Item 1. Business (a) General Maui Land & Pineapple Company, Inc. is a Hawaii corporation, the successor to a business organized in 1909. The Company consists of a land- holding and operating parent company as well as its principal wholly-owned subsidiaries, Maui Pineapple Company, Ltd., Kapalua Land Company, Ltd., Kapalua Investment Corp., Kapalua Waste Treatment Company, Ltd., Kapalua Water Company, Ltd. and Honolua Plantation Land Company, Inc. Maui Pineapple Company, Ltd. and Kapalua Land Company, Ltd. are the major operating subsidiaries. The Company, as used herein, refers to the parent and all of its subsidiaries.
(b) Financial Information About Industry Segments The information set forth under Note 13 to Consolidated Financial Statements on page 18 of the Maui Land & Pineapple Company, Inc. 1995 Annual Report to Stockholders is incorporated herein by reference.
(c) Narrative Description of Business The Company's principal activities are Pineapple, Resort and Commercial & Property. (1) Pineapple In 1995 Maui Pineapple Company, Ltd. recorded an operating loss (before corporate expenses, interest expense and income taxes) of $3.5 million compared to an operating loss of $867,000 in 1994. During the year we focused on meeting case sales volume, pricing objectives, recovery goals and on lowering the unit cost per case. We did achieve higher pricing levels than in 1994, but we were unable to meet our objectives in the other three key measures of performance. In 1995 the Island of Maui experienced a severe drought with especially dry conditions on the Haliimaile plantation. Dry weather reduced fruit size and caused sunburned, porous fruit. This in turn lowered recovery in canned pineapple and juice products. The lower recovery resulted in fewer cases packed than originally planned, which raised per case production costs. We reduced some effects of the drought by using drip irrigation systems; however, there was not enough water to adequately irrigate the Haliimaile plantation.
The Company's overall case volume declined by 5% compared to 1994. In total, canned fruit sales volume was unchanged compared with 1994. The grocery and government segments showed modest gains. Institutional sales moved down sharply due to several customers purchasing large inventories of canned pineapple at the end of 1994. Total juice sales volume declined by 11%. The grocery, government and institutional juice segments declined 5%, 82% and 4% respectively. We experienced the largest decline in the government segment due to the loss of the USDA and Department of Defense bids; they were awarded to smaller regional juice packers. Concentrate sales were down 26%, a planned volume reduction. Although sales were down slightly for the year, we did retain our customer base and were able to acquire a number of new customers late in the year. Mainland Jet Fresh and local fresh fruit sales declined in 1995. On May 30, 1995, the United States Department of Commerce announced the results of the antidumping investigation and imposed duties of between 2% and 51% on imports by Thailand pineapple companies. On June 30, 1995, the International Trade Commission ruled 6-0 in the Company's favor on final injury determination. All four Thai respondents have filed an appeal with the U.S. Trade Court in New York. They are challenging the Department of Commerce's methodology in calculating the duty. They make no challenge to the final determination on injury to the domestic industry. The Company also has filed an appeal with the same court to allow us to introduce new evidence to help the Department of Commerce defend its decision. We do not expect a decision on the appeal before December 1996. We believe the appeal by the Thai respondents adds a degree of uncertainty to the marketplace, which will dampen price increases until the matter is resolved. Many Thailand producers shipped additional inventory into the U.S. before the final antidumping determination. This oversupply of canned pineapple continued to exert downward pressure on prices and volume during the first half of the year. By year-end the situation had improved. Drought-related crop conditions in the Far East and the favorable antidumping decision reduced U.S. imports. As a result, most pineapple producers announced moderate fruit price increases beginning in the third quarter. These increases ranged from 8.5% for nationally branded products to 20% for regionally distributed imports. These conditions allowed Maui Pineapple Company to make its first significant price increase in four years. The increase began to impact revenues in the fourth quarter. In 1994 we commenced a modest consumer-focused marketing effort to promote awareness of Hawaiian pineapple. During 1995 we expanded on this effort in selected geographical areas of the U.S., positioning our product as the only 100% Hawaiian U.S.A. canned pineapple. We are moving toward our diversification objectives. Soon we will begin selling Costa Rican fresh pineapple to U.S. east coast customers under the label of Royal Coast. This addition of fresh pineapple allows us to provide a line extension to our existing east coast customer base. We are continuing research and development on fresh chilled pineapple and intend to enter this rapidly expanding market in 1996. Maui Pineapple Company, Ltd. is the operating subsidiary for pineapple. It owns and operates fully-integrated facilities for the production of pineapple products. Pineapple is cultivated on two company-operated plantations on Maui which provided approximately 76% of the fruit processed in 1995. The balance of fruit processed was purchased from independent growers. Two pineapple crops are normally harvested from each new planting. The first, or plant crop, is harvested approximately 18 to 23 months after planting, and the second, or ratoon crop, is harvested 12 to 14 months later. Harvested pineapple is processed at the Company's cannery in Kahului, Maui, where a full line of canned pineapple products is produced, including solid pineapple in various grades and styles, juice, and juice concentrates. The cannery operates most of the year; however, over 50% of production volume takes place during June, July and August. The metal containers used in canning pineapple are produced in the Company-owned can plant. Warehouses are maintained at the cannery site for inventory purposes. The Company sells pineapple products under buyers' labels principally to large grocery chains, other food processors, wholesale grocers, and to organizations offering a complete buyers' brand program to affiliated chains and wholesalers serving both retail and food service outlets. A substantial volume of its pineapple products is marketed through food brokers. Maui Pineapple Company, Ltd. is the sole supplier of private label, 100% Hawaiian canned pineapple products to United States supermarkets. In 1995, approximately 20 domestic customers accounted for about 51% of pineapple sales. Export sales, chiefly to Japan, Canada and Western Europe, amounted to approximately 7.1%, 6.2% and 5.2% of total pineapple sales in 1995, 1994 and 1993, respectively. Sales to the U.S. government amounted to approximately 13.1%, 11.8% and 8.5% of total pineapple sales in 1995, 1994 and 1993, respectively. The Company's pineapple sales office is in Concord, California. As a service to its customers, the Company maintains inventories of its products in public warehouses in the continental United States. The balance of its products are shipped directly from Hawaii to its customers. The Company sells its products in competition with both foreign and U.S. companies. Its principal competitors are two U.S. companies which produce sizable quantities of pineapple, a significant portion of which is produced in the Philippines. Producers in other foreign countries (particularly Thailand) are also a major source of competition. Foreign production has the advantage of lower hourly labor costs. Other canned fruits and fruit juices are also a source of competition. Generally, the price of the Company's products is influenced by supply and demand of pineapple and other fruits and juices. To grow and harvest its crops, operate its cannery and sell and market its product, the Company employed approximately 910 year-round employees and hired approximately 590 seasonal workers in 1995.
(2) Resort Kapalua Land Company, Ltd. had an operating profit (before corporate expenses, interest expense and income taxes) of $7.3 million in 1995 compared with an operating loss of $2.2 million in 1994. Most of this improvement was due to the reversal of previously allocated losses from Kaptel Associates, The Ritz-Carlton Kapalua Hotel joint venture. Development activities other than the Kaptel joint venture improved by $900,000 over the previous year while profits from ongoing Resort operations declined by $500,000. Although The Ritz-Carlton Kapalua Hotel has consistently generated a positive cash flow from operations, beginning in February 1995 Kaptel was only able to make partial payment on its debt service and defaulted on its loan. NI Hawaii Resort, Inc. (NI), the major general partner, commenced negotiations with the lenders to acquire the loan and on October 31, 1995, the partners concluded an agreement to dissolve the partnership.
As a result, we transferred our 25% ownership interest in the partnership to NI and reversed all of the previously allocated losses. This represents an increase in earnings of $5.0 million for 1995 compared to an allocated loss of $4.1 million in 1994. An amended management agreement was also negotiated with The Ritz- Carlton Hotel Company as the hotel operator and a revised ground lease was negotiated with us. Under the terms of the agreement, we retain ownership of the land (subject to a $65 million first mortgage) with a reduced rent, but with important controls related to the use of this property. Additionally, $4.75 million of off-site construction loan debt is to be repaid solely from ground rent and any balance remaining on the loan at January 1, 1999 will be canceled. We will not recognize any ground rent income until 1999. Since April of last year, the owners of the Kapalua Bay Hotel actively tried to sell the hotel, but were unsuccessful in their efforts. In December 1995, the owners filed bankruptcy under Chapter 11 and are presently still trying to conclude a sale. Under terms of our ground lease, we have a right of first refusal regarding any potential sale. Our primary interest is to make sure the hotel is properly positioned with strong financial ownership and experienced quality management. Other development activities at the Resort included the sale of one of the remaining five lots in Plantation Estates Phase I. As a result, Plantation Club Associates contributed $152,000 to operating profits. In 1994 the Resort's share of the loss from this joint venture was $766,000. Real estate activity within the Resort slowed during 1995, but prices remained stable. Capital expenditures for the Resort water system and sewer capacity decreased from $3.4 million in 1994 to $800,000 in 1995. Last year we completed payment on water system improvements needed to comply with the Environmental Protection Agency Safe Drinking Water Act. On December 12, 1995, the Public Utility Commission ruled favorably on our application for a rate increase for our water and waste treatment companies. This increase provides a fair return on our investment in water system infrastructure and will have a positive impact on our operating results going forward. We also continued our funding of the expansion of the Lahaina Sewage Treatment Plant and expect to make our final payment in 1996. This investment provides us with the required sewage capacity for future development.
Resort on-going operations posted a profit of $2.3 million in 1995 compared with a profit of $2.8 million in 1994. Resort revenues were $34.3 million in 1995 compared to $34.1 million in 1994. Cash flow from Resort operations increased to $5.0 million from $4.4 million in 1994. Maui destination resorts experienced a modest increase in occupancy in 1995. Resort occupancy at Kapalua remained the same at 56%. This was well below the average occupancy for Maui as competition in the over-built luxury hotel market remains intense. In our recreation departments, the number of paid golf rounds declined by 2% from 1994 levels, but total golf and merchandise revenues were up slightly. Tennis play was comparable with prior year levels and profitability improved. Our Kapalua villa program continues to grow with a 7% increase in the number of units in the program, a 10% increase in the number of occupied rooms and a 7% improvement in profitability. The addition of a sales representative in February resulted in a noticeable impact on bookings late in the year. The Kapalua Resort development is a destination resort community in West Maui. The resort borders the ocean and includes two hotels, 528 condominium units, three residential subdivisions, three championship golf courses, two ten-court tennis facilities, a 22,000 square foot commercial shopping center, restaurants, a water utility and a waste transmission utility. Kapalua Land Company, Ltd. is the development and operating subsidiary for the Kapalua Resort. It operates the golf and tennis facilities, the commercial shopping center, a short-term vacation rental program (The Kapalua Villas) and certain retail outlets in the Kapalua Resort. It is the provider of certain services to the resort including shuttle, security and the maintenance of common areas. Kapalua Land Company, Ltd. also receives rental income from the lease of certain properties to third parties. Kapalua Realty Company, Ltd. (a wholly-owned subsidiary of Kapalua Land Company, Ltd.) is a general brokerage real estate company located within the resort. Kapalua Water Company, Ltd. and Kapalua Waste Treatment Company, Ltd. (wholly-owned subsidiaries of the Company) are public utilities providing water and waste transmission services to the Kapalua Resort.
Kapalua Land Company, Ltd. and Rolfing Partners formed a joint venture in 1988 to finance and develop a third 18-hole golf course and Plantation Estates Phase I and Phase II, two residential development projects at Kapalua. Four lots in Plantation Estates Phase I and allocated planning and offsite costs related to Plantation Estates Phase II remain in inventory at December 31, 1995. Kapalua Investment Corp. (KIC), a wholly-owned subsidiary of the Company, was a general partner in Kaptel Associates, the partnership that owned The Ritz-Carlton Kapalua Hotel. In October of 1995 KIC transferred its 25% interest in Kaptel to the major general partner, NI Hawaii Resorts, Inc. The Kapalua Resort faces substantial competition from existing and planned resort developments throughout Hawaii and the world. Kapalua is adjacent to the Napili resort area and is approximately five miles from the Kaanapali resort area. The Company employed approximately 370 employees in its resort operations at December 31, 1995.
(3) Commercial & Property The Company's Commercial & Property business segment produced a substantially lower operating profit in 1995 on about the same level of revenues as compared to 1994. Revenues were $10.1 million compared to $10.6 million in 1994. Operating profit (before corporate expenses, interest expense and income taxes) was $3.6 million compared to $5.4 million in 1994. Land sales arising from four transactions contributed a total of $3.4 million profit and cash flow in 1995. The largest of these, the final payment from the State of Hawaii for the 50-acre parcel taken under condemnation for the King Kekaulike High School, was received in June and amounted to $1.8 million. Three other transactions involved the sale of homes on Baldwin Avenue in Makawao which generated $1.6 million in operating profit and cash flow. Kaahumanu Center's results were lower than expected due to the depressed level of retail sales on Maui caused by the relatively weak local economy. Job layoffs in the sugar industry, a low level of construction activity and continued weakness in the visitor industry all combined in 1995 to result in a poor business environment for retailers on the Island. Kaahumanu Center, while achieving a dominant position as the largest retail center, was negatively affected throughout the year by the weak economy. While Kaahumanu Center's main market has been and will continue to be Island residents, the Center has improved its attractions for Maui's visitors. JTB, Japan's largest tour company, has signed a lease and started construction of its "Oli Oli Station," a briefing and processing facility for JTB's group tour business. Approximately 50,000 visitors are expected to use this facility in its first year of operation. Kaahumanu Center is also the terminus for the West Maui, South Maui and Airporter bus systems, effectively Maui's only mass transportation system. Commercial & Property includes Kaahumanu Center, Napili Plaza and other non-resort property rentals and sales. Kaahumanu Center is a regional shopping mall and office building located in Kahului on the Island of Maui. On December 31, 1995, 94% of the available gross leasable area was occupied by 114 tenants. The Center's primary competitor is the Maui Mall which is located within one mile of Kaahumanu Center. Napili Plaza is a 44,000 square foot retail and commercial office center located in West Maui. The first tenants in Napili Plaza began operation in January of 1992. As of December 31, 1995, 80% of the gross leasable area was occupied by 18 tenants. Napili Plaza faces competition from several other retail locations in the Napili area. In June of 1993 Kaahumanu Center Associates (KCA) was formed to finance the expansion of and to own and operate the Kaahumanu Center. KCA is a partnership between the Company as general partner and the Employees' Retirement System of the State of Hawaii (ERS) as a limited partner. As of April 30, 1995, the Company and ERS each have a 50% ownership interest in KCA. Prior to that, the ownership interests were 99% for the Company and 1% for ERS. The renovation which was completed in November of 1994, expanded the Center from approximately 315,000 to 572,000 square feet of gross leasable area.
(4) Other Information The Company engages in continuous research to develop techniques to reduce costs through crop production innovations. Improved production systems have resulted in increased productivity by the labor force. Research and development expenses approximated $410,000 in 1995, $375,000 in 1994 and $416,000 in 1993. The Company has reviewed its compliance with Federal, State and local provisions which regulate the discharge of materials into the environment. It does not expect any material financial impact as a result of compliance with these laws. The Company's method of disposing of pineapple processing waste water utilizes underground injection wells. In recent years, such methods have come under the scrutiny of the regulatory agencies. The Company's capital expenditure budget for 1996 includes $2 million for a system which will totally replace the existing method of disposing of processing waste water. In total, the Company employed approximately 1,940 people in 1995.
(d) Financial Information About Foreign and Domestic Operations and Export Sales. Export sales only arise through the pineapple company. Export sales of pineapple products are made chiefly to Japan, Western Europe and Canada. For the last three years these sales did not exceed 10% of total consolidated revenues.
Item 2.

Item 2. PROPERTIES The Company owns approximately 28,600 acres of land on the Island of Maui. This land, most of which was acquired from 1911 to 1932, is carried at cost. The Company believes it has clear and unencumbered marketable title to all of the preceding property except for the following: (1) a mortgage on the fee and leasehold interest of the 36-acre Ritz- Carlton Kapalua Hotel site, which secures a loan to the ground lessee for up to $65 million (See Note 3 to Consolidated Financial Statements in the Maui Land & Pineapple Company, Inc. 1995 Annual Report to Shareholders.); (2) a perpetual conservation easement granted to the State of Hawaii on a 13-acre parcel at Kapalua; (3) certain existing easements and rights-of-way that do not materially affect the Company's use of such property; (4) a mortgage on the three golf courses at Kapalua, which secures the Company's $22 million revolving credit arrangement; (5) a permanent conservation easement granted to The Nature Conservancy of Hawaii, a non-profit corporation, covering approximately 8,600 acres; and (6) a small percentage of the Company's land in various locations on which multiple claims exist and for which the Company has initiated quiet title actions. Approximately 22,400 acres of the Company's land are located in West Maui, approximately 6,200 acres are located at its Haliimaile plantation in central Maui, and approximately 28 acres are located in Kahului, Maui. The 22,400 acres in West Maui comprise a largely contiguous parcel which extends from the sea to an elevation of approximately 5,700 feet and includes nine miles of ocean frontage with approximately 3,300 lineal feet along sandy beaches, as well as agricultural and grazing lands, gulches and heavily forested areas. The Haliimaile property is situated at elevations between 1,000 and 3,000 feet above sea level on the slopes of Haleakala. Approximately 6,400 acres of Company-owned land are used directly or indirectly in the pineapple operations and approximately 1,500 acres are designated for the Kapalua resort. The Kahului acreage includes offices, a can manufacturing plant and pineapple processing cannery with interconnected warehouses at the cannery site where finished product is stored. The remaining land is primarily in pasture or forest reserve. Approximately 3,000 acres of leased land are used in the Company's pineapple operations. A major operating lease covers approximately 1,500 acres of land. The balance of the leased property is covered under eleven leases expiring variously through 2012. The aggregate land rental for these leases was $390,000 in 1995.
Item 3.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II
Item 5.

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS The information set forth under the caption "Common Stock" on page 19 of the Maui Land & Pineapple Company, Inc. 1995 Annual Report to Stockholders is incorporated herein by reference.
Item 6.

Item 6. SELECTED FINANCIAL DATA The information set forth under the caption "Selected Financial Data" on page 20 of the Maui Land & Pineapple Company, Inc. 1995 Annual Report to Stockholders is incorporated herein by reference.
Item 7.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION "Management's Discussion and Analysis of Results of Operations and Financial Condition" on pages 21 through 23 of the Maui Land & Pineapple Company, Inc. 1995 Annual Report to Stockholders is incorporated herein by reference.
Item 8.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The "Independent Auditors' Report," "Consolidated Financial Statements" and "Notes to Consolidated Financial Statements" on pages 7 through 18 of the Maui Land & Pineapple Company, Inc. 1995 Annual Report to Stockholders are incorporated herein by reference.
Item 9.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III Item 10.

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information set forth under the captions "Compliance with Section 16(a) of the Exchange Act" and "Election of Directors" on pages 6 through 8 of the Maui Land & Pineapple Company, Inc. Proxy Statement, dated March 29, 1996, is incorporated herein by reference. The Company has the following executive officers: Principal Occupation Name During Last 5 Years Gary L. Gifford President & Chief Executive Officer since April (Age 48) 1995; Executive Vice President/Resort from 1987 to 1995.
Paul J. Meyer Executive Vice President/Finance since 1984; (Age 48) Treasurer since 1994.
Douglas R. Schenk Executive Vice President/Pineapple since 1995; (Age 43) Vice President/Pineapple from 1993 to 1995; Cannery Manager of Maui Pineapple Company, Ltd. from 1989 to 1993.
Donald A. Young Executive Vice President/Resort since April 1995; (Age 48) Executive Vice President/Operations of Kapalua Land Company, Ltd. from 1992 to 1995; Vice President/Operations of Kapalua Land Company, Ltd. from 1985 to 1992.
Scott A. Crockford Vice President/Retail Property since 1995; (Age 40) General Manager of Kaahumanu Center from 1989 to 1995.
Julie L. Salady Vice President/Human Resources since 1995; (Age 32) Director of Human Resources from 1991 to 1995.
Warren A. Suzuki Vice President/Land Management since October 1995; (Age 43) Vice President/Construction & Planning of Kapalua Land Company, Ltd. from May 1995 to October 1995; Director of Project Coordination of Kapalua Land Company, Ltd. from 1988 to 1995.
Item 11.

Item 11. EXECUTIVE COMPENSATION The information set forth under the caption "Executive Compensation" on pages 9 through 11 of the Maui Land & Pineapple Company, Inc. Proxy Statement, dated March 29, 1996, is incorporated herein by reference.
Item 12.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" on pages 4 through 6 of the Maui Land & Pineapple Company, Inc. Proxy Statement, dated March 29, 1996, is incorporated herein by reference.
Item 13.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information set forth under the caption "Compensation Committee Interlocks and Insider Participation" on pages 13 to 14 of the Maui Land & Pineapple Company, Inc. Proxy Statement, dated March 29, 1996, is incorporated herein by reference.
PART IV
Item 14.

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. Financial Statements The following Financial Statements and Supplementary Data of Maui Land & Pineapple Company, Inc. and subsidiaries and the Independent Auditors' Report are included in Item 8 of this report: Consolidated Balance Sheets, December 31, 1995 and 1994 Consolidated Statements of Operations and Retained Earnings for the Years Ended December 31, 1995, 1994 and 1993 Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements
(a) 2. Financial Statement Schedules The Financial Statements of Kaahumanu Center Associates for the Years Ended December 31, 1995, 1994 and Period from June 23, 1993 (Date of Formation) Through December 31, 1993 are filed as exhibits.
The Financial Statements of Kaptel Associates for the Years Ended December 31, 1994 and 1993 are filed as exhibits.
(a) (3) Exhibits Exhibits are listed in the "Index to Exhibits" found on pages 17 to 20 of this Form 10-K.
(b) (3) Reports on Form 8-K No reports on Form 8-K were filed during the last quarter of the period covered by this report.
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MAUI LAND & PINEAPPLE COMPANY, INC.
March 29, 1996 By /s/GARY L. GIFFORD Gary L. Gifford President & Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/MARY C. SANFORD Date March 29, 1996 Mary C. Sanford Chairman of the Board
By /s/RICHARD H. CAMERON Date March 29, 1996 Richard H. Cameron Vice Chairman of the Board
By /s/PAUL J. MEYER Date March 29, 1996 Paul J. Meyer Exec. Vice Pres./Finance & Treasurer
By /s/TED PROCTOR Date March 29, 1996 Ted Proctor Controller & Assistant Treasurer
By /s/PETER D. BALDWIN Date March 29, 1996 Peter D. Baldwin Director
By /s/JOSEPH W. HARTLEY, JR. Date March 29, 1996 Joseph W. Hartley, Jr. Director
By /s/RANDOLPH G. MOORE Date March 29, 1996 Randolph G. Moore Director
By /s/FRED E. TROTTER III Date March 29, 1996 Fred E. Trotter III Director
INDEX TO EXHIBITS
The exhibits designated by an asterisk (*) are filed herein. The exhibits not so designated are incorporated by reference to the indicated filing. All previous exhibits were filed with the Securities and Exchange Commission in Washington D. C. under file number 0-4674.
3. Articles of Incorporation and By-laws 3(i) Articles of Incorporation (Amended as of 4/19/79). Exhibit 3 to Form 10-K for the year ended December 31, 1980. 3(ii) By Laws (Amended as of 2/26/88). Exhibit (3ii) to Form 10-Q for the quarter ended September 30, 1994.
10. Material Contracts 10.1(i) Revolving and Term Loan Agreement, dated as of December 31, 1992. Exhibit (10)A to Form 10-K for the year ended December 31, 1992. (ii) First Loan Modification Agreement, dated and effective as of March 1, 1993. Exhibit (10)A to Form 10-Q for the quarter ended March 31, 1993. (iii) Second Loan Modification Agreement, dated September 8, 1993. Exhibit (10)B to Form 10-Q for the quarter ended September 30, 1993. (iv) Third Loan Modification Agreement, dated September 30, 1994. Exhibit (10)B to Form 10-K for the year ended December 31, 1993. (v) Fourth Loan Modification Agreement, dated March 8, 1994. Exhibit (10)A to Form 10-K for the year ended December 31, 1993. (vi) Fifth Loan Modification Agreement, dated as of December 31, 1994. Exhibit 10.1(vi) to Form 10-K for the year ended December 31, 1994. (vii) Sixth Loan Modification Agreement, effective as of March 31, 1995. Exhibit (10) to Form 10-Q for the quarter ended June 30, 1995. (viii)* Seventh Loan Modification Agreement, effective as of December 31, 1995.
10.2(i) Limited Partnership Agreement of Kaahumanu Center Associates, dated June 18, 1993. Exhibit (10)A to Form 10-Q for the quarter ended June 30, 1993. (ii) Cost Overrun Guaranty Agreement, dated June 28, 1993. Exhibit (10)B of Form 10-Q for the quarter ended June 30, 1993. (iii) Environmental Indemnity Agreement, dated June 28, 1993. Exhibit (10)C to Form 10-Q for the quarter ended June 30, 1993. (iv) Indemnity Agreement, dated June 28, 1993. Exhibit (10)D to Form 10-Q for the quarter ended June 30, 1993. (v) Direct Liability Agreement, dated June 28, 1993. Exhibit (10)E to Form 10-Q for the quarter ended June 30, 1993. (vi) Amendment No. 1 to Limited Partnership Agreement of Kaahumanu Center Associates. Exhibit (10)B to Form 8-K, dated as of April 30, 1995.
(vii) Conversion Agreement, dated April 27, 1995. Exhibit (10)C to Form 8-K, dated as of April 30, 1995. (viii) Indemnity Agreement, dated April 27, 1995. Exhibit (10)D to Form 8-K, dated as of April 30, 1995.
10.3(i) Note Purchase Agreement between John Hancock Mutual Life Insurance Company and Maui Land & Pineapple Company, Inc., dated September 9, 1993. Exhibit (10)A to Form 10-Q for the quarter ended September 30, 1993. (ii) First Amendment to Note Purchase Agreement dated as of March 30, 1994. Exhibit (10)A to Form 10-Q for the quarter ended March 31, 1994. (iii)* Second Amendment to Note Purchase Agreement, dated as of November 13, 1995.
10.4(i) The following relate to the Ritz-Carlton Kapalua Hotel: Partnership Agreement; Development Agreement; Operating Agreement; Hotel Ground Lease; Supplemental Agreement; Construction Loan Agreement; Promissory Note; Real Property Mortgage; Leasehold Mortgage. Exhibit (10)A-I to Form 10-Q for the quarter ended September 30, 1990. (ii) Dissolution Agreement, dated October 31, 1995. Exhibit (10)A to Form 10-Q for the quarter ended September 30, 1995. (iii)* First Mortgage, Security Agreement, Financing Statement and Assignment of Rentals covering the fee simple interest and the leasehold interest, securing a loan of $65,000,000, dated February 24, 1996. (iv)* Subordination, Nondisturbance and Attornment Agreement (Ground Lessor), dated February 24, 1996. (v)* Hotel Ground Lease by and between Maui Land & Pineapple Company, Inc. (Lessor) and NI Hawaii Resort, Inc. (Lessee), effective January 1, 1996. (vi)* Amendment Relating to Off-Site Loan, dated January 9, 1996 and Effective January 1, 1995. (vii)* Letter Agreement, dated January 1, 1996, Re: Nonrecourse Open Account For Off-Site Improvements. (viii)* Agreement with NI Hawaii Resort, Inc. (Ground Lease), dated January 9, 1996. (ix)* Amendment and Restatement of Tennis Operating Agreement by and between Kapalua Land Company, Ltd. (Operator) and NI Hawaii Resort, Inc. (Owner), dated January 9, 1996. (x)* Assignment Agreement (Assignment of Amended and Restated Tennis Operating Agreement), dated January 9, 1996. (xi)* Golf Course Use Agreement by and between Maui Land & Pineapple Company, Inc. and NI Hawaii Resort, Inc. dated, January 9, 1996. (xii)* Memorandum of Understanding between Maui Hotels, Kapalua Investment Corp. and NI Hawaii Resort, Inc., effective October 31, 1995.
(xiii)* Supplemental Agreement, entered into among Maui Hotels, Kapalua Investment Corp. and NI Hawaii Resort, Inc. as of February 15, 1996. (xiv)* Release of Real Property Mortgage, Security Agreement and Financing Statement, dated March 12, 1996.
10.5 Partnership Agreement of Plantation Club Associates, dated November 10, 1988. Exhibit (10)A to Form 10-K for the year ended December 31, 1988.
10.6 Fifteen million dollar ($15 million) Promissory Note, dated March 31, 1986, for the acquisition of Kaahumanu Center. Exhibit (10)C to Form 10-K for the year ended December 31, 1986.
10.7 Compensatory plans or arrangements (i) Executive Deferred Compensation Plan (revised as of 8/16/91). Exhibit (10)A to Form 10-Q for the quarter ended September 30, 1994. (ii) Executive Insurance Plan (Amended). Exhibit (10)A to Form 10-K for the year ended December 31, 1980. (iii) Remunerative agreement between Maui Land & Pineapple Company, Inc. and Paul J. Meyer, Executive Vice President/Finance. Exhibit (10)A to Form 10-Q for the quarter ended June 30, 1984. (iv) Supplemental Executive Retirement Plan (effective as of January 1, 1988). Exhibit (10)B to Form 10-K for the year ended December 31, 1988.
10.8 Hotel Ground Lease between Maui Land & Pineapple Company, Inc. and The KBH Company. Exhibit (10)B to Form 10-Q for the quarter ended September 30, 1985.
11. Statement re computation of per share earnings: Net Income (Loss) divided by weighted Average Common Shares Outstanding equals Net Income (Loss) Per Common Share.
13.* Annual Report to security holders. Maui Land & Pineapple Company, Inc. 1995 Annual Report.
21. Subsidiaries of registrant: All of the following were incorporated in the State of Hawaii: Maui Pineapple Company, Ltd. Kapalua Land Company, Ltd. Kapalua Investment Corp. Kapalua Water Company, Ltd. Kapalua Waste Treatment Company, Ltd. Honolua Plantation Land Company, Ltd.
27.* Financial Data Schedule.
99. Additional Exhibits.
99.1* Financial Statements of Kaahumanu Center Associates for the years ended December 31, 1995 and 1994 and period from June 23, 1993 (date of formation) through December 31, 1993.
99.2 Financial Statements of Kaptel Associates for the years ended December 31, 1994 and 1993. Exhibit 99.1 to Form 10-K for the year ended December 31, 1994.


Item 1. Business (Dollars in thousands unless otherwise indicated)
General Housewares Corp. (hereinafter referred to as the "Company") manufactures and markets consumer durable goods. The Company limits itself to product categories in which, through market share, product innovation or brand image, it is considered a leader. Through the acquisition and/or development of products that "delight and excite" the consumer, (i.e., deliver unexpected value, simplify and enhance a task or redefine a task) the Company believes that it is able to establish such a leadership position. The Company currently enjoys such a position in the following product categories: cookware, cutlery, kitchen tools and precision cutting tools. Cookware, cutlery and kitchen tools are grouped into the Housewares reportable segment, while precision cutting tools also constitute a reportable segment. For financial information related to the two reportable segments, see Note 12 in the financial statements included in this report.
HOUSEWARES
Approximately 71% of this segment's products sold by the Company during 1995 were produced domestically, primarily in factories owned and operated by the Company.
The remaining products are obtained from seven foreign sources (some of which buy from sub-contractors) primarily located in the Far East. The Company believes that a loss of any individual foreign source would not have a material impact on future results of operations.
COOKWARE
In 1995, the Company was one of the country's largest manufacturers and marketers of cookware, distributing its products throughout the United States, Canada and selected European markets. The Company's collection of leading, brand name cookware products has enabled it to deliver, to both retailers and consumers, products which satisfy a complete range of functional, aesthetic and value requirements. The Company competed in four main cookware product categories in 1995, covering a broad range of materials, designs, colors and prices. The categories included cast aluminum, cast iron, stamped and spun aluminum and enamelware.
In January of 1996, the Company announced its intention to exit the cast aluminum and cast iron product categories during the first half of 1996 in an effort to focus on faster growing, more profitable product categories. The Company is in discussions with buyers possibly interested in acquiring the associated product lines and the related manufacturing facility located in Sidney, Ohio. The cast iron and cast aluminum product lines include Magnalite(R), Magnalite Professional(R), Magnalite Professional(R) with Eclipse(R) and Wagner's(R) 1891 Original Cast Iron brand names. Gross revenues derived from the categories to be exited were $18,927 in 1995.
Remaining cookware lines include enamelware and stamped and spun aluminum. The Company is the only domestic manufacturer of enamelware and has developed a leading market share. Ceramic on Steel(TM) cookware products produced by the Company are sold under the Columbian and Graniteware brand names. As of September 1, 1994, the Company acquired the Normandy line of enamelware from National Housewares, Inc. Normandy enamelware products, similar to the Company's Ceramic on Steel(TM) cookware products, were, at the time, manufactured in Mexico. In 1995, the Normandy line of enamelware was discontinued and sourcing to service the Normandy customers was transitioned to the Company's Ceramic on Steel (TM) manufacturing operations. Enamelware is in demand because of its easy cleanup and popular price. It is particularly popular for roasting and specialty top-of-stove uses (e.g., spaghetti cookers and vegetable steamers). Products in this category are primarily sold in discount stores, mass merchandise outlets and warehouse clubs. Heavy gauge, large capacity stamped and spun aluminum products are marketed under the brand name Leyse Professional(TM) and distributed through department stores, mass merchants and specialty shops. Leyse products are purchased from a domestic manufacturer. Gross revenues derived from enamelware and stamped and spun aluminum were $25,577 in 1995.
The total United States market for cookware, defined as metal pots and pans used for top-of-stove and oven cooking, is estimated by the Cookware Manufacturers Association at approximately $1.9 billion in terms of annual sales. Domestic industry unit sales have remained relatively flat during the past five years and, as a result, domestic manufacturers have lost market share to imports, which the Association estimates have grown from 42% of the market in 1990 to 47% in 1995. Imported merchandise, principally from Korea, Taiwan, Mexico and the Peoples Republic of China, has been successful in penetrating the market through comparable quality products at lower prices.
The cookware industry is highly competitive and fragmented. In addition, it is characterized by little product differentiation. The Company believes that known brand names, price-value relationships, product design, quality and creative merchandising programs, as well as responsive, superior customer service, are key factors contributing to success.
CUTLERY AND ASSOCIATED PRODUCTS
The Company is a manufacturer and marketer of quality kitchen cutlery with the leading domestic brand name (Chicago Cutlery(R)) and market share in its industry. The Company markets for consumers, under the Chicago Cutlery(R) brand umbrella, three complete lines of kitchen knives for consumers, sharpening tools, storage units and cutting boards. Its most popular household cutlery line is The Walnut Tradition(R), which features a solid American walnut handle with a Taper Grind(R) edge on the blade. The Company manufactures and sells a popular priced knife under the Cherrywood(TM) brand name. For the consumer that prefers a synthetic handled knife, the Company manufactures and sells the Metropolitan(TM) product line which features a durable high-impact plastic handle and a Taper Grind(R) edge.
All Chicago Cutlery(R) blades are made from high carbon stainless steel that resists rusting, pitting and staining. The Taper Grind(R) edge provides a uniform and smooth taper, thereby facilitating the blade's movement through the object being cut.
The Company also sells a line of promotionally priced cutlery under the banner "Designed and Marketed by Chicago Cutlery(R)". These products compete in both the fine edge and "never-needs-sharpening" segments of the cutlery industry and are purchased from suppliers in the Far East. Promotional cutlery "Designed and Marketed by Chicago Cutlery(R)" consists of thirteen separate cutlery brands, seven of which are sold exclusively through department stores, and the remaining lines are distributed through department stores, mass merchandisers and catalog showrooms.
While the overall market for kitchen cutlery in the United States has remained relatively unchanged in recent years, foreign products, including the Company's promotionally priced imported cutlery, have made significant inroads. The Company believes that imports in 1995 accounted for more than half of domestic sales in dollars and 75% of domestic sales in units. As a result of its widely recognized brand name and reputation for high quality at a good price, the Company has gained market share in the kitchen cutlery industry by marketing a combination of the promotionally priced imports and the traditional Chicago Cutlery(R) products.
The Company also manufactures a full line of knives for the commercial poultry processing market. These molded handle knives are designed to meet the special needs of professionals and have specialized blade shapes for specific cutting jobs. The handles are textured to be slip-resistant and feature a finger guard for safety, as well as, in some cases, ergonomic handles.
Under the Idaho Woodworks(TM) and Chicago Cutlery(R) names, the Company manufactures and markets cutting boards made of wood, polyethylene, and combinations of wood and acrylic, marble or polyethylene.
Gross revenues derived from cutlery and associated products were $39,251 in 1995.
KITCHEN TOOLS
Effective October 1, 1992, the Company purchased all of the partnership interests in OXO International L.P. ("OXO"), a New York limited partnership, marketing a broad line of kitchen tools under the Good Grips(R), Prima(R) Plus(TM) and Basics brand names. The purchase price was $6,250 and consisted of a cash payment of $5,500 and Subordinated Promissory Note in the principal amount of $750 bearing interest at 8% per annum. The OXO products are primarily made by manufacturers located in the Far East according to OXO's designs and specifications. The kitchen tools sold by OXO generally utilize a proprietary handle which is covered by patents owned by the Company which run through 2002. OXO(R) kitchen tools are distributed primarily in the United States through department stores, gourmet and specialty outlets and mass merchandisers. OXO also sells a line of garden tools that utilizes its proprietary handle. Garden tools are primarily distributed through specialty outlets. The OXO product category has experienced significant growth since acquisition.
Gross revenues derived from the kitchen tool category were $16,262 in 1995.
PRECISION CUTTING TOOLS
Effective October 1, 1994, the Company purchased certain assets of Walter Absil Company Limited and Olfa Products Corp. (collectively referred to as the "Olfa Products Group"). The purchase price was $13,576 and consisted of a cash payment of $6,843, Subordinated Promissory Notes in the principal amount of $2,233 bearing interest at 6% per annum and 400,000 restricted shares (valued at $4,500) of the Company's common stock. The Olfa Products Group is the exclusive distributor, in the United States and Canada, of precision cutting tools and accessories manufactured by Olfa Corporation of Osaka, Japan. The Company believes that relations with Olfa Corporation are strong and that a long-term relationship will continue. Products of the Olfa Products Group are sold both to distributors and direct to hobby, craft, hardware and fabric stores.
The North American hobby and craft market is both large and diverse with sales exceeding $10 billion. Products distributed through the Olfa Products Group compete in small selected segments in this market. Typically, these products compete on the basis of performance and value.
Gross revenues derived from the precision cutting tool segment were $16,605 in 1995.
DISTRIBUTION
Housewares products are sold by the Company to most major retail and wholesale distribution organizations in the United States and Canada through its direct sales force and through independent commissioned sales representatives. The Olfa Products Group utilizes a combination of a direct sales force and independent commissioned sales representatives.
In addition, the Company sells products through a chain of manufacturers' retail outlet stores operating under the name "Chicago Cutlery etc., Inc." Gross revenues derived from the stores were $9,248 in 1995.
MAJOR CUSTOMERS
During 1995, the ten largest customers of the Company accounted for 46% of the Company's gross sales. Sales to the Company's largest customer, Wal-mart, were $13.0 million or approximately 10% of total gross sales. The Company has had good long-term relationships with its major customers.
EMPLOYEES
The Company employs approximately 845 persons, of whom 480 are involved in manufacturing with the balance serving in sales, general and administrative capacities. The Company believes that its relations with employees are good.
Approximately 390 employees are represented by three different labor organizations, which have contracts expiring in February, March and July of 1996.
Included in these Company totals are approximately 220 people employed at the Sidney, Ohio, manufacturing facility, 200 of which are represented by two labor organizations. It is anticipated that the sale of product lines manufactured at the plant and possibly the facility itself, will reduce headcount at the Company by these amounts.
EXPORT SALES
Exports account for less than 10% of the Company's total sales.
RAW MATERIALS
The principal raw materials used in manufacturing the Company's housewares products are steel, iron, aluminum, ceramic compounds, plastic compounds and hardwood products. All of these materials are generally available from numerous suppliers, and the Company believes that the loss of any one supplier would not have a significant impact on its operations. The Company's precision cutting tool products are imported as finished goods.
SEASONALITY
Shipments of cookware, cutlery and kitchen tools are higher in the second half of the year and highest in the fourth quarter due to the seasonality of housewares retail sales. Shipments of precision cutting tools vary little from quarter to quarter.
WORKING CAPITAL
The Company is increasingly forced to meet rapid delivery requirements from customers, and increased inventory levels have resulted. The Company believes that increased technological and supply chain initiatives, for which implementation began in 1995, will position it well for the heightened customer requirements.
While the Company normally sets payment terms at net 30 days, industry practice has dictated an occasional extension of such terms. Accordingly, certain customers have been given extensions of payment terms.
FOREIGN OPERATIONS
The Company operates a wholly owned subsidiary located in Montreal, Canada. Revenues, Operating Income and Assets of the subsidiary are all less than 10% of total Company Revenues, Operating Income and Assets.
Item 2.

Item 2. Properties
The following table sets forth the location and size of the Company's principal properties.
OPERATING FACILITIES
Property Leased: [CAPTION]
In addition, the Company leases an average of 2,700 square feet of retail space in 27 factory outlet malls with initial lease terms ranging from 3 to 7 years.
In the opinion of the Company's management, the properties and plants described above are in good condition and repair and are adequate for the particular operations for which they are used.
NON-OPERATING FACILITIES
Property Owned: (Reported as "other assets" in the financial statements in this Report) [CAPTION]
In addition, at December 31, 1995, the Company owned a candle manufacturing facility located in Hyannis, Massachusetts which it leased to a third party. The 74,600 square feet facility was sold on January 17, 1996. The Company received cash consideration that approximated net book value.
Item 3.

Item 3. Legal Proceedings
The Company and its wholly owned subsidiary, Chicago Cutlery, Inc., instituted an action on February 2, 1995, against the personal representatives of the Estate of Ronald J. Gangelhoff in the United States District Court for the District of Minnesota, Fourth Division. The action was instituted in order to comply with Minnesota probate practices for settling claims against estates. The action seeks indemnity and/or contribution for all losses and expenses suffered and incurred, and to be suffered and incurred, by the plaintiffs arising from the New Hampshire Department of Environmental Services mandated clean-up of hazardous substances generated at the Antrim, New Hampshire, manufacturing site owned by Chicago Cutlery, Inc. and arising from the remediation of the site and the landfill at which some of the substances were disposed. The action also seeks a declaratory judgement that the defendants are liable to the Company. The action is brought on the basis of the breach of representations and warranties in the 1988 Stock Purchase Agreement pursuant to which the Company purchased the stock of Chicago Cutlery, Inc. from Ronald J. Gangelhoff. It is also brought under the provisions of the Comprehensive Environmental Response, Compensation, and Liability Act, the provisions of the New Hampshire Hazardous Waste Clean-up and Contribution statutes and under common law causes of action. It is the opinion of the Company's in-house legal counsel that adequate support exists in favor of the Company in the case.
Before the death of Mr. Gangelhoff, Chicago Cutlery, Inc. had instituted an action on October 8, 1993, against David D. Hurlin in the United States District Court for the District of New Hampshire, seeking damages and a declaratory judgement that Mr. Hurlin is liable to plaintiff for losses and expenses suffered and incurred, and to be suffered and incurred, arising from the mandated clean-up of hazardous substances generated at the Antrim, New Hampshire, manufacturing site during the period it was owned by Goodell Company and arising from remediation of the site. The basis of the action against Mr. Hurlin is that as chief executive officer, a director and substantial stockholder of the Goodell Company he was in control of, or in a position to control and direct, hazardous substances handling and disposal practices at the site when hazardous substances were improperly released to the environment. The action is brought under the provisions of the Comprehensive Environmental Response, Compensation, and Liability Act, the provisions of the New Hampshire Hazardous Waste Clean-up and Contribution statutes and under common law causes of action. To the extent that recovery is made against David D. Hurlin, the amount of the Company's claim against the assets of the late Ronald J. Gangelhoff will be reduced.
For information concerning various environmental matters with which the Company is involved, see Notes to Consolidated Financial Statements on page 20 of this Report.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
EXECUTIVE OFFICERS OF THE COMPANY
The following individuals are executive officers of the Company, each of whom will serve in the capacities indicated until May 2, 1996, or until the election and qualification of a successor.
Messrs. Saxton, Evans and Gray have been executive officers of the Company for more than five years. Mr. Kulla has been employed with the Company since November 14, 1995, and an executive officer since January 1, 1996. Prior thereto, he was Vice President, General Counsel and Secretary of AXIA Incorporated. Mr. Blackwell has been employed with the Company and an executive officer since March 20, 1995. Prior thereto, he served as Vice President, Sales and Marketing, for EMX Corporation, Executive Vice President, Sales and Marketing of Moulinex Appliances, Inc. and President and General Manager of Oster Housewares, a division of Sunbeam/Oster Company. Mr. Brown has been employed with the Company and an executive officer since July 3, 1995. Prior thereto, he served as Managing Director of Bottom Line Logistics, a management consulting firm. Mr. Scales has been employed with the Company and an executive officer since July 10, 1995. Prior thereto, he served as Controller at Cosco, Inc. and Hoosier Energy Rural Electric Cooperative, Inc. and as a Senior Audit Manager at Price Waterhouse.
PART II
Item 5.

Item 5. Market for the Company's Common Stock and Related Stockholder Matters
The market on which the Company's Common Stock is traded is the New York Stock Exchange, Inc. The high and low sales prices of the Company's Common Stock and the cash dividends declared for each quarterly period during the last two fiscal years is disclosed in quarterly financial information presented in Item
8.
The approximate number of holders of Common Stock as of March 18, 1996, including beneficial owners of shares held in nominee accounts of whom the Company is aware, was 1,000.
Item 6.

Item 6. Selected Financial Data
SELECTED CONSOLIDATED FINANCIAL DATA (in thousands except per share amounts)
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
(Dollars in Thousands Except per Share Amounts)
Year Ended December 31, 1995 versus 1994
Net sales for 1995 were $119,340, an increase of 22% over net sales of $97,729 in 1994. The increase stems primarily from acquisitions made in the third and fourth quarters of 1994, as well as market penetration in the Company's kitchen tool product line. Revenue increases resulting from acquisitions represent approximately $14,660 or 15% of the growth in total sales. The sales increase in the kitchen tool product line was driven primarily by volume with modest price increases also a contributing factor. Gross profit increased from $35,010 in 1994 to $40,312 in 1995 as a result of increased sales volume. As a percentage of net sales, gross profit decreased 2% from 1994. Gross profit percentage was adversely affected by an increased cost of aluminum, an unfavorable change in sales mix as well as inventory balancing that resulted in adjustments to inventory and cost of sales. Selling, general and administrative expenses increased to $33,232 from $28,373 in 1994. As a percentage of sales, selling, general and administrative expenses decreased from 29.0% in 1994 to 27.8% in 1995. Of the gross dollar increase, approximately $3,500 was directly attributable to 1994 acquisitions. In addition, significant personnel changes were made in 1995 resulting in approximately $450 of increased severance and employment costs. Increases in contractual incentive payments to the former owners of the kitchen tool product line and royalty payments related to the design of the kitchen tool product line driven by increased sales accounted for $516 of the increase. A restructuring of distribution activities and the move of a manufacturing facility resulted in an increase of $269. The decrease as a percentage of sales is a result of increased sales activity covering fixed selling, general and administrative costs.
Operating income for 1995 was $7,080, representing a $443 increase over operating income of $6,637 in the prior year. Interest expense increased from $1,699 in 1994 to $3,115 in 1995. Increased debt related to the 1994 acquisitions and working capital needs to support improved customer service were primarily responsible for the increases in interest expense. Net income for the year was $2,286 as compared to $2,750 in 1994; related earnings per share dropped from $0.80 in 1994 to $0.61 in 1995. Earnings per share were calculated on 3,769 weighted average shares as compared to 3,440 for 1994, reflecting additional shares issued in connection with the 1994 acquisition activity.
Year Ended December 31, 1994 versus 1993
Net sales for 1994 were $97,729, an increase of 10% when compared to net sales of $88,529 for 1993. Sales increased as a result of growth in the Company's kitchen tool and retail outlet store businesses and as a result of acquisitions.
The increase in total net sales tied to acquisitions was $7,274. Of the remaining increase, the spread between the kitchen tool and retail outlet store businesses varied little. These increases were driven primarily by volume with slight increases in price. While the dollar amount of gross profit increased modestly, gross profit margins declined, reflecting competitive pricing pressures and increased raw material costs. Selling, general and administrative expense increased slightly. Increased costs related to the higher sales volume and a partial year's amortization of goodwill (related to the purchases of the assets of Walter Absil Company Limited, Olfa Products Corp. and National Housewares, Inc.) were offset by reduced general and administrative costs. Included in operating expense were additions of $391 to bad debt reserves to cover customer bankruptcies during the year and $153 (exclusive of amounts for which recovery from third parties is expected) to the reserve provisions for environmental remediation. The increase in environmental remediation estimates was a result of updated communications from environmental authorities.
Net income was $2,750 or $0.80 per share in 1994 compared to $3,036 or $0.91 per share in 1993. The effective tax rate applied to pre-tax income increased to 44% in 1994, compared to 41% in 1993. The effective tax rate increase was attributable to provision for potential assessments with regard to ongoing review by the Internal Revenue Service of years 1991-1993.
Seasonality
Sales are higher in the second half of the year (and highest in the fourth quarter) due to the seasonality of housewares retail sales.
Capital Resources and Liquidity
Inventories increased from $20,841 in 1994 to $26,867 in 1995. The increase was due to Company-wide goals of improving customer service coupled with a soft retail holiday buying season that resulted in below forecast sales in the fourth quarter of 1995. Inventories increased from $11,765 in 1993 to $20,841 in 1994.
Of this increase, $5,292 was directly attributable to acquisitions. The remaining increase was a result of aggressive sales plans for 1995 that required an increase in inventory levels.
On November 30, 1994, the Company completed a financing package consisting of a $30,000 three-year bank loan agreement and the private placement of $20,000 of 8.41% Senior Notes. Proceeds from the new financing package were used to refinance existing bank loans incurred to support working capital requirements and for acquisitions. As a result of the new financing, the Company believes that it has sufficient liquidity to fund existing operations and to continue to make acquisitions.
Substantially all of the expenditures made by the Company to comply with environmental regulations were for the remediation of previously contaminated sites. The Company has established a reserve to cover such expenses (see Note 11 to the Consolidated Financial Statements). In addition to the amounts provided for in the reserve, the Company may be required to make certain additional capital expenditures which, in aggregate, are not expected to be material.
Subsequent to the completion of the remediation contemplated in setting the reserve, the Company believes that the ongoing costs of compliance with environmental regulation, including the cost of monitoring, pollution abatement and disposal of hazardous materials, will not be material.
On January 4, 1996, the Company announced its intention to exit its cast iron and cast aluminum cookware businesses during the first half of 1996. The proceeds from such disposition and the concomitant reduction in ongoing working capital requirements will result in a reduction of debt outstanding and improved liquidity.
Effect of Inflation
For the year ended December 31, 1995, price increases in certain commodities used by the Company (e.g., aluminum ingot (44%), steel (5%) and packaging materials (10%)) had an adverse effect on the operations of the Company. The impact of the aluminum ingot increase adversely impacted operating income by approximately $800. For the years ended December 31, 1993 and 1994, there were no significant effects related to price increases.
Effect of New Accounting Principles
Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long Lived Assets and Long Lived Assets to be Disposed of," establishes the financial accounting and reporting standards for the recognition of impairments to long lived assets. The implementation of this statement, which will be required in 1996, is not expected to have a material effect on the Company's consolidated financial position or cash flow.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation," establishes a fair-value based method of accounting for stock options and other equity instruments. The Company has not identified the financial reporting effect of the implementation of this statement, which will be required in 1996.
Item 8.

Item 8. Financial Statements and Supplementary Data
Financial Statements:
Report of Independent Accountants
Consolidated Statement of Income for the three years ended December 31, 1995
Consolidated Statement of Changes in Stockholders' Equity for the three years ended December 31, 1995
Consolidated Balance Sheet at December 31, 1995 and
Consolidated Statement of Cash Flows for the three years ended December 31, 1995
Notes to Consolidated Financial Statements
Quarterly Financial Information
Financial Statement Schedule:
For the three years ended December 31, 1995 VII - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
REPORT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
To the Board of Directors and Stockholders of General Housewares Corp.
In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, of stockholders' equity and of cash flows present fairly, in all material respects, the financial position of General Housewares Corp., and its subsidiaries at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP Indianapolis, Indiana February 2, 1996
CONSOLIDATED STATEMENT OF INCOME
See notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
See notes to consolidated financial statements
CONSOLIDATED BALANCE SHEET
See notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share amounts)
1. Nature of Operations
The Company manufactures and markets consumer durable goods with principal lines of business consisting of housewares (cookware, cutlery and kitchen tools) and precision cutting tools. In addition, the Company sells products through a chain of manufacturer's retail outlet stores. The majority of the Company's sales are derived from the cookware and cutlery lines, with these two lines approximately equal in size. Substantially all of the remaining sales are in the kitchen tool and precision cutting tool lines which are approximately equal in size.
2. Accounting Policies
Principles of Consolidation - The Consolidated Financial Statements include the accounts of General Housewares Corp. and its subsidiaries, all of which are wholly-owned.
Inventories - Inventories are stated at the lower of cost or market and at December 31 were comprised of the following:
Cost, at December 31, 1995, is determined on a last-in, first-out (LIFO) basis for approximately 74% (80% at December 31, 1994) of the Company's inventories. The remaining inventories are determined on a first-in, first-out (FIFO) basis. During 1993, inventory quantities were reduced. This reduction resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of 1993 purchases, the
effect of which decreased cost of goods sold by approximately $285 and increased net income by approximately $170. There were no significant liquidations in 1994 or 1995.
Property, Plant and Equipment - Property, plant and equipment is recorded at cost and depreciated using the straight-line method on useful lives of 20 to 45 years for buildings and 3 to 15 years for machinery and equipment.
Property, Plant and Equipment is as follows:
Other Current Assets - Included in other current assets is a receivable related to an anticipated recovery of $150 ($400 in 1994) of estimated environmental costs (See Note 11) and other miscellaneous receivables and prepaid expenses.
Other Assets - Included in other assets are three manufacturing facilities (Land and Buildings - cost of $5,857 with accumulated depreciation of $1,546) that the Company no longer operates. The Company sold one of these facilities in January 1996 (see Note 13). The other two facilities are currently being leased to unaffiliated third parties under non-cancelable leases. Income generated by these leases is not significant to the consolidated operations of the Company. Each of these facilities is being depreciated over its estimated useful life using the straight-line method. Other assets also include prepaid pension expense.
Intangible Assets - The cost in excess of net assets acquired is amortized using the straight-line method over periods ranging from 10 to 40 years. Other intangible assets arising from acquisitions are included in patents and other intangible assets and are amortized using the straight-line method over periods of 5 to 15 years. Amortization of intangible assets was approximately $1,793 in 1995 ($1,179 in 1994 and $1,008 in 1993) and accumulated amortization was $6,561 and $4,768 at December 31, 1995 and 1994, respectively. The Company assesses the recoverability of costs in excess of net assets acquired based on undiscounted future cash flows. No write-downs to such costs were incurred for the periods ended December 31, 1995, 1994 or 1993. At December 31, 1995 and 1994, the Company recognized an intangible asset related to the recording of a minimum pension liability in accordance with Statement of Financial Accounting Standards No. 87.
Advertising - The Company participates in cooperative advertising programs with certain customers. Advertising expense related to the programs is matched with associated revenues and was $3,675, $5,366, and $5,245 for the periods ended December 31, 1995, 1994 and 1993, respectively.
Deferred Liabilities - Deferred liabilities include a minimum pension liability, deferred income taxes and deferred compensation.
Earnings per Share - Earnings per share are computed using the weighted average number of shares of common stock and common stock equivalents outstanding during the year.
Sales to Significant Customers - During 1995 and 1994, the Company had gross sales to a single customer of $12,980 and $13,278, respectively, which represented approximately 10% and 13% of total sales for 1995 and 1994, respectively.
Accounts Receivable - Substantially all accounts receivable are uncollateralized and arise from sales to the retail industry. Accounts receivable allowances include reserves for doubtful accounts, returns, adjustments and cooperative advertising allowances to customers.
Reclassification - Certain 1994 and 1993 amounts have been reclassified to conform with the 1995 presentation.
Cash Equivalents - The Company considers all highly liquid temporary cash investments with low interest rate risk to be cash equivalents. Temporary cash investments are stated at cost, which approximates market value.
Currency Translation - The net assets of foreign operations are translated into U.S. dollars using year-end exchange rates. Revenue and expenses are translated at average exchange rates during the reporting period.
Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Long-Lived Assets - FAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," is applicable for financial statements for fiscal years beginning after December 15, 1995. The Company does not expect the standard to have a significant impact on its 1996 financial statements.
Stock Based Compensation - FAS No. 123, "Accounting for Stock Based Compensation," is applicable for financial statements for fiscal years beginning after December 15, 1995. The standard establishes a fair value based method of accounting for stock options and other equity instruments with such fair value recognized in the income statement or disclosed in the footnotes to the financial statements. The Company has not selected the accounting treatment to be used, as defined by FAS No. 123, and therefore is not in a position to identify the possible related financial statement impact.
3. Acquisitions
Effective October 1, 1994, the Company purchased the assets of Walter Absil Company Limited and Olfa Products Corp. (collectively referred to as "Olfa Products Group"). The Olfa Products Group is the exclusive distributor, for the United States and Canada, of precision cutting tools and accessories manufactured by Olfa Corporation of Osaka, Japan. Assets acquired included accounts receivable, inventories and equipment.
The purchase price was $13,576 and consisted of a cash payment of $6,843,
Subordinated Promissory Notes in the principal amount of $2,233 bearing interest at 6% per annum and 400,000 restricted shares (valued at $4,500) of the Company's common stock. The common stock issued in connection with this acquisition is restricted as to both sale and voting rights. All such restrictions will expire no later than September 30, 1999.
The acquisition was accounted for as a purchase and the net assets and results of operations are included in the Company's Consolidated Financial Statements beginning October 1, 1994. The purchase price was allocated to the assets acquired and liabilities assumed of the Olfa Products Group based on their estimated respective fair values. Cost in excess of net assets acquired was $6,349 and is being amortized over 20 years.
In connection with the issuance of restricted common stock related to the acquisition of Olfa Products Group, the Company has agreed, under certain circumstances, to make payments of up to $600 to the former owners upon sale of the restricted common stock. In addition, the Company has agreed to make payments of up to approximately $3,565 to the management of the Olfa Products Group based upon the achievement of a specific aggregate financial target for the three-year period ending December 31, 1997.
Effective September 1, 1994, the Company purchased the assets of Normandy, the enamel on steel cookware business of National Housewares, Inc., for a cash consideration of $1,800 and deferred payments equal to $3,767 plus an incentive payment of $382 based upon operational performance for the remainder of 1994. The cash payment was equivalent to the fair market value of the inventories acquired. Cost in excess of net assets acquired was $4,149 and is being amortized over 10 years.
The following unaudited pro forma information combines the consolidated results of operations of the Company, the Olfa Products Group and Normandy as if the acquisitions had occurred at the beginning of 1994 and 1993. The pro forma information is not necessarily indicative of the results of operations which would have actually occurred during such periods.
(Unaudited)
4. Debt
Long-term and short-term debt includes the following:
At December 31, 1995 and 1994, all of the Company's debt outstanding was unsecured.
The bank debt outstanding at December 31, 1995, relates to a Credit Agreement with two banks with an aggregate commitment of $30,000 of which $5,000 is reserved for letters of credit at December 31, 1995. The commitment will expire on November 30, 1997, but may be renewed, under certain circumstances, for two additional one-year periods. Amounts outstanding under such Credit Agreement are classified as short-term debt as of December 31, 1995, as the Company intends to repay such outstanding amounts from current working capital and the proceeds from the sale of assets disclosed in Note 13. Drawings under the Credit Agreement are priced based on the banks' Prime or LIBOR with spreads calculated on an incentive formula. At December 31, 1995, the Company could borrow under the Credit Agreement at Prime or LIBOR + 1%. The interest rates on outstanding amounts on December 31, 1995, range from 6.93% to 8.75%. Commitment fees of .25% of the unused balance on the line of credit are included in interest expense. In addition, during 1994, the Company sold $20,000 of 8.41% Senior Notes payable to a group of institutional investors.
Terms of the Credit Agreement and the Senior Notes require, among other things, that the Company maintain certain minimum financial ratios. In addition, the agreements provide for limits on dividends, certain investments and lease commitments.
The 12% subordinated note payable is due the estate of the former principal owner of Chicago Cutlery, Inc., a wholly-owned subsidiary of the Company. The estate is a significant stockholder of the Company. The principal balance of the note was reduced by $632 in 1995 as an offset to payments made with regard to the environmental remediation program discussed in Note 11.
The deferred payment obligation was incurred in connection with the acquisition of the assets of the Normandy enamel on steel cookware business of National Housewares, Inc. In addition to the obligation listed in the above table, the Company had additional obligations related to the transaction of $2,382, all of which were paid in January, 1995.
Terms of the Deferred Payment Obligation and all of the Subordinated Notes provide for the right of offset upon the occurrence of certain events.
Aggregate principal payments for the five years subsequent to December 31, 1995, are as follows:
Cash paid during 1995 for interest, net of cash received, was $2,798 (1994 - $1,614; 1993 - $1,361). Of this amount, $562, $450 and $615 consisted of amounts paid related parties in 1995, 1994 and 1993, respectively.
As of January 1, 1996, the Company was not in compliance with one of the covenants in the Bank Credit Agreement. This non-compliance has been waived through March 31, 1996. Based on the disposition of assets discussed in Note 13 and the Company's current operating performance, it is likely that the Company will not be in compliance with certain covenants contained in the Bank Credit Agreement at the end of the first quarter of 1996. Management intends to seek waivers for any such non-compliance at such time as the impact of the disposition of assets becomes determinable. The Company believes that such waivers will be obtained.
5. Common Stock and Rights
Common stock reserved at December 31, 1995, included 303,770 shares reserved for outstanding stock options.
In February 1989, the Company effected a dividend distribution of one Right for each outstanding share of common stock. Under certain circumstances, each Right may be exercised to purchase 1/100th of a share of Series A Junior Participating Preferred Stock, at a purchase price of $25, subject to adjustment to prevent dilution. Each preferred share fraction is designed to be equivalent in voting and dividend rights to one share of common stock. The Rights may only be exercised after a person acquires, or has the right to acquire, 21% or more of the common stock or makes an offer for 30% or more of the common stock. The Rights, which do not have voting rights and do not entitle the holder to dividends, expire on February 27, 1999, and may be redeemed by the Company prior to their being exercisable at a price of $.01 per Right.
6. Stock Plans
The Company maintains a stock plan for key employees which provides for the granting of options or awards of restricted stock until January 31, 2003. A summary of transactions under the plan follows:
Options granted under the plan provide for the issuance of common stock at not less than 100% of the fair market value on the date of grant. When options are exercised, proceeds received are credited to common stock and capital in excess of par value. Stock options were exercised at prices ranging from $7.125 to $13.750 in 1995. Options outstanding at December 31, 1995, were granted at prices ranging from $7.125 to $14.00 per share. Options for 179,069 shares were exercisable at December 31, 1995.
Restricted stock granted under the plan is subject to restrictions relating to earnings targets of the Company and/or continuous employment or other relationships.
On July 1, 1992, the Company introduced its Employee Stock Purchase Plan. The plan, administered by a Committee appointed by the Board of Directors, is intended to qualify as an "employee stock purchase plan" within the meaning of Section 423 of the Internal Revenue Code. The Employee Stock Purchase Plan provides that shares of the Company's Common Stock will be purchased at the end of each calendar quarter with funds deducted from the payroll of eligible employees. Employees receive a bargain purchase price equivalent to 90% of the lower of the opening or closing stock price of each calendar quarter. Dividends paid to the Employee Stock Purchase Plan fund are reinvested in the fund to buy additional shares. At December 31, 1995, the balance in the plan consisted of 17,951 shares of General Housewares Corp. Common Stock (13,072 shares in 1994).
7. Employee Benefit Plans
The Company sponsors four defined benefit pension plans which cover substantially all salaried and hourly employees. Pension benefit formulas are related to final average pay or fixed amount per year of service. It is the Company's policy to fund at least the minimum amounts required by applicable regulations.
Net periodic pension cost included the following components:
The funded status of the plans as of December 31 was as follows:
In accordance with the provisions of Statement of Financial Accounting Standards No. 87 - "Employers' Accounting for Pensions," the Company has recorded an additional minimum liability at December 31, 1995 and 1994, representing the excess of the accumulated benefit obligation over the fair value of plan assets and prepaid pension asset. The minimum liability for plans with accumulated benefits in excess of assets of $1,199 at December 31, 1995, has been included in the Company's consolidated balance sheet as a deferred liability with an offset in other intangible assets and equity. In addition, a deferred tax asset of $336 has been recognized for the minimum liability charge to equity.
The actuarial present value of the projected benefit obligation at December 31, 1995 and 1994, was determined using a weighted average discount rate of 7.25% and 8.0%, respectively, and a rate of increase in future compensation levels of 4%. The weighted average expected long-term rate of return on assets was 9% at December 31, 1995 and 1994. As of December 31, 1995, approximately 32% (1994 - 59%) of the plan's assets were invested in fixed income funds.
In addition to the defined benefit plans described above, the Company also sponsors a 401(K) plan for all full-time employees. The Company matches a portion of each employee contribution. The Company's contribution expense was $316 in 1995 ($302 in 1994 and $335 in 1993).
The Company maintains a non-qualified, unfunded deferred compensation plan for certain key executives providing payments upon retirement. The present value of the deferred compensation is included in deferred liabilities.
8. Income Taxes
The components of the provision for income taxes were as follows:
A reconciliation of the federal statutory rate to the Company's effective tax rate is as follows:
Deferred tax assets (liabilities) are comprised of the following at December 31:
Cash paid for income taxes during 1995 was $318 (1994 - $1,659; 1993 - $1,939).
The Company reached a settlement with the Internal Revenue Service in 1995 relating to the review of the Company's tax returns for the years ended December 31, 1991, 1992 and 1993. The settlement did not have a significant effect on the results of operations for the year ended December 31, 1995.
9. Operating Leases
The Company leases warehouses, administrative offices, computer equipment and retail outlet store space. Certain of the retail store leases provide for contingent rental payments, generally based on the sales volume of the applicable retail unit. All leases in which the Company is engaged are classified as operating leases.
Future minimum annual lease payments under these operating leases, the majority of which have initial or remaining non-cancelable lease terms in excess of one year, were as follows at December 31, 1995:
Certain leases require payments of real estate taxes, insurance, repairs and other charges. Total rental expense was $2,098 in 1995 (1994 - $1,455; 1993 - $1,106).
10. Fair Value of Financial Instruments
FAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires disclosure of information about the fair value of certain financial instruments for which it is practical to estimate that value. The Company has performed fair value calculations on its financial instruments (principally debt obligations) and has determined that fair value approximates carrying value.
11. Commitments and Contingent Liabilities
The Company is currently involved in the review and evaluation, or remediation, of seven sites posing potential or identified environmental contamination problems. Based on information currently available, management's best estimate of probable remediation costs, recorded as a liability, is $403 at December 31, 1995 ($1,549 at December 31, 1994) which aggregate amount management believes will be paid out during the course of the next five years. Based on provisions in the stock purchase agreement related to the acquisition of Chicago Cutlery, Inc., the Company has recovered $932 through an offset to amounts owed to the holders of the 12% subordinated note (see Note 4) and based on the opinion of legal counsel, considers it probable that it will retain such amounts. Additional amounts are also expected to be recovered from the subordinated note holder as a result of environmental remediation activities at a Chicago Cutlery facility. The holders of the 12% subordinated note have not agreed to such offset. Within a range of
reasonably possible environmental cleanup liabilities established on the basis of current information, the recorded liability represents approximately 68% of the currently estimable maximum loss that has been identified by the Company and its environmental advisors. While neither the timing nor the amount of the ultimate costs associated with environmental matters can be accurately determined, management does not expect that these matters will have a material effect on the Company's consolidated financial position and cash flow.
12. Segment Information
The Company's principal business involves the manufacture and marketing of consumer durable goods. These operations are classified into two reportable segments:
Housewares - Included in this segment are the Company's cookware, cutlery and kitchen tool products, as well as a chain of manufacturer's retail outlet stores with sales derived primarily from these products. These products are used primarily in commercial and residential food preparation and are distributed primarily through mass merchandisers, department stores and specialty shops.
Precision Cutting Tools - Included in this segment is the Company's Olfa Products Group. Products in this segment are designed and marketed for diverse commercial and residential use including hobby, craft, sewing and construction. The goods are sold both directly and through distributors, primarily to hardware stores and sewing/hobby/craft stores.
Financial information by reportable segments is as follows:
The Precision Cutting Tools segment was added in October of 1994 as a result of an acquisition of assets. As such, 1994 results for this segment represent only three months of activity.
During 1995, the Housewares segment had gross sales to one customer of $12,577, which represents approximately 11% of total Housewares segment gross sales for 1995. During 1994 and 1993, the Company had gross sales to that same customer of $13,046 and $11,130, representing 14% and 13% of total Housewares segment gross sales.
13. Subsequent Events
On January 4, 1996, the Company announced its intention to exit its cast iron and cast aluminum cookware businesses during the first half of 1996. The Company is in discussions with buyers interested in acquiring the associated product lines and possibly the related manufacturing facility located in Sidney, Ohio. A charge related to this transaction and other restructuring efforts, including the closure of certain of the Company's retail outlet stores, will be recorded in 1996. At this time, the Company is unable to determine the financial statement impact related to these transactions that will be recorded in 1996.
On January 17, 1996, the Company sold a non-operating facility located in Hyannis, Massachusetts. The Company received cash consideration of $1,300 for the facility, which represented an amount slightly above net book value. The book gain and related tax liability will be reflected in first quarter 1996 financial statements.
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following table summarizes the 1995 and 1994 unaudited interim financial information: (in thousands of dollars except per share amounts - reclassifications have been made to conform with income statement presentation for the periods ended December 31, 1995 and 1994)
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
There have been no changes in or disagreements with the Company's independent accountants on accounting and financial disclosure.
PART III
The information required by Part III, Items 10, 11, 12 and 13 with respect to the directors and executive officers of the Company has been omitted because this information appears on pages 1 to 9 of the Company's definitive proxy statement which the Company expects to file with the Securities and Exchange Commission on or prior to March 31, 1996, and which is incorporated herein by reference, except with respect to the identification and business experience of executive officers required by Item 10, which is set forth under the caption "Executive Officers of the Company" in Part I of this Report. The Report of the Compensation Committee and the Performance Graph, which begin on page 9 and on page 12, respectively, of the Company's definitive proxy statement, are not incorporated by reference.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial Statements - See item 8 - index to financial statements.
(a) 2. Financial Statement Schedule - See item 8 - index to financial statements.
(a) 3. Exhibits
3. (i) Restated Certificate of Incorporation, filed May 7, 1987 (filed as Exhibit 3 to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, and incorporated herein by reference).
(ii) By-laws as amended February 7, 1995 (filed as Exhibit 3. (i) to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, and incorporated herein by reference).
5. Rights Agreement dated as of February 22, 1989 (filed with the Securities and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A, and incorporated herein by reference).
10. Material Contracts
10.1 Note Purchase Agreement, dated November 30, 1994 among the Company and certain institutional investors (filed as Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, and incorporated herein by reference).
10.2 Credit Agreement, dated November 30, 1994, between the Company and Harris Trust and Savings Bank as agent, and The First National Bank of Chicago (filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, and incorporated herein by reference).
*10b. Employment and Consulting Agreement, dated July 1, 1990, between the Company and John H. Muller, Jr. (filed as Exhibit 10b to the Company's Annual Report on Form 10-K for the year ended December 31, 1990, and incorporated herein by reference).
*10c. Compensation Agreement, dated August 7, 1987, between the Company and Paul A. Saxton relating to retirement and termination agreements (filed as Exhibit 10c to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, and incorporated herein by reference).
*10e. Employment Agreement, dated April 12, 1990, between the Company and Robert L. Gray, relating, among other matters, to termination arrangements (filed as Exhibit 10e to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, and incorporated herein by reference).
*10f. The Company's Severance Compensation Plan, as amended and restated August 6, 1985, in which all of the named executive officers participate, and form of designation of participation (filed as Exhibit 10f to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, and incorporated herein by reference).
*10g. Employment Agreement, dated March 20, 1995, between the Company and John C. Blackwell, relating, among other matters, to retirement and termination agreements.
*10h. Employment Agreement, dated July 3, 1995, between the Company and Gordon H. Brown, relating, among other matters, to retirement and termination agreements.
*10i. Employment Agreement, dated November 11, 1995, between the Company and Ray J. Kulla, relating, among other things, to retirement and termination agreements.
11. Computation of primary earnings per share.
21. Subsidiaries of the registrant.
23. Consent of Price Waterhouse, independent accountants, to the incorporation by reference constituting part of Registration Statements on Form S-8 (Nos. 33-33328, 2-77798 and 33-48336) of their report dated February 2, 1996.
99. Audited financial statements of the Company's Employee Stock Purchase Plan.
* Represents a contract, plan or arrangement pursuant to which compensation or benefits are provided to certain Executive Officers or Directors of the Company.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the period ended December 31, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
GENERAL HOUSEWARES CORP.
By /s/ Robert L. Gray 3/18/96 Robert L. Gray Date Vice President, Finance and Treasurer Principal Financial Officer
By /s/ Mark S. Scales 3/18/96 Mark S. Scales Date Controller Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Paul A. Saxton 3/18/96 Paul A. Saxton Date Chairman of the Board President and Chief Executive Officer
/s/ Charles E. Bradley 3/18/96 Charles E. Bradley - Director Date
/s/ John S. Crowley 3/18/96 John S. Crowley - Director Date
/s/ Thomas L. Francis 3/18/96 Thomas L. Francis - Director Date
/s/ Joseph Hinsey IV 3/18/96 Joseph Hinsey IV - Director Date
/s/ Ann Manix 3/18/96 Ann Manix - Director Date
/s/ John H. Muller, Jr. 3/18/96 John H. Muller, Jr. - Director Date
/s/ Phillip A. Ranney 3/18/96 Phillip A. Ranney - Director Date
INDEX TO EXHIBITS
Exhibit No.
10g. Employment Agreement
10h. Employment Agreement
10i. Employment Agreement
11. Computation of primary earnings per share
21. Subsidiaries of the registrant
23. Consent of Price Waterhouse
27. Financial Data Schedule
99. Financial statements of the Company's Employee Stock Purchase Plan