SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____ .
Commission File Number 0-1349
Enesco Group, Inc.
- -----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-1864170
- ------------------------------------ -----------------------
(State or other jurisdiction of (I.R.S. Employee
incorporation or organization) Identification No.)
333 Western Avenue, Westfield, Massachusetts 01085
- -----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
413-562-3631
- -----------------------------------------------------------------------
(Registrant's telephone number, including area code)
Stanhome Inc.
_______________________________________________________________________
(Former name, address and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
March 31,
1998 1997
---- ----
Shares Outstanding:
Common Stock with 16,343,251 17,910,333
Associated Rights Total number of pages
contained herein 69
Index to Exhibits is
on page 22
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1998 and DECEMBER 31, 1997
(Unaudited)
(In Thousands)
March 31, December 31,
1998 1997
---- ----
ASSETS
CURRENT ASSETS:
Cash and certificates of deposit $ 23,074 $ 35,724
Accounts receivable, net 97,216 101,731
Inventories 98,164 107,752
Prepaid expenses 3,047 2,482
-------- --------
Total current assets 221,501 247,689
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost 83,098 82,414
Less - Accumulated depreciation and
amortization 48,131 46,836
-------- --------
34,967 35,578
-------- --------
OTHER ASSETS:
Goodwill and other intangibles, net 88,688 89,596
Other 34,265 27,539
-------- --------
122,953 117,135
-------- --------
$379,421 $400,402
======== ========
The accompanying notes are an integral part of these condensed financial
statements.
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1998 and DECEMBER 31, 1997
(Unaudited)
(In Thousands)
March 31, December 31,
1998 1997
---- ----
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes and loans payable $ 34,007 $ 8,388
Accounts payable 32,936 43,576
Federal, state and foreign taxes
on income 31,357 42,158
Accrued expenses--
Payroll and commissions 11,514 13,576
Royalties 8,510 6,767
Vacation, sick and postretirement benefits 5,008 4,853
Pensions and profit sharing 3,508 6,128
Other 26,504 24,958
-------- --------
Total current liabilities 153,344 150,404
-------- --------
LONG-TERM LIABILITIES:
Postretirement benefits 21,367 21,084
-------- --------
Total long-term liabilities 21,367 21,084
-------- --------
SHAREHOLDERS' EQUITY:
Common stock 3,154 3,154
Capital in excess of par value 47,173 46,858
Retained earnings 354,724 355,806
Accumulated other comprehensive income ( 1,417) ( 1,519)
-------- --------
403,634 404,299
Less - Shares held in treasury, at cost 198,924 175,385
-------- --------
Total shareholders' equity 204,710 228,914
-------- --------
$379,421 $400,402
======== ========
The accompanying notes are an integral part of these condensed financial
statements.
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 and 1997 (Unaudited)
(In thousands, except per share amounts)
1998 1997
---- ----
NET SALES $108,220 $102,060
COST OF SALES 57,452 52,633
-------- --------
GROSS PROFIT 50,768 49,427
SELLING, DISTRIBUTION, GENERAL
AND ADMINISTRATIVE EXPENSES 43,317 43,225
-------- --------
OPERATING PROFIT 7,451 6,202
Interest expense ( 756) ( 1,886)
Other expense, net ( 544) ( 399)
-------- --------
INCOME BEFORE INCOME TAXES
FROM CONTINUING OPERATIONS 6,151 3,917
Income taxes 2,645 1,724
-------- --------
INCOME OF CONTINUING OPERATIONS, NET OF TAXES 3,506 2,193
INCOME OF DISCONTINUED OPERATIONS, NET OF TAXES - 1,048
NET LOSS ON SALE OF DIRECT RESPONSE - ( 35,000)
-------- --------
NET INCOME (LOSS) 3,506 ( 31,759)
RETAINED EARNINGS, beginning of period 355,806 403,805
Cash dividends, $.28 per share in
1998 and 1997 ( 4,588) ( 5,014)
-------- --------
RETAINED EARNINGS, end of period $354,724 $367,032
======== ========
EARNINGS (LOSS) PER COMMON SHARE,
BASIC:
CONTINUING OPERATIONS $ .21 $ .12
DISCONTINUED OPERATIONS - .06
SALE OF DIRECT RESPONSE - ( 1.95)
----- -----
TOTAL $ .21 ($1.77)
===== =====
DILUTED:
CONTINUING OPERATIONS $ .21 $ .12
DISCONTINUED OPERATIONS - .06
SALE OF DIRECT RESPONSE - ( 1.95)
----- -----
TOTAL $ .21 ($1.77)
===== =====
The accompanying notes are an integral part of these condensed financial
statements.
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 and 1997 (Unaudited)
(In Thousands)
1998 1997
---- ----
OPERATING ACTIVITIES:
Net income (loss) $ 3,506 ($31,759)
Less- Net income discontinued operations - ( 1,048)
- Loss on sale of Direct Response - 35,000
Adjustments to reconcile continuing operations net
income to net cash provided by operating activities ( 13,349) ( 3,672)
Operating activities of discontinued operations - 2,291
------- -------
Net cash provided (used) by operating activities ( 9,843) 812
------- -------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment ( 622) ( 1,221)
Proceeds from sales of property, plant and equipment 47 661
Payments for acquisition of businesses,
net of cash acquired ( 6) ( 51)
Investing activities of discontinued operations - ( 524)
------- -------
Net cash used by investing activities ( 581) ( 1,135)
------- -------
FINANCING ACTIVITIES:
Cash dividends ( 4,588) ( 5,014)
Exchanges and purchases of common stock ( 23,616) -
Notes and loans payable 25,668 9,085
Exercise of stock options 33 -
Other common stock issuance 360 173
Financing activities of discontinued operations - ( 76)
------- -------
Net cash provided (used) by financing activities ( 2,143) 4,168
------- -------
Effect of exchange rate changes on cash
and cash equivalents ( 83) ( 714)
------- -------
Increase/(decrease) in cash and cash equivalents ( 12,650) 3,131
Cash and cash equivalents,
beginning of year 35,722 10,306
------- -------
Cash and cash equivalents, end of quarter $23,072 $13,437
======= =======
The accompanying notes are an integral part of these condensed financial
statements.
ENESCO GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The consolidated condensed financial statements and related notes
included herein have been prepared by the Company, without audit except for
the December 31, 1997 condensed balance sheet, which was derived from the
Company's Annual Report on Form 10-K for the year ended December 31, 1997,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. The information
furnished reflects all normal recurring adjustments which are, in the
opinion of management, necessary to a fair statement of the results for the
interim periods. It is suggested that these condensed financial statements
be read in conjunction with the financial statements and related notes to
consolidated financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.
At its annual meeting in April 1998, the Company's shareholders
approved a proposal to change its corporate name to "Enesco Group, Inc.",
to reflect the Company's transformation into a singularly focused designer
and marketer of branded gifts and collectibles. The Stanhome Inc. name was
sold as part of the December 1997 agreement to sell the majority of the
business of the Direct Selling discontinued operation.
1. ACCOUNTING POLICIES:
The Company's financial statements for the three months ended March
31, 1998 have been prepared in accordance with the accounting policies
described in Note 1 to the December 31, 1997 consolidated financial
statements included in the Company's 1997 Annual Report on Form 10-K. The
Company considers all highly liquid securities, including certificates of
deposit with maturities of three months or less, when purchased, to be cash
equivalents. Accounts receivable were net of reserves for uncollectible
accounts, returns and allowances of $13,738,000 at March 31, 1998 and
$11,146,000 at December 31, 1997.
The Company recognizes revenue as merchandise is turned over to the
shipper and a provision for anticipated merchandise returns and allowances
is recorded based upon historical experience. Amounts billed to customers
for shipping and handling orders and collector club subscriptions are
netted against the associated costs.
The Company paid cash for interest and taxes as follows (in
thousands):
Three Months Ended
March 31
------------------
1998 1997
---- ----
Interest $ 583 $ 1,512
Income taxes $11,077 $ 3,953
2. COMPREHENSIVE INCOME:
In June 1997, the Financial Accounting Standards Board adopted a
new standard on reporting comprehensive income, which established standards
for reporting and display of comprehensive income (net income (loss)
together with other non-owner changes in equity) and its components in a
full set of general purpose financial statements. The standard became
effective for the Company in 1998 and required reclassification of
comparative financial statements for prior years. The other comprehensive
income consists only of cumulative translation adjustments. Comprehensive
income (loss) for the three months ended March 31, 1998 and 1997 was as
follows (in thousands):
Three Months Ended
March 31
------------------
1998 1997
---- ----
NET INCOME (LOSS) $ 3,506 ($31,759)
------- -------
OTHER COMPREHENSIVE INCOME:
Cumulative translation adjustments 102 ( 5,576)
------- -------
TOTAL OTHER COMPREHENSIVE INCOME 102 ( 5,576)
------- -------
COMPREHENSIVE INCOME (LOSS) $ 3,608 ($37,335)
======= =======
3. DISCONTINUED OPERATIONS:
In 1997, the Company discontinued and sold the majority of the
Hamilton Direct Response and Worldwide Direct Selling operations. In
connection with the Hamilton sale, the Company recorded a $35 million after
tax charge in the first quarter of 1997. Accordingly, the applicable
financial statements and related notes present these two business segments
as discontinued operations. Therefore, the net assets and operating results
of these two business segments have been segregated and reported as
discontinued operations in the Consolidated Balance Sheets, Statements of
Income, and Statements of Cash Flow.
Included in other assets at March 31, 1998 is $6.7 million of the
original $11 million Direct Selling Sale escrow deposit that continues to
be held in escrow after March 31, 1998 due to claims filed by Laboratoires
de Biologie Vegetale Yves Rocher of France. The Company is in the process
of gathering information and detail to assess the merits of the claim.
4. INVENTORY CLASSES:
The major classes of inventories at March and December 3l were as
follows (in thousands):
March 31, December 31,
1998 1997
---- ----
Raw materials and supplies $ 1,247 $ 1,719
Work in process 805 930
Finished goods in transit 9,804 14,865
Finished goods 86,308 90,238
-------- --------
$ 98,164 $107,752
======== ========
5. OTHER EXPENSE, NET:
Other expense, net for the three months ended March 31, 1998 and
1997 consists of the following (in thousands):
1998 1997
---- ----
Interest income $ 343 $ 691
Amortization of other assets ( 873) ( 957)
Other, net ( 14) ( 133)
------ ------
($ 544) ($ 399)
====== ======
6. EARNINGS PER COMMON SHARE (BASIS OF CALCULATION):
In February 1997, the Financial Accounting Standards Board adopted
a new standard on accounting for earnings per share. The standard became
effective for the Company at December 31, 1997 and required restatement of
prior years' earnings per share. Basic earnings per common share are based
on the average number of common shares outstanding during the period
covered. Diluted earnings per common share assumes, in addition to the
above, a dilutive effect of common share equivalents during the period.
Common share equivalents represent dilutive stock options using the
treasury stock method.
For the first quarter basic computations, the average numbers of
outstanding shares utilized were 16,595,000 shares for 1998 and 17,905,000
shares for 1997. For the first quarter diluted computations, the average
numbers of shares utilized were 16,605,000 and 17,926,000 shares for 1998
and 1997, respectively, including common share equivalents of 10,000 in
1998 and 21,000 in 1997. The lower average number of shares for the first
quarter of 1998 primarily resulted from the repurchase of shares as part of
the Company's repurchase program.
7. FINANCIAL INSTRUMENTS:
The Company operates globally with various manufacturing and
distribution facilities and product sourcing locations around the world.
The Company may reduce its exposure to fluctuations in foreign interest
rates and exchange rates by creating offsetting positions through the use
of derivative financial instruments. The Company currently does not use
derivative financial instruments for trading or speculative purposes.
The notional amount of forward exchange contracts and options is
the amount of foreign currency bought or sold at maturity. The notional
amount of interest rate swaps is the underlying principal amount used in
determining the interest payments exchanged over the life of the swap. The
notional amounts are not a direct measure of the Company's exposure through
its use of derivatives.
The Company periodically uses interest rate swaps to hedge
portions of interest payable on debt. In addition, the Company may
periodically employ interest rate caps to reduce exposure, if any, to
increases in variable interest rates. In October 1996, the Company entered
into a three year interest rate swap with a notional amount of $50 million
to effectively convert variable interest on debt to a fixed rate of 6.12%.
The Company may periodically hedge foreign currency royalties, net
investments in foreign subsidiaries, firm purchase commitments, contractual
foreign currency cash flows or obligations, including third-party and
intercompany foreign currency transactions. The Company regularly monitors
its foreign currency exposures and ensures that hedge contract amounts do
not exceed the amounts of the underlying exposures.
The Company enters into various short-term foreign exchange
agreements during the year. The purpose of the Company's foreign currency
hedging activities is to protect the Company from risk that the eventual
settlement of foreign currency transactions will be adversely affected by
changes in exchange rates. The Company's various subsidiaries import
products in foreign currencies and from time to time will enter into
agreements or build foreign currency deposits as a partial hedge against
currency fluctuations on inventory purchases. Gains and losses on these
agreements are deferred and recorded as a component of cost of sales when
the related inventory is sold. At March 31, 1998, deferred amounts were not
material. The Company makes short-term foreign currency intercompany loans
to various international subsidiaries and utilizes agreements to fully
hedge these transactions against currency fluctuations. The cost of these
agreements is included in the interest charged to the subsidiaries and
expensed monthly as the interest is accrued. The intercompany interest
eliminates upon consolidation and any gains and losses on the agreements
are recorded as a component of other income. The Company receives
dividends, technical service fees, royalties and other payments from its
subsidiaries and licensees. From time to time, the Company will enter into
foreign currency forward agreements as a partial hedge against currency
fluctuations on these current receivables. Gains and losses are recognized
or the credit or debit offsets the foreign currency payables. As of March
31, 1998, net deferred amounts on outstanding agreements were not material.
The outstanding agreement amounts (notional value) at March 31, 1998, are
$6.5 million U.S. dollars.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ENESCO GROUP, INC.
THREE MONTHS ENDED MARCH 31, 1998
The information set forth below should be read in conjunction with
the unaudited condensed consolidated financial statements and notes thereto
included in Part I - Item 1 of the Quarterly Report and the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 which
contains the audited financial statements and notes thereto for the years
ended December 31, 1997, 1996 and 1995 and Management's Discussion and
Analysis of Financial Condition and Results of Operations for those
respective periods.
Forward-looking statements, in this Quarterly Report on Form 10-Q
as well as in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Stockholders are
cautioned that all forward-looking statements pertaining to the Company
involve risks and uncertainties, including, without limitation, risks
detailed from time to time in the Company's periodic reports and other
information filed with the Securities and Exchange Commission.
At the Company's Annual Meeting on April 23, 1998, the shareholders
approved a resolution authorizing the Company to change its name from
Stanhome Inc. to Enesco Group, Inc., to reflect the Company's
transformation into a singularly focused designer and marketer of branded
gifts and collectibles. Commencing on May 1, 1998, shares of the Company's
common stock traded on the New York Stock Exchange and the Pacific Exchange
under the symbol "ENC".
RESULTS OF OPERATIONS:
Net sales increased 6.0% in the first quarter of 1998, due
primarily to unit volume growth in the United States. International sales
increased slightly and represented 17.9% of total 1998 first quarter sales
compared to 18.9% in 1997. The Precious Moments line represented 39.4% of
the 1998 first quarter sales compared to 36.3% in 1997 and the Cherished
Teddies line represented 20.9% of 1998 first quarter sales compared to
23.7% in 1997. In the United States, the Company is in the process of
analyzing the total economic return for all of its product lines, with the
objective of phasing out those product lines that do not cover their total
cost of capital investment. As these lines are phased out during the next
year, the absence of sales from these lines will reduce sales volumes.
Gross profit increased 2.7% in the first quarter of 1998, due
primarily to the increase in sales volume. Gross profit as a percentage of
net sales was 46.9% in the first quarter of 1998, compared to 48.4% in
1997. The decrease in the gross profit percentage in 1998 was due primarily
to sales mix and a greater percentage of products sold at less than normal
margins in the United States.
Selling, distribution, general and administrative expenses
increased .2% in the first quarter of 1998 versus 1997 and represented
40.0% of first quarter 1998 sales, compared to 42.4% in 1997. The 1998
reduction in expenses as a percentage of sales was due primarily to lower
general and administrative expenses in the United States. The reductions
were from cost controls, the start of benefits from downsizing the
Company's Westfield, MA corporate headquarters, and a reduction of
compensation resulting from the expiration on December 31, 1997 of an
executive officer's employment agreement that had entitled a bonus in an
amount equal to five percent of Enesco's pre-tax income, with certain
adjustments, less a base salary. During the first quarter of 1998, there
was a net pre-tax expense of approximately one million dollars resulting
from a workforce reduction in the United States.
Operating profit increased 20% in the first quarter of 1998
compared to 1997 and represented 6.9% of sales in 1998 compared to 6.1% in
1997, due to the factors described above. Most of the operating profit
improvement was in the United States. International operating profit
increased slightly.
INTERNATIONAL ECONOMIES AND CURRENCY:
The value of the U.S. dollar versus international currencies where
the Company conducts business impacts the results of these businesses. In
addition to the currency risks, the Company's international operations,
including sources of imported products, are subject to other risks of doing
business abroad, including import or export restrictions and changes in
economic and political climates.
The fluctuations in net sales and operating profit margins from
quarter to quarter are partially due to the seasonal characteristics of the
Company's business.
INTEREST EXPENSE, net of investment income, decreased in the first
quarter of 1998 compared with 1997, from lower borrowing levels due to the
utilization of cash proceeds from the sale of discontinued operations in
1997. Other expense, net is principally the amortization of goodwill and
was less in the first quarter of 1998 compared to 1997 due to certain
categories being fully amortized.
THE PROVISION FOR INCOME TAXES of 43% in the first quarter of 1998
was lower than the 44% provision in 1997, due primarily to a higher
percentage of total before tax income from the United States, which has a
lower effective tax rate.
DISCONTINUED OPERATIONS:
In April 1997, the Company announced the sale of the majority of
its Hamilton Direct Response business and a plan to sell its Direct Selling
business. The majority of the Direct Selling business was sold in December
1997. The Company's Direct Selling Cosmhogar manufacturing subsidiary,
located in Spain, was not sold. The Cosmhogar facility and certain other
assets of the Direct Selling Group remain to be sold.
The applicable financial statements and related notes present these
two divested business segments as discontinued operations. Therefore, the
net assets and operating results of these two divested business segments
have been segregated and reported as discontinued operations in the
Consolidated Balance Sheets, Statements of Income, and Statements of Cash
Flows. Note 3, Discontinued Operations, to the Consolidated Condensed
Financial Statements provides additional information on the two
discontinued operations.
FINANCIAL CONDITION
The Company has historically satisfied its capital requirements
with internally generated funds and short-term loans. Working capital
requirements fluctuate during the year and are generally greatest during
the third quarter and lowest at the beginning of the first quarter.
The major sources of funds in the first quarter of 1998 from
operating activities for continuing operations were from net income,
depreciation, amortization and lower levels of accounts receivable and
inventories. Due to seasonal sales volume, accounts receivable were down
from year-end 1997. Accounts receivable in the first quarter of 1998
decreased 12% compared to the first quarter of 1997. The decrease occurred,
even though sales increased 6% in the first quarter 1998, due to the impact
of the implementation of tighter credit controls and improved collection
performance. Inventories decreased compared to year-end 1997 as progress
was made in alleviating the high levels of inventory. Other assets
increased at March 31, 1998 due primarily to $6.7 million of the $11
million Direct Selling sale escrow deposit continuing to be held in escrow
after March 31, 1998. Accounts payable and accrued expenses decreased from
year-end levels due to lower seasonal volumes. Taxes payable decreased due
to seasonal volumes and payments of taxes related to the sale of the Direct
Selling business. 1998 current liabilities, excluding loans payable, were
higher than 1997 first quarter levels due to timing of payments and to the
amounts remaining to be paid from the 1997 provision to downsize corporate
headquarters and for payments due relating to the 1997 sales of
discontinued operations.
The major use of cash in investing activities in the first quarter
of 1998 was for capital expenditures. Capital expenditure commitments for
$10 million are forecasted for 1998. The level of changes of marketable
securities from period to period principally represents investment
alternatives versus certificates of deposit, time deposits, and
intercompany loans.
The major uses of cash in financing activities in the first quarter
of 1998 were for dividends to shareholders and purchases of common stock,
which were primarily financed with increased borrowings. During the first
three months this year, the Company repurchased 872 thousand shares for
$23.6 million. The Company has an authorized program to purchase shares of
stock for the Company treasury from time to time in the open market or in
private transactions, depending on market and business conditions, and may
utilize funds for this purpose in the future. As of March 31, 1998, 1.3
million shares remained available for purchase under the program. The
Company's earnings, cash flow, and available debt capacity have made and
make stock repurchases, in the Company's view, one of its best investment
alternatives. The major source of funds from financing activities was from
higher seasonal borrowings. The aggregate exercise price of the total
number of stock options outstanding was $92 million at March 31, 1998, and
the Company could receive some or all of these funds in the future if the
options are exercised.
Fluctuations in the value of the U. S. dollar versus international
currencies affect the U. S. dollar translation value of international
currency denominated balance sheet items. The changes in the balance sheet
dollar values due to international currency translation fluctuations are
recorded as a component of accumulated comprehensive income in
shareholders' equity.
The Company currently believes that cash from operations and
available financing alternatives are adequate to meet anticipated
requirements for working capital, dividends, capital expenditures, the
stock repurchase program and other needs. No liquidity problems are
anticipated.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders was held on April 23, 1998.
(c) The first matter voted upon at the meeting was the election of
Directors. The members of Class III were standing for election to
a three-year term expiring at the Annual Meeting in 2001. Upon
motion duly made and seconded, it was voted to elect John F.
Cauley, Jeffrey A. Hutsell, Homer G. Perkins and Anne-Lee Verville
as Class III Directors for a three-year term expiring at the
Annual Meeting in 2001 and until their successors are elected and
qualified. The votes for each of the candidates were reported as
follows:
John F. Cauley For: 14,201,546
Withheld: 127,495
Jeffrey A. Hutsell For: 14,217,907
Withheld: 111,134
Homer G. Perkins For: 14,190,571
Withheld: 138,470
Anne-Lee Verville For: 14,206,465
Withheld: 122,576
The second matter voted upon at the meeting was the approval of
amendments to the Restated Articles of Organization, as amended,
of the Company. Upon motion duly made and seconded, it was voted
to change the name and purpose of the Company and to provide that
stockholders meetings may be held anywhere within the United
States. The votes for the amendments were reported as follows:
Amendments to Articles For: 13,067,133
Against: 80,331
Abstain: 149,325
Broker Non-Votes: 1,032,252
The third matter voted upon at the meeting was a stockholder
proposal recommending the sale of the Company and its
subsidiaries. Upon motion duly made and seconded, it was voted
that the stockholder proposal not be approved. The votes for the
above referenced stockholder proposal were reported as follows:
Stockholder Proposal For: 1,419,786
Against: 11,429,371
Abstain: 447,630
Broker Non-Votes: 1,032,254
The fourth matter voted upon at the meeting was the approval and
ratification of the Board's appointment of Arthur Andersen LLP as
independent accountants for 1998. Upon motion duly made and
seconded, it was voted that the appointment by the Board of
Directors at its March 4, 1998 meeting of Arthur Andersen LLP,
independent certified public accountants, as independent
accountants for the Company for its fiscal year ending December
31, 1998 be ratified and approved. The votes for the independent
accountants were reported as follows:
Arthur Andersen LLP For: 14,191,839
Against: 109,295
Abstain: 27,907
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
- Restated Articles of Organization as amended
- By-Laws as amended
- Fourth Amendment to Stanhome Inc. Supplemental Pension Plan
- Change in Control Agreement with Eugene Freedman
- John J. Dur Release Agreement
- Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
Quarter for which this report is filed.
All other items hereunder are omitted because either such item is
inapplicable or the response to it is negative.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STANHOME INC.
(Registrant)
Date: May 12, 1998 /s/ H. L. Tower
-----------------------------------------
H.L. Tower
Chairman and Chief Executive Officer
Date: May 12, 1998 /s/ Allan G. Keirstead
-----------------------------------------
Allan G. Keirstead
Chief Administrative and Financial
Officer
EXHIBIT INDEX
Reg. S-K
Item 601 Exhibit 10-Q Page No.
- --------- ------- -------------
3(a) Restated Articles of Organization 23
as amended
3(b) By-Laws as amended 32
10(a) Fourth Amendment to Stanhome Inc.
Supplemental Pension Plan 46
10(b) Change in Control Agreement with
Eugene Freedman 48
10(c) John J. Dur Release Agreement 58
27 Financial Data Schedule 69