1
Form 10-K for the period ended December 31, 1993- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10K
/X/10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DecemberFOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
/ /1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________
Commission file numberFOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-6176
----------
AUGAT INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2022285
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
89 Forbes Boulevard, P.O. Box 448, Mansfield, Massachusetts 02048
- ----------------------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 508-543-4300
Securities registered pursuant to Section 12(b) of the Act: -------------(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Title of Each Class Name of Each Exchange
------------------- on Which Registered
---------------------
Common Stock $.10 Par Value New York Stock ExchangeMASSACHUSETTS 04-2022285
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
89 FORBES BOULEVARD, P.O. BOX 448,
MANSFIELD, MASSACHUSETTS 02048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 508-543-4300
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
COMMON STOCK $.10 PAR VALUE
(TITLE OF EACH CLASS)
NEW YORK STOCK EXCHANGE
(NAME OF EACH EXCHANGE ON WHICH REGISTERED)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YesYES X No
-------- --------NO
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant at March 2, 19941, 1996 was $425,346,178.$348,226,298.
The number of shares of the Registrant's common stock outstanding on March
2, 19941, 1996 was 19,146,455.
Documents Incorporated19,806,450.
DOCUMENTS INCORPORATED BY REFERENCE:
Information with respect to directors in Item 10 and other information
required by Reference:
Portions of the Proxy Statement for the Company's Annual Meeting of
Shareholders to be held April 26, 1994 areItems 11-13 is incorporated by reference into Part III of this Form
10-K, to the extent described in such Part III.III, from the Company's Proxy
Statement for its Annual Meeting of Shareholders scheduled for April 23, 1996.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
FORM 10-K ANNUAL REPORT
TWELVE MONTHS ENDED DECEMBER 31, 19931995
AUGAT INC.
PAGE
----
PART I
Item 1. BusinessBusiness.............................................................. 1
Item 2. Properties 7Properties............................................................ 6
Item 3. Legal Proceedings 8Proceedings..................................................... 7
Item 4. Submission of Matters to a Vote of Security Holders 9Holders................... 7
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters 9Matters............................................................... 10
Item 6. Selected Financial Data 10Data............................................... 11
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of OperationsOperations................................................. 11
Item 8. Financial Statements and Supplementary Data 13Data........................... 15
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial DisclosureDisclosure.................................................. 34
PART III
Item 10. Directors and Executive Officers of the RegistrantRegistrant.................... 35
Item 11. Executive Compensation 39Compensation................................................ 35
Item 12. Security Ownership of Certain Beneficial Owners and Management 39Management........ 35
Item 13. Certain Relationships and Related Transactions 39Transactions........................ 35
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 40
SIGNATURES 438-K....... 36
SIGNATURES.............................................................................. 38
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PART I
ITEM 1 --- BUSINESS
- -----------------
General
- -------GENERAL
Augat Inc. ("Augat") is a Massachusetts corporation organized in 1946. As
used herein the term the "Company" means Augat and, unless the context indicates
otherwise, its consolidated subsidiaries.
Augat designs and manufactures a broad range of electromechanical
components for the electronics industry. The Company's principal products are
interconnection components, including integrated circuit sockets and
accessories, coaxial cable network and fiber optic interconnection products,
packaging panels and interconnection test probes and systems. The Company also
makes terminals, custom connector assemblies, wiring harnesses and specialty
wiring systems for the automotive, communications, information processing and
business equipment markets.
Industry Segments
- -----------------INDUSTRY SEGMENTS
The Company operates within a single segment of the electronics industry
defined as the electromechanical component and subsystem sector. Although the
Company operates internally with several profit centers, the products of these
centers all have similar purposes or end uses, i.e., interconnecting or
controlling the flow of electricity among components or boards and other
assemblies within electronic equipment or systems. These products are used by
manufacturers of electronic equipment or systems. These products are used by
manufacturers of electronic equipment in their products to obtain specified
interconnections of components, subassemblies or subsystems.
Each profit center is responsible for the manufacture of its own products
within its own facilities. The manufacturing equipment and technology used by
each profit center, while similar, are not interchangeable because they are
customized for the particular product. However, Augat's manufacturing labor
force, for the most part, is similar and interchangeable, as are the basic
materials that make up the Company's products. Each profit center has comparable
capital-to-labor ratios, as well as labor costs as a percentage of sales, with
the exception of the Company's wire harness business, which consumes
approximately twice as much labor cost as a percentage of sales as the other
profit centers.
Products of the various profit centers, while sold to different market
segments, principally the automotive, computer, dataprocessing,
telecommunications and CATV markets, are sold across the same geographic areas
and marketed via similar methods. Augat's customers are primarily companies that
manufacture or install electronic equipment.
1
4
Narrative Description of the Business
- -------------------------------------NARRATIVE DESCRIPTION OF THE BUSINESS
The Company designs, manufactures and markets electromechanical products
used for the interconnection of circuits in electronic applications. Passive
components used in electronic equipment, such as resistors and capacitors, and
more complex active components, such as transistors, integrated circuits, hybrid
circuits and microprocessors, must be attached and electrically interconnected
to perform their specified functions. The Company's products principally relate
to mounting and interconnecting components, testing or controlling the flow of
electricity among components, boards and/or other assemblies within electronic
equipment or systems.
In general terms, the Company's products can be applied wherever computer
logic is used, either in business or scientific systems or in the numerous
products which incorporate computer functions. More specifically, the Company's
products are used in computers, computer-aided engineering and manufacturing
systems, industrial electronics, test equipment, medical electronics, business
equipment, and additional applications in automotive, aerospace,
telecommunications and broadband communications --- including CATV --- markets.
Principal Products
- ------------------1
4
PRINCIPAL PRODUCTS
The Company's products include a broad range of integrated circuit sockets,
miniature and subminiature switches, custom connector assemblies for the
automotive and telecommunications industries, packaging panels, coaxial cable
network and fiberopticfiber optic products and related hardware accessories and wire
harness assemblies for the automotive industry.
Integrated circuit sockets are mechanical devices into which integrated
circuits are plugged to provide easy component replacement. The sockets are
usually soldered to printed circuit boards by customers in order to connect
integrated circuits, including microprocessors, large and very large scale
integrated circuits and other dual-in-line packages, onto boards. Several
thousand varieties of miniature and subminiature control switches of the toggle,
slide, pushbutton and lighted types for use on printed circuit boards or
elsewhere in electronic equipment are sold by the Company.
Packaging panels are used to interconnect integrated circuits and other
components. Each panel consists of a board with one or more copper etched and
plated power and ground planes and incorporates sockets in particular patterns
for placement of integrated circuits or other components on one side and
wire-wrappable interconnections on the other. The Company also provides design
and wiring services for purchasers of packaging panels and for the wiring of
back planes and interconnection panels manufactured by others and provides spring loaded test probes and test fixtures for use in
conjunction with functional board and device testers.
The Companytesters and is a manufacturer of
high density discrete connectors for both conventional board mounting and
surface mounting.
2
5The Company also designs and manufactures solutions for complex high
density electronic connectors. The Company manufactures connectors made of
silicone rubber (elastomers) for leading edge commercial, military and
integrated circuit electronics manufacturers. These connectors allow customers
to design products with finer pitches, higher operating speeds, greater
functionality, and lower cost of manufacture than conventional mechanical
connectors.
The Company also manufactures a wide range of interconnection hardware
accessories generally used on or in connection with printed circuit boards, such
as test jacks and jumpers, relay and crystal sockets, breadboards, racks and
enclosures, adaptor plugs and cable assemblies as well as marketing flat cable
and related components manufactured by others.
The Company is also a major supplier of connectors and electronic packaging
modules and wire harnesses to two major U.S. automotive manufacturers and is
actively participating in the development of interconnection components for
future automotive model years. Such automotive programs include a "mass air flow
module",module," an "actuating assembly" that triggers automatic seatbelts, and an
"electronic search module" for a luxury car audio system.system and an interconnection
program that will link Powertrain Controller Module processors to critical
sensors, actuators and other controls via the main engine wire harness.
Products manufactured for the telecommunication industry include central
office distribution, remote-switching and cross-connect applications. The
Company also is a leading supplier of coaxial connector, fiber optic and
broadband products for the cable television and local area network (LAN)
markets. Specifically in the CATV market, the Company provides single-part
assemblies and connectors as well as line amplifiers to cable system operators
who, in turn, construct cable television systems that distribute signals from
the head-end to a home. In addition, the Company designs and manufactures
products -- laser transmitters and optical nodes -- that enable
telecommunications and CATV system operators to distribute quality signals on
fiber optic networks over longer distances than those permitted by traditional
transmission equipment. The Company is pursuing market opportunities for its
coaxial, broadband and fiber optic products in the rapidly evolving
communications technology marketplace.
Sources and Availability of Raw Materials
- -----------------------------------------SOURCES AND AVAILABILITY OF RAW MATERIALS
The Company's manufacturing operations utilize a wide variety of mechanical
components, raw materials and other supplies. It has multiple commercial sources
of supply for all materials which are important to its business.
Patents and Licenses
- --------------------PATENTS AND LICENSES
The Company owns a number of domestic and foreign patents and has filed a
number of additional patent applications. The Company's general policy has been
to seek patent protection for those inventions and improvements likely to be
incorporated in its products. While the Company believes that its patents and
patent applications have value, it considers that its competitive position in
the marketplace is not materially
2
5
dependent upon patent protection and no individual patent or patent application
is considered material to future operations.
Seasonality
- -----------SEASONALITY
The only seasonal effect experienced by the Company is in the third quarter
of the calendar year and is principally due to vacation shutdowns at selected
Company locations and by many of its customers, particularly in Europe.
Working Capital
- ---------------WORKING CAPITAL
The Company manufactures and markets a full line of standard catalog items
and also an extensive line of special products to meet specific customer needs.
In order to maximize its market opportunities, the Company maintains a high
level of inventory of both raw materials and finished products. Sales by the
Company are generally made on credit and customers typically take 30 to 70 days
to make payment; thus, the Company also has significant amounts of money
invested in accounts receivable. Despite the high level of accounts receivable
and inventory required, the Company has generally been able to finance these
assets from current operations. When additional working capital in excess of
that generated by the business has been required, the use of short-term
3
6
borrowings, long-term debt and equity financing have been utilized. The
Company's payment terms and the rights of return offered by it to customers and
to it by manufacturers vary among such customers and manufacturers, but do not
differ substantially from industry practice. The Company has generally allowed
credits for returns by customers under appropriate circumstances.
Marketing
- ---------MARKETING
The Company sells to a broadly diversified group of customers located
primarily in the United States, Western Europe, Far East and Canada. Sales are
made to industrial and commercial customers within the computer, computer-aided
engineering and manufacturing, industrial electronics, test equipment,
telecommunications, aerospace, automotive and broadband communication markets.
The Company's products are also widely used in both industrial and institutional
research laboratories. During 19931995 the Company's products and services were sold
directly to approximately 5,6003,600 customers and a substantial number of additional
customers were served through a network of industrial electronic component
distributors. Of total sales 20%21% was derived from sales through a number of
distributors located throughout the world and no distributor accounted for as
much as 2%3% of the Company's sales. One customer, Ford Motor Company, accounted
for approximately 28%23% and another customer for 7%5% of the Company's sales in
1993;1995; no other customer accounted for more than 4%4.5% of sales.
The acquisition of National Industries, Inc. in August 1991, has changed the
sales mix of the Registrants' major products as follows (see also Footnote
Number 2 to the accompanying financial statements of the Registrant which are
included under Item 8 hereof):
Percent of sales
----------------
1993 1992 1991
---- ---- ----
As As As Pro-
Reported Reported Reported forma
-------- -------- -------- -----
Interconnection Products Business 30% 35% 46% 37%
Wiring Systems and Components Business 52% 50% 37% 49%
Communication Products Business 18% 15% 17% 14%
---- ---- ---- ----
Total 100% 100% 100% 100%
==== ==== ==== ====
The Company markets its products and services through independent sales
representatives and direct Company sales personnel working throughout the United
States and abroad, including wholly owned marketing subsidiaries in the United
Kingdom, France, Germany, Switzerland, Sweden, Italy, Japan, Canada and
Australia and sales offices in other areas.
In 19931995 the Company's international sales amounted to approximately 21%25% of
total sales. Approximately 51%52% of these sales were derived from Western Europe.
The overall net margins on international sales are somewhat less than those
obtained on sales made in the United States. The Company's international
business is subject to risks customarily encountered in foreign operations,
including fluctuations in monetary exchange rates.
43
7
Backlog
- -------6
BACKLOG
The Company estimates that its backlog of unfilled orders at December 31,
19931995 was $104$124 million compared with $90$119 million at December 31, 1992.1994. Orders
tend to fluctuate during the year according to customer requirements and
business conditions, and the backlog level from quarter to quarter does not
follow a consistent pattern. Although unfilled orders can be cancelled, the
Company's experience has been that the dollar amount of cancelled orders is not
material.
Substantially all of the backlog is reasonably expected to be shipped
within twelve months.
Government Contracts
- --------------------GOVERNMENT CONTRACTS
The amount of the Company's business that may be subject to renegotiation
of profits or termination of contracts or subcontracts at the election of the
government is insignificant.
Competition
- -----------COMPETITION
The Company encounters competition in all areas of its business activity
from a number of competitors but does not compete with any one company in all
areas. Competitors range from some of the country's largest diversified
companies to small and highly specialized firms. The Company competes primarily
on the basis of technology, innovation, performance and reliability. Price and
company reputation are also important competitive factors. Although there are no
precise statistics available, the Company believes it is a principal factor in
the markets in which it competes.
Research, Development and Engineering
- -------------------------------------RESEARCH, DEVELOPMENT AND ENGINEERING
The Company maintains a continuous program of design, development and
engineering of new products and improvement of existing products to meet the
changing needs of its customers. The Company provides engineering assistance to
its customers by designing products to fill their individual requirements. The
majority of new product development, manufacturing research, quality control
development, new equipment development and related research and development
expenditures take place in product management groups involving engineering,
marketing, manufacturing, quality control and general management personnel.
These expenses are included in the categories of marketing, manufacturing and
general administrative expenses. In calendar year 1993, 19921995, 1994 and 19911993
expenditures for such research, development and engineering were approximately
$21 million, $20 million, and $19 million, $19 million, and $16 million, respectively.
Environmental Affairs
- ---------------------ENVIRONMENTAL AFFAIRS
The Company's manufacturing facilities are subject to numerous laws and
regulations designed to protect the environment. The Company has spent
substantialsufficient amounts to purchase, install, and operate containment, remediation
and other pollution control equipment and conduct appropriate environmental
audits. The Company believes that its efforts in this regard places it in
substantial compliance with existing environmental laws and regulations.
5
8
In connection with the acquisition of National Industries, Inc. in 1991,
the Company determined that possibleactual contamination at certain National facilities
in Alabama warranted additional study. The Company informed the StateAlabama
Department of AlabamaEnvironmental Management "ADEM" about the possible contamination
and its desire to voluntarily proceed with further study and, if necessary,
remediation of the possible contamination. The Company has completed its investigationobtained the
necessary permits and provided this information tois in the State. The Stateprocess of remediating the site. ADEM has
recently informed the Company that it believes further
investigation is necessary. Thewants the Company however, has consideredto 1) expand its
investigations at both facilities and disagreed
with2) enter into a binding consent order
compelling the State's comments and is voluntarily proceeding to design and implement
an appropriate remedy.cleanup. The Company has includedagreed to negotiate with ADEM on both
demands. Negotiations are continuing. The Company has recorded in its financial
statements an
allowancea liability of $4.7$4.2 million for estimated environmental cleanup costs
as of December 31, 1993.
Employees
- ---------1995.
Based on a study conducted in 1995, the Company notified the Massachusetts
Department of Environmental Protection on January 20, 1996 of a release of
hazardous materials associated with its facility in Mashpee, Massachusetts. The
Company will follow-up this notice with further investigation in compliance with
State law.
4
7
Based upon preliminary information provided by third party consultants, the
Company estimates that the cleanup costs will approximately be $1.8 million. A
liability for this amount was recorded in 1995.
EMPLOYEES
The Company had approximately 4,3003,900 employees as of December 31, 1993.1995. None
of the employees are covered by collective bargaining agreements and operations
have never been interrupted by a work stoppage. The Company believes that
relations with its employees are good. The Company also contracts for
manufacturing labor and as of December 31, 19931995 had approximately 2,0001,100 contract
laborers.
Financial Information about Foreign and Domestic Operations and Export Sales
- ----------------------------------------------------------------------------FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
Certain financial information concerning domestic and international
operations and export sales can be found in Footnote number 10 to the
accompanying financial statements of the Registrant which are included under
Item 8 hereof.
Balance of this page intentionally left blank.
65
98
ITEM 2 -- PROPERTIES
ITEM 2 - PROPERTIES
- -------------------
Information regarding the Company's active properties appears below:
Approximate facility
size DecemberAPPROXIMATE FACILITY
SIZE DECEMBER 31, 1993
(Square Feet)
-----------------------1995
(SQUARE FEET)
----------------------
Montgomery, Alabama 192,000 (1)Alabama.............................................. 192,000(1)
Tucson, Arizona.................................................. 54,000(2)
Sanford, Maine 92,000 (1)Maine................................................... 92,000(1)
Canton, Massachusetts 30,000 (1)Massachusetts............................................ 30,000(1)
Mansfield, Massachusetts 38,000 (1)Massachusetts......................................... 38,000(1)
Mashpee, Massachusetts 83,000 (1)Massachusetts........................................... 83,000(1)
North Attleboro, Massachusetts 52,000 (1)Massachusetts................................... 52,000(1)
Boyne, Michigan 68,000 (1)Michigan.................................................. 68,000(1)
Chesterfield, Michigan 66,000 (1)Michigan........................................... 66,000(1)
Chesterfield, Michigan 26,000 (2)Michigan........................................... 26,000(2)
Clinton, Michigan 96,000 (1)Michigan................................................ 96,000(1)
Livonia, Michigan 6,000 (2)Michigan................................................ 6,000(2)
Horseheads, New York 75,000 (1)York............................................. 75,000(1)
Horseheads, New York 11,000 (2)York............................................. 113,000(2)
Hatboro, Pennsylvania............................................ 16,000(2)
Kent, Washington 58,000 (2)Washington................................................. 106,000(2)
Sydney, Australia 4,000 (2)Australia................................................ 4,000(2)
British Columbia, Canada......................................... 5,000(2)
Mississauga, Canada 5,000 (2)Canada.............................................. 11,000(2)
Telford, England 41,000 (1)
LaSeine, France 6,000 (2)England................................................. 41,000(1)
Rungis-Cedex, France............................................. 5,000(2)
Troisdorf, Germany 22,000 (2)
Tsuen Wan, N.T., Hong Kong 1,000 (2)Germany............................................... 11,000(2)
Milan, Italy 4,000 (2)Italy..................................................... 4,000(2)
Kawasaki, Japan 13,000 (2)
Mishima, Japan 1,000 (2)Japan.................................................. 20,000(2)
Empalme, Sonora, Mexico 170,000 (2)
Singapore 24,000 (2)Mexico.......................................... 223,000(2)
Guaymas, Sonora, Mexico.......................................... 112,000(2)
Singapore........................................................ 24,000(2)
Stockholm, Sweden 2,000 (2)Sweden................................................ 2,000(2)
Bioggio, Switzerland 188,000 (1)Switzerland............................................. 188,000(1)
Zug, Switzerland 2,000 (2)Switzerland................................................. 2,000(2)
---------
1,376,0001,765,000
=========
Total facilities upheld for sale or inactive as accounted for by
restructuring reserves 352,000inactive....................... 272,000
=========
- ---------------
(1) Company - ownedCompany-owned facility
(2) Company - leasedCompany-leased facility
7
10
The Company believes that its existing facilities are adequate and suitable
for the manufacture and sale of its products and have sufficient capacity to
meet its current requirements. Machine capacity is adequate although additional
machine capacity is currently being added in the business to meet increasing
demands for the Company's new products and for ongoing cost reduction programs.
The Company anticipates no difficulty in retaining occupancy of any of its
manufacturing, office or sales facilities through lease renewals prior to
expiration or through month-to-month occupancy, or in replacing them with
equivalent facilities.
6
9
In addition to the above listed properties, the Company leases a small
amount of other office/warehouse space in the United States and foreign
countries. The amount of such space is not significant.
See Note 7 --- "Commitments and Contingencies" to the accompanying financial
statements of the Registrant which are included under Item 8 hereof for
information concerning the Company's obligations under all leases.
ITEM 3 --- LEGAL PROCEEDINGS
- --------------------------
On April 26, 1985, the Company and its subsidiary, Isotronics, Inc.
("Isotronics"), commenced an action in the Bristol County Superior Court of
Massachusetts against Aegis, Inc. ("Aegis"), and a former employee of
Isotronics (the "Employee"), seeking damages to be trebled under the
Massachusetts statute relating to unfair trade practices (M.G.L. c. 93A) and
injunctive relief. The complaint alleged wrongdoing by the defendants in
connection with the organization and operation of Aegis, which competed with
Isotronics in the manufacture and sale of microcircuit packages.
On May 21, 1985, the defendants filed a counterclaim, and added the Chairman of
the Board of the Company as an additional defendant. The counterclaim alleged
improper interference with a contract of Aegis; the making of disparaging
remarks about the Employee and another officer of Aegis; that the action is
groundless; and that it was commenced because of personal animosity toward the
Employee. The counterclaim seeks damages of $7,500,000 for abuse of process,
damages of $50,000 for interference with the contract, and damages of
$7,500,000, to be trebled, for violation of the Massachusetts statute relating
to unfair trade practices (M.G.L. c 93A). A reply was filed which denied the
material allegations of the counterclaim.
On May 13, 1985, Aegis commenced an action in the U.S. District Court for the
District of Massachusetts. The allegations of the amended complaint in the
federal case generally are similar to those of the counterclaim in the Superior
Court case, but include an additional claim that the Company and Isotronics had
attempted to monopolize interstate commerce in violation of the Sherman Act.
The allegations with respect to damages are similar to those of the Superior
Court counterclaim.
Assets of Isotronics were sold by the Company in May 1989, but all claims
relating to the litigation were retained by the Company.
On August 31, 1989 the Bristol County Superior Court ruled that Aegis and the
Employee violated the Massachusetts statute relating to unfair trade practices.
The court ruled further that Aegis and the Employee had failed to prove the
counterclaims they had asserted against the Company, Isotronics and an officer
of the Company.
Aegis and the Employee appealed the decision and on October 1, 1990, the case
was argued to the Massachusetts Supreme Judicial Court. The court rendered a
decision on January 16, 1991, affirming the trial court's finding of a knowing
and willful violation of the Massachusetts Unfair Trade Practices statute. A
further trial to determine the amount of damages to be awarded against Aegis
and the Employee took place in the Bristol County Superior Court from January
6, 1992 until February 20, 1992.
8
11
On November 2, 1992, the Court issued a 173 page Memorandum of Decision and
Order ("Order"). The Order concluded that the illegal conduct of defendants
Aegis and Employee proximately caused the Company to suffer $14,140,000 in lost
profits during the period January 1, 1985 until March 31, 1987.
In 1987, a joint venture owned by Olin Corporation ("Olin") and Asahi Glass Co,
Ltd. purchased the stock of Aegis. Because of alleged indemnity obligations
which may run from Olin to the defendant Employee, the Company moved to amend
its Complaint and add Olin as a defendant. On November 25, 1992 the court
allowed the Company's motion. Olin moved to dismiss that complaint. The Court
denied Olin's motion on December 14, 1992. At the same time the Court granted
the Company a preliminary injunction restraining Olin from modifying any
obligation it may have to defendant Employee. Olin has renewed its objections
to the Company's complaint.
On December 14, 1992, final judgment was entered entitling the Company to
recover from the defendants jointly and severally, the sum of $14,140,000 in
compensatory damages, plus costs of $376,632.98, interest of $10,744,460.47,
and attorneys' fees of $1,216,188.06, for a total of $26,477,281.51. The
judgment also awarded the Company noncompensatory damages of $14,140,000. The
judgment also found in favor of the former Chairman of the Board on all counts
of the defendants' counterclaims against him.
The defendants have appealed the judgment, generally challenging the entire
damages decision. The Company has filed a cross appeal limited to the question
of whether a portion of the damages award should be assessed against each of
the defendants jointly instead of jointly and severally. The appeal of the
damages decision was argued before the Supreme Judicial Court in early October
1993, and the Court has not issued its decision.
On September 4, 1992, the Company filed suit in the United States District
Court for the District of Massachusetts against June M. Collier ("Collier").
This suit arises out of an Agreement of Merger which the Company entered into in
August 1991, and through which an Alabama manufacturing company, National
Industries, Inc. was merged into Augat National Inc., a wholly owned subsidiary
of the Company. The Company alleges that the defendant, who was the sole
stockholder of National Industries, breached certain warranties she made in
connection with the merger and misrepresented certain aspects of the financial
and operating conditions of National Industries. The suit also alleges a
violation of Mass. Gen. Laws c. 93A.c.93A. Collier has answered the company'sCompany's complaint
and asserted counterclaims for breach of contract, breach of the implied
covenant of good faith and fair dealing, violation of section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5, duress, misrepresentation and
violations of Mass. Gen. Laws c. 93A.c.93A. Both parties have brought claims for
declaratory judgements on Collier's request for indemnification for her legal
fees and costs in this case as a former officer and director of National
Industries. The Company has responded to Collier's counterclaims and has denied
all of the substantive allegations. Management believes that Collier's
counterclaims are without merit and will defend them vigorously.
Discovery is
scheduledThe Company filed a motion for partial summary judgment on most of
Collier's counterclaims, and Collier moved for summary judgment on the Company's
claims against her. In response to endthe Company's motion, Collier voluntarily
dismissed her breach of contract claim, securities law claims, and part of her
misrepresentation claim.
On January 22, 1996, a Magistrate Judge recommended to the District Court
Judge that Collier's motion for summary judgment on June 15, 1994.the Company's claims be
denied to the extent it relates to obsolete inventory, tooling and
indemnification issues, and allowed to the extent it relates to excess premium
freight charges. The Magistrate Judge also recommended that the Company's motion
for partial summary judgment be denied as to all issues other than Collier's
defamation claim and that the motion be denied without prejudice to refiling
after discovery as it relates to Collier's defamation claim. The District Court
Judge accepted all recommendations of the Magistrate Judge.
Trial hashad been set for August 1, 1994.1994, but did not occur. No new trial date
has been set.
There are no other material legal proceedings to which the Registrant is a
party. Routine litigation incidental to its business is immaterial.
ITEM 4 --- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
Not Applicable.
MANAGEMENT
The following table sets forth the names of all executive officers of the
Company and certain other information relating to the positions held by them
with the Company and other business experience.
BUSINESS EXPERIENCE
EXECUTIVE OFFICER AGE POSITION FOR THE PAST FIVE YEARS
- ------------------------ --- ------------------------------ ---------------------------------
William R. Fenoglio..... 56 President and Chief President and Chief Executive
Executive Officer Officer since December 20, 1994.
President and Chief Operating
Officer from September 6, 1994 to
December 20, 1994. Served as
President and Chief Executive
Officer with the Barnes Group
Inc. from 1991 to 1994 and as
President and Chief Operating
Officer with that Corporation
from 1985 to 1991.
7
10
BUSINESS EXPERIENCE
EXECUTIVE OFFICER AGE POSITION FOR THE PAST FIVE YEARS
- ------------------------ --- ------------------------------ ---------------------------------
Anthony F. Lefkowicz.... 58 Vice President and Vice President, Automotive
General Manager, Business since September 1991.
Wiring Systems and From February 1991 to September
Components Business 1991 he was Vice President of
Manufacturing Operations.
Previously he was Vice President
and General Manager, Automotive
Division from May 1988 to
February 1991.
Richard J. Eaton........ 59 Vice President -- Vice President, Human Resources
Human Resources since 1984.
Daniel J. Maher, Jr..... 49 Corporate Controller Corporate Controller since 1979.
John E. Lynch, Jr....... 52 Vice President and Vice President and General
General Counsel Counsel since December, 1994.
From June 1994 to December 1994
he was General Counsel.
Previously from January, 1985 to
June 1994 he was Treasurer.
Larry E. Buffington..... 48 Vice President and Vice President and General
General Manager, Manager, Communications Products
Communications Business since August, 1991.
Products Business Previously he was Chairman of the
Board and Chief Executive Officer
of Adaptive Technologies, Inc.
from 1989 to 1991. From 1988 to
1989 he served as Vice President
and General Manager, Cook
Division of Northern Telcom.
L. Ronald Hoover........ 55 Vice President Vice President Business and
Business Technology & Technology Development since
Development August, 1994. Vice President and
General Manager, Interconnection
Products Business from December
1991 to August 1994. Previously,
he was President and Chief
Operating Officer of Diceon
Electronics, Inc. from 1989 to
1991.
Gasper Buffa............ 43 Vice President and Vice President and General
General Manager, Manager, Automotive Components
Components Division Division since January, 1994.
From August 1992 to January 1994
he was Vice President,
Engineering, Sales & Marketing
for the Wiring Systems and
Components Division. Previously,
from September 1991 to August
1992 he was Vice President &
General Manager, Components
Division and from February 1991
to September 1, 1991 he was Vice
President, Manufacturing
Operations for the Automotive and
Communications Division. From
March of 1989 to February 1, 1991
he was Vice President Operations
for the Automotive Division.
8
11
BUSINESS EXPERIENCE
EXECUTIVE OFFICER AGE POSITION FOR THE PAST FIVE YEARS
- ------------------------ --- ------------------------------ ---------------------------------
James E. Finley......... 42 Vice President and Vice President and General
General Manager, Manager Wiring Systems Division
Wiring Systems Division since December 1995. Vice
President and General Manager
Augat Europe from March, 1992 to
December 1995. Previously Vice
President and General Manager,
European Automotive Division from
August 1991 to March 1992. From
February to August 1991, Vice
President and General Manager,
Automotive Division. From March,
1989 to February, 1991 was Vice
President, Sales and Marketing,
Automotive Division.
Ellen B. Richstone...... 44 Vice President and Vice President and Chief
Chief Financial Officer Financial Officer since November,
1992. From March, 1992 to
October, 1992 she was Senior Vice
President and Chief Financial
Officer of Rohr, Inc. Prior to
that, she was Executive Vice
President and Chief Financial
Officer of Bull H.N. Worldwide
Information Systems from 1989 to
1992.
Sam Smookler............ 56 Vice President and Vice President and General
General Manager Manager, Interconnection Products
Interconnection Products Business since February 1995.
Business Previously Vice President
Marketing/Sales --
Interconnection Products Division
from October 1994 to February
1995. From 1992 to 1994 he was
General Manager, R.F. Components
and Subsystems, M/A Comm.
Corporation.
Carey A. Paulus......... 36 Vice President and Vice President and General
General Manager, Augat Europe Manager, Augat Europe since
December 1995. Previously he was
Vice President, European
Manufacturing from April 1994 to
December 1995. From September
1991 to April 1994 he was Plant
Manager, Lugano, Switzerland and
Plant Manager, San Antonio, Texas
from December 1987 to September
1991. From 1983 to 1987 he was a
Manufacturing Engineer for the
Automotive Division.
Lynda M. Avallone....... 40 Treasurer Treasurer since July, 1994.
Previously, she was Director of
Taxes from March, 1994 to July,
1994. From 1992 to March, 1994
she was Director of Tax for the
Timberland Company and from 1983
to 1991 was in the Tax Department
for the Company.
The executive officers of the Company are elected annually.
9
12
PART II
ITEM 5 --- MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
- --------------------------------------------------------------------------
The Company's Common Stock is currently traded on the New York Stock
Exchange under the symbol "AUG"."AUG."
The following table sets forth the range of high and low closing prices for
its Common Stock on a quarterly basis for each of the Company's last three
fiscal years.
Closing Price Range
Common Stock Dividends
1993 High Low Paid
- ----- ----- -----CLOSING PRICE RANGE
COMMON STOCK DIVIDENDS
------------------- ---------
HIGH LOW PAID
------ ------ ---------
1995
1st QuarterQuarter................................................. $19.25 $14.50 $.04
2nd Quarter................................................. 21.75 18.00 .04
3rd Quarter................................................. 24.50 17.63 .04
4th Quarter................................................. 19.38 15.00 .04
------ ------ ----
$24.50 $14.50 $.16
1994
1st Quarter................................................. $23.75 $17.50 --
2nd Quarter................................................. 21.75 18.75 --
3rd Quarter................................................. 24.38 20.25 $.04
4th Quarter................................................. 21.38 16.00 .04
------ ------ ----
$24.38 $16.00 $.08
1993
1st Quarter................................................. $13.25 $11.25 ---
2nd QuarterQuarter................................................. 16.88 12.63 ---
3rd QuarterQuarter................................................. 21.75 16.50 ---
4th QuarterQuarter................................................. 21.25 15.50 -
------- ------- -----------
------ ------ ----
$21.75 $11.25 -
9
12
1992
- -----
1st Quarter $11.00 $ 8.63 -
2nd Quarter 12.00 10.25 -
3rd Quarter 13.25 9.88 -
4th Quarter 12.25 10.38 -
------- ------- -------
$13.25 $ 8.63 -
1991
- -----
1st Quarter $13.00 $ 9.13 $.10
2nd Quarter 14.00 11.25 .10
3rd Quarter 13.00 11.13 .10
4th Quarter 12.25 7.88 .10
------- ------- ------
$14.00 $ 7.88 $.40--
The Company, in December 1991, suspendedJuly 1994, reinstated its quarterly common stock dividend in
order to maintain a strong balance sheet and to ensure Augat's financial
long-term objectives. As discussed in Note 3 of the Notes to Consolidated
Financial Statements which are included under Item 8 hereof,cash dividend. The
current quarterly amount is $.04 per share on the Company's senior secured notes impose certain restrictions on the payment of dividends.
Management intends to reinstate a dividend when it is feasible and prudent.Common Stock.
The approximate number of holders of record of the company'sCompany's Common Stock
at December 31, 19931995 was 1,648.1,707.
10
13
ITEM 6 --- SELECTED FINANCIAL DATA
(In thousands except per share data)1995 1994 1993 1992 1991
1990 1989
- --------------------------------------------------------------------------------------------------- -------- -------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
Sales, Income and Dividends
Net salessales......................... $534,873 $530,706 $420,263 $361,718 $281,602
$299,193 $306,647
Cost of products soldsold............. 423,699 420,647 328,964 287,524 219,358 212,437 221,016
Selling, general and
administrative expensesexpenses........ 75,998 66,219 63,492 60,920 62,301
63,940 62,566
Restructuring costscosts............... 18,700 22,000
2,500
Other income (expense)
- net (4,207) (3,519) 463 1,133 1,221expense (income) -- net..... 4,716 4,140 4,207 3,519 (463)
Income (loss) before taxes and minority
interestson
income......................... 11,760 39,700 23,600 9,755 (21,594)
23,949 21,786
Provision for taxes on income..... 4,160 13,500 8,000 3,169 468
6,816 6,886
Net income (loss)................. 7,600 26,200 15,600 6,586 (22,062)
17,133 14,900
Earnings (loss) per shareshare......... .39 1.36 .83 .36 (1.21)
.95 .83
Cash dividends per share .40 .40share.......... .16 .08 .40
Net income (loss) as a percent of
net salessales...................... 1.4% 4.9% 3.7% 1.8% (7.8%)
5.7% 4.9%
Net income (loss) as a percent of
share-
holders'shareholders' average equityequity... 3.1% 11.9% 8.1% 3.7% (11.4%)
8.7% 8.1%
Working Capital
Current assetsassets.................... 222,771 198,460 176,508 157,641 154,941
153,582 140,549
Current liabilitiesliabilities............... 119,953 73,643 57,580 50,767 60,930
37,292 40,603
Working capitalcapital................... 102,818 124,817 118,928 106,874 94,011
116,290 99,946
Current ratioratio..................... 1.9 to 1 2.7 to 1 3.1 to 1 3.1 to 1 2.5 to 1
4.1 to 1 3.5 to 1
Other Data
Property, plant, and
equipment - net-- net............... 134,652 120,839 99,999 98,262 101,795
105,468 99,406
Total assetsassets...................... 407,476 357,958 317,860 295,448 293,229
272,541 252,032
Long-term debtdebt.................... 25,854 35,033 45,797 56,939 50,236
12,864 16,098
Debt/Equity ratioLong-term debt as a percent of
equity......................... 10.4% 14.7% 22.7% 31.4% 28.4%
6.1% 8.7%
Shareholders' equityequity.............. 249,738 237,521 201,611 181,481 176,633
209,389 185,519
Average common shares
outstandingoutstanding.................... 19,727 19,280 18,789 18,370 18,182 18,050 17,962
10
13
ITEM 7 -ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- ------------------------------------------------------------------------
As an aid to understanding the Company's operating results, the following
table indicates the percentage of sales that each income statement item
represents, and the percentage increase or decrease in such items for the years
indicated.
Percentage
Increase
(Decrease)
---------------
Years ended DecemberPERCENTAGE
INCREASE
(DECREASE)
FOR THE YEARS ENDED --------------
DECEMBER 31, 1995 1994
------------------------- VS. VS.
1995 1994 1993 1992
------------------------- vs. vs.1994 1993
1992 1991 1992 1991
------ ------ ------ ------ ----------- ----- ----- ----- ----
SalesNet sales........................................... 100.0% 100.0% 100.0% 16.2% 28.4%.7% 26.3%
Cost of goods soldproducts sold............................... 79.2 79.3 78.3 79.5 77.9 14.4 31.1.7 27.9
Gross Marginmargin........................................ 20.8 20.7 21.7 -- 20.5 22.1 23.0 19.1
Selling, general, etc. ............................. 14.2 12.5 15.1 16.8 22.1 4.2 (2.2)14.8 4.3
Restructuring costs - - 7.8 * *costs................................. 3.5
Other (income) expense -- net................................ .9 .8 1.0 1.0 (.2) 19.6 *13.9 (1.6)
Provision for taxes on income....................... .8 2.5 1.9 .9 .2 152.4 *
------ ------ ------ ------ ------(69.2) 68.7
----- ----- ----- ----- ----
Net income (loss)income.......................................... 1.4% 4.9% 3.7% 1.8% (7.8%(71.0%) 136.9% *
====== ====== ====== ====== ======
* Not meaningful67.9%
===== ===== ===== ===== ====
11
14
SALES BY MAJOR PRODUCT AREA
Sales by Major Product Area
A breakdown of sales for calendar years 1993, 19921995, 1994 and 19911993 by major
product is as follows:
Net Sales (In thousands)NET SALES
----------------------------------------------
1995 % 1994 % 1993 %
1992 % 1991 %
------ ---- ----------- ---- ----------- ---- ---
(IN MILLIONS)
Interconnection Products Business $129,000 30% $127,000 35% $130,000 46%Business........ $144 27 $131 25 $129 30
Wiring Systems and Components Business 217,000 52% 180,000 50% 105,000 37%Business... 249 46 292 55 217 52
Communications Products Business 74,000 18% 55,000 15% 47,000 17%
--------Business......... 142 27 108 20 74 18
---- ----------- ---- ----------- ---- Total $420,000---
Total.......................... $535 100% $362,000$531 100% $282,000$420 100%
-------- ---- -------- ---- -------- ----==== === ==== === ==== ===
Results of OperationsRESULTS OF OPERATIONS
The Company continued to growCompany's 1995 overall sales growth was modest with operating
performance below expectations. These results reflect the continuing increase in
1993 over 1992 due to the significant
improvement in the domestic automotive markets and increasedglobal market penetration in the cable television and telecommunications
segments ofmarkets, the communications
industry.improvement in servicing the worldwide information processing
industries and increased volume in domestic and European component customer
requirements. Such increases were offset by a significant decrease in domestic
automotive wiring sales due to reduction in demand for certain vehicle
platforms. Changes in foreign exchange rates increased sales by approximately
one percent. The sales improvement in 19921994 over 19911993 was attributable toa result of the
Company's expanded roleincreased participation in the worldwidefast growing U.S. cable television and
telecommunications markets, the strength of the U.S. automotive markets as well as
substantial sales growthindustry and the
improvement in the Communications Products Business. Sales in
1991 were affected in all major business units by the worldwide recession.European market. International sales were $89$135 million, $92$109
million and $79$89 million for the years 1995, 1994 and 1993, 1992 and 1991, respectively. Sales in 1991 included $28 million from
National Industries, Inc. acquired in August 1991. See Note 2 of the
Notes to Consolidated Financial Statements which are included under Item 8
hereof.
The
Interconnection Products Business experienced sales remained flatgrowth in 1995 due to
improved domestic and European markets along with the acquisition of Elastomeric
Technologies Inc. The modest sales growth for the three years ended 1993 as the computer industry continued its lackluster performance.
Increases1995
resulted from increases in new product sales have been offset by reduction in sales of
mature product lines, and price reductions duringand the de-emphasizing of certain product
lines. During these periods, this three year period.
Salesbusiness has reorganized and reengineered its
domestic and international operations in order to be a more efficient and
competitive player in the markets it serves. As part of the restructuring
announced by the Company in December 1995, this business will be exiting from
certain low-margin, commodity product lines and closing a plant. The Company
will also be transferring certain product line production within Company
facilities. These actions will allow the business to operate with a more focused
product line strategy, concentrating on areas that have strong market share
positions.
The Wiring Systems and Components Business increased worldwide 21%had a difficult sales year in
19931995. Wiring sales, which management expected to decline in 1995 decreased by
30% due to the lower production run rates for both the Ford Aerostar and Mustang
car platforms. Overall this business' sales were down by only 15% as the growth
in both domestic and European automotive component markets partially offset the
weak wiring sales. In 1994, this business had significant sales growth with
domestic sales increasing 27%34% and internationalEuropean sales decreasing 22%
compared with 1992. For 1992,increasing 41%. In addition, in
1994 this business benefitted from the strong domestic automotive market demand
which included Ford's Mustang and Aerostar vehicles.
The Communications Products Business continued its stellar performance as
sales increased 88% and international
sales increased 14% when compared to 1991.
Worldwide salesover 30% in the Communication's Business increased 35%1995 with market penetration in 1993 over 1992
after increasing 17% in 1992 over 1991. The divisionkey geographical
areas. This business serves two primary markets:markets, cable television (CATV) and
telecommunications. Both markets continuedtelecommunications which are building and upgrading their growth improvementsystems to accommodate
new technologies and services. The Company has invested approximately $16
million and $11 million in 1993 that startedthis business for the last two years in 1992.
11
14
Salesnew plant and
equipment in 1993 continued its growthresponse to the significant sales growth. The Company is projecting
to invest approximately $18 million in capital expenditures for this business in
1996 to accommodate the anticipated customer demand. This capital commitment
reflects the Company's strategy to grow this business to be 50% of the total
Company sales.
Gross margin as a percentage of sales was approximately the same for the
last two years. The sales mix has changed year over year with the significant
increase in higher margin communications products offset by sales increases in
mature, low-margin products and underabsorption of overheads due to increased domesticautomotive
volume
in the
automotive business, improvement in worldwide communications sales offset
in part12
15
shortfalls. In addition, gross margin was affected by a decline in international automotive sales.
Cost of products sold decreased by 1.2% of sales in 1993 as the Company
benefitted from its on-going cost control and productivity programs, increase
in new products offeringsselective price decreases
which were offset by selectiveincreases in new product offerings (approximately $185
million and $138 million in 1995 and 1994, respectively).
Management intends to maintain selling, price
decreases. These costs increased by 1.6% of sales in 1992 compared to 1991 due
to the inclusion for a full year of National Industries which has higher labor
and material costs compared to the other business units.
Selling, general and administrative expenses
(SG&A) continuedin the 13% to decrease15% range of sales. During 1995, the Company invested in
future-oriented SG&A expenditures for the Communications Products Business. In
addition, SG&A in 1995 included charges for estimated environmental cleanup
costs amounting to $1.8 million for one facility which will be closed in
connection with the Company's restructuring plan. In 1994, the Company recorded
a portion of the Aegis litigation settlement proceeds (approximately $2 million)
as a credit to SG&A as such amounts represented a recovery of litigation costs
charged to SG&A in 1994 and prior periods.
In December 1995, the Company announced plans to restructure its
Interconnection Products Business and Wiring Systems and Components Business.
This $18.7 million restructuring charge represented the costs to close certain
manufacturing operations in its Interconnection Products and Wiring Systems
Businesses, as well as the costs associated with exiting several low-margin,
commodity interconnect product lines. The cash requirements associated with the
restructuring will be paid over the next two years, and are expected to be less
than $4 million after taxes. The restructuring charge includes $9.3 million
related to redundant or excess facilities and equipment costs which are being
closed or abandoned. Operating expenses related to such facilities and equipment
up to the time of closure or abandonment were not included in the restructuring
charge. Additionally, $5.5 million of the restructuring charge related to
employee severance costs for approximately 800 employees who will be terminated.
The charge does not include salaries and wages to be paid to such employees up
to their termination date. The remaining $3.9 million of the restructuring
charge related to products which have been eliminated from the Company's product
lines. The Company expects the savings from this restructuring plan will be
approximately $7 million per year, however, such savings cannot be assured.
Other income (expense) has remained relatively constant as a percentage of
sales for the three years ended 1995. In 1995, other income (expense) included
the write-down of assets held for sale and facility costs amounting to $1
million. In 1994, other income (expense) included the write-down of assets held
for sale and lease termination costs of approximately $1 million. In addition,
approximately $1 million gain from the Aegis litigation settlement was recorded
under this caption in 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company's statements of cash flows for the periods indicated are
summarized below:
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
------- ------- --------
(IN THOUSANDS)
Net cash provided by operating activities............ $34,501 $40,469 $ 8,468
Net cash used for investing activities............... 35,053 29,702 19,970
Net cash provided by (used for) financing
activities......................................... 10,990 238 (7,642)
Effect of exchange rate changes on cash.............. (229) 990 (639)
------- ------- --------
Increase (decrease) in cash.......................... $10,209 $11,995 $(19,783)
======= ======= ========
Net cash flows provided by operating activities were $34.5 million during
1995 compared with $40.5 million during 1994. The difference was primarily due
to a decrease in net income. Cash provided by operating activities was $40.5
million in 1994 compared with $8.5 million in 1993. This resulted from the leveraging of such
expensesincrease was due to increased volume, alongan
increase in net income coupled with the Company's ongoing concerted
effort to maintain strong cost controla decrease in this area. Management intends to
maintain SG&A expenses in the 16% to 18% range of sales.
In 1991, the Company reviewed the operations and asset base of the
Interconnection Products Business and it was determined that the recession has
shortened the life-cycle of some of the division's mature products resulting in
substantial excess manufacturing capacity. Accordingly, this resulted in a $22
million restructuring charge against 1991 operating results. The major
components of the charge include $18 million to close two manufacturing
facilities, discontinue selected mature product lines, consolidate two
administrative offices into one, and reduce administrative and management
personnel. The 1991 restructuring program has been substantially completed in
1993. Additionally, a $4 million reserve was provided for the write-down of
two unsold facilities.
Interest income decreased in 1993 and 1992inventories due to excessimproved
inventory management during 1994.
The Company's investing activities included principally capital
expenditures for property, plant and equipment. In addition, such activities in
1995 included the cash being reinvested
in the business units and lower investment rates compared to the prior year.
Interest expense decreased in 1993 due to reduction in long-term debt. For
1992, interest expense increased substantially from 1991 due to the full year
impact of the $45 million debt incurred in September 1991expenditures for the acquisition of National Industries,two businesses,
Photon Systems Corp. and Elastomeric Technologies Inc. Effective January 1,for approximately $8
million. Capital expenditures were $20.4 million, $31.5 million and $29.7
million for the years ended December 31, 1993, the Company adopted Financial Accounting Standard
No. 109, "Accounting for Income Taxes" (SFAS 109). This change, as of that
date, did not have a significant impact on the financial statements. Taxes in
19931994 and 1992 were 33.9% and 32.5% of income, respectively, compared to the
statutory rate in 1993 and 1992 of 35% and 34%,1995 respectively. The
loss
incurredCompany used these expenditures to purchase, modernize or upgrade production
13
16
equipment, maintain facilities and comply with environmental regulations.
Capital expenditures for 1996 are expected to be approximately $30 to $35
million, principally related to improvements in 1991 as a result(i) operating efficiencies and
reliability, (ii) product quality, (iii) safety and working conditions and (iv)
environmental practices. The costs of these capital projects are expected to be
funded out of the restructuring was not tax benefitted due to
the lack of income earned in the jurisdictions where the charge was incurred.
The effective statutory rateCompany's operating cash flow.
Net cash flows used for 1993financing activities were $7.6 million for 1993.
Net cash flows provided by financing activities were $.2 million and 1992 was negatively impacted by taxes
imposed by various domestic operations$11.0
million for 1994 and by higher taxes on international
earnings where the Company operates. These higher taxes were offset by the tax
benefit associated with the 1991 restructuring charge. An income tax provision
of $.5 million was reported in 1991 due to income earned in various tax
jurisdictions. See Note 5 of the Notes to Consolidated Financial Statements
which are included under Item 8 hereof for the reconciliation of the provision
for income taxes.
Liquidity and Capital Resources1995, respectively.
The Company maintains sufficient liquidity and has the resources to fund
its operations under current business conditions. TheIn 1994, the Company in 1993 amended
its revolving credit agreement with three banks by increasingto increase its maximum
borrowing availability to $40 million.$100 million through July 1997. As of December 31,
1993,1995, the Company had $22.5 million in outstanding borrowings of $1 million under this credit
facility. During 1993,Although the Company reducedhas the ability to finance these borrowings on a
long-term basis under its total debt by $14.2 million. The Company's financial condition
improved in 1993 asrevolving credit agreement, it is management's
intention to repay these borrowings during 1996 out of available working
capital, increasedand accordingly, the $22.5 million has been reported in the
accompanying financial statements as a current liability.
As a result of the restructuring charge in 1995, the Company would have
violated certain requirements of its private placement senior note agreement
relating to $119 million comparedfailure to $107maintain certain minimum financial ratios had the
agreement not been amended during the fourth quarter of 1995. If the agreement
is not renegotiated or refinanced, or if additional amendments are not received,
the Company will be in default at March 31, 1996. The Company, which is
currently investigating various long-term financing alternatives, has the
ability to prepay the notes utilizing proceeds from its revolving credit
agreement. Accordingly, the private placement senior notes have been classified
as noncurrent at December 31, 1995. During 1995, the Company made payments under
its long-term debt totaling $13.2 million. Although the Company had
approximately $31 million in 1992.cash at December 31, 1995, a substantial portion of
this amount is maintained outside the United States. These international cash
balances may not be repatriated to the United States without incurring a
significant tax cost. Therefore, the Company elected to borrow under its
domestic revolving credit agreement in 1995 to support domestic operations and
also to invest approximately $8 million in two acquisitions, Photon Systems
Corp. and Elastomeric Technologies Inc.
At year end 1993,December 31, 1995, the percentage of long-term debt represented 22.7%to equity was 10.4%
of equity compared with 31.4% for 1992. Income14.7% in 1994. Cash flow generated from operations along
with establishedavailable credit facilities is sufficient to cover expected growth in the
next few years.
Capital expenditures in 1994 are projectedSince 1992, the Company has spent approximately $1.2 million associated
with environmental site remediation for certain facilities (see Note 7 to the
Consolidated Financial Statements). At December 31, 1995, the Company had a
liability for estimated environmental evaluation, assessment and remediation
costs totaling approximately $6.0 million which is expected to be paid in equal
amounts over the $20 to
22next fourteen years.
The net after-tax cash impact of the 1995 restructuring program is
approximately $4 million range.over the next two years.
The Company, in December 1991, suspendedJuly, 1994, reinstated its quarterly common stock dividend in
order to maintain a strong balance sheet and to ensure Augat's financial
long-term objectives. Management intends to reinstate a dividend when itdividend.
The current quarterly amount is feasible and prudent.
12
15
In December 1992, the Company was awarded a $40 million judgment as a result of
a lawsuit involving unfair trade practices. The lawsuit is under appeal
and the eventual amount to be received is not determinable at this time.$.04 per share.
The book value of the Company's common stock at December 31, 1993,1995 was
$10.60.
ITEM 8 -$12.63.
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," is
effective for financial statements for fiscal years beginning after December 15,
1995. This standard, among other things, requires entities to review long-lived
assets for impairment whenever events or changes in circumstances indicate that
their carrying value may not be recoverable. Based upon current facts and
circumstances, adoption of this standard is not expected to have a material
effect on the Company's financial condition, results of operations or cash
flows.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require, a fair value based
method of accounting for employee stock options or similar equity instruments.
As permitted under the new standard, the Company anticipates that it will
14
17
continue to account for employee stock options as it has in the past under APB
No. 25. The pro-forma disclosures required by this standard will be adopted for
the year ended December 31, 1996.
RECENT DEVELOPMENTS
In March 1996, the Company was notified by Ford Motor Company that Ford is
proceeding with a plan to consolidate its suppliers. The first expected impact
from this process to Augat is not until 1998 for various wiring cable porducts.
Although the Company cannot at this time predict with certainty the future
impact of the Ford consolidation plans, at the present time this could
represent a reduction of approximately $15-20 million in sales volume in 1998.
As part of this supplier base consolidation, Augat will also be discontinued as
the harness supplier for the Mustang car platform effective in the fiscal year
2001. Similarly, the Mustang harnesses could represent approximately $30-40
million on a full year basis in reduced sales in 2002. The Company believes
there may be some impact in 2001 but is unable at this time to quantify the
magnitude of such impact. The Company has continued to implement programs
within the automotive business to diversify both its products and customer base
for the long term.
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
The following financial statements and financial statement schedules are
submitted herewith:
PAGES
-----
Financial Statements:
Pages
------
Independent Auditors' Report 14Report..................................................... 16
Consolidated Balance Sheets at December 31, 19931995 and 1992 15
Consolidated1994........................ 17
Statements of Consolidated Income for the years ended
December 31, 1993, 19921995, 1994 and 1991 17
Consolidated1993............................................... 18
Statements of Consolidated Shareholders' Equity for the years ended
December 31, 1993, 19921995, 1994 and 1991 18
Consolidated1993............................................... 19
Statements of Consolidated Cash Flows for the years ended
December 31, 1993, 19921995, 1994 and 1991 191993............................................... 20
Notes to Consolidated Financial Statements 20Statements....................................... 21
Financial Statement Schedules:
Schedule
V - Property, Plant and Equipment 29
Schedule VI - Accumulated Depreciation, and
Amortization of Property, Plant and Equipment 30
Schedule VIII -II -- Valuation and Qualifying Accounts 31
Schedule IX - Short-Term Borrowings 32
Schedule X - Supplementary Income Statement InformationAccounts................................. 33
13The balance of this page intentionally left blank.
15
1618
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Augat Inc.
Mansfield, Massachusetts:
We have audited the accompanying consolidated balance sheets of Augat Inc.
and its subsidiaries as of December 31, 19931995 and 1992,1994, and the related
consolidated statements of operations, stockholders'income, shareholders' equity, and cash flows for each
of the three years in the period ended December 31, 1993.1995. Our audits also
included the consolidated financial statement schedulesschedule listed at Item 8. These financial
statements and financial statement schedulesschedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements and financial statement schedulesschedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Augat Inc. and its subsidiaries
as of December 31, 19931995 and 1992,1994, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 19931995 in
conformity with generally accepted accounting principles. Also, in our opinion,
such financial statement schedules,schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presentpresents fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
January 27, 1994
1430, 1996
16
1719
AUGAT INC.
CONSOLIDATED BALANCE SHEETS
DecemberDECEMBER 31,
(In thousands) 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------------------------
1995 1994
--------- ---------
(IN THOUSANDS EXCEPT
SHARE AMOUNTS)
ASSETS
Current Assets:
Cash and cash equivalentsequivalents.................................................... $ 8,54030,744 $ 28,32320,535
Accounts receivable --- less allowance for doubtful accounts, $1,129$1,205 in 19931995
and $1,451$1,276 in 1992 73,633 53,0841994......................................................... 85,887 89,521
Refundable income taxes 138 113taxes...................................................... 4,000
Inventories:
Finished goods 33,493 31,447goods............................................................. 34,859 33,359
Work in process 26,415 17,491process............................................................ 29,325 20,894
Raw materials 26,654 24,428
--------materials.............................................................. 28,945 28,698
--------- ---------
Total inventories 86,562 73,366inventories............................................................ 93,129 82,951
Deferred income taxes 4,556taxes........................................................ 7,481 2,873
Prepaid expenses 3,079 2,755
--------expenses............................................................. 1,530 2,580
--------- ---------
Total current assets 176,508 157,641
--------assets.................................................. 222,771 198,460
--------- ---------
Property, Plant, and Equipment:
Land 3,528 4,204Land......................................................................... 4,910 3,826
Building and building improvements 54,674 56,830improvements........................................... 69,455 63,365
Machinery and equipment 115,155 105,931equipment...................................................... 163,142 137,978
Furniture and fixtures 20,603 19,781fixtures....................................................... 24,457 22,590
Construction in progress --- buildings and machinery 10,010 6,942
--------machinery.......................... 14,496 13,543
--------- Total 203,970 193,688---------
Total........................................................................ 276,460 241,302
Less accumulated depreciation 103,971 95,426
--------depreciation................................................ (141,808) (120,463)
--------- ---------
Property, plant, and equipment - net 99,999 98,262
---------- net.......................................... 134,652 120,839
--------- ---------
Other Assets:
Goodwill - net 26,759 28,037-- net.............................................................. 31,697 25,454
Property held for sale 9,179 6,801
Other 5,415 4,707
---------- net................................................ 2,183 4,829
Other........................................................................ 16,173 8,376
--------- ---------
Total other assets 41,353 39,545
--------assets.................................................... 50,053 38,659
--------- Total $317,860 $295,448
========---------
Total................................................................. $ 407,476 $ 357,958
========= =========
See notes to consolidated financial statements.
15
18
CONSOLIDATED BALANCE SHEETS
December 31,
(In thousands) 1993 1992
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payablepayable................................................................ $ 1,000 $ 3,90022,500
Current maturities of long-term debt 2,130 2,290debt......................................... 9,362 $ 10,884
Accounts payable 28,353 21,016payable............................................................. 36,192 32,744
Federal, state and foreign taxes payable 3,352 1,361
Accrued restructuring costs 1,751 2,952payable..................................... 3,667 4,963
Accrued compensation and benefits 10,193 8,653benefits............................................ 14,456 13,258
Accrued restructuring costs.................................................. 17,322
Other accrued expenses 10,801 10,595
--------expenses....................................................... 16,454 11,794
--------- ---------
Total current liabilities 57,580 50,767
--------liabilities............................................. 119,953 73,643
--------- ---------
Long-Term Debt 45,797 56,939Debt................................................................. 25,854 35,033
Deferred Income Taxes 12,872 6,261Taxes.......................................................... 11,931 11,761
Commitments and Contingencies
Shareholders' Equity:
Common stock --- par value $.10 per share:
Authorized 60,000,000 shares:
Issued and outstanding, 19,032,76719,795,003 in 19931995 and 18,421,62419,467,467 in 1992 1,903 1,8421994.......... 1,979 1,947
Paid-in capital 69,262 62,442capital.............................................................. 80,751 75,730
Retained earnings 118,878 103,278earnings............................................................ 147,984 143,526
Cumulative translation adjustment 11,923 14,121adjustment............................................ 20,258 17,088
Treasury stock, at cost:
16,700 shares at 19931995 and 19921994............................................. (110) (110)
Unearned compensation - restricted stock awards (245) (92)
--------Other........................................................................ (1,124) (660)
--------- ---------
Shareholders' equity 201,611 181,481
--------equity........................................................... 249,738 237,521
--------- Total $317,860 $295,448
========---------
Total................................................................. $ 407,476 $ 357,958
========= =========
See notes to consolidated financial statements.
1617
1920
AUGAT INC.
STATEMENTS OF CONSOLIDATED INCOME
For the Years Ended DecemberFOR THE YEARS ENDED DECEMBER 31,
(In thousands except per share data)----------------------------------
1995 1994 1993
1992 1991
- ------------------------------------------------------------------------------------------------------------------------------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
Net salessales.................................................. $534,873 $530,706 $420,263 $361,718 $281,602
Cost of products soldsold...................................... 423,699 420,647 328,964 287,524 219,358
-------- -------- --------
Gross marginmargin............................................... 111,174 110,059 91,299 74,194 62,244
Selling, general and administrative expensesexpenses............... 75,998 66,219 63,492
60,920 62,301
Restructuring costs 22,000costs........................................ 18,700
-------- -------- --------
Income (loss) from operationsoperations..................................... 16,476 43,840 27,807 13,274 (22,057)
Other income (expense):
Interest and other income etc.(expense)...................... (541) 71 386
1,486 2,905
Interest expenseexpense......................................... (4,175) (4,211) (4,593)
(5,005) (2,442)-------- -------- --------
Other income (expense) -- net.............................. (4,716) (4,140) (4,207)
-------- -------- --------
Income before taxes on income.............................. 11,760 39,700 23,600
Provision for taxes on income.............................. 4,160 13,500 8,000
-------- -------- --------
Net (4,207) (3,519) 463
-------- -------- --------
Income (loss) before taxes on income 23,600 9,755 (21,594)
Provision for taxes on income 8,000 3,169 468
-------- -------- --------
Net income (loss) $income................................................. 7,600 26,200 15,600 $ 6,586 $(22,062)
-------- -------- --------
Earnings (loss) per shareshare......................................... $ .39 $ 1.36 $ .83 $ .36 $ (1.21)
======== ======== ========
See notes to consolidated financial statements.
1718
2021
AUGAT INC.
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
(In thousands) For the Years Ended DecemberFOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1992 and 1991
- ----------------------------------------------------------------------------------------------------------------------------------
Common Stock
---------------------
Number of Cumulative
Shares Paid-in Retained Translation
Outstanding Amount Capital Earnings Adjustment
---------------------------------------------------------------
COMMON STOCK
----------------------
NUMBER OF CUMULATIVE
SHARES PAID-IN RETAINED TRANSLATION
OUTSTANDING AMOUNT CAPITAL EARNINGS ADJUSTMENT
----------- ------ ------- -------- -----------
Balance, December(IN THOUSANDS)
BALANCE, DECEMBER 31, 1990 18,086 $1,809 $58,746 $126,019 $23,1721992............ 18,422 $1,842 $62,442 $103,278 $14,121
Common stock issued under employee
benefit plans 81 8 821
Stock issued in connection with an acquisition 189 19 2,181plans.................... 611 61 6,820
Net loss (22,062)
Dividends paid (7,265)income.......................... 15,600
Foreign currency translation
adjustment (6,590)adjustment....................... (2,198)
------ ----- ------ ------- -------- -------
Balance, DecemberBALANCE, DECEMBER 31, 1991 18,356 1,836 61,748 96,692 16,5821993............ 19,033 1,903 69,262 118,878 11,923
Common stock issued under employee
benefit plans 66 6 694plans.................... 435 44 5,475
Tax benefit from exercise of stock
options.......................... 993
Net income 6,586income.......................... 26,200
Dividends paid...................... (1,552)
Foreign currency translation
adjustment (2,461)adjustment....................... 5,165
------ ----- ------ ------- -------- -------
Balance, DecemberBALANCE, DECEMBER 31, 1992 18,422 1,842 62,442 103,278 14,1211994............ 19,468 1,947 75,730 143,526 17,088
Common stock issued under employee
benefit plans 611 61 6,820plans.................... 327 32 4,247
Tax benefit from exercise of stock
options.......................... 774
Net income 15,600income.......................... 7,600
Dividends paid...................... (3,142)
Foreign currency translation
adjustment (2,198)adjustment....................... 3,170
------ ----- ------ ------- -------- -------
Balance, DecemberBALANCE, DECEMBER 31, 1993 19,033 $1,903 $69,262 $118,878 $11,9231995............ 19,795 $1,979 $80,751 $147,984 $20,258
====== ===== ====== ======= ======== =======
See notes to consolidated financial statements.
1819
2122
AUGAT INC.
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Years Ended DecemberFOR THE YEARS ENDED DECEMBER 31,
(In thousands)----------------------------------
(IN THOUSANDS) 1995 1994 1993
1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------------ -------- --------
Cash Flows From Operating Activities:CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $15,600income............................................... $ 6,586 $(22,062)7,600 $ 26,200 $ 15,600
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortizationamortization......................... 21,819 18,421 15,758 16,040 16,041
Amortization of restricted stock awardsawards............... 400 304 169 131 105
Provision for non-current asset write-downwrite-down............ 500 635 600
13,844
GainLoss (gain) on the sale of property, plant, and
equipmentequipment........................................... 219 (226) (97) (213) (420)
Deferred income taxes - net-- net.......................... (5,246) 98 2,055 831 (7,484)
Loss applicable to minority interests (82)
Increase (decrease) in cash from changes in assets and
liabilities,
net of effects from business acquired:liabilities:
Accounts receivablereceivable................................. 4,480 (15,888) (20,549) (2,496) 13,721
Refundable income taxestaxes............................. (4,000) 138 (25)
962 300
InventoriesInventories......................................... (9,205) 3,611 (13,196)
117 (436)
Prepaid expensesexpenses.................................... 1,072 499 (324)
(486) 1,613
Other assetsassets........................................ (1,372) (1,629) (703)
(3,003) (838)
Accounts payablepayable.................................... 2,786 4,391 7,337 4,051 (9,814)
Income taxes payablepayable................................ (624) 2,604 1,991 598 (857)
Accrued restructuring, compensation and other
expensesexpenses......................................... 15,964 323 545 (9,266) (1,644)
Effect of exchange rate changes on current assets
and liabilities (other than cash)................ 108 988 (693)
(701) (488)
------- ------- --------------- -------- --------
Net cash provided by operating activitiesactivities.................. 34,501 40,469 8,468
13,151 1,499
------- ------- -------
Cash Flows From Investing Activities:-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant, and equipmentequipment............... (29,682) (31,452) (20,377) (14,495) (14,240)
Proceeds from the sale of property, plant, and
equipmentequipment............................................. 2,546 1,750 407
2,924 2,446
Payment for business acquired (38,201)
------- ------- -------Acquisitions, net of cash acquired....................... (7,917)
-------- -------- --------
Net cash used for investing activitiesactivities..................... (35,053) (29,702) (19,970)
(11,571) (49,995)
------- ------- -------
Cash Flows From Financing Activities:-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid (7,265)paid...................................... (3,142) (1,552)
Proceeds from short-term borrowingsborrowings...................... 93,800 70,000 29,700 12,900 45,000
Payments for short-term borrowingsborrowings....................... (71,300) (71,000) (32,600) (58,000)
Proceeds from long-term debt 49,000
Payments for long-term debtdebt.............................. (13,203) (2,010) (11,302) (4,269) (2,483)
Common stock issued under employee benefit plansplans......... 4,835 4,800 6,560
592 857
------- ------- --------------- -------- --------
Net cash provided (used) by (used for) financing activitiesactivities....... 10,990 238 (7,642)
223 36,109
------- ------- --------------- -------- --------
Effect of exchange rate changes on cashcash.................... (229) 990 (639)
(1,006) (2,705)-------- -------- --------
Net changes in cash and cash equivalentsequivalents................... 10,209 11,995 (19,783) 797 (15,092)
Cash and cash equivalents beginning of yearyear................ 20,535 8,540 28,323
27,526 42,618
------- ------- --------------- -------- --------
Cash and cash equivalents end of yearyear...................... $ 30,744 $ 20,535 $ 8,540
$28,323 $ 27,526
======= ======= =============== ======== ========
See notes to consolidated financial statements.
1920
2223
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. SUMMARY OF ACCOUNTING POLICIES
Basis of ConsolidationBASIS OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the
Company and all majority-owned domestic and foreign subsidiaries. Long-term
investments in affiliated companies representing ownership interests of 20% to
50% are accounted for on the equity method. Foreign
subsidiaries are included on the basis of fiscal years ended November 30.
Material intercompany transactions and balances have been eliminated.
InventoriesBUSINESS
The Company designs, manufactures and markets globally a broad range of
electromechanical components and subsystems that provide solutions for the
electronic connector needs of the automotive, communications and information
processing industries worldwide.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities at the date of the
financial statements and the reported amounts of sales and expenses during the
period. Significant estimated liabilities included restructuring costs and
environmental accruals.
INVENTORIES
Inventories are stated at the lower of cost (principally, first-in, first-out
method) or market.
Property, Plant, and EquipmentPROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment is recorded at cost. For financial reporting
purposes, depreciation is provided using the straight-line method based on the
estimated useful lives of the various classes of assets. The estimated useful
lives for buildings and improvements are 5 to 40 years; for machinery and
equipment 3 to 10 years; and for furniture and fixtures 3 to 10 years.
Maintenance, repairs and minor improvements are charged to expense as incurred,
while additions, major improvements and renewals of fixed assets are
capitalized. The cost of property retired or sold together with the accumulated
depreciation is removed from the respective accounts and any difference, less
proceeds from sale, is charged or credited to income.
Revenue RecognitionREVENUE RECOGNITION
Sales are recognized at the time of shipment.
Income TaxesINCOME TAXES
The Company effective January 1, 1993, adopted the Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109)., effective January 1, 1993. The
cumulative effect on prior years at the date of adoption was not material to the
results of operations or the financial position of the Company.
SFAS 109 uses an asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. In estimating future tax consequences, SFAS 109 generally considersrequires the
Company to consider all expected future events other than enactments of changes
in the tax law or rates.
Previously, the Company used the Statement of
Financial Accounting Standards No. 96, "Accounting for Income Taxes" (SFAS 96),
which employed an asset and liability approach that gave no recognition to
future events other than the recovery of assets and settlement of liabilities at
their carrying amounts.
Research and DevelopmentRESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred. Such costs amounted to
approximately $21,000, $20,000 and $19,000, $19,000in 1995, 1994 and $16,000, in 1993,
1992 and 1991,
respectively.
Translation of Foreign Currencies21
24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
TRANSLATION OF FOREIGN CURRENCIES
Assets and liabilities of foreign operations are translated at year-end exchange
rates. Revenues and expenses are translated using average exchange rates. The
resulting translation adjustment is reported as a separate component of
shareholders' equity. Gains and losses from foreign currency transactions are
not material and are reflected in net income.
Other AssetsOTHER ASSETS
The excess of the purchase price of acquired companies over the fair value of
net identifiable assets at dates of acquisition has been recorded as goodwill
and is being amortized on a straight-line basis over various periods not
exceeding twenty-five years. The Company periodically reviews goodwill to assess
recoverability, based upon expectations of nondiscounted cash flows and
operating income for each subsidiary having a material goodwill balance.
Impairments would be recognized in operating results if a permanent diminution
in value were to occur. Accumulated amortization at December 31, 19931995 and 1992,1994
was $3,498$6,321 and $2,206$4,803, respectively. Amortization of goodwill was $1,518, $1,305
and $1,292 $1,262in 1995, 1994 and $533, in 1993, 1992 and 1991, respectively.
Earnings Per ShareEARNINGS PER SHARE
Earnings per share is based on the weighted average number of shares outstanding
during each year. The exercise of all presently outstanding stock options and
the issuance of shares under the "Employee Stock Purchase Plan" would have no
material dilutive effect on earnings per share.
20
23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
StatementsSHAREHOLDERS' EQUITY
Shareholders' equity at December 31, 1995, 1994 and 1993 included reductions of
Cash Flows$478, $660 and $245, respectively, related to unearned compensation on
restricted stock awards, and $646 at December 31, 1995 related to a minimum
pension liability adjustment. Compensation expense relating to the restricted
stock awards is recognized over the vesting period.
SUPPLEMENTAL CASH FLOW INFORMATION
The Company considers all highly liquid investments with a maturity of three
months or less at the time of purchase to be cash equivalents. Supplemental Cash Flow InformationDuring 1995, the
Company entered into a capital lease in the amount of $1,600 to finance the
acquisition of property and equipment.
Cash payments during the years ended 1993, 19921995, 1994 and 19911993 included interest of
$4,510, $3,450$4,286, $4,391 and $2,497,$4,510, and income taxes of $12,851, $11,326 and $4,112,
$2,362 and $7,428,
respectively. In 1991,At December 31, 1995, the Company paidhad approximately $25 million in
cash equivalents in foreign locations which can not be repatriated to the United
States without a significant tax cost.
OTHER MATTERS
Other income (expense) in 1995 included an additional $1 million related to the
write-down of $38,201, issued common stockassets held for sale and facility costs. During 1994, the Company
received a cash settlement in connection with the Aegis litigation. A portion of
$2,200the settlement (approximately $2 million) was recorded as a credit to selling,
general and assumed liabilitiesadministrative expenses (SG&A), as such amounts represented a
recovery of $30,808litigation costs charged to acquireSG&A in the current and prior periods.
Other income (expense) in 1994 included approximately $1 million of the above
settlement and the write-down of assets with a fair valueheld for sale and lease termination
costs of $71,209.
Financial Instruments and Concentrations of Credit Risk
Off-Balance-Sheet Risk -approximately $1 million.
22
25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
OFF-BALANCE-SHEET RISK -- The Company enters into forward foreign exchange and
commodity contracts to hedge foreign currency and inventory purchases,
respectively, when deemed appropriate for periods consistent with its committed
exposures. The Company'sThis hedging minimizes the impact of foreign exchange and commodity contracts do not
subjectrate movements
on the Company to risk becauseCompany's operating results as gains and losses on contracts are offset
by losses and gains on the assets, liabilities, and transactions being hedged.
These financial instruments are with major financial institutions and expose the
Company to market and credit risks and may at times be concentrated with certain
counterparties or groups of counterparties. The credit worthiness of
counterparties is subject to continuing review and full performance is
anticipated. The foreign exchange and commodity contracts generally have
maturities which do not exceed six
months.one year. Gains and losses on contracts which
hedge specific foreign currency denominated commitments are deferred and
recognized in the period in which the transaction is completed. As of December
31, 1993,1995 and 1994, the Company had $3.5 million$22,400 and $7,100, respectively, of foreign
exchange and commodity contracts outstanding. The Company had no outstanding
foreign exchange contractsAmounts deferred at December 31,
1992.
Concentrations of Credit Risk -1995 and 1994 were not material.
CONCENTRATIONS OF CREDIT RISK -- Financial instruments which potentially subject
the Company to concentrations of credit risk consist principally of temporary
cash investments and trade receivables.
The Company places its temporary cash investments with high credit qualified
financial institutions. The investment policy limits the Company's exposure to
concentrations of credit risk. Except for major domestic automotive
manufacturers, credit risk with respect to trade receivables is limited due to
the large number of customers comprising the Company's customer base, and its
dispersion across many different industries and geographies. Sales to major
domestic automotive manufacturers represent approximately 35%27%, 37% and 31%35% of
total sales in 1995, 1994 and 1993, respectively. Accounts receivable from these
major domestic automotive manufacturers represent approximately 24% and 1992,30% of
total accounts receivable at December 31, 1995 and 1994, respectively.
The Company's financial instruments include cash, accounts receivable and
payable, notes payable and long-term debt at December 31, 1993. Cash,
accounts receivable1995 and payable are recorded1994. The
carrying amounts of the Company's financial instruments generally approximate
their fair values at their net realizable value,
which approximates market. BasedDecember 31, except that, on the borrowing rates currently
available to the Company, Managementmanagement believes the recordedfair value of notes payable and
long-term debt
approximates market.was approximately $27,532 and $37,663 at December 31, 1995 and 1994,
respectively.
In the normal course of its business activities, the companyCompany is required under
certain contracts to provide letters of credit which may be drawn down in the
event the Company fails to perform under the contracts. At December 31,
1993,Outstanding letters of
credit outstanding amounted to $1,700.$2,129 at December 31, 1995.
NEW ACCOUNTING PRONOUNCEMENTS
SFAS NO. 121 -- Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, requires impairment losses on long-lived
assets to be recognized when an asset's book value exceeds its expected future
cash flows (undiscounted). SFAS No. 121 also requires that long-lived assets to
be disposed of be reported at the lower of the carrying amount or fair value
less cost to sell. The Company anticipates adopting this standard on January 1,
1996 and does not expect that adoption will have a material impact on the
financial position or results of operations of the Company.
SFAS NO. 123 -- Accounting for Stock-Based Compensation, encourages, but does
not require, a fair value based method of accounting for employee stock options
or similar equity instruments. As permitted under the new standard, the Company
anticipates that it will continue to account for employee stock options as it
has in the past under APB No. 25. The pro-forma disclosures required by this
standard will be adopted for the year ended December 31, 1996.
23
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
2. ACQUISITIONS
In August 1991,1995 the Company acquired National Industries,two companies for approximately $8,000 in cash;
Photon Systems Corp., a designer and manufacturer of systems that enable
telecommunications and cable companies to distribute signals over fiber optic
networks and Elastomeric Technologies Inc., a manufacturer of wire harnesses for the automotive industry, for $9,600customized
interconnection technology used in cash, $28,601
repayment of debtcommunications and the issuance of 188,840 shares of the Company's common
stock with a fair market value of $2,200.
The acquisition hasportable electronics.
These acquisitions have been accounted for by the purchase method of accounting,
and, accordingly, the purchase price has been allocated to the assets acquired
and the liabilities assumed based on the estimated fair value at the date of
acquisition. The excess of the purchase price over the estimated fair value of
the net assets acquired, as adjusted in 1992, of $27,937,$7,700 has been recorded as goodwill, and is being
amortized over twenty-fivetwenty years.
The operating results of this acquisitionthese acquisitions are included in the Company's
consolidated results of operations from the date of acquisition. Unaudited pro
forma summaryPro-forma
results of operations have not been presented because the effects of the acquisition as if the acquisition had
occurred at the beginning of 1991, after giving effect to certain adjustments,
including amortization of goodwill, interest expense on the acquisition debt and
related income tax effects, would have resulted in net sales of $345,522, a net
loss of $27,405 and loss per share of $1.50. These pro forma results have been
prepared for comparative purposes only and dothese
acquisitions were not purport to be indicative of
what would have occurred had the acquisition been made as of those dates or of
results which may occur in the future.
21
24
significant.
3. DEBT AND AVAILABLE CREDIT FACILITIES
Long-term debt at December 31, 19931995 and 1992,1994, exclusive of current maturities,
consisted of the following:
1993 1992
- -------------------------------------------------------------------------------------------------------------1995 1994
------- -------
Senior securedPrivate placement senior notes due 1995 - 19991997-1999 at interest rates
ranging from 8.71% torate of
8.61% $40,000 $40,000
Revolving credit facility at interest rates ranging from 4.7% to 6.0% 9,000.......................................................... $22,200 $31,100
Industrial development and pollution control revenue bonds at
interest rates ranging from 5.7%4.0% to 7.5%8.4%, due 1995-2009 5,376 7,110
Capitalized lease obligations:
Industrial development bonds due 1995-19961997-2009........ 2,400 3,800
Obligations under capital leases at interest rates ranging from 70%7.2% to
75% of prime 421 8299.0% due 1997-2000............................................. 1,254 133
------- -------
Total $45,797 $56,939Total.................................................. $25,854 $35,033
======= =======
Long-term borrowing maturities in each of the five years subsequent to December
31, 1994,1996 are as follows: 1995, $10,866; 1996, $10,331; 1997, $8,900;$9,320; 1998, $8,900$9,287; 1999, $4,725; 2000, $122
and 19992001 and thereafter, $6,800.$2,400. The industrial development and pollution
control revenue bonds are collateralized by buildings and equipment with a net
book value of approximately $10,850, of which $6,026 is$1,616, and are guaranteed by a letter of credit at
December 31, 1993.1995.
The capitalized lease obligations whichunder capital leases are financed by proceeds from
bonds, are securedcollateralized by the leased facilitiesproperties
which had a net book value of $1,413$1,472 at December 31, 1993.
In 1992, the Company completed a private placement of $40,000 of senior
secured notes. Interest is paid semiannually commencing August 1, 1992.1995.
The private placement senior secured note agreement includes certain financial covenants
and restrictions upon dividends, investments, indebtedness, and the sale of
certain assets. DividendsThe aggregate amount of dividends paid for the period from
January 1, 1993 to and including the date the dividend payment is made ($4,694
at December 31, 1995) cannot exceed the sum of $9,800 plus 50% of cumulative
consolidated net income annually.
Aggregate short-term notes payable averaged $3,094, $15,917 and $19,000($24,700 at December 31, 1995) for such period. Had the
agreement not been amended during 1993, 1992 and 1991, respectively, and the weighted average interest
rates on such borrowings were 6%, 6% and 8%. The maximum outstanding balances
were $10,000, $49,000 and $49,000 in 1993, 1992 and 1991. Short-term debt was
used principally for working capital needs, and in 1991 for an acquisition.
In 1993,fourth quarter of 1995, the Company increasedwould
have violated certain requirements of the agreement relating to failure to
maintain certain minimum financial ratios as a result of the restructuring
charge in 1995. If the agreement is not renegotiated or refinanced, or if
additional amendments are not received, the Company will be in default at March
31, 1996. The Company, which is currently investigating various long-term
financing alternatives, has the ability to prepay the notes utilizing proceeds
from its borrowing limit from $20revolving credit agreement. Accordingly, the private placement senior
notes have been classified as noncurrent at December 31, 1995.
The Company has an unsecured $100 million up
to $40 million under its secured revolving credit agreement with
several banks. The agreement, which expires no sooner than December 31, 1994July 1, 1997,
requires a commitment fee of one-halfapproximately one-twentieth percent per annum,
payable on any available and unused portion. At December 31, 1993 and 1992,1995, the Company's
borrowings under the revolving credit facility totaled $1.0$22.5 million, and $12.9 million,
respectively, which was
borrowed for working capital purposes. Interest on the working capital
borrowings are at primea variable base rate, (6%ranging from 6.1% to 6.4% at
December 31, 1993).
4. RESTRUCTURING COSTS
Restructuring costs totaling $22,000 in 1991 include provisions for estimated
costs from restructuring and cost-reduction programs. This provision includes
costs associated with plant closings, discontinuance of selected older
products, the write-off of related equipment and the write-down of facilities
to net realizable value. The 1991 restructuring program has been substantially
completed in 1993.
The Company in connection with the acquisition of National Industries,
Inc. in 1991 established a restructuring liability for estimated costs to
reorganize National Industries' operations. This program has been substantially
completed as of December 31, 1993.
2224
2527
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars-- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
December 31, 1995. Although the Company has the ability to finance these
borrowings on a long-term basis under the revolving credit agreement, it is
management's intention to repay these borrowings during 1996 out of available
working capital, and accordingly, the $22.5 million has been reported in thousands, except share data)
5.the
accompanying financial statements as a current liability. At December 31, 1994,
there were no borrowings under the revolving credit facility.
4. INCOME TAXES
The geographic components of income (loss) before taxes on income were as follows:
1995 1994 1993
1992 1991
- -------------------------------------------------------------------------------------------------------------------------------- ------- -------
United StatesStates......................................... $(1,496) $28,455 $21,364
$6,456 $(23,978)
ForeignForeign............................................... 13,256 11,245 2,236
3,299 2,384
------- ------ --------------- -------
Income (loss) before taxes on incomeincome............... $11,760 $39,700 $23,600
$9,755 $(21,594)
======= ====== =============== =======
The components of the provision (credit) for taxes on income were as follows:
1995 1994 1993
1992 1991
- --------------------------------------------------------------------------------------------------------------------------------- ------- -------
Current:CURRENT:
United States $1,607States....................................... $ 189 $(1,858)
Foreign3,334 $ 8,509 $ 1,607
Foreign............................................. 4,982 3,107 1,452
1,141 347
StateState............................................... 1,090 1,786 838
871 1,154
------- ------ --------------- -------
Total currentcurrent............................... 9,406 13,402 3,897
2,201 (357)======= ======= =======
DEFERRED:
United States....................................... (5,250) (86) 3,611
Foreign............................................. (91) 184 492
State............................................... 95
------- ------ --------
Deferred:
United States 3,611 (825)
Foreign 492 968 1,650
------- ------ ---------------
Total deferreddeferred.............................. (5,246) 98 4,103
968 825
------- ------ --------------- -------
Provision for taxes on income $8,000 $3,169income............... $ 4684,160 $13,500 $ 8,000
======= ====== =============== =======
Deferred income taxes result from timing differences in the recognition of
revenues and expenses for financial statement and income tax purposes. Included
in the deferred amounts for 1995, 1994 and 1993 are the benefits of operating
losses of $151, $740 and credits of $3,035$882, respectively and a decreasean increase (decrease) in the
valuation reserveallowance of $513.$943, ($1,496) and ($513), respectively.
A reconciliation of the Company's provision for taxes on income and the amount
computed by applying the statutory federal income tax rate to income (loss)
before
taxes is as follows:
% Of Pretax Income (Loss)
-----------------------------------------OF PRETAX INCOME
-------------------------
1995 1994 1993
1992 1991
- ------------------------------------------------------------------------------------------------------------------------------- ----- -----
Statutory federal tax raterate.................................. 35.0 34.0 (34.0)35.0 35.0
State income taxes - net-- net................................... 6.6 2.9 2.3 5.9 3.5
Foreign income taxed at different rates, losses not tax
benefitted, or earnings of foreign subsidiaries expected
to be remittedremitted............................................ 1.0 1.8 9.0
18.5 5.6
NetUtilization of domestic and foreign losses (with) without tax benefit and tax
credit carryoverscredits................................................... (7.4) (6.4) (12.8)
(33.0) 29.6
Effect of adoption of SFAS 96 (3.8)
Non-deductible expensesexpenses..................................... 1.9 .8 .6 5.1 1.3
Other items - net-- net.......................................... (1.7) (.1) (.2)
2.0
------- ------ ---------- ---- -----
Effective tax raterate.......................................... 35.4 34.0 33.9
32.5 2.2
======= ====== ========== ==== =====
2325
2628
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
The components of the net deferred tax assetassets and liabilityliabilities as of December 31,
1993,1995 and 1994 were as follows:
Deferred Tax
-----------------------------------------------
Current: Assets Liabilities Total
-----------------------------------------------1995 1994
-------- --------
DEFERRED TAX ASSETS:
CURRENT:
Accrued liabilities $(3,883) $(3,883)
Alternative minimum tax credit carryforwards (2,616) (2,616)
Other liabilitiesliabilities............................................ $ 1,943 1,943
------- -------(4,185) $ (3,621)
Restructuring costs............................................ (4,396)
-------- --------
Current deferred tax asset (6,499) 1,943 (4,556)
------- -------assets.................................... (8,581) (3,621)
Valuation allowance............................................ 1,100 748
-------- Non-current:--------
Current deferred tax assets -- net............................. $ (7,481) $ (2,873)
-------- --------
NON-CURRENT:
Pension costs (2,293) (2,293)
Operatingcosts.................................................. $ (2,138) $ (3,339)
Other liabilities.............................................. (3,007) (2,349)
Restructuring costs............................................ (1,703)
Foreign operating loss carryfowards (6,665) (6,665)carryforwards........................... (6,412) (6,065)
Foreign tax credit carryfowards (2,442) (2,442)
Property, plant, and equipment 15,165 15,165
------- -------carryforwards............................... (409) (1,192)
-------- --------
Non-current deferred tax liability (11,400) 15,165 3,765assets................................ (13,669) (12,945)
Valuation allowance 9,107 9,107
------- -------allowance............................................ 7,454 6,863
-------- Net non-current--------
Non-current deferred tax liability $(2,293) $15,165 $12,872
------- -------assets -- net......................... $ (6,215) $ (6,082)
======== ========
1995 1994
-------- --------
DEFERRED TAX LIABILITIES:
NON-CURRENT:
Depreciation & amortization.................................... $ 18,146 $ 17,843
-------- --------
Non-current deferred tax liabilities........................... $ 18,146 $ 17,843
======== ========
The change in the deferred tax assets and liabilities relating to foreign
currency translation was $808 in 1995 and $474 in 1994.
The accumulated earnings of foreign subsidiaries on which federal income taxes
have not been provided amounted to $48,948$56,626 through December 31, 1993.1995. The
Company's intention is to permanently reinvest these earnings at least until
such time as they can be repatriated without a material incremental tax cost.
At December 31, 19931995 the Company had foreign net operating losses amounting to
approximately $20,792,$19,089, of which $16,952$15,876 can be carried fowardforward indefinitely and
the balance expires at various dates through 1998.2002. Additionally, there were
available foreign tax credits of $2,442$409 that will expire at various dates through
19982000.
5. RESTRUCTURING COSTS
In December 1995, the Company recorded estimated restructuring costs of $18.7
million. These costs included $9.3 million related to redundant or excess
facilities and alternative minimum tax creditsequipment which are being closed or abandoned. Operating expenses
related to such facilities and equipment up to the time of $2,616closure or
abandonment were not included in the restructuring costs. Additionally, $5.5
million of the restructuring costs related to employee severance costs for
approximately 800 employees who prior to year end were notified that they will
be terminated. The remaining $3.9 million related to the cost to exit low-margin
product inventory which have indefinite carryover periods.been eliminated from the Company's product lines.
26
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
6. EMPLOYEE BENEFIT PLANS
Pension PlansPENSION PLANS
The Company sponsors noncontributory defined benefit pension plans that cover
substantially all eligible U.S. employees. Benefits are based on employees'
years of service and compensation during employment. The principal plan is
funded on a current basis, in compliance with the requirements of the Employee
Retirement Income Security Act.
The following table sets forth the plan's funded status and amounts recognized
in the consolidated financial statements at December 31:
1995 1994
-------- --------
Plan's funded status:
Plan assets at fair value...................................... $18,289 $16,737
Projected benefit obligation:
Vested....................................................... 16,372 11,481
Nonvested.................................................... 629 603
Effect of future compensation increases...................... 6,403 4,276
------- -------
Plan assets in excess of (less than) projected benefit
obligation................................................... (5,115) 377
Unrecognized net (gain) or loss................................ 4,452 (1,747)
Unrecognized net transition asset being recognized over 15
years........................................................ (1,375) (1,604)
------- -------
Accrued pension liability...................................... $(2,038) $(2,974)
------- -------
Pension cost -- net:
Service cost-benefits earned during year....................... $ 1,383 $ 1,663
Interest cost on projected benefit obligation.................. 1,477 1,262
Actual return on plan assets................................... (1,163) (1,007)
Net amortization and deferral.................................. (746) (416)
------- -------
Pension cost -- net............................................ $ 951 $ 1,502
------- -------
The Supplementaryaccrued pension liabilities, as calculated above, are included in accrued
compensation and benefits on the December 31, 1995 and 1994 consolidated balance
sheets.
In addition to the above plan, the Company also has a Supplemental Employee
Retirement Plan (SERP) which is a non-qualified plan providing certain elected
officers with additional defined pension benefits. Pension expense was $1,155, $875The actuarial present value
of accumulated benefit obligations related to this plan totaled $2,793 and
$964$5,183 at December 31, 1995 and 1994, respectively. Pursuant to the provisions
of SFAS No. 87, "Employers' Accounting for Pensions," the Company recorded an
additional minimum pension liability adjustment of $2,242 at December 31, 1995.
The additional liability has been offset by an intangible asset to the extent of
previously unrecognized prior service cost. The amount in 1993, 1992excess of previously
unrecognized prior service cost is recorded as a reduction of shareholders'
equity in the amount of $646, representing the after-tax impact. Assets related
to this plan are reported as other assets in the accompanying balance sheets and
1991,totaled $9,729 and $6,910 at December 31, 1995 and 1994, respectively.
The following table sets forth the plans' funded status and amounts recognized
in the consolidated financial statements:
December 31,
Defined Benefit Plan SERP
----------------------- ----------------------
1993 1992 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------
Plans' funded status:
Plan assets at fair value $13,954 $12,531 $ 6,152 $5,278
Projected benefit obligation:
Vested 13,206 10,347 3,767 2,023
Nonvested 469 429
Effect of future compensation increases 5,075 3,360 448 468
------ ------- ------ -----
Plan assets in excess of (less than)
projected benefit obligation (4,796) (1,605) 1,937 2,787
Unrecognized net (gain) or loss 2,730 (1,055) 1,246 (408)
Unrecognized net transition obligation (asset)
being recognized over 15 years (1,834) (2,202) 1,371 1,501
------ ------- ------ -----
Prepaid (accrued) pension liability $(3,900) $ (4,862) $4,554 $3,880
------ ------- ------ -----
Pension cost - net:
Service cost-benefits earned during year $ 1,349 $ 1,198 $ 261 $ 221
Interest cost on projected benefit obligation 1,195 1,067 261 218
Actual return on plan assets (932) (945) (108) (45)
Net amortization and deferral (694) (659) (177) (180)
------ ------- ------ -----
Pension cost - net $ 918 $ 661 $ 237 $ 214
------ ------- ------ -----
24
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
1993 1992
- ------------------------------------------------------------------------------------------------------------1995 1994
---- ----
Actuarial assumptions:
Discount raterate.......................................................... 7.5% 8.5%
Long-term rate of compensation increasesincreases............................... 5.0% 5.0%
Long-term rate of return on plan assetsassets................................ 8.5% 9.0%8.5%
Domestic pension expense was $1,286, $2,032 and $1,155 in 1995, 1994 and 1993,
respectively.
27
30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
The Company's foreign defined contribution pension plans are consistent with
local practice and are principally funded through insurance programs. Pension
expense in 1993, 19921995, 1994 and 1991,1993 for the foreign plans was $916, $695 and $800,
$857 and $914,
respectively.
Savings and Retirement PlanSAVINGS AND RETIREMENT PLAN
The Company in 1988, adoptedsponsors the Augat Inc. Savings and Retirement Plan and
established a related trust. The Planwhich covers
substantially all eligible U.S. employees and allows employees to contribute
from one to tenfourteen percent of salary through salary reduction, up to the
Internal Revenue Service limit on salary reduction contributions. The Company
will make matching contributions of 25% of the employees' contributions of up to
6% of salary in the form of Company common stock. Company contributions will
vest 20% after two years of service (with prior service vesting allowed for active employees at the inception of
the Plan), increasing by 20% per year up to 100% after
six years of service. The Plan will permit participants to elect to invest their
contributions in one
or morea variety of three savings and investment funds. For the years 1993, 19921995,
1994 and 1991,1993, the Company contributed 17,390, 19,82028,354, 19,621 and 17,98417,390 shares,
respectively, of Company common stock to the Plan at a cost of $245, $215$533, $397 and
$224,$245, respectively.
7. COMMITMENTS AND CONTINGENCIES
Operating LeasesOPERATING LEASES
The Company and its subsidiaries are obligated under facility and equipment
leases which expire at various dates through 2002. These leases generally
provide extension privileges and are exclusive of real estate taxes, insurance
and other expenses. Rent expense in 1995, 1994 and 1993 1992was $8,493, $7,184 and
1991 was $6,765, $5,720
and $3,613, respectively. Annual minimum future rentals are $5,686, $3,971,
$2,451, $1,554$6,851, $4,787, $1,743,
$1,235 and $1,075$1,169 for the years 19941996 through 1998,2000, and aggregate to $2,115$3,206 for
all the years subsequent to 1998.
Contingencies2000.
CONTINGENCIES
The acquisition of National Industries, Inc. in 1991 included a liability of
approximately $5,400 to cover the estimated costs of environmental site
remediation for certain National facilities. Management estimated the liability
using third-party consultants. Costs incurred as ofthrough December 31, 19931995
(approximately $700)$1,200) represent amounts expended for preliminary site
evaluation and design and testing. The Company has obtained the necessary
permits and is in the process of discussingremediating the site. The Company is currently
negotiating with governmental agencies
the procedures necessary to complete additional studies and remediation.state for agreement on remediation procedures. The Company
believes the recorded liability of approximately $4,700$4,200 at December 31, 19931995 to
be adequate.
Based on a study conducted in 1995, the Company notified the Massachusetts
Department of Environmental Protection of the release of hazardous materials
associated with its facility in Mashpee, Massachusetts. The Company will
follow-up this notice with further investigation in accordance with state law.
Based upon preliminary information provided by third-party consultants, the
Company estimates that the clean-up costs will be approximately $1,800. This
amount was charged to SG&A in the fourth quarter of 1995.
8. COMMON STOCK
In 1988, the Company's Board of Directors adopted a Shareholder Rights Plan and
declared a dividend distribution of one Right for each outstanding share of
common stock. Pursuant to the Plan, the Rights become exercisable when certain
triggering events occur that involve an entity's attempt to acquire, or the
acquisition of, at least 20 percent of the Company's Common Stock or announces a
tender or exchange offer that would result in such entity owning 30 percent or
more of the Company's Common Stock. Such percentages may, at the Board's
discretion, be lowered.
If any entity becomes the beneficial owner of 25 percent or more of the Common
Stock (except pursuant to a tender or exchange offer for all shares at a fair
price as determined by the independent members of the
28
31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
Board), if a 20 percent or more shareholder consolidates or merges into or
engages in certain self-dealing transactions with the Company, or if there
occurs any reclassification, merger, or other transaction or transactions which
increases by more than one percent of the proportionate share of the Company's
outstanding Common Stock held by a 20 percent or more shareholder, then each
holder of a Right will be entitled to purchase that number of shares of the
Company's Common Stock which equals the exercise price of the Right divided by
one-half of the current market price of such Common Stock at the date of the
occurrence of the event. In addition, if the Company is involved in a merger or
other business combination transaction with another entity in which it is not
the surviving corporation or in connection with which its Common Stock is
changed or converted, or it sells or transfers 50 percent or more of its assets
or earning power to another entity, each Right that has not previously been
exercised will entitle its holder to purchase the number of shares of common
stock of such other person which equals the exercise price of the Right divided
by one-half of the current market price of such Common Stock at the date of the
occurrence of the event. The Company will generally be entitled to redeem the
Rights at $.02 per Right 25
28
at any time until the tenth day following a public
announcement that a 20 percent stock position has been acquired and in certain
other circumstances. The Rights will expire on August 23, 1998, unless earlier
redeemed or exchanged.
9. STOCK OPTION AND STOCK PURCHASE PLANS
Stock Options, Appreciation Rights and Restricted StockSTOCK OPTIONS, APPRECIATION RIGHTS AND RESTRICTED STOCK
The Company has three Stock Option and Appreciation Rights Plans, the 1984,1987, the
19871989 and the 19891994 Plans, pursuant to which stock options and appreciation rights
have been granted and will be granted in the future. In addition, restricted
stock awards may be granted under the 1989 Plan.and 1994 Plans.
All Plans provide for the issuance of stock options and tandem appreciation
rights to key employees of the Company and in the case of the 1987
and 1989 Plans only, also to directors of the Company. The
options may be either incentive stock options or non-qualified options. No more
than a total of 2,100,0002,350,000 shares of common stock may be issued under all of the
Plans. The period over which options must be exercised is determined on the date
of grant and may not be later than 10 years or 10 years and 30 days in the case
of incentive and non-qualified options, respectively.
Under the Plans, incentive stock options will be granted at fair market value as
of the date of grant and may not be exercised until 12 months after the date of
grant. Non-qualified options must equal at least 90% of the fair market value on
the date of grant.
Stock appreciation rights may also be granted to holders of options. UnderUpon
exercise of such rights, the holder will receive shares of common stock or a
combination of cash and common stock at the election of the Board of Directors
equal to the increase in the fair market value of the number of shares of common
stock subject to such rights. Under the Plan, when both an option and an
appreciation right are granted, the exercise of one cancels the other.
Restricted stock awards may be issued under the 1989 Planand the 1994 Plans and
entitle the participant to purchase common stock from the Company under terms
which provide for vesting over a specified number of years and a right of
repurchase by the Company of non-vested stock when the recipient's relationship
with the Company terminates. The price of the awards may be less than fair
market value but not less than par value ($.10 per share). Compensation expense
resulting from the grant of awards is recognized over the period from the award
date to the date the forfeiture provisions lapse. Stock awards amounting to 26,500
shares were issued in
1995, 1994 and 1993 amounting to 14,000, 33,000 and 10,50026,500 shares, respectively,
with a total value of $234, $719 and $321, respectively. In 1995, 1,000 shares
were issuedrepurchased. None were repurchased in 1992. Shares
repurchased totaled 4,500 and 5,000 in 1992 and 1991, respectively, and none in1994 or 1993. The net cost of shares outstandingcompensation
expense recognized in 1995, 1994 and 1993 related to the restricted stock awards
was $169.$400, $304 and $169, respectively.
The Compensation Committee of the Board of Directors administers all of the
Plans.
29
32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
A summary of options under the Plans is as follows:
Number of Shares Option Price Per Share
- --------------------------------------------------------------------------------------------------------------OPTION PRICE
NUMBER OF SHARES PER SHARE
---------------- ---------------
Outstanding, December 31, 1990 1,564,164
Granted 419,0001992....................... 1,731,791
Granted............................................ 328,525 $ .10-12.75
Exercised (40,290) .10-12.63.10 - 16.88
Exercised.......................................... (567,935) .10 - 14.50
Cancelled or expired (424,688) 9.38-24.50expired............................... (254,293) 9.38 - 15.00
--------- ------------------------
Outstanding, December 31, 1991 1,518,186
Granted 481,000 .10-11.75
Exercised (40,317) .10-10.881993....................... 1,238,088 9.38 - 18.38
Granted............................................ 579,000 .10 - 23.75
Exercised.......................................... (358,413) .10 - 14.00
Cancelled or expired (227,078) 9.38-23.25expired............................... (75,150) 9.38 - 16.88
--------- ------------------------
Outstanding, December 31, 1992 1,731,791
Granted 328,525 .10-16.88
Exercised (567,935) .10-14.501994....................... 1,383,525 9.38 - 23.75
Granted............................................ 459,400 .10 - 23.50
Exercised.......................................... (255,052) .10 - 21.75
Cancelled or expired (254,293) 9.38-15.00expired............................... (114,166) .10 - 22.38
--------- ------------------------
Outstanding, December 31, 1993 1,238,0881995....................... 1,473,707 9.38 - 23.75
--------- -------------
Options exercisable at December 31, 1993 372,163 $9.38-12.631995........... 436,872 $9.38 - 23.75
--------- ------------------------
Options available for future grant at December 31,
1993 182,0081995............................................ 13,021
---------
Employee Stock Purchase PlanEMPLOYEE STOCK PURCHASE PLAN
The Company has an Employee Stock Purchase Plan which allows employees to
purchase shares of common stock of the Company at a 15% discount from market
value (subject to a minimum price and a maximum contribution per employee)
pursuant to annual offerings. The maximum number of shares available for
issuance under the current plan is 600,000 shares over a five-year period ending
in 1997. Employees purchased 25,818, 5,38044,130, 56,666 and 22,81025,818 shares in 1995, 1994 and
1993, 1992 and 1991, respectively.
26
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
10. BUSINESS SEGMENT AND FOREIGN OPERATIONS
The Company operates within a single segment of the electronics industry defined
as the electromechanical component and subsystem sector. The Company designs,
manufactures and markets a broad range of electromechanical components and
subsystems.
The sales and marketing operations outside the United States are conducted
through marketing/warehousing subsidiaries in Australia, Canada, France,
Germany, Italy, Japan, Singapore, Sweden, Switzerland, the United Kingdom and
sales offices in other areas. The foreign manufacturing operations are in
Mexico, Singapore, Switzerland and the United Kingdom. The products manufactured
in Switzerland are sold to the parent company for further processing or to the
foreign marketing/warehousing subsidiaries for further finishing or resale in
local markets.
30
33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
Financial information concerning the Company's operations by major geographical
area is as follows:
1995 1994 1993
1992 1991
- ------------------------------------------------------------------------------------------------------------------- -------- --------
Net Sales:
United StatesStates:
Sales excluding export salessales............................. $399,899 $421,858 $331,200
$269,603 $202,518
Export salessales............................................. 9,836 7,873 9,181
9,304 4,684
Intersegment salessales....................................... 34,710 24,488 18,464 18,914 15,265
-------- -------- --------
TotalTotal............................................ 444,445 454,219 358,845 297,821 222,467
======== ======== ========
Western Europe:
Sales excluding export salessales............................. 69,501 55,761 44,979
55,914 51,541
Export salessales............................................. 2,738 1,568 1,282
1,079 161
Intersegment salessales....................................... 7,246 3,986 5,301 5,853 5,435
-------- -------- --------
TotalTotal............................................ 79,485 61,315 51,562 62,846 57,137
======== ======== ========
Other Areas:
Sales excluding export salessales............................. 52,563 43,646 33,621
25,818 22,698
Export salessales............................................. 336
Intersegment salessales....................................... 10,439 10,302 3,942 984 1,737
-------- -------- --------
TotalTotal............................................ 63,338 53,948 37,563 26,802 24,435
======== ======== ========
TotalTotal...................................................... 587,268 569,482 447,970 387,469 304,039
Less eliminations 27,707 25,751 22,437
-------- -------- --------
TotalLess eliminations........................................ 52,395 38,776 27,707
-------- -------- --------
Total...................................................... $534,873 $530,706 $420,263 $361,718 $281,602
======== ======== ========
Operating Income:
United StatesStates............................................ $ 31,736 $ 47,713 $ 37,740
$ 17,036 $ 2,320
Western EuropeEurope........................................... 10,269 2,970 (135)
4,309 7,265
Other AreasAreas.............................................. 7,972 4,507 771 (1,596) (1,773)
-------- -------- --------
TotalTotal............................................ $ 38,37649,977 $ 19,74955,190 $ 7,81238,376
======== ======== ========
Identifiable Assets:
United StatesStates............................................ $291,483 $253,342 $230,322
$211,087 $208,683
Western EuropeEurope........................................... 77,335 72,338 58,027
62,757 64,831
Other AreasAreas.............................................. 38,658 32,278 29,511 21,604 19,715
-------- -------- --------
TotalTotal............................................ $407,476 $357,958 $317,860 $295,448 $293,229
======== ======== ========
Operating income by geographical area does not include corporate expenses,
restructuring costs and other charges, other income or expenses,expense, or income taxes.
Intersegment sales represent transfers between geographic areas which are made
at negotiated selling prices. One customer accounted for approximately 28%23%, 32%
and 24%28% of sales and 21%, 23% and 26% of net receivables for 1995, 1994 and
1993, and 1992,
respectively.
2731
3034
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
11. UNAUDITED SELECTED QUARTERLY FINANCIAL DATA
(In thousands)
---------------------------------------------------
Net Earnings
Net Gross Income (Loss)
1993 Sales Margin (Loss) Per ShareNET EARNINGS
NET GROSS INCOME (LOSS)
1995 SALES MARGIN (LOSS) PER SHARE
- ------------------------------------------------- -------- -------- ------- ---------
1st QuarterQuarter...................................... $134,589 $ 27,857 $ 5,800 $ .30
2nd Quarter...................................... 130,550 29,146 7,060 .36
3rd Quarter...................................... 131,860 26,443 4,210 .21
4th Quarter...................................... 137,874 27,728 (9,470) (.48)
-------- -------- ------- -----
$534,873 $111,174 $ 7,600 $ .39
1994
- -------------------------------------------------
1st Quarter...................................... $127,403 $ 26,422 $ 5,700 $ .30
2nd Quarter...................................... 134,399 29,555 6,950 .36
3rd Quarter...................................... 127,709 27,304 6,400 .33
4th Quarter...................................... 141,195 26,778 7,150 .37
-------- -------- ------- -----
$530,706 $110,059 $26,200 $1.36
1993
- -------------------------------------------------
1st Quarter...................................... $101,155 $21,545$ 21,545 $ 2,900 $ .16
2nd QuarterQuarter...................................... 106,295 23,313 3,600 .19
3rd QuarterQuarter...................................... 100,014 22,421 4,100 .22
4th QuarterQuarter...................................... 112,799 24,020 5,000 .26
-------- ------- --------- -------
$420,263 $91,299 $ 15,600 $ .83
1992
1st Quarter $ 84,587 $16,916 $ 1,400 $ .08
2nd Quarter 90,234 18,609 2,193 .12
3rd Quarter 91,422 18,879 1,703 .09
4th Quarter 95,475 19,790 1,290 .07
-------- ------- --------- -------
$361,718 $74,194-----
$420,263 $ 6,58691,299 $15,600 $ .36
1991
1st Quarter $ 63,121 $15,280 $ 1,183 $ .07
2nd Quarter 64,846 15,875 758 .04
3rd Quarter* 70,015 15,812 (20,531) (1.13)
4th Quarter 83,620 15,277 (3,472) (.19)
-------- ------- --------- -------
$281,602 $62,244 $(22,062) $(1.21)
* Includes before tax restructuring costs of $22,000 in 1991..83
28The balance of this page intentionally left blank.
32
31
SCHEDULE V35
SCHEDULE II
AUGAT INC. AND SUBSIDIARIES
---------------------------
PROPERTY, PLANT, AND EQUIPMENT
For the Years Ended December 31, 1993, 1992 and 1991
(In thousands)
- -------------------------------------------------------------------------------------------------------------------
Balance At Retire- Balance
Beginning Additions ments Other Translation At End
Description of Year At Cost Or Sales Changes Adjustments Of Year
(1) (2)
- -------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1993:
Land $ 4,204 $ $ $( 616) $( 60) $ 3,528
Buildings and building
improvements 56,830 35 27 ( 1,353) ( 811) 54,674
Machinery and equipment 105,931 947 3,240 12,083 ( 566) 115,155
Furniture and fixtures 19,781 340 978 1,643 ( 183) 20,603
Construction in progress 6,942 19,055 (15,938) ( 49) 10,010
-------- ------- ------ --------- -------- --------
TOTAL $193,688 $20,377 $4,245 $( 4,181) $(1,669) $203,970
-------- ------- ------ --------- -------- --------
Year Ended December 31, 1992:
Land $ 4,410 $ $ $( 113) $( 93) $ 4,204
Buildings and building
improvements 58,745 1,309 302 ( 2,365) ( 557) 56,830
Machinery and equipment 102,970 1,264 2,484 4,361 ( 180) 105,931
Furniture and fixtures 17,772 1,801 580 943 ( 155) 19,781
Construction in progress 6,365 10,121 796 ( 8,706) ( 42) 6,942
-------- ------- ------- --------- -------- --------
TOTAL $190,262 $14,495 $4,162 $( 5,880) $(1,027) $193,688
-------- ------- ------- --------- -------- --------
Year Ended December 31, 1991:
Land $ 3,925 $ 305 $ 191 $ 569 $( 198) $ 4,410
Buildings and building
improvements 54,500 642 687 6,912 (2,622) 58,745
Machinery and equipment 109,274 1,552 2,224 ( 3,604) (2,028) 102,970
Furniture and fixtures 14,626 1,589 114 2,006 ( 335) 17,772
Construction in progress 10,374 10,152 827 (13,000) ( 334) 6,365
-------- ------- ------ --------- -------- --------
TOTAL $192,699 $14,240 $4,043 $( 7,117) $(5,517) $190,262
-------- ------- ------ --------- -------- --------
- ------------------------------------------------------------------------------------------------------------------
NOTES: 1993 1992 1991
---- ---- ----
1.a. Includes assets written off as part of restructuring. $(3,914) $(20,266)
b. Includes assets acquired in purchase transactions.
See note 2 to the consolidated financial statements. 13,943
c. Includes assets which have been reclassified to or
from Property held for sale. $(4,181) (1,966) (794)
See note 4 to the consolidated financial statements. ------- ------- --------
TOTAL $(4,181) $(5,880) $( 7,117)
d. Includes reclassifications made between categories. ======= ======= ========
2. Amounts represent the effect of Financial Accounting
Standards Board Statement No. 52, "Foreign Currency
Translation".
29
32
SCHEDULE VI
AUGAT INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT, AND EQUIPMENT
For the Years Ended December 31, 1993, 1992 and 1991
(In thousands)
- ---------------------------------------------------------------------------------------------------------
ADDITIONS
BALANCE AT CHARGED TO TRANSLATION BALANCE
BEGINNING COSTS AND OTHER ADJUSTMENTS AT END
DESCRIPTION OF YEAR EXPENSES RETIREMENTS CHANGES (1) (2) OF YEAR
- ---------------------------------------------------------------------------------------------------------
Year Ended December
31, 1993:
Buildings and
building
improvements $15,231 $ 1,908 $ 22 $(1,147) $( 197) $ 15,773
Machinery and
equipment 68,334 9,856 2,995 ( 3) ( 452) 74,740
Furniture and
fixtures 11,861 2,702 919 ( 34) ( 152) 13,458
-----------------------------------------------------------------------
TOTAL $95,426 $14,466 $3,936 $(1,184) $( 801) $103,971
-----------------------------------------------------------------------
Year Ended December
31, 1992:
Buildings and
building
improvements $14,191 $ 2,205 $ 279 $( 861) $( 25) $ 15,231
Machinery and
equipment 64,350 9,865 1,939 (3,805) ( 137) 68,334
Furniture and
fixtures 9,926 2,622 325 ( 251) ( 111) 11,861
-----------------------------------------------------------------------
TOTAL $88,467 $14,692 $2,543 $(4,917) $( 273) $ 95,426
-----------------------------------------------------------------------
Year Ended December
31, 1991:
Buildings and
building
improvements $13,796 $ 2,134 $ 223 $(1,002) $( 514) $ 14,191
Machinery and
equipment 65,430 10,920 1,719 (8,872) (1,409) 64,350
Furniture and
fixtures 8,005 2,244 75 ( 50) ( 198) 9,926
-----------------------------------------------------------------------
TOTAL $87,231 $15,298 $2,017 $(9,924) $(2,121) $ 88,467
-----------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
NOTES: 1993 1992 1991
-------- -------- --------
1a. Includes amounts written off as part of restructuring. $(3,914) $(8,922)
b. Includes amounts acquired in purchase transactions.
See note 2 to the consolidated financial statements.
c. Includes amounts which have been reclassified to
Property held for sale. $(1,184) (1,003) (1,002)
See note 4 to the consolidated financial -------- -------- --------
statements. Total $(1,184) $(4,917) $(9,924)
d. Includes reclassification made between ======= ======= =======
categories
2. Amounts represent the effect of Financial Accounting
Standards Board Statement No. 52 "Foreign
Currency Translation".
30
33
SCHEDULE VIII
AUGAT INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended DecemberFOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1992 and 1991
(In thousands)(IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------------
ADDITIONS
-----------------------------------------
CHARGED CHARGED
BALANCE AT TO COSTS TO OTHER BALANCE
BEGINNING AND ACCOUNTS -- DEDUCTIONS --- AT END
DESCRIPTION OF YEAR EXPENSES DESCRIBE DESCRIBE OF YEAR
- ---------------------------------------------------------------------------------------------------------------------
1993
- --------------------------------------- ---------- -------- ---------- ---------------- -------
1995
VALUATION ACCOUNTS DEDUCTED FROM
ASSETS TO WHICH THEY APPLY --
- - --- Allowance for doubtful
accounts $1,451 $272accounts......................... $1,276 $410 Bad Debts $594 (1) $1,129$481(1) $1,205
- --- Reserve for assets held for
resale $600 $ 600
------------------------ ----------------------------
1992
-resale........................... $1,235 $500 $1,735
------ ---- ---------- ---- ------
1994
VALUATION ACCOUNTS DEDUCTED FROM
ASSETS TO WHICH THEY APPLY --
- - --- Allowance for doubtful
accounts $1,479 $514accounts......................... $1,129 $326 Bad Debts $542 (1) $1,451
------------------------ ------------------------------
1991$179(1) $1,276
- -- Reserve for assets held for
resale........................... $ 600 $635 $1,235
------ ---- ---------- ---- ------
1993
VALUATION ACCOUNTS DEDUCTED FROM
ASSETS TO WHICH THEY APPLY --
- - --- Allowance for doubtful
accounts $1,832 $302 $236 (2)accounts......................... $1,451 $272 Bad Debts $891 (1) $1,479
------------------------ -----------------------------$594(1) $1,129
- ----------------------------------------------------------------------------------------------------------------------- Reserve for assets held for
resale........................... $600 $ 600
------ ---- ---------- ---- ------
- ---------------
Note 1. Amount is net of recoveries.
Note 2. Amount acquired in purchase transaction. See note 2 to the
consolidated financial statements.
31
34
AUGAT INC.
SCHEDULE IX - SHORT-TERM BORROWINGS
For the Years Ended December 31, 1993, 1992 and 1991
(Thousands, except interest rates)
(3)
(3) Weighted
Weighted Average average
interest Maximum amount interest
(2) rate at amount outstanding rate
(1) Balance at end of outstanding during during
Classification end of year year during year year year
- -------------- ----------- ------- ------------ ---------- --------
1993
- ----
Lines of credit $ 1,000 6.0% $10,000 $ 3,094 6.0%
1992
- ----
Lines of credit $12,900 6.0% $49,000 $15,917 6.0%
1991
- ----
Lines of credit $49,000 6.6% $49,000 $19,000 8.0%
(1) U.S. dollar bank borrowings represent variable rate borrowings
under the Company's $40,000 credit agreement in 1993 and the
Company's former $20,000 and $10,000 credit agreements in 1992
and 1991, respectively. In 1992 and 1991, borrowings also include
bridge loan financing totaling $45,000 obtained in connection
with the acquisition of National Industries Inc.
(2) Reflects balance of borrowings under the credit agreement, short-
term, fixed rate loan prior to reclassification of such borrowings
(or a portion of such borrowings) to long-term debt based on the
Company's intention to refinance these notes on a long-term basis
and the ability, if necessary, to refinance these notes under the
credit agreement. At the end of 1992 and 1991, $9,000 and $40,000 of
such borrowings were reclassified to long-term
debt.
(3) The computation of average amounts outstanding and weighted average
interest rates during the year are based on daily balances and
interest rates for U.S dollar borrowings.
32
35
SCHEDULE X
AUGAT INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In thousands)
- -----------------------------------------------------------------------------------------------------------
CHARGED TO COSTS AND EXPENSES
-----------------------------------
ITEM 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------
Maintenance and Repairs $4,137 $4,335 $3,724
------ ------ ------
Advertising Costs $1,413 $2,090 $2,355
------ ------ ------
Information not listed herein is omitted because of the absence of the
conditions under which it is required.
- ------------------------------------------------------------------------------------------------------------
33
36
ITEM 9 --- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- ------------------------------------------------------------------------
Not Applicable.
The balance of this page intentionally left blank.
34
37
PART III
ITEM 10 --- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item concerning directors is incorporated
herein by reference pursuant to Rule 12b-23 to the Company's Proxy Statement
dated March 24, 199425, 1996 with respect to the Annual Meeting of Shareholders to be
held April 26, 1994.
The following table sets forth the names of all executive officers of the
Company and certain other information relating to the positions held by them
with the Company and other business experience.
Business Experience
Executive Officer Age Position For the Past Five Years
- ----------------- --- -------- -----------------------
Marcel P. Joseph 58 Chief Executive Chairman of the Board
Officer, President of Directors since
and Chairman of February, 1989.
the Board President and Chief
Executive Officer
since February, 1988.
Served as Executive
Vice President and
President and Chief
Operating Officer
with Communications
Satellite Corporation,
from April, 1985 to
February, 1988. For
twenty-four of the
previous twenty-six
years he was with
General Electric
Company serving in
various management
positions, the last
being as Vice Presi-
dent and General
Manager of the Trans-
portation Products
Division.
Anthony F. Lefkowicz 56 Vice President Vice President, Auto-
and General motive Business since
Manager, Augat September 1991. From
Automotive February 1991 to
Business September 1991 he was
Vice President of
Manufacturing Opera-
tions. Previously he
was Vice President and
General Manager, Auto-
motive Division from
May 1988 to February
1991. For twenty-
seven years he held
35
38
various management
positions with General
Electric Company, with
the last being General
Manager - Product
Support Operation,
Lighting Products
Division.
Richard J. Eaton 57 Vice President - Vice President, Human
Human Resources Resources since June,
1984. For the eleven
preceding years he
held various manage-
ment positions with
Itek Corporation, with
the latest being Vice
President Employee
Relations for Itek
Systems and Communi-
cations Industries.
Daniel J. Maher, Jr. 47 Corporate Controller Corporate Controller
since 1979.
John E. Lynch, Jr. 50 Treasurer Treasurer since
January, 1985;
Assistant Treasurer
from 1983 to 1985;
from August, 1979 to
December, 1982 Tax
Manager.
Larry E. Buffington 46 Vice President and Vice President and
General Manager, General Manager,
Communications Communications Pro-
Products Business ducts Business since
August 1991. Pre-
viously he was Chair-
man of the Board and
Chief Executive
Officer of Adaptive
Technologies, Inc.
from 1989 to 1991.
From 1988 to 1989 he
served as Vice
President and General
Manager, Cook Division
of Northern Telcom.
He was with AMP, Inc.
for 19 years serving
in various management
positions with the
last being General
Manager, Signal Trans-
mission Systems
Division.
36
39
L. Ronald Hoover 53 Vice President and Vice President and
General Manager, General Manager,
Interconnection Interconnection Pro-
Products Business ducts Business since
December 1991. Pre-
viously, he was
Managing Director and
Chief Operating
Officer of Diceon
Electronics, Inc. from
1989 to 1991. From
1979 to 1989 he served
AMP, Inc. in various
Management positions
with the last being
Group Vice President,
Signal Transmission
Products.
Gasper Buffa 41 Vice President and Vice President and
General Manager, General Manager, Auto-
Components Division motive Components
Division since
January, 1994. From
August 1992 to January
1994 he was Vice Pre-
sident, Engineering,
Sales & Marketing for
the Wiring Systems and
Components Division.
Previously, from
September 1991 to
August 1992 he was
Vice President &
General Manager, Com-
ponents Division and
from February 1991 to
September 1, 1991 he
was Vice President,
Manufacturing Opera-
tions for the Auto-
motive and Communica-
tions Division. From
March of 1989 to
February 1, 1991 he
was Vice President
Operations for the
Automotive Division.
He served the General
Electric Company from
1974 to 1989 in
various management
positions with the
last being Plant
Manager, Carolina
Products Plant.
James E. Finley 40 Vice President and Vice President and
General Manager, General Manager Augat
Augat Europe Europe since March
1992. Previously
Vice President and
General Manager,
European Automotive
Division from August
1991 to March 1992.
From February to
August 1991, Vice
President and General
Manager, Automotive
Division. From March
1989 to February 1991
was Vice President,
Sales and Marketing,
Automotive Division.
37
40
From 1986 to 1989 he
served as General
Marketing Manager with
Interconnect Products
Operation, GTE Pro-
ducts Corporation.
From 1978 to 1986 he
served in various
management positions
with AMP, Inc.
Ellen B. Richstone 42 Vice President and Vice President and
Chief Financial Chief Financial
Officer Officer since Novem-
ber, 1992. From March
1992 to October 1992
she was Senior Vice
President and Chief
Financial Officer of
Rohr, Inc. Prior to
that, she was Execu-
tive Vice President
and Chief Financial
Officer of Bull H.N.
Worldwide Information
Systems from 1989 to
1992. From 1981 to
1989, she served in
various positions at
Data General Corpora-
tion, the most recent
being Vice President
and Corporate
Treasurer.
Steven M. Abelman * 43 Vice President and Vice President and
General Manager, General Manager, Auto-
Wiring Systems motive Wiring Systems
Division Division since January
1994. Previously, he
was Vice President
Operations, Wiring
Systems and Components
Division from August
1992 to January 1994
and Vice President
Manufacturing, Wiring
Systems from March
1992 to August 1992.
From December 1991 to
March 1992 he was Vice
President U.S. Opera-
tions, Wiring Systems.
From 1990 to 1991 he
was Vice President
Connector Operations
for TriStar Inc. and
from 1985 to 1990 was
Director of Operations
for the Components
Division of I.T.T.
Cannon.
The executive officers of the Company are elected annually.
* Effective, February, 1994
38
4123, 1996.
ITEMS 11 AND 12 --- EXECUTIVE COMPENSATION AND SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------
The information required by these items is incorporated herein by reference
pursuant to Rule 12b-23 to the Company's Proxy Statement dated March 24, 199425, 1996
for the Annual Meeting of Shareholders to be held April 26, 1994.23, 1996. The sections
entitled "Compensation Committee Report" and "Stock Performance Graph" in the
1996 Proxy Statement are not incorporated herein by reference.
ITEM 13 --- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
Not applicable.
The balance of this page intentionally left blank.
3935
4238
PART IV
ITEM 14 --- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- ----------------------------------------------------------------
(a) 1. Financial Statements
The Financial Statements listed below appear in Part II, Item
8 hereof.
Financial Statements:
---------------------
Independent Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(a) 2. Financial Statement Schedules
-----------------------------
The Financial Statement Schedules listed below appear in
Part II, Item 8 hereof.
Schedule V - Property, Plant and Equipment
Schedule VI - Accumulated Depreciation, and
Amortization of Property, Plant and
Equipment
Schedule VIII- Valuation and Qualifying Accounts
Schedule IX - Short-Term Borrowings
Schedule X - Supplementary Income Statement
Information
Schedules not included with this additional financial data
have been omitted because of the absence of conditions under
which they are required or because the required financial
information is included in the financial statements submitted.
(a) 3. Exhibits
--------
(3) Articles of Incorporation and By-Laws
(a) Restated Articles of Organization, as amended.
Incorporated by reference to Exhibit 3(a) to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1989.
(b) By-Laws, as amended. Incorporated by reference to
Exhibit 3(b) to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1987.
(4) Instruments Defining the Rights of Security Holders, Including
Indentures
(a) Specimen certificate representing shares of the
Registrant's $.10 par value common stock.
Incorporated by reference to Exhibit 4(a) to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1988.
40
43
(b) Trust Indenture dated as of August 2, 1988 between
Augat Inc. and The Chase Manhattan Bank, N.A. as
Trustee. Incorporated by reference to Exhibit 2 of
the Registrant's Registration Statement on Form 8-A
dated August 2, 1988.
(10) Material Contracts
(a) 1994 Stock Plan (Exhibit 10(a)).
(b) 1984
(a) 1. FINANCIAL STATEMENTS
The Financial Statements listed below appear in Part II, Item 8 hereof.
FINANCIAL STATEMENTS:
Independent Auditors' Report
Consolidated Balance Sheets
Statements of Consolidated Income
Statements of Consolidated Shareholders' Equity
Statements of Consolidated Cash Flows
Notes to Consolidated Financial Statements
(a) 2. FINANCIAL STATEMENT SCHEDULES
The Financial Statement Schedule listed below appears in Part II, Item 8 hereof.
Schedule II- Valuation and Qualifying Accounts
Schedules not included with this additional financial data have been omitted
because of the absence of conditions under which they are required or because
the required financial information is included in the financial statements
submitted.
(a) 3. EXHIBITS
(3) Articles of Incorporation and By-Laws
(a) Restated Articles of Organization, as amended. Incorporated by reference
to Exhibit 3(a) to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1989.
(b) By-Laws, as amended. Incorporated by reference to Exhibit 3(b) to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1987.
(4) Instruments Defining the Rights of Security Holders, Including Indentures
(a) Specimen certificate representing shares of the Registrant's $.10 par
value common stock. Incorporated by reference to Exhibit 4(a) to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1988.
(b) Trust Indenture dated as of August 2, 1988 between Augat Inc. and The
Chase Manhattan Bank, N.A. as Trustee. Incorporated by reference to
Exhibit 2 of the Registrant's Registration Statement on Form 8-A dated
August 2, 1988.
(10) Material Contracts
(a) 1994 Stock Plan. Incorporated by reference to Exhibit 10 (a) to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1993.
(b) Employment Agreement dated August 29, 1994 between the Registrant and
William R. Fenoglio. Incorporated by reference to Exhibit 10(a) to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1994.
(c) 1987 Stock Option and Appreciation Right Plan. Incorporated by reference to Exhibit A to the Proxy
Statement dated March 12, 1984 for the Annual Meeting
of the Registrant's Shareholders on April 24, 1984.
(c) 1987 Stock Option and Appreciation Right Plan.
Incorp- orated by reference
to Exhibit A to the Registrant's Proxy Statement dated March 25, 1987 for
the Annual Meeting of the Registrant's Shareholders held on April 28,
1987.
(d) 1989 Stock Plan. Incorporated by reference to Exhibit 10(d) to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1990.
(e) Supplementary Employee Retirement Plan. Incorporated by reference to
Exhibit 10(c) to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1986.
(f) Letter of Credit and Reimbursement Agreement among
Chemical Bank as Letter of Credit Issuer, Altair
International, Inc. as Borrower and Augat Inc. as
Guarantor dated as of December 1, 1986. Incorporated
by reference to Exhibit 10(f) to the Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1986.
(g) Employment Agreement dated January 3, 1991 between
the Registrant and Marcel P. Joseph. Incorporated by
reference to Exhibit 10(g) to the Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1990.
(h) Augat Inc. Savings and Retirement Plan. Incorporated
by reference to Exhibit 10(h) to the Registrant's
Annual Report on Form 10-K for the year ended December
31, 1988.
(i) Rights Agreement dated as of August 2, 1988 between
Augat Inc. and The Chase Manhattan Bank, N.A., Rights
Agent. Incorporated by reference to Exhibit 1 of the
Registrant's Registration Statement on Form 8-A
dated August 2, 1988.
(j) Severance Agreements. Incorporated by reference to
Exhibit 10(k) to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1989.
(k) Deferred Compensation Plan. Incorporated by
reference to Exhibit 10(1) to the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1989.
41
36
44
(l) Supplemental Disability Income Plan. Incorporated by
reference to Exhibit 10(m) to the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1989.
(m) Supplemental Survivor Benefit Plan. Incorporated by
reference to Exhibit 10(n) to the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1989.
(n) Agreement of Merger among Augat Inc., National
Industries, Inc. and June M. Collier dated August 30,
1991. Incorporated by reference to Exhibit 2 to the
Registrants' Form 8-K filed September 16, 1991.
(p) Note Agreement between Augat Inc., as Borrower and
Principal Mutual Life Insurance Company and Allstate
Life Insurance Company, as Lenders, dated as of
February 1, 1992. Incorporated by reference to
Exhibit 10(p) to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1991.
(q) Revolving Credit Agreement among Augat Inc., Augat
Wiring Systems Inc., Augat Automotive Inc., Augat
Communications Group Inc., LRC Electronics Inc., Reed
Devices Inc., The First National Bank of Boston,
Shawmut Bank, N.A., Chemical Bank and The First
National Bank of Boston, as agent, dated as of
September 14, 1992. Incorporated by reference to
the Exhibit (10.1) to the prospectus included in
Registration Statement No. 33-
53600 dated December 2, 1992.
(r) 1993 Employee Stock Purchase Plan. Incorporated by
reference to Exhibit 10(r) to the Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1992.
(s) Amendment No. 3 to the Revolving Credit Agreement
among Augat Inc., Augat Wiring Systems Inc., Augat
Automotive Inc., Augat Communication Products Inc.,
LRC Electronics Inc., Reed Devices Inc., The First
National Bank of Boston, Shawmut Bank, N.A., Chemical
Bank and The First National Bank of Boston, as agent,
dated as of July 9, 1993.
(21) Subsidiaries of the Registrant. Exhibit 21.
(23) Independent Auditors' Consent. Exhibit 23.
(b) Reports on Form 8-K.
--------------------
No reports on Form 8-K were filed with the Commission during
the last quarter of calendar year 1993.
4239
(f) Augat Inc. Savings and Retirement Plan. Incorporated by reference to
Exhibit 10(h) to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1988.
(g) Rights Agreement dated as of August 2, 1988 between Augat Inc. and The
Chase Manhattan Bank, N.A., Rights Agent. Incorporated by reference to
Exhibit 1 of the Registrant's Registration Statement on Form 8-A dated
August 2, 1988.
(h) Severance Agreements. Incorporated by reference to Exhibit 10(k) to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1989.
(i) Deferred Compensation Plan. Incorporated by reference to Exhibit 10(1) to
the Registrant's Annual Report on Form 10-K for the year ended December
31, 1989.
(j) Supplemental Disability Income Plan. Incorporated by reference to Exhibit
10(m) to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989.
(k) Supplemental Survivor Benefit Plan. Incorporated by reference to Exhibit
10(n) to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989.
(l) Agreement of Merger among Augat Inc., National Industries, Inc. and June
M. Collier dated August 30, 1991. Incorporated by reference to Exhibit 2
to the Registrants' Form 8-K filed September 16, 1991.
(m) Note Agreement between Augat Inc., as Borrower and Principal Mutual Life
Insurance Company and Allstate Life Insurance Company, as Lenders, dated
as of February 1, 1992. Incorporated by reference to Exhibit 10(p) to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1991.
(n) Revolving Credit Agreement among Augat Inc., The First National Bank of
Boston, Shawmut Bank, N.A., Nations Bank of North Carolina, N.A., National
Westminster Bank USA and The First National Bank of Boston, as agent,
dated as of July 22, 1994. Incorporated by reference to Exhibit 10(b) to
the Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1994.
(o) 1993 Employee Stock Purchase Plan. Incorporated by reference to Exhibit
10(r) to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992.
(p) Amendment No. 1 to the Revolving Credit Agreement among Augat Inc., The
First National Bank of Boston, Fleet National Bank of Massachusetts
(formerly known as Shawmut Bank, N.A.), Nations Bank of North Carolina,
N.A., NatWest Bank NA (formerly known as National Westminster Bank USA)
and The First National Bank of Boston, as agent, dated as of December 31,
1995.
(q) Amendment No. 2 to the Amended and Restated Note Agreement among Augat
Inc., Principal Mutual Life Insurance Company and Allstate Life Insurance
Company, dated as of December 18, 1995.
(21) Subsidiaries of the Registrant. Exhibit 21.
(23) Independent Auditors' Consent. Exhibit 23.
(b) THE FOLLOWING REPORT ON FORM 8-K WAS FILED DURING THE LAST QUARTER OF CALENDAR
YEAR 1994:
(1) On December 21, 1995, the Registrant filed Form 8-K in Item 5 (Other
Events) stating that it plans to restructure its Interconnection Products
and Automotive Divisions and that results for the Fourth Quarter ended
December 31, 1995 will include a restructuring charge and other charges
totaling $23 million pretax. Also, the Registrant announced it has signed
a letter of intent to acquire certain electronic assets of Lindsay
Specialty Products.
37
4540
SIGNATURES
Pursuant to the requirementrequirements 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 ofby the undersigned thereunto duly authorized.
(Registrant) AUGAT INC.
---------------------------------------------------------
By(Registrant)
By: /s/ MARCEL P. JOSEPH ByWILLIAM R. FENOGLIO
------------------------------------------
William R. Fenoglio
President & Chief Executive Officer
By: /s/ ELLEN B. RICHSTONE
--------------------------- ---------------------------
Marcel P. Joseph------------------------------------------
Ellen B. Richstone
Chairman of the Board, Vice President & Title Chief Executive Officer Title Chief Financial Officer
----------------------- -----------------------
& President
-----------and Principal Accounting Officer
Date March 24, 1994
--------------------27, 1996
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 date indicated.
SIGNATURE TITLE DATE
- --------------------------------------------- --------- ---------------
/s/ WILLIAM R. FENOGLIO Director March 27, 1996
- ---------------------------------------------
William R. Fenoglio
/s/ MARCEL P. JOSEPH Director March 27, 1996
- ------------------------------- ----------------------------------------------------------------------------
Marcel P. Joseph
/s/ VERNON R. ALDEN Director March 27, 1996
- ---------------------------------------------
Vernon R. Alden
/s/ BRUCE L. CROCKETT Director March 27, 1996
- ---------------------------------------------
Bruce L. Crockett
/s/ JOHN D. CURTIN, JR. Director March 27, 1996
- ---------------------------------------------
John D. Curtin, Jr.
Director March , 1996
- ---------------------------------------------
Samuel S. Dennis 3d
/s/ JERALD G. FISHMAN Director March 27, 1996
- ---------------------------------------------
Jerald G. Fishman
Director March , 1996
- ---------------------------------------------
Thomas L. King
Director (Date) March 24, 1994 (Date) March , 1994
------------------------- -------------------------
/s/ VERNON R. ALDEN /s/ JOHN N. LEMASTERS1996
- ------------------------------- -------------------------------
Vernon R. Alden, Director---------------------------------------------
John N. Lemasters
Director (Date) March 24, 1994 (Date) March 24, 1994
------------------------- -------------------------, 1996
- ---------------------------------------------
Thomas C. McDermott
/s/ DAVID V. RAGONE Director March 27, 1996
- ------------------------------- -------------------------------
Bruce L. Crockett, Director---------------------------------------------
David V. Ragone
Director (Date) March , 1994 (Date) March 24, 1994
------------------------- -------------------------
/s/ ALAN1996
- ---------------------------------------------
Alan J. ZAKON
- ------------------------------- -------------------------------
John D. Curtin, Jr., Director Alan J. Zakon Director
(Date) March , 1994 (Date) March 24, 1994
------------------------- -------------------------
- ------------------------------- -------------------------------
Samuel S. Dennis 3d, Director Norton Q. Sloan, Director
(Date) March , 1994 (Date) March , 1994
------------------------- -------------------------
/s/ JERALD G. FISHMAN
- -------------------------------
Jerald G. Fishman, Director
(Date) March 24, 1994
-------------------------
4338