-----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, DQFfNH1C17l8IWr8RoeLZJmP8TUXQDaPBDQ0IMYOoBpzldzt2Fdp2VaXU8YvKGRg HkwzYJVEIJ/NyO23c4TAdQ== 0000950130-96-003205.txt : 19960816 0000950130-96-003205.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950130-96-003205 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TAMBRANDS INC CENTRAL INDEX KEY: 0000096277 STANDARD INDUSTRIAL CLASSIFICATION: CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES) [2670] IRS NUMBER: 131366500 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08714 FILM NUMBER: 96613167 BUSINESS ADDRESS: STREET 1: 777 WESTCHESTER AVE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 9146966000 MAIL ADDRESS: STREET 1: 777 WESTCHESTER AVE CITY: NEW YORK STATE: NY ZIP: 10604 FORMER COMPANY: FORMER CONFORMED NAME: TAMPAX INC DATE OF NAME CHANGE: 19840502 10-Q 1 FORM 10-Q 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 quarterly period ended June 30, 1996 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-8714 TAMBRANDS INC. -------------- (Exact name of registrant as specified in its charter) Delaware 13-1366500 -------- ---------- (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 777 Westchester Avenue, White Plains, New York 10604 - ---------------------------------------------- ----- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (914) 696-6000 -------------- 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Stock, par value $.25 per share: 36,862,909 shares as of July 31, 1996 Index to Exhibits is set forth at page 10. PART I - FINANCIAL INFORMATION Item 1. Financial Statements - ---------------------------- TAMBRANDS INC. AND SUBSIDIARIES Consolidated Statements of Earnings and Retained Earnings Three and Six Months Ended June 30, 1996 and 1995 (in thousands, except per share amounts) (Unaudited)
Three Months Ended June 30 Six Months Ended June 30 ---------------------------- ---------------------------- 1996 1995 1996 1995 ------------ ------------ ------------ ------------ Net sales $161,307 $176,338 $330,296 $343,285 Cost of products sold 54,068 58,428 109,909 113,732 ------------ ------------ ------------ ------------ Gross profit 107,239 117,910 220,387 229,553 Selling, administrative and general expenses: Marketing, selling and distribution 72,178 66,604 132,631 125,288 Administrative and general 12,336 13,907 25,818 27,622 ------------ ------------ ------------ ------------ 84,514 80,511 158,449 152,910 ------------ ------------ ------------ ------------ Operating income 22,725 37,399 61,938 76,643 Interest, net and other (2,294) (2,594) (4,411) (5,028) Litigation charge - (11,396) - (11,396) ------------ ------------ ------------ ------------ Earnings before provision for income taxes 20,431 23,409 57,527 60,219 Provision for income taxes 7,416 10,372 20,882 24,360 ------------ ------------ ------------ ------------ Net earnings 13,015 13,037 36,645 35,859 Retained earnings at beginning of period 482,115 463,761 476,252 457,071 ------------ ------------ ------------ ------------ 495,130 476,798 512,897 492,930 ------------ ------------ ------------ ------------ Dividends 16,949 16,112 33,884 32,256 Net issuance of treasury stock 86 (54) 918 (66) ------------ ------------ ------------ ------------ 17,035 16,058 34,802 32,190 ------------ ------------ ------------ ------------ Retained earnings at end of period $478,095 $460,740 $478,095 $460,740 ============ ============ ============ ============ Net earnings per share $0.35 $0.36 $1.00 $0.98 ============ ============ ============ ============ Dividends per share $0.46 $0.44 $0.92 $0.88 ============ ============ ============ ============ Average shares of Common Stock outstanding during the period 36,835 36,656 36,803 36,667
See accompanying notes to consolidated financial statements on page 5. -2-
TAMBRANDS INC. AND SUBSIDIARIES Consolidated Balance Sheets June 30, 1996 and December 31, 1995 (in thousands) 1996 (Unaudited) 1995 ------------ ------------ ASSETS - ------ Current assets: Cash and cash equivalents $9,591 $11,135 Accounts receivable, less allowance for doubtful accounts of $1,634 in 1996 and $1,667 in 1995 123,443 98,047 Inventories: Raw materials 12,680 17,952 Finished goods 38,461 28,784 ------------ ------------ 51,141 46,736 Deferred taxes on income 18,259 17,724 Prepaid expenses and other current assets 27,427 26,271 ------------ ------------ Total current assets 229,861 199,913 Property, plant and equipment 360,672 353,429 Less accumulated depreciation (145,180) (137,307) ------------ ------------ 215,492 216,122 Intangible and other assets 5,839 6,014 ------------ ------------ Total assets $451,192 $422,049 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Short-term borrowings $83,041 $55,063 Accounts payable 53,699 48,498 Accrued expenses 78,139 73,330 Taxes on income 23,232 27,078 ------------ ------------ Total current liabilities 238,111 203,969 Medium-term obligations 69,852 80,889 Deferred taxes on income 22,983 22,537 Postemployment benefits 11,262 11,682 ------------ ------------ Total liabilities 342,208 319,077 Shareholders' equity: Common Stock 10,887 10,887 Retained earnings 478,095 476,252 Cumulative foreign currency translation adjustment (15,779) (14,223) Treasury stock (362,189) (368,543) Unamortized value of restricted stock and pension costs (2,030) (1,401) ------------ ------------ Total shareholders' equity 108,984 102,972 ------------ ------------ Total liabilities and shareholders' equity $451,192 $422,049 ============ ============
See accompanying notes to consolidated financial statements on page 5. -3-
TAMBRANDS INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Six Months Ended June 30, 1996 and 1995 (in thousands) (Unaudited) 1996 1995 ------------ ------------ Cash Flows from Operating Activities: Net earnings $36,645 $35,859 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 14,135 12,403 Deferred income taxes (17) 1,489 Litigation charge (391) 8,686 Restructuring and other charges (467) (2,551) Change in: Accounts receivable (26,417) (25,850) Inventories (4,906) (10,705) Prepaid expenses and other current assets (772) 768 Taxes on income (3,196) (369) Accounts payable and accrued expenses 10,983 1,081 ------------ ------------ Net cash provided by operating activities 25,597 20,811 ------------ ------------ Cash Flows from Investing Activities: Capital expenditures (14,818) (18,359) Proceeds from sales of property, plant and equipment 106 427 ------------ ------------ Net cash used in investing activities (14,712) (17,932) ------------ ------------ Cash Flows from Financing Activities: Payment of dividends (33,884) (32,256) Purchase of shares for treasury -- (4,326) Short-term debt changes 16,792 25,106 Issuance of medium-term obligations 176 5,555 Proceeds from exercise of stock options and other 4,602 1,414 ------------ ------------ Net cash used in financing activities (12,314) (4,507) ------------ ------------ Effect of exchange rate changes on cash (114) (696) ------------ ------------ Net decrease in cash and cash equivalents (1,544) (2,324) Cash and cash equivalents at beginning of period 11,135 13,876 ------------ ------------ Cash and cash equivalents at end of period $9,591 $11,552 ============ ============
See accompanying notes to consolidated financial statements on page 5. -4- Notes to Consolidated Financial Statements - ------------------------------------------ 1. The financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the information contained therein, and are subject to audit and adjustment at the end of the fiscal year, with the exception of the Consolidated Balance Sheet at December 31, 1995, which has been derived from the audited financial statements at that date. Item 2. Management's Discussion and Analysis of Financial Condition and - ------- --------------------------------------------------------------- Results of Operations --------------------- Results of Operations - --------------------- Net sales for the second quarter of 1996 were $161.3 million, a decrease of 9% from the same period in the prior year. The decline is primarily attributable to a 16% reduction in unit sales in the United States resulting from intense competitive activity, particularly in the form of retail price promotions. The reduced volume was partially offset by selective price increases in certain international markets and in the United States. Net sales for the six months ended June 30, 1996 were $330.3 million, 4% below the same period of the preceding year. The reduction was primarily due to 9% lower unit sales in the United States resulting from intense competitive activity as discussed above. The lower volume was partially offset by price increases in the United States and certain international markets. During the second quarter of 1996, the U.S. tampon category in units remained relatively flat versus the same period of the prior year. Tampax U.S. market share in units during the second quarter of 1996 was below the comparable period of 1995 by 4.6 percentage points primarily due to strong competitive activity, particularly in the form of retail price promotions. Gross profit as a percentage of Net sales was 66.5% and 66.7% for the second quarter and six months, respectively, versus 66.9% for each of the corresponding periods of 1995. The lower margin in the current year is primarily the result of the unfavorable volumes discussed above, partially offset by pricing improvements. -5- Marketing, selling and distribution expenses were 8% and 6% above the second quarter and first half of 1995, respectively. The increase in the second quarter principally reflects promotional support for the launch of Tampax Naturals in the United States and the launch of a non-applicator tampon in France. The same factors contributed to the elevated spending levels for the six-month period of the current year, which were also attributable in part to support for the relaunched Tampax flushable line in the first quarter of 1996. The increase in brand support was partially offset by income from the distribution of third-party products, primarily in Russia and Eastern Europe. Administrative and general expenses declined 11% and 7% in the second quarter and six months of 1996, respectively, versus the same period of 1995. The decrease is the result of management's continuing efforts to contain overhead costs. Operating income for the three- and six-month periods was 39% and 19%, respectively, below the corresponding periods of 1995. The decrease was principally attributable to the lower sales volume and increased promotional activities, partially mitigated by favorable pricing, as discussed above. Interest, net and other was favorable by 12% for both the second quarter and first half of 1996, compared to the corresponding periods of the prior year. The decrease is primarily due to a reduction in realized foreign exchange losses from the prior year. The effective tax rate was 36% for each of the three- and six- month periods of 1996, versus 44% and 40% for the comparable periods of 1995, respectively. The lower effective tax rate was principally due to the litigation charge taken in 1995, which was not fully deductible, and the additional utilization of foreign tax credits in the current year. Earnings per share were $.35 and $1.00 for the second quarter and six months of 1996, respectively, versus $.36 and $.98 for the comparable periods of the prior year. Earnings per share in 1995 would have been $.59 and $1.21 for the three- and six-month periods, respectively, excluding the litigation charge taken in the previous year. -6- Outlook - ------- In the early part of the third quarter of 1996, the worldwide market for consumer products continued to be highly competitive and sensitive to price. The Company expects that this will continue throughout the remainder of 1996. However, management will continue to evaluate price increase opportunities as appropriate. The Company anticipates a continuation of the current high level of advertising and promotional activities and new product introductions by competitors, along with continued activity in the private label sector. As previously announced, full-year 1996 earnings are likely to be below 1995 earnings, which were $2.57 per share before the litigation charge taken in the second quarter of that year. The Company intends to continue to support the Tampax tampon franchise aggressively with promotions, advertising and product line extensions in the United States and international markets. The cost of manufacturing continues to be impacted by the prior escalation of raw material and packaging costs. Based on the current downward trend of pulp and paper prices, management expects these costs to moderate somewhat through the latter part of 1996 and the first part of 1997. The Company intends to continue its efforts to achieve productivity improvements in order to eliminate excess cost from the supply chain. Financial Condition - ------------------- At June 30, 1996, there was a working capital deficit of $8.3 million, compared to a deficit of $4.1 million at the prior-year end. Cash flows from operating activities for the six months ended June 30, 1996 were $25.6 million, versus $20.8 million in the comparable period of 1995. The increase in cash flows from operating activities is primarily attributable to higher accounts payable and lower inventory levels, partially offset by the timing of tax payments. Capital expenditures of $14.8 million in the six months ended June 30, 1996 represent the Company's continued investment in equipment to improve product quality and productivity, modernize production facilities, and manufacture and launch new products. The spending levels in 1996 are expected to approximate those of 1995. The Company anticipates that its future cash requirements will be met by its cash flows from operations and the ability to borrow from a variety of sources. -7- Information Concerning Forward-Looking Statements - ------------------------------------------------- Statements contained in this Quarterly Report other than matters of historical fact are forward-looking statements, and are made based on management's expectations and beliefs concerning future developments and their potential effect on the Company. There can be no assurance that future developments will be in accordance with management's expectations or that the effect of future developments on the Company will be those anticipated by management. Among the factors that could cause actual results to differ materially from such forward- looking statements are the following: - the market reception given the Company's new products, including TAMPAX NATURALS; - competitive pressures, including new product developments or increased advertising or promotional activity by existing or new competitors or growth in the private label tampon segment; - changes in the market for raw or packaging materials, which could impact the Company's manufacturing costs; - changes in the pricing of the products of the Company or its competitors; - changes in consumer preferences affecting the usage of tampons; - the loss of a significant customer; - the costs and uncertainties associated with implementation of actions resulting from the Company's ongoing evaluation of its business strategies and organizational structures; - production delays or inefficiencies; - the costs and other effects of legal and administrative cases and proceedings, settlements and investigations; - real or perceived safety or quality issues with respect to the Company's products, whether arising from tampering or otherwise; and - changes in U.S. or international economic or political conditions, such as inflation or fluctuations in interest or foreign exchange rates. While the Company periodically reassesses material trends and uncertainties affecting the Company's results of operations and financial condition in connection with its preparation of management's discussion and analysis of results of operations and financial condition contained in its quarterly and annual reports, the Company does not intend to review or revise any particular forward-looking statement in light of future events. -8- PART II - OTHER INFORMATION --------------------------- Item 1. Legal Proceedings - ------- ----------------- The Company or a subsidiary is a defendant in a small number of product liability lawsuits based on allegations that toxic shock syndrome ("TSS") was contracted through the use of tampons. A small number of pre-suit claims involving similar TSS allegations have also been asserted. The damages alleged vary from case to case and often include claims for punitive damages. The Company is involved, either as a named defendant or as the result of contractual indemnities, in certain litigation arising out of the operations of certain divested subsidiaries. There are certain other legal proceedings pending against the Company arising out of its normal course of business in which claims for monetary damages are asserted. While it is not feasible to predict the outcome of these legal proceedings and claims with certainty, management is of the belief that any ultimate liabilities in excess of provisions therefor will not individually or in the aggregate have a material adverse effect on the Company's financial position or results of operations. Items 2, 3 and 5 of Part II have been omitted since either the Company's response to the Item would be negative or the Item is inapplicable. Item 4. Submission of Matters to a Vote of Security Holders - ------- --------------------------------------------------- At the Annual Meeting of Shareholders held on April 23, 1996, the shareholders of the Company elected 12 directors for a one-year term. The number of votes cast at such meeting with respect to this matter is as follows: -9- Votes Votes Votes Broker Matter For Against Withheld Abstentions Non-Votes - ------ --- ------- -------- ----------- --------- Election of Directors - --------- Lilyan H. Affinito 30,691,194 214,203 Anne M. Busquet 30,693,482 211,915 Paul S. Doherty 30,229,926 675,471 Edward T. Fogarty 30,695,827 209,570 Janet Hill 30,695,276 210,121 Robert P. Kiley 30,696,060 209,337 John Loudon 30,018,638 886,759 Ruth M. Manton 30,684,384 221,013 John A. Meyers 30,693,255 212,142 H.L. Tower 30,699,404 205,993 Howard B. Wentz, Jr. 30,695,422 209,975 Robert M. Williams 30,678,723 226,674 Further information regarding this matter is set forth in the Company's proxy statement, dated March 11, 1996, and is incorporated herein by reference. Item 6. Exhibits and Reports on Form 8-K - ------ -------------------------------- a) Exhibits -------- Exhibit Number Description ------ ----------- 3(1) Certificate of Incorporation of the Company, as amended through April 28, 1987, filed April 30, 1987 as Exhibit 4(a) to the Company's Form S-8 Registration Statement (Reg. No. 33-13902), incorporated herein by reference. 3(2) Certificate of Amendment of Certificate of Incorporation of the Company, dated April 24, 1990, filed May 15, 1990 as Exhibit 4(2) to the Company's Report on Form 10-Q for the quarter ended March 31, 1990, incorporated herein by reference. 3(3) Certificate of Amendment of Certificate of Incorporation of the Company, dated April 28, 1992, filed May 15, 1992 as Exhibit 4(2) to the Company's Report on Form 10-Q for the quarter ended March 31, 1992, incorporated herein by reference. -10- Exhibit Number Description ------ ----------- 3(4) By-Laws of Company, as amended, filed March 31, 1995 as Exhibit 3(4) to the Company's Report on Form 10-K for the year ended December 31, 1994, incorporated herein by reference. 4(1) Description of the rights of security holders set forth in the Certificate of Incorporation of the Company, as amended through April 28, 1987, filed April 30, 1987 as Exhibit 4(a) to the Company's Form S-8 Registration Statement (Reg. No. 33-13902), incorporated herein by reference. 4(2) Description of the rights of security holders set forth in the Certificate of Amendment of Certificate of Incorporation of the Company, dated April 28, 1992, filed May 15, 1992 as Exhibit 4(2) to the Company's Form 10-Q Report for the quarter ended March 31, 1992, incorporated herein by reference. 4(3) Rights Agreement between the Company and First Chicago Trust Company of New York, as Rights Agent, dated as of October 24, 1989, which includes the Form of Right Certificate as Exhibit A and the Summary of Rights to Purchase Common Shares as Exhibit B, filed October 27, 1989 as Exhibit 1 to the Company's Form 8-A Registration Statement, incorporated herein by reference. 4(4)(a) Indenture dated as of December 1, 1993 between the Company and Citibank, N.A., as trustee, relating to the Company's Medium-Term Note Program, filed March 31, 1994 as Exhibit 4(4)(a) to the Company's Form 10-K Report for the year ended December 31, 1993, incorporated herein by reference. 4(4)(b) Form of Floating Rate Debt Security, filing December 16, 1993 as Exhibit 4-a to the Company's Report on Form 8-K, incorporated herein by refernce. 4(4)(c) Form of Fixed Rate Debt Security, filed December 16, 1993 as Exhibit 4-b to the Company's Report on Form 8-K, incorporated herein by reference. -11- Exhibit Number Description ------ ----------- 10(1) Tambrands Inc. 1996 Non-Employee Director Stock Unit Plan, effective as of April 23, 1996, filed herewith. 12 Computation of Ratio of Earnings to Fixed Charges, filed herewith. 27 Financial Data Schedules, filed herewith (in electronic format only). Exhibits 2, 11, 15, 18, 19, 22, 23, 24 and 99 have been omitted as inapplicable. b) Reports on Form 8-K ------------------- The Company filed a Report under Item 5 of Form 8-K on April 24, 1996 in order to file a press release, issued by the Company on April 23, 1996, which contained the Company's first-quarter 1996 results. The Company filed a Report under Item 5 of Form 8-K on June 13, 1996 in order to file a press release, issued by the Company on June 12, 1996, which contained the Company's expectations for earnings for the second quarter of 1996 and the full year. -12- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TAMBRANDS INC. ______________________ (Registrant) /s/ Susan J. Riley ________________________ Susan J. Riley Senior Vice President - Chief Financial Officer and Authorized Signatory Date: August 14, 1996 -13- EX-10.1 2 DIRECTORS STOCK UNIT PLAN EXHIBIT 10(1) TAMBRANDS INC. 1996 NON-EMPLOYEE DIRECTOR STOCK UNIT PLAN ------------------------------------------ Section 1. Establishment of Plan; Purpose. - --------- ------------------------------ The Plan is hereby established to permit Eligible Directors, in recognition of their prior and/or expected contributions to the Company, to receive Units in the manner hereinafter provided. The Plan is intended to enable the Company to attract, retain and motivate the best qualified directors and to enhance the long-term mutuality of interest between the Eligible Directors and the shareholders of the Company. Section 2. Definitions. - --------- ----------- When used in this Plan, the following terms shall have the definitions set forth in this Section: "Board" shall mean the Board of Directors of the Company. ----- "Common Stock" shall mean the common stock of the Company, par value ------------ twenty-five cents ($0.25), any common stock into which such common stock may be changed, and any common stock resulting from any reclassification of such common stock. "Company" shall mean Tambrands Inc. ------- "Director" shall mean any member of the Board regardless of whether such -------- person is an Eligible Director. "Disability" shall mean permanent and total disability within the meaning ---------- of Section 22(e) of the Internal Revenue Code of 1986, as amended. "Election Grant" shall mean a Grant of Units to an Eligible Director first -------------- elected to the Board after January 1, 1996. "Eligible Director" shall mean a Director who is not an employee of the ----------------- Company or any Subsidiary. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. ------------ "Fair Market Value" on any date shall mean the mean between the high and ----------------- low sales price of a Share on such date as reported in the principal consolidated transaction reporting system for the New York Stock Exchange (or, if the Common Stock is not listed on the New York Stock Exchange, on such other national exchange or the over-the-counter market on which the Common Stock is principally traded). "Grant" shall mean a grant of Units under Section 3. ----- "Retirement" shall mean termination of service as a Director in accordance ---------- with the Company's mandatory retirement policy for Directors, as in effect from time to time. "Service Termination Date" shall have the meaning ascribed thereto under ------------------------ Section 4.2. "Share" shall mean a share of Common Stock. ----- "Subsidiary" shall mean any entity of which the Company possesses directly ---------- or indirectly fifty percent (50%) or more of the total combined voting power of all classes of stock of such entity. "Unit" shall mean a contractual obligation of the Company to pay cash in an ---- amount equal to the value of one Share (or, in certain circumstances, to deliver a Share at the election of the Eligible Director in accordance with the terms and conditions set forth in Section 4.3) to an Eligible Director or the beneficiary or estate of such Eligible Director as provided herein. An Eligible Director shall have no rights as a stockholder with respect to any Share covered by any Unit unless and until such Eligible Director shall have become the holder of record of any Share related thereto. Section 3. Units - --------- ----- 3.1. Conversion of Retirement Benefits. Each Eligible Director in --------------------------------- office on January 1, 1996 shall receive a Grant of that number of Units as are equal to the quotient of (i) the present value of the retirement benefits payable to such Eligible Director under the terms of the Company's Pension Plan for Directors, based 2 on the Eligible Director's actual age and the actuarial assumptions used for calculating the present value of a participant's retirement benefits under the Company's Pension Plan for Employees and assuming that (A) the Eligible Director has completed the service required to obtain the maximum benefit payable thereunder and (B) the Eligible Director terminates service as a Director at age 65, divided by (ii) the Fair Market Value of a Share on the date of the annual -- meeting of shareholders to be held in 1996. Fractional Units shall be credited, but shall be rounded to the nearest hundredth percentile, with amounts equal to or greater than .005 rounded up and amounts less than .005 rounded down. An Eligible Director's rights and interests in the Units awarded under this Section 3.1 shall be immediately vested and nonforfeitable. 3.2. Election Awards. (a) Election Grant; Standard Vesting Requirements. --------------- --------------------------------------------- Each Eligible Director first elected to the Board on or after January 1, 1996 shall be awarded an Election Grant of 1,000 Units effective as of the later of (i) the annual meeting of shareholders of the Company held in 1996 and (ii) the - -- -- date such Eligible Director first becomes a Director (the "Commencement Date"); provided that, if any such Eligible Director ceases to be a Director for any - ------------- reason other than death, Disability or Retirement prior to the fifth anniversary of the Commencement Date, such Eligible Director shall forfeit to the Company any and all rights and interests in the Units credited to him or her without any compensation therefor. After completing five years of service as a Director fol lowing his or her Commencement Date, an Eligible Director's rights and interests in his or her Units shall be fully vested and nonforfeitable. (b) Death, Disability or Retirement. In the event that an Eligible ------------------------------- Director shall cease to be a Director prior to the fifth anniversary of the Commencement Date due to death, Disability or Retirement, the rights and interest of such Eligible Director (or in the case of the Eligible Director's death, the Eligible Director's beneficiary or beneficiaries) in the Units which are the subject of such 3 Election Grant shall become fully vested and nonforfeitable. (c) Change of Control. Upon the occurrence of a Change of Control, ----------------- each Eligible Director's rights and interest in Units which have not previously vested under this Section 3 shall become vested and nonforfeitable regardless of the period of the Eligible Director's service since the date such Units were granted. A "Change in Control" shall mean the occurrence of any of the following events: (1) an acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then - outstanding Shares or (B) the combined voting power of the then - outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"), but excluding (w) any acquisition directly from the - Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (x) any acquisition by the Company, - (y) any acquisition by an employee benefit plan (or related trust) - sponsored or maintained by the Company and (z) any acquisition by any - corporation pursuant to a reorganization, merger, consolidation or similar corporate transaction (in each case, a "Corporate Transaction"), if such Corporate Transaction is an Exempt Corporate Transaction (as defined below); or (2) the approval by the shareholders of the Company of a Corporate Transaction or, if consummation of such Corporate Transaction is subject, at the time of such approval by shareholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Corporate Transaction (an "Exempt Corporate Transaction") pursuant to which (A) all or substantially all of the individuals and - entities who are the beneficial owners, respectively, of the outstanding Shares and Outstanding Company Voting Securities immediately prior to such 4 Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction and the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors, in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the outstanding Shares and Outstanding Company Voting Securities, as the case may be, and (B) no - Person (other than the Company, any employee benefit plan (or related trust) of the Company or the corporation resulting from such Corporate Transaction and any Person beneficially owning, immediately prior to such Corporate Transaction, directly or indirectly, 20% or more of the outstanding Shares or Outstanding Company Voting Securities, as the case may be) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding securities of such corporation entitled to vote generally in the election of directors; or (3) the approval by the shareholders of the Company of (A) a complete - liquidation or dissolution of the Company or (B) the sale or other - disposition of all or substantially all of the assets of the Company other than pursuant to an Exempt Corporate Transaction. 3.3. Dividend Equivalents. Whenever a dividend other than a dividend -------------------- payable in the form of Shares is declared with respect to the Shares, the number of Units credited to an Eligible Director shall be increased by the number of Units determined by dividing (i) the product of - (A) the number of Units credited to such Eligible Director on the - related dividend record date and (B) the amount of any cash dividend declared by the Company on a Share - (or, in the case of any dividend distributable in property other 5 than Common Shares, the per share value of such dividend, as determined by the Company for purposes of Federal income tax reporting) by (ii) the Fair Market Value on the related dividend payment date. In the case of any dividend declared on Shares which is payable in Shares, the number of Units credited to an Eligible Director shall be increased by the number of Units equal to the product of (i) the number of Units credited to such Eligible Director on the related dividend record date and (ii) the number of Shares (including any fraction thereof) distributable as a dividend on a Share. 3.4. Capital Adjustments. In the event of any change in the number ------------------- or kind of outstanding Shares by reason of any recapitalization, reorganization, merger, consolidation, stock split or any similar change affecting the Shares, other than a stock dividend as provided above, the Board shall make an appropriate adjustment in the number of Units credited for the benefit of each Eligible Director. 4. Distributions in Respect of Units. --------------------------------- 4.1. No Payment on Units While a Director. No amount shall be paid ------------------------------------ to any Eligible Director in respect of any Units until such time as such Eligible Director has ceased to be a member of the Board. 4.2 Timing of Payment. An Eligible Director may elect, at any time ----------------- and from time to time, but in no event later than six months prior to the date as of which his or her service as an Eligible Director terminates (the "Service Termination Date"), whether (i) to receive a distribution of the value of his or her Units in a single lump sum payment or in such number of annual installments, not to exceed ten, as the Eligible Director shall elect; and (ii) whether the lump sum distribution or first installment shall be made 6 (A) as soon as practicable after the Service Termination Date; (B) on the first day of the calendar month beginning more than six months after the Service Termination Date; or (C) on the first anniversary of the Service Termination Date. Any election shall be filed in writing with the Secretary of the Company and shall be effective when received by the Secretary; provided that, if an Eligible ------------- Director's Service Termination Date occurs within six months of the date an election is received it shall be deemed to be ineffective and the last election filed more than six months before the Service Termination Date shall be deemed to be effective. 4.3. Form of Payment. Any payment to be made to an Eligible Director --------------- shall be made in cash, except that, if an Eligible Director elects to commence receipt of his or her distribution at least six months after his Service Termination Date, the Eligible Director may elect to receive payment with respect to all or a portion of his or her Units in Shares; provided that, any ------------- fractional Shares to be delivered in respect of Units shall be settled in cash based upon the Fair Market Value on the date such Shares would otherwise have been delivered to the Eligible Director or the Eligible Director's beneficiary. Any election to receive Shares in lieu of cash shall be filed in writing with the Secretary of the Corporation prior to the date as of which the distribution is to be made, and shall become irrevocable on such date; provided that, an ------------- election to receive Shares shall have no force or effect until at least six months after the Service Termination Date. 4.4. Default Provisions. If an Eligible Director fails to specify a ------------------ commencement date for a distribution in accordance with Section 4.2, such distribution shall be made in cash and commence on the first anniversary of the Eligible Director's Service Termination Date. If an Eligible Director fails to specify whether a distribution shall be made in a lump-sum payment or a number of installments, such distribution shall be made in a lump-sum payment. If an Eligible Director who could have elected to receive Shares instead of cash pursuant to Section 4.3 does not specify that any portion of his or her distribution should be in Shares, the distribution in respect of such Director shall be made entirely in cash. 7 4.5. Payment Rules as to Installments. In the case of any distribution -------------------------------- being made in annual installments, each installment after the first installment shall be paid on the first business day of each subsequent calendar year until the entire amount shall have been paid. The value of any installment payment payable in cash shall be an amount equal to the product of (i) the number Units then standing to the credit of an Eligible Director (which shall be net of the number of Units with respect to which any prior installment payments have been made); (ii) the Fair Market Value of a Share on the last business day immediately prior to the date as of which such installment is payable; and (iii) a fraction, the numerator of which is one and the denominator of which is the number of installments (including the then current installment) remaining to be paid. 4.6. Payment of Units Upon Death. In the event of the death of an --------------------------- Eligible Director, any payment due in respect of the Eligible Director's Units shall be made to the beneficiary designated in writing by such Eligible Director and filed with the Secretary of the Company, or, in the absence of such designation, to the Eligible Director's estate. Any such payment shall be made at the same time and subject to the same conditions as would have applied had the Eligible Director survived and the date of his or her death been treated as the Eligible Director's Service Termination Date, unless the Eligible Director shall have specified that an alternative form of payment permitted under the Plan should apply in the event of his or her death. Section 5. Administration. -------------- 5.1. Rules; Interpretation; Determinations. The Plan shall be ------------------------------------- administered by the Board; provided, however, that the Plan shall be administered such that (i) any Director participating in the Plan shall continue to be deemed to be a "disinterested person" under Rule 16b-3 under the Exchange Act ("Rule 16b-3") for purposes of such Director's ability to serve on any committee charged with administering any of the Company's stock based 8 incentive plans for executive officers intended to qualify for the exemptive relief available under Rule 16b-3; and (ii) the Units shall be treated, to the extent necessary to assure or facilitate compliance with the provisions of Section 16 under the Exchange Act, as exempt from the definition of a derivative security under Rule 16a-1(c)(3) as promulgated by the Securities and Exchange Commission under the Exchange Act. Subject to the foregoing, the Board shall have full authority to interpret and administer the Plan, to establish, amend and rescind rules for carrying out the Plan and to make all other determinations and to take all other actions that it deems necessary or desirable for administering the Plan. Each determination, interpretation or other action made or taken by the Board shall be final and binding for all purposes and upon all persons. The Board may delegate its powers and functions hereunder to a duly appointed committee of the Board and such committee shall have the powers granted to the Board and the rights afforded to the Board and/or its members pursuant to the Plan. 5.2. Agents and Expenses. The Board may appoint agents (who may be ------------------- employees of the Company) to assist in the administration of the Plan and may grant authority to such persons to execute agreements or other documents on its behalf. The Board may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan, and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. All expenses incurred in the administration of the Plan, including, without limitation, for the engagement of any counsel, consultant or agent, shall be paid by the Company. 5.3. Indemnification. No member or former member of the Board or any --------------- agent designated pursuant to Section 5.2 shall be liable for any action or determination made in good faith with respect to the Plan. To the maximum extent permitted by applicable law, each member or former member of the Board or any designated agent shall be indemnified and held harmless by the Company against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act in con- 9 nection with the Plan, unless arising out of such person's willful misconduct. Section 6. Amendment and Termination. - --------- ------------------------- The Board may amend the Plan at any time; provided that, to the extent the -------- ---- Units must qualify for the exemption from treatment as a derivative security under Rule 16a-1(c)(3) to assure or facilitate the continued compliance of the plan and the Company's other equity based plans with the requirements of Section 16, the Board may not accelerate the times at which Shares may be delivered under the Plan. Notwithstanding the foregoing, no amendment or termination of the Plan shall materially and adversely affect any rights of any Director under any Grant previously made pursuant to the Plan. Section 7. General Provisions - --------- ------------------ 7.1. Nontransferable Grants. Grants made under the Plan may not be ---------------------- assigned or transferred, in whole or in part, either directly or by operation of law (except in the event of an Eligible Director's death by will or applicable laws of descent and distribution), including, but not by way of limitation, by execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner, and no such right or interest of any Eligible Director in the Plan shall be subject to any obligation or liability of such Eligible Director. 7.2. No Right to Remain as a Director. This Plan shall not impose any -------------------------------- obligations on the Company to retain any Eligible Director as a Director nor shall it impose any obligation on the part of any Eligible Director to remain as a Director of the Company. 7.3. No Right to Specific Assets. Nothing contained in the Plan and no --------------------------- action taken pursuant to the Plan shall create or be construed to create a trust of any kind or any fiduciary relationship between the Company and any Director, the executor, administrator or other personal representative or designated beneficiary of such Director, or any other persons. Any reserves that may be established by the Company in connection with Units granted under this Plan shall continue to be treated as the assets of the Company for Federal income tax purposes and remain subject to the claims of the Company's creditors. To the extent 10 that any Eligible Director or the executor, administrator, or other personal representative of such Eligible Director, acquires a right to receive any payment from the Company pursuant to this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. 7.4. Listing of Shares and Related Matters. If at any time the Board shall ------------------------------------- determine in its discretion that the listing, registration or qualification of the Shares covered by this Plan upon any national securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the delivery of Shares under this Plan, no Shares will be delivered unless and until such listing, registration, qualifi cation, consent or approval shall have been effected or obtained, or otherwise provided for, free of any conditions not acceptable to the Board. 7.5. Non-Exclusivity. Neither the adoption of this Plan by the Board nor --------------- the grant of Units hereunder shall be construed as creating any limitations on the power of the Board to adopt such other compensatory arrangements as it may deem desirable, including, without limitation, the granting or issuance of stock options, Shares and/or other incentives otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific instances. 7.6. No Limit on Corporate Action. The existence of this Plan and the ---------------------------- Shares and Units granted hereunder shall not affect in any way the right or power of the Board or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting Common Stock, the dissolution or liquidation of the Company or any sale or transfer of all or part of its assets or business, or any other corporate act or proceeding. 7.7. Severability of Provisions. If any provision of this Plan shall be -------------------------- held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provision had not been included. 11 7.8. Incapacity. Any benefit payable to or for the benefit of a minor, an ---------- incompetent person or other person incapable of receipting therefor shall be deemed paid when paid to such person's guardian or to the party provid ing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge any liability or obligation of the Board, the Company and all other part ies with respect thereto. 7.9. Retired Directors. Nothing in this Plan shall be construed to limit ----------------- or in any way impair the right of any person who served as a member of the Board of Directors who terminated service with the Company prior to January 1, 1996 (or any beneficiary of any such Director) to receive payment of cash retirement benefits under the Pension Plan for Directors, as in effect on December 31, 1995. 7.10. Notices. Each Eligible Director shall be responsible for furnishing ------- the Secretary of the Company with the current and proper address for the mailing of notices and delivery of payments pursuant to the Plan. Any notices required or permitted to be given shall be deemed given if directed to the person to whom addressed at such address and mailed by regular United States mail, first-class and prepaid. If any item mailed to such address is returned as undeliverable to the addressee, mailing will be suspended until the Eligible Director or his or her beneficiary furnishes the proper address. 7.11. Voting Rights. The Company shall have the right, but not the ------------- obligation, to establish a grantor trust to assist it in meeting its obligations under the Plan to fund the benefits payable to Directors hereunder. If the Company shall establish and fund such a trust using Shares, the Company shall cause the trustee of such trust to accept direction from each Eligible Director as to how to vote that number of Shares held by the trust that corresponds to the number of Units credited to the account of such Eligible Director. 7.12 Headings and Captions. The headings and captions herein are --------------------- provided for reference and convenience only, shall not be considered part of this Plan, and shall not be employed in the construction of this Plan. 7.13. Controlling Law. The Plan shall be construed and enforced according --------------- to the laws of the State of Delaware. 12 EX-12 3 RATIO OF EARNINGS TO FIXED CHARGES Tambrands Inc. FORM 10-Q PART II, Item 6., Exhibit 12 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Unaudited) The following table sets forth the Company's ratio of earnings to fixed charges for the periods indicated.
Three months ended June 30, Six months ended June 30, ------------------------------- ----------------------------- (in thousands, except ratios) 1996 1995 1996 1995 ------------ ------------ ------------ ------------- Earnings: Income before income taxes $ 20,431 $ 23,409 $ 57,527 $ 60,219 Fixed charges 2,521 2,908 5,012 5,474 ------------ ------------ ------------ ------------- EARNINGS $ 22,952 $ 26,317 $ 62,539 $ 65,693 ============ ============ ============ ============= Fixed charges: Interest portion of operating lease expense: Operating lease expense $ 1,133 $ 1,372 $ 2,189 $ 2,819 Assumed interest factor 0.33 0.33 0.33 0.33 ------------ ------------ ------------ ------------- Interest portion of operating lease expense 374 453 722 930 Interest expense 2,147 2,455 4,290 4,544 ------------ ------------ ------------ ------------- FIXED CHARGES $ 2,521 $ 2,908 $ 5,012 $ 5,474 ============ ============ ============ ============= RATIO OF EARNINGS TO FIXED CHARGES 9.1 9.1 12.5 12.0 ============ ============ ============ =============
EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SECOND QUARTER 10Q 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS 6-MOS DEC-31-1996 DEC-31-1996 APR-01-1996 JAN-01-1996 JUN-30-1996 JUN-30-1996 9,591 9,591 0 0 125,077 125,077 (1,634) (1,634) 51,141 51,141 229,861 229,861 360,672 360,672 (145,180) (145,180) 451,192 451,192 238,111 238,111 69,852 69,852 0 0 0 0 10,887 10,887 98,097 98,097 451,192 451,192 161,307 330,296 161,307 330,296 54,068 109,909 54,068 109,909 0 0 0 0 (2,294) (4,411) 20,431 57,527 7,416 20,882 13,015 36,645 0 0 0 0 0 0 13,015 36,645 0.35 1.00 0.35 1.00
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