porcelain
and cold cast figurines, musicals and music boxes, dolls, ornaments,
waterballs, decoupage, miniatures, jack-in-the-boxes, tinware, gift bags,
and other giftware primarily produced by independent manufacturers in the
Far East, with total production capacity in several cases being exclusively
devoted to Enesco products. As part of a previously announced
restructuring, the operations of Via Vermont Ltd. were transferred to Elk
Grove Village in January, 1995 and consolidated into Enesco's operations.
During 1994 the Enesco Worldwide Group also closed its retail store at the
Gurnee Mills Mall in Gurnee, Illinois, converted its Australian operations
into a distributorship, made preparations to take over the existing
operations of Hamilton (U.K.), and acquired all of the stock of both
Lilliput Group plc and Border Fine Arts Company Limited as well as
substantially all of the assets of Otagiri Mercantile Company, Inc.
Enesco sells its products through three separately managed divisions,
each with its own sales organization comprised of independent sales
representatives. The Designed Giftware and Gift Gallery divisions each
have approximately 200 independent sales representatives servicing defined
territories with their respective giftware lines. The newest division,
International Collections, is serviced by about 65 sales representatives
offering decorative accessories for the home from the product lines of each
of the Company's 1994 acquisitions, Lilliput, Otagiri, and Border Fine
Arts, as well as from Via Vermont. Enesco displays the Worldwide Giftware
Group products of the three divisions in fifteen showrooms located in the
U.S. as well as at periodic trade and private shows held in major U.S. and
foreign cities. These products are marketed principally in the U.S.
through more than 30,000 independent retail outlets, including gift stores,
greeting card and gift shops, national chains, mail order houses, and
department stores. Another newly established affiliate, Consumer
Appreciation, Inc., administers the Group's collectors clubs and
promotional advertising. Foreign affiliates and distributors of the Enesco
Worldwide Giftware Group are presently located in Australia, Brazil,
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Canada, Chile, Germany, Hong Kong, Italy, Japan, The Netherlands, People's
Republic of China, Philippines, Singapore, Taiwan, Thailand, and the United
Kingdom.
The product lines of the Worldwide Giftware Group are based partially
on Enesco's collection of proprietary designs and partially on products
produced under license from independent creative designers. Most of its
products, whether proprietary or produced under license, are protected by
trademark and/or copyright registrations in the U.S. and many foreign
countries. Principal product trademarks of the Enesco Worldwide Giftware
Group include ENESCO, TREASURED MEMORIES, GROWING UP, LAURA'S ATTIC, SUN
SHELLS, ENESCO SMALL WONDERS, SMALL WORLD OF MUSIC, ELUSIVE LEGEND, THE
ENESCO TREASURY OF CHRISTMAS ORNAMENTS, CHERISHED TEDDIES, MAGNAMARKER, VIA
VERMONT, SPORTS IMPRESSIONS, SANTA'S SPECIAL DEERLIVERY, COW KISSES, CUTE
AS A BUTTON, CORAL KINGDOM, MARY'S MOO MOOS, LILLIPUT LANE, BORDER FINE
ARTS, and OTAGIRI. Among its important licensed lines are PRECIOUS
MOMENTS, CHERISHED TEDDIES, GARFIELD, MEMORIES OF YESTERDAY, LUCY AND ME,
CHAPEAU NOELLE, CALICO KITTENS, BARBIE, PENNYWHISTLE LANE, A CELEBRATION OF
LIFE, SISTERS & BEST FRIENDS, MICKEY & CO./DISNEY, THE NORTH POLE VILLAGE,
COCA COLA, FROSTY THE SNOWMAN, CURRIER & IVES, GNOMES, THE WORLD OF
SINTERKLAAS, THE GOLDEN LEAGUE, SESAME STREET, McDONALD'S, RUDOLPH THE RED
NOSED REINDEER, IVORY CATS, MAUD HUMPHREY BOGART, BESSIE PEASE GUTMANN,
ROSE O'NEIL KEWPIE COLLECTION, ELVIS PRESLEY, THE BEATLES, STAR TREK,
WIZARD OF OZ, SANDMAN, VICTORIAN BELLES, COUNTRY HAMLET, PUREBRED PUPS, and
IN HIS NAME.
The internal development and licensing of innovative new product
designs lessens Enesco's dependency on existing trademarks or copyrighted
designs. Protection of all of the intellectual property is important to
the Company's business, and Enesco has maintained an aggressive and visible
program to identify and challenge companies and individuals who infringe
its registered trademarks and copyrighted designs. The rights with respect
to the licensed lines are materially important to Enesco because of the
substantial volume of sales represented by these products, especially the
PRECIOUS MOMENTS and CHERISHED TEDDIES product lines which accounted for
approximately 25% and 9% of the Company's consolidated revenue during 1994,
respectively.
Collectibles and giftware products sold in the Via Vermont, Lilliput,
and Border Fine Arts lines are supplied by manufacturing plants owned by
Stanhome's subsidiaries operating in Mexico, England, and Scotland,
respectively. Worldwide Giftware Group operations are supplied by these
manufacturing plants and by Enesco's affiliate in Hong Kong, Enesco
International (H.K.) Limited, which assists Enesco by ordering and
overseeing the production of collectibles and giftware products by
independent manufacturers, which are located principally in China, Hong
Kong, and Taiwan, and to a lesser extent in the Philippines, Indonesia, and
Thailand. In addition, this affiliate assists the Company's direct selling
operations in Europe and Latin America by sourcing premium items and
giftware manufactured in the Far East. N.C. Cameron & Sons Limited, a
subsidiary of the Company and a member of the Enesco Worldwide Giftware
Group located in Ontario, Canada, sources its products not only through
Enesco's manufacturing subsidiaries and Enesco International (H.K.) Limited
but also from other Far Eastern, European, and Canadian manufacturers.
Enesco and its affiliates require all manufacturing sources, whether
Company affiliates or contract manufacturers, to comply with quality
standards established and enforced by the Company and its subsidiaries.
Competition in the giftware business in North America, Europe, and
the Far East is highly fragmented among a diversity of collectible and
giftware product categories. The principal factors affecting success in
the marketplace are originality of product design, quality, sourcing
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marketing ability, customer service, and price. The Company believes that
Enesco is a significant factor in the U.S. giftware business among a small
number of sizable, and largely privately-held, competitors within the
industry, which businesses include Hallmark, Department 56, Lladro,
Silvestri, and Schmid, among others. With the addition of both Lilliput
Group plc and Border Fine Arts Company Limited, the Enesco European
Giftware Group has become the third largest quality giftware distributor in
the U.K., behind only Wedgwood and Royal Doulton. The Enesco Group's sales
tend to peak in the third and fourth quarters. As of the end of 1994, the
Enesco Worldwide Giftware Group had a backlog of firm orders totaling
$93,400,000, as compared to $91,800,000 as of the end of 1993. The Company
expects that substantially all of the existing order backlog will be
fulfilled during 1995. It is a standard practice within the giftware
industry, however, that orders are subject to amendment or cancellation by
customers prior to shipment. Because of the multiplicity of external
factors that can impact the status of unshipped orders at any particular
time, the comparison of backlog orders in a given year with those at the
same date in a prior year is not necessarily indicative of sales
performance for that year or for prospective sales results in future years.
Backlog orders can also be affected by various programs employed by the
Company to induce its customers to place orders and accept shipments at
specified times in the year. In addition, extended credit and payment
terms have been and will continue to be key marketing tools. The Enesco
Worldwide Giftware Group plans to utilize similar sales promotions in 1995
to those it employed in 1994 and 1993.
Over the years, there has been an ongoing issue in the U.S. as to the
classification of sales representatives as employees or independent
contractors, with resulting tax and other legal consequences to the worker
and company involved. The U.S. Internal Revenue Service and Congress have
expressed renewed interest in this area in general, and some states have
challenged from time to time the classification of positions within the
Enesco sales organizations. This will in all likelihood receive increased
attention from the federal and state governments in the future.
Direct Response
The Company's Hamilton Worldwide Direct Response Group is led by The
Hamilton Collection, Inc. ("Hamilton"), a subsidiary of the Company, which
has its headquarters and warehouse facilities located in Jacksonville,
Florida. Hamilton sells collectibles and giftware directly to consumers
through print advertising and direct mail marketing in the U.S., Canada,
and the United Kingdom. The Hamilton business in the U.K. became part of
the Enesco Worldwide Giftware Group effective January 1, 1995.
Hamilton's direct mail promotions and media advertisements offer
approximately 90 new products each year, primarily collectible plates,
dolls, and figurines. The artwork incorporated in these items is, for the
most part, licensed from well known artists and many feature television and
motion picture properties. In 1993, limited-edition dolls accounted for
38% of Hamilton's Worldwide Group sales. In 1994, its collectible plates,
hand-painted sculptures, and other non-doll product categories continued to
grow substantially as a percentage of sales and accounted for over 69% of
total sales of the Worldwide Direct Response Group. The principal
trademarks of Hamilton include THE HAMILTON COLLECTION.
Most of Hamilton's products are advertised and sold as part of a
collection series. Generally, the consumer is offered the opportunity to
purchase a single limited-edition item for which the Company has
anticipated related follow-up items. After the initial purchase, the
collector may be offered additional products over a period of time based
upon the same theme and utilizing the same artist as the first product
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purchased. Advertising costs total approximately 49% of all Worldwide
Direct Response Group sales. A key factor in achieving continued sales
growth for Hamilton, especially in the collectible plate category during
1994, has been the sale of product with no down payment and, particularly
in the case of dolls, sales on installment payments and subsequent
shipments in a collection series. The collector may typically purchase a
product with either little or no down payment and a small number of
interest-free installment payments, depending on the price of the product.
Hamilton sources its products in the U.S., Great Britain, Germany,
Italy, and the Far East from numerous contract manufacturers that comply
with quality standards established and enforced by the Company and its
subsidiaries. It has an expanding customer mailing list of over 1,200,000
buyers and collectors. Hamilton's principal licensed properties include:
PRECIOUS MOMENTS, THE WIZARD OF OZ, CHERISHED TEDDIES, STAR WARS, I LOVE
LUCY, THE GIFTED LINE, NASCAR, and STAR TREK. Well known artists include
Chuck Ren, Chuck Dehaan, Connie Walser Derek, Donald Zolan, Sandra Kuck,
Thomas Blackshear, Jim Lamb, Helen Kish, Samuel J. Butcher, and Ted Xaras.
The Hamilton Worldwide Direct Response Group is faced with
substantial competition in its North American markets. Competition in
direct response marketing exists with respect to price, product design and
innovation, licensing, quality, advertising and marketing ability, and
customer service. The Company believes that Hamilton is a growing factor
in the U.S. among the handful of prominent giftware and manufactured
collectibles companies whose products are sold to the public through direct
response media and mail. These industry leaders include Danbury Mint,
Franklin Mint, Bradford Exchange, and Lenox Collection, three of which have
significantly larger sales volumes than Hamilton. The volume of sales of
the Hamilton Worldwide Group peaks in the third and fourth quarters.
Many of Hamilton's direct response solicitations and most of its
product orders are shipped to customers through the U.S. Postal Service and
increases in the rates for this service, such as the increase effective
January 1, 1995, as well as recent increased media advertising and paper
costs, will have a substantial impact on Hamilton's operating profit
depending on the amount of the increases and its ability to introduce cost-
saving measures or pass along the increased costs to its customers.
Direct Selling
The Company's Stanhome Worldwide Direct Selling Group is now composed
of direct selling operations conducted by subsidiaries of the Company in
France, Italy, Mexico, Spain, and Venezuela. Some of these operations
manufacture, as well as distribute and sell, a broad line of home care
items and personal care and other products, including specialty chemical
products for household use, cleaning equipment, cosmetics, toiletries, and
general giftware. The Company is presently undergoing the divestiture of
its North American direct selling operations, known as Stanley Home
Products, which will result in the closing of all such operations in the
U.S. and Puerto Rico. For these operations, the Company has licensed the
products, trademarks, and business to CPAC, Inc. for continued direct
selling in these jurisdictions plus Canada until 2010. These changes
follow closely on the previously announced restructuring which led to the
consolidation of several facilities and operations and the elimination of
approximately ten percent of the Company's then worldwide work force.
Worldwide sales of home care items and personal care products to
consumers generally result from the direct selling method known as the
"Famous Stanley Hostess Party Plan". Under this method a homemaker, or
hostess, invites her friends and neighbors to her home to view a
demonstration of Stanhome products by an independent Stanhome dealer, in
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return for which she usually receives premium prizes or gifts. After the
demonstration, the dealer solicits orders from those present. In Italy and
France, the local affiliate of the Company sells the ordered products
directly to the consumer, pays a commission to the dealer on those sales,
and distributes the premiums to the hostess. In other countries, the
dealer purchases products at wholesale from the local affiliate of the
Company to fill her orders and resells the products at retail to the
consumers who placed the orders either at the home demonstration or through
catalog solicitations, door-to-door and other non-party sales, or over the
telephone. The dealer may also purchase premiums from the local affiliate
to distribute to the hostess as prizes or gifts for hosting the
demonstration. These premium prizes or gifts generally consist of cookware
and other useful or decorative household items that are purchased from
multiple independent suppliers located around the world.
The independent contractor relationship between the independent
Stanhome dealers and the Worldwide Direct Selling Group has proven
adaptable in most of the foreign jurisdictions in which the Company
conducts its direct selling business and in the past has been well
established in the U.S., where the Company has not been subject to either
social security or unemployment compensation tax with respect to them.
Government efforts to broaden social benefit coverage, as well as to impose
additional taxes on occupations including dealers, affects the local
affiliates' recruiting and marketing approach and results, in some cases,
in additional expense for them.
In Italy, the Company has previously reported that independent
dealers have received personal tax assessments in connection with the
distribution of hostess gifts as a part of the Stanhome Party Plan Sales
System. Some dealers have elected to use an amnesty settlement procedure
to resolve their pending claims. Because of the effect on dealer
recruitment and retention, Stanhome's Italian subsidiary is continuing to
assist dealers in the defense of their individual tax claims by making
payments of legal expenses, advancing amounts for tax deposits, and making
payments of settlements where this is more cost effective than potential
litigation costs. These payments have not been material. Stanhome S.p.A.
has recently received a favorable ruling from the Italian government
regarding certain tax consequences of the distribution of hostess gifts.
This ruling should lead to a favorable resolution of the ongoing dealer tax
litigation concerning these assessments. Separately, registration taxes
imposed by the Italian government continue to affect the dealer force.
Wholesale products sold in Mexico, Spain, and Venezuela are largely
supplied by manufacturing plants owned by Stanhome's subsidiaries operating
in those countries. The remaining foreign operations are supplied by these
manufacturing plants, and, in France, Italy, and Venezuela, partially by
independent local manufacturing licensees. All products of the Stanhome
Worldwide Direct Selling Group, whether manufactured by Company affiliates
or by contract manufacturers, comply with quality standards established and
enforced by the Company and its subsidiaries.
The Stanhome Worldwide Direct Selling Group also has license
arrangements in Brazil and, effective after March 1995, the U.S., Canada,
and Puerto Rico. Distribution arrangements are currently in effect with
independent distributors in the Caribbean area, Chile, Cyprus, Peru,
Portugal, Singapore, and Thailand.
The direct selling operations of the Company are faced with
substantial competition in all markets in which they are engaged.
Competition in direct selling worldwide exists not only with respect to
price and product performance, but also with respect to obtaining and
retaining an adequate number of dealers, which is of material importance to
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the success of the direct selling business. Like other direct selling
companies, there is a substantial turnover in dealers, particularly with
respect to individuals who engage in this independent business activity
only on a part-time and occasional basis. The recruiting process is
therefore a continuous one. The retention of key sales personnel is highly
dependent on interpersonal relationships and loyalties as well as on
competitive remuneration systems.
While adequate figures are not available for precise comparisons, the
Company believes that the Stanhome Worldwide Direct Selling Group is a
major factor among the large group of companies whose products are sold to
the public via the party plan sales method in those principal foreign
markets where affiliates of the Group are doing business. This is
particularly the case in Italy, where the Company's local subsidiary is
considered a major direct selling organization. While this operation
accounted for less than half of the Worldwide Direct Selling Group's total
1994 sales, it produced a substantial majority of the Group's 1994
operating profits. Sales for the direct selling subsidiaries tend to peak
in the fourth quarter and, to a lesser degree, in the second quarter.
The Company's direct selling trademarks are generally protected by
registrations in the U.S. and foreign countries where its product line is
marketed and by registrations of its major trademarks in many other
countries throughout the world. The principal trademark is the STANHOME
name and design. These marks play a substantial role in the identification
and acceptance of the Company's products by consumers. The Company's
direct selling business is not materially dependent on patents or patent
protection. Similarly, while the Company owns a large number of formulae
and regards many of its manufacturing processes as secret, it does not
believe that its business is materially dependent upon the maintenance of
secrecy with respect to such formulae or processes.
Other Information
By March 31, 1995, the Company plans to have discontinued
substantially all of the operations of its Stanley Home Products (U.S.)
Division and its Puerto Rican subsidiary. As part of the Company's
previously announced restructuring, certain assets of the Stanley Home
Products (U.S.) Division are planned to be sold to CPAC, Inc. and others
upon cessation of its operations.
As of December 31, 1994, the Company and its U.S. subsidiaries
employed approximately 1,640 persons on a full-time basis. There were also
approximately 24,160 Stanley Home Products (U.S.) dealers, group leaders,
and district managers and 470 Enesco sales representatives engaged in
selling the Company's products in the U.S., all of whom are treated as
independent contractors. As of the same date, the Company's foreign
subsidiaries employed approximately 3,300 persons on a full-time basis.
Additionally, there were approximately 49,350 Stanhome direct selling
dealers, most of whom are recognized as independent contractors.
For financial information about industry segments, including
financial information regarding foreign and domestic operations, see Note 5
of "Notes to Consolidated Financial Statements" included on pages 40 and 41
of the 1994 Annual Report to Stockholders, which is incorporated herein by
reference.
See also "Management's Discussion and Analysis of Financial Condition
and Results of Operations" commencing on page 21 of the 1994 Annual Report
to Stockholders, which is incorporated herein by reference, for a
comparison and discussion of the results of operations and operating profit
from foreign and domestic sources and a discussion of sales tax collection
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efforts by several states involving mail-order purchases.
ITEM 2. PROPERTIES.
The principal physical properties of the Company and its subsidiaries
in the United States, all of which are owned unless otherwise noted,
consist of the following: Corporate Headquarters - 333 Western Avenue,
Westfield, Massachusetts; a new headquarters offices of Enesco in Itasca,
Illinois; and showroom, warehouse, and distribution facilities for Enesco's
giftware business in Elk Grove Village, Illinois. The Enesco Group also
leases showrooms in various other locations in the U.S. for the display of
its products. The Hamilton Group Limited, Inc. leases office headquarters
and warehouse space in Jacksonville, Florida. In addition, a former office
of Stanley Home Products (U.S.), manufacturing, and warehouse facilities in
Easthampton, Massachusetts and three other former Stanley Home Products
direct selling warehouse and distribution centers situated across the U.S.
are still owned but are all currently being offered for sale as part of the
Company's ongoing worldwide restructuring.
Outside of the U.S., the principal physical properties of the
Company's Worldwide Direct Selling Group subsidiaries, all of which are
owned unless otherwise noted, consist of 8 major manufacturing and/or
distribution facilities located in France, Italy, Mexico, Spain, and
Venezuela. Some of these foreign manufacturing plants had, and continue to
have, additional capacity available. In addition, the various direct
selling foreign subsidiaries maintain numerous sales and administrative
offices as well as smaller distribution facilities, most of which are
leased. The principal physical properties relating to the foreign
subsidiaries of the Enesco Worldwide Giftware Group are for the most part
owned. These include Via Vermont, S.A. de C.V., which owns an assembly and
distribution facility in San Miguel de Allende, Guanajuato, Mexico;
Lilliput Group plc, which owns warehouse facilities in Penrith, Cumbria,
England, and manufacturing plants in Workington and Carlisle, England; and
Border Fine Arts Company Limited, which owns a manufacturing plant and
warehouse complex in Langholm, Dumfriesshire, Scotland and a manufacturing
facility in Carlisle, England. These manufacturing facilities are
generally operating at capacity.
ITEM 3. LEGAL PROCEEDINGS.
There are various legal proceedings pending against the Company and
its subsidiaries which have arisen during the course of business. While
Management cannot predict the eventual outcome of these proceedings, it
believes that none of these proceedings will have a material adverse impact
upon the consolidated financial statements of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Date First
Name Age Positions Elected
G. William Seawright 53 Director 3/08/90
President and Chief
Executive Officer 11/09/93
Member of the Executive
Committee 4/22/93
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Prior to Mr. Seawright joining the Company in November, 1993, he was
President and Chief Executive Officer of The Paddington Corporation, an
importer of wines and spirits, in Fort Lee, New Jersey since 1990, after
having previously served as the President of Heublein International and a
Senior Vice President of Heublein, Inc. since 1986.
Allan G. Keirstead 50 Director 4/25/85
Executive Vice President
and Chief Administrative
Officer 4/28/88
Chief Financial Officer 4/28/83
Controller 12/02/81
Member of the Executive
Committee 4/25/85
Prior to Mr. Keirstead's election as Executive Vice President and
Chief Administrative Officer, he served as Financial Vice President from
January, 1983 to April, 1988. He served as Assistant Controller from
April, 1977 to December, 1981.
Eugene Freedman 70 Executive Vice President 4/28/88
President and CEO of Enesco
Worldwide Giftware Group 9/06/89
Mr. Freedman previously served as a Vice President of the Company
from January, 1984 to April, 1988. He also has served for many years as
President and Chief Executive Officer of Enesco Corporation.
James P. Smith, Jr. 51 Executive Vice President 1/26/94
President and CEO of Hamilton
Worldwide Direct Response Group 9/06/89
Mr. Smith previously served as Senior Vice President of the Company
from April, 1992 until January, 1994 and as a Vice President of the Company
from May, 1989 to April, 1992. He also has served for many years as
President and Chief Executive Officer of The Hamilton Collection, Inc.
John J. Dur 43 Vice President 2/01/95
President and CEO of Stanhome
Worldwide Direct Selling Group 1/16/95
Prior to Mr. Dur joining the Company in January, 1995, he was the
founding principal of Tozai Strategists, a consulting company specializing
in Asian market development. Previously, Mr. Dur served as President and
Chief Executive Officer for both Gilbey Canada, Inc. and Heublein Japan
from 1990 to 1994 and from 1981 to 1989, respectively, both of which are
indirect subsidiaries of Grand Metropolitan plc.
Bruce H. Wyatt 48 Vice President and
General Counsel 9/07/88
Clerk and Secretary 4/28/88
Prior to Mr. Wyatt's elections as Vice President and General Counsel,
and Clerk and Secretary, he served as Assistant General Counsel from April,
1985, Assistant Clerk from April, 1983, and Assistant Secretary from April,
1981.
Ronald R. Jalbert 56 Vice President 8/29/79
Mr. Jalbert joined the Company in August, 1979 as its Vice President
of Personnel and from April, 1982 until January, 1995 he served as Vice
President, Human Resources and Public Affairs. Since January, 1995, he has
served as Vice President, Human Resources.
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Thomas E. Evangelista 45 Vice President 12/07/88
Prior to Mr. Evangelista joining the Company in December, 1988, he
was a Marketing Consultant for Marketing Corporation of America in
Westport, Connecticut where he focused on business development strategies
primarily for consumer products and services clients. From December, 1988
until January, 1995 he served as Vice President, Strategic Planning and
Development. Since January, 1995, he has served as Vice President,
Corporate Development and Communications.
Carmen J. Mascaro 59 Treasurer 2/01/93
Prior to Mr. Mascaro's election as Treasurer, he served as Assistant
Treasurer from January, 1986 to February, 1993.
NOTE: All officers are elected for the ensuing year and until their
successors are duly elected and qualified.
P A R T II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Information required by this item is set forth in the Sections
entitled "Financial Highlights" and "Stock Market, Dividend and
Shareholder Information" appearing on page 1 of the 1994 Annual Report to
Stockholders, and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
Information required by this item is set forth in the Section
entitled "Financial Highlights Last Ten Years" appearing on pages 50 and
51 of the 1994 Annual Report to Stockholders, and is incorporated herein
by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
Information required by this item is set forth in the Section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" appearing on pages 21 through 27 of the 1994 Annual
Report to Stockholders, and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required by this item is set forth in the Financial
Statements together with Notes and the Report of Independent Public
Accountants appearing on pages 28 through 48 of the 1994 Annual Report to
Stockholders, and is incorporated herein by reference. Also incorporated
herein by reference are the Quarterly results (unaudited) during 1994,
1993 and 1992 set forth on page 49 of the 1994 Annual Report to
Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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P A R T III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information required by this item regarding the directors of the
Company is set forth under the captions "Election of Directors" and
"Information as to Board of Directors and Nominees" in the Company's proxy
statement dated March 17, 1995, and is incorporated herein by reference.
Information required by this item regarding the executive officers of the
Company is included under a separate caption in Part I hereof, and is
incorporated herein by reference, in accordance with General Instruction
G(3) of Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this item is set forth under the captions
"Executive Compensation", "Compensation and Stock Option Committee Report
on Executive Compensation", "Performance Graph", and "Remuneration of Non-
Employee Directors" in the Company's proxy statement dated March 17, 1995,
and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this item is set forth under the caption
"Voting Securities and Principal Holders Thereof" in the Company's proxy
statement dated March 17, 1995, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this item is set forth under the captions
"Compensation Committee Interlocks and Insider Participation" and "Certain
Relationships and Related Transactions" in the Company's proxy statement
dated March 17, 1995, and is incorporated herein by reference.
P A R T IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) and (2) Financial Statements and Schedules. The financial
statements and schedules required by this item are listed in the Index to
Financial Statements and Schedules of Stanhome Inc. on page 14 of this Form
10-K.
(a)(3) Exhibits. The exhibits required by this item are listed in
the Exhibit Index on pages 17 - 18 of this Form 10-K. The management
contracts and compensatory plans or arrangements required to be filed as an
exhibit to this Form 10-K are listed as Exhibits 10(a) to 10(t) in the
Exhibit Index.
(b) Reports on Form 8-K. During the fourth quarter of 1994, a Form
8-K dated October 14, 1994 was filed by the Company which reported the
acquisition of all but 5.83% of the allotted, called up and fully paid
shares of capital stock of Lilliput Group plc, a public limited company
organized and existing in the United Kingdom, with its principal place of
business located at Penrith, Cumbria, England, and the Company's offer to
acquire the remaining shares and all outstanding options for shares in
Lilliput as well. Total cash consideration for all of the shares and
options of Lilliput amounted to approximately (Pounds)37,334,356 in the
aggregate. Because no financial statements and pro forma financial
information were filed therewith, a Form 8-K/A dated December 14, 1994 was
also filed by the Company which reported the financial statements of
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businesses acquired and pro forma financial information on a consolidated
basis relating to the acquisition of all the shares and options of
Lilliput.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on the
29th day of March, 1995.
STANHOME INC.
(Registrant)
By:/s/G. William Seawright
G. William Seawright
President and Chief Executive Officer
By:/s/Allan G. Keirstead
Allan G. Keirstead
Executive Vice President,
Chief Administrative & Financial Officer
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Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on the 29th day of March, 1995 by the
following persons on behalf of the registrant and in the capacities
indicated.
Signature Title
/s/H. L. Tower *
H. L. Tower Director
/s/Homer G. Perkins *
Homer G. Perkins Director
/s/Allan G. Keirstead
Allan G. Keirstead Director, Executive Vice
President, and Chief
Administrative & Financial
Officer
/s/John F. Cauley, Jr. *
John F. Cauley, Jr. Director
/s/G. William Seawright
G. William Seawright Director, President, and
Chief Executive Officer
/s/Thomas R. Horton *
Thomas R. Horton Director
/s/Anne-Lee Verville *
Anne-Lee Verville Director
/s/Judith R. Haberkorn *
Judith R. Haberkorn Director
/s/Janet M. Clarke *
Janet M. Clarke Director
/s/Charles W. Elliott *
Charles W. Elliott Director
*By:/s/G. William Seawright
G. William Seawright
Attorney-In-Fact
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STANHOME INC.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - Incorporated herein by
reference to "Report of Independent Public Accountants" on page 48
of Stanhome's 1994 Annual Report to Stockholders.
FINANCIAL STATEMENTS - All of which are incorporated herein by reference
to Stanhome's 1994 Annual Report to Stockholders.
Consolidated Balance Sheet - December 31, 1994 and 1993
Consolidated Statement of Income For the Years Ended December 31,
1994, 1993 and 1992
Consolidated Statement of Retained Earnings For the Years Ended
December 31, 1994, 1993 and 1992
Consolidated Statement of Cash Flows For the Years Ended December
31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements - December 31, 1994,
1993 and 1992
Quarterly results (unaudited)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
SCHEDULE SUPPORTING FINANCIAL STATEMENTS:
Schedule
Number Description
II Valuation and Qualifying Accounts and Reserves For
the Three Years Ended December 31, 1994
NOTES:
(a) All other schedules are not submitted because they are not
applicable, not required or because the required information
is included in the consolidated financial statements or notes
thereto.
(b) Individual financial statements of the Company have been
omitted since (1) consolidated statements of the Company and
its subsidiaries are filed and (2) the Company is primarily an
operating company and all subsidiaries included in the
consolidated financial statements filed are wholly-owned and
do not have a material amount of debt to outside persons.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
----------------------------------------------------
To Stanhome Inc.:
We have audited in accordance with generally accepted auditing
standards, the financial statements included in Stanhome Inc.'s annual
report to shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated February 21, 1995. Our audit was made
for the purpose of forming an opinion on those statements taken as a whole.
The schedule listed in the accompanying index is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in
our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
/s/ Arthur Andersen LLP
Hartford, Connecticut
February 21, 1995
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SCHEDULE II
STANHOME INC.
-------------
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
----------------------------------------------
FOR THE THREE YEARS ENDED DECEMBER 31, 1994
--------------------------------------------
Column A Column B Column C Column D Column E
Additions
---------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
----------- ---------- ---------- ---------- ---------- ----------
For the year ended December 31, 1992
------------------------------------
Reserves which are deducted in the
balance sheet from assets to which
they apply -
Allowance for doubtful accounts $11,029,789 $8,452,492 $ - $7,077,330 $12,404,951
=========== ========== ======== ========== ===========
Accumulated amortization of
other assets $14,630,221 $2,215,827 $145,000(b) $ 108,116 $16,882,932
=========== ========== ======== ========== ===========
Other reserves $ 1,001,020 $ 576,998
=========== ===========
For the year ended December 31, 1993
------------------------------------
Reserves which are deducted in the
balance sheet from assets to which
they apply -
Allowance for doubtful accounts $12,404,951 $7,478,700 $ - $4,153,126 $15,730,525
=========== ========== ======== ========== ===========
Accumulated amortization of
other assets $16,882,932 $2,285,245 $ - $ 55,335 $19,112,842
=========== ========== ======== ========== ===========
Other reserves $ 576,998 $ 627,416
=========== ===========
For the year ended December 31, 1994
------------------------------------
Reserves which are deducted in the
balance sheet from assets to which
they apply -
Allowance for doubtful accounts $15,730,525 $7,919,917 $200,619(a) $8,602,247 $15,248,814
=========== ========== ======== ========== ===========
Accumulated amortization of
other assets $19,112,842 $2,782,503 $ - $ 56,984 $21,838,361
=========== ========== ======== ========== ===========
Other reserves $ 627,416 $ 548,594
=========== ===========
Note:
(a) Represents recorded reserves at dates of acquisitions.
(b) Represents balance sheet reclassifications related to prior acquisitions.
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EXHIBIT INDEX
Reg. S-K
Item 601 EXHIBIT
3(a)* Restated Articles of Organization as amended. (Exhibit 3 to
Form 10-Q filed for the period ended March 31, 1988.)
3(b)* By-Laws as amended. (Exhibit 3(ii) to Form 10-Q filed for
the period ended March 31, 1994.)
4(a)* Rights Agreement dated as of September 7, 1988, between
Stanhome Inc. and The Connecticut Bank and Trust Company,
N.A. as amended. (Exhibit 4(a) to Form 10-Q filed for the
period ended September 30, 1988 and Exhibit 1 to Form 8-K
filed on October 1, 1990.)
10(a) 1984 Stock Option Plan, as amended and restated through
March 1, 1995.
10(b) 1991 Stock Option Plan, as amended and restated through
March 1, 1995.
10(c)* Special Interim Chief Executive Officer Stock Option Plan.
(Exhibit 10(c) to Form 10-K filed for the period ended
December 31, 1993.)
10(d)* Outline of Deferred Compensation Plan for Non-employee
Directors, as amended. (Exhibit 10(e) to Form 10-K filed
for the period ended December 31, 1988.)
10(e)* Employment Contract, as amended, with E. Freedman. (Exhibit
10(e) and 10(i) to Form 10-K filed for the periods ended
December 31, 1983 and December 31, 1986 respectively,
Exhibit 19(a) to Form 10-Q filed for the period ended June
30, 1989, and Exhibit 19(e) to Form 10-K filed for the
period ended December 31, 1992.)
10(f)* Employment Agreement with James P. Smith, Jr. (Exhibit 10 to
Form 10-Q filed for the period ended September 30, 1993.)
10(g)* Employment Agreement with Alejandro Diaz Vargas. (Exhibit
10(g) to Form 10-K filed for the period ended December 31,
1993.)
10(h) Agreement with Alejandro Diaz Vargas made as of February 17,
1995.
10(i)* Employment Agreement with G. William Seawright. (Exhibit
10(h) to Form 10-K filed for the period ended December 31,
1993.)
10(j)* Management Incentive Plan, as amended and restated effective
January 1, 1994. (Exhibit 10(i) to Form 10-K filed for the
period ended December 31, 1993.)
10(k)* Retirement Agreement with G. William Seawright. (Exhibit
10(j) to Form 10-K filed for the period ended December 31,
1993.)
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10(l) Supplemental Retirement Plan, as amended, with Allan G.
Keirstead.
10(m)* Agreement under Supplemental Pension Plan, as amended, with
Ronald R. Jalbert. (Exhibit 10(n) to Form 10-K filed for
the period ended December 31, 1993.)
10(n)* Form of Severance Agreement. Similar agreements exist with
Allan G. Keirstead, Bruce H. Wyatt, Ronald R. Jalbert, and
Thomas E. Evangelista. (Exhibit 19(d) to Form 10-K filed
for the period ended December 31, 1992.)
10(o)* Form of Change in Control Agreement. Similar agreements
exist with Allan G. Keirstead, Bruce H. Wyatt, Ronald R.
Jalbert, and Thomas E. Evangelista. (Exhibit 19(c) to Form
10-K filed for the period ended December 31, 1992.)
10(p)* Change in Control Agreement with G. William Seawright.
(Exhibit 10(r) to Form 10-K filed for the period ended
December 31, 1993.)
10(q)* Change in Control Agreement with certain corporate and
subsidiary non-executive officers. (Exhibit 19(c) to Form
10-K filed for the period ended December 31, 1991.)
10(r) Stanhome Inc. Supplemental Pension Plan effective May 1,
1994.
10(s) Stanhome Supplemental Investment Savings Plan effective May
1, 1994.
10(t) Hamilton Supplemental Investment Savings Plan effective
April 1, 1994.
10(u)* License Agreement between Precious Moments, Inc. and Enesco
Corporation. (Exhibit 10 to Form 10-Q filed for the period
ended June 30, 1993.)
13 Portions of the 1994 Annual Report to the Stockholders of
Stanhome Inc.
21 Subsidiaries of Stanhome Inc.
23 Consent of Arthur Andersen LLP
24 Power of Attorney
27 Financial Data Schedule
______________________________________________
*Incorporated Herein By Reference
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