0000950135-95-001775.txt : 19950816 0000950135-95-001775.hdr.sgml : 19950816 ACCESSION NUMBER: 0000950135-95-001775 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950702 FILED AS OF DATE: 19950815 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EKCO GROUP INC /DE/ CENTRAL INDEX KEY: 0000018827 STANDARD INDUSTRIAL CLASSIFICATION: METAL FORGING & STAMPINGS [3460] IRS NUMBER: 112167167 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07484 FILM NUMBER: 95564341 BUSINESS ADDRESS: STREET 1: 98 SPIT BROOK RD CITY: NASHUA STATE: NH ZIP: 03062 BUSINESS PHONE: 6038881212 MAIL ADDRESS: STREET 1: 98 SPIT BROOK RD CITY: NASHUA STATE: NH ZIP: 03062 FORMER COMPANY: FORMER CONFORMED NAME: CENTRONICS CORP DATE OF NAME CHANGE: 19880504 FORMER COMPANY: FORMER CONFORMED NAME: CENTRONICS DATA COMPUTER CORP DATE OF NAME CHANGE: 19870304 10-Q 1 FORM 10-Q FOR EKCO GROUP, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For quarterly period ended JULY 2, 1995 ------------ Commission File Number 1-7484 ------ EKCO GROUP, INC. -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 11-2167167 -------------------------------- ------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 98 SPIT BROOK ROAD, NASHUA, NEW HAMPSHIRE 03062 --------------------------------------------------- (Address of principal executive offices) (Zip Code) (603) 888-1212 ---------------------------------------------------- (Registrant's telephone number, including area code) 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 --- --- As of August 7, 1995, there were issued and outstanding 18,394,577 shares of common stock of the registrant. 2 EKCO GROUP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
JULY 2, JANUARY 1, 1995 1995 ----------- --------- (UNAUDITED) Current assets Cash and cash equivalents $ 222 $ 129 Accounts receivable, net 38,849 46,030 Inventories 63,060 48,242 Prepaid expenses and other current assets 6,321 6,296 Deferred income taxes 7,320 7,330 Investment pledged as collateral - 3,600 -------- -------- Total current assets 115,772 111,627 Property and equipment, net 55,512 52,361 Property held for sale or lease, net 6,904 7,373 Other assets 4,800 5,440 Excess of cost over fair value of net assets acquired, net 138,801 140,982 -------- -------- Total assets $321,789 $317,783 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Note payable $ - $ 3,643 Current portion of long-term obligations 82 36 Accounts payable 18,041 15,652 Accrued expenses 24,468 27,843 Income taxes 2,318 3,944 -------- -------- Total current liabilities 44,909 51,118 -------- -------- Long-term obligations, less current portion 111,715 102,580 -------- -------- Other long-term liabilities 9,449 9,375 -------- -------- 7% Convertible Subordinated Note 22,000 22,000 -------- -------- Series B ESOP Convertible Preferred Stock, net; outstanding July 2, 1995, 1,533 shares; outstanding January 1, 1995, 1,568 shares, redeemable at $3.61 per share 3,305 3,096 -------- -------- Commitments and contingencies - - Minority interest 498 498 -------- -------- Stockholders' equity Common stock, $.01 par value; outstanding July 2, 1995, 18,395 shares; outstanding January 1, 1995, 18,069 shares 184 181 Capital in excess of par value 107,246 105,448 Cumulative translation adjustment 877 771 Retained earnings 27,317 27,172 Unearned compensation (4,223) (2,968) Pension liability adjustment (1,488) (1,488) -------- -------- 129,913 129,116 -------- -------- Total liabilities and stockholders' equity $321,789 $317,783 ======== ========
The accompanying notes are an integral part of the financial statements. 2 3 EKCO GROUP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JULY 2, 1995 AND JULY 3, 1994 (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- 1995 1994 1995 1994 ---- ---- ---- ---- Net revenues $61,691 $59,199 $120,423 $113,553 ------- ------- -------- -------- Costs and expenses Cost of sales 43,229 39,657 83,954 76,265 Selling, general and administrative 12,398 13,482 25,683 25,168 Amortization of excess cost over fair value 1,108 1,109 2,217 2,219 ------- ------- -------- -------- 56,735 54,248 111,854 103,652 ------- ------- -------- -------- Income before interest and income taxes 4,956 4,951 8,569 9,901 ------- ------- -------- -------- Net interest expense Interest expense 3,410 3,095 6,843 6,289 Investment income - (133) (75) (226) ------- ------- -------- -------- 3,410 2,962 6,768 6,063 ------- ------- -------- -------- Income before income taxes 1,546 1,989 1,801 3,838 Income taxes 735 956 856 1,826 ------- ------- -------- -------- Net income $ 811 $ 1,033 $ 945 $ 2,012 ======= ======= ======== ======== Net income per share $ .04 $ .05 $ .05 $ .10 ======= ======= ======== ======== Weighted average number of shares used in computation of per share data 20,308 20,114 20,266 20,091
The accompanying notes are an integral part of the financial statements. 3 4 EKCO GROUP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JULY 2, 1995 AND JULY 3, 1994 (AMOUNTS IN THOUSANDS) (UNAUDITED)
1995 1994 ---- ---- Cash flows from operating activities Net income $ 945 $ 2,012 Adjustments to reconcile net income to net cash provided by (used in) operations Depreciation 4,901 4,757 Amortization 5,226 3,985 Other (1) 940 Change in certain assets and liabilities, affecting cash provided by (used in) operations: Accounts receivable 7,603 (302) Inventories (14,789) (6,833) Other assets (2,484) 4,276 Accounts payable and accrued expenses (1,000) (4,468) Income taxes payable (1,621) (2,146) -------- -------- Net cash provided by (used in) operations (1,220) 2,221 -------- -------- Cash flows from investing activities Proceeds from sale of property, equipment and product line 236 4,412 Capital expenditures (6,926) (4,481) -------- -------- Net cash used in investing activities (6,690) (69) -------- -------- Cash flows from financing activities Proceeds from issuance of long-term obligations 31,183 24,355 Proceeds from sale of investment held as collateral 3,600 - Payment of dividends (800) - Issuance of stock under stock option and purchase plans 238 363 Payment of note and long-term obligations (25,645) (26,349) Other (574) (400) -------- -------- Net cash provided by (used in) financing activities 8,002 (2,031) -------- -------- Effect of exchange rate changes on cash 1 52 -------- -------- Net increase in cash and cash equivalents 93 173 Cash and cash equivalents at beginning of year 129 327 -------- -------- Cash and cash equivalents at end of period $ 222 $ 500 ======== ======== Cash paid during the period for Interest $ 5,940 $ 5,928 Income taxes 2,379 3,762
The accompanying notes are an integral part of the financial statements. 4 5 EKCO GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (1) BASIS OF PRESENTATION AND OTHER MATTERS The consolidated condensed financial statements included herein have been prepared by Ekco Group, Inc. (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. It is believed, however, that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. The consolidated condensed financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. The condensed financial statements, in the opinion of management, reflect all adjustments necessary to fairly state the Company's financial position and the results of its operations. Such adjustments are of a normal recurring nature. A large part of the Company's business is seasonal. Historically, revenues in the last half of the calendar year have been greater than revenues in the first half of the year. Accordingly, the results for the entire year may not necessarily be the product of annualizing results for any interim period. (2) ACCOUNTS RECEIVABLE, NET Accounts receivable consisted of the following:
JULY 2, 1995 JANUARY 1, 1995 ------------ --------------- (AMOUNTS IN THOUSANDS) Accounts receivable $39,875 $47,769 Allowance for doubtful accounts (1,026) (1,739) ------- ------- $38,849 $46,030 ======= =======
(3) INVENTORIES The components of inventory were as follows:
JULY 2, 1995 JANUARY 1, 1995 ------------ --------------- (AMOUNTS IN THOUSANDS) Raw materials $15,204 $15,229 Work in process 4,963 4,047 Finished goods 42,893 28,966 ------- ------- $63,060 $48,242 ======= =======
5 6 EKCO GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (4) PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following:
JULY 2, 1995 JANUARY 1, 1995 ------------ --------------- (AMOUNTS IN THOUSANDS) Property and equipment at cost Land, buildings and improvements $22,443 $22,261 Equipment, factory and other 66,859 59,839 ------- ------- 89,302 82,100 Less accumulated depreciation 33,790 29,739 ------- ------- $55,512 $52,361 ======= =======
(5) EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED, NET Excess of cost over fair value of net assets acquired is net of accumulated amortization of $25,507 as of July 2, 1995 and $23,290 as of January 1, 1995. (6) INCOME TAXES The Company's effective tax rate as reported in its latest annual report on Form 10-K was 46% for the year ended January 1, 1995 ("Fiscal 1994"). The difference between the Company's effective tax rate of 48% for the three and six months ended July 2, 1995 and the Fiscal 1994 rate results primarily from amortization of excess of cost over fair value of net assets acquired becoming a higher percentage of earnings before income taxes. (7) LONG-TERM OBLIGATIONS AND OTHER LONG-TERM LIABILITIES Long-term obligations consisted of the following:
JULY 2, 1995 JANUARY 1, 1995 ------------ --------------- (AMOUNTS IN THOUSANDS) Group Credit Facility $ 51,664 $ 42,424 (a) 12.70% Notes, due 1998 60,000 60,000 Other 133 192 -------- -------- 111,797 102,616 Less current portion 82 36 -------- -------- $111,715 $102,580 ======== ======== 7% Convertible Subordinated Note, due 2002 $ 22,000 $ 22,000 ======== ========
6 7 EKCO GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) (7) LONG-TERM OBLIGATIONS AND OTHER LONG-TERM LIABILITIES (CONTINUED) Other long-term liabilities consisted of the following:
JULY 2, 1995 JANUARY 1, 1995 ------------ --------------- (AMOUNTS IN THOUSANDS) Accrued pension cost $1,484 $1,408 Deferred income taxes 1,034 948 Other long-term liabilities 6,931 7,019 ------ ------ $9,449 $9,375 ====== ======
(a) Borrowings which were refinanced under the Group Credit Facility:
JANUARY 1, 1995 --------------- (AMOUNTS IN THOUSANDS) Frem Credit Agreement $ 5,896 Housewares Credit Agreement 14,305 Group Credit Line 22,223 -------- $ 42,424 ========
On April 11, 1995, the Company entered into a bank credit agreement (the "Group Credit Facility") which provides lines of credit aggregating $75 million for each of the Company ($30 million), Ekco Housewares, Inc. ("Housewares") ($35 million) and Frem Corporation ("Frem") ($10 million). The proceeds from the Group Credit Facility were used to retire loans under the Housewares and Frem Credit Agreements and the Group Credit Line and, consequently, all amounts due under these agreements were classified as long-term. The facility matures on December 1, 1998. Loans under the Group Credit Facility bear interest ranging from the bank's prime rate to the prime rate plus 0.25% or the LIBOR rate plus 1.25% to 1.75%, depending on the Company's borrowing strategy and the ratio of total debt to cash flow (as defined). The Group Credit Facility provides for a commitment fee of three-eighths of one percent on the unused portion of the commitment amount and a $60,000 annual agency fee. Borrowings under the Group Credit Facility are collateralized by substantially all of the tangible assets of the Company. The Group Credit Facility contains certain financial and operating covenants. The most restrictive covenant requires the Company to maintain a minimum level of cash flow. (8) SERIES B ESOP CONVERTIBLE PREFERRED STOCK Series B ESOP Convertible Preferred Stock, net, consisted of the following:
JULY 2, 1995 JANUARY 1, 1995 ------------ -------------- (AMOUNTS IN THOUSANDS) Series B ESOP Convertible Preferred Stock, par value $.01, redeemable at $3.61 per share $ 5,535 $ 5,662 Unearned compensation (2,230) (2,566) ------- ------- $ 3,305 $ 3,096 ======= =======
7 8 EKCO GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) (9) COMMON STOCK, $.01 PAR VALUE Share information regarding common stock consisted of the following:
JULY 2, 1995 JANUARY 1, 1995 ------------ --------------- Authorized shares 60,000,000 60,000,000 ========== ========== Shares issued 27,632,372 27,292,641 Shares held in treasury 9,237,795 9,223,600 ---------- ---------- 18,394,577 18,069,041 ========== ==========
(10) NET INCOME PER COMMON SHARE Primary earnings per common share are based upon the weighted average of common stock and dilutive common stock equivalent shares outstanding during each period. Fully diluted earnings per share have been omitted since they are either the same as primary earnings per share or anti-dilutive. The weighted average number of shares used in computation of earnings per share consisted of the following for the periods presented:
THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- JULY 2, JULY 3, JULY 2, JULY 3, ------- ------- ------- ------- 1995 1994 1995 1994 ---- ---- ---- ---- (AMOUNTS IN THOUSANDS) Weighted average shares of common stock outstanding during the period 18,343 17,927 18,273 17,887 Series B ESOP Convertible Preferred Stock 1,533 1,640 1,551 1,640 Weighted average common equivalent shares due to stock options 432 547 442 564 ------ ------ ------ ------ 20,308 20,114 20,266 20,091 ====== ====== ====== ======
(11) ENVIRONMENTAL MATTERS 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 in Massillon and Hamilton, Ohio; Chicago, Illinois; Easthampton, Massachusetts; Hudson, New Hampshire and Lititz, Pennsylvania; hazardous substances and oil have been detected and that additional investigation will be, and remedial action will or may be, required. 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 owned or operated by the Company or future facilities may not result in additional environmental claims being asserted against the Company or additional investigations or remedial actions being required. 8 9 EKCO GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) (11) ENVIRONMENTAL MATTERS (CONTINUED) In connection with the acquisition of Kellogg Brush Manufacturing Co. and subsidiaries ("Kellogg") by the Company in fiscal year 1993, the Company engaged environmental engineering consultants ("Consultants") to review potential environmental liabilities at all of Kellogg's properties. Such additional investigation and testing resulted in the identification of likely environmental remedial actions, operation, maintenance and ground water monitoring and the estimated costs thereof. Based upon the cost estimates provided by the Consultants, the Company believes remediation costs will be approximately $1.6 million and the expense for the ongoing operation, maintenance and ground water monitoring will be $181,000 for the first ten years and $116,000 for 20 years thereafter. Management believes that the total amount of these liabilities is approximately $6 million, including the effects of inflation. Accordingly, the Company has recorded a liability of approximately $3.6 million. This amount represents the undiscounted costs of remediation and the net present value of future operation, maintenance and ground water monitoring costs discounted at 6%. The Company expects to pay approximately $1.3 million of the remediation costs in the current year ("Fiscal 1995") with the balance being paid out in fiscal years 1996 and 1997. During the first six months of Fiscal 1995, the Company paid approximately $124,000 of such costs. These estimates may subsequently change if additional sites are identified or further remediation measures are required or undertaken or the interpretation of current laws or regulations are modified. The Company has not anticipated any insurance proceeds or third-party payments in arriving at the above estimates. 9 10 EKCO GROUP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS The following discussion and analysis of the consolidated results of operations for the thirteen week periods ended July 2, 1995 (the "Second Quarter of 1995") and July 3, 1994 (the "Second Quarter of 1994") and for the twenty six week periods ended July 2, 1995 (the "First Half of 1995") and July 3, 1994 (the "First Half of 1994") and the financial condition at July 2, 1995 should be read in conjunction with the Company's Consolidated Condensed Financial Statements and Notes thereto. Because of the seasonality of the Company's revenues, which have historically been concentrated in the second half of its fiscal year, the results of operations for any interim period and the balance sheet as of the end of any interim period are not indicative of either a full year's operations or the financial condition of the Company at the end of any fiscal year. NET REVENUES Net revenues for the Second Quarter and First Half of 1995 increased approximately $2.5 million (4.2%) and $6.9 million (6.1%), respectively, from the comparable prior year periods. The increase in net revenues for the Second Quarter and First Half of 1995 was primarily the result of price increases ($2.6 million and $3.6 million, respectively), the introduction of new products ($1.2 million and $2.8 million, respectively, principally plastic products), increased sales from the Company's J-Hook program ($300,000 and $1.0 million, respectively) and increased sales of kitchenware products ($900,000 and $2.4 million, respectively). While in the Second Quarter of 1995 the Company experienced a slight decline in net revenues from its bakeware products ($900,000) this was more than offset by strong first quarter sales, resulting in increased net revenues from the Company's bakeware products for the First Half of 1995 of $500,000. The above increases were partially offset by the decline in net revenues from the Company's plastic products, reflecting retailer and consumer resistance to price increases. GROSS PROFIT The Company's gross profit margin declined from approximately 33% in the 1994 periods to approximately 30% for the 1995 periods. The principal contributing factors to this decline were the significant rise in the prices of resin, corrugated and wood, increases in manufacturing and distribution costs and a shift in product mix, partially offset by the effect of price increases initiated in the beginning of the year. SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expenses for the Second Quarter of 1995 decreased approximately $1.1 million (8.1%) from the comparable prior year period, but increased $500,000 for the First Half of 1995 as compared with the First Half of 1994. The decline in second quarter expenses was the direct result of management's efforts to reorganize and better control expenditures. The increase in selling, general and administrative expenses in the First Half of 1995 from the First Half of 1994 was due primarily to planned increases in advertisement and product placement costs in the first quarter of 1995, and costs associated with B. Via International Housewares, Inc., a start-up subsidiary, that is developing products for the upscale and specialty market place. NET INTEREST EXPENSE Net interest expense increased $448,000 from the Second Quarter of 1994 level of $3.0 million and $705,000 from the First Half of 1994 level of $6.1 million. The increases were due to both an increase in interest rates and higher average borrowings. 10 11 EKCO GROUP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE During the Fourth Quarter of Fiscal 1993, the Company recorded an $11 million restructuring/reorganization and excess facilities charge ($6.6 million after income taxes) resulting from management's analysis of the Company's operations and future strategy. Of this charge approximately $2.7 million was non-cash. At January 1, 1995, the accrual relating to restructuring/reorganization and excess facilities costs was $3.3 million. In February 1995, the Company announced the second phase of its restructuring which is expected to utilize the balance of the reserve. During this phase, the Company has combined its principal housewares business units into a single operating division. The new division consolidates the management and operations of Housewares, Frem and Kellogg. This new division also provides certain administrative and distribution services to the Company's other business units. During the First Half of 1995, the Company charged approximately $1.9 million against the reserve for costs incurred in the implementation of the second phase of the restructuring plan. At July 2, 1995 the remaining accrual was $1.4 million. LIQUIDITY AND CAPITAL RESOURCES During the First Half of 1995, the Company utilized approximately $1.2 million to fund operating activities, primarily to increase working capital and pay interest expense. Also, during the First Half of 1995, the Company used approximately $5.5 million of increased borrowings along with proceeds of $3.6 million from investments previously pledged as collateral for capital expenditures of approximately $6.7 million and dividend payments of approximately $800,000. The decline in the Company's accounts receivable balance relates to the seasonality of the Company's revenues, which have historically been concentrated in the second half of its fiscal year. The increase in inventory reflects a planned increase in plastic products and bakeware products to better balance manufacturing in anticipation of the "back-to-school" and holiday baking seasons and a softening of demand experienced towards the end of the quarter. On April 11, 1995, the Company entered into a bank credit agreement (the "Group Credit Facility") which provides lines of credit aggregating $75 million for each of the Company ($30 million), Housewares ($35 million) and Frem ($10 million). Loans under the Group Credit Facility bear interest ranging from the bank's prime rate to the bank's prime rate plus 0.25% or the LIBOR rate plus 1.25% to 1.75%, depending on the Company's borrowing strategy and the ratio of total debt to cash flow (as defined). The Group Credit Facility provides for a commitment fee of three-eighths of one percent on the unused portion of the commitment amount and a $60,000 annual agency fee. The facility matures on December 1, 1998. At July 2, 1995, the Company and its operating subsidiaries had unused credit facilities of $16.2 million (net of approximately $7.1 million in outstanding letters of credit). The Company believes it has sufficient borrowing capacity to finance its ongoing operations through the end of Fiscal 1995. The Company may require additional funds to finance any additional acquisitions. The Company has land and buildings in Hudson, New Hampshire; Chicago, Illinois; and a portion of its facilities in Lititz, Pennsylvania; held for sale. The Company is actively pursuing the sale or lease of these properties, and has partially leased the Hudson and Lititz facilities. The aggregate carrying values of such properties are periodically reviewed and are stated at the lower of cost or market. 11 12 EKCO GROUP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) The Company has provided a reserve of approximately $3.6 million for environmental remediation and ongoing operation, maintenance and ground water monitoring costs associated with Kellogg-owned or occupied facilities. The Company believes the provision is adequate but will continue to monitor and adjust the provision, as appropriate, should additional sites be identified or further remediation measures be required or undertaken or if interpretation of current laws or regulations are modified. 12 13 EKCO GROUP, INC. AND SUBSIDIARIES PART II OTHER INFORMATION ITEM 1 LEGAL PROCEEDINGS: 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 asserted claims 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 with respect to its operating facilities at Massillon and Hamilton, Ohio; Chicago, Illinois; Easthampton, Massachusetts; Hudson, New Hampshire and Lititz, Pennsylvania; hazardous substances or oil have been detected and that additional investigation will be, and remedial action will or may be, required. 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 owned or operated by the Company or any future facilities may not result in additional environmental claims being asserted against the Company or additional investigations or remedial actions being required. ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: At the Annual Meeting of Stockholders held on May 25, 1995 in Boston, Massachusetts, each of the persons nominated for election as a director of the Company were elected by the votes shown below. Directors will hold office until the next annual meeting of stockholders and until their successors are duly chosen and qualified or until their earlier resignation or removal.
No. of No. of Shares Voted Shares FOR WITHHELD ---------------------------------------------------------------------------------------------------- T. Michael Long 15,487,004 399,047 Stuart B. Ross 15,487,004 399,047 Malcolm L. Sherman 15,462,348 423,703 Bill W. Sorenson 15,487,169 398,882 Herbert M. Stein 15,480,419 405,632 Robert Stein 15,449,434 436,617 Jeffrey A. Weinstein 15,487,404 418,647
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K: a) Exhibits: None. b) Reports on Form 8-K: On April 14, 1995, the registrant filed a report on Form 8-K as of April 13, 1995 to report under "Item 5. Other Events" that it had issued a press release in which it announced that it had entered into a $75 million bank credit agreement. 13 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EKCO GROUP, INC. -------------------------------------- (Registrant) Date: August 15, 1995 By: /s/ Robert Stein ------------------------ ----------------------------------- Robert Stein President and Chief Executive Officer By: /s/ Donato A. DeNovellis ----------------------------------- Donato A. DeNovellis Executive Vice President, Finance and Administration, and Chief Financial Officer 14 15 INDEX TO EXHIBIT FILED WITH FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JULY 2, 1995
EXHIBIT NO. DESCRIPTION ----------- ----------- 27 Financial Data Schedule
15 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF EKCO GROUP, INC FOR THE SIX MONTHS ENDED JULY 2, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 6-MOS DEC-31-1995 JAN-01-1995 JUL-02-1995 1 222 0 39,875 1,026 63,060 115,772 89,302 33,790 321,789 44,909 133,797 3,305 0 184 129,729 321,789 120,423 120,423 83,954 109,637 2,217 (404) 6,843 1,801 856 945 0 0 0 945 .05 .05