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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.