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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________.
Commission File Number: 0-1349
STANHOME INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-1864170
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
333 Western Avenue, Westfield, Massachusetts 01085
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (413) 562-3631
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $.125 New York Stock Exchange
per share, together with the The Pacific Stock Exchange
Associated Common Stock Purchase
Rights ("Common Stock")
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[X]
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State the aggregate market value of the voting stock held by non-
affiliates of the registrant: $437,665,428 on January 31, 1998.
The number of shares outstanding of the registrant's Common Stock as of
March 18, 1998 was 16,385,992 Shares.
Parts I, II, and IV of this Form 10-K incorporate by reference certain
information from the registrant's Annual Report to Stockholders for the
fiscal year ended December 31, 1997 (the "1997 Annual Report"). Part III
of this Form 10-K incorporates by reference certain information from the
registrant's definitive Proxy Statement dated March 13, 1998 (the "Proxy
Statement"), for its Annual Meeting of Stockholders to be held on April 23,
1998.
P A R T I
ITEM 1. BUSINESS.
Through its Enesco Giftware Group subsidiaries' or their licensed
distributors, the Company sells quality designed and licensed collectible
figurines and ornaments, action musicals, decorative home accessories and
other giftware, principally at wholesale, to independent retailers, mass
marketers, catalogers and other direct response distributors. As described
in more detail below, during 1997, the Company sold most of its former
Hamilton Direct Response Group and Stanhome Direct Selling Group businesses
as part of a major corporate and operational restructuring. In April,
1997, the Company announced a series of strategic initiatives that resulted
in the reclassification of the Stanhome Direct Selling Group and Hamilton
Direct Response Group businesses as discontinued operations. The Company
has now completed the initial stages of its transformation into a
singularly focused designer and marketer of branded gifts and collectibles
and is in the process of selling its corporate headquarters facility and
relocating those operations from Massachusetts to Illinois.
DISCONTINUED OPERATIONS
On May 22, 1997, the Company completed the previously announced sale of
its United States Hamilton Direct Response businesses to The Crestley
Collection, Ltd., an affiliate of The Bradford Group, for approximately
$48.3 million, including repayment of $30.8 million of intercompany debt,
subject to certain conditions. In connection with the sale, the Company
recorded in the first quarter of 1997 a $35 million after-tax charge
consisting mainly of the write-down of goodwill, current assets and
associated transaction and severance costs. The Company is in the process
of closing Hamilton's foreign operations. Under the sale agreement, until
May 22, 2000 (in most cases), the Company agreed to indemnify Bradford for
damages (up to a maximum of $10 million) suffered by Bradford resulting
from certain breaches by the Company and any unpaid taxes for which no
applicable financial reserve existed. As part of the transaction, Bradford
and Enesco Corporation ("Enesco"), a wholly owned subsidiary of the
Company, entered into two license agreements pursuant to which Enesco will
license certain proprietary and licensed lines of products to Bradford for
an initial five-year period.
On December 18, 1997, the Company completed the previously announced sale
of the majority of the operations comprising its Worldwide Direct Selling
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Group to Laboratoires de Biologie Vegetale Yves Rocher of France. Subject
to certain conditions, the sale price was approximately $68.4 million in
cash ($44 million after taxes and transaction fees) for the stock and
assets sold in connection with the sale. The Company recorded in the
fourth quarter of 1997 a $6 million after-tax charge, primarily to write
down assets that were not part of the sale. Under the sale agreement,
until December 18, 2000 (in most cases), the Company agreed to indemnify
Yves Rocher for damages (in amounts up to $20.9 million) suffered by Yves
Rocher resulting from certain breaches by the Company. As part of the
transaction, Stanhome's manufacturing subsidiary, Cosmhogar S.A., located
in Spain, entered into a supply agreement and related license agreement
with Yves Rocher for terms of one year for cosmetics and personal care
products and five years for household care products. The Cosmhogar
facility and other retained assets of the Group remain to be sold. Also,
as part of the agreement, the Stanhome name was sold to Yves Rocher with
the business of the Worldwide Direct Selling Group.
CONTINUING GIFTWARE OPERATIONS
Wholesale sales of branded gifts and collectibles products by the
Company's Enesco Giftware Group are led by Enesco, with its headquarters
located in Itasca, Illinois and its principal showroom, warehouse and
distribution center complex located in nearby Elk Grove Village, Illinois.
Enesco is a leading importer and distributor of creatively designed
giftware items, including proprietary and licensed lines of collectibles.
Its products include diverse lines of branded porcelain bisque, cold cast,
and resin figurines, cottages, musicals, music boxes, ornaments,
waterballs, miniatures, tableware, sculpture, general home accessories and
other giftware primarily produced by independent manufacturers in the Far
East, with total production capacity in several cases being exclusively
devoted to Enesco products.
Enesco sells its products through a nationwide sales organization
comprised of independent sales representatives. Approximately 400
independent sales representatives service defined territories with the
Company's gifts and collectibles lines. Enesco displays the Giftware Group
products in twelve showrooms located in the U.S. as well as at periodic
trade and private shows held in major U.S. and foreign cities. These
products are marketed principally in the U.S. through approximately 30,000
independent retail outlets, including gift stores, greeting card and gift
shops, national chains, mail order houses and department stores. Consumer
Appreciation, Inc., an Enesco affiliate, administers the Group's U.S.-based
collectors clubs and their related promotional advertising. During 1997,
there was a significant downward trend in memberships for each of the
Precious Moments Collector and Birthday Clubs, which the Company is
addressing in 1998 by offering increased promotions, including a special
series of nationwide marketing events scheduled to celebrate the 20th
Anniversary of the Precious Moments product line. Foreign affiliates or
distributors of the Enesco Giftware Group are presently located in
Australia, Brazil, Canada, Ecuador, France, Germany, Hong Kong, Japan,
Mexico, The Netherlands, The People's Republic of China, Philippines,
Singapore, South Korea, Taiwan, Thailand and the United Kingdom.
The product lines of the Giftware Group are based partially on Enesco's
collection of proprietary designs and partially on licenses Enesco has from
independent creative designers. Most of its products, whether or not
produced under license, are protected by trademark and/or copyright
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registrations in the U.S. and many foreign countries. Principal product
trademarks of the Enesco Giftware Group include ENESCO, GROWING UP, MARY'S
HEN HOUSE, THIS LITTLE PIGGY, SMALL WORLD OF MUSIC, CHERISHED TEDDIES,
CALICO KITTENS, VIA VERMONT, TEDDY TOMPKINS, MOOSE CREEK CROSSING, FRIENDS
OF THE FEATHER, CUTE AS A BUTTON, MARY'S MOO MOOS, DOMINIQUE GAULT,
LILLIPUT LANE and BORDER FINE ARTS. Among its important licensed lines are
PRECIOUS MOMENTS, CHERISHED TEDDIES, PRETTY AS A PICTURE, MEMORIES OF
YESTERDAY, LUCY & ME, CALICO KITTENS, BARBIE, MY BLUSHING BUNNIES, MICKEY &
CO./DISNEY, MICKEY UNLIMITED /DISNEY, COCA COLA, DAVID WINTER COTTAGES,
PRISCILLA'S MOUSE TALES, McDONALD'S, WIZARD OF OZ, ALL THAT JAZZ, IN HIS
NAME, MAHOGANY PRINCESS, GONE WITH THE WIND, BEATRIX POTTER, SNOW FOLKS,
and DOWN PETTICOAT LANE.
The internal development and licensing of innovative new product designs
lessens Enesco's dependency on existing trademarks or copyrighted designs.
Protection of all of the Company's intellectual property (whether owned or
licensed) is important to the Company's business, and Enesco has maintained
an aggressive and visible program to identify and challenge companies and
individuals who infringe its registered trademarks and copyrighted designs.
The rights with respect to the licensed lines are materially important to
Enesco because of the substantial volume of sales represented by these
products, especially the PRECIOUS MOMENTS and CHERISHED TEDDIES product
lines, which accounted for approximately 36.0% and 20.4%, respectively, of
the Company's consolidated revenue from continuing operations during 1997.
Gifts and collectibles products sold within the Via Vermont, Lilliput,
and Border Fine Arts branded lines are supplied by manufacturing plants
owned by the Company's subsidiaries operating in Mexico, England and
Scotland, respectively. Enesco branded lines are supplied directly by
independent manufacturers in the Far East and indirectly through Enesco's
affiliate in Hong Kong, Enesco International (H.K.) Limited, which also
assists by ordering and overseeing the production of gifts and collectibles
products by independent manufacturers located principally in The People's
Republic of China (P.R.C.), Hong Kong and Taiwan, and to a lesser extent in
the Philippines, Indonesia, and Thailand. In 1997, the Company's purchases
from its two largest contract manufacturer sources accounted for
approximately 16% and 15%, respectively, of its net sales, with no other
single supplier location accounting for more than 10% of that amount. While
the Company believes that there are other available manufacturing sources
for its gifts and collectibles product lines, any loss or substantial
reduction of sourcing capability from one or more of the predominant
manufacturing sources could have a significant short-term adverse effect on
its importing and distribution operations. Moreover, approximately 75% of
the Company's total product purchases during 1997 came from manufacturing
sources located in the P.R.C., which currently enjoys most-favored nation
status. Should the P.R.C.'s status be revoked by the U.S. President and
Congress, the cost of importing products from the P.R.C. would increase
significantly. The Company could suffer a resulting short-term adverse
effect until it established satisfactory alternative sourcing arrangements.
N.C. Cameron & Sons Limited, a subsidiary of the Company and a member of
the Enesco Giftware Group located in Mississauga, Ontario, Canada, sources
its products not only through Enesco's manufacturing subsidiaries and
Enesco International (H.K.) Limited but also from other Far Eastern,
European and Canadian manufacturers. Enesco and its affiliates require all
manufacturing sources, whether Company affiliates or contract
manufacturers, to comply with quality standards established and enforced by
the Company and its subsidiaries. In addition to selling various product
- 4 -
lines itself in the U.K. and several other European countries, Enesco
European Giftware Group Limited, a subsidiary of the Company, with its
headquarters located in Carlisle, Cumbria, England, oversees the
distribution operations of affiliated companies located in Germany and
France and administers the Group's collectors clubs that are based outside
of North America.
Competition in the gifts and collectibles business in North America,
Europe, and the Far East is highly fragmented among a diversity of gifts
and collectibles product categories. The principal factors affecting
success in the marketplace are originality of product design, quality,
sourcing, marketing ability, customer service and price. The Company
believes that Enesco is a significant factor in the U.S. gifts and
collectibles business among a small number of sizable, and largely
privately-held, competitors within the industry, which businesses include
Hallmark, Department 56, Lladro, Cast Art, Boyd's Bears and Midwest
Imports, among others. Enesco European Giftware Group Limited, which
manages businesses in the United Kingdom, France, and Germany under the
brand names of Lilliput Lane, Border Fine Arts, and Enesco, is the third
largest quality giftware distributor in the U.K., behind only Wedgwood and
Royal Doulton. It maintains an employed sales organization based in the
United Kingdom along with a network of distributors and multiple
independent sales agents throughout continental Europe.
The Enesco Giftware Group's sales normally tend to peak in the third and
fourth quarters, although in 1997 most sales occurred during the second and
third quarters. As of the end of 1997, the Enesco Giftware Group had a
backlog of firm orders totaling $87,000,000, as compared to $80,000,000 as
of the end of 1996. It is a standard practice within the giftware
industry, however, that orders are subject to amendment or cancellation by
customers prior to shipment. Because of the multiplicity of external
factors that can impact the status of unshipped orders at any particular
time, the comparison of backlog orders in a given year with those at the
same date in a prior year is not necessarily indicative of sales
performance for that year or for prospective sales results in future years.
Backlog orders can also be affected by various programs employed by the
Company to incentivize its customers to place orders and accept shipments
at specified times in the year. In addition, extended credit and payment
terms have been and will continue to be key marketing tools. During 1997,
however, particularly in the third and fourth quarters, the Company
tightened its credit controls which had a significant negative impact on
sales results.
There has been a long-standing issue in the U.S. as to the appropriate
classification of sales representatives as employees or independent
contractors, with resulting tax and other legal consequences to the worker
and company involved. The U.S. Internal Revenue Service and Congress
periodically have expressed interest in this area in general, and some
states have challenged from time to time the classification of positions
within the Enesco sales organization, successfully in two jurisdictions, as
well as other contracted service providers. While the Company received a
determination from the U.S. Equal Employment Opportunity Commission as to
the independent contractor status of a former Enesco sales representative
in 1997, the federal government is continuing to review this issue based
upon other requests and management expects increased attention on the
status of workers from both federal and state governments in the future.
- 5 -
Other Information
As of December 31, 1997, the Company and its U.S. subsidiaries employed
approximately 1,120 persons on a full-time basis. As of the same date,
there were also approximately 400 independent contractor sales
representatives engaged in selling Enesco's product lines in the U.S.
As of the same date, the Company's foreign subsidiaries employed
approximately 1,380 persons on a full-time basis.
For financial information about geographic areas in which the Company
conducts its businesses, including financial information regarding foreign
and domestic operations, see Note 7 of "Notes to Consolidated Financial
Statements" included on page 31 of the 1997 Annual Report to Stockholders,
which is incorporated herein by reference.
See also "Management's Discussion and Analysis of Financial Condition and
Results of Operations" commencing on page 6 of the 1997 Annual Report,
which is incorporated herein by reference, for a comparison and discussion
of the results of operations and operating profit from foreign and domestic
sources within the Enesco Giftware Group.
ITEM 2. PROPERTIES.
The principal physical properties of the Company and its subsidiaries in
the United States, all of which are owned unless otherwise noted, consist
of the following: Corporate Headquarters - 333 Western Avenue, Westfield,
Massachusetts; headquarters offices of Enesco in Itasca, Illinois; and
showroom, warehouse and distribution facilities for Enesco's giftware
business in Elk Grove Village, Illinois. Enesco also leases showrooms in
eight other major market locations in the U.S. for the display of its
products. The Corporate Headquarters property is currently being offered
for sale as part of the Company's ongoing worldwide restructuring.
Outside of the U.S., the principal physical property of the Company's
remaining Direct Selling Group subsidiaries consists of a major
manufacturing and distribution facility owned in Spain. The principal
physical properties relating to the foreign subsidiaries of the Enesco
Giftware Group are for the most part owned. These include Via Vermont,
S.A. de C.V., which owns an assembly and distribution facility in San
Miguel de Allende, Guanajuato, Mexico; and Enesco European Giftware Group
Limited, which owns manufacturing plants and warehouse facilities in
Penrith, Workington, and Carlisle, Cumbria, England, and Langholm,
Dumfriesshire, Scotland. These manufacturing facilities are generally
operating at or near to capacity.
ITEM 3. LEGAL PROCEEDINGS.
In the ordinary course of the Company's business, there have arisen
various legal proceedings pending against the Company and its subsidiaries.
While the Company cannot predict the eventual outcome of these proceedings,
it believes that none of these proceedings will have a material adverse
impact upon the consolidated financial statements of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
- 6 -
EXECUTIVE OFFICERS OF THE REGISTRANT
Date First
Name Age Positions Elected
H. L. Tower 65 Director 2/04/78
Chairman of the Board 4/22/82
President and Chief
Executive Officer 9/04/97
Chairman of the Executive
Committee 4/27/78
Mr. Tower also served as President from March, 1978 to April, 1982 and
again from January, 1985 to April, 1988. He served as Chief Executive
Officer from March, 1978 to August, 1990. He served as interim President
and Chief Executive Officer from August, 1993 to November, 1993.
Allan G. Keirstead 53 Director 4/25/85
Vice Chairman 10/22/97
Executive Vice President
and Chief Administrative
Officer 4/28/88
Chief Financial Officer 4/28/83
Controller 12/02/81
Member of the Executive
Committee 4/25/85
Prior to Mr. Keirstead's election as Executive Vice President and
Chief Administrative Officer, he served as Financial Vice President from
January, 1983 to April, 1988. He served as Assistant Controller from
April, 1977 to December, 1981.
Eugene Freedman 73 Director 9/04/97
Vice Chairman 10/22/97
Executive Vice President 4/28/88
Chairman and CEO of Enesco
Giftware Group 9/06/89
Mr. Freedman previously served as a Vice President of the Company from
January, 1984 to April, 1988. He also has served for many years as
President and Chief Executive Officer of Enesco Corporation, a subsidiary
of the Company, of which Mr. Freedman was a founder in 1959.
John J. Dur 46 Vice President 2/01/95
President and CEO of
Stanhome Direct
Selling Group 1/16/95
Prior to Mr. Dur joining the Company in January, 1995, he was the
founding principal of Tozai Strategists, a consulting company specializing
in Asian market development. Previously, Mr. Dur served as President and
Chief Executive Officer for both Gilbey Canada, Inc. and Heublein Japan
from 1990 to 1994 and from 1981 to 1989, respectively, both of which are
indirect subsidiaries of Diageo plc.
Jeffrey A. Hutsell 44 Director 9/04/97
Vice President 1/22/97
- 7 -
President and COO of
Enesco Giftware Group 1/20/97
Prior to Mr. Hutsell's elections as Director and Vice President of the
Company and as President and Chief Operating Officer of Enesco Corporation,
a subsidiary of the Company, he served as Enesco's Executive Vice
President, Worldwide Creative from January, 1992 to January, 1997, Vice
President, Creative from January, 1989 until December, 1991, as Vice
President, Art from April, 1986 until December, 1988, and as Vice
President, Product Development from August, 1985 to April, 1986.
Bruce H. Wyatt 51 Vice President and
General Counsel 9/07/88
Secretary 4/28/88
Prior to Mr. Wyatt's elections as Vice President and General Counsel,
and as Secretary, he served as Assistant General Counsel from April, 1985
to September 1988 and Assistant Secretary from April, 1981 to April, 1988.
He also served as Assistant Clerk from April, 1983 to April, 1988 and Clerk
from April, 1988 to March, 1998.
Thomas E. Evangelista 48 Vice President 12/07/88
Prior to Mr. Evangelista joining the Company in December, 1988, he was
a Marketing Consultant for Marketing Corporation of America in Westport,
Connecticut where he focused on business development strategies primarily
for consumer products and services clients. From December, 1988 to
January, 1995 he served as Vice President, Strategic Planning and
Development. Since January, 1995, he has served as Vice President,
Corporate Development and Communications.
Carmen J. Mascaro 62 Treasurer 2/01/93
Prior to Mr. Mascaro's election as Treasurer, he served as Assistant
Treasurer from January, 1986 to February, 1993.
NOTE: All officers are elected for the ensuing year and
until their successors are duly elected and qualified.
P A R T II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Information required by this item is set forth in the Section
entitled "Stock Market, Dividend and Shareholder Information" appearing on
page 1 of the 1997 Annual Report and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
Information required by this item is set forth in the Section
entitled "Financial Highlights Last Ten Years" appearing on pages 40 and
41 of the 1997 Annual Report and is incorporated herein by reference.
- 8 -
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
Information required by this item is set forth in the Section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" appearing on pages 6 through 11 of the 1997 Annual
Report and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required by this item is set forth in the Financial
Statements, together with the accompanying Notes and Report of Independent
Public Accountants, appearing on pages 12 through 36 of the 1997 Annual
Report and is incorporated herein by reference. Also incorporated herein
by reference are the Quarterly results (unaudited) during 1997, 1996 and
1995 set forth on pages 38 and 39 of the 1997 Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
P A R T III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information required by this item regarding the directors of the
Company is set forth under the captions "Election of Directors" and
"Information as to Board of Directors and Nominees" in the Company's Proxy
Statement and is incorporated herein by reference. Information required
by this item regarding the executive officers of the Company is included
under a separate caption in Part I hereof, and is incorporated herein by
reference, in accordance with General Instruction G(3) of Form 10-K and
Instruction 3 to Item 401(b) of Regulation S-K. Information required by
this item regarding reporting compliance is included under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's
Proxy Statement and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this item is set forth under the captions
"Executive Compensation", "Compensation and Stock Option Committee Report
on Executive Compensation", "Performance Graph", and "Remuneration of Non-
Employee Directors" in the Company's Proxy Statement and is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this item is set forth under the caption
"Voting Securities and Principal Holders Thereof" in the Company's Proxy
Statement and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this item is set forth under the caption
"Compensation Committee Interlocks and Insider Participation" in the
Company's Proxy Statement and is incorporated herein by reference.
- 9 -
P A R T IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K.
(a)(1) and (2) Financial Statements and Schedules. The financial
statements and schedules required by this item are listed in the Index to
Financial Statements and Schedules of Stanhome Inc. on page 12 of this Form
10-K.
(a)(3) Exhibits. The exhibits required by this item are listed in
the Exhibit Index on pages 15 - 18 of this Form 10-K. The management
contracts and compensatory plans or arrangements required to be filed as an
exhibit to this Form 10-K are listed as Exhibits 10(a) to 10(ff) in the
Exhibit Index.
(b) Reports on Form 8-K. A Current Report on Form 8-K dated
December 18, 1997 was filed by Stanhome Inc. with the Securities and
Exchange Commission on December 31, 1997 reporting under Item 2 and Item 7
regarding the disposition of the majority of the Company's Direct Selling
Group operations and certain related supply and license agreements together
with the associated pro forma condensed consolidated balance sheet dated
September 30, 1997 and pro forma condensed consolidated statements of
income for the nine months ended September 30, 1997 and for the year ended
December 31, 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on the
27th day of March, 1998.
STANHOME INC.
(Registrant)
By:/s/ H. L. Tower
________________________
H. L. Tower
Chairman, President and Chief
Executive Officer
By:/s/ Allan G. Keirstead
_________________________
Allan G. Keirstead
Vice Chairman, Executive Vice
President and Chief Administrative
& Financial Officer
- 10 -
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on the 27th day of March, 1998 by the
following persons on behalf of the registrant and in the capacities
indicated.
Signature Title
/s/ H. L. Tower
_________________________
H. L. Tower Chairman of the Board,
President and Chief
Executive Officer and
Director
/s/ Homer G. Perkins *
_________________________
Homer G. Perkins Director
/s/ Allan G. Keirstead
_________________________
Allan G. Keirstead Vice Chairman, Executive
Vice President and Chief
Administrative and
Financial Officer and
Director
/s/ John F. Cauley *
________________________
John F. Cauley Director
/s/ Thomas R. Horton *
________________________
Thomas R. Horton Director
/s/ Anne-Lee Verville *
_________________________
Anne-Lee Verville Director
/s/ Judith R. Haberkorn *
_________________________
Judith R. Haberkorn Director
/s/ Charles W. Elliott *
_________________________
Charles W. Elliott Director
/s/ Eugene Freedman
________________________
Eugene Freedman Vice Chairman, Executive
Vice President and Director
/s/ Jeffrey A. Hutsell
________________________
Jeffrey A. Hutsell Vice President and Director
*By:/s/ H. L. Tower
____________________
H. L. Tower
Attorney-In-Fact
- 11 -
STANHOME INC.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - Incorporated herein by
reference to "Report of Independent Public Accountants" on page 36 of
Stanhome's 1997 Annual Report to Stockholders.
FINANCIAL STATEMENTS - All of which are incorporated herein by reference to
Stanhome's 1997 Annual Report to Stockholders.
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Income For the Years Ended December 31, 1997,
1996 and 1995
Consolidated Statements of Retained Earnings For the Years Ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows For the Years Ended December 31,
1997, 1996 and 1995
Notes to Consolidated Financial Statements as of December 31, 1997, 1996
and 1995
Quarterly results (unaudited)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
SCHEDULE SUPPORTING FINANCIAL STATEMENTS:
Schedule
Number Description
II Valuation and Qualifying Accounts and Reserves For
Each of the Three Years Ended December 31, 1997(a)
NOTES:
(a) All other schedules are not submitted because they are not
applicable, not required or because the required information is
included in the consolidated financial statements or notes thereto.
(b) Individual financial statements of the Company have been omitted
since (1) consolidated statements of the Company and its
subsidiaries are filed and (2) the Company is primarily an
operating company and all subsidiaries included in the
consolidated financial statements filed are wholly-owned and do
not have a material amount of debt to outside persons.
- 12 -
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To Stanhome Inc.:
We have audited in accordance with generally accepted auditing
standards, the financial statements included in Stanhome Inc.'s annual
report to shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated February 23, 1998. Our audit was made
for the purpose of forming an opinion on those statements taken as a whole.
The schedule listed in the accompanying index is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in
our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
/s/ Arthur Andersen LLP
Hartford, Connecticut
February 23, 1998
-13-
SCHEDULE II
STANHOME INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR EACH OF THE THREE YEARS ENDED DECEMBER 31, 1997(a)
Column A Column B Column C Column D Column E
Additions
--------------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
----------- ---------- ---------- --------- ---------- ----------
For the year ended December 31, 1995
- ------------------------------------
Reserves which are deducted in the balance
sheet from assets to which they apply -
Reserves for uncollectible accounts,
returns and allowances $ 8,011,748 $ 1,397,299 $ - $ 1,544,214 $ 7,864,833
=========== =========== ====== =========== ===========
Accumulated amortization of other assets $18,652,864 $ 3,527,135 $ - $ 61,688 $22,118,311
=========== =========== ====== =========== ===========
Other reserves $ 175,647 $ 220,493
=========== ===========
For the year ended December 31, 1996
- ------------------------------------
Reserves which are deducted in the balance
sheet from assets to which they apply -
Reserves for uncollectible accounts,
returns and allowances $ 7,864,833 $ 6,134,148 $ 17,277(b) $ 4,125,459 $ 9,890,799
=========== =========== =========== =========== ===========
Accumulated amortization of other assets $22,118,311 $ 3,843,526 $ - $ (57,347)(c) $26,019,184
=========== =========== =========== =========== ===========
Other reserves $ 220,493 $ -
=========== ===========
For the year ended December 31, 1997
- ------------------------------------
Reserves which are deducted in the balance
sheet from assets to which they apply -
Reserves for uncollectible accounts,
returns and allowances $ 9,890,799 $ 5,892,540 $ - $ 4,636,992 $11,146,347
=========== =========== ========== =========== ===========
Accumulated amortization of other assets $26,019,184 $ 3,479,053 $ - $ 2,653,172 $26,845,065
=========== =========== ========== =========== ===========
Note:
(a) The figures for 1996 and 1995 have been restated to exclude
discontinued operations.
(b) Represents recorded reserve at date of acquisition.
(c) Includes currency translation losses.
EXHIBIT INDEX
Reg. S-K
Item 601 EXHIBIT
2(a)* Agreement of Purchase and Sale dated April 22, 1997 by
and among The Crestley Collection, Ltd., The Bradford
Exchange, Ltd. (with respect to Section 12(p) therein only)
and Stanhome Inc. (Exhibit 2.1 to Form 8-K filed on June 5,
1997.)
2(b)* Stock and Asset Purchase Agreement dated as of November
24, 1997 by and between Stanhome Inc. and Laboratoires De
Biologie Vegetale Yves Rocher. (Exhibit 2.1 to Form 8-K
filed on December 31, 1997.)
3 (a)* Restated Articles of Organization as amended. (Exhibit
3 to Form 10-Q filed for the period ended March 31, 1988.)
3 (b)* By-Laws as amended. (Exhibit 3 (ii) to Form 10-Q filed
for the period ended March 31, 1994.)
4 (a)* Rights Agreement dated as of September 7, 1988, between
Stanhome Inc. and The Connecticut Bank and Trust Company,
N.A. as amended. (Exhibit 4 (a) to Form 10-Q filed for the
period ended September 30, 1988 and Exhibit 1 to Form 8-K
filed on October 1, 1990.)
10 (a)* 1984 Stock Option Plan, as amended and restated through
December 4, 1996. (Exhibit 10 (a) to Form 10-K filed for
the period ended December 31, 1996.)
10 (b)* 1991 Stock Option Plan, as amended and restated through
December 4, 1996. (Exhibit 10 (b) to Form 10-K filed for
the period ended December 31, 1996.)
10 (c)* Special Interim Chief Executive Officer Stock Option
Plan. (Exhibit 10 (c) to Form 10-K filed for the period
ended December 31, 1993.)
10 (d)* 1996 Stock Option Plan, as amended and restated through
June 4, 1996. (Exhibit 10 to Form 10-Q filed for the period
ended June 30, 1996.)
10 (e) 1997 President and Chief Executive Officer Stock Option
Plan.
10 (f)* Non-Employee Director Stock Plan. (Exhibit 10 to Form
10-Q filed for the period ended March 31, 1995.)
10 (g)* Outline of Deferred Compensation Plan for Non-Employee
Directors, as amended. (Exhibit 10 (e) to Form 10-K filed
for the period ended December 31, 1988.)
10 (h)* Management Incentive Plan, as amended and restated
effective January 1, 1996. (Exhibit 10 (f) to Form 10-K
filed for the period ended December 31, 1995.)
10 (i) Supplemental Retirement Contract with Homer G. Perkins,
as amended and restated through February 9, 1988.
10 (j) Supplemental Retirement Contract with H. L. Tower, as
amended and restated through June 5, 1997.
10 (k) Amendment of Retirement Agreement with Allan G.
Keirstead.
10 (l)* Supplemental Retirement Contract, as amended, with
Allan G. Keirstead. (Exhibit 10 (1) to Form 10-K filed for
the period ended December 31, 1994.)
10 (m)* Amendment of Allan G. Keirstead Supplemental Retirement
Contract. (Exhibit 10 (c) to Form 10-Q filed for the period
ended June 30, 1997.)
10 (n) Description of Relocation Benefits for Allan G.
Keirstead.
10 (o)* Thomas E. Evangelista Agreement. (Exhibit 10 (e) to
Form 10-Q filed for the period ended June 30, 1997.)
10 (p)* Carmen J. Mascaro Agreement. (Exhibit 10 (f) to Form
10-Q filed for the period ended June 30, 1997.)
10 (q)* Bruce H. Wyatt Retirement Agreement. (Exhibit 10 (g)
to Form 10-Q filed for the period ended June 30, 1997.)
10 (r) Amendment of Bruce H. Wyatt Retirement Agreement.
10 (s) Bruce H. Wyatt Release Agreement.
10 (t) Ronald R. Jalbert Release Agreement.
10 (u)* Form of Severance Agreement. Substantially identical
agreements exist with Allan G. Keirstead, Bruce H. Wyatt,
and Thomas E. Evangelista. (Exhibit 19 (d) to Form 10-K
filed for the period ended December 31, 1992.)
10 (v)* John J. Dur Separation Letter Agreement. (Exhibit 10
(h) to Form 10-Q filed for the period ended June 30, 1997.)
10 (w) First Amendment to John J. Dur Separation Letter
Agreement.
10 (x) Second Amendment to John J. Dur Separation Letter
Agreement.
10 (y)* Form of Retention Benefits Plan as described in the
Estimated Termination Benefits Summary Letters dated June
16, 1997 for Stanhome Inc. Corporate Headquarters Exempt
Employees. Similar plans exist with Allan G. Keirstead,
Bruce H. Wyatt, Thomas Evangelista, and Carmen J. Mascaro.
(Exhibit 10 (i) to Form 10-Q filed for the period ended
June 30, 1997.)
10 (z)* Form of Change in Control Agreement. Substantially
identical agreements exist with Allan G. Keirstead, Bruce
H. Wyatt, John J. Dur, and Thomas E. Evangelista. (Exhibit
19 (c) to Form 10-K filed for the period ended December 31,
1992.)
10 (aa)* Form of Change in Control Agreement with certain other
executive officers and non-executive officers.
Substantially identical agreements exist with Carmen J.
Mascaro and Jeffrey A. Hutsell. (Exhibit 19 (c) to Form
10-K filed for the period ended December 31, 1991.)
10 (bb)* Second Amendment to Stanhome Inc. Supplemental Pension
Plan, as amended and restated through December 16, 1996.
(Exhibit 10 (s) to Form 10-K filed for the period ended
December 31, 1996 and Exhibit 10 (j) to Form 10-Q filed for
the period ended June 30, 1997.)
10 (cc) Third Amendment to Stanhome Inc. Supplemental Pension
Plan.
10 (dd)* Enesco Corporation Supplemental Profit Sharing Plan
effective January 1, 1994. (Exhibit 10 to Form 10-Q filed
for the period ended September 30, 1996.)
10 (ee)* Stanhome Supplemental Investment Savings Plan, as
amended and restated effective January 1, 1997. (Exhibit 10
(k) to Form 10-Q filed for the period ended June 30, 1997.)
10 (ff) First Amendment to Stanhome Supplemental Investment
Savings Plan.
10 (gg)* License Agreement between Precious Moments, Inc. and
Enesco Corporation. (Exhibit 10 to Form 10-Q filed for the
period ended June 30, 1993.)
10 (hh) First Amendment to License Agreement between Precious
Moments, Inc. and Enesco Corporation.
13 Portions of the 1997 Annual Report to the Stockholders
of Stanhome Inc.
21 Subsidiaries of Stanhome Inc.
23 Consent of Arthur Andersen LLP
24 Power of Attorney
27 Financial Data Schedule
99 Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995, as amended and restated through March 27, 1998.
*Incorporated Herein By Reference