Item 1. BUSINESS - ------- --------
General - -------
Ekco Group, Inc. ("Ekco" or the "registrant" and, together with its subsidiaries, the "Company") is a leading U.S. manufacturer and marketer of multiple categories of branded houseware products for everyday home use. The Company believes it is the leading U.S. supplier of metal bakeware, kitchen tools and gadgets and non-toxic pest control products. In addition, the Company believes it is a leading U.S. supplier of plastic storage products (including crates, containers, baskets and office organizers), cleaning products (primarily brushes, brooms and mops) and small animal care and control products. The Company markets its products primarily in the U.S. through substantially all distribution channels that sell houseware products for everyday home use, including mass merchandisers, supermarkets, hardware, drug and specialty stores.
The Company was incorporated in Delaware in 1968. The current business of the Company was established in 1987 through the Company's purchase of Ekco Housewares, Inc. and through subsequent acquisitions and internal development. The Company has acquired or developed the following businesses and product lines (net of divestitures):
October 1987--acquisition of Ekco Housewares, Inc. ("Housewares"), a manufacturer and marketer of bakeware and kitchen tools and gadgets.
January 1989--acquisition of Woodstream Corporation ("Woodstream"), a manufacturer and marketer of non-toxic pest control products.
December 1989--acquisition of the non-toxic pest control product line of McGill Metal Products Company.
December 1991--acquisition of the small animal care product line of Beacon Industries, Inc.
January 1992--acquisition of Frem Corporation ("Frem"), a manufacturer and marketer of molded plastic products.
April 1993--acquisition of Kellogg Brush Manufacturing Co. and subsidiaries ("Kellogg"), a manufacturer and marketer of brushes, brooms and mops.
January 1995--introduction of an internally developed line of upscale bakeware and kitchen tools, gadgets and other houseware products by B. VIA International Housewares, Inc. ("VIA!"), a newly formed subsidiary of the Company.
The Company operates in one industry segment. See Note 14 of Notes to Consolidated Financial Statements appearing in Exhibit 13 hereto, incorporated herein by reference, for industry and geographic area information.
The Company's business strategy is to (i) leverage the Company's brand names to further increase brand recognition and reputation among retailers and consumers and expand sales to existing and future customers across multiple product categories, (ii) focus on customer sales and service, (iii) increase market and customer penetration by offering differentiated product lines and
new and proprietary products and by cross-marketing the full range of the Company's product lines, and (iv) pursue growth through acquisition of additional consumer product lines and businesses.
Since the fourth quarter of Fiscal 1993, Ekco has taken a series of actions to position the Company for long-term growth (the "Ekco Integration"). The Ekco Integration included (i) the combination of four of the Company's principal business units into a single operating division, and (ii) the introduction of a new branding strategy to capitalize on the strength of the Ekco(R) brand name. The Ekco Integration combined the management and operations of the Company's bakeware, kitchenware, cleaning products and molded plastic products businesses, which sell through common channels of distribution and accounted for over 75% of the Company's net revenues in Fiscal 1995. The newly created single organization combines and coordinates the sales, marketing, manufacturing, distribution, administrative and financial activities for the four product categories. The Company also consolidated a large portion of the distribution of bakeware and kitchenware products as well as certain cleaning products into its new distribution facility in Bolingbrook, Illinois from four separate warehousing and distribution locations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Notes to the Consolidated Financial Statements appearing in Exhibit 13 hereto, incorporated herein by reference.
As part of the Ekco Integration, in January 1996 the Company introduced its new branding strategy in which the Ekco(R) brand name is used to market most of the products in these four categories. The new strategy enables the Company to capitalize on the strength of the Ekco(R) brand name by improving the brand identification of these products by consumers and increasing promotional opportunities for retailers. In addition, management believes that the new branding strategy enhances the effectiveness of the Company's newly consolidated sales and marketing effort by facilitating cross-marketing of the Company's products to retail customers under Ekco(R), one of the strongest brand names in the housewares industry.
Recent Developments ------------------- OFFERING OF SENIOR NOTES. On March 25, 1996, the Company completed a private offering to institutional investors of an aggregate of $125 million principal amount of 9 1/4% Senior Notes due 2006 (the "Senior Notes") at a price of 99.291% of face value. The net proceeds of the offering were used by the Company to (i) repurchase all of the outstanding 12.70% Senior Subordinated Notes due 1998 of Housewares, (ii) repurchase the Company's outstanding 7.0% Subordinated Convertible Note due 2002, and (iii) repay amounts outstanding under the Company's existing $75 million revolving credit facility. The offering was effected without registration under the Securities Act of 1933, as amended, or any applicable state securities law. The Company, however, has agreed to file with the Securities and Exchange Commission (the "Commission") and use its best efforts to become effective, a registration statement with respect to a new issue of senior notes (the "Exchange Notes") with terms substantially identical to those of the Senior Notes and, upon becoming effective, to offer the holders of the Senior Notes the opportunity to exchange their Senior Notes for a like principal amount of Exchange Notes and, under certain circumstances, to file a shelf registration statement to cover resales of the Senior Notes by the holders thereof. Concurrently with the closing of the above-described private offering, the Company amended its $75 million revolving credit facility (as so amended, the "Revolving Credit Facility") by consolidating the outstanding debt and borrowing capacity of the Company and its subsidiaries and by revising certain financial covenants. See Note 19 to Notes to Consolidated Financial Statements appearing in Exhibit 13 hereto, incorporated herein by reference, for further information regarding the offering and the Revolving Credit Facility.
Products - --------
BAKEWARE. The Company manufactures and markets a broad line of metal bakeware for home use, including non-stick coated bakeware marketed under a group of Baker's Secret(R) trademarks and uncoated bakeware marketed under the Ekco(R) trademark. Through Housewares, the Company has over 100 years of experience in the metal bakeware market, and its bakeware products include cookie sheets, muffin tins, brownie pans, loaf pans and similar metal bakeware items. The Company emphasizes value, quality, functionality and, in the case of coated products, ease of cleaning and release. The Company believes it is the leading U.S. supplier of metal bakeware in the U.S.
The Company regularly develops new products to capitalize on its high consumer brand recognition and broad retail distribution. New product development efforts are conducted by the Company's internal staff and by third parties on a contract basis. In 1995, the Company introduced specialty muffin pans marketed under the Baker's Secret(R) trademark. In January 1996, the Company expanded its insulated, non-stick coated bakeware product line with the introduction of a variety of baking sheets and baking pans marketed under the Baker's Secret Air Insulated(TM) trademark. The Company also introduced its "Healthy Cooking Made Simple" non-stick coated ovenware, including broiling pans featuring porcelain-coated racks which double as grill tops, and non-stick roasters which hold poultry vertically during cooking for self-basting. The Company also introduced two new merchandising display systems for bakeware: a "cross bar" system which provides full-view product presentation, and its Air Pockets(TM) slanted-shelf peg-board system.
KITCHENWARE. The Company sells kitchen tools and gadgets under the Ekco(R) and Ekco Pro(TM) trademarks. The Company markets more than 1,000 products in its kitchen tools and gadgets line, including multiple colors of the same item and various packaging combinations. Kitchen tools include metal, plastic and wooden spoons, spatulas, serving forks, ladles and other cooking accessories. Gadgets include peelers, corkscrews, whisks, can openers, bottle openers and similar items. The Company also markets stainless steel and carbon steel cutlery and stainless steel flatware, mixing bowls and colanders. The Company believes that it is the leading U.S. supplier of kitchen tools and gadgets. The Company believes that it has obtained this position because of its broad product lines, brand name recognition, quality and service.
The Company believes that the sale of kitchenware is more dependent on impulse buying by the consumer than any other line of products the Company offers. The Company regularly updates its kitchenware line and introduces new items. For example, in January 1996 the Company introduced a line of upscale kitchen tool, gadget and cutlery products under the Ekco Pro(TM) trademark. The Company also introduced a line of boxed gadgets which include various kitchenware items and sets such as spice racks, gadget organizers and canisters and updated the colors of its Nova(TM) line of kitchen tools. In addition, the Company supplemented its merchandising display program by adding a movable vertical "power tower" which utilizes only one square foot of selling space.
CLEANING PRODUCTS. The Company manufactures and markets a broad line of cleaning products, including brushes, brooms and mops for home use, indoor and outdoor specialty cleaning and janitorial use. The Company believes that it is a leading manufacturer of cleaning brushes for household, kitchen and personal use.
In 1995, the Company introduced a line of indoor and outdoor push brooms and a line of professional-grade janitorial dust and wet mops. Consistent with its strategy of leveraging the Ekco(R) brand name, in January 1996 the Company reintroduced its cleaning products in new packaging utilizing the Ekco(R) trademark for distribution in the mass merchandise and supermarket distribution channels. The Company continues to market brooms and brushes under the Wright-Bernet(TM) trademark to specialty hardware retailers, and mops to janitorial supply and professional cleaning companies. In January 1996, the Company introduced its line of short-handle and long-handle cleaning products with comfortable non-slip grips marketed under the Clean Results(TM) trademark, and further expanded its long-handle product line to include "better" and "best" dust mops and a ceiling fan brush. The Company also expanded its cleaning product line to include lint traps, dust, glass and quick wipes and scrub and scour mitts.
PEST CONTROL AND SMALL ANIMAL CARE AND CONTROL PRODUCTS. The Company manufactures and markets non-toxic pest control and small animal care and control products under the Victor(R) and Havahart(R) trademarks, respectively. The Company's products include spring-action rodent traps and glue-based rodent and insect traps marketed under the Victor(R) trademark, pet cages marketed under the Havahart(R) trademark and live animal cage traps marketed under the Havahart(R) trademark, which are used to control garden pests and other nuisance animals such as raccoons. The Company believes it is the leading supplier of non-toxic pest control products, rodent traps and live animal cage traps in the U.S. In 1995, the Company introduced a no-see, no-touch, pre-set and pre-baited mouse trap, and the Roach Magnet(TM), a non-toxic roach trap containing a pheromone attractant.
MOLDED PLASTIC PRODUCTS. The Company manufactures and markets injection molded plastic housewares, office and juvenile products. The Company's houseware products include a variety of storage crates and bins, laundry and storage baskets, organizers, wastebaskets and utility caddies. Office products include file crates, desk-top organizers, file caddies and carts. Juvenile products include pocket trays, activity desks and organizing bins and baskets. The Company's molded plastic products emphasize functionality as well as fashion and color and currently consist of more than 60 products in a variety of distinctive colors.
The Company develops new products and works with retailers on design concepts. In January 1995, the Company introduced a storage locker with a lift out tray, a flip-top storage crate for files and a smaller carry-all box. Consistent with its strategy of leveraging the Ekco(R) brand name, in January 1996 the Company reintroduced its molded plastic products with new packaging that utilizes the Ekco(R) brand name. In January 1996, the Company expanded its plastic stacking bin product line to include big and jumbo-sized storage bins for garage, pantry, closet and children's use, and added a jumbo-sized cart to its line of plastic rolling carts. The Company introduced an expanded line of laundry products, including a divided laundry basket organizer, a three-handle "hip rider" laundry basket and a wheeled hamper with a built-in handle. The Company also introduced a multi-purpose bin with a folding handle marketed under the Tag Along(TM) trademark.
VIA! In January 1995, the Company introduced its VIA!(TM) line of houseware products designed for the upscale and specialty marketplace. Initial products included VIA!'s kitchen tools and gadgets such as "Tutto
Italiano" pasta, garlic and pizza cooking and storage items, multi-function items, such as a combination spoon rest/tea bag holder/utility dish, and bakeware products, including cookie sheets, loaf pans and muffin tins in heavy-gauge coated and uncoated steel, tin steel pans, and heavy-gauge coated steel roasting pans, racks, bakers and broilers. In January 1996, the VIA!(TM) product line was expanded to include tea kettles marketed under the "House Blend" brand, pantryware marketed under the "Classic Pantry" brand, a line of trivets and tool jugs and additional multi-function gadgets marketed under the "2 Tools in 1" brand.
Customers and Distribution - --------------------------
Management believes that the Company has one of the broadest distribution networks of any company in the housewares industry. The Company markets its products primarily in the U.S. through substantially all distribution channels that sell houseware products for everyday home use, including mass merchandisers, supermarkets, hardware stores, drug stores, specialty stores and other retail channels. The Company sells its products to each of the 30 largest mass merchandisers (as ranked by the July 3, 1995 Discount Industry Annual Report published by Discount Store News), including Wal-Mart, Kmart and Target. The Company estimates that it sells its products in over 90% of the approximately 38,000 U.S. supermarkets, including Winn-Dixie, Kroger and Albertson's. The Company sells its products to many of the largest hardware chains, including Ace Hardware, Home Depot, True Value, ServiStar and Lowe's Home Centers. Of its customers, Wal-Mart and Kmart accounted for 13.4% and 9.0%, respectively, of the Company's net revenues in Fiscal 1995. No other customer accounted for more than 5% of the Company's net revenues in Fiscal 1995.
The Company's products are distributed through the following retail channels: Bakeware is distributed primarily through mass merchandisers and supermarkets; kitchenware is distributed primarily through supermarkets and mass merchandisers, as well as hardware and drug stores; cleaning products are marketed under the Ekco(R) trademark primarily to mass merchandisers and supermarkets; broom and brush products are marketed under the Wright-Bernet(TM) trademark to hardware retailers and mops are marketed to janitorial supply and professional cleaning companies; pest control and small animal care and control products are marketed to mass merchandisers, supermarkets, hardware, drug and variety stores, agricultural centers and farm stores, home centers and professional pest control companies; molded plastic products are distributed through mass merchandisers, as well as large specialty retailers such as office supply stores and drug stores; and VIA!(TM) products are distributed through department stores and upscale and specialty stores, including Lechter's, Crate & Barrel, Linens 'N Things and Bed, Bath & Beyond.
Sales and Marketing - -------------------
The Ekco Integration has enabled the Company to shift the focus of its sales and marketing strategy from individual product categories to the broader needs of each of its customers. Each of the Company's customers now has one Ekco sales person responsible for selling and marketing most of the Company's products. As part of the Ekco Integration, the Company has created a new Ekco(R) logo and new "family" look packaging and marketing materials designed to present consumers with a uniform message of Ekco(R) quality, value, design and functionality.
The Company markets its product lines directly through its own sales and marketing organization and through a network of representatives and brokers. Outside the U.S., the Company's products are marketed through its Canadian and U.K. subsidiaries and distributors and agents who
provide marketing support to supermarkets, mass merchandising stores, specialty stores and department stores. The Company's agreements with its distributors and agents are generally terminable upon 30 days notice and are not deemed to be material by the Company.
Manufacturing and Sourcing - --------------------------
The Company manufactures most of its bakeware, cleaning, molded plastic and pest control and small animal care and control products. High volume kitchenware products (representing approximately 25% of kitchenware sales) are generally manufactured and assembled by the Company and the remainder are sourced from third parties. The Company utilizes a variety of standard manufacturing processes, including metal stamping, injection molding, mesh welding, wire forming, and automatic staple setting. The Company regularly evaluates its manufacturing and third party sourcing options to maintain an appropriate balance between quality and cost.
Raw Materials and Components - ----------------------------
The Company purchases primary raw materials, including plastic resin, tin-plated steel, wood and corrugated boxes and packaging, from a number of suppliers, including several major steel companies and a number of plastic resin suppliers. All of these materials are subject to price fluctuations which may adversely affect the Company's profitability. The Company purchases primarily on the spot market and does not maintain long-term contracts with suppliers. The Company also purchases components and complete products, primarily for kitchen tools and gadgets, from several domestic and foreign suppliers. The Company believes that raw materials, component items and complete products are available from other suppliers, and that the loss of any one of its suppliers would not have a material adverse effect on the Company.
Trademarks and Patents - ----------------------
The Company believes that its Ekco(R) trademark, as well as its Baker's Secret(R), Havahart(R), Victor(R), Wright-Bernet(TM) and VIA!(TM) trademarks are significant to its competitive position. The Company holds a number of patents, none of which is believed to be material to the Company's business.
Competition - -----------
The Company believes that the markets for all of its product lines are highly competitive and that competition for retail sales to consumers is based on several factors, including brand name recognition, value, quality, price and availability. Primary competitive factors with respect to selling such products to retailers are brand reputation, number of product categories offered, broad product coverage within each product category, support and service of the retailer and price.
The Company competes with established companies, several of which have substantially greater resources than those of the Company. There are no substantial regulatory or other barriers to entry of new competitors in the housewares industry. However, suppliers that are able to maintain, or increase, the amount of retail space allocated to a product may gain a competitive advantage in that product market. The Company believes that the allocation of space by retailers is influenced by many factors, including the brand name recognition by consumers, quality and price of the supplier's products, the level of service provided by the supplier and the supplier's ability to support promotions.
The Company believes that its ability to compete successfully is based on the wide recognition of its brand names, its multiple category product offerings, its ability to design, develop, acquire, manufacture and market competitively priced products, its broad product coverage within most product categories, its attention to retailer and consumer needs and its access to major channels of distribution. There can be no assurance that the Company will be able to compete successfully against current and future sources of competition or that the competitive pressures faced by the Company will not adversely affect its profitability or financial performance.
Seasonality - -----------
Many of the Company's product categories are affected by seasonal consumer purchasing patterns, including holiday cooking and baking, back-toschool shopping and spring cleaning. Historically, the Company's revenues in the last half of the fiscal year have been greater than in the first half. See Note 16 of Notes to Consolidated Financial Statements appearing in Exhibit 13 hereto, incorporated herein by reference, for information regarding quarterly results of operations.
Backlog - -------
Information as to backlog is not material to an understanding of the Company's business because most of the Company's net revenues result from short lead-time customer orders. The Company generally is able to fill orders from inventory, and has generally been able to adjust production levels to meet increases in customers' orders that cannot be filled from inventory.
Employees - ---------
As of December 31, 1995, the Company employed 1,255 persons in the U.S. of whom 671 were represented under collective bargaining agreements which expire on dates ranging from February 1997 to February 2000. As of such date, the Company also employed 33 persons in Canada, of whom 13 were represented under a collective bargaining agreement which expires in July 1997, and three persons in the U.K. The Company considers its employee relations to be satisfactory.
Business Outlook - ----------------
This annual report on Form 10-K, including "Business," "Properties," "Legal Proceedings" and "Management's Discussion and Analysis of Results of Operations and Financial Condition" in Exhibit 13 hereto, contains forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements. Such factors and uncertainties include, but are not limited to: the impact of the level of the Company's indebtedness; restrictive covenants contained in the Company's various debt documents; general economic conditions and conditions in the retail environment; the Company's dependence on a few large customers; price fluctuations in the raw materials used by the Company; competitive conditions in the Company's markets; the seasonal nature of the Company's business; and the impact of federal, state and local environmental requirements (including the impact of current or future environmental claims against the Company). As a result, the Company's operating results may fluctuate, especially when measured on a quarterly basis.
Item 2.
Item 2. PROPERTIES - ------- ----------
As of December 31, 1995, the Company owned or leased for use in its business the properties set forth in the table below:
Item 3.
Item 3. LEGAL PROCEEDINGS - ------- -----------------
Environmental Regulation and Claims - -----------------------------------
From time to time, the Company has had claims asserted against it by regulatory agencies or private parties for environmental matters relating to the generation or handling of hazardous substances by the Company or its predecessors and has incurred obligations for investigations or remedial actions with respect to certain of such matters. While the Company does not believe that any such claims asserted or obligations incurred to date will result in a material adverse effect upon the Company's financial position, results of operations or liquidity, the Company is aware that at its facilities at Massillon (more fully described below) and Hamilton, Ohio; Easthampton, Massachusetts (more fully described in Note 13 of Notes to Consolidated Financial Statements appearing in Exhibit 13 and incorporated herein by reference); Chicago, Illinois and Lititz, Pennsylvania, and at its previously owned facility in Hudson, New Hampshire hazardous substances and oil have been detected and that additional investigations will be, and remedial actions will or may be, required at such facilities. Operations at these and other facilities currently or previously owned or leased by the Company utilize, or in the past have utilized, hazardous substances. There can be no assurance that activities at these or any other facilities or future facilities may not result in additional environmental claims being asserted against the Company or additional investigations or remedial actions being required.
Prior to the Company's acquisition of Housewares in 1987, Housewares' Massillon, Ohio steel bakeware manufacturing facility was the subject of administrative proceedings before the United States Environmental Protection Agency by issuance of an administrative complaint alleging violations of the Resource Conservation and Recovery Act resulting from operation of a wastewater lagoon at the facility. American Home Products Corporation ("AHP"), a former owner of Housewares, pursuant to an indemnity agreement (the "Indemnity Agreement") with Housewares relating to acts occurring prior to September 7, 1984, assumed the costs of remediation measures in addition to the defense of the administrative proceedings with federal and state environmental protection agencies, as well as preparation of closure plans and other plans called for as a result of these proceedings. While AHP has acknowledged its full responsibility under the Indemnity Agreement with respect to the wastewater lagoon, it has asserted that Housewares should contribute to the cost of a remediation study and certain remediation measures to the extent that Housewares exacerbated contamination at the facility since September 7, 1984. Housewares has denied that it has exacerbated contamination at the facility since such date. AHP and Housewares have agreed to allocate such costs in proportion to their respective responsibilities based on the results of an engineering study but in no event will Housewares' share with respect to the wastewater lagoon exceed the lesser of 25% of the total cost or $750,000. The Company is unable to determine to what extent, if any, it will be responsible to contribute to such costs but the Company does not believe that any such contribution that it may be required to make will have a material adverse effect on its financial position, results of operations or liquidity.
In June 1992, the United States filed an action in the U.S. District Court for the Northern District of Ohio against Housewares seeking penalties and injunctive relief and alleging violations as a result of an alleged failure to provide certain closure and post-closure financial assurances with respect to the Massillon, Ohio site. Pursuant to the Indemnity Agreement and
a confirmatory letter from AHP to Housewares on December 19, 1988 (the "Indemnity Documents"), AHP conducted and controlled all matters relating to such financial assurances and the defense of the action filed in June 1992. In January 1994, the court entered judgment against Housewares in the amount of $4.6 million in the lawsuit. AHP filed a notice of appeal on behalf of Housewares. In March 1994, AHP informed Housewares that, should it be unsuccessful in its appeal, it would attempt to hold Housewares responsible for a portion of the penalties (approximately $600,000, exclusive of interest) arising from Housewares' alleged delay in furnishing certain information to the Ohio Environmental Protection Agency. In March 1994, Housewares notified AHP that Housewares denies all liability and that AHP is liable for all liabilities, losses, costs or damages arising from the lawsuit pursuant to the Indemnity Documents. In August 1995, the Appeals Court affirmed the Company's liability, reversed the imposition of civil penalties for certain periods of time and remanded the redetermination of such penalties to the District Court. The District Court has not yet completed its redetermination. The Company is unable to predict the result of the redetermination or AHP's attempts to obtain contribution from Housewares, but the Company does not believe that any such liability will have a material adverse effect on its financial position, results of operations or liquidity.
Litigation - ----------
In addition to the environmental claims discussed above, from time to time the Company is a party to litigation and other legal proceedings, including product liability claims. In many cases, claims are covered by insurance, subject to standard deductibles. Although the outcome of such proceedings cannot be determined with certainty, the Company believes that the final outcome of such proceedings will not have a material adverse effect on the Company.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------- ---------------------------------------------------
Not applicable.
The executive officers of the Company are elected annually by the Board of Directors and serve, subject to the provisions of any employment agreement between the executive and the Company, until their respective successors are chosen and qualified or until their earlier resignation or removal.
Part II -------
Item 5.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS - ------- ---------------------------------------------------------------------
The information set forth in the section entitled "Common Stock Price Range and Dividends" appearing in Exhibit 13 hereto is incorporated herein by reference.
Item 6.
Item 6. SELECTED FINANCIAL DATA - ------- -----------------------
The information set forth in the section entitled "Selected Consolidated Financial Data" appearing in Exhibit 13 hereto is incorporated herein by reference.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS ---------------------
The information set forth in the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition" appearing in Exhibit 13 hereto is incorporated herein by reference.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - ------- -------------------------------------------
The information set forth in the consolidated financial statements and notes thereto (including the note which sets forth certain supplementary information) and the Report of Independent Auditors appearing in Exhibit 13 hereto are incorporated herein by reference. Reference is also made to Item 14(a)2 with respect to Financial Statement Schedules filed herewith.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND - ------- --------------------------------------------------------------- FINANCIAL DISCLOSURE --------------------
None.
Part III --------
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - -------- --------------------------------------------------
a) Directors - The information set forth in the section entitled "Election of Directors" appearing in the Company's definitive proxy statement with respect to the 1996 Annual Meeting of Stockholders is incorporated herein by reference.
b) Executive Officers - See "Executive Officers of the Registrant" appearing in Part I above.
Item 11.
Item 11. EXECUTIVE COMPENSATION - -------- ----------------------
The information set forth in the sections entitled "Compensation of Directors" and "Compensation of Executive Officers" (except for the information under the captions "Report of the Compensation Committee on Executive Compensation" and "Performance Graph") appearing in the Company's definitive proxy statement with respect to the 1996 Annual Meeting of Stockholders is incorporated herein by reference.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - -------- --------------------------------------------------------------
The information set forth in the section entitled "Security Ownership of Certain Beneficial Owners and Management" appearing in the Company's definitive proxy statement with respect to the 1996 Annual Meeting of Stockholders is incorporated herein by reference.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - -------- ----------------------------------------------
The information set forth in the section entitled "Certain Relationships and Related Transactions" appearing in the Company's definitive proxy statement with respect to the 1996 Annual Meeting of Stockholders is incorporated herein by reference.
Part IV -------
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.
EKCO GROUP, INC.
By: /s/ ROBERT STEIN ------------------------------------ Robert Stein, President and Chief Executive Officer (Principal Executive Officer) Date: March 29, 1996
By: /s/ DONATO A. DeNOVELLIS ------------------------------------ Donato A. DeNovellis, Executive Vice President, Finance and Administration, and Chief Financial Officer (Principal Financial Officer) Date: March 29, 1996
By: /s/ BRIAN R. McQUESTEN ------------------------------------ Brian R. McQuesten, Vice President and Controller (Principal Accounting Officer) Date: March 29, 1996
INDEPENDENT AUDITORS' REPORT ----------------------------
Board of Directors and Stockholders Ekco Group, Inc.
Under date of February 5, 1996, except as to note 19, which is as of March 25, 1996, we reported on the consolidated balance sheets of Ekco Group, Inc. and subsidiaries as of December 31, 1995 and January 1, 1995, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the fiscal years in the three-year period ended December 31, 1995, as contained in the 1995 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in this annual report on Form 10-K for the fiscal year 1995. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedules as listed in Item 14(a)2 of this report. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth herein.
In 1993, the Company changed its method of accounting for income taxes, post-retirement benefits other than pensions and post-employment benefits.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts March 25, 1996
The accompanying notes are an integral part of the consolidated condensed financial statements.
The accompanying notes are an integral part of the consolidated condensed financial statements.
The accompanying notes are an integral part of the consolidated condensed financial statements.
EKCO GROUP, INC. AND SUBSIDIARIES SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT (CONTINUED) NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND OTHER MATTERS:
The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes included in this Form 10-K.
The consolidated condensed financial statements include the accounts of the Company and its subsidiaries all of which are reported under the equity method of accounting. The accompanying condensed financial statements include the fiscal years ended December 31, 1995 ("Fiscal 1995"), January 1, 1995 ("Fiscal 1994") and January 2, 1994 ("Fiscal 1993"). Certain amounts from prior periods have been reclassified to conform with the presentation for the current fiscal year.
Equity in earnings of the Company's subsidiaries is presented after elimination of management fees payable to the Company, for Fiscal 1995 $4.4 million, for Fiscal 1994 $4.3 million and for Fiscal 1993 $4.2 million and interest payable of $4.9 million for Fiscal 1995.
Under the terms of the Ekco Housewares' 12.70% Notes, the amount which may be paid to the Company by Ekco Housewares is limited in accordance with a formula, which is based primarily on the consolidated net revenues and net income of Ekco Housewares, plus reimbursement for expenses and amounts due pursuant to a tax sharing arrangement. At December 31, 1995, the amount payable to the Company by Ekco Housewares was approximately $800,000.
During Fiscal 1995, Fiscal 1994 and Fiscal 1993, no dividends were paid to the Company by its subsidiaries.
2. Income taxes:
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect, if any, on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
27 Financial Data Schedule.
- -------------------------------------------------------------------------------- Schedules to Exhibits 10,21, 10.22, 10.23(a) and 10.23(c) will be supplied upon request by the Commission.
THE FOREGOING EXHIBITS WILL NOT BE INCLUDED IN COPIES OF THIS ANNUAL REPORT ON FORM 10-K SUPPLIED TO STOCKHOLDERS. A COPY OF THESE EXHIBITS WILL BE FURNISHED TO STOCKHOLDERS UPON WRITTEN REQUEST ADDRESSED TO JOHN T. HARAN, VICE PRESIDENT AND TREASURER, EKCO GROUP, INC., 98 SPIT BROOK ROAD, NASHUA, NEW HAMPSHIRE 03062.