-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KLWCA7i29W6T6YOW/6blnhqCrdqRT5aJwjZ1Z4AbaZgq3Ld7FGkOEYXfbjgwawUD vF88xxp3D/M7iKTnhqBVLQ== 0000217084-96-000001.txt : 19960401 0000217084-96-000001.hdr.sgml : 19960401 ACCESSION NUMBER: 0000217084-96-000001 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WINDMERE CORP CENTRAL INDEX KEY: 0000217084 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC HOUSEWARES & FANS [3634] IRS NUMBER: 591028301 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-10177 FILM NUMBER: 96541729 BUSINESS ADDRESS: STREET 1: 5980 MIAMI LAKES DR CITY: MIAMI LAKES STATE: FL ZIP: 33014 BUSINESS PHONE: 3053622611 MAIL ADDRESS: STREET 1: 5980 MIAMI LAKES DRIVE CITY: MIAMI LAKES STATE: FL ZIP: 33014 FORMER COMPANY: FORMER CONFORMED NAME: SAVE WAY INDUSTRIES INC DATE OF NAME CHANGE: 19830815 FORMER COMPANY: FORMER CONFORMED NAME: SAVE WAY BARBER & BEAUTY SUPPLIES INC DATE OF NAME CHANGE: 19770626 10-K405 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-10177 WINDMERE CORPORATION (Exact name of Registrant as specified in its charter) Florida 59-1028301 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 5980 Miami Lakes Drive, Miami Lakes, Florida 33014 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (305) 362-2611 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock $.10 Par Value New York Stock Exchange Special Preferred Stock Rights New York Stock Exchange Common Stock Purchase Rights New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No_____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation 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] As of March 20, 1996, the aggregate market value of the voting stock (based on the closing price as reported by NYSE of $9.75) held by non-affiliates of the Registrant was approximately $138,251,000. APPLICABLE ONLY TO CORPORATE REGISTRANTS: Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date. 16,427,924 Shares of Common Stock (as of the close of business on March 20, 1996) DOCUMENTS INCORPORATED BY REFERENCE 1. Windmere Corporation's 1995 Annual Report to Shareholders (for the fiscal year ended December 31, 1995). Information contained in this document has been incorporated by reference in PARTS I and II. 2. Windmere Corporation Proxy Statement for its 1996 Annual Meeting of Shareholders (dated April 12, 1996). Information contained in this document has been incorporated by reference in PART III. PART I ITEM 1. DESCRIPTION OF BUSINESS General Windmere Corporation (the "Company") is engaged principally in manufacturing and distributing a wide variety of personal care, kitchen electric and seasonal products. The Company designs and manufactures its products for sale to retail stores, distributors and professional beauty supply customers located primarily in the United States, Canada and Europe, with additional distribution in Latin America and the Far East. The Company's products are sold largely under its Windmere trade name, as well as under other trade names, trademarks and private labels. The Company also manufactures products on a contract basis for others. The Company's products are primarily manufactured by Durable Electrical Metal Factory, Ltd. ("Durable"), its wholly-owned Hong Kong subsidiary, in Bao An County, Guandong Province of the People's Republic of China ("People's Republic"), which is approximately 60 miles northwest of central Hong Kong. The Company has a significant amount of its assets in the People's Republic, primarily consisting of inventory, equipment and molds. Substantially all of the Company's products are manufactured by Durable and unrelated factories in the People's Republic. Approximately 85% to 90% of the Company's products are manufactured by Durable. The supply and cost of these products can be adversely affected, among other reasons, by changes in foreign currency exchange rates, increased import duties, imposition of tariffs, imposition of import quotas, interruptions in sea or air transportation and political or economic changes. From time to time, the Company explores opportunities to diversify its sourcing and/or production of certain products to other low-cost locations or with other third parties or joint venture partners in order to reduce its dependence on production in the People's Republic and/or reduce Durable's dependence on the Company's existing distribution base. However, at the present time, the Company intends to continue its production in the People's Republic. In June 1989, the People's Republic experienced civil disturbances and, although such disturbances have dissipated since that time, there continues to be pressure for political reform. No assurance can be given, however, that civil disturbances will not recur. If it becomes necessary to relocate the Company's manufacturing facilities from the People's Republic as a result of civil disturbances in that country or otherwise, the Company believes the production currently conducted in the People's Republic could be relocated to other Far East locations, including Hong Kong, or other low-cost manufacturing locations, with only temporary disruption and delay in such production and possible short-term operating and capital losses, provided that the Company is able to move substantially all of its manufacturing equipment and other assets currently in the People's Republic to another location. If the Company is unable to remove such assets, due to confiscation, expropriation, nationalization, embargoes or governmental restrictions, it would incur substantial operating and capital losses, including losses resulting from business disruption and delays in production. In addition, as a result of a relocation of its manufacturing equipment and certain other assets, the Company would likely incur relatively higher manufacturing costs. A relocation could also adversely affect the Company's revenues if the demand for the Company's products currently manufactured in the People's Republic decreases due to a disruption in the production and delivery of such products or due to higher prices which might result from increased manufacturing costs. Furthermore, earnings could be adversely affected due to reduced sales and/or the Company's inability to maintain its current margins on the products currently manufactured in the People's Republic. In 1995, President Clinton extended the People's Republic's most- favored-nation (MFN) trading status for an additional year, beginning July 3, 1995. The President announced in 1994 that the United States would, in the future, permanently de-link MFN renewal from human rights issues, other than freedom of emigration provisions. Under U.S. law, MFN status means that products are subject to the relatively low duty rates set forth in Column 1 of the Harmonized Tariff Schedules of the United States (HTSUS), that have resulted from several rounds of reciprocal tariff negotiations conducted under the auspices of the General Agreement on Tariffs and Trade (GATT) since 1945. Products from countries not eligible for MFN treatment are subject to much higher rates of duty, averaging 30 percent ad valorem, as set forth in Column 2 of the HTSUS. If MFN status for goods produced in the People's Republic were removed, there would be a substantial increase in tariffs imposed on goods of Chinese origin entering the United States, including those manufactured by the Company, which could have a material adverse impact on the Company's revenues and earnings. The Company was incorporated under the laws of the State of Florida in 1963. As used herein, the term "Company" refers to Windmere Corporation and its subsidiaries, unless the context indicates otherwise. The Company's executive offices are located at 5980 Miami Lakes Drive, Miami Lakes, Florida 33014, (see Item 2. Properties), and its telephone number is (305) 362-2611. Products The major portion of the Company's revenues are generated by the sale of personal care products. The Company's personal care products include hair dryers, curling irons, curling brushes, hairsetters, combs and brushes, shears, mirrors and electric shavers. The Company's appliances include toasters, toaster ovens, can openers, blenders, hand mixers, waffle irons, steam irons, electronic air cleaners, fans and air fresheners. In 1995, 1994 and 1993, net sales of personal care products and appliances represented approximately 63% and 37%, 70% and 30%, and 74% and 26%, respectively, of the Company's total net sales. Marketing and Distribution Distribution: The Company's products are sold principally by independent sales representatives. The Company utilizes media advertising, cooperative advertising and collateral materials to promote its products. The Company's products are sold under various federal trademarks and registrations, some of which include: Windmere, Jumbo Curl, Belson Pro, Curlmaster, Design Pro, First Class Gourmet, Solid Gold, Hot'n Steamy, Windmere Salon, Steam Express, Air Moves, ESP, Electric Shock Protection, VIP Pro, Setting Pretty, Skinni Mini, Clothes Shaver, Easy Styler, Four Way Curls, Set Up, All Curl Trio, Mirror Go Lightly, Jerdon, First Class, Plak Trac, Litter Maid, Smoke Catcher, Curly Top, Prelude, High Fashion, Belson, Pro Touch, Pro Star, Hot Silver, Golden Touch, Profiles, Comare, Salon Designs, Premiere, Espree, Gold'n Hot and Gentle Air. The Company believes that its business has not been materially dependent on any one such trademark. The Company's distribution businesses include the sale of consumer products and professional salon products primarily in the United States, Canada and Europe. Consumer products are primarily sold under the Windmere brand and professional salon products are sold under the Belson Products and Comare brands. In addition, private label and controlled label sales are made by the Company. In the United States, the Company wholesales its line of consumer products nationwide to retailers, including department stores, drug chains, catalog stores and discount and variety stores. The Company also markets its consumer and professional salon appliances, hair pieces and a wide variety of brushes and other hair care accessories to beauticians, barbers and stylists through distributors. In addition, certain items, including the Company's hair dryers, curling irons and other personal care appliances, are sold through professional beauty and barber retail store outlets. The Company owns a 50% interest in a joint venture, Paragon Industries, which distributes electric fans and other seasonal products manufactured by Durable and unaffiliated third parties. At December 31, 1995, this investment had a negative book value of $.8 million and there were no significant contingent liabilities arising from such investment. Manufacturing: The Company's manufacturing business is conducted by Durable. Durable, through its twenty-four year relationship with the Company, has produced an extensive product line, which includes not only the appliances sold to the Company and its customers and a substantial amount of oscillating fans for a joint venture, but it has also become a contract manufacturer for a range of products, such as toasters, steam irons, toaster ovens, can openers, blenders, hand mixers and waffle irons, which it sells primarily to customers in the United States, Canada and Europe. Some of its customers are Rival, Salton-Maxim and Sunbeam. In February 1996, the Company announced the signing of an agreement whereby it would acquire a 50% ownership in Salton-Maxim, a designer and marketer of small kitchen appliances and beauty care products. The transaction, which is subject to a number of conditions, is expected to close in June 1996. Manufacturing and Supplies The Company's foreign sales and operations are subject to the usual risks incident to operating abroad, including currency fluctuations, political conditions and changes in foreign laws. A weakening or strengthening of the United States dollar may result in higher or lower cost of goods for the Company from suppliers in countries whose exchange rate does not parallel the United States dollar, unlike Hong Kong the currency of which fluctuates substantially parallel to the United States dollar. The Company generates approximately 85% to 90% of its revenues from products manufactured by Durable in the People's Republic. Such products utilize raw materials available from at least two and as many as nine or more independent suppliers. The Company has no material dependence on any single foreign source for such materials. Seasonality The Company's business is generally seasonal. The Company has historically experienced higher revenues in the third and fourth quarters of each fiscal year primarily due to increased demand by customers for the Company's products in the late summer for "back to school" sales and in the fall for Christmas sales. In typical years, the Company begins to accumulate inventory for its major selling season in June and July and it continues to purchase products at accelerated rates until November. The Company's major sales occur during August through November. Sales are generally made on 60 to 90 day terms. Heaviest collections on its open accounts receivable are received from November through March, at which time the Company is in its most liquid state. Backlog The Company's backlog of orders as of December 31, 1995, 1994 and 1993 was approximately $22.2 million, $20.1 million and $17.7 million, respectively, which orders are generally shipped within the next succeeding year. Competition The Company encounters significant competition with respect to all of its products. Although the Company's prices for products distributed under its labels are in general below or competitive with those of many nationally advertised brands, the Company also competes through quality of product, attractive packaging, breadth of product lines, speed of delivery and maintenance of good customer relations. Many of the Company's major competitors are substantially larger, have greater financial and other resources and spend more for national advertising. Some of the Company's competitors include Conair, Helen of Troy and Remington. Regulation In the United States, Canada and Europe, most federal, state, provincial and local authorities require Underwriters Laboratory, Inc. ("UL") or other safety regulation certification prior to marketing electrical appliances in those jurisdictions. All of the non-professional salon appliances marketed by the Company have such certifications. The Company endeavors to have most of its products designed to meet those requirements and to be so certified, although there can be no assurance that those products, or additional electrical appliances which may be developed by the Company, will meet such specifications. Certain of the products sold by the Company in the United States are subject to the cosmetic purity and labelling provisions of the Fair Packaging and Labelling Act. The Company believes that in addition to complying with the Fair Packaging and Labelling Act, it complies with the applicable rules and regulations of the Federal Trade Commission and other municipal agencies with respect to, among other things, the content of advertising and other trade practices. Patents Although the Company does not believe that its business is materially dependent upon patents and patent protection, from time to time, new products have been introduced with unique features for which the Company has filed or obtained licenses for patents and design registrations in the United States and in several foreign countries. Employees At March 1, 1996, the Company's distribution businesses in the United States, Canada, Europe and Hong Kong employed approximately 250 persons. Durable's operations in Hong Kong and the People's Republic of China employed approximately 10,000 persons. The Company enjoys satisfactory working relations with these employees. The Company is not a party to any collective bargaining agreement. Geographic Area Financial Information Incorporated by reference to the Company's 1995 Annual Report to Shareholders, under the caption, "Note M to Consolidated Financial Statements, Geographic Area Information". Included as part of Exhibit 13. Item 2. PROPERTIES The executive offices of the Company, from which a significant amount of its business activities are conducted, are currently located at 5980 Miami Lakes Drive, Miami Lakes, Florida. All of the space in this two- story office and warehouse facility is owned and occupied by the Company. The Company also utilizes the services of public warehouses located in Reno, Nevada and Memphis, Tennessee pursuant to short-term contracts. Durable owns approximately 50,000 sq. ft. of office space in Hong Kong, of which 30,000 sq. ft. is used for its and the Company's trading companies' headquarters. Durable also utilizes facilities of 1,600,000 sq. ft. in the People's Republic which it operates under contracts with the local government. The contracts require such periodic adjustments that terms of between one and five years exist at all times. Certain facilities have contract terms extending beyond five years. ITEM 3. LEGAL PROCEEDINGS In April 1994, Kabushiki Kaisha Izumi Seiki Seisakusho, a Japanese corporation ("Izumi"), filed an action against the Company, David M. Friedson, the President and Chief Executive Officer of the Company, U.S. Philips Corporation, North American Philips Corporation and N.V. Philips Gloellampenfabrieken (together, "Philips"). This action concerns the 1992 settlement (the "Philips Settlement") of certain claims, primarily a Federal antitrust claim, made by the Company against Philips, which resulted in an $89,644,257 judgment in favor of the Company. Pursuant to the Philips Settlement, Philips paid the Company $57,000,000 in May 1992. As part of the Philips Settlement, the Company and Philips agreed that the Company's money judgment against Philips in connection with such antitrust litigation would be vacated. Izumi is claiming, among other things, that the Philips Settlement, including the agreement with Philips to cooperate to vacate the related judgment in favor of the Company, constitutes a breach by the Company of a customary indemnification agreement between Izumi (as seller of goods) and the Company (as buyer of goods) dated February 20, 1984. This indemnification agreement covered certain claims against the Company and was entered into more than eight months prior to the commencement of the Philips litigation in connection with the routine purchase by the Company of goods from Izumi. Izumi advanced certain legal fees and costs to the Company in connection with the Philips litigation. Izumi is further claiming that it is entitled to recover from the Company an unspecified portion of the Philips Settlement, punitive damages and reimbursement of litigation and other related costs and expenses. The Company disagrees with Izumi's position and believes that it has meritorious defenses to these claims by Izumi. A pre-answer motion by the Company has resulted in the dismissal of some of Izumi's claims, and the Company has answered the remaining claims. The Company intends to defend this action fully and vigorously. In addition, in June 1995, Izumi filed another lawsuit against the Company and Philips. In this second lawsuit, Izumi sought equitable relief in the form of reinstatement of the 1990 judgments in the Company's favor against Philips, which were vacated. This complaint was amended to include Sears, Roebuck and Co. ("Sears") as a co-plaintiff and to seek reinstatement of an unfair competition judgment only. In December 1995, this second lawsuit was dismissed by the Court. Izumi and Sears filed notices of appeal, but subsequently withdrew the appeal. The Company is also subject to other legal proceedings, product liability and other claims which arise in the ordinary course of its business. In the opinion of management, the amount of ultimate liability, if any, in excess of applicable insurance coverage, is not likely to have a material effect on the financial position of the Company. However, as the outcome of litigation or other legal claims is difficult to predict, significant changes in the estimated exposures could occur. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Company's common stock is traded on the New York Stock Exchange under the symbol WND. High and low market prices and dividends paid per share in 1995 and 1994, by quarters, are as follows: Market Price Cash High Low Dividends 1995 Fourth quarter 7 3/8 6 $.05 Third quarter 8 1/4 7 1/4 .05 Second quarter 9 7 5/8 .05 First quarter 9 3/4 7 5/8 .05 $.20 1994 Fourth quarter 11 1/8 7 5/8 $.05 Third quarter 12 9 3/8 .05 Second quarter 11 7/8 7 3/4 .05 First quarter 8 1/2 6 3/4 .00 $.15 The approximate number of holders of common stock of the Company, as of December 31, 1995, was 1,400. This number does not include any adjustment for shareholders owning common stock in the Depository Trust name or otherwise in "Street" name, which the Company believes represents an additional 6,300 shareholders. ITEM 6. SELECTED FINANCIAL DATA (Dollars in thousands, except per share data) 1995 1994 1993 Net sales $187,777 $181,112 $170,661 Equity in net earnings (loss) of joint ventures $ (393) $ 91 $ (504) Earnings (loss) before taxes and minority interest $ (3,165) $ 23,131 $ 12,305 Provision for taxes (benefits) $ (1,281) $ 2,595 $ 1,365 Effective tax rate (40.5)% 11.2% 11.0% Net earnings (loss) $ (1,884)* $ 20,537** $ 11,469*** Working capital $127,626 $129,281 $117,961 Current ratio 7.5 to 1 7.0 to 1 5.8 to 1 Property, plant and equipment, net $ 30,485 $ 28,449 $ 25,022 Total assets $188,012 $197,124 $180,479 Long-term debt, deferred liabilities and minority interest $ 3,519 $ 4,932 $ 9,492 Common stock in treasury - at cost $ - $ - $ - Stockholders' equity $164,931 $170,625 $146,587 Per share data: Net earnings (loss) $ (.11)* $ 1.17** $ .71*** Cash dividends paid $ .20 $ .15 $ - Book value at year end $ 9.87 $ 10.20 $ 9.29 Return on average equity - 12.9% 8.2% *Includes a non-recurring loss on the sale of an other asset of $5,280,000, or $.31 per share. **Includes a non-recurring gain on the sale of Hong Kong office space of $7,810,500, or $.45 per share. ***Includes cumulative effect of accounting change benefit of $1,731,100, or $.11 per share. ****Includes extraordinary credit from litigation settlement of $29,648,800, or $1.82 per share. 1992 1991 Net sales $175,450 $141,608 Equity in net earnings (loss) of joint ventures $ (848) $ (1,020) Earnings (loss) before taxes and minority interest $ 6,531 $(11,947) Provision for taxes (benefits) $ 805 $ (813) Effective tax rate 10.9% (7.4)% Net earnings (loss) $ 34,335**** $ (9,488) Working capital $104,139 $ 96,705 Current ratio 4.8 to 1 4.8 to 1 Property, plant and equipment, net $ 24,546 $ 25,751 Total assets $172,974 $175,836 Long-term debt, deferred liabilities and minority interest $ 12,291 $ 49,999 Common stock in treasury - at cost $ - $ 7,344 Stockholders' equity $132,922 $100,216 Per share data: Net earnings (loss) $ 2.09**** $ (.59) Cash dividends paid $ - $ - Book value at year end $ 8.65 $ 6.19 Return on average equity 29.4% - ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Year Ended December 31, 1995 compared with Year Ended December 31, 1994 Net Sales Net sales were $187.8 million and $181.1 million for the years ended December 31, 1995 and 1994, respectively. Manufacturing sales increased by $14.4 million due to increased shipments of kitchen electric appliances. Distribution sales declined by $7.7 million primarily due to the weak U.S. retailing environment in 1995. Wal-Mart Stores, Inc. and a kitchen electric appliance distributor accounted for 13.1% and 11.4%, respectively, of the Company's 1995 sales. Set forth below is a table indicating the revenues that the Company derived from its distribution and manufacturing operations for the periods indicated: Year Ended December 31, 1995 1994 Distribution $147,576,000 79% $155,320,600 86% Manufacturing 40,200,900 21 25,791,600 14 Total Sales $187,776,900 100% $181,112,200 100% Gross Profit Margin The Company's gross margin percentage decreased in 1995 to 21.8% of sales from the 27.0% level in the prior year due to higher raw materials costs which could not be passed on to customers and the greater concentration of lower-margin manufacturing sales. Selling, General and Administrative Expenses Selling, general and administrative expenses as a percentage of sales were 20.0% and 19.6% in 1995 and 1994, respectively. The Company's higher aggregate operating expenses were primarily a result of increased bad debt expense and inventory storage costs. Unusual or Non-Recurring Items In 1995, the Company incurred a non-recurring pre-tax loss of $8.0 million on the sale of an other asset. This transaction reduced 1995 net earnings by $5.3 million, or $.31 per share, on an after-tax basis. Equity in Net Earnings (Loss) of Joint Ventures The Company's equity in net earnings (loss) of joint ventures was $(.4) million and $.1 million in 1995 and 1994, respectively. Lower gross margins in 1995, due to higher raw materials costs, produced the decline in the joint venture's earnings. Taxes The Company's tax expense is based on the earnings of each of its foreign and domestic operations and it includes such additional U.S. taxes as are applicable to the repatriation of foreign earnings. Offshore earnings generally are taxed at rates lower than in the United States. The Company made a provision in its 1995 second quarter of $.4 million, or $.02 per share, as a result of its settlement of a Hong Kong tax audit. Earnings Per Share The average number of common shares and common equivalent shares used in computing per share results was 2.1% lower in 1995 primarily as a result of a lower dilutive effect from unexercised stock options and warrants, due both to a decline in the quoted market price of the Company's common stock during the year and the Company's fourth quarter loss. Year Ended December 31, 1994 compared with Year Ended December 31, 1993 Net Sales Net sales were $181.1 million and $170.7 million for the years ended December 31, 1994 and 1993, respectively. The higher sales volume was produced by the Company's distribution businesses on increased unit shipments of core products. The sales increase was almost evenly divided between shipments to retailers and professional beauty supply customers. Manufacturing sales by Durable were relatively unchanged, as 1994's growth in sales of kitchen electric appliances offset a $6.5 million decline in sales of electric fragrance units. Wal-Mart Stores, Inc. accounted for 17.8% of the Company's 1994 sales. Set forth below is a table indicating the revenues that the Company derived from its distribution and manufacturing operations for the periods indicated: Year Ended December 31, 1994 1993 Distribution $155,320,600 86% $144,609,600 85% Manufacturing 25,791,600 14 26,051,800 15 Total Sales $181,112,200 100% $170,661,400 100% Gross Profit Margin The Company's gross profit margin declined in 1994 to 27.0% of sales from the 28.1% level in the prior year. The lower gross margin resulted primarily from three factors. The Company experienced the effects of higher raw materials prices in the second half of 1994. In addition, growth in kitchen electric appliance sales was achieved at lower than normal margins in order to establish a market presence. Finally, while manufacturing sales were level for both years, electric fragrance unit sales, which had higher margins, were significantly lower in 1994. Selling, General and Administrative Expenses Selling, general and administrative expenses as a percentage of sales were 19.6% and 21.4% in 1994 and 1993, respectively. The Company's lower aggregate operating expenses were primarily a result of reduced advertising costs and legal expenses. Unusual or Non-Recurring Items In 1994, the Company recorded an unusual and non-recurring gain of $7.8 million on the sale of 60,000 square feet of office space in Hong Kong. No taxes were provided as the gain is not taxable. Equity in Net Earnings (Loss) of Joint Ventures The Company's equity in net earnings (loss) of joint ventures, excluding the results of a joint venture sold in August 1993, was $.1 million and $(.3) million in 1994 and 1993, respectively. Higher sales and gross margins in 1994 produced the improved earnings. Taxes The Company's tax expense is based on the earnings of each of its foreign and domestic operations and it includes such additional U.S. taxes as are applicable to the repatriation of foreign earnings. Offshore earnings generally are taxed at rates lower than in the United States. Non- recurring transactions in 1994 and 1993 lowered the Company's effective tax rate by 5.9 percentage points in each of those years. Earnings Per Share The average number of common shares and common equivalent shares used in computing per share results was 8.5% higher in 1994 primarily as a result of the 1,000,000 shares issued to acquire the additional 20% interest in Durable, the exercise of stock options and warrants, as well as a higher dilutive effect from unexercised stock options and warrants due to increases in the quoted market price of the Company's common stock during most of 1994. The purchase and retirement of 397,400 common shares produced only a small reduction in the annual weighted average shares total because these purchases occurred late in 1994. Liquidity & Capital Resources At December 31, 1995, the Company's working capital was $127.6 million, a decrease of $1.7 million since the end of 1994. At the end of 1995, 1994 and 1993, the Company's current ratio was 7.5 to 1, 7.0 to 1 and 5.8 to 1, respectively, and its quick ratio was 3.5 to 1, 3.6 to 1 and 3.1 to 1, respectively. Cash and cash equivalents increased by $4.8 million during 1995. Cash of $13.4 million was provided from operating activities, which included the refund of $3.0 million that had been deposited as security in connection with a Hong Kong tax audit. The Company utilized approximately $13.1 million of cash this year to finance higher inventory levels and for the acquisition of fixed assets. In 1995, the Company purchased and retired 139,600 shares of its common stock at a cost of $1.0 million. Cash dividends of $3.4 million were paid to shareholders in 1995. In January 1996, the Company used $2.6 million to purchase and retire 356,500 shares of its common stock, bringing the total number of shares purchased under a 1,000,000 share authorization to 893,500, at an aggregate cost of $7.5 million. The Company's foreign subsidiaries (the "subsidiaries") have $6.4 million in trade finance lines of credit, payable on demand, which are secured by the subsidiaries' tangible and intangible property located in Hong Kong and in the People's Republic of China, as well as a Company guarantee. At December 31, 1995, the subsidiaries were utilizing, including letters of credit, approximately $.6 million of these credit lines, leaving a remaining funding capacity of $5.8 million. These subsidiaries also have available an additional $5.0 million line of credit which is supported by a domestic standby letter of credit, which credit line was not being used at December 31, 1995. The Company has a $20.0 million demand line of credit from a domestic bank, which is secured by domestic accounts receivable. At December 31, 1995, there were no outstanding borrowings under this credit line. No provision for U.S. taxes has been made on undistributed earnings of the Company's foreign subsidiaries and joint ventures because management plans to reinvest such earnings in their respective operations or in other foreign operations. Repatriating those earnings or using them in some other manner which would give rise to a U.S. tax liability would reduce after tax earnings and available working capital. The Company believes that its cash on hand and internally generated funds, together with its credit lines, will provide sufficient funding to meet the Company's capital requirements and its operating needs for the foreseeable future. Legal Proceedings In April 1994, Kabushiki Kaisha Izumi Seiki Seisakusho, a Japanese corporation ("Izumi"), filed an action against the Company, David M. Friedson, the President and Chief Executive Officer of the Company, U.S. Philips Corporation, North American Philips Corporation and N.V. Philips Gloellampenfabrieken (together, "Philips"). This action concerns the 1992 settlement (the "Philips Settlement") of certain claims, primarily a Federal antitrust claim, made by the Company against Philips, which resulted in an $89,644,257 judgment in favor of the Company. Pursuant to the Philips Settlement, Philips paid the Company $57,000,000 in May 1992. As part of the Philips Settlement, the Company and Philips agreed that the Company's money judgment against Philips in connection with such antitrust litigation would be vacated. Izumi is claiming, among other things, that the Philips Settlement, including the agreement with Philips to cooperate to vacate the related judgment in favor of the Company, constitutes a breach by the Company of a customary indemnification agreement between Izumi (as seller of goods) and the Company (as buyer of goods) dated February 20, 1984. This indemnification agreement covered certain claims against the Company and was entered into more than eight months prior to the commencement of the Philips litigation in connection with the routine purchase by the Company of goods from Izumi. Izumi advanced certain legal fees and costs to the Company in connection with the Philips litigation. Izumi is further claiming that it is entitled to recover from the Company an unspecified portion of the Philips Settlement, punitive damages and reimbursement of litigation and other related costs and expenses. The Company disagrees with Izumi's position and believes that it has meritorious defenses to these claims by Izumi. A pre-answer motion by the Company has resulted in the dismissal of some of Izumi's claims, and the Company has answered the remaining claims. The Company intends to defend this action fully and vigorously. In addition, in June 1995, Izumi filed another lawsuit against the Company and Philips. In this second lawsuit, Izumi sought equitable relief in the form of reinstatement of the 1990 judgments in the Company's favor against Philips, which were vacated. This complaint was amended to include Sears, Roebuck and Co. ("Sears") as a co-plaintiff and to seek reinstatement of an unfair competition judgment only. In December 1995, this second lawsuit was dismissed by the Court. Izumi and Sears filed notices of appeal, but subsequently withdrew the appeal. The Company is also subject to other legal proceedings, product liability and other claims which arise in the ordinary course of its business. In the opinion of management, the amount of ultimate liability, if any, in excess of applicable insurance coverage, is not likely to have a material effect on the financial position of the Company. However, as the outcome of litigation or other legal claims is difficult to predict, significant changes in the estimated exposures could occur. Manufacturing Operations The Company's products are primarily manufactured by Durable, its wholly- owned Hong Kong subsidiary, in Bao An County, Guandong Province of the People's Republic of China, which is approximately 60 miles northwest of central Hong Kong. The Company has a significant amount of its assets in the People's Republic, primarily consisting of inventory, equipment and molds. Substantially all of the Company's products are manufactured by Durable and unrelated factories in the People's Republic. Approximately 85% to 90% of the Company's revenues are currently derived from products manufactured by Durable. The supply and cost of these products, as well as finished products, can be adversely affected, among other reasons, by changes in foreign currency exchange rates, increased import duties, imposition of tariffs, imposition of import quotas, interruptions in sea or air transportation and political or economic changes. From time to time, the Company explores opportunities to diversify its sourcing and/or production of certain products to other low-cost locations or with other third parties or joint venture partners in order to reduce its dependence on production in the People's Republic and/or reduce Durable's dependence on the Company's existing distribution base. However, at the present time, the Company intends to continue its production in the People's Republic. In June 1989, the People's Republic experienced civil disturbances and, although such disturbances have dissipated since that time, there continues to be pressure for political reform. No assurance can be given, however, that civil disturbances will not recur. If it becomes necessary to relocate the Company's manufacturing facilities from the People's Republic as a result of civil disturbances in that country or otherwise, the Company believes the production currently conducted in the People's Republic could be relocated to other Far East locations, including Hong Kong, or other low-cost manufacturing locations, with only temporary disruption and delay in such production and possible short-term operating and capital losses, provided that the Company is able to move substantially all of its manufacturing equipment and other assets currently in the People's Republic to another location. If the Company is unable to remove such assets, due to confiscation, expropriation, nationalization, embargoes or governmental restrictions, it would incur substantial operating and capital losses, including losses resulting from business disruption and delays in pro- duction. In addition, as a result of a relocation of its manufacturing equipment and certain other assets, the Company would likely incur relatively higher manufacturing costs. A relocation could also adversely affect the Company's revenues if the demand for the Company's products currently manufactured in the People's Republic decreases due to a dis- ruption in the production and delivery of such products or due to higher prices which might result from increased manufacturing costs. Furthermore, earnings could be adversely affected due to reduced sales and/or the Company's inability to maintain its current margins on the products currently manufactured in the People's Republic. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Incorporated by reference to the Company's 1995 Annual Report to Shareholders (Exhibit 13). See also PART IV, ITEM 14(a)2 of this report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Incorporated by reference to the Company's Proxy Statement for its 1996 Annual Meeting of Shareholders under the captions "Election of Directors" and "Executive Officers". ITEM 11. EXECUTIVE COMPENSATION Incorporated by reference to the Company's Proxy Statement for its 1996 Annual Meeting of Shareholders under the captions "Executive Compensation" and "Certain Transactions". ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated by reference to the Company's Proxy Statement for its 1996 Annual Meeting of Shareholders under the caption "Security Ownership". ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated by Reference to the Company's Proxy Statement for its 1996 Annual Meeting of Shareholders under the captions "Executive Compensation" and "Certain Transactions". PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a)1. FINANCIAL STATEMENTS The following consolidated financial statements of Windmere Corporation and subsidiaries are incorporated by reference in PART II, ITEM 8: AUDITOR'S REPORT Exhibit 13 CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1995 AND 1994 Exhibit 13 CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 Exhibit 13 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - THREE YEARS ENDED DECEMBER 31, 1995 Exhibit 13 CONSOLIDATED STATEMENTS OF CASH FLOWS - YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 Exhibit 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Exhibit 13 2. FINANCIAL STATEMENT SCHEDULES AUDITOR'S REPORT Filed herewith SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES - YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 Filed herewith Individual financial statements of the Company have been omitted since consolidated financial statements have been presented, the parent is primarily an operating company and all subsidiaries included in the consolidated financial statements are wholly-owned. All other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule or because the information required is included in the consolidated financial statements or the notes thereto. EXHIBITS (3) Articles of Incorporation and By-Laws. 3.1 Amended and Restated Articles of Incorporation of the Company filed with the Florida Secretary of State on May 17, 1984. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1984. 3.2 Articles of Amendment to the Articles of Incorporation of the Company filed with the Florida Secretary of State on May 16, 1986. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1986. 3.3 Articles of Amendment to the Articles of Incorporation of the Company filed with the Florida Secretary of State on June 23, 1986. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 3.4 By-Laws as amended through October 11, 1991. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 3.5 Amendment to October 11, 1991 By-Laws. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. (10) Material Contracts Executive Compensation Plans and Arrangements 10.1 Employment Agreement dated as of January 27, 1983, between Belvin Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1982. 10.2 Employment Agreement, First Amendment, dated as of February 27, 1987, between Belvin Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1986. 10.3 Employment Agreement, Second Amendment, dated as of December 16, 1992, between Belvin Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.4 Employment Agreements dated as of July 18, 1983, between David M. Friedson, Barbara Friedson Garrett and Arnold Thaler, respectively, and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1983. 10.5 Employment Agreement, First Amendment, dated as of January 17, 1985, between David M. Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1984. 10.6 Employment Agreement, Second Amendment and Nonqualified Stock Option, dated as of September 30, 1985, between David M. Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1985. 10.7 Employment Agreement (Third Amendment) and Nonqualified Stock Option (First Amendment) dated as of October 28, 1987, between David M. Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.8 Employment Agreement (Fourth Amendment) and Nonqualified Stock Option (Second Amendment) dated as of October 26, 1987, between David M. Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.9 Employment Agreement (Fifth Amendment) dated as of December 16, 1992, between David M. Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.10 Nonqualified Stock Option dated as of January 5, 1987, granted by the Company to Barbara Friedson Garrett. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1986. 10.11 Employment Agreement (First Amendment) and Nonqualified Stock Option (First Amendment) dated as of October 26, 1987, between Barbara Friedson Garrett and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.12 Employment Agreement (Second Amendment) and Nonqualified Stock Option (Second Amendment) dated as of October 26, 1987 between Barbara Friedson Garrett and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.13 Employment Agreement (Third Amendment) dated as of December 16, 1992, between Barbara Friedson Garrett and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.14 Nonqualified Stock Option dated as of January 5, 1987, granted by the Company to Arnold Thaler. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1986. 10.15 Employment Agreement (First Amendment) and Nonqualified Stock Option (First Amendment) dated as of October 26, 1987 between Arnold Thaler and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.16 Employment Agreement (Second Amendment) and Nonqualified Stock Option (Second Amendment) dated as of October 26, 1987 between Arnold Thaler and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.17 Employment Agreement (Third Amendment) dated as of December 16, 1992, between Arnold Thaler and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.18 Employment Agreement dated May 31, 1987, between Robert Gorman and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.19 Employment Agreement (First Amendment) dated as of December 16, 1992, between Robert Gorman and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.20 1982 Employees Incentive Stock Option Plan. Incorporated by reference to Exhibit 4 to Post-Effective Amendment No. 1 to the Company's Form S-8 Registration Statement No. 2-92540. 10.21 Amendment to 1982 Employees Incentive Stock Option Plan. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.22 1992 Employees Incentive Stock Option Plan. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.23 Employment Agreement dated as of October 26, 1987 between Burton A. Honig and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.24 Employment Agreement (First Amendment) dated as of December 16, 1992, between Burton A. Honig and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.25 Consulting Agreement dated January 1, 1989 between Mr. Lai Kin, Chairman of Durable, and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988. 10.26 Employment Agreement dated January 3, 1989, between Harry Schulman and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988. 10.27 Employment Agreement (First Amendment) dated as of June 4, 1990, between Harry Schulman and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.28 Employment Agreement (Second Amendment) dated as of December 16, 1992, between Harry Schulman and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.29 1988 Director Stock Option Plan. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988. 10.30 1989 Employees 401(k) Profit Sharing Plan and Trust. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989. 10.31 Consulting Agreement, dated March 30, 1987, between Paragon Industries, Paragon Sales, Inc., William Weber, Jacqueline K. Weber and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990. 10.32 Amendment to Consulting Agreement, dated May 29, 1990, between Paragon Industries, Paragon Sales, Inc., William Weber, Jacqueline K. Weber and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990. 10.33 Second Amended and Restated Employment Agreement dated January 1, 1991, between David O'Neill and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.34 Second Amended and Restated Employment Agreement (First Amendment) dated December 16, 1992, between David O'Neill and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. Other Material Contracts 10.35 Installment Purchase Contract dated as of May 1, 1985, between the Dade County Industrial Development Authority and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1985. 10.36 Asset Purchase Agreement dated September 30, 1988 between Sally Beauty Company, Alberto-Culver Company, the Company and certain of the Company's affiliates. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988. 10.37 Joint Venture Agreement, dated March 30, 1987, between Paragon Sales, Inc., William Weber, Jacqueline K. Weber and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990. 10.38 Amendment to Joint Venture Agreement, dated May 29, 1990, between Paragon Sales, Inc., William Weber, Jacqueline K. Weber and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990. 10.39 Exclusive Sales Agreement dated May 29, 1992 among the Company, American International Industries and Zvi and Betty Ryzman. Incorporated by reference to the Company's Form S-2 Registration Statement No. 33-51776. 10.40 Settlement Agreement dated May 6, 1992 between North American Philips Corporation and the Company. Incorporated by reference to the Company's Form S-2 Registration Statement No. 33-51776. 10.41 Letter of Credit Agreement dated July 31, 1992 between NationsBank and the Company. Incorporated by reference to the Company's Form S-2 Registration Statement No. 33-51776. 10.42 Agreement dated May 28, 1991, between Xingiao Economic Development Corporation and Durable. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.43 Agreement dated May 28, 1991, between Bogang Economic Development Company and Durable. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.44 Agreement dated May 28, 1991, between Wanfeng Economic Development Corporation and Durable. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.45 Warrant Agreement dated October 1, 1992, between American Stock Transfer and Trust Company and the Company. Incorporated by reference to the Company's Form S-2 Registration Statement No. 33- 51776. 10.46 Stock Purchase Agreement dated May 29, 1992 between Glamour Industries, Inc. and the Company. Incorporated by reference to the Company's Form S-2 Registration Statement No. 33-51776. 10.47 Trademark Licensing Agreement dated January 11, 1994, between Helene Curtis, Inc. and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993. 10.48 Stock Acquisition Agreement dated April 1, 1994, between Durable, PPC Industries 1980 Limited, Ourimbah Investment, Limited and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994. 10.49 1995 Common Stock Purchase Rights Agreement dated March 6, 1995 between American Stock Transfer and Trust Company and the Company. Incorporated by reference to the Company's Form 8-A Registration Statement filed March 7, 1995. 10.50 Facility Letter dated June 3, 1995, from the Bank of East Asia, Limited to Durable, Durable Electric Limited and PPC Industries 1980 Limited. Incorporated by reference to the Company's Form 10-Q dated June 30, 1995. 10.51 Amended and Restated Letter Agreement dated July 28, 1995, between NationsBank and the Company. Incorporated by reference to the Company's Form 10-Q dated June 30, 1995. 10.52 Amendment No. 1 to Amended and Restated Letter Agreement, dated March 1, 1996, between NationsBank and the Company. Exhibit 1. (13) Annual Report to Security Holders for the year ended December 31, 1995. Exhibit 13. (22) Subsidiaries of the Registrant. Filed herewith. (24) Consents of experts and counsel. Filed herewith. (b) REPORTS ON FORM 8-K None. REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors and Stockholders Windmere Corporation We have audited the accompanying consolidated balance sheets of Windmere Corporation and Subsidiaries (the "Company") as of December 31, 1995 and 1994, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Windmere Corporation and Subsidiaries at December 31, 1995 and 1994, and the consolidated results of their operations and their consolidated cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. We have also audited Schedule II of Windmere Corporation and Subsidiaries for each of the three years in the period ended December 31, 1995. In our opinion, this schedule presents fairly, in all material respects, the information required to be set forth therein. GRANT THORNTON LLP Miami, Florida February 7, 1996 WINDMERE CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Changes in allowance for possible losses on accounts receivable: Years Ended December 31, 1995 1994 1993 Balance at beginning of period $1,338,100 $1,424,600 $1,635,600 Addition - Charged to costs and expenses 894,700 231,400 212,100 Addition - Charged to other accounts (a) 31,600 31,300 157,300 Deductions (b) (1,106,400) (349,200) (580,400) Balance at end of period $1,158,000 $1,338,100 $1,424,600 (a) Recoveries of amounts previously written off against the reserve. (b) Write-off of accounts receivable against the reserve. Part IV. Item 3. (22). SUBSIDIARIES OF THE REGISTRANT Name Incorporated In Consumer Products Americas, Inc. Florida EDI Masters, Inc. Florida Fortune Products, Inc. Florida Jerdon Products, Inc. Florida Windmere Fan Products, Inc. Florida Windmere Holdings Corporation Delaware Goal Making Company Limited British Virgin Islands Remdale Investments Limited British Virgin Islands Windmere Consumer Products, Inc. Canada Windmere France, S.A.R.L. France Durable Electric, Ltd. Hong Kong Durable Electrical Metal Factory, Ltd. Hong Kong Durable Europe, Ltd. Hong Kong PPC Industries (1980) Ltd. Hong Kong Sandgate Services, Ltd. Hong Kong Windmere Europe, B.V. Netherlands Each of the above subsidiaries is wholly-owned and is included in the consolidated financial statements as of December 31, 1995. AUDITOR'S CONSENT We have issued our report dated February 7, 1996, accompanying the consolidated financial statements and schedules incorporated by reference in the Annual Report of Windmere Corporation on Form 10-K for the year ended December 31, 1995. We hereby consent to the incorporation by reference of the aforementioned report in the Registration Statements of Windmere Corporation on Form S-8 (File No. 33-7681, effective September 30, 1986), Form S-8 (File No. 33-36424, effective August 17, 1990), Form S-2 (File No. 33-51776, effective January 19, 1993), and on Form S-8 (File No. 33-58574, effective February 22, 1993). GRANT THORNTON LLP Miami, Florida March 27, 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. WINDMERE CORPORATION (Registrant) BY: /s/ DATE: 3-26-96 David M. Friedson, President Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. BY: /s/ DATE: 3-26-96 David M. Friedson, Director and President (Principal Executive Officer) BY: /s/ DATE: 3-27-96 Harry D. Schulman, Executive Vice President - Finance and Administration (Principal Financial Officer) BY: /s/ DATE: 3-26-96 Burton A. Honig, Vice President - Finance (Principal Accounting Officer) BY: /s/ DATE: 3-25-96 Bertley Sager, Director BY: /s/ DATE: 3-25-96 Jerald I. Rosen, Director BY: /s/ DATE: 3-25-96 Harold Strauss, Director BY: /s/ DATE: 3-26-96 Lai Kin, Director BY: /s/ DATE: 3-26-96 Raymond So, Director BY: /s/ DATE: 3-26-96 Leonard Glazer, Director BY: /s/ DATE: 3-27-96 Barbara Friedson Garrett, Director BY: /s/ DATE: 3-27-96 Felix S. Sabates, Director EX-1 2 AMENDMENT NO. 1 TO AMENDED AND RESTATED LETTER AGREEMENT AND AMENDED AND RESTATED NOTE THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED LETTER AGREEMENT AND AMENDED AND RESTATED NOTE (the "Amendment") dated March 1, 1996, is made by and between WINDMERE CORPORATION, a Florida corporation (the "Borrower"), and NATIONSBANK, NATIONAL ASSOCIATION (SOUTH) (successor by merger of NationsBank of Florida, National Association), a national banking association, (the "Bank"). W I T N E S S E T H: WHEREAS, the Bank by an Amended and Restated Letter Agreement dated as of July 28, 1995 (the "Agreement"), has agreed to make available and has made available to Borrower a working capital loan of up to $20,000,000, reducing at December 31, 1995 to $10,000,000, and a letter of credit facility of up to $5,000,000; and WHEREAS, the Borrower has requested that the Bank reinstate the additional $10,000,000 of the working capital facility which reduced at December 31, 1995 upon the same terms and conditions existing prior to December 31, 1995 and the Bank is willing to reinstate such amount; NOW, THEREFORE, in consideration of the mutual covenants, promises and conditions herein set forth, it is hereby agreed as follows: 1. The terms "Agreement" and "Note" as used herein and in the Agreement, the Note and the other Loan Documents (as defined in the "Agreement") shall mean the Agreement and the Note as hereby amended and modified. Unless the context otherwise requires, all capitalized terms used herein and in the other Loan Documents without definition shall have the respective meanings provided therefor in the Agreement, as hereby amended. 2. Subject to the conditions set forth in paragraph 5 hereof, the Agreement shall be and hereby is amended, effective as of March 1, 1996, as follows: (a) The second sentence of the first paragraph of the Agreement is amended to read as follows: "The Borrower has requested that the Bank increase the amount of the revolving loan to the principal amount of $20,000,000 and that the Bank increase the letter of credit facility to $10,000,000 to the Borrower." (b) Paragraph 5 of the Agreement is hereby amended in its entirety so that as amended it shall read as follows: "5. Reinstatement. The Committed Amount shall automatically be increased, effective March 1, 1996, from $10,000,000 to $20,000,000 and the Note shall be deemed amended to reflect a Maximum Amount of $20,000,000 from and after March 1, 1996." (c) Paragraph 6 of the Agreement is hereby amended in its entirety so that as amended it shall read as follows: "6. Unused Fee. For the period beginning on the date hereof and ending on the Termination Date (excluding however the period from January 1, 1996 through February 29, 1996), the Borrower will pay to the Bank an unused fee equal to one quarter of a percent (1/4%) per annum multiplied by the amount by which the Committed Amount exceeds the greater of (i) $10,000,000 or (ii) the daily amount of (A) the aggregate undrawn amount of Standby Letters of Credit and (B) Loans outstanding. The unused fee shall be calculated on a basis of a year of 360 days for actual days elapsed and shall be payable quarterly in arrears on the last day of each September, December, March and June." (d) Exhibit E to the Agreement is amended in its entirety so that as amended it reads as attached hereto. 3. The Note shall be and hereby is amended, effective as of March, 1996 in order to define on page one the term "Maximum Amount" to read as follows: "Maximum Amount: $20,000,000" 4. Each of the Domestic Subsidiaries of the Borrower who has previously delivered a Guaranty to the Bank has joined in the execution of this Amendment Agreement for the purpose of consenting to this Amendment Agreement and affirming its respective guaranty of the obligations of Borrower arising under the Agreement as amended by this Amendment Agreement. 5. The Borrower hereby represents and warrants to the Agent and the Bank that as of the date hereof the Agreement has been re- examined by the Borrower and: (i) The representations and warranties made by the Borrower therein and in the other Loan Documents are true, complete and correct in all material respects on and as of the date hereof, are hereby reaffirmed, and shall survive the execution and delivery of the Amendment Agreement; (ii) The execution, delivery and performance of this Amendment Agreement will not conflict with or result in the breach of any of the provisions of, or cause a default under, the Articles of Incorporation or Bylaws of the Borrower, or any applicable law, rule or regulation, or any judgment, order, writ, injunction or decree of any court, administrative agency or other government instrumentality to which the Borrower or any Subsidiary is subject or any agreement or instrument to which the Borrower or any Subsidiary is a party, the effect of which would have any material adverse effect on the ability of the Borrower or any Guarantor to observe the covenants and agreements contained in the Agreement, as amended hereby, or in any other Loan Document or to pay the obligations arising under the Agreement and the Guaranty, and will not result in the creation or imposition of any security interest, lien, charge or encumbrance on any of the assets of the Borrower or any Subsidiary. 6. As conditions to the effectiveness of this Amendment Agreement there shall not have occurred either (i) any Default or Event of Default which shall not have been waived or (ii) any material adverse change in the business, financial condition or operations of the Borrower or any Subsidiary since September 30, 1995. 7. This Amendment Agreement sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. No promise, condition, representation or warranty, express or implied, not herein set forth shall bind any party hereto, and none of them has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as in this Amendment Agreement otherwise expressly stated, no representations, warranties or commitments, express or implied, have been made by any party to the other. 8. Except as specifically amended, modified or supplemented by this Amendment Agreement, all of the other documents delivered in connection with the Loans, as heretofore amended, are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms. 9. Should any stamp or excise tax become payable under the laws of the United States or of any state or any subdivision thereof or municipality therein in respect of the Amendment Agreement, the Borrower shall pay the same (including interest penalties, if any) and shall hold the Bank and the Agent harmless with respect thereto. 10. This Amendment Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be duly executed by their duly authorized officers, all as of the day and year first above written. WINDMERE CORPORATION WITNESS: __________________________ By :________________________________ Name: John Heinlein __________________________ Title: Treasurer NATIONSBANK, NATIONAL ASSOCIATION (SOUTH) By:________________________________ Name: Bennie H. Duck, Jr. Title: Vice President The undersigned hereby acknowledge, agree to and consent to the terms and provisions hereof, as of this 1st day of March, 1996. WITNESS: WINDMERE HOLDINGS CORPORATION _________________________ By: ________________________________ Name: John Heinlein _________________________ Title: Secretary WITNESS: WINDMERE FAN PRODUCTS, INC. _________________________ By: ________________________________ Name: John Heinlein _________________________ Title: Treasurer WITNESS: JERDON PRODUCTS, INC. _________________________ By: ________________________________ Name: John Heinlein _________________________ Title: Secretary WITNESS: CONSUMER PRODUCTS AMERICAS, INC. _________________________ By: ________________________________ Name: John Heinlein _________________________ Title: Secretary WITNESS: FORTUNE PRODUCTS, INC. _________________________ By: ________________________________ Name: John Heinlein _________________________ Title: Treasurer WITNESS: EDI MASTERS, INC. _________________________ By: ________________________________ Name: John Heinlein _________________________ Title: Vice President EXHIBIT E Indebtedness (a) Dade County Industrial Development Authority Variable Rate Demand Industrial Development Revenue Bonds (Windmere Corporation Project) Series 1985 ($7,500,000), and related documents thereto, including, but not limited to, (i) Guaranty Agreement, dated as of May 1, 1985, between Windmere Corporation and Bankers Trust Company, and (ii) Letter of Credit Agreement, dated as of July 31, 1992, between Windmere Corporation and NationsBank of Florida, N.A. (b) Banking Facility or Facilities in an aggregate principal amount not to exceed $8,000,000 granted by the Bank of East Asia, Limited or other financial institution to Durable Electrical Metal Factory, Ltd. and/or other Subsidiaries. (c) Guarantee by Windmere Corporation of the Indebtedness described in (b) above. (d) Equipment leases existing at July 28, 1995. (e) $5,000,000 Standby Letter of Credit from Bank of Tokyo Limited-Hong Kong (through Miami office) to provide working capital. (f) Subordinated Note in the amount of $10,847,620 payable to Salton/Maxim Housewares, Inc. EX-13 3 FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS WINDMERE CORPORATION AND SUBSIDIARIES December 31, 1995 and 1994 Board of Directors and Stockholders Windmere Corporation We have audited the accompanying consolidated balance sheets of Windmere Corporation and Subsidiaries (the "Company") as of December 31, 1995 and 1994, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above resent fairly, in all material respects, the consolidated financial position of Windmere Corporation and Subsidiaries at December 31, 1995 and 1994, and the consolidated results of their operations and their consolidated cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Miami, Florida February 7, 1996 Windmere Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS December 31, ASSETS 1995 1994 CURRENT ASSETS Cash and cash equivalents (Note A) $17,768,100 $12,988,300 Short-term investments (Note A) - 2,500,000 Accounts and other receivables, less allowances of $1,158,000 in 1995 and $1,338,100 in 1994 (Note E) 36,597,300 38,733,300 Receivables from affiliates (Notes A and C) 9,982,800 12,444,300 Inventories (Note A) 79,013,600 74,278,400 Prepaid expenses (Note I) 2,183,600 8,020,500 Future income tax benefits (Notes A and I) 1,642,900 1,883,400 Total current assets 147,188,300 150,848,200 INVESTMENTS (Notes A and C) - - PROPERTY, PLANT AND EQUIPMENT - AT COST, less accumulated depreciation (Notes A and D) 30,484,700 28,449,100 OTHER ASSETS (Notes A and B) 10,338,900 17,826,700 $188,011,900 $197,124,000 LIABILITIES CURRENT LIABILITIES Notes and acceptances payable (Note E) $ 42,300 $ 740,100 Current maturities of long-term debt (Note G) 814,800 814,800 Accounts payable 9,979,700 8,120,000 Accrued expenses (Note F) 8,127,800 8,981,700 Income taxes (Notes A and I) - 2,312,600 Deferred income, current portion (Note A) 598,100 598,100 Total current liabilities 19,562,700 21,567,300 LONG-TERM DEBT, less current maturities (Note G) 2,851,800 3,666,700 DEFERRED INCOME, less current portion (Note A) 666,900 1,265,000 COMMITMENTS AND CONTINGENCIES (Note J) - - STOCKHOLDERS' EQUITY (Notes A, K, L and P) Special preferred stock - authorized 40,000,000 shares of $.01 par value; none issued - - Common stock - authorized 40,000,000 shares of $.10 par value; issued 16,713,053 in 1995 and 16,734,172 in 1994 1,671,300 1,673,400 Paid-in capital 30,173,000 30,648,700 Retained earnings 133,851,400 139,088,800 Unrealized foreign currency translation adjustment (765,200) (785,900) Total stockholders' equity 164,930,500 170,625,000 $188,011,900 $197,124,000 The accompanying notes are an integral part of these statements. Windmere Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS Years ended December 31, 1995 1994 1993 Net sales $187,776,900 $181,112,200 $170,661,400 Cost of goods sold 146,907,300 132,185,700 122,772,300 Gross profit 40,869,600 48,926,500 47,889,100 Selling, general and administrative expenses 37,625,100 35,531,600 36,447,900 Unusual or non-recurring items (Note B) 8,000,000 (7,810,500) - Operating profit (loss) (4,755,500) 21,205,400 11,441,200 Other (income) expense Interest expense 578,300 551,900 819,800 Interest and other income (2,561,800) (2,385,800) (2,187,700) (1,983,500) (1,833,900) (1,367,900) Earnings (loss) before equity in net earnings (loss) of joint venture, income taxes, minority interest and cumulative effect of accounting change (2,772,000) 23,039,300 12,809,100 Equity in net earnings (loss) of joint venture (Notes A and C) (392,600) 91,400 (503,900) Earnings (loss) before income taxes, minority interest and cumulative effect of accounting change (3,164,600) 23,130,700 12,305,200 Income taxes (benefit) (Notes A and I) Current (1,242,700) 2,375,700 1,468,000 Deferred (38,100) 218,800 (103,500) (1,280,800) 2,594,500 1,364,500 Earnings (loss) before minority interest and cumulative effect of accounting change (1,883,800) 20,536,200 10,940,700 Minority interest in net (profit) loss of subsidiary - 1,200 (1,202,600) Earnings (loss) before cumulative effect of accounting change (1,883,800) 20,537,400 9,738,100 Cumulative effect of accounting change (Note I) - - 1,731,100 Net earnings (loss) $(1,883,800) $20,537,400 $11,469,200 Per share data (Note A) Earnings (loss) per common share and common equivalent shares Earnings (loss) before cumulative effect of accounting change $(.11) $1.17 $ .60 Cumulative effect of accounting change - - .11 Net earnings (loss) $(.11) $1.17 $ .71 Dividends per common share $.20 $ .15 $ - The accompanying notes are an integral part of these statements. Windmere Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Three years ended December 31, 1995 Unrealized foreign currency Common Paid-in Retained translation stock capital earnings adjustment Balance at January 1, 1993 $ 1,535,700 $22,546,400 $109,617,300 $(777,000) Net earnings - - 11,469,200 - Exercise of stock options and warrants 42,400 1,829,800 - - Tax benefit resulting from exercise of stock options - 257,100 - - Unrealized foreign currency translation adjustment - - - 66,300 Balance at December 31, 1993 1,578,100 24,633,300 121,086,500 (710,700) Net earnings - - 20,537,400 - Cash dividends - $.15 per share - - (2,535,100) - Acquisition of additional 20% interest in Durable Electrical Metal Factory, Ltd. ("Durable") 100,000 7,900,000 - - Purchase and retirement of 397,400 shares of common stock (39,700) (3,858,900) - - Exercise of stock options and warrants 35,000 1,645,800 - - Tax benefit resulting from exercise of stock options - 328,500 - - Unrealized foreign currency translation adjustment - - - (75,200) Balance at December 31, 1994 1,673,400 30,648,700 139,088,800 (785,900) Net (loss) - - (1,883,800) - Cash dividends - $.20 per share - - (3,353,600) - Purchase and retirement of 139,600 shares of common stock (14,000) (997,400) - - Exercise of stock options and warrants 11,900 414,400 - - Tax benefit resulting from exercise of stock options - 242,800 - - Cost of intercompany recapitalization - (135,500) - - Unrealized foreign currency translation adjustment - - - 20,700 Balance at December 31, 1995 $1,671,300 $30,173,000 $133,851,400 $(765,200) The accompanying notes are an integral part of these statements. Windmere Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 1995 1994 1993 Cash flows from operating activities Net earnings (loss) $(1,883,800) $20,537,400 $11,469,200 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities Depreciation of property, plant and equipment 6,218,300 5,378,500 5,151,800 Amortization of intangible assets 561,100 440,100 553,600 Loss on sale of other asset 8,000,000 - - Net change in allowance for losses on accounts receivable (180,100) (86,500) (211,000) Gain on sale of fixed asset - (7,810,500) - Amortization of deferred income (598,100) (598,100) (598,200) Equity in (earnings) losses of joint venture 392,600 (91,400) 503,900 Increase (decrease) in minority interest - (1,200) 1,493,600 Changes in assets and liabilities Decrease (increase) in accounts and other receivables 2,316,100 (7,378,200) 4,834,800 Decrease (increase) in inventories (4,735,200) (7,120,900) 1,383,600 Decrease (increase) in prepaid expenses 5,836,900 (1,029,600) (4,328,200) Increase (decrease) in accounts payable and accrued expenses 1,005,800 (1,845,600) (1,340,500) Increase (decrease) in current and deferred income taxes (1,829,300) 2,695,900 (1,738,600) Decrease in notes and acceptances payable (697,800) (2,255,700) (2,816,000) Decrease (increase) in other assets (1,073,300) (294,800) 569,000 Increase in current maturities of long-term debt - - 814,800 Decrease (increase) in other accounts 20,700 (75,200) 66,300 Net cash provided by operating activities 13,353,900 464,200 15,808,100 Cash flows from investing activities Proceeds from fixed asset sales 129,600 9,442,000 262,900 Additions to property, plant and equipment (8,383,500) (10,436,900) (5,891,000) (Decrease) increase in short-term investments 2,500,000 (2,500,000) - Other changes in investments in affiliates - - (437,200) Sale of investments - - 242,600 Decrease (increase) in receivables from affiliates 2,068,900 (3,186,300) 2,449,900 Decrease in restricted cash - - 6,212,000 Net cash provided by (used in) investing activities (3,685,000) (6,681,200) 2,839,200 Cash flows from financing activities Payments of long-term debt (814,900) (836,500) (3,019,300) Exercises of stock options and warrants 426,300 1,680,800 1,872,200 Cash dividends paid (3,353,600) (2,535,100) - Purchases of common stock (1,011,400) (3,898,600) - Cost of intercompany recapitalization (135,500) - - Net cash used in financing activities (4,889,100) (5,589,400) (1,147,100) Increase (decrease) in cash and cash equivalents 4,779,800 (11,806,400) 17,500,200 Cash and cash equivalents at beginning of year 12,988,300 24,794,700 7,294,500 Cash and cash equivalents at end of year $17,768,100 $ 12,988,300 $24,794,700 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the year for: Interest $ 488,500 $ 502,200 $ 593,900 Income taxes $2,181,800 $1,927,300 $2,353,500 Non-cash investing and financing activities: Common stock issued for additional investment in Durable (Note A) $ - $8,000,000 $ - Tax benefit resulting from exercise of stock options $ 242,800 $ 328,500 $ 257,100 The accompanying notes are an integral part of these statements. Windmere Corporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1995, 1994 and 1993 NOTE A - SUMMARY OF ACCOUNTING POLICIES Windmere Corporation and Subsidiaries (the "Company") is principally engaged in the manufacture and sale of personal care, kitchen electric and seasonal products. In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. A summary of the Company's significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions are eliminated in consolidation. The Company reflects its investment in its 50%-owned joint venture at cost plus its equity in undistributed net earnings. Foreign Currency Translation Balance sheet accounts of the Company's foreign operations are translated at the exchange rate in effect at each year end and income statement accounts are translated at the average exchange rates prevailing during the year. Adjustments resulting from this translation process are accumulated in a separate component of stockholders' equity and are not included in the determination of net earnings. The Company's foreign manufacturing subsidiary utilizes the local currency as its functional currency, and the other foreign subsidiaries primarily utilize the U.S. dollar as their functional currency. Cash and Cash Equivalents Short-Term Investments The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Similar investments with maturities between three months and one year at the time of purchase are classified as short-term investments. Inventories Inventories are stated at the lower of cost or market; cost is determined by the first-in, first-out method. Inventories are comprised of the following: 1995 1994 Raw materials $16,327,900 $18,993,200 Work in process 21,085,300 15,155,900 Finished goods 41,600,400 40,129,300 $79,013,600 $74,278,400 Receivables from Affiliates Receivables from affiliates arise primarily in the ordinary course of business, are interest bearing and are settled as trade obligations. Property, Plant and Equipment Depreciation and amortization are provided for in amounts sufficient to relate the cost of depreciable assets to their estimated operating service lives using accelerated and straight-line methods. Intangible Assets Intangible assets, consisting primarily of goodwill, are being amortized on a straight-line basis over twenty years. Intangible assets were $10,113,700 and $10,169,300 at December 31, 1995 and 1994, respectively, and the related accumulated amortization was $2,126,800 and $1,660,900, respectively. In 1994, the Company acquired the 20% interest in Durable that it did not already own. The purchase price consisted of the delivery of one million shares of the Company's common stock, valued at $8,000,000, and a cash payment of $10,000. This acquisition was accounted for as a purchase. Goodwill of $5,211,000 was recognized on the transaction. On an ongoing basis, management reviews the valuation and amortization of goodwill. As part of this review, the Company estimates the value and future benefits of the net income generated by the related subsidiaries to determine that no impairment has occurred. In March 1995, the Financial Accounting Standards Board issued Statement 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to Be Disposed Of." This Statement had no impact on the Company's results of operations or financial position upon adoption in January 1996. Fair Value of Financial Instruments The carrying values of cash and cash equivalents, trade receivables and accounts payable approximate fair value due to the short-term maturities of these instruments. Income Taxes No provision has been made for U.S. taxes on undistributed earnings of foreign subsidiaries and joint ventures of approximately $104,000,000 at December 31, 1995, as it is anticipated that such earnings will be reinvested in their respective operations or in other foreign operations. Deferred taxes have been provided on temporary differences in reporting certain transactions for financial accounting and tax purposes. Deferred Income In 1992, the Company granted an exclusive license for the distribution of a product. Deferred income of $1,340,600 resulted from this transaction, which will be reported as other income on a straight-line basis over the five year license term. In 1988, the Company sold its Save-Way Beauty Supply stores for a gain of approximately $6,980,000, $3,300,000 of which was allocated to a ten-year covenant not to compete that is being amortized to other income on a straight-line basis. Earnings Per Share Earnings per share are based upon the weighted average number of common shares and common equivalent shares outstanding during each year. The total number of such weighted average shares was 17,227,000 in 1995, 17,589,000 in 1994, and 16,212,000 in 1993. Stock options and warrants are considered common stock equivalents unless their inclusion would be antidilutive. Stock Options Options granted under the Company's Stock Option Plans are accounted for under APB 25, "Accounting for Stock Issued to Employees," and related interpretations. In November 1995, the Financial Accounting Standards Board issued Statement 123, "Accounting for Stock-Based Compensation," which will require additional proforma disclosures for companies that will continue to account for employee stock options under the intrinsic value method specified in APB 25. The Company plans to continue to apply APB 25 and the only effect of adopting Statement 123 in 1996 will be the new disclosure requirement. Reclassifications Certain prior year amounts within the accompanying financial statements have been reclassified for comparability. NOTE B - UNUSUAL OR NON-RECURRING ITEMS In 1995, the Company incurred a non-recurring pre-tax loss of $8,000,000 on the sale of an other asset. This transaction reduced 1995 net earnings by $5,280,000, or $.31 per share, on an after-tax basis. In 1994, Durable sold 60,000 square feet of office space in Hong Kong, for $9,500,000. This transaction generated a non-recurring profit of $7,810,500, or approximately $.45 per share. No taxes were provided as the gain was not taxable. NOTE C - INVESTMENTS Investments are comprised of the following: 1995 1994 Joint venture - at cost plus equity in undistributed earnings $ - $ - The Company's joint venture investment at December 31, 1995 and 1994 had negative values of approximately $800,000 and $400,000, respectively, which deficits have been classified as a reduction in receivables from affiliates. The following table provides financial data for the joint venture, which is accounted for on the equity method: 1995 1994 Current assets $9,657,400 $12,967,600 Non-current assets 35,100 17,900 Total assets $9,692,500 $12,985,500 Current liabilities $11,317,100 $13,773,200 Non-current liabilities - - Total liabilities $11,317,100 $13,773,200 Sales $30,171,600 $30,184,500 Gross profit $ 2,346,000 $ 3,572,500 Net earnings (loss) $ (785,200) $ 182,800 All sales made by the joint venture were to entities other than members of the consolidated group. Included in the Company's sales are sales made to the joint venture of approximately $7,485,300 and $8,621,000 in 1995 and 1994, respectively. NOTE D - PROPERTY, PLANT AND EQUIPMENT The following is a summary of property, plant and equipment: 1995 1994 Building $4,493,100 $4,493,100 Building improvements 589,700 389,000 Computer equipment 4,697,600 4,959,000 Furniture and equipment 55,197,000 49,470,700 Leasehold improvements 3,283,300 1,890,800 Land and land improvements 2,650,600 2,650,600 70,911,300 63,853,200 Less accumulated depreciation and amortization 40,426,600 35,404,100 $30,484,700 $28,449,100 NOTE E - NOTES AND ACCEPTANCES PAYABLE The Company's foreign subsidiaries (the "subsidiaries") have $6,400,000 in trade finance lines of credit, payable on demand, which are secured by the subsidiaries' tangible and intangible property located in Hong Kong and in the People's Republic of China, as well as a Company guarantee. At December 31, 1995, the subsidiaries were utilizing, including letters of credit, approximately $600,000 of these credit lines. These subsidiaries also have available an additional $5,000,000 line of credit which is supported by a domestic standby letter of credit, which credit line was not being used at December 31, 1995. The Company has a $20,000,000 line of credit from a domestic bank, which is secured by domestic accounts receivable. At December 31, 1995, there were no outstanding borrowings under this credit line. NOTE F - ACCRUED EXPENSES Accrued expenses are summarized as follows: 1995 1994 Advertising allowances $ 971,400 $1,896,800 Salaries and bonuses 1,611,100 1,958,800 Volume rebates 1,022,700 1,081,200 Other 4,522,600 4,044,900 $8,127,800 $8,981,700 NOTE G - LONG-TERM DEBT Long-term debt is summarized as follows: 1995 1994 Industrial development revenue bonds $3,666,600 $4,481,500 Less current maturities 814,800 814,800 Total long-term debt $2,851,800 $3,666,700 In 1985, the Company received proceeds of $7,500,000 from the issuance of tax-exempt industrial development revenue bonds. The bonds are being paid off in equal quarterly principal payments of $203,700 through May 2000. At December 31, 1995, the interest rate on the bonds was 6.70%. The bonds include certain covenants which provide, among other things, restrictions relating to the maintenance of minimum levels of working capital, net worth and other financial ratios. NOTE H - EMPLOYEE BENEFIT PLANS The Company has a 401(k) plan for its employees to which the Company makes discretionary contributions at rates dependent on the level of each employee's contributions. Contributions made by the Company are limited to the maximum allowable for federal income tax purposes. The amounts charged to earnings for this plan during the three years ended December 31, 1995 were not significant. The Company does not provide any health or other benefits to retirees. NOTE I - INCOME TAXES Income tax expense (benefit) consists of the following: 1995 1994 1993 Current Federal $(1,392,300) $2,156,000 $1,286,400 Foreign 183,800 72,900 125,500 State (34,200) 146,800 56,100 (1,242,700) 2,375,700 1,468,000 Deferred (38,100) 218,800 (103,500) $(1,280,800) $2,594,500 $1,364,500 The analysis of the deferred income tax provision (benefit) representing the tax effects of temporary differences between tax and financial reporting is as follows: 1995 1994 1993 Intercompany profit in inventory $(72,500) $ - $ - Differences in timing between financial and tax reporting 49,300 15,000 (302,600) Utilization of net operating loss carryforward 220,100 413,500 477,700 Deferred income 224,300 55,300 68,300 Depreciation and amortization (303,800) (248,900) (204,400) Other (155,500) (16,100) (142,500) $(38,100) $218,800 $(103,500) The United States and foreign components of earnings (loss) before income taxes are as follows: 1995 1994 1993 United States $(8,056,300) $7,449,500 $3,979,400 Foreign 4,891,700 15,681,200 8,325,800 $(3,164,600) $23,130,700 $12,305,200 The differences between the statutory rates and the tax rates computed on pre-tax profits are as follows: 1995 1994 1993 % % % Tax expense (benefit) at statutory rates (34.0)% 34.0% 34.0% State taxes, net of federal tax benefit (.7) .4 .5 Foreign (income) loss not subject to tax 2.6 (15.9) (11.0) Provision for prior years' Hong Kong income taxes 12.3 (5.9) - Net tax rate differential on undistributed foreign earnings(25.6) (2.0) (14.5) Equity in joint venture earnings not subject to U.S. tax or already taxed (4.2) .1 1.4 Effect of gross up of foreign taxes, net of foreign tax credit (4.1) - - Federal withholding taxes 7.8 - - Other 5.4 .5 .6 (40.5)% 11.2% 11.0% In the third quarter of 1995, the Company reached an agreement with the Hong Kong Inland Revenue Department concerning the taxes assessed against the Company's consolidated Hong Kong subsidiaries through 1991. The assessment, including interest charges and net of U.S. foreign tax credits, approximates $1,400,000. The Company made a provision in its 1995 second quarter of $400,000 or $.02 per share, to increase its contingency reserve to the settlement amount. Security deposits of approximately $3,000,000 were refunded to the Company during the fourth quarter of 1995. Hong Kong tax returns for the fiscal years 1992 through 1994 have also been audited and accepted as filed. The Internal Revenue Service is currently examining the Company's 1992 tax return. To date, no material adjustments have been proposed. Management believes that adequate provision for taxes has been made for the years under examination and those not yet examined. The Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," on January 1, 1993, which changed the Company's method of accounting for income taxes to an asset and liability approach. The cumulative effect of this change in the method of accounting for income taxes, after minority interest in the portion relating to Durable, was a benefit of $1,731,100 or $.11 per share. The cumulative effect adjustment primarily consists of the tax benefit associated with Durable's net operating loss carryforward. A valuation allowance has not been recorded limiting such benefits based on management's current estimate that future profits will be sufficient to realize these benefits. A valuation allowance for the entire tax benefit of the net operating losses primarily accumulated by the Company's European subsidiary has been provided as the realizability of the benefits of such net operating losses is not assured. The primary components of future income tax benefits at December 31, 1995 are as follows: Net operating loss carryforwards (net of valuation allowances of $171,000) $ 244,100 Depreciation and amortization 76,300 Deferred income 513,300 Differences in timing between financial and tax reporting 1,708,500 Other 170,900 2,713,100 Less amount included in other assets 1,070,200 $1,642,900 The tax benefits resulting from the exercise of stock options have been recorded as additions to paid-in capital in the amounts of $242,800 and $328,500 in 1995 and 1994, respectively. NOTE J - COMMITMENTS AND CONTINGENCIES Litigation In April 1994, Kabushiki Kaisha Izumi Seiki Seisakusho, a Japanese corporation ("Izumi"), filed an action against the Company, David M. Friedson, the President and Chief Executive Officer of the Company, U.S. Philips Corporation, North American Philips Corporation and N.V. Philips Gloellampenfabrieken (together, "Philips"). This action concerns the 1992 settlement (the "Philips Settlement") of certain claims, primarily a Federal antitrust claim, made by the Company against Philips, which resulted in an $89,644,257 judgment in favor of the Company. Pursuant to the Philips Settlement, Philips paid the Company $57,000,000 in May 1992. As part of the Philips Settlement, the Company and Philips agreed that the Company's money judgment against Philips in connection with such antitrust litigation would be vacated. Izumi is claiming, among other things, that the Philips Settlement, including the agreement with Philips to cooperate to vacate the related judgment in favor of the Company, constitutes a breach by the Company of a customary indemnification agreement between Izumi (as seller of goods) and the Company (as buyer of goods) dated February 20, 1984. This indemnification agreement covered certain claims against the Company and was entered into more than eight months prior to the commencement of the Philips litigation in connection with the routine purchase by the Company of goods from Izumi. Izumi advanced certain legal fees and costs to the Company in connection with the Philips litigation. Izumi is further claiming that it is entitled to recover from the Company an unspecified portion of the Philips Settlement, punitive damages and reimbursement of litigation and other related costs and expenses. The Company disagrees with Izumi's position and believes that it has meritorious defenses to these claims by Izumi. A pre-answer motion by the Company has resulted in the dismissal of some of Izumi's claims, and the Company has answered the remaining claims. The Company intends to defend this action fully and vigorously. In addition, in June 1995, Izumi filed another lawsuit against the Company and Philips. In this second lawsuit, Izumi sought equitable relief in the form of reinstatement of the 1990 judgments in the Company's favor against Philips, which were vacated. This complaint was amended to include Sears, Roebuck and Company ("Sears") as a co-plaintiff and to seek reinstatement of an unfair competition judgment only. In December 1995, this second lawsuit was dismissed by the Court. Izumi and Sears filed notices of appeal, but subsequently withdrew the appeal. The Company is also subject to other legal proceedings, product liability and other claims which arise in the ordinary course of its business. In the opinion of management, the amount of ultimate liability, if any, in excess of applicable insurance coverage, is not likely to have a material effect on the financial position of the Company. However, as the outcome of litigation or other legal claims is difficult to predict, significant changes in the estimated exposures could occur. Employment Agreements The Company has entered into employment agreements with several of its executive officers for periods ranging from two to five years. The agreements provide the employees with an option to terminate their agreements and receive lump sum payments of up to five years compensation if there is a change in control of the Company. Other In April 1994, the Company purchased from Ourimbah Investment, Limited ("Ourimbah") the remaining 20% of the issued and outstanding capital stock of Durable (the "Purchased Shares") which had not, prior to such purchase, been owned, directly or indirectly, by the Company. In connection with such purchase, the Company agreed to make an additional payment to Ourimbah for the Purchased Shares upon the occurrence of a change of control of the Company on or before July 1, 1999. Any such additional payment will be in an amount with respect to each Purchased Share equal to the greater of (i) the same multiple of earnings per share of Durable as the highest multiple of earnings per share paid for the shares of common stock of the Company received in connection with such change of control or (ii) the same multiple of net asset value per share of Durable as the highest multiple of price per net asset value per share paid for the shares of common stock of the Company received in connection with such change of control. For purposes of determining whether any such additional payment is required, a change of control will be deemed to have occurred upon (i) the acquisition by any person of 50% or more of the then outstanding shares of common stock of the Company, (ii) a change in the majority of the members of the Company's board of directors who are serving as of the date of the purchase agreement or (iii) the approval by the Company's shareholders of (A) a reorganization, merger or consolidation in which the shareholders of the Company prior to such transaction do not, immediately thereafter, own more than 50% of the combined voting power of the Company following such transaction, (B) a liquidation of dissolution of the Company or (C) a sale of all or substantially all of the Company's assets. No change of control will be deemed to have occurred in connection with any transaction approved by a majority of the members of the board of directors. NOTE K - STOCKHOLDERS' EQUITY Stock Options The 1982 and 1992 Employees' Incentive Stock Option Plans provide for granting of options of not more than 1,200,000 shares and 500,000 shares, respectively, of common stock at a price based upon the fair market value at the date the options are granted. Options granted under the plans are exercisable in equal annual installments during a five or six year period beginning one year after the date the option is granted. Qualified incentive stock option activity is summarized as follows: Option price Shares per share Options outstanding January 1, 1994 487,400 $3.25 - $6.38 Granted 147,500 $7.13 - $9.75 Exercised (161,695) $3.25 - $6.38 Expired or cancelled (8,000) $5.13 Options outstanding December 31, 1994 465,205 $3.25 - $9.75 Granted 89,500 $6.13 - $7.88 Exercised (88,000) $3.25 - $7.13 Expired or cancelled (75,200) $3.25 - $9.75 Options outstanding December 31, 1995 391,505 Options exercisable December 31, 1995 182,505 As of December 31, 1995, the options outstanding pursuant to the 1982 and 1992 plans were 156,005 and 235,500, respectively, of which 145,505 shares were exercisable under the 1982 plan and 37,000 shares were exercisable under the 1992 plan. Non-qualified stock options have also been granted by the Company. Their activity is summarized as follows: Option price Shares per share Options outstanding January 1, 1994 741,967 $ 2.88 - $17.38 Granted 901,200 $ 7.00 - $10.88 Exercised (80,500) $ 2.88 - $ 8.00 Expired or cancelled (61,190) $ 3.25 - $16.63 Options outstanding December 31, 1994 1,501,477 $ 2.88 - $17.38 Granted 16,500 $ 8.56 Exercised (23,000) $ 3.25 - $ 6.00 Expired or cancelled (20,000) $ 17.38 Options outstanding December 31, 1995 1,474,977 Options exercisable December 31, 1995 1,045,977 No amount has been charged to income under the above plans. Warrants As part of a lawsuit settlement, warrants to purchase 750,423 shares of the Company's common stock have been issued. The warrants have an exercise price of $7.50 per share and are exercisable through January 19, 1998. At December 31, 1995, 199,189 warrants have been exercised. Common Stock Purchase Rights Plan In March 1995, the Company implemented a Common Stock Purchase Rights Plan and distributed one Right for each share of the Company's common stock outstanding. The Rights are not exercisable or transferable, apart from the Company's common stock, until after a person or group acquires, or has the right to acquire, beneficial ownership of 15 percent or more of the Company's common stock (which threshold may, under certain circumstances, be reduced to 10 percent) or announces a tender or exchange offer to acquire such percentage of the Company's common stock. Each Right entitles the holder to purchase one quarter of one share of common stock at an exercise price of $25.00 per full share and contains provisions that entitle the holder in the event of specific transactions, to purchase common stock of the Company or any acquiring or surviving entity at one-half of market price as determined under the terms of the Rights Agreement. The Rights will expire in March 2005, unless previously exercised or redeemed at the option of the Company for $.00001 per Right. NOTE L - SPECIAL PREFERRED STOCK During 1986, the Company was authorized to issue 40,000,000 shares of $.01 par value special preferred stock purchase rights for each share of common stock, par value $.10 per share. These rights entitled the holder to purchase one share of special preferred stock at a price of $.01 under certain conditions in connection with preserving for the Company and its stockholders the benefits of any recovery in the Company's lawsuit with North American Philips Corporation, et al. In 1992, these conditions ceased to apply, therefore, the special preferred stock rights remain outstanding but have no continuing application. NOTE M - GEOGRAPHIC AREA INFORMATION 1995 1994 1993 Revenues United States operations $126,959,000 $136,500,000 $126,114,200 International operations Sales to unaffiliated customers 60,817,900 44,612,200 44,547,200 Transfers between geographical areas 83,517,400 85,070,700 72,783,100 Eliminations (83,517,400) (85,070,700) (72,783,100) $187,776,900 $181,112,200 $170,661,400 Operating profit United States operations $(7,774,000) $ 5,799,000 $ 3,133,900 International operations 1,854,500 15,853,400 9,141,100 Eliminations 1,164,000 (447,000) (833,800) Operating profit (loss) (4,755,500) 21,205,400 11,441,200 Equity in net earnings (loss) of joint ventures (392,600) 91,400 (503,900) Interest expense (578,300) (551,900) (819,800) Interest and other income 2,561,800 2,385,800 2,187,700 Consolidated earnings (loss) before income taxes, minority interest and cumulative effect of accounting change $(3,164,600) $23,130,700 $12,305,200 Identifiable assets United States operations $101,555,700 $112,339,500 $92,237,200 International operations 145,714,800 123,670,900 110,311,200 Eliminations (59,258,600) (38,886,400) (22,069,100) Consolidated assets $188,011,900 $197,124,000 $180,479,300 Transfers between geographic areas are billed at negotiated prices. In 1995, the United States operations' operating profit includes an $8,000,000 loss on the sale of an other asset. In 1994, the international operations' operating profit includes a $7,810,500 gain on the sale of Hong Kong office space. All United States revenues are derived from sales to unaffiliated customers. Included in domestic revenues and operating profit are certain sales derived from direct product shipments from Hong Kong to customers located in the United States. International operations are conducted in Canada, Hong Kong, Europe and the People's Republic of China. NOTE N - CONCENTRATION OF CREDIT AND OTHER RISKS The Company sells on credit terms to a majority of its customers, most of which are U.S. and Canadian retailers and distributors located throughout those countries. Wal-Mart Stores, Inc. accounted for 13.1%, 17.8% and 19.3% of the Company's sales in 1995, 1994 and 1993, respectively. In 1995, a kitchen electric appliance distributor accounted for 11.4% of the Company's sales. The Company's allowance for doubtful accounts is based on management's estimates of the creditworthiness of its customers, and, in the opinion of management is believed to be set in an amount sufficient to respond to normal business conditions. Should such conditions deteriorate or any major credit customer default on its obligations to the Company, this allowance may need to be increased which may have an adverse impact upon the Company's earnings. The Company produces the vast majority of its products in its facilities in the People's Republic of China ("PRC"). The Company is subject to the risk that political or economic upheaval in the PRC could cause production disruptions and/or increases to its costs, although no such events have occurred in over five years. Presently, products imported into the U.S. from the PRC are subject to favorable duty rates based on the "Most Favored Nation" status of the PRC ("MFN Status"). MFN Status is renewed on an annual basis by the President and Congress. If political or economic instability in the PRC develops or if higher duties were applied to imports into the U.S., the Company could experience a material adverse impact on its revenues and earnings. NOTE O - RELATED PARTY TRANSACTIONS The Company has used the services of Top Sales Company, Inc. ("Top Sales"), an independent sales representative, since 1978. A member of the Company's Board of Directors is the sole shareholder and Chief Executive Officer of Top Sales. The Company made commission payments to Top Sales of $556,400, $719,600 and $575,500 in 1995, 1994 and 1993, respectively. In 1986, the Company made a non-interest bearing loan of $78,000 to a director of the Company. The entire amount of such loan was outstanding during the current year. During 1995, the Company made a series of personal loans bearing interest at prevailing market rates to the Company's President and Chief Executive Officer. At December 31, 1995, the loan balance was $680,200. NOTE P - SUBSEQUENT EVENT In February 1996, the Company signed an agreement with Salton/Maxim Housewares, Inc. ("Salton"), whereby it will acquire a 50% ownership interest in Salton. The Company will issue to Salton 748,112 shares of its common stock, a $10,847,620 note, and a cash payment of $3,254,286. The closing of the transaction, currently anticipated in June 1996, is subject to a number of conditions including the Company and Salton entering into mutually satisfactory commercial agreements, the Board of Directors of Salton receiving a fairness opinion, and approval of the transaction by the shareholders of Salton. SUPPLEMENTAL FINANCIAL DATA Quarterly Financial Data (Unaudited) The quarterly results for the years 1995 and 1994 are set forth in the following tabulation. Net Earnings Gross Earnings (Loss) Sales Profit (Loss) Per Share 1995 First quarter $37,930,100 $9,135,600 $ 305,200 $ .02 Second quarter 42,102,100 9,073,600 936,000 .05 Third quarter 52,681,300 11,220,800 871,600 .05 Fourth quarter 55,063,400 11,439,600 (3,996,600)* (.23) Total $187,776,900 $40,869,600 $(1,883,800) $ (.11) 1994 First quarter $31,191,600 $8,008,700 $ 447,400 $ .03 Second quarter 41,962,000 11,278,900 9,940,800 ** .57 Third quarter 55,885,000 16,318,000 5,837,900 .33 Fourth quarter 52,073,600 13,320,900 4,311,300 .24 Total $181,112,200 $48,926,500 $20,537,400 $1.17 * Includes an after-tax non-recurring loss on the sale of an other asset of $5,280,000, or $.31 per share. ** Includes a non-recurring gain on the sale of Hong Kong office space of $7,810,500, or $.45 per share. Quarterly Stock Quotations and Dividends Per Share The Company's common stock is traded on the New York Stock Exchange under the symbol WND. High and low market prices and dividends paid per share in 1995 and 1994, by quarters, are as follows: Market Price Cash High Low Dividends 1995 Fourth quarter 7-3/8 6 $ .05 Third quarter 8-1/4 7-1/4 .05 Second quarter 9 7-5/8 .05 First quarter 9-3/4 7-5/8 .05 $ .20 1994 Fourth quarter 11-1/8 7-5/8 $ .05 Third quarter 12 9-3/8 .05 Second quarter 11-7/8 7-3/4 .05 First quarter 8-1/2 6-3/4 .00 $ .15 The approximate number of holders of common stock of the Company, as of December 31, 1995, was 1,400. This number does not include any adjustment for shareholders owning common stock in the Depository Trust name or otherwise in "Street" name, which the Company believes represents an additional 6,300 shareholders. EX-27 4
5 12-MOS DEC-31-1995 DEC-31-1995 17,768,100 0 37,755,300 1,158,000 79,013,600 147,188,300 70,911,300 40,426,600 188,011,900 19,562,700 2,851,800 0 0 1,671,300 163,259,200 188,011,900 187,776,900 187,776,900 146,907,300 146,907,300 0 894,700 578,300 (2,772,000) (1,280,800) (1,883,800) 0 0 0 (1,883,800) (.11) 0 INCLUDES A $5,280,000 LOSS ON THE SALE OF AN OTHER ASSET.
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