SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended Commission file number December 31, 1995 1-9608 NEWELL CO. (Exact name of Registrant as specified in its charter) DELAWARE 36-3514169 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) (Identification No.) Newell Center 29 East Stephenson Street, Freeport, Illinois 61032-0943 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (815) 235-4171 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- --------------------- Common Stock, $1 par value per share, and associated Preferred Stock Purchase Rights New York Stock Exchange Chicago Stock Exchange 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 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) 2 There were 158.7 million shares of the Registrant's common stock outstanding as of January 31, 1996. The aggregate market value of the shares of common stock (based upon the closing price on the New York Stock Exchange on that date) beneficially owned by nonaffiliates of the Registrant was approximately $3,960.3 million. For purposes of the foregoing calculation only, which is required by Form 10-K, the Registrant has included in the shares owned by affiliates those shares owned by directors and officers of the Registrant, and such inclusion shall not be construed as an admission that any such person is an affiliate for any purpose. Documents Incorporated by Reference Part III Portions of the Registrant's Definitive Proxy Statement for its Annual Meeting of Stockholders to be held May 8, 1996, which will be filed March 15, 1996. 3 PART I Item 1. Business - ----------------- "Newell" or the "Company" refers to Newell Co. alone or with its wholly-owned subsidiaries, as the context requires. GENERAL - ------- Newell is a manufacturer and full-service marketer of high-volume consumer products serving the needs of volume purchasers. The Company's basic strategy is to merchandise a multi-product offering of brand-name consumer products, with an emphasis on excellent customer service, in order to achieve maximum results for its stockholders. Each group of the Company's products is manufactured and sold by a subsidiary or division (each referred to herein as a "division," even if separately incorporated). The Company manages the activities of its divisions through executives at the corporate level, to whom the divisional managers report, and controls financial activities through centralized accounting, capital expenditure reporting, cash management, order processing, billing, credit, accounts receivable and data processing operations. The production and marketing functions of each division, however, are conducted with substantial independence. Each division is managed by employees who make day-to-day operating and sales decisions and participate in an incentive compensation plan that ties a significant part of their compensation to their division's return on assets and sales and income growth. The Company believes that this allocation of responsibility and system of incentives fosters an entrepreneurial approach to management that has been important to the Company's success. This 1995 Annual Report on Form 10-K contains forward looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward looking statements are subject to risks and uncertainties. Exhibit 99 to this 1995 10-K Report identifies important risk factors which could cause the Company's actual financial results to differ materially from results forecast or estimated by the Company in forward looking statements. INDUSTRY SEGMENTS - ----------------- The Company operates in a single industry segment consisting of Consumer Products sold through a variety of retail and wholesale distribution channels. 4 PRODUCTS HOUSEWARES Glassware and Plasticware - ------------------------- The Company's glassware and plasticware business is conducted by the Anchor Hocking and Newell Europe divisions. Anchor Hocking and Newell Europe design, manufacture, package and distribute glass and plastic products. These products include glass ovenware, servingware, cookware and dinnerware products and plastic microwave cookware and food storage products. Anchor Hocking also produces foodservice products and glass lamp parts, lighting components, meter covers and appliance covers for the foodservice and specialty markets. Newell Europe also produces glass components for appliance manufacturers and its products are marketed in Europe, the Middle East and Africa only. Anchor Hocking products are sold primarily under the brand names of ANCHOR HOCKING (R) and PLASTICS INC. (R), and the trade names of OVEN BASICS (R) and STOWAWAYS (R). Newell Europe's products are sold primarily under the brand names of PYREX (R), PYROFLAM (R), VISION (R) and VITRI (R). Anchor Hocking markets its products directly to mass merchants, warehouse clubs, grocery/drug stores, department/specialty stores, hardware distributors and select contract customers, using a network of manufacturers' representatives, as well as regional zone and market-specific sales managers. Newell Europe markets its products to mass merchants, industrial manufacturers and buying groups using a direct sales force. Principal facilities are located in Lancaster, Ohio; Monaca, Pennsylvania; St. Paul and Coon Rapids, Minnesota; Sunderland, Great Britain; Muhtal, Germany and Chateauroux, France. Aluminum Cookware and Bakeware - ------------------------------- The Company's aluminum cookware and bakeware business is conducted by the Mirro division. Mirro primarily manufactures aluminum cookware and bakeware for the retail marketplace. Mirro also manufactures various specialized aluminum cookware and bakeware items for the food service industry. It also produces aluminum contract stampings and components for other manufacturers and makes aluminum and plastic kitchen tools and utensils. Mirro products are sold primarily under the brand names of MIRRO (R) and WEAREVER (R), and the trade names of AIRBAKE (R), CUSHIONAIRE (R), CONCENTRIC AIRE (R) and CHANNELON (R). Mirro markets its products directly to mass merchants, warehouse clubs, grocery/drug stores, department/specialty stores, hardware 5 distributors, cable TV networks, and select contract customers, using a network of manufacturers' representatives, as well as regional zone and market-specific sales managers. Mirro manufacturing operations are highly integrated, rolling its own sheet stock from aluminum ingot, and producing phenolic handles and knobs at its own plastics molding facility. Principal facilities are located in Manitowoc and Chilton, Wisconsin and Salina, Kansas. Other - ----- Goody - personal consumer products including hair accessories and beauty organizers. HOME FURNISHINGS Window Treatments - ----------------- The Company's window treatments business is conducted by the Levolor Home Fashions and Newell Window Furnishings divisions. Levolor Home Fashions and Newell Window Furnishings primarily manufacture made-to-order and stock horizontal and vertical blinds; pleated, cellular and pull shades; and window hardware for the retail marketplace. Levolor Home Fashions also produces window treatment components for custom window treatment fabricators. Levolor Home Fashions and Newell Window Furnishings products are sold primarily under the brand names of NEWELL (R), LEVOLOR (R), LOUVERDRAPE (R), DEL MAR (R), and JOANNA (R), and the trade names SPECTRIM (R), MAGIC FIT (R) and RIVIERA (R). Levolor Home Fashions and Newell Window Furnishings market their products directly and through distributors to mass merchants, home centers, department/specialty stores, hardware distributors, custom shops and select contract customers, using a network of manufacturers' representatives, as well as regional zone and market-specific sales managers. Levolor Home Fashions and Newell Window Furnishings design, manufacture, package and distribute their window treatments products. Principal facilities are located in Freeport, Illinois and High Point, North Carolina. Levolor Home Fashions and Newell Window Furnishings have a total of 15 facilities in the U.S. and Canada. Other - ----- Lee Rowan and System Works - coated wire storage, home storage, shelving systems and organization products; Intercraft, Decorel and Holson Burnes - ready-made picture frames. 6 OFFICE PRODUCTS Markers and Writing Instruments - ------------------------------- The Company's Markers and Writing Instruments business is conducted by the Sanford division. Sanford primarily manufactures permanent/waterbase markers, dry erase markers, overhead projector pens, highlighters and wood-cased pencils, and distributes other writing instruments including rolling ball pens, ball-point pens and mechanical pencils for the retail marketplace. Sanford markets its products directly and through distributors to mass merchants, warehouse clubs, grocery/drug stores, office superstores, office supply stores, contract stationers, and hardware distributors, using a network of manufacturers' representatives, as well as regional zone and market-specific sales managers. Sanford manufactures its own inks and designs, manufactures, packages and distributes markers and wood-cased pencils. Sanford also packages and distributes pens and mechanical pencils. Principal facilities are located in Bellwood, Illinois; and Lewisburg and Shelbyville, Tennessee. Principal foreign facilities are located in Tlalnepantla, Mexico, Bogota, Colombia and King's Lynn, Great Britain. Other - ----- Stuart Hall - school supplies, stationery and office supplies; and Newell, Rogers and Keene Office Products - desktop and computer accessories. 7 HARDWARE AND TOOLS Hardware - -------- The Company's hardware business is conducted by the Amerock and Bulldog divisions. Amerock primarily manufactures cabinet hardware for the retail marketplace. Amerock also manufactures window hardware for window manufacturers. Bulldog packages and distributes hardware which includes bolts, screws and mechanical fasteners. Amerock and Bulldog products are sold primarily under the brand names of AMEROCK (R), ALLISON (R) and BULLDOG (R). Amerock and Bulldog market their products directly and through distributors to mass merchants, home centers, hardware distributors, cabinet shops and window manufacturers, using a network of manufacturers' representatives, as well as regional zone and market- specific sales managers. Amerock designs, manufactures, packages and distributes its hardware products. Bulldog packages and distributes its products. Principal facilities are located in Rockford, Illinois and Memphis, Tennessee. Tools - ----- EZ Paintr - manual paint applicator products; BernzOmatic - propane and propane/oxygen hand torches. MARKETING AND DISTRIBUTION - -------------------------- Sales to Wal-Mart Stores, Inc. and subsidiaries amounted to approximately 14% of consolidated sales in 1995, 15% in 1994 and 14% in 1993. Sales to each of the Company's other customers, individually, amounted to less than 10% of consolidated net sales. Most of the Company's customers are retailers who rely on a single or principal source for each of the consumer products that they sell. Accordingly, the divisions focus their marketing effort not on the ultimate consumer, but on the retailer, and compete with other suppliers for business. The Company's strategy is to emphasize excellent customer service, innovative merchandising programs and a quality multi-product offering. The Company's computerized order processing system allows it to receive orders from its customers on a computer-to-computer basis. This system, and the ability to fill and ship orders promptly, are important competitive factors since they reduce a customer's order processing costs and allow the customer to minimize the inventory it must carry. The divisions maintain sales and service organizations to be responsive to the needs of their customers. 8 BACKLOG - ------- The dollar value of unshipped factory orders is not material. SEASONAL VARIATIONS - ------------------- The divisions are only moderately affected by seasonal trends. Housewares products typically have higher sales in the second half of the year due to retail stocking related to the holiday season, Home Furnishings and Hardware products have higher sales in the second and third quarters due to an increased level of do-it-yourself projects completed in the summer months and Office Products have higher sales in the second and third quarters due to the back-to-school season. The Company's consolidated quarterly sales do not fluctuate significantly because these seasonal trends are moderate. 9 NET SALES BY PRODUCT CLASS - -------------------------- The following table sets forth the amounts and percentages of the Company's net sales for the three years ended December 31, 1995 (including sales of acquired companies only from the time of acquisition), for the classes of similar products described previously. Year Ended December 31, 1995 % 1994 % 1993 % ---- ---- ---- (In millions, except percentages) Housewares: Glassware and Plasticware $ 397.6 16% $ 256.3 12% $ 245.0 15% Alum. Cookware and Bakeware 261.9 11 280.9 14 264.7 16 Other * 160.1 6 154.6 8 19.1 1 ----- ----- ---- Total Housewares 819.6 33 691.8 34 528.8 32 ----- ----- ----- Home Furnishings: Window Treatments 392.0 16 317.8 15 222.7 13 Other * 340.3 13 325.0 16 202.8 13 ----- ----- ----- Total Home Furnishings 732.3 29 642.8 31 425.5 26 ----- ----- ----- Office Products: Markers and Writing Instruments 402.4 16 212.6 10 156.0 10 Other * 179.8 7 170.6 8 184.7 11 ----- ----- ---- Total Office Products 582.2 23 383.2 18 340.7 21 ----- ------ ----- Hardware & Tools Hardware 202.7 8 208.8 10 198.7 12 Tools 161.6 7 148.3 7 136.6 8 ----- ----- ----- Total Hardware & Tools 364.3 15 357.1 17 335.3 20 ----- ----- ----- Sold Businesses: Counselor Bath Scales - - - - 14.7 1 ----- ----- ----- Total Sold Businesses - - - - 14.7 1 ----- ----- ------ Newell Consolidated $2,498.4 100% $2,074.9 100% $1,645.0 100% ======= === ======= === ======= === * This category is comprised of many different product classes, each representing less than 10% of net sales. Certain 1993 and 1994 amounts have been reclassified to conform with the 1995 presentation. 10 ACQUISITIONS AND DIVESTITURES OF BUSINESSES - ------------------------------------------- At the foundation of the Company's growth strategy is acquisitions. Since the late 1960s, acquisitions have been the Company's primary vehicle for growth. Over the last twenty-five years, the Company has acquired more than 50 companies. In the last five years alone, the Company has completed over 10 major acquisitions, representing nearly $2 billion in additional sales. From a small manufacturer of drapery hardware with about $20 million in sales and $2 million in net income in the late 1960's, Newell has grown almost 20% per year and is now an international consumer goods supplier with annualized sales approaching $3 billion and net income exceeding $220 million. This dramatic growth is largely the result of acquisitions, supplemented by internal growth from existing and acquired product lines, as the vehicle to execute a multi-product offering strategy. In its acquisition planning, the Company looks for branded, staple product lines sold to volume purchasers. These product lines must have the potential to reach the Company's high standard of profitability, have a low technology level and a long product life cycle. In addition to adding entirely new product lines, acquisitions can be beneficial in rounding out existing businesses by filling gaps in the product offering, adding new customers and distribution channels and improving operational efficiency through shared resources. The Company has typically acquired companies that it believes have unrealized profit potential. "Newellization" is the profit improvement and productivity enhancement process that is applied to newly acquired product lines to bring them up to the Company's standards of profitability. Elements of the Newellization process at newly acquired companies include establishing a focused business strategy, improving customer service, building partnerships with customers, reducing corporate overhead through centralization of administrative functions, trimming excess costs, tightening financial controls, improving manufacturing efficiency, pruning nonproductive product lines and reducing inventories, increasing trade receivable turnover and improving sales mix profitability through the application of program merchandising techniques. As part of the Newellization process to improve profitability, sales can often decline as unprofitable product lines are reduced or eliminated. In the Newell strategy, once a company has been Newellized (the process usually takes about two years), it is expected to begin building profitable sales and contribute to the Company's internal sales growth. 11 Additional information regarding acquisitions and divestitures of businesses is included in note 2 to the consolidated financial statements. FOREIGN OPERATIONS - ------------------ Prior to the November 1994 acquisition of Newell Europe and the November 1995 acquisition of Berol, the Company operated almost entirely in the United States and Canada. Following these acquisitions, the Company operates in several non-U.S. locations, including England, France, Germany, Mexico and Colombia. Summary financial information by geographic area included in the consolidated financial statements is as follows: 1995 ---------------------- $ % of Total ---------------------- (In millions) Net sales: - U.S. $2,214.0 88.6% - Non-U.S. 284.4 11.4 -------- ----- Total $2,498.4 100.0% ======= ===== Operating income: - U.S. $ 395.5 94.2% - Non-U.S. 24.0 5.8 -------- ----- Total $ 419.5 100.0% ======== ===== Total assets at December 31: - U.S. (including corporate assets of $972.7 million) $2,517.2 85.9% - Non-U.S. 414.0 14.1 -------- ----- Total $2,931.2 100.0% ======= ===== Sales between geographic areas are not material. The Company's international division (financial information included in the U.S. category in the above table) coordinates export sales of consumer products from the U.S. to all other foreign countries. These export sales were approximately 2.2% of 1995 total net sales. 12 RAW MATERIAL - ------------ The Company expects to have multiple foreign and domestic sources of supply for substantially all of its material requirements. The raw materials and various purchased components required for its products have generally been available in sufficient quantities. PATENTS AND TRADEMARKS - ---------------------- The Company has a number of patents, trademarks and trade names, none of which is considered material to the consolidated operations. COMPETITION - ----------- The markets in which the Company competes are highly competitive, with a number of well-established domestic and foreign manufacturers. In addition, many of the Company's products compete with a number of substitute products. The Company believes, however, that it has a significant share in many of its markets. The Company's principal methods of competition are customer service, price, brand name identification, merchandising programs, domestic manufacturing resources and breadth of product line offerings. The Company believes that its customer service programs, which include computer-to-computer EDI capabilities and Quick Response programs, are superior to programs offered by many of its competitors. The Company also believes customers are positively influenced by previous experience with the Company, which includes delivery of quality products on time and complete and innovative good-better-best merchandising programs. The Company's principal customers are sophisticated volume purchasers, which consider a combination of all of these factors in determining where to purchase products. ENVIRONMENT - ----------- The Company is subject to various laws regulating the discharge of materials into the environment or otherwise relating to the protection of the environment. Regulation in this area is still developing, including changes in the standards of enforcement of existing laws and enactment of new laws. Although the Company, like other companies engaged in similar businesses, is a party to various proceedings relating to environmental matters and makes capital expenditures for environmental projects, it does not believe it will have material capital expenditures for environmental control facilities during the current or succeeding fiscal year. See note 14 to the notes to consolidated financial statements for a discussion of the environmental matters in which the Company has been identified as a potentially responsible party, which is hereby incorporated by reference. 13 EMPLOYEES - --------- The Company has approximately 23,000 employees, of whom approximately 6,300 are covered by collective bargaining agreements. 14 Item 2. Properties - ------------------- The following table shows the location and general character of the principal operating facilities owned or leased by the Company. The executive offices are located in Beloit, Wisconsin, which is an owned facility occupying approximately 9,000 square feet. Other Corporate offices are located in owned facilities in Freeport, Illinois (occupying 59,000 square feet) and in Rockford, Illinois (occupying 7,000 square feet). Most of the idle facilities, which are excluded from the following list, are subleased while being held pending sale or lease expiration. The Company considers its properties to be in generally good condition and well-maintained, and are generally suitable and adequate to carry on the Company's business. Exp. Date Location City Owned If Leased General Character ------------- -------------------- ---------------- --------- --------------------------------------- Alabama Phoenix City 08/96 Distribution Arizona Bisbee 05/96 Distribution Belgium Zellick 10/98 Distribution and Administrative Office California Beaumont 11/97 Distribution Garden Grove 03/97 Manufacturing Los Angeles 10/96 Manufacturing Santa Fe 08/96 Distribution San Fernando 06/96 Manufacturing and Administrative Office Santa Monica 10/96 Manufacturing Vista 06/03 Manufacturing and Distribution Westminster 09/96 Manufacturing, Distribution and Administrative Office Canada Brampton, ON 09/96 Manufacturing and Distribution Calgary, AB 07/96 Manufacturing Drummondville, PQ Owned Distribution Mississauga, ON Owned Manufacturing and Distribution Montreal 12/96 Administrative Office Oakville, ON 10/96 Distribution and Administrative Office Pickering, ON 03/07 Distribution Prescott, ON Owned Manufacturing Richmond Hills, ON 10/00 Administrative Office Toronto, ON 08/00 Manufacturing, Distribution and Administrative Office Watford, ON 01/04 Manufacturing, Distribution and Administrative Office Weston, ON M-T-M Administrative Office 15 Exp. Date Location City Owned If Leased General Character ------------- -------------------- ---------------- --------- --------------------------------------- Colombia Bogota Owned Manufacturing, Distribution and Administrative Office Barrarquilla 05/96 Administrative Medellin 11/96 Distribution France Avon 11/96 Administrative Office Chateauroux Owned Manufacturing, Distribution and Administrative Office Georgia Athens 03/96 Manufacturing Columbus Owned Distribution Manchester Owned Manufacturing Peachtree City Owned Administrative Office Germany Muhltal Owned Manufacturing Great Britain Dunstable 02/05 Distribution and Administrative Office King's Lynn Owned Manufacturing, Distribution and Administrative Office Slough 06/07 Administrative Office Sunderland 11/99 Distribution Sunderland 12/00 Distribution Sunderland Owned Manufacturing Hawaii Kapolei 06/00 Manufacturing Illinois Bedford Park 08/96 Manufacturing, Distribution and Administrative Office Bellwood 11/99 Distribution and Administrative Office Bellwood Owned Manufacturing Freeport Owned Distribution and Administrative Office Freeport 12/96 Distribution and Administrative Office Mundelein 12/98 Manufacturing and Administrative Office Rockford M-T-M Manufacturing, Distribution and Administrative Office Rockford Owned Manufacturing South Holland 12/96 Manufacturing Vernon Hills 02/97 Manufacturing Waukegan 07/98 Distribution Indiana Lowell Owned Manufacturing, Distribution and Administrative Office Italy Milan 12/01 Distribution and Administrative Office Kansas Salina 06/96 Manufacturing and Distribution Kentucky Georgetown Owned Manufacturing, Distribution and Administrative Office 16 Exp. Date Location City Owned If Leased General Character ------------- -------------------- ---------------- --------- --------------------------------------- Mexico Durango M-T-M Manufacturing, Distribution and Administrative Office Tlalnepantla M-T-M Manufacturing, Distribution and Administrative Office Michigan St. Joseph Owned Manufacturing, Distribution and Administrative Office Minnesota Coon Rapids Owned Manufacturing Eagan 01/99 Distribution St. Paul Owned Manufacturing and Administrative Office Missouri Fenton 12/99 Administrative Office Jackson Owned Manufacturing and Administrative Office Kansas City 12/05 Manufacturing, Distribution and Administrative Office Nebraska Omaha 09/96 Distribution New Jersey Newark Owned Manufacturing, Distribution and Administrative Office Parsippany 08/97 Administrative Office Rockaway 03/97 Manufacturing New York Medina Owned Manufacturing, Distribution and Administrative Office Ogdensburg Owned Manufacturing and Distribution Orangeburg 01/98 Manufacturing and Distribution North Carolina High Point Owned Manufacturing and Administrative Office Statesville Owned Manufacturing and Distribution Ohio Bremen Owned Manufacturing Lancaster M-T-M Manufacturing, Distribution and Administrative Office Pennsylvania Ambridge M-T-M Distribution Monaca Owned Manufacturing and Administrative Office Puerto Rico Carolina 06/98 Distribution and Administrative Office Clinton 05/97 Manufacturing and Distribution Greenwood M-T-M Distribution South Carolina Joanna 06/96 Manufacturing and Distribution Spain Las Rozas, Madrid 12/96 Administrative Office Tennessee Brentwood 12/97 Administrative Office Johnson City M-T-M Manufacturing and Distribution 17 Exp. Date Location City Owned If Leased General Character ------------- -------------------- ---------------- --------- --------------------------------------- Tennessee Lewisburg Owned Manufacturing, Distribution and Administrative Office Memphis 01/98 Distribution and Administrative Office Shelbyville Owned Manufacturing, Distribution and Administrative Office Tullahoma 09/96 Distribution Texas Taylor Owned Manufacturing, Distribution and Administrative Office Laredo M-T-M Distribution Utah Ogden Owned Manufacturing Salt Lake City 04/98 Manufacturing est Virginia Weirton Manufacturing Wisconsin Beloit Owned Administrative Office Chilton Owned Manufacturing Madison 07/96 Manufacturing, Distribution and Administrative Office Manitowoc 04/97 Distribution and Administrative Office Manitowoc Owned Manufacturing South Milwaukee 06/97 Distribution St. Francis Owned Manufacturing, Distribution and Administrative Office 18 Item 3. Legal Proceedings - -------------------------- Information regarding legal proceedings is included in note 14 to the consolidated financial statements and is hereby incorporated by reference herein. Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------- There were no matters submitted to a vote of the Company's security holders during the fourth quarter of fiscal year 1995. Supplementary Item - Executive Officers of the Registrant as of 12/31/95 NAME AGE PRESENT POSITION WITH THE COMPANY - ----- --- --------------------------------- William P. Sovey 62 Vice Chairman and Chief Executive Officer Thomas A. Ferguson, Jr. 48 President and Chief Operating Officer Donald L. Krause 56 Senior Vice President-Corporate Controller William T. Alldredge 55 Vice President-Finance Richard C. Dell 49 Group President William J. Denton 51 Group President William K. Doppstadt 63 Vice President-Personnel Relations William P. Sovey has been Vice Chairman and Chief Executive Officer since July 1992. From January 1986 through July 1992, he had been President and Chief Operating Officer. Thomas A. Ferguson, Jr. has been President and Chief Operating Officer since May 1992. From January 1989 to May 1992, he was President- Operating Companies. Donald L. Krause was appointed Senior Vice President-Corporate Controller in March 1990. He was President-Industrial Companies from February 1988 to March 1990. William T. Alldredge has been Vice President-Finance of the Company since August 1983. 19 Richard C. Dell has been Group President since June 1992. He was President of Amerock from November 1989 to June 1992. He was President of EZ Paintr from September 1987 to November 1989. William J. Denton has been Group President since March 1990. From April 1989 to March 1990, he was Vice President-Corporate Controller. He was President of Anchor Hocking Glass from August 1987 to April 1989. William K. Doppstadt has been Vice President-Personnel Relations of the Company since 1974. 20 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters ------------------------------------------------- The Company's common stock is listed on the New York and Chicago Stock Exchanges (symbol: NWL). The following table sets forth the high and low sales prices of the common stock on the New York Stock Exchange Composite Tape (as published in the Wall Street Journal) for the calendar periods indicated as adjusted for the two-for-one stock split discussed below. Year Ended December 31, 1995 1994 -------------- -------------- High Low High Low ---- --- ---- ---- Quarters: First $25 1/2 $20 5/8 $21 13/16 $19 1/8 Second 25 22 1/4 23 1/4 19 Third 26 1/4 23 5/8 23 7/8 21 7/8 Fourth 27 1/4 23 43/64 22 3/8 20 1/2 On December 31, 1995 there were 12,518 record holders of the Company's common stock. The Company has paid regular cash dividends on its common stock since 1947. On May 12, 1994, the quarterly cash dividend was increased to $0.10 per share from the $0.09 per share that had been paid since May 13, 1993. The quarterly cash dividend was again increased to $0.12 per share on May 11, 1995. In August 1994, the Company's Board of Directors declared a two- for-one common stock split in the form of a 100% stock distribution of the Company's common stock, which was paid on September 1, 1994 to stockholders of record on August 15, 1994. All per share data was adjusted to reflect the two-for-one stock split. 21 Item 6. Selected Financial Data - -------------------------------- The following is a summary of certain consolidated financial information relating to the Company. The summary has been derived in part from, and should be read in conjunction with, the consolidated financial statements of the Company included elsewhere in this report and the schedules thereto. Year Ended December 31, 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- (In millions, except per share data) INCOME STATEMENT DATA Net sales $2,498.4 $2,074.9 $1,645.0 $1,451.7 $1,259.0 Cost of products sold 1,715.6 1,403.8 1,101.7 997.3 845.6 -------- -------- -------- -------- -------- Gross income 782.8 671.1 543.3 454.4 413.4 Selling, general and administrative expenses 363.3 313.2 257.2 201.1 182.2 Restructuring costs - - - 20.9 - ------- -------- ------- ------- ------- Operating income 419.5 357.9 286.1 232.4 231.2 Nonoperating expenses (income): Interest expense 49.8 30.0 19.1 20.4 13.2 Other (1.1) (1.4) (8.5) (65.6) (6.0) ------- ------- ------- ------- ------ Net 48.7 28.6 10.6 (45.2) 7.2 ------- ------- ------- ------- ------ Income before income taxes and cumulative effect of accounting change 370.8 329.3 275.5 277.6 224.0 Income taxes 148.3 133.7 110.2 114.3 88.4 ------- ------- ------- ------- -------- Net income before cumulative effect of accounting change 222.5 195.6 165.3 163.3 135.6 Cumulative effect of accounting change - - - (44.2) - ------- ------- ------- ------- -------- Net income $ 222.5 $ 195.6 $ 165.3 $ 119.1 $ 135.6 ======= ======= ======= ======= ======== 22 Item 6. Selected Financial Data (Cont.) Year Ended December 31, 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- EARNINGS PER SHARE DATA Before cumulative effect of accounting change $1.41 $1.24 $1.05 $ 1.05 $0.89 Cumulative effect of accounting change - - - (0.29) - ------- ------- ------- ------- ------- Earnings per share $1.41 $1.24 $1.05 $0.76 $0.89 ======= ======= ======= ======= ======= Cash dividends per share $0.46 $0.39 $0.35 $0.30 $0.30 ======= ======= ======= ======= ======= WEIGHTED AVERAGE SHARES 158.2 157.8 157.3 155.8 151.5 BALANCE SHEET DATA Inventories $ 509.2 $ 420.7 $ 301.0 $ 226.2 $ 215.3 Working Capital 452.6 133.6 76.7 219.5 187.9 Total assets 2,931.2 2,488.3 1,952.9 1,569.6 1,187.5 Short-term debt 163.0 309.1 247.2 97.1 2.1 Long-term debt, net of current maturities 761.6 409.0 218.1 176.8 176.6 Stockholders' equity 1,300.1 1,125.3 979.1 859.4 728.8 23 1992 _____ On February 14, 1992, the Company acquired Sanford Corporation ("Sanford"), a designer, manufacturer and marketer of marking and writing instruments, plastic desk accessories, file storage boxes and other office and school supplies. The Company issued approximately 13.8 million shares of common stock for all the common stock of Sanford. This transaction was accounted for as a pooling of interests; therefore, prior financial statements were restated to reflect this merger. On July 8, 1992, the Company acquired Stuart Hall Company, Inc. ("Stuart Hall"), a manufacturer of school supplies, stationery and office supplies. The Company issued 1.6 million shares of common stock for all the common stock of Stuart Hall. On October 1, 1992, the Company acquired substantially all of the assets of Intercraft Industries, L.P., and all of the capital stock of Intercraft Industries of Canada, Inc. (collectively, "Intercraft"), manufacturers of ready-made picture frames. The purchase price was $175.0 million in cash. These transactions were accounted for as purchases; therefore, the results of operations for Stuart Hall and Intercraft are included in the accompanying consolidated financial statements since their respective dates of acquisition. The cost of these 1992 acquisitions was allocated to the fair market value of assets acquired and liabilities assumed and resulted in trade names and goodwill of approximately $161.9 million. 1993 - ---- On April 30, 1993, the Company acquired substantially all of the assets of Levolor Corporation ("Levolor"), a manufacturer and distributor of decorative window coverings. The purchase price was $72.5 million in cash. On September 22, 1993, the Company acquired Lee Rowan Co. ("Lee Rowan"), a manufacturer and marketer of coated wire storage and organization products. The purchase price was $73.5 million in cash. On November 9, 1993, the Company acquired Goody Products, Inc. ("Goody"), a manufacturer and marketer of personal consumer products including hair accessories and beauty organizers. The purchase price, excluding the cost of Goody common stock that the Company owned prior to the acquisition, was $147.1 million in cash. These transactions were accounted for as purchases. The results are included in the accompanying consolidated financial statements since their respective dates of acquisition. The cost of the 1993 acquisitions was allocated to the fair market value of assets acquired and liabilities assumed and resulted in trade names and goodwill of approximately $208.2 million. 24 1994 - ---- On August 29, 1994, the Company acquired Home Fashions, Inc.("HFI"), a manufacturer and marketer of decorative window coverings, including vertical blinds and pleated shades sold under the Del Mar and LouverDrape brand names. The purchase price was $130.4 million in cash. This company was combined with Levolor and together they are operated as a single entity called Levolor Home Fashions. On October 18, 1994, the Company acquired Faber-Castell Corporation, a maker and marketer of markers and writing instruments, including wood- cased pencils and rolling ball pens, whose products are marketed under the Eberhard Faber brand name ("Eberhard Faber"). The purchase price was $137.3 million in cash. This company was combined with Sanford and together they are operated as single entity called Sanford. On November 30, 1994, the Company acquired the European consumer products business of Corning Incorporated (now known as "Newell Europe"). This acquisition included Corning's consumer products manufacturing facilities in England, France and Germany, the European trademark rights and product lines for Pyrex, Pyroflam and Visions brands in Europe, the Middle East and Africa, and Corning's consumer distribution network throughout these areas (Pyrex and Visions are registered trademarks of Corning Incorporated). Additionally, the Company became the distributor in Europe, the Middle East and Africa for Corning's U.S.-manufactured cookware and dinnerware brands. The purchase price was $87.8 million in cash. These transactions were accounted for as purchases. The results of operations are included in the accompanying consolidated financial statements since their respective dates of acquisition. The cost of the 1994 acquisitions was allocated to the fair market value of assets acquired and liabilities assumed and resulted in trade names and goodwill of approximately $197.8 million. The allocations of cost were completed in 1995 with no material adjustments to the financial statements. 1995 - ---- On September 29, 1995, the Company acquired Decorel Incorporated ("Decorel"), a manufacturer and marketer of ready-made picture frames. The purchase price was $29.6 million in cash. On November 2, 1995, the Company acquired Berol Corporation ("Berol"), a designer, manufacturer and marketer of markers and writing instruments. The purchase price was $118.8 million in cash. This company will be combined into Sanford. These transactions were accounted for as purchases. The results of operations are included in the accompanying consolidated financial statements since their respective dates of acquisition. The cost of the 1995 acquisitions was allocated on a preliminary basis to the fair market value of assets acquired and liabilities assumed and resulted in trade names and goodwill of approximately $188.3 million. The 25 final adjustments to the purchase price allocations are not expected to be material to the financial statements. The unaudited consolidated results of operations for the years ended December 31, 1995 and 1994 on a pro forma basis, as though Berol, Decorel, Eberhard Faber, HFI and Newell Europe each had been acquired on January 1, 1994, are as follows: Year Ended December 31, ----------------------- 1995 1994 ---- ---- (In millions, except per share data) Net sales $2,732.3 $2,767.7 Net income 218.3 195.1 Earnings per share 1.38 1.24 (1) In August 1994, the Company's Board of Directors declared a two- for-one common stock split in the form of a 100% stock distribution of the Company's common stock, which was paid on September 1, 1994 to stockholders of record on August 15, 1994. All per share data was adjusted to reflect the two-for-one stock split. (2) In 1992, the Company adopted SFAS No. 106, "Employers" Accounting for Postretirement Benefits Other than Pensions." Adoption of this standard did not have a material effect on the annual expense for postretirement benefits. As part of adopting this standard, the Company recorded, in the first quarter of 1992, a one-time, non-cash charge against earnings of $71.7 million before taxes and $44.1 million after taxes, or $0.29 per share. The effect of the charge on 1992 net income before cumulative effect of accounting change was not material to the consolidated financial statements. (3) On December 31, 1992, the Company sold its closures business for a $210.0 million note receivable due and paid January 4, 1993. The Company recognized a net pre-tax gain of $82.9 million on the sale. Sales for this business totaled $160.6 million in 1992. 26 QUARTERLY SUMMARIES Summarized quarterly data for the last three years are as follows (unaudited): Calendar Year 1st 2nd 3rd 4th Year - ------------- ------ ------- ------- ------- ----- (In millions, except per share data) 1995 ---- Net sales $ 556.6 $ 621.3 $ 651.3 $ 669.2 $2,498.4 Gross income 166.8 189.5 207.2 219.3 782.8 Net income 36.1 54.9 65.1 66.4 222.5 Earnings per share .23 .35 .41 .42 1.41 1994 ---- Net sales $ 443.5 $ 493.5 $ 553.2 $ 584.7 $2,074.9 Gross income 134.8 159.9 179.2 197.2 671.1 Net income 31.5 44.0 58.0 62.1 195.6 Earnings per share .20 .28 .37 .39 1.24 1993 ---- Net sales $ 334.2 $ 372.7 $ 456.7 $ 481.4 $1,645.0 Gross income 104.5 121.7 149.1 168.0 543.3 Net income 27.7 34.5 47.6 55.5 165.3 Earnings per share .18 .22 .30 .35 1.05 27 Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition - ------------------------------------------------------------ The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company's consolidated results of operations and financial condition. The discussion should be read in conjunction with the consolidated financial statements and notes thereto. RESULTS OF OPERATIONS The following table sets forth for the period indicated items from the Consolidated Statements of Income as a percentage of net sales. Year Ended December 31, 1995 1994 1993 ---- ---- ---- Net sales 100.0% 100.0% 100.0% Cost of products sold 68.7 67.7 67.0 ----- ----- ----- Gross income 31.3 32.3 33.0 Selling, general and administrative expenses ("SG&A") 14.5 15.1 15.6 ----- ----- ----- Operating income 16.8 17.2 17.4 Nonoperating expenses (income): Interest expense 2.0 1.4 1.1 Other - (0.1) (0.5) ----- ----- ----- Net 2.0 1.3 0.6 ----- ----- ----- Income before income taxes 14.8 15.9 16.8 Income taxes 5.9 6.5 6.7 ----- ----- ----- Net income 8.9% 9.4% 10.1% ===== ===== ===== 28 1995 vs. 1994 Net sales for 1995 were $2,498.4 million, representing an increase of $423.5 million or 20.4% from 1994. Net sales for each of the Company's product groups (and the primary reasons for the increases) were as follows, in millions: Year Ended December 31, Primary Reasons 1995 1994 % Change for Increases ---- ---- -------- --------------- Housewares $ 819.6 $ 691.8 18.5% Newell Europe November 1994 acquisition Home Furnishings 732.3 642.8 13.9 Decorel September 1995 acquisition HFI August 1994 acquisition Office Products 582.2 383.2 51.9 Berol November 1995 acquisition Eberhard Faber October 1994 acquisition 9% internal sales growth Hardware & Tools 364.3 357.1 2.0 Internal sales growth -------- -------- ---- $2,498.4 $2,074.9 20.4% ======== ======== ==== The overall increase in net sales was primarily attributable to the 1995 acquisitions of Decorel and Berol, and the 1994 acquisitions of HFI, Eberhard Faber and Newell Europe (all of which are described in note 2 to the consolidated financial statements). Internal sales growth is defined as growth from continuing businesses owned more than two years ("core businesses"), including minor acquisitions. Internal sales growth was lower than expected in 1995 due to a sluggish retail environment. Gross income as a percent of net sales for 1995 was 31.3% versus 32.3% in 1994. The decrease was due to lower than average gross margins from the businesses acquired in 1994 and 1995. SG&A as a percent of net sales in 1995 was 14.5% versus 15.1% in 1994. The decrease was due to lower spending at the Company's core businesses and low levels of SG&A at Eberhard Faber. 29 Net nonoperating expenses for 1995 were $48.7 million in 1995 versus $28.6 million in 1994. Net nonoperating expenses are summarized as follows, in millions: Year Ended December 31, ---------------------------------- 1995 1994 Change ----- ---- ------ Interest expense (1) $49.8 $30.0 $ 19.8 Interest income (1.9) (1.0) (0.9) Trade names and goodwill amortization 19.3 15.4 3.9 Dividend income (12.8) (12.6) (0.2) Equity earnings in American Tool Companies, Inc. (the Company has a 49% ownership interest) (6.0) (5.7) (0.3) Write-down in carrying value of a long-term foreign investment accounted for under the equity method (2) 16.0 - 16.0 Net gain on marketable equity securities (15.8) (0.4) (15.4) Other 0.1 2.9 (2.8) ----- ------ ------ $48.7 $28.6 $20.1 ===== ===== ===== (1) Increase was due to the 1994 and 1995 cash acquisitions which were funded with increased debt. (2) During the second quarter, the Company initiated a plan to dispose of the foreign investment and has reduced its investment to the net realizable value. The effective tax rate was 40.0% in 1995 and 40.6% in 1994. See note 11 to the consolidated financial statements for an explanation of the effective tax rate. Net income for 1995 was $222.5 million, representing an increase of $26.9 million or 13.8% from 1994. Earnings per share for 1995 were up 13.7% to $1.41 versus $1.24 in 1994. The increases in net income and earnings per share were primarily attributable to contributions from the 1994 and 1995 acquisitions and increased operating margins at core businesses, net of increases in net nonoperating expenses. 30 1994 vs. 1993: Net sales for 1994 were $2,074.9 million, representing an increase of $429.9 million or 26.1% from 1993. Net sales for each of the Company's product groups (and the primary reasons for the increases) were as follows, in millions: Year Ended December 31, Primary Reasons 1994 1993 %Change for Increases ---- ---- ------ --------------- Housewares $ 691.8 $ 528.8 30.8% Goody November 1993 acquisition 5% internal sales growth Home Furnishings 642.8 425.5 51.1 Levolor April 1993 acquisition Lee Rowan September 1993 acquisition HFI August 1994 acquisition 10% internal sales growth Office Products 383.2 340.7 12.5 Eberhard Faber October 1994 acquisition 6% internal sales growth Hardware & Tools 357.1 335.3 6.5 Internal sales growth Sold Businesses - 14.7 N/A -------- -------- ------ $2,074.9 $1,645.0 26.1% ======= ======= ==== The overall increase in net sales was primarily attributable to the 1993 acquisitions of Levolor, Lee Rowan and Goody and the 1994 acquisitions of HFI and Eberhard Faber (all of which are described in note 2 to the consolidated financial statements), and internal sales growth. "Sold Businesses" represents the sales in 1993 of Counselor, which was divested in October 1993. Gross income as a percent of net sales for 1994 was 32.3% versus 33.0% in 1993. The decrease was due to lower than average gross margins from the businesses acquired in 1993 and 1994. SG&A as a percent of net sales in 1994 was 15.1% versus 15.6% in 1993. The decrease was due to internal sales growth, with only slight increases in spending. Net nonoperating expenses for 1994 were $28.6 million versus $10.6 million in 1993. Net nonoperating expenses are summarized as follows, in millions: 31 Year Ended December 31, ---------------------------------- 1994 1993 Change ----- ----- ------- Interest expense (1) $30.0 $19.1 $10.9 Interest income (1.0) (0.9) (0.1) Trade names and goodwill amortization 15.4 10.1 5.3 Dividend income (12.6) (12.9) 0.3 Equity earnings in American Tool Companies, Inc. (5.7) (3.8) (1.9) Net gain on marketable equity security (0.4) (0.4) Other 2.9 (1.0) 3.9 ----- ----- ----- $28.6 $10.6 $18.0 ===== ===== ===== (1) Increase was due to the 1993 and 1994 cash acquisitions which were funded primarily with debt. The effective tax rate was 40.6% in 1994 and 40.0% in 1993. See note 11 to the consolidated financial statements for an explanation of the effective tax rate. Net income for 1994 was $195.6 million, representing an increase of $30.3 million or 18.3% from 1993. Earnings per share for 1994 were up 18.1% to $1.24 versus $1.05 in 1993. The increases in net income and earnings per share were primarily attributable to contributions from the 1993 acquisitions and internal sales growth, net of increases in net nonoperating expenses. LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of liquidity and capital resources include cash provided from operations and use of available borrowing facilities. Operating activities provided net cash of $276.7 million during 1995, an increase of $38.3 million from $238.4 million in 1994. This change was primarily due to the increase in net income and depreciation and amortization. The Company has short-term foreign and domestic lines of credit with various banks and a commercial paper program which are available for short-term financing. Under the line of credit arrangements, the Company may borrow up to $280.2 million (of which $170.7 million was available at December 31, 1995) based upon such terms as the Company and the respective banks have mutually agreed upon. Committed lines of credit compose $134.5 million of the total line of credit 32 arrangements. Borrowings under the Company's uncommitted lines of credit are subject to the discretion of the lender. At December 31, 1995 the Company had outstanding $345.0 million (principal amount) of medium-term notes with maturities ranging from one to five years at an average rate of interest equal to 6.3%. The Company had outstanding $186.0 million on December 31, 1994 and $153.0 million of medium-term notes on December 31, 1993. In June 1995, the Company entered into a five-year $550.0 million revolving credit agreement and a $200.0 million, 364-day revolving credit agreement (and terminated its existing revolving credit agreements). Under these agreements, the Company may borrow, repay and reborrow funds in an aggregate amount up to $750.0 million, at a floating interest rate. At December 31, 1995, there were no borrowings under the revolving credit agreements. In lieu of borrowings under the revolving credit agreements, the Company may issue up to $750.0 million of commercial paper. The Company's revolving credit agreements referred to above provide the committed backup liquidity required to issue commercial paper. Accordingly, commercial paper may only be issued up to the amount available under the Company's revolving credit agreements. At December 31, 1995, $448.6 million (face or principal amount) of commercial paper was outstanding, all of which was supported by the five-year revolving credit agreements. The entire amount is classified as long-term debt. As of January 23, 1996, the Company has a universal shelf registration statement under which the Company may issue up to $500 million of debt and equity securities, subject to market conditions. The Company's primary uses of liquidity and capital resources include capital expenditures, dividend payments and acquisitions. Capital expenditures were $82.6 million, $66.0 million and $58.9 million in 1995, 1994 and 1993, respectively. The Company has paid regular cash dividends on its common stock since 1947. On May 11, 1995, the quarterly cash dividend was increased to $0.12 per share from the $0.10 per share that had been paid since May 12, 1994. Dividends paid during 1995, 1994 and 1993 were $72.8 million, $61.5 million and $54.3 million, respectively. In August 1994, the Company's Board of Directors declared a two-for-one common stock split in the form of a 100% stock distribution of the Company's common stock, which was paid on September 1, 1994 to stockholders of record on August 15, 1994. All per share data has been adjusted to reflect the two-for-one stock split. Retained earnings increased in 1995, 1994 and 1993 by $149.7 million, $134.0 million and $111.1 million, respectively. The average dividend payout ratio to common stockholders in 1995, 1994 and 1993 was 33%, 31% and 33%, respectively. 33 In 1995, the Company acquired Decorel, Berol and completed other minor acquisitions for $203.9 million. In 1994 and 1993, the Company completed acquisitions with a total cost of $362.8 million and $332.1 million, respectively. All of these acquisitions were accounted for as purchases and were paid for with proceeds obtained from the issuance of commercial paper, medium-term notes, notes payable under the Company's lines of credit or shares of the Company's common stock. The increases in current assets, current liabilities, property, plant and equipment and trade names and goodwill during 1995, 1994 and 1993 were primarily due to the acquisitions occurring in those years. Working capital at December 31, 1995 was $452.6 million compared to $133.6 million at December 31, 1994 and $76.7 million at December 31, 1993. The current ratio at December 31, 1995 was 1.67:1 compared to 1.17:1 at December 31, 1994 and 1.13:1 at December 31, 1993. The working capital and current ratio increased in 1995 as a result of increased current assets related to acquired businesses coupled with lower levels of short-term debt. Total debt to total capitalization (net of cash and cash equivalents) was .40:1 at December 31, 1995, .38:1 at December 31, 1994 and .32:1 at December 31, 1993. The Company believes that cash provided from operations and available borrowing facilities will continue to provide adequate support for the cash needs of existing businesses; however, certain events, such as significant acquisitions, could require additional external financing. In 1995, the Financial Accounting Standards Board ("FASB") issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." This statement has not been adopted by the Company and management believes that the adoption of this statement in 1996 will not be material to the consolidated financial statements. In 1995, the FASB also issued SFAS No. 123, "Accounting for Stock Based Compensation". The Company will adopt this statement in 1996 which will require additional disclosures in the footnotes to the consolidated financial statements. Management believes the adoption of this statement will not be material to the consolidated financial statements. Environmental Matters - --------------------- The Company is involved in various environmental remediation and other compliance activities, including activities arising under the federal Comprehensive Environmental Response, Compensation and Liability Act ("Superfund") and similar state statutes. Certain information regarding these activities is included in note 14 to the consolidated financial statements. Based on information currently available to it, the Company has estimated that remediation costs 34 associated with these activities will be between $11.0 million and $15.6 million. As of December 31, 1995, the Company had a reserve equal to $13.8 million for such remediation costs in the aggregate. Because of the uncertainties associated with environmental assessment and remediation activities, the possibility that sites could be identified in the future that require environmental remediation and the possibility of additional sites as a result of businesses acquired, actual costs to be incurred by the Company may vary from the Company's estimates. Subject to difficulties in estimating future environmental costs, the Company does not expect that any sums it may have to pay in connection with environmental matters in excess of amounts reserved will have a material adverse effect on its consolidated financial statements. Outlook - ------- The Company's primary financial goals are to maintain return on beginning equity at 20% or above and increase earnings per share ("EPS") an average of 15% per year, while maintaining a prudent ratio of total debt to total capital ("leverage"). The Company has achieved these goals over the last ten years, averaging 21% ROE, increasing EPS 20% and averaging 26% leverage. The factors affecting the Company's ability to achieve these goals in the future will be the rates of internal and acquisition growth. In terms of internal growth, the Company has achieved an average of 5% internal sales growth over the last five years, and at the same time, has improved its core business operating margins. Internal sales growth has been under pressure recently, however, as a result of a sluggish retail environment and continuing competition and consolidation among the Company's volume purchasers. Over the longer term, economic trends will continue to affect the Company's internal growth prospects. In terms of acquisition growth, since 1990 the Company has more than doubled its size, acquiring businesses with annual sales of almost $2 billion. The rate at which the Company can integrate these recent acquisitions, in order to meet the Company's high standards of profitability, may affect near-term EPS growth. Over the longer term, the Company's ability to make and integrate strategic acquisitions will impact the EPS growth rate. 35 Item 8. Financial Statements and Supplementary Data - ---------------------------------------------------- Report of Independent Public Accountants - ---------------------------------------- To the Stockholders and Board of Directors of Newell Co.: We have audited the accompanying consolidated balance sheets of Newell Co. (a Delaware corporation) and subsidiaries as of December 31, 1995, 1994 and 1993, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1995. These consolidated financial statements are the responsibility of Newell Co.'s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Newell Co. and subsidiaries as of December 31, 1995, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in Part IV Item 14(a)(2) of this Form 10-K is presented for purposes of complying with the Securities and Exchange Commission's rules and is not a part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our 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. ARTHUR ANDERSEN LLP Milwaukee, Wisconsin, January 27, 1996. 36 NEWELL CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, 1995 1994 1993 ---- ---- ---- (In thousands, except per share amounts) Net sales $2,498,414 $2,074,934 $1,645,036 Cost of products sold 1,715,585 1,403,786 1,101,720 ---------- --------- --------- GROSS INCOME 782,829 671,148 543,316 Selling, general and administrative expenses 363,356 313,283 257,186 ---------- ---------- --------- OPERATING INCOME 419,473 357,865 286,130 Nonoperating expenses (income): Interest expense 49,812 29,970 19,062 Other (1,124) (1,397) (8,488) ----------- --------- --------- Net 48,688 28,573 10,574 ----------- --------- --------- Income before income taxes 370,785 329,292 275,556 Income taxes 148,314 133,717 110,222 ----------- --------- -------- NET INCOME $ 222,471 $ 195,575 $ 165,334 ========= ========= ========= Earnings per share $1.41 $1.24 $1.05 ==== ==== ==== Weighted average shares outstanding 158,212 157,774 157,269 ======= ======= ======= See notes to consolidated financial statements. 37 NEWELL CO. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 1995 1994 1993 ---- ---- ---- (In thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 58,771 $ 14,892 $ 2,866 Accounts receivable, net 390,296 335,806 256,468 Inventories, net 509,245 420,654 301,016 Deferred income taxes 107,499 90,063 73,461 Prepaid expenses and other 67,063 56,256 42,217 ---------- --------- ---------- TOTAL CURRENT ASSETS 1,132,874 917,671 676,028 MARKETABLE EQUITY SECURITIES 53,309 64,740 48,974 OTHER LONG-TERM INVESTMENTS 203,857 214,044 208,563 OTHER ASSETS 122,702 133,652 116,119 PROPERTY, PLANT AND EQUIPMENT, NET 530,285 454,597 370,382 TRADE NAMES AND GOODWILL 888,215 703,572 532,881 ---------- --------- ---------- TOTAL ASSETS $2,931,242 $2,488,276 $1,952,947 ========== ========== ========== See notes to consolidated financial statements. 38 NEWELL CO. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONT.) December 31, 1995 1994 1993 ----- ----- ---- (In thousands, except per share amounts) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 104,017 $ 209,720 $ 189,003 Accounts payable 113,927 112,269 72,832 Accrued compensation 73,057 57,785 49,550 Other accrued liabilities 317,184 296,554 209,483 Income taxes 13,043 8,271 20,244 Current portion of long-term debt 59,031 99,425 58,200 --------- -------- ------- TOTAL CURRENT LIABILITIES 680,259 784,024 599,312 LONG-TERM DEBT 761,578 408,986 218,090 OTHER NONCURRENT LIABILITIES 158,321 152,697 156,400 DEFERRED INCOME TAXES 30,987 17,243 - STOCKHOLDERS' EQUITY Par value of common stock issued ($1 par) 158,626 157,844 78,793 Additional paid-in capital 190,860 175,218 249,588 Retained earnings 938,567 788,862 654,819 Net unrealized gain on securities available for sale 15,912 9,868 N/A Cumulative translation adjustment (3,868) (6,466) (4,055) -------- -------- --------- TOTAL STOCKHOLDERS' EQUITY 1,300,097 1,125,326 979,145 --------- --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,931,242 $2,488,276 $1,952,947 ========= ========= ========= See notes to consolidated financial statements. 39 NEWELL CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 1995 1994 1993 ---- ---- ----- (In thousands) OPERATING ACTIVITIES: Net income $ 222,471 $ 195,575 $ 165,334 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and amortization 101,722 72,485 64,262 Deferred income taxes 40,747 30,673 19,757 Net gains(losses) on: Sale of businesses - - (1,233) Marketable equity securities (15,819) (373) - Write-off of investment 16,000 - - Equity earnings of investment (5,993) (5,661) (3,811) Changes in current accounts, excluding the effects of acquisitions and sale of businesses: Accounts receivable 16,380 (254) (129,562) Inventories (4,444) (13,798) (6,328) Other current assets (4,629) 4,187 (860) Accounts payable (14,941) (5,626) (4,508) Accrued liabilities and other (74,752) (38,782) (72,920) -------- ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 276,742 238,426 30,131 -------- ------- -------- INVESTING ACTIVITIES: Acquisitions, net (187,788) (345,392) (309,846) Expenditures for property, plant and equipment (82,562) (66,026) (58,898) Sale of businesses - - 219,638 Sale of marketable equity securities 37,324 1,053 - Purchase of other investments - - (1,660) Disposals of noncurrent assets and other 1,227 2,628 (16,141) --------- -------- -------- NET CASH USED IN INVESTING ACTIVITIES (231,799) (407,737) (166,907) --------- -------- -------- 40 NEWELL CO. AND SUBSIDIARIES (continued) CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 1995 1994 1993 ---- ---- ----- (In thousands) FINANCING ACTIVITIES: Proceeds from issuance of debt 315,191 402,708 232,852 Proceeds from exercised stock options and other 7,100 2,799 5,216 Payments on notes payable and long-term debt (250,589) (162,638) (72,154) Cash dividends (72,766) (61,532) (54,280) --------- -------- -------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (1,064) 181,337 111,634 --------- -------- -------- INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS 43,879 12,026 (25,142) Cash and cash equivalents at beginning of year 14,892 2,866 28,008 --------- -------- -------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 58,771 $ 14,892 $ 2,866 ========= ========= ======== Supplemental cash flow disclosures: Cash paid during the year for: Income taxes $ 129,300 $ 115,900 $ 144,700 Interest 44,800 31,100 18,900 See notes to consolidated financial statements. 41 NEWELL CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Net Unrealized Gain on Add'l Securities Cumulative Common Paid-In Retained Available Translation Stock Capital(1) Earnings for Sale Adjustment -------- -------- -------- ---------- ------------ (In thousands, except per share amounts) Balance at December 31, 1992 $ 78,338 $239,483 $543,765 $ N/A $ (2,208) Net income 165,334 Cash dividends: Common stock $0.35 per share (54,280) Stock issued for acquisition 44 1,715 Exercise of stock options 445 8,374 Foreign currency translation and other (34) 16 (1,847) -------- -------- -------- ---------- ------------ Balance at December 31, 1993 78,793 249,588 654,819 N/A (4,055) Net income 195,575 Fair value adjustment for securities available for sale at January 1, 1994 3,353 Cash dividends: Common stock $0.39 per share (61,532) Stock split, form of 100% stock dividend 78,910 (78,910) Exercise of stock options 155 4,604 Change in net unrealized gain on securities available for sale 6,515 Foreign currency translation and other (14) (64) (2,411) -------- -------- -------- ---------- ------------ Balance at December 31, 1994 157,844 175,218 788,862 9,868 (6,466) 42 NEWELL CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Net Unrealized Gain on Add'l Securities Cumulative Common Paid-In Retained Available Translation Stock Capital(1) Earnings for Sale Adjustment -------- -------- -------- ---------- ------------ (In thousands, except per share amounts) Net income 222,471 Cash dividends: Common stock $0.46 per share (72,766) Stock issued for acquisitions 381 8,943 Exercise of stock options 412 6,759 Change in net unrealized gain on securities available for sale 6,044 Foreign currency translation and other (11) (60) 2,598 -------- -------- -------- ---------- ------------ Balance at December 31, 1995 $158,626 $190,860 $938,567 $ 15,912 $ (3,868) ======== ======= ======= ======= ======= (1) Net of treasury stock (at cost) of $37, $134 and $161 as of December 31, 1993, 1994 and 1995, respectively. See notes to consolidated financial statements. 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995, 1994 AND 1993 1) SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation: The consolidated financial statements include the accounts of Newell and its majority owned subsidiaries ("the Company") after elimination of intercompany accounts and transactions. Use of estimates: The preparation of these financial statements required the use of certain estimates by management in determining the Company's assets, liabilities, revenue and expenses and related disclosures. Revenue Recognition: Sales of merchandise are recognized upon shipment to customers. Disclosures about Fair Value of Financial Instruments: The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Long-term Investments: The fair value of the investment in convertible preferred stock of the Black & Decker Corporation ("Black & Decker") was based on an independent appraisal. Long-term Debt: The fair value of the Company's long-term debt issued under the medium-term note program is estimated based on quoted market prices which approximate cost. All other significant long-term debt are floating rate instruments whose carrying amounts approximate fair value. Derivatives: Premiums paid related to interest rate swap agreements are amortized into interest expense over the terms of the agreements. Unamortized premiums are included in other assets in the consolidated balance sheets. Gains and losses relating to qualifying hedges of firm commitments are deferred and are recognized in income as adjustments of carrying amounts when the hedged transaction occurs. Allowances for Doubtful Accounts: Allowances for doubtful accounts at December 31, totalled $11.0 million in 1995, $10.9 million in 1994 and $6.2 million in 1993. Inventories: Inventories are stated at the lower of cost or market value. Cost of certain domestic inventories (approximately 89%, 87% and 83% of total inventories at December 31, 1995, 1994 and 1993, respectively) was determined by the "last-in, first-out" ("LIFO") method; for the balance, cost was determined using the "first-in" first-out"("FIFO") method. 44 If the FIFO inventory valuation method had been used exclusively, inventories would have been increased by $29.0 million, $12.3 million and $9.2 million at December 31, 1995, 1994 and 1993, respectively. The components of inventories at the end of each year, net of the LIFO reserve, were as follows: December 31, 1995 1994 1993 ------ ------ ------ (In millions) Materials and supplies $147.7 $ 81.7 $ 71.3 Work in process 87.5 98.9 49.6 Finished products 274.0 240.1 180.1 ------ ------ ------ $509.2 $420.7 $301.0 ===== ===== ===== Reserves for excess and obsolete inventories at December 31 totalled $37.5 million in 1995, $27.0 million in 1994 and $19.3 million in 1993. Long-term Marketable Equity Securities: Long-term marketable equity securities at the end of each year are summarized as follows: December 31, 1995 1994 1993 ------ ------ ------ (In millions) Aggregate market value $ 53.3 $ 64.7 $ 54.6 Aggregate cost 26.8 48.3 49.0 ------ ------ ------ Unrealized gain $ 26.5 $ 16.4 $ 5.6 ====== ====== ====== Beginning January 1, 1994, long-term marketable equity securities are carried at fair value with adjustments for fair value reported separately as a component of stockholders' equity and excluded from earnings. During 1995, the Company received proceeds of $37.3 million from the sale of long-term marketable securities and recorded a gain of $15.8 million on the sale. Gains and losses on the sales of long-term marketable securities are based upon the average cost of securities sold. Other Long-Term Investments: The Company owns 150,000 shares of privately placed Black & Decker convertible preferred stock, Series B, purchased at a cost of $150.0 million. The Series B preferred shares pay a 7 3/4% cumulative dividend, are convertible into Black & Decker common stock at $23.62 per share, and have voting rights equivalent to 45 the common stock into which they are convertible. These shares have restrictions on disposition by the Company, and Black & Decker has the option during the 90-day period beginning September 15, 2001, to repurchase the remaining preferred shares and any common stock issued upon conversion then held by the Company. The estimated fair value of this investment was $244.5 million at December 31, 1995. The Company has a 49% ownership interest in American Tool Companies, Inc., a manufacturer of hand tools and power tool accessory products marketed primarily under the VISE-GRIP and IRWIN trademarks. This investment is accounted for on the equity method with a net investment of $39.2 million included in Other Long-Term Investments at December 31, 1995. Accounting Principles to be Adopted: In 1995, the Financial Accounting standards Board ("FASB") issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." This statement has not been adopted by the Company and management believes that the adoption of this statement in 1996 will not be material to the consolidated financial statements. In 1995, the FASB also issued SFAS No. 123, "Accounting for Stock Based Compensation." The Company will adopt this statement in 1996 which will require additional disclosures in the footnotes to the consolidated financial statements. Management believes the adoption of this statement will not be material to the consolidated financial statements. 46 Property, Plant and Equipment: Property, plant and equipment at the end of each year consisted of the following: December 31, 1995 1994 1993 ----- ---- ----- (In millions) Land $ 16.2 $ 9.6 $ 7.1 Buildings and improvements 194.8 164.8 136.5 Machinery and equipment 647.8 515.8 419.1 ------ ------ ------ 858.8 690.2 562.7 Allowance for depreciation (328.5) (235.6) (192.3) ------ ------ ------ $ 530.3 $ 454.6 $ 370.4 ====== ====== ====== The components of depreciation are provided by annual charges to income calculated to amortize, principally on the straight-line basis, the cost of the depreciable assets over their depreciable lives. Estimated useful lives determined by the Company are as follows: Buildings and improvements 20-40 years Machinery and equipment 5-12 years Replacements and improvements are capitalized. Expenditures for maintenance and repairs are charged to expense. Trade Names and Goodwill: Trade names and the excess of cost over identifiable net assets of businesses acquired are being amortized over 40 years on a straight-line basis. Accumulated amortization of trade names and goodwill was $76.3 million, $57.0 million and $42.1 million at December 31, 1995, 1994 and 1993, respectively. Subsequent to an acquisition, the Company periodically evaluates whether later events and circumstances have occurred that indicate the remaining estimated useful life of goodwill may warrant revision or that the remaining balance of goodwill may not be recoverable. When factors indicate that goodwill should be evaluated for possible impairment, the Company uses an estimate of the relevant business unit's undiscounted net income over the remaining life of the goodwill in measuring whether the goodwill is recoverable. 47 Accrued Liabilities: Accrued liabilities at the end of each year included the following: December 31, 1995 1994 1993 ----- ---- ----- (In millions) Promotion accruals $ 82.6 $ 74.9 $ 53.4 Accrued self-insurance liability 39.7 38.7 36.1 The self-insurance accrual is primarily for workers' compensation and is estimated based upon historical claim experience. Foreign Currency Translation: Foreign currency translation gains and losses were insignificant in 1995, 1994 and 1993. Reclassification: Certain 1993 and 1994 amounts have been reclassified to conform with the 1995 presentation. 2) ACQUISITIONS AND DIVESTITURES OF BUSINESSES 1993 - ----- On April 30, 1993, the Company acquired substantially all of the assets of Levolor Corporation ("Levolor"), a manufacturer and distributor of decorative window coverings. The purchase price was $72.5 million in cash. On September 22, 1993, the Company acquired Lee Rowan Co. ("Lee Rowan"), a manufacturer and marketer of coated wire storage and organization products. The purchase price was $73.5 million in cash. On November 9, 1993, the Company acquired Goody Products, Inc. ("Goody"), a manufacturer and marketer of personal consumer products including hair accessories and beauty organizers. The purchase price, excluding the cost of Goody common stock that the Company owned prior to the acquisition, was $147.1 million in cash. These transactions were accounted for as purchases. The results of operations are included in the accompanying consolidated financial statements since their respective dates of acquisition. The cost of the 1993 acquisitions was allocated to the fair market value of assets acquired and liabilities assumed and resulted in trade names and goodwill of approximately $208.2 million. 48 1994 - ----- On August 29, 1994, the Company acquired Home Fashions, Inc. ("HFI"), a manufacturer and marketer of decorative window coverings, including vertical blinds and pleated shades sold under the Del Mar and LouverDrape brand names. The purchase price was $130.4 million in cash. This company was combined with Levolor and together they are operated as a single entity called Levolor Home Fashions. On October 18, 1994, the Company acquired Faber-Castell Corporation, a maker and marketer of markers and writing instruments, including wood-cased pencils and rolling ball pens, whose products are marketed under the Eberhard Faber brand name ("Eberhard Faber"). The purchase price was $137.3 million in cash. This company was combined with Sanford and together they are operated as a single entity called Sanford. On November 30, 1994, the Company acquired the European consumer products business of Corning Incorporated (now known as "Newell Europe"). This acquisition included Corning's consumer products manufacturing facilities in England, France and Germany, the European trademark rights and product lines for Pyrex, Pyroflam and Visions brands in Europe, the Middle East and Africa, and Corning's consumer distribution network throughout these areas (Pyrex and Visions are registered trademarks of Corning Incorporated). Additionally, the Company became the distributor in Europe, the Middle East and Africa for Corning's U.S.-manufactured cookware and dinnerware brands. The purchase price was $87.8 million in cash. These transactions were accounted for as purchases. The results of operations are included in the accompanying consolidated financial statements since their respective dates of acquisition. The cost of the 1994 acquisitions was allocated to the fair market value of assets acquired and liabilities assumed and resulted in trade names and goodwill of approximately $197.8 million. The allocations of cost were completed in 1995 with no material adjustments to the financial statements. 1995 - ----- On September 29, 1995, the Company acquired Decorel Incorporated ("Decorel"), a manufacturer and marketer of ready-made picture frames. The purchase price was $29.6 million in cash. On November 2, 1995, the Company acquired Berol Corporation ("Berol"), a designer, manufacturer and marketer of markers and writing instruments. The purchase price was $118.8 million in cash. This company will be combined into Sanford. These transactions were accounted for as purchases. The results of operations are included in the accompanying consolidated financial statements since their respective dates of acquisition. The cost of the 1995 acquisitions was allocated on a preliminary basis to the fair market value of assets acquired and liabilities assumed and resulted in trade names and goodwill of approximately $188.3 million. The 49 total adjustments to the purchase price allocation are not expected to be material to the financial statements. The unaudited consolidated results of operations for the years ended December 31, 1995 and 1994 on a pro forma basis, as though Berol, Decorel, HFI, Eberhard Faber and Newell Europe each had been acquired on January 1, 1994, are as follows: Year Ended December 31, --------------------------------------- 1995 1994 ---- ----- (In millions, except per share amounts) Net sales $2,732.3 $2,767.7 Net income 218.3 195.1 Earnings per share 1.38 1.24 3) CREDIT ARRANGEMENTS The Company has short-term foreign and domestic lines of credit with various banks. Under the line of credit arrangements, the Company may borrow U.S. or foreign currencies up to $280.2 million (of which $170.7 million was available at December 31, 1995) based upon such terms as the Company and the respective banks have mutually agreed upon. Committed lines of credit compose $134.5 million of the total line of credit arrangements. Borrowings under the Company's uncommitted lines of credit are subject to the discretion of the lender. Compensating balances on the Company's foreign and domestic lines of credit are not material. 50 The following is a summary of borrowings under foreign and domestic lines of credit: 1995 1994 1993 ------ ------ ------ (In millions) Notes payable to banks: Outstanding at year-end - borrowing $104.0 $ 92.6 $ 50.3 - average interest rate 6.6% 6.0% 3.3% Average for the year - borrowing 102.4 21.5 37.3 - average interest rate 6.7% 4.9% 3.3% Maximum borrowing outstanding during the year 137.8 119.3 138.0 The Company can also issue $750 million of commercial paper. The revolving credit facilities, as described in note 4 to the consolidated financial statements, provide the committed backup liquidity required to issue commercial paper. The entire amount of commercial paper is classified as long-term under the five-year revolving credit agreement. The following is a summary of commercial paper: 1995 1994 1993 ------ ------ ------ (In millions) Commercial paper: Outstanding at year-end - borrowing $448.6 $417.1 $138.7 - average interest rate 5.8% 6.0% 3.3% Average for the year - borrowing 410.4 324.8 4.4 - average interest rate 6.0% 4.4% 3.3% Maximum borrowing outstanding during the year 500.0 479.0 138.7 51 4) LONG-TERM DEBT The following is a summary of long-term debt: December 31, 1995 1994 1993 ------ ------ ------ (In millions) Medium-term notes $345.0 $186.0 $153.0 Revolving Credit Agreement: Commercial paper 448.6 300.0 - Loans payable to banks - - 100.0 Other long-term debt 27.0 22.4 23.3 ------ ------ ------ 820.6 508.4 276.3 Current portion (59.0) (99.4) (58.2) ------ ------ ------ $761.6 $409.0 $218.1 ====== ====== ====== At December 31, 1995, the Company had outstanding $345.0 million (principal amount) of medium-term notes with maturities ranging from one to five years at an average rate of interest equal to 6.3%. In June 1995, the Company entered into a five-year $550.0 million revolving credit agreement and a $200.0 million, 364-day revolving credit agreement (and terminated its existing revolving credit agreements). Under these agreements, the Company may borrow, repay and reborrow funds in an aggregate amount up to $750.0 million, at a floating interest rate. At December 31, 1995, there were no borrowings under the revolving credit agreements. In lieu of borrowings under the revolving credit agreements, the Company may issue up to $750.0 million of commercial paper. The Company's revolving credit agreements referred to above provide the committed backup liquidity required to issue commercial paper. Accordingly, commercial paper may only be issued up to the amount available under the Company's revolving credit agreements. At December 31, 1995, $448.6 million (face or principal amount) of commercial paper was outstanding, all of which was supported by the five-year revolving credit agreement. The entire amount is classified as long-term debt. The revolving credit agreements permit the Company to borrow funds using Syndicated loans (Base Rate loans or Eurodollar loans), 52 Money Market loans (LIBOR Market loans or Set Rate loans) or Acceptance liabilities, as selected by the Company. The terms of these agreements require, among other things, that the Company maintain a certain Total Debt to Total Capital Ratio and a minimum Operating Income to Interest Expense Ratio, all capitalized terms as defined in these agreements. As of December 31, 1995, the Company was in compliance with these agreements. The aggregate maturities of long-term debt outstanding at December 31, 1995, are as follows: Year Aggregate Maturities ---- -------------------- (In millions) 1996 $59.0 1997 3.3 1998 1.3 1999 8.3 2000 596.9 Thereafter 121.8 ----------------- $820.6 ===== As of January 23, 1996, the Company has a universal shelf registration statement under which the Company may issue up to $500 million of debt and equity securities, subject to market conditions. 5) DERIVATIVE FINANCIAL INSTRUMENTS The Company has only limited involvement with derivative financial instruments and does not use them for trading purposes. They are used to manage certain interest rate and foreign currency risks. Interest rate swap agreements are utilized to convert certain floating rate debt instruments into fixed rate debt or to convert certain floating rate debt based on federal funds rates to floating rate debt based upon commercial paper rates. As of December 31, 1995, the Company was party to two interest rate swap agreements which terminate in June 1996 and June 1998, respectively. The first agreement requires the Company to pay on a monthly basis the amounts by which the commercial paper rate exceeds the Federal Funds rate on $50.0 million of debt. The second agreement has a principal value of $100.0 million and converts one month LIBOR rate debt into fixed rate debt with a rate of 5.5%. The Company uses forward exchange contracts to hedge certain purchase commitments denominated in currencies other than the domestic currency (primarily Japanese yen and U.S. dollar for the Company's 53 Canadian subsidiary). As of December 31, 1995, the Company had no forward exchange contracts outstanding. The Company does not obtain collateral or other security to support financial instruments subject to credit risk but monitors the credit standing of the counterparties. The market value of all the Company's derivatives approximates their carrying values. 6) LEASES The Company has minimum rental payments through the year 2007 under noncancellable operating leases as follows: Year Minimum Payments ---- ---------------- (In millions) 1996 $25.1 1997 18.5 1998 11.8 1999 7.5 2000 4.7 Thereafter 17.5 ----- $85.1 ===== Total rental expense for all operating leases was approximately $38.3 million, $31.8 million and $26.0 million in 1995, 1994 and 1993, respectively. 7) EMPLOYEE BENEFIT RETIREMENT PLANS The Company and its subsidiaries have noncontributory pension and profit sharing plans covering substantially all of its foreign and domestic employees. Pension plan benefits are generally based on years of service and/or compensation. The Company's funding policy is to contribute not less than the minimum amounts required by the Employee Retirement Income Security Act of 1974 or local statutes to assure that plan assets will be adequate to provide retirement benefits. Due to the overfunded status of most of the pension plans, contributions to these plans were insignificant during the past three years. 54 The net periodic pension cost components for the pension plans are as follows: Year Ended December 31, --------------------------- 1995 1994 1993 ---- ---- ---- (In millions) Service cost-benefits earned during the year $ 14.3 $ 13.4 $ 8.3 Interest cost on projected benefit obligation 35.0 31.3 27.3 Actual return on assets (64.0) (31.3) (42.7) Net amortization and other components 17.5 (9.4) 6.8 ----- ----- ----- Total pension plan expense (income) $ 2.8 $ 4.0 $ (.3) ===== ===== ===== The principal actuarial assumptions used are as follows: 1995 1994 1993 ---- ---- ---- (In percent) Measurement of projected benefit obligation: Discount rate 7.75% 8% 7.25% Long-term rate of compensation increase 5% 5% 5% Long-term rate of return on plan assets 9% 9% 9% 55 The following table sets forth the funded status of the pension plans and the amount recognized in the Company's consolidated balance sheets: Plans Whose Plans Whose Assets Accumulated Exceed Benefits Accumulated Exceed Benefits Assets -------------- ------------- 1995 1994 1995 1994 ---- ---- ---- ---- (In millions) Actuarial present value of benefit obligations: Vested $329.0 $347.1 $ 89.2 $ 21.1 Nonvested 10.1 12.0 10.5 4.8 ------ ------ ------ ------ Accumulated benefit obligation 339.1 359.1 99.7 25.9 Effect of projected future salary increases 15.2 20.9 17.9 5.7 ------ ------ ------ ------ Projected benefit obligation 354.3 380.0 117.6 31.6 Plan assets at market value (primarily common stock and fixed income investments) 463.1 469.2 75.9 6.1 ------ ------ ------ ------ Plan assets in excess of (less than) projected benefit obligation 108.8 89.2 (41.7) (25.5) Unrecognized transition (net asset) obligation (4.5) (13.5) (3.1) 1.7 Unrecognized prior service cost (3.0) - 1.1 - Unrecognized net (gain)loss (21.9) (7.5) 11.3 5.1 ------ ------ ------ ------ Net pension asset (liability) recognized in the consolidated balance sheets $ 79.4 $ 68.2 $(32.4) $(18.7) ===== ===== ===== ===== Total expense under all profit sharing plans were $5.5 million, $4.5 million and $3.5 million for the years ended December 31, 1995, 1994 and 1993, respectively. 56 8) RETIREE HEALTH CARE Several of the Company's subsidiaries currently provide retiree health care benefits for certain employee groups. The components of the net postretirement health care cost are as follows: Year Ended December 31, 1995 1994 1993 ---- ---- ---- (In millions) Service cost-benefits attributed to service during the period $ 1.7 $ 2.0 $ 1.1 Interest cost on accumulated postretirement benefit obligation 7.5 7.3 8.1 Net amortization and deferral ( .5) - - ---- ---- ---- Net postretirement health care cost $ 8.7 $ 9.3 $ 9.2 ===== ==== ==== A reconciliation of the accumulated postretirement benefit obligation to the liability recognized in the consolidated balance sheets is as follows: December 31, 1995 1994 1993 ------- ------- ------- (In millions) Accumulated postretirement benefit obligation: Retirees $ (67.4) $ (65.2) $ (73.0) Fully eligible active plan participants (5.6) (6.0) (5.2) Other active plan participants (23.4) (21.1) (22.8) ------- ------- ------- Accumulated postretirement benefit obligation (96.4) (92.3) (101.0) Market value of assets - - - ------- ------- ------- Funded status (96.4) (92.3) (101.0) Unrecognized net(gain) (13.0) (16.7) (8.4) ------- ------- ------- Other Noncurrent Liability $(109.4) $(109.0) $(109.4) ======= ======= ======= The actuarial calculation assumes an 11% increase in the health care cost trend rate for fiscal year 1995. The assumed rate decreases one percent every year through the sixth year to six percent and remains constant beyond that point. The health care cost trend rate has a significant effect on the amounts reported. For example, a one percentage point increase in the health care cost trend rate would increase the accumulated postretirement benefit obligation by $6.2 million and increase net periodic cost by $.8 million. The discount 57 rate used in determining the accumulated postretirement benefit obligation was 7.75% in 1995, 8% in 1994 and 7.25% in 1993. 9) STOCKHOLDERS' EQUITY AND PER SHARE DATA The Company's common stock consists of 400.0 million authorized shares, with a par value of $1 per share. Of the total unissued common shares at December 31, 1995, total shares in reserve included 8.9 million shares for issuance under the Company's stock option plans. Each share of common stock includes a preferred stock purchase right (a "Right"). Each Right will entitle the holder, until the earlier of October 31, 1998 or the redemption of the Rights, to buy one four-hundredth of a share of a new series of preferred stock, denominated "Junior Participating Preferred Stock, Series B," at a price of $25 per one four-hundredth of a share (as adjusted to reflect stock splits since the issuance of the Rights). This preferred stock is nonredeemable and will have 100 votes per share. The Company has reserved 500,000 Series B preferred shares for issuance upon exercise of such Rights. The Rights will be exercisable only if a person or group acquires 20% or more of voting power of the Company or announces a tender offer following which it would hold 30% or more of the Company's voting power. In the event that any person becomes the beneficial owner of 30% or more of the Company's voting power, the Rights (other than Rights held by the 30% stockholder) would become exercisable for that number of shares of the Company's common stock having a market value of two times the exercise price of the Right. Furthermore, if, following the acquisition by a person or group of 20% or more of the Company's voting power, the Company were acquired in a merger or other business combination or 50% or more of its assets were sold, or in the event of certain types of self-dealing transactions by a 20% stockholder, each Right (other than Rights held by the 20% stockholder) would become exercisable for that number of shares of common stock of the Company (or the surviving company in a business combination) having a market value of two times the exercise price of the Right. The Company may redeem the Rights at one cent per Right prior to the occurrence of an event that causes the Rights to become exercisable for common stock. The Board of Directors may terminate the Company's right to redeem the Rights under certain circumstances at any time after a group or person acquires 20% or more of the Company's voting power. The earnings per share amounts are computed based on the weighted average monthly number of shares outstanding during the year. 58 10) STOCK OPTIONS All options are granted at prices at least equal to the market value on the date of grant and expire five years to ten years and one day thereafter. The following summarizes the changes in number of shares of common stock under option: Range of Number of Per Share Shares Option Prices -------- ------------- Outstanding at December 31, 1992 2,552,880 3.84 - 24.44 Granted 431,860 16.44 - 19.38 Goody Grants Assumed 53,210 8.63 - 15.16 Exercised (881,428) 3.88 - 16.44 Cancelled (74,322) 10.35 - 10.35 --------- Outstanding at December 31, 1993 2,082,200 3.84 - 24.44 Granted 454,400 19.88 - 22.38 Exercised (273,196) 3.84 - 19.19 Cancelled (107,646) 7.34 - 21.75 --------- Outstanding at December 31, 1994 2,155,758 3.84 - 24.44 Granted 284,250 23.25 - 26.00 Exercised (411,528) 3.84 - 24.44 Cancelled (82,750) 16.44 - 26.00 --------- Outstanding at December 31, 1995 1,945,730 3.88 - 26.00 ========== Options outstanding on December 31, 1995, are exercisable at an average price of $18.72 and expire on various dates from January 25, 1996 to November 9, 2005. 59 11) INCOME TAXES The Company utilizes SFAS No. 109, "Accounting for Income Taxes," for computing its income tax provision. The provision for income taxes consists of the following: Year Ended December 31, 1995 1994 1993 ---- ---- ---- (In millions) Current: Federal $ 88.5 $ 82.3 $ 70.5 State 16.7 19.1 19.0 Foreign 2.4 1.6 0.9 ------- ------- ------ 107.6 103.0 90.4 Deferred 40.7 30.7 19.8 ------- ------- ------ Total $ 148.3 $ 133.7 $ 110.2 ====== ====== ====== The components of the net deferred tax asset are as follows: December 31, ---------------------------- 1995 1994 1993 ---- ---- ---- (In millions) Deferred tax assets: Accruals, not currently deductible for tax purposes $ 105.1 $ 79.5 $ 65.1 Postretirement liabilities 43.6 44.9 48.0 Inventory reserves 16.5 6.2 2.1 Self-insurance liability 13.2 14.1 11.3 Other .8 3.0 2.2 ------ ------ ------- 179.2 147.7 128.7 Deferred tax liabilities: Accelerated depreciation (45.5) (37.1) (26.3) Prepaid pension asset (31.6) (24.2) (24.5) Unrealized gain on securities available for sale (10.6) (6.5) - Other (15.0) (7.0) (1.6) ------ ----- ------ (102.7) (74.8) (52.4) ------ ------- ------- Net deferred tax asset $ 76.5 $ 72.9 $ 76.3 ====== ====== ====== 60 The net deferred tax asset is classified in the consolidated balance sheets as follows: December 31, 1995 1994 1993 ---- ---- ----- (In millions) Current net deferred income tax asset $ 107.5 $ 90.1 $ 73.5 Noncurrent deferred income taxes: Included in Other Assets - - 2.8 Liability (31.0) (17.2) - _______ ______ _______ $ 76.5 $ 72.9 $ 76.3 ====== ====== ====== A reconciliation of the U.S. statutory rate to the effective income tax rate is as follows: Year Ended December 31, ----------------------------- 1995 1994 1993 ---- ---- ---- (In percent) Statutory rate 35.0% 35.0% 35.0% Add (deduct) effect of: State income taxes, net of federal income tax effect 4.3 4.5 4.5 Nondeductible trade names and goodwill amortization 1.4 1.3 0.9 ---- ----- ----- Other (0.7) (0.2) (0.4) Effective rate 40.0% 40.6% 40.0% ==== ==== ==== No U.S. deferred taxes have been provided on undistributed non- U.S. subsidiary earnings of $28.1 million, which are considered to be permanently invested. The non-U.S. component of income before income taxes was $19.3 million in 1995, $3.5 million in 1994 and $1.8 million in 1993. 61 12) OTHER NONOPERATING EXPENSES(INCOME) Total other nonoperating expenses (income) consist of the following: Year Ended December 31, 1995 1994 1993 ---- ---- ----- (In millions) Interest income $ (1.9) $ (1.0) $ (.9) Trade names and goodwill amortization 19.3 15.4 10.1 Dividend income (12.8) (12.6) (12.9) Equity in earnings of American Tool Companies, Inc. (6.0) (5.7) (3.8) Write-downs in carrying value of a long-term foreign investment accounted for under the equity method 16.0 - - Net gain on marketable equity securities (15.8) (0.4) - Other 0.1 2.9 (1.0) ----- ---- ----- $ (1.1) $ (1.4) $ (8.5) ===== ===== ===== 13) OTHER OPERATING INFORMATION INDUSTRY SEGMENT INFORMATION The Company operates in a single industry segment; the Company is a manufacturer and full-service marketer of high-volume, brand-name, staple consumer products sold to volume purchasers. The Company's consumer products are sold through a variety of retail and wholesale distribution channels. 62 The Company's consumer products and the primary brand names under which they are sold include: Primary Product Group Product Class Brand Names - ------------- ------------- --------------- Housewares Glassware & Plasticware Anchor Hocking(R) Pyrex(R) (1) Aluminum Cookware & Mirro(R) Bakeware WearEver(R) Hair Accessories Goody(R) Ace(R) Home Furnishings Window Treatments Newell(R) Levolor(R) LouverDrape(R) Del Mar(R) Joanna(R) Home Storage Products Lee Rowan(R) System Works(R) Picture Frames Intercraft(R) Decorel(R) Holson Burnes(TM) Office Products Markers & Writing Sanford(R) Instruments Eberhard Faber(R) Berol(R) School Supplies & Stuart Hall(R) Stationery Desktop & Computer Newell(R) Accessories Rogers(R) Keene(R) Hardware & Hardware Amerock(R) Tools Bulldog(R) Paint Applicators EZ Paintr(R) Hand Torches BernzOmatic(R) (1) Marketed in Europe, the Middle East and Africa. Sales to Wal-Mart Stores, Inc. and subsidiaries amounted to approximately 14% of consolidated sales in 1995, 15% in 1994 and 14% in 1993. Sales to each of the Company's other customers, individually, amounted to less than 10% of consolidated net sales. 63 GEOGRAPHIC SEGMENT INFORMATION Prior to the November 1994 acquisition of Newell Europe and the November 1995 acquisition of Berol, the Company operated principally in the United States and Canada. Following these acquisitions, the Company operates in several non-U.S. locations including England, France, Germany, Mexico and Colombia. Summary financial information by geographic area included in the consolidated financial statements is as follows. 1995 ------------- (In millions) Net sales: U.S. $2,214.0 Non-U.S. 284.4 -------- Total $2,498.4 ======= Operating Income: U.S. $ 395.5 Non-U.S. 24.0 -------- Total $ 419.5 ======= Total assets at December 31 U.S. (including corporate assets of $972.7 million) $2,517.2 Non-U.S. 414.0 -------- Total $2,931.2 ======= Sales between geographic areas are not material. 14) LITIGATION The Company and its subsidiaries are subject to certain legal proceedings and claims, including the environmental matters described below, that have arisen in the ordinary conduct of its business. Although management of the Company cannot predict the ultimate outcome of these matters with certainty, it believes that their ultimate resolution will not have a material effect on the Company's consolidated financial statements. The Company and its subsidiaries are involved in various matters concerning federal and state environmental laws and regulations, including seventeen matters in which they have been identified by the U.S. Environmental Protection Agency and certain state environmental agencies as potentially responsible parties ("PRPs") at hazardous waste disposal sites under the Comprehensive Environmental Response, 64 Compensation and Liability Act ("Superfund") and equivalent state laws. In assessing its remediation costs, the Company has considered several factors, including: the extent of the Company's volumetric contribution at each site relative to that of other PRPs; the kind of waste; where applicable, the terms of existing cost sharing and other agreements; the ability of other PRPs to share in the payment of requisite costs; the Company's prior experience with environmental remediation; environmental studies and cost estimates available to the Company; the effects of inflation on cost estimates; and the extent to which the Company's and other party's status as a PRP is disputed. Based on information currently available to it, the Company's estimate of remediation costs associated with these matters ranges between $11.0 million and $15.6 million. As of December 31, 1995, the Company had a reserve equal to $13.8 million for such remediation costs in the aggregate. No insurance recovery was taken into account in determining the Company's cost estimates or reserve nor do the Company's cost estimates or reserve reflect any discounting for present value purposes. Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure - ------- ----------------------------------------------------------- None. 65 PART III Item 10. Directors and Executive Officers of the Registrant - -------- -------------------------------------------------- Information regarding executive officers of the Company is included as a Supplementary Item at the end of Part I of this Form 10- K. Information regarding directors of the Company is included in the Company's Definitive Proxy Statement for the Annual Meeting of Stockholders to be held May 8, 1996 ("Proxy Statement") under the caption "Proposal 1 - Election of Directors," which information is hereby incorporated by reference herein. Information regarding compliance with Section 16(a) of the Exchange Act is included in the Proxy Statement under the caption "Compliance with Forms 3, 4 and 5 Reporting Requirements," which information is hereby incorporated by reference herein. Item 11. Executive Compensation - -------- ---------------------- Information regarding executive compensation is included in the Proxy Statement under the caption "Proposal 1 - Election of Directors - - Information Regarding Board of Directors and Committees," the captions "Executive Compensation - Summary; - Option Grants in 1995; - Option Exercises in 1995; - Pension and Retirement Plans; - Employment Security Agreements," and the caption "Executive Compensation Committee Interlocks and Insider Participation," which information is hereby incorporated by reference herein. Item 12. Security Ownerships of Certain Beneficial Owners and Management - -------- --------------------------------------------------------------- Information regarding security ownership is included in the Proxy Statement under the caption "Certain Beneficial Owners," which information is hereby incorporated by reference herein. Item 13. Certain Relationships and Related Transactions - ------- ------------------------------------------------ Not Applicable. 66 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K - -------- ------------------------------------------------------- (a) (1) The following is a list of the financial statements of Newell Co. included in this report on Form 10-K which are filed herewith pursuant to Item 8: Report of Independent Public Accountants Consolidated Statements of Income - Years Ended December 31, 1995, 1994 and 1993 Consolidated Balance Sheets - December 31, 1995, 1994 and 1993 Consolidated Statements of Cash Flows - Year Ended December 31, 1995, 1994 and 1993 Consolidated Statements of Stockholders' Equity - Years Ended December 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements - December 31, 1995, 1994 and 1993 (2) The following is a list of the consolidated financial statement schedules of the Company included in this report on Form 10-K which are filed herewith pursuant to Item 14(d) and appear immediately preceding the Exhibit Index: Schedule VIII - Valuation and Qualifying Accounts (3) The exhibits filed herewith are listed on the Exhibit Index filed as part of this report on Form 10-K. Each management contract or compensatory plan or arrangement of the Company listed on the Exhibit Index is separately identified by an asterisk. (b) Reports on Form 8-K (1) Registrant filed a Report on Form 8-K dated November 14, 1995 reporting the filing of an unallocated shelf registration statement on Form S-3. 67 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. NEWELL CO. Registrant By /s/ William T. Alldredge ---------------------------- William T. Alldredge Vice President-Finance Date March 12, 1996 ------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 12, 1996, by the following persons on behalf of the Registrant and in the capacities indicated. Signature Title --------- ---------- /s/ Daniel C. Ferguson Chairman of the Board and Director - ---------------------------- Daniel C. Ferguson /s/ William P. Sovey Vice Chairman of the Board, Chief Executive - ---------------------------- William P. Sovey Officer and Director (Principal Executive Officer) /s/ Thomas A. Ferguson, Jr. President and Chief Operating Officer - ---------------------------- Thomas A. Ferguson, Jr. and Director /s/ Donald L. Krause Senior Vice President-Corporate Controller - ---------------------------- Donald L. Krause (Principal Accounting Officer) /s/ William T. Alldredge Vice President-Finance - ---------------------------- William T. Alldredge (Principal Financial Officer) 68 /s/ Alton F. Doody Director - ---------------------------- Alton F. Doody /s/ Gary H. Driggs Director - ---------------------------- Gary H. Driggs /s/ Robert L. Katz Director - ---------------------------- Robert L. Katz /s/ John J. McDonough Director - ---------------------------- John J. McDonough /s/ Elizabeth Cuthbert Millett Director - ---------------------------- Elizabeth Cuthbert Millett /s/ Cynthia A. Montgomery Director - ---------------------------- Cynthia A. Montgomery /s/ Allan P. Newell Director - ---------------------------- Allan P. Newell Director - ---------------------------- Henry B. Pearsall 69 SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS NEWELL CO. AND SUBSIDIARIES - ----------------------------------------------------------------------------------- Column A Column B Column C Column D Column E - -------- --------- -------- -------- -------- - ----------------------------------------------------------------------------------- Additions ---------------------------------------------------- Balance at Charged to Charged to Balance at Beginning costs and other accounts Deductions end Description of Period expenses (A) (B) of period ----------- --------- ---------- ------------- ------------ ------------ Allowance for doubtful accounts: Year ended December 31, 1995 $10,886 $2,838 $1,990 $(4,700) $11,014 Year ended December 31, 1994 6,226 2,780 3,996 (2,116) 10,886 Year ended December 31, 1993 5,577 2,068 1,420 (2,839) 6,226 Note A - Represents recovery of accounts previously written off, along with reserves of acquired businesses. Note B - Represents accounts charged off. Balance at Beginning of Balance at Period Provision Write-offs End of Period ----------- --------- ---------- ------------- Reserve for excess and obsolete inventories: Year ended December 31, 1995 $(26,987) $(14,205) $ 3,700 $(37,492) Year ended December 31, 1994 (19,297) (12,096) 4,406 (26,987) Year ended December 31, 1993 (17,605) (3,062) 1,370 (19,297) 70 (C) EXHIBIT INDEX Exhibit Number Description of Exhibit ------- ------------------------- Item 3. Articles of 3.1 Restated Certificate of Incorporation Incorporation of Newell Co., as amended as of and By-Laws September 7, 1995. 3.2 By-Laws of Newell Co., as amended through November 9, 1995 (incorporated by reference to Exhibit 4.2 to Pre- effective Amendment No. 1 to the Company's Registration Statement on Form S-3, Reg. No. 33-64225, filed January 23, 1996). Item 4. Instruments 4.1 Restated Certificate of Incorporation of defining the Newell Co., as amended as of May 10, rights of 1995 is included in Item 3.1. security holders, 4.2 By-Laws of Newell Co., as amended including through November 9, 1995, are included indentures in Item 3.2. 4.3 Rights Agreement dated as of October 20, 1988 between the Company and First Chicago Trust Company of New York (formerly known as Morgan Shareholders Services Trust Company)(incorporated by reference to Exhibit 4 to the Company's Current Report on Form 8-K dated October 25, 1988). 4.4 Indenture dated as of April 15, 1992, between the Company and The Chase Manhattan Bank (National Association). Trustee (incorporated by reference to Exhibit 4.4 to the Company's Report on Form 8 amending the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1992). Pursuant to item 601(b)(4)(iii)(A) of Regulation S-K, the Company is not filing certain documents. The Company agrees to furnish a copy of each such document upon the request of the Commission. 71 Exhibit Number Description of Exhibit -------- ------------------------- Item 10. Material *10.1 The Newell Long-Term Savings and Contracts Investment Plan, as amended and restated effective May 1, 1993 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1993 (the "June 1993 Form 10-Q"). *10.2 The Company's Amended and Restated 1984 Stock Option Plan, as amended through February 14, 1990 (incorporated by reference to Exhibit 10.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1990 (the "1990 Form 10-K")). *10.3 Newell Co. Deferred Compensation Plan, as amended, effective October 23, 1986. *10.4 Newell Operating Company's ROA Cash Bonus Plan, effective January 1, 1977, as amended (incorporated by reference to Exhibit 10.8 to the 1981 Form S-14). *10.5 Newell Operating Company's ROI Cash Bonus Plan, effective July 1, 1966, as amended (incorporated by reference to Exhibit 10.9 to the 1981 Form S-14). *10.6 Newell Operating Company's Pension Plan for Salaried and Clerical Employees, as amended and restated, effective January 1, 1989 (incorporated by reference to Exhibit 10.2 to the June 1993 Form 10-Q). *10.7 Newell Operating Company's Pension Plan for Factory and Distribution Hourly-Paid Employees, as amended and restated, effective January 1, 1984 (incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended December 31, 1985 (File No. 0-7843) (the "1985 Form 10-K")). 72 Exhibit Number Description of Exhibit ------- ------------------------- *10.8 Newell Operating Company's Supplemental Retirement Plan for Key Executives, effective January 1, 1982, as amended (incorporated by reference to Amendment No. 2 to the Company's Registration Statement on Form S-14, File No. 2- 71121, filed February 2, 1982). 10.9 Securities Purchase Agreement dated June 21, 1985 between American Tool Companies, Inc. and the Company (incor- porated by reference to Exhibit 10.13 to the 1985 Form 10-K). *10.10 Form of Employment Security Agreement with six executive officers (incorpor- ated by reference to Exhibit 10.10 to the 1990 Form 10-K). 10.11 Letter Agreement dated as of August 13, 1991 between The Black & Decker Corpora- tion and the Company (incorporated by reference to Exhibit 1 to the Company's Statement on Schedule 13D dated August 22, 1991). 10.12 Standstill Agreement dated as of September 24, 1991 between The Black & Decker Corporation and the Company (incorporated by reference to Exhibit 3 to Amendment No. 1 to the Company's Statement on Schedule 13D dated September 26, 1991 (the "Schedule 13D Amendment")). *10.13 Newell Co. 1993 Stock Option Plan, effective February 9, 1993 (incorporated by reference to the Company's Registration Statement on Form S-8, File No. 33-67632, filed August 19, 1994). 10.14 Form of Placement Agency Agreement relating to private placement to accredited investors of unsecured notes of the Company (incorporated by reference to Exhibit 10.20 to the 1993 Form 10-K). 73 Exhibit Number Description of Exhibit ------- ------------------------- 10.15 364-Day Credit Agreement dated as of June 12, 1995 among the Company, certain of its affiliates, The Chase Manhattan Bank (National Association), as Agent and the banks whose names appear on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1995 (the "June 1995 Form 10-Q")). 10.16 Five Year Credit Agreement dated as of June 12, 1995 among the Company, certain of its affiliates, The Chase Manhattan Bank (National Association), as Agent, and the banks whose names appear on the signature pages thereto (incorporated by reference to Exhibit 10.2 to the June 1995 Form 10-Q). Item 21. Subsidiaries 21.1 Subsidiaries of the Company. of the Registrant Item 23. Consent of 23.1 Consent of Arthur Andersen LLP. experts and counsel Item 27. Financial 27 Financial Data Schedule. Data Schedule Item 99. Additional 99 Safe Harbor Statement. Exhibits * Management contract or compensatory plan or arrangement of the Company.