-----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, Uq4yc6G762Hsse5EnM8L9LDr/zoVPs85YfBWvpaQMcW7mafquda5hR2MrhuFXhgW 2Sd6CwS33HVro/MwLtqlvA== 0000950152-96-004018.txt : 19960813 0000950152-96-004018.hdr.sgml : 19960813 ACCESSION NUMBER: 0000950152-96-004018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960812 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH O METER PRODUCTS INC /DE CENTRAL INDEX KEY: 0000883327 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC HOUSEWARES & FANS [3634] IRS NUMBER: 363635286 STATE OF INCORPORATION: DE FISCAL YEAR END: 1002 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19912 FILM NUMBER: 96608932 BUSINESS ADDRESS: STREET 1: 24700 MILES ROAD CITY: BEDFORD HEIGHTS STATE: OH ZIP: 44146 BUSINESS PHONE: 2164644000 MAIL ADDRESS: STREET 1: 24700 MILES ROAD CITY: BEDFORD STATE: OH ZIP: 44146 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH O METER INC CENTRAL INDEX KEY: 0000925252 STANDARD INDUSTRIAL CLASSIFICATION: MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590] IRS NUMBER: 363330781 STATE OF INCORPORATION: DE FISCAL YEAR END: 1002 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-80000-01 FILM NUMBER: 96608933 BUSINESS ADDRESS: STREET 1: 24700 MILES ROAD CITY: BEDFORD HEIGHTS STATE: OH ZIP: 44146 BUSINESS PHONE: 2164644000 MAIL ADDRESS: STREET 1: 24700 MILES RD CITY: BEDFORD HIGHTS STATE: OH ZIP: 44146 10-Q 1 HEALTH-O-METER 10Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended June 30, 1996 ----------------------------------------------------------- or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to --------------------- -------------------------- Commission File Number: 0-19912 -------------------------------------------------------- Health o meter Products, Inc. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 36-3635286 - ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 24700 Miles Road, Bedford Heights, Ohio 44146-1399 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (216) 464-4000 - ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of July 30, 1996, the issuer had 9,071,784 shares of common stock outstanding. 2 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended June 30, 1996 ----------------------------------------------------------- or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ---------------------- ------------------------- Commission File Number: 33-80000 -------------------------------------------------------- Health o meter, Inc. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 36-3330781 - ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 24700 Miles Road, Bedford Heights, Ohio 44146-1399 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (216) 464-4000 - ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 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 --- ---- The Registrant is a wholly-owned subsidiary of Health o meter Products, Inc. Accordingly, none of its equity securities are owned by non-affiliates. 3 PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HEALTH O METER PRODUCTS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
June 30, October 1, 1996 1995 -------- ---------- (Unaudited) ASSETS Current assets Cash $ 1,149 835 Trade accounts receivable, net 45,621 54,151 Inventories 34,655 41,787 Refundable income taxes - 207 Deferred income taxes 5,108 5,108 Other current assets 978 1,828 -------- ------- Total current assets 87,511 103,916 Property, plant, and equipment, net 18,543 20,157 Other assets Excess of cost over fair value of net assets acquired, net 141,084 144,084 Deferred financing costs, net 4,794 5,437 Deferred income taxes 63 63 Other 1,485 1,478 -------- ------- Total other assets 147,426 151,062 -------- ------- Total assets $253,480 275,135 ======== =======
(Continued) 2 4 HEALTH O METER PRODUCTS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
June 30, October 1, 1996 1995 ------------ ---------- (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current portion of debt $ 5,000 5,000 Accounts payable 14,239 25,803 Accrued liabilities 21,933 19,828 --------- -------- Total current liabilities 41,172 50,631 Long-term debt Revolving Credit Facility 29,600 39,400 Term Note 61,250 65,000 Senior Subordinated Notes 68,626 68,458 --------- -------- Total long-term debt 159,476 172,858 Product liability - noncurrent 3,698 3,621 Other 1,348 2,008 --------- -------- Total liabilities 205,694 229,118 Stockholders' equity Common stock, par value $.01 per share 91 91 Paid-in capital 51,741 51,741 Warrants 1,773 1,773 Accumulated deficit (5,819) (7,588) --------- -------- Total stockholders' equity 47,786 46,017 --------- -------- Total liabilities and stockholders' equity $ 253,480 275,135 ========= ========
See accompanying notes to consolidated financial statements. 3 5 HEALTH O METER PRODUCTS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
Thirteen weeks ended Thirty-nine weeks ended -------------------- ----------------------- June 30, July 2, June 30, July 2, 1996 1995 1996 1995 -------- -------- --------- --------- Net sales $ 59,339 54,939 213,021 202,223 Operating costs and expenses Cost of goods sold 40,328 38,652 145,729 141,519 Selling, general, and administrative expenses 14,041 13,109 44,929 42,769 Amortization of intangible assets 1,000 1,002 3,000 2,983 -------- ------- -------- -------- Total operating costs and expenses 55,369 52,763 193,658 187,271 -------- ------- -------- -------- Operating income 3,970 2,176 19,363 14,952 Interest expense 4,637 4,772 14,451 14,439 Other income (94) (43) (260) (178) -------- ------- -------- -------- Income (loss) before income taxes (573) (2,553) 5,172 691 Income tax expense (benefit) (355) (1,829) 3,403 656 -------- ------- -------- -------- Net income (loss) $ (218) (724) 1,769 35 ======== ======= ======== ======== Net income (loss) per share $ (0.02) (0.08) 0.20 -- ======== ======= ======== ======== Number of common and common equivalent shares used in computing net income (loss) per share 9,071 9,071 9,071 9,071
See accompanying notes to consolidated financial statements. 4 6 HEALTH O METER PRODUCTS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS)
Thirty-nine weeks ended ------------------------------- June 30, 1996 July 2, 1995 --------------- -------------- Cash flows from operating activities Net income $ 1,769 35 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization of plant and equipment 4,418 3,911 Loss on asset write-offs and disposals 106 -- Amortization of intangible assets 3,000 2,983 Amortization of deferred financing costs 643 614 Accretion of debt discount 168 168 Changes in Accounts receivable 8,530 1,653 Inventories 7,132 12,553 Refundable income taxes 207 3,044 Other assets 843 463 Accounts payable (11,564) (17,882) Accrued liabilities 2,105 2,572 Noncurrent liabilities (583) 401 -------- ------- Net cash provided by operating activities 16,774 10,515 -------- ------- Cash flows from investing activities Capital expenditures (2,910) (2,749) -------- ------- Net cash used in investing activities (2,910) (2,749) -------- ------- Cash flows from financing activities Proceeds from revolving credit facilities 52,800 57,400 Repayments of revolving credit facilities (62,600) (62,300) Repayment of long-term debt (3,750) (3,750) Payment of financing fees -- (302) -------- ------- Net cash used in financing activities (13,550) (8,952) -------- ------- Increase (decrease) in cash 314 (1,186) Cash at beginning of the period 835 1,684 -------- ------- Cash at end of the period $ 1,149 498 ======== ======= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for Interest $ 11,453 12,125 Income taxes 3,454 --
See accompanying notes to consolidated financial statements. 5 7 HEALTH O METER PRODUCTS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) In the opinion of management, the information furnished herein includes all adjustments of a normal recurring nature that are necessary for a fair presentation of results for the interim periods shown in accordance with generally accepted accounting principles. The unaudited interim consolidated financial statements have been prepared using the same accounting principles that were used in preparation of the Company's annual report on Form 10-K for the year ended October 1, 1995, and should be read in conjunction with the consolidated financial statements and notes thereto. Because of the seasonal nature of the small appliance and consumer scale industries, the results of operations for the interim period are not necessarily indicative of results for the full fiscal year. (2) The components of inventories are as follows (in thousands):
June 30, 1996 October 1, 1995 ------------- --------------- Inventories at FIFO cost Raw materials and purchased parts $ 12,501 13,389 Finished goods 22,265 28,220 -------- ------ 34,766 41,609 Excess of FIFO cost over LIFO (111) 178 -------- ------ Total inventories $ 34,655 41,787 ======== ======
Work-in-process inventories are not significant and are included with raw materials. 6 8 HEALTH O METER PRODUCTS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (3) Condensed consolidated financial information for Health o meter, Inc. at June 30, 1996 and October 1, 1995, and for the thirteen-week and thirty-nine-week periods ended June 30, 1996 and July 2, 1995 is as follows (in thousands):
June 30, October 1, 1996 1995 --------- --------- Current assets $ 87,511 103,916 Noncurrent assets 165,969 171,219 --------- -------- Total assets $ 253,480 275,135 ========= ======== Current liabilities $ 41,172 50,631 Noncurrent liabilities 164,522 178,487 Intercompany payables 47,627 47,627 --------- -------- Total liabilities 253,321 276,745 Stockholder's equity Common stock - $.01 par value; authorized 1,000,000 shares; issued and outstanding 1,000,000 shares 10 10 Paid-in capital 2,811 2,811 Accumulated deficit (2,662) (4,431) --------- -------- Total stockholder's equity 159 (1,610) --------- -------- Total liabilities and stockholder's equity $ 253,480 275,135 ========= ========
Thirteen-week period ended Thirty-nine-week period ended -------------------------- ----------------------------- June 30, July 2, June 30, July 2, 1996 1995 1996 1995 ------- ------- -------- ------ Net sales $ 59,339 54,939 213,021 202,223 Gross profit 19,011 16,287 67,292 60,704 Net income (loss) (218) (724) 1,769 35
7 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- THIRTEEN WEEKS ENDED JUNE 30, 1996 AND JULY 2, 1995 Net Sales. Net sales in the third quarter of fiscal 1996 increased approximately 8.0 percent to $59.3 million, compared with $54.9 million for the same period in fiscal 1995. Net sales of the Consumer Products Division increased approximately 10.1 percent to $50.3 million in the third quarter of fiscal 1996, compared with $45.7 million for the same period last year. The increase in net sales of the Consumer Products Division was due primarily to sales of the recently introduced automatic hot teamaker, Mrs. Tea(TM). Consumer Products Division sales were also favorably impacted by higher sales of consumer scales attributable to increased distribution of higher priced, higher margin analog scales at certain wholesale clubs, as well as improved distribution of electronic strain gauge scales at certain mass merchandisers. Increased distribution of iced teamakers at warehouse clubs, along with new distribution of filters, also favorably impacted third quarter 1996 sales. Net sales of the Professional Products Division declined approximately 2.3 percent to $9.0 million, primarily because third quarter fiscal 1995 sales had been favorably impacted by the U.S. Postal rate increase in January 1995, which generated incremental sales of postal scale dials, electronic rate chips and postal scales to accommodate the new rates. The Professional Products sales decline was partially offset in the third quarter of 1996 by improved sales of certain commercial coffeemaker models. Gross Profit. The Company's gross profit in the third quarter of fiscal 1996 was $19.0 million, or approximately 32.0 percent of net sales, compared with $16.3 million, or approximately 29.6 percent of net sales in the same period in fiscal 1995. The addition of new higher margin products to the sales mix, as well as improvements in operating efficiency during the third quarter of fiscal 1996 contributed to the overall gross profit improvement. A reduction of product liability of $0.6 as a result of favorable experience also contributed to the overall gross profit in the third quarter. The Consumer Products Division's gross profit increased from approximately 28.6 percent of net sales for the third quarter of fiscal 1995 to approximately 31.8 percent of net sales for the third quarter of fiscal 1996. The Consumer Products Division's gross profit percentage reflects the favorable impact from sales of the recently introduced automatic hot teamaker, Mrs. Tea(TM). Historically, gross margins on individual product lines have been greatest near the point of introduction and gradually decreasing as the product matures and becomes subject to pricing pressure. There continues to be intense pressure on retail prices and there can be no assurance as to the Company's ability to achieve any price increases or maintain current price levels in the 8 10 future. The Company continues its efforts to introduce new products and to reduce the cost of existing products as a means of protecting margins. The Professional Products Division's gross profit declined slightly from 34.8 percent of net sales for the third quarter of fiscal 1995 to 33.6 percent for the third quarter of fiscal 1996. Gross profit of the Professional Products Division had been favorably impacted during the third quarter of fiscal 1995 by the U.S. Postal rate increase in January 1995. Selling, General, and Administrative Expenses. Selling, general, and administrative expenses ("SG&A") for the third quarter of fiscal 1996 totalled $14.0 million, or approximately 23.7 percent of net sales, compared with $13.1 million, or approximately 23.9 percent, for the third quarter of fiscal 1995. The decrease in SG&A as a percentage of net sales is primarily attributable to lower variable selling costs, partially offset by higher national advertising expenditures to support the marketing of new products such as Mrs. Tea(TM). Amortization of Intangible Assets. The amortization of intangible assets relates primarily to intangible assets associated with the acquisition of Mr. Coffee, inc. in August 1994 (the "Acquisition"). Interest Expense. Net interest expense for the third quarter of fiscal 1996 was approximately $4.6 million, compared with $4.8 million for the same period in the prior year. The decrease in interest expense is attributable to lower interest rates compared with the same quarter in 1995. Income Taxes. Due to the pre-tax loss in the third quarter of fiscal 1996 and because the Company expects to be profitable in fiscal 1996, a tax benefit of $0.4 million was recognized in the third quarter of fiscal 1996. Net Income. Based on the foregoing, the Company recorded a net loss of approximately $0.2 million in the third quarter of fiscal 1996, compared with a net loss of approximately $0.7 million in the same period last year. THIRTY-NINE WEEKS ENDED JUNE 30, 1996 AND JULY 2, 1995 Net Sales. Net sales in the first three quarters of fiscal 1996 increased approximately 5.3 percent to $213.0 million, compared with $202.2 million for the same period in fiscal 1995. Net sales of the Consumer Products Division increased approximately 7.5 percent to $186.2 million in the first three quarters of fiscal 1996, compared with $173.3 million for the same period last year. The increase in net sales of the Consumer Products Division was primarily due to sales of recently introduced automatic hot teamaker, Mrs. Tea(TM), and improved distribution of consumer scales along with sales of new model Big Foot(R) scales. Professional Products Division net sales decreased approximately 7.3 percent to $26.8 million, compared with $28.9 million for the same period last year. Professional Products Division net sales were favorably impacted in fiscal 1995 by the U.S. Postal rate increase in January 1995. 9 11 Gross Profit. The Company's gross profit in the first three quarters of fiscal 1996 was $67.3 million, or approximately 31.6 percent of net sales, compared with $60.7 million, or approximately 30.0 percent of net sales in the same period in fiscal 1995. The Consumer Products Division's gross profit increased from approximately 28.9 percent of net sales for the first three quarters of fiscal 1995 to approximately 31.0 percent of net sales for the first three quarters of fiscal 1996. The improvement in the Consumer Products Division's gross profit percentage was primarily due to sales of the automatic hot teamaker, Mrs. Tea(TM), which was introduced in fourth quarter of fiscal 1995. The Professional Products Division's gross profit was 36.0 percent of net sales in the first three quarters of fiscal 1996, compared with 36.6 percent of net sales in the same period last year. Selling, General, and Administrative Expenses. Selling, general and administrative expenses ("SG&A") for the first three quarters of fiscal 1996 totalled $44.9 million, compared with $42.8 million for the first three quarters of fiscal 1995. For both periods, selling, general, and administrative expenses were 21.1 percent of net sales. The increase in the dollar amount of SG&A is primarily attributable to higher national advertising expenditures to support the marketing of new products such as Mrs. Tea(TM) and new Big Foot(R) scales. Amortization of Intangible Assets. The amortization of intangible assets relates primarily to intangible assets associated with the acquisition of Mr. Coffee, inc. in August 1994. Interest Expense. Net interest expense for the first three quarters of fiscal 1996 was approximately $14.5 million, which was comparable to approximately $14.4 million for the same period in the prior year. Income Taxes. Income tax expense was $3.4 million for the first three quarters of fiscal 1996. The provision for income taxes is unfavorably impacted by the non-deductibility, for tax purposes, of the amortization of intangible assets. Net Income. Based on the foregoing, the Company achieved net income of approximately $1.8 million in the first three quarters of fiscal 1996, compared with approximately $35,000 in the same period last year. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company's primary source of liquidity is borrowings under a Credit Agreement between HOM and a group of Banks represented by Banque Nationale de Paris, New York Branch ("BNP") as issuer of letters of credit and as agent ("Bank Credit Agreement"), entered into in connection with the Acquisition. Cash flow activity for the third quarters of fiscal 1996 and 1995 is presented in the Consolidated Statements of Cash Flows. During the first three quarters of fiscal 1996, the Company generated approximately $16.8 million in cash flow from its operating activities. Net income plus non-cash charges generated approximately $10.1 million, while changes in working capital components generated approximately $6.7 million. A decrease in accounts receivable and 10 12 inventories, which generated $8.5 million and $7.1 million, respectively, was offset by a reduction in accounts payable, which required $11.6 million. The decrease in accounts receivable, inventories and accounts payable is primarily attributable to the seasonally higher sales activity which takes place during the first quarter of the fiscal year. An increase in accrued liabilities, which is primarily attributable to accrued interest under the Company's senior subordinated notes, generated $2.1 million. The Company's business is seasonal, with the majority of its sales and earnings generated in the last half of the calendar year (the fourth and first quarters of its fiscal year). The Company's aggregate capital expenditures during the first three quarters of fiscal 1996 were approximately $2.9 million primarily for a computerized design system to streamline the Company's new product development cycle and for new product tooling. During fiscal 1996, the Company anticipates making capital expenditures of approximately $4.8 million primarily for new product tooling. Management plans to fund these capital expenditures with available cash, cash flow from operations and, if necessary, borrowings under the revolving credit facility provided under the Bank Credit Agreement. Indebtedness incurred in connection with the Acquisition has significantly increased the Company's cash requirements and imposes various restrictions on its operations. The Acquisition and related transactions were financed with approximately $98 million in borrowings under the Bank Credit Agreement, approximately $70 million in proceeds from a unit offering of 13% senior subordinated notes due 2002 (the "Notes") and warrants to purchase shares of Common Stock at a price of $6.25 per share, and approximately $17.2 million in net proceeds received from the exercise of certain transferable rights to purchase 3,543,433 shares of Common Stock issued to the stockholders of the Company. Financing provided under the Bank Credit Agreement consisted of a $75.0 million term loan facility, which was fully drawn at the closing of the Acquisition, and a $50.0 million revolving credit facility (which also provides for a $18.0 million letter of credit sub-facility), under which approximately $22.5 million was drawn in connection with the Acquisition. Effective June 30, 1995, the Bank Credit Agreement was amended, increasing the revolving credit facility to $60.0 million. Borrowings under the Term Loan and the Revolving Credit Facility bear interest at a rate equal to BNP's Base Rate (as defined) plus 1.0% per annum or BNP's Eurodollar Rate (as defined and adjusted for reserves) plus 2.5% per annum, in either case as selected by HOM. HOM's obligations under the Bank Credit Agreement are secured by substantially all of HOM's assets and a pledge of all of its issued and outstanding common stock. HOM's obligations under the Bank Credit Agreement are also guaranteed by the Company. The Term Loan is subject to amortization on a quarterly basis commencing December 31, 1994 in aggregate 12 month amounts of $5.0 million, $5.0 million, $5.0 million, $10.0 million, $15.0 million, $15.0 million and $20 million during the first through the seventh years following the Acquisition. HOM is required to make prepayments on the Term Loan and Revolving Credit Facility with a percentage of Excess Cash Flow (as defined) and 100% of the proceeds from certain asset sales, issuances of debt and equity securities and extraordinary items outside the ordinary course of business. HOM may also make optional prepayments, in full or in 11 13 part, on the Term Loan, provided that each partial prepayment must be in an amount equal to $500,000 or an integral multiple of $200,000 in excess thereof. As a partial hedge against increases in interest rates and as required by the terms of the Bank Credit Agreement, HOM entered into an interest rate cap agreement with The First National Bank of Chicago in September 1994. This agreement covers a notional amount of $50 million and provides for an interest rate cap on LIBOR of 7.5 percent. The interest cap expires August 22, 1996. The Company is currently evaluating whether to renew or replace its existing interest rate cap arrangement or enter into a similar hedging arrangement subsequent to the expiration of its existing interest rate cap agreement. Costs associated with any such interest rate protection arrangement will be amortized over the term thereof. HOM is subject to certain customary affirmative and negative covenants contained in the Bank Credit Agreement. These include, without limitation, covenants that restrict, subject to certain exceptions, incurrence of additional indebtedness, mergers, consolidations or asset sales, changes in the nature of the business, granting of liens to secure any other indebtedness and transactions with affiliates. In addition, the Bank Credit Agreement requires that the Company maintain certain specified financial ratios, including minimum interest and fixed charge coverage ratios, maximum leverage ratio, minimum net worth levels and ceilings on leverage and capital expenditures. In order to reflect the impact of the seasonality of the Company's business on its financial condition, relevant covenants in the Bank Credit Agreement are set on a rolling twelve month basis. Borrowing availability under the Bank Credit Agreement at June 30, 1996 was $13.4 million after considering outstanding letters of credit of $1.2 million, actual borrowings of $29.6 million, and sufficiency of collateral. The Notes are general obligations of HOM and bear interest at the rate of 13% per annum. The interest on the Notes is payable semi-annually, in arrears, commencing on February 15, 1995. Principal of the Notes is payable on the maturity date, August 15, 2002. HOM's payment obligations under the Notes are unconditionally guaranteed by the Company. The Notes and the Company's guaranty are subordinated to the prior payment of all of the Company's senior debt (which includes amounts outstanding under the Bank Credit Agreement). The Indenture governing the Notes contains customary provisions restricting mergers, consolidations or sales of assets, issuances of preferred stock or the incurrence of additional indebtedness, payment of dividends, creation of liens and transactions with affiliates. Provided that certain financial tests are met, the Indenture does not limit the amount of additional indebtedness that HOM and its subsidiaries may incur. The Notes are generally not redeemable at the option of the Company until August 15, 1999. Subject to certain conditions, at any time within 36 months of the date of the Indenture under which the Notes were issued, up to 35% of the initial principal amount of the Notes originally issued may be redeemed with the net proceeds of one or more public offerings of equity securities of the Company or HOM at a redemption price of 110% of the principal amount thereof, together with accrued and unpaid interest. Under certain limited circumstances, HOM may be required to use a portion of the proceeds from asset sales to make an offer to purchase a portion of the Notes, at a price of 101% of the principal amount thereof, together with accrued and unpaid interest. In addition, in the event of a change in control of HOM (generally defined to 12 14 mean any transaction or series of transactions which results in persons other than the Thomas H. Lee Company, its affiliates and certain related entities acquiring beneficial ownership of more than 50% of the total voting power of the Company on a fully diluted basis), each holder will have the right to require HOM to repurchase its Notes at a price of 101% of the principal amount thereof, together with accrued and unpaid interest thereon. Except for the foregoing circumstances, HOM is not required to make mandatory redemption or sinking fund payments with respect to the Notes. The Bank Credit Agreement currently prohibits HOM from purchasing any Notes prior to the expiration thereof and also provides that certain change in control events with respect to HOM would constitute a default thereunder. The Company is a holding company with no independent operations and has no material assets other than its ownership of all of the outstanding stock of HOM. Therefore, the Company is dependent on the receipt of dividends and other distributions from HOM and the proceeds from the sale of its capital stock (to the extent that such proceeds are not required to be used to prepay outstanding indebtedness) to fund any obligations that the Company incurs. The Bank Credit Agreement prohibits, and the Indenture restricts, the payment of dividends to the Company by HOM. Based upon current levels of operations, anticipated sales growth and plans for expansion, management believes that the Company's cash flow from operations (including favorable cost savings estimated to be achieved in the future), combined with borrowings available under the Bank Credit Agreement, will be sufficient to enable the Company to meet all of its cash operating requirements over both the short term and the longer term, including scheduled interest and principal payments, capital expenditures and working capital needs. This expectation is predicated upon continued growth in revenues in the Company's core businesses consistent with historical experience, achievement of operating cash flow margins consistent with historical experience, and the absence of significant increases in interest rates. INFLATION Increases in interest rates, the costs of materials and labor, and federal, state and local tax rates can significantly affect the Company's operations. Management believes that the current practices of maintaining adequate operating margins through a combination of new product introductions, product differentiation, cost reduction, outsourcing, manufacturing and overhead expense control and careful management of working capital are its most effective tools for coping with inflation. NEW ACCOUNTING PRONOUNCEMENTS During 1995, the Financial Accounting Standards Board issued two pronouncements effective for financial statements for years beginning after December 15, 1995 that will apply to the Company in future periods. Statement No. 121, Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to be Disposed Of, will require the Company to review long-lived assets, certain identifiable intangibles, and goodwill related to those 13 15 assets for impairment whenever events or changes in circumstances indicate that the carrying values of those assets may not be recoverable. In the event that the Company determines that the carrying value of such intangible assets is impaired, it would be required to write-down such carrying value, which would result in a charge to earnings. Based on its review of Statement No. 121, the Company does not anticipate, under current circumstances, that adjustment to the carrying values of its long-lived assets will be necessary as a result of its implementation. The Company has also determined to remain within the accounting prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees, and accordingly the implementation of Statement. No. 123, Accounting for Stock-Based Compensation will result in additional disclosures without any impact on the statements of operations or financial condition. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) See the Exhibit Index at page E-1 of this Form 10-Q. (b) No reports on Form 8-K were filed during the quarter for which this report is filed. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HEALTH O METER PRODUCTS, INC. HEALTH O METER, INC. Date: August 12, 1996 /s/ Steven M. Billick -------------------------------- Steven M. Billick Senior Vice President, Treasurer and Chief Financial Officer 14 16 Exhibit Index -------------
Sequential Exhibit Number Description of Document Page - -------------- ----------------------- ---- 3.1 Amended and Restated Certificate of Incorporation of the (A) Company ) 3.2 Certificate of Incorporation of HOM, as amended (B) 3.3 Amended and Restated By-laws of the Company, as amended (A) 3.4 By-laws of HOM (B) 3.5 Certificate of Amendment to Amended and Restated Certificate of (J) Incorporation of the Company 4.1 Indenture dated August 17, 1994 pursuant to which HOM's 13% (C) Senior Subordinated Notes due 2002 have been issued 4.2 13% Senior Subordinated Note due 2002 (C) 4.3 Warrant Agreement dated August 17, 1994 (C) 10.1 Second Amended 1992 Stock Incentive Plan of the Company* (B) 10.2 Employment Agreement among the Company, HOM and Peter C. (A) McC. Howell* 10.3 Form of Non-Qualified Stock Option Agreement between the (A) Company and Peter C. McC. Howell* 10.4 Amended and Restated Employment and Non-Competition (B) Agreement among the Company, HOM and Lawrence Zalusky, dated as of June 28, 1994* 10.5 Employment Agreement between the Company and S. Donald (A) McCullough dated April 4, 1994* 10.6 Employment Agreement between the Company and Richard C. Adamany (K) dated March 31, 1995* 10.7 Employment Agreement between the Company and Timothy J. (K) McGinnity dated March 31, 1995* 10.8 Employment Agreement between the Company and Thomas W. Rehmus (L) dated July 19, 1995* 10.9 Employment Agreement between the Company and John D. Lange dated March 20, 1995* 10.10 Second Amended and Restated Stockholders Agreement among the (A) Company and certain of its stockholders 10.11 Credit Agreement dated August 17, 1994 among HOM, Banque (C) National de Paris, New York Branch and the lenders named therein 10.12 Amended and Restated Management Agreement among the THL Co., (A) HOM and the Company 10.13 Letter Agreement between HOM and JLP Media, Inc. dated (D) January 31, 1992
E-1 17 10.14 Agreement for Purchase and Sale of Assets dated November 11, (G) 1992 among Pelouze, HOM and PSC Acquisition Co. 10.15 Agreement and Plan of Merger dated as of May 24, 1994 among (B) the Company, HOM, Java Acquisition Corporation and Mr. Coffee, inc. 10.16 1994-1999 Labor Agreement between Mr. Coffee and Industrial and (H) Allied Employees Local Union No. 73. 10.17 1995 Stock Option and Incentive Plan of the Company* (I) 21 Subsidiaries of the Company (H) 27 Financial Data Schedule - ------------------------- (A) Incorporated herein by reference to the appropriate exhibit to the Company's registration statement on Form S-1 (Reg. No. 33-80124). (B) Incorporated herein by reference to the appropriate exhibit to the Company's and HOM's registration statement on Form S-1 (Reg. No. 33-80000). (C) Incorporated herein by reference to the appropriate exhibit to the Company's current report on Form 8-K dated August 17, 1994. (D) Incorporated herein by reference to the appropriate exhibit to the Company's registration statement on Form S-1 (Reg. No. 33-45202). (E) Incorporated herein by reference to the appropriate exhibit to the Company's annual report on Form 10-K for the year ended December 31, 1992. (F) Incorporated herein by reference to the appropriate exhibit to the Company's annual report on Form 10-K for the year ended December 31, 1993. (G) Incorporated herein by reference to the appropriate exhibit to the Company's current report on Form 8-K dated December 12, 1992. (H) Incorporated herein by reference to the appropriate exhibit to the Company's annual report on Form 10-K for the period ended October 2, 1994. (I) Incorporated herein by reference to the appropriate exhibit to the Company's Proxy statement in connection with the Annual Meeting of Stockholders held on April 27, 1995. (J) Incorporated herein by reference to the appropriate exhibit to the Company's current report on Form 10-Q for the period ended April 2, 1995. (K) Incorporated herein by reference to the appropriate exhibit to the Company's current report on Form 10-Q for the period ended July 2, 1995. (L) Incorporated herein by reference to the appropriate exhibit to the Company's annual report on Form 10-K for the year ended October 1, 1995. * Management contract or compensatory plan or arrangement.
E-2 EX-10.9 2 EXHIBIT 10.9 1 Exhibit 10.9 -1- 2 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT, made and entered into as of the 20th day of March, 1995 by and between JOHN D. LANGE ("Employee") and HEALTH O METER PRODUCTS, INC., a Delaware corporation (the "Company"). W I T N E S S E T H ------------------- WHEREAS, the Company desires to retain the services of the Employee as its Senior Vice President - Marketing - Consumer Products; and WHEREAS, the Company and the Employee deem it necessary and appropriate to enter into an agreement setting forth the terms and conditions of the Employee's employment with the Company. NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the Employee and the Company agree as follows: ARTICLE I EFFECTIVE TIME Section 1.00. EFFECTIVE TIME. This Agreement shall become effective as of March 20, 1995 (the "Effective Time"). ARTICLE II EMPLOYMENT Section 2.01. EMPLOYMENT. The Company hereby employs the Employee and the Employee hereby agrees to serve the Company on the terms and conditions set forth herein. Employee shall initially hold the offices of Senior Vice President - Marketing - Consumer Products of the Company. Section 2.02. AT WILL STATUS. Employee specifically acknowledges and agrees that his employment with the Company is "at will," and may be terminated by him or the Company at any time with or without cause. ARTICLE III DUTIES OF EMPLOYMENT Section 3.00. DUTIES. Subject to the authority of the Board, Employee shall have the status and powers as are customarily associated with, and shall perform such duties and functions as the Board shall from time to time determine and as are customarily assigned to, the -2- 3 Senior Vice President - Marketing - Consumer Products of a corporation. Employee shall devote his full time and effort to the business and affairs of the Company. Employee further agrees to serve, if elected or appointed thereto, as a director of the Company's subsidiaries and affiliated entities (if any) and in one or more executive offices of any of the Company's subsidiaries and affiliated entities (if any); provided that the indemnity provisions of Section 11.01 of this agreement shall apply to Employee's service in any such capacity. ARTICLE IV COMPENSATION AND RELATED MATTERS Section 4.01 SALARY. As compensation for the employment services to be rendered by Employee hereunder, the Company shall pay to Employee a salary at an initial rate of One Hundred Forty Two Thousand Five Hundred ($142,500) Dollars per annum, payable at such intervals as may be consistent with the Company's payroll policies, subject to increase or decrease by the Compensation Committee of the Board in its sole discretion. Compensation of Employee by salary payments shall not be deemed exclusive and shall not prevent Employee from participating in any other compensation or benefit plan of the Company. The salary payments (including any increased salary payments) hereunder shall not in any way limit or reduce any other obligation of the Company hereunder, and no other compensation, benefit or payment hereunder shall in any way limit or reduce the obligation of the Company to pay Employee's salary hereunder. Section 4.02 EXPENSES. During the term of Employee's employment hereunder, Employee shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Employee in performing the services hereunder, including, but not limited to, all expenses for travel and living expenses while away from home on business or at the request of and in the service of the Company, its subsidiaries or affiliated entities; provided that such expenses are incurred and accounted for in accordance with the policies and procedures established by the Company. Employee shall also be provided an automobile allowance from the Company, in such amount as is determined appropriate by the Board of Directors of the Company from time to time. Section 4.03 CONTINUED PARTICIPATION. Employee shall be entitled to participate in all of the Company's employee benefit plans in effect from time to time and made available by the Company to its executives and key management employees, including the Company's life and long-term disability insurance plans, medical and dental plans and 401(k) Plan. Section 4.04 ANNUAL PERFORMANCE BONUS. In addition to the Employee's salary, the Employee will be entitled to participate during the period of his employment in any bonus plan established by the Board of Directors from time to time that contemplates participation by the executive officers of the Company. The amount of any annual bonus payable to Employee shall be determined under such plan; notwithstanding the foregoing, unless the Employee is terminated for cause or resigns prior to the end of the 1995 fiscal year, the Employee shall be entitled to receive a cash bonus with respect to such year in an amount equal to not less than -3- 4 $21,375, whether or not the Employee would be entitled to receive a bonus under the terms of such plan. Section 4.05 SPECIAL BONUS. The Employee will receive a cash bonus in the amount of $5,000 at the Effective Time; provided, that if the Employee resigns from his position with the Company prior to the first anniversary of the Effective Time, such bonus shall be promptly repaid to the Company. Section 4.06 STOCK OPTIONS. On April 27, 1995, Employee will receive non-qualified stock options to purchase 25,000 shares of the Company's Common Stock under the Company's Second Amended 1992 Stock Incentive Plan. Such options shall be exercisable at a price determined in accordance with the provisions of the Plan and will vest in 25% increments on an annual basis, commencing on the first anniversary of the date of grant. The options will expire 10 years from the date of grant, or earlier in the event of termination of the Employee's employment with the Company and will be subject to the other terms and conditions set forth in the form of Option Agreement relating thereto attached as Exhibit A to this Agreement. ARTICLE V SEVERANCE ARRANGEMENTS Section 5.01 DEFINITIONS. (a) For purposes of this Article, "termination for cause" shall mean any termination of the Employee's employment resulting from: (i) Employee's engaging in fraud, misappropriation of funds, embezzlement or like conduct committed against the Company; (ii) Employee's conviction of a felony; or (iii) Employee's material violation of any provision of this Agreement which has not been cured within thirty (30) days after written notice setting forth such material violation and also setting forth the actions that Employee shall be required to take to cure such material violation has been given by the Company to Employee. (b) The Company may terminate Employee's employment hereunder at any time without cause. Notwithstanding any other provisions of this Agreement to the contrary and for purposes of this Article, any termination of Employee's employment resulting from: (i) Employee's death or (ii) Employee's inability to perform the essential functions of his job with or without reasonable accommodation, shall be deemed to be a termination by the Company without cause. Section 5.02 RESIGNATION; TERMINATION FOR CAUSE. If Employee's resigns from his positions with the Company or his employment shall be terminated by the Company for cause, the Company shall pay Employee his full salary through the date of resignation or termination at the rate then in effect and the Company shall have no further obligations to Employee under this Agreement. -4- 5 Section 5.03 TERMINATION WITHOUT CAUSE. If the Company terminates Employee's employment hereunder without cause, then: (a) the Company shall pay Employee his full salary through the date of termination, at the annual rate then in effect; (b) in lieu of any further salary payments to Employee for periods subsequent to the date of termination, the Company shall continue to pay to Employee his salary at the annual rate in effect immediately prior to such termination until the earlier to occur of (i) the date that Employee obtains a position with another employer providing for the payment of an annual base salary at a rate substantially equivalent to that provided herein or (ii) the expiration of the twelve (12) month period following such termination (the "Salary Continuation Period"), in equal periodic installments consistent with the Company's payroll policies; and (c) payment of the foregoing by the Company shall constitute complete satisfaction and remedy with respect to termination of Employee's employment by the Company without cause. Section 5.04 CONTINUED BENEFITS. Unless Employee is terminated by the Company for cause, or Employee shall resign from his positions with the Company, the Company shall maintain in full force and effect, for the continued benefit of Employee during the Salary Continuation Period, coverage under all medical and dental insurance plans and programs in which Employee participated prior to termination at the same cost to Employee as that applicable to other employees participating in such plans during such period; provided, that Employee's continued participation is possible under the general terms and provisions of such plans and programs. In the event Employee's participation in any such plan or program is barred, the Company shall arrange to provide Employee with benefits substantially similar to those which Employee would otherwise have been entitled to receive under such plans and programs from which his continued participation is barred. ARTICLE VI BINDING AGREEMENT Section 6.00 BINDING AGREEMENT. This Agreement and all rights of Employee hereunder shall inure to the benefit of and be enforceable by Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Employee should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Employee's devisee, legatee, designee or, if there is no such -5- 6 designee, to Employee's estate. This Agreement and all rights of the Company hereunder shall inure to the benefit of and be enforceable by the Company's successors and assigns. ARTICLE VII REPRESENTATIONS AND AGREEMENTS OF EMPLOYEE Section 7.01 ABILITY TO PERFORM. Employee represents and warrants that he is free to enter into this Agreement and to perform the duties required hereunder, and that there are no employment contracts or understandings, restrictive covenants or other restrictions, whether written or oral, preventing the performance of his duties hereunder. Section 7.02 COOPERATION. Employee agrees to submit to a medical examination and to cooperate and supply such other information and documents as may be required by any insurance company in connection with the Company's obtaining life insurance on the life of Employee, and any other type of insurance or fringe benefit as the Company shall determine from time to time to obtain. ARTICLE VIII RESTRICTIVE COVENANTS Section 8.01 NON-COMPETITION. Employee agrees that during the Non-Competitive Period (as defined below), Employee shall not, directly or indirectly, as owner, partner, joint venturer, stockholder, employee, broker, agent, principal, trustee, corporate officer, director, licensor or in any capacity whatsoever, engage in, become financially interested in, be employed by, render any consultation or business advice with respect to, or have any connection with, any business engaged in manufacturing, assembly, marketing or sales of coffeemakers, teamakers, filters, scales, massagers or any other product then being manufactured, assembled, marketed or sold by the Company, or then being developed by the Company with the expectation of sale by the --time of the termination of his employment hereunder, the business of the Company was being conducted in any material respect; provided, however, that Employee may own any securities of any corporation which is engaged in such business and is publicly owned and traded but in an amount not to exceed at any one time five percent (5%) of any class of stock or securities of such corporation. The term "Non-Competitive Period" shall mean the period commencing on the date of his termination or resignation and ending on the date which is (i) twelve (12) months later, in the event of termination by the Company without cause, or (ii) eighteen (18) months later, in the event of termination by Employee of his employment hereunder, or termination by the Company for cause. Section 8.02 NO HIRING. During the Non-Competitive Period, Employee will not knowingly (i) hire or attempt to hire any employee of the Company or of any of the Company's subsidiaries or affiliated entities (if any); (ii) assist in such hiring by any other -6- 7 person; or (iii) encourage any such employee to terminate his employment with the Company or any of such subsidiaries or affiliated entities. Section 8.03 SEVERABILITY. If any portion of the restrictions set forth in this Article VIII should, for any reason whatsoever, be declared invalid by a court of competent jurisdiction, the validity or enforceability of the remainder of such restrictions shall not thereby be adversely affected. Section 8.04 REASONABLENESS. Employee agrees that the territorial and time limitations set forth in this Article VIII are reasonable and properly required for the adequate protection of the business of the Company. In the event any such territorial or time limitation is deemed to be unreasonable by a court of competent jurisdiction, Employee agrees to the reduction of the territorial or time limitation to the area or period which such court shall have deemed reasonable. ARTICLE IX NON-DISCLOSURE OF CONFIDENTIAL INFORMATION Section 9.01 NON-DISCLOSURE. Employee shall not, during the term of this Agreement and at any time thereafter, directly or indirectly, disclose or permit to be known outside of the scope of his duties to the Company, to any person, firm or corporation, any confidential information acquired by him during the course of, or as an incident to, his employment relating to the Company. It shall not be outside the scope of Employee's duties to the Company to disclose confidential information to the Company's directors, officers, employees, advisors, attorneys, accountants, lenders, financial institutions or investors. Such confidential information shall be limited to proprietary technology, market data, formulae, customer and supplier lists, non-public financial and operating information and data, and any other documents embodying such confidential information to the extent that such data and information relate specifically to the Company. Such restrictions apply only to the reproduction or use of the specific written documents of the Company relating to the above-described categories and not to any knowledge (including but not limited to knowledge gained from such confidential information) based on Employee's experience during his employment with the Company or otherwise. Section 9.02 RETURN OF DOCUMENTS. Upon termination of Employee's employment with the Company, all documents, records, reports, writings and other similar documents containing confidential information, including copies thereof, then in Employee's possession or control shall be returned and left with the Company. ARTICLE X EQUITABLE RELIEF -7- 8 Section 10.00 RIGHT TO INJUNCTION. Employee recognizes that the services to be rendered by him hereunder are of a special, unique, unusual, extraordinary and intellectual character, involving skill of the highest order and giving them peculiar value, the loss of which cannot be adequately compensated for in damages. In the event of a breach of this Agreement by Employee, the Company shall be entitled to injunctive relief or any other legal or equitable remedies. Employee agrees that the Company may recover by appropriate action the amount of the actual damages caused the Company by any failure, refusal or neglect of Employee to perform his agreements, representations and warranties herein contained. The remedies provided in this Agreement shall be deemed cumulative and the exercise of one shall not preclude the exercise of any other remedy, at law or in equity, for the same event or any other event. ARTICLE XI MISCELLANEOUS Section 11.01 INDEMNIFICATION; INSURANCE. The Company will indemnify Employee to the maximum extent permitted by law (including advancing expenses where appropriate) with respect to actions taken by him as an officer or director of the Company, any of its subsidiaries, or any affiliated entity of the Company or any of its subsidiaries. The Company's obligation to provide indemnification shall survive termination of employment. The Company will also maintain in effect during Employee's employment hereunder directors and officer liability insurance, to the extent the same can be obtained on commercially reasonable terms. If permitted by the terms of the policy providing such insurance, Employee will remain insured under such policy until the first to occur of (i) termination of such policy (other than termination by the Company), or (ii) the fifth anniversary of termination of Employee's employment with the Company. Section 11.02 ARBITRATION. Should any dispute arise between the parties concerning the performance of this Agreement, the parties agree to mediation and, if not resolved through such mediation within thirty (30) days, final and binding arbitration in Cleveland, Ohio in accordance with the rules of the American Arbitration Association, subject to Article X in the case of alleged breach of Articles VIII or IX. The decision rendered in any arbitration proceedings shall be in writing and shall set forth the basis therefor. The parties shall abide by the award rendered in the arbitration proceedings, and such award may be entered as a final, non-appealable judgment, and may be enforced and executed upon, in any court having jurisdiction over the party against whom enforcement of such award is sought. Each of the parties agrees (in connection with any action brought to enforce the arbitration provisions of this paragraph) not to assert in any such action, any claim that it is not subject to the personal jurisdiction of such court, that the action is brought in an inconvenient forum, that the venue of the action is improper or that such mediation or arbitration may not be enforced by such courts. Each party agrees that service of process may be made upon it by any method authorized by the laws of the state in which arbitration is to be conducted in accordance with this Section 11.02. -8- 9 Section 11.03 NOTICE. For the purposes of this Agreement, notices, demands and all other communications provided for in the Agreement shall be in writing, shall be deemed to have been duly given when delivered or unless otherwise specified mailed by U.S. registered mail, return receipt requested, postage prepaid, addressed as follows: If to Employee: John D. Lange 8472 Hilltop Drive Mentor, Ohio 44060 If to the Company: Health o meter Products, Inc. 24700 Miles Road Bedford Heights, Ohio 44146 With a copy to: Calfee, Halter & Griswold 1400 McDonald Investment Center 800 Superior Avenue Cleveland, Ohio 44114 Attn: Thomas F. McKee, Esq. or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. Section 11.04 AMENDMENT OR ALTERATION. No amendment or alteration of the terms of this Agreement shall be valid unless made in writing and signed by both of the parties hereto. Section 11.05 GOVERNING LAW. This Agreement shall be governed by the laws of the State of Ohio, without giving effect to the conflicts of laws provisions thereof. Section 11.06 SEVERABILITY. The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect. Section 11.07 WAIVER OR BREACH. No waiver of or failure to enforce any provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision of this Agreement, nor shall such waiver or failure to enforce constitute a continuing waiver. Section 11.08 ASSIGNMENT. This Agreement may not be transferred or assigned by either party without the prior written consent of the other party. Section 11.09 FURTHER ASSURANCES. The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement. -9- 10 Section 11.10 HEADINGS. The section headings appearing in this Agreement are for purposes of each reference and shall not be considered a part of this Agreement or in any way modify, amend or affect its provisions. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. HEALTH O METER PRODUCTS, INC. By: /s/ S. Donald McCullough ------------------------------------ President and Chief Operating Officer ` /s/ John D. Lange ------------------------------------ Senior Vice President, Marketing - Consumer Products -10- EX-27.1 3 EXHIBIT 27.1
5 0000883327 HEALTH O METER PRODUCTS, INC. 1,000 9-MOS SEP-29-1996 OCT-2-1995 JUN-30-1996 1,149 0 45,621 0 34,655 87,511 18,543 0 253,480 41,172 159,476 91 0 0 47,695 253,480 213,021 0 145,729 193,658 0 0 14,451 5,172 3,403 1,769 0 0 0 1,769 .20 .20
EX-27.2 4 EXHIBIT 27.2
5 0000925252 HEALTH O METER, INC. 1,000 9-MOS SEP-29-1996 OCT-2-1995 JUN-30-1996 1,149 0 45,621 0 34,655 87,511 18,543 0 253,480 41,172 159,476 10 0 0 149 253,480 213,021 0 145,729 193,658 0 0 14,451 5,172 3,403 1,769 0 0 0 1,769 .20 .20
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