SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 1995 Commission file number 1-5838
--------------- ------
NCH CORPORATION
- ---------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-0457200
- ------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
P.O. Box 152170
2727 Chemsearch Boulevard
Irving, Texas 75015
- ------------------------------- ----------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (214) 438-0211
----------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class which registered
------------------- -----------------
COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: NONE
--------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
------ -------
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. (X)
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date:
Approximate Aggregate
Market Value* Total Shares
of Shares Held by Outstanding
Class Non-affiliates at June 23, 1995
- -------------------------- -------------- ----------------
COMMON STOCK, $1 PAR VALUE $ 233,156,600 8,311,240
- -------------------------- -------------- ----------------
*The approximate aggregate market value of the common stock held by
non-affiliates is based on the closing price of these shares on the
New York Stock Exchange on June 23, 1995.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's 1995 Annual Report to the Shareholders
and definitive Proxy Statement relating to the Registrant's 1995
Annual Shareholders Meeting are incorporated by reference in Parts II
and III of this Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
Location in Form 10-K Incorporated Document
PART II
Item 5 - Market for the Registrant's Page 32 of the 1995
Common Equity and Related Shareholder Annual Report.
Matters.
Item 6 - Selected Financial Data. Page 18 of the 1995
Annual Report.
Item 7 - Management's Discussion and Pages 18-20 of the 1995
Analysis of Financial Condition and Annual Report.
Results of Operations.
Item 8 - Financial Statements and Pages 21-32 of the 1995
Supplementary Data. Annual Report.
PART III
Item 10 - Directors and Executive Pages 2-4 of the
Officers of the Registrant. Company's Proxy
Statement dated
June 20, 1995, in
connection with
its Annual Meeting
to be held on
July 27,1995.
Item 11 - Executive Compensation. Pages 4-8 of the
Company's Proxy
Statement dated
June 20, 1995, in
connection with
its Annual Meeting
to be held on
July 27, 1995.
Item 12 - Security Ownership of Pages 10-11 of the
Certain Beneficial Owners and Company's Proxy
Management. Statement dated
June 20, 1995, in
connection with
its Annual Meeting
to be held on
July 27, 1995.
Item 13 - Certain Relationships and Pages 3 and 8 of the
Related Transactions. Company's Proxy
Statement dated
June 20, 1995, in
connection with
its Annual Meeting
to be held on
July 27, 1995.
PART I
Item 1. Business
---------
NCH Corporation, a Delaware corporation, and its
subsidiaries (herein collectively referred to as the "Company" or
"NCH" unless the context requires differently) markets an
extensive line of maintenance, repair and supply products to
customers throughout the world. Products include specialty
chemicals, fasteners, welding supplies, plumbing and electronic
parts, and safety supplies. These products are marketed
principally through the Company's own sales force. There have
been no significant changes in the kind of products produced or
marketed by the Company since the beginning of the last fiscal
year, although individual products are continually added to and
deleted from the product line. Sales are generally consistent
throughout the year, with no significant seasonal fluctuations.
Competitive conditions in the industry involved are severe
and the Company believes that no one enterprise or group of
enterprises has a dominant or preeminent position in the market.
Further, the Company believes that no enterprise has a
significant percentage of the market. No informative statement
can be made as to the Company's rank in its industry. Not only
do other concerns compete in the broad general range of
maintenance, repair or supply products, but there are also many
competitors who produce one or more products which compete with
specific products sold by the Company. Competition in the
industry is primarily on the basis of price, service and product
performance. The Company's main emphasis is on service and
product performance rather than price. Sales of Company products
are not dependent upon a limited number of customers, and no
particular customer accounts for more than 1.5% of sales.
Qualified sales representatives are crucial to the Company's
operations. In addition to industry competition, the Company
competes with the entire business community for qualified sales
representatives. This competition has been, and remains, severe.
The Company has a required formal training program for its sales
representatives consisting of in-house and field training.
Turnover of new sales representatives in the first year is
estimated to be approximately 85%, based on the Company's
experience in the last three years. The cost of recruiting and
training sales representatives was approximately $46.0 million,
$47.5 million and $46.2 million for the years ended April 30,
1995, 1994 and 1993, respectively.
The products that the Company markets are readily available
from numerous sources. The Company buys raw materials and
finished products from a large number of suppliers, none of whom
would materially impact the sales or earnings of the Company
should they cease to be a source of supply. In some foreign
countries, licensees manufacture specialty chemical products for
marketing by the Company's subsidiaries.
Patents, franchises and concessions have not played an
important role in the Company's business. Trademarks are
extensively used on products, and are useful but not of paramount
importance.
As of the end of its last fiscal year the Company employed
10,569 persons. The Company employs 84 professional or technical
persons on its laboratory staff ranging from Ph.D's to
nongraduate chemical technicians. Although the laboratory staff
spends time on research activities relating to the development of
new products or services and the improvement of existing products
or services, the staff is also engaged in quality control and
customer service activities. Costs cannot be broken down between
these various activities. The approximate amounts spent on
laboratory operations in the years ended April 30, 1995, 1994 and
1993, were $4.6 million, $4.4 million and $3.9 million,
respectively. All laboratory costs, including research and
development, are expensed as incurred.
The Company is subject to various federal, state and local
laws and regulations affecting businesses in general, including
environmental laws and regulations. Complying with all laws and
regulations has not materially affected the Company's competitive
position, earnings or capital expenditures. All laws and
regulations are subject to change and the Company cannot predict
what effect, if any, changes might have on its business.
International sales are conducted through subsidiaries in
Europe, Canada, Latin America, Australia and the Far East.
Intercompany sales and profits have been eliminated from the
following schedule. Corporate expenses are allocated between the
geographic areas. Identifiable assets are those identified with
the operations in each geographic area. Corporate assets
includes portions of cash and cash equivalents and marketable
securities.
Financial information by geographic area, in thousands of
dollars, follows for the years ended April 30:
Latin
United Pacific America Consoli-
States Europe Far East Canada dated
------ ------ -------- ------ --------
1995
Net Sales $408,668 $244,517 $31,837 $50,076 $735,098
Net Income (Loss) 22,294 13,354 313 (379) 35,582
Identifiable
Assets 246,926 123,659 17,792 20,383 408,760
Corporate Assets 120,377
1994
Net Sales $381,949 $222,214 $28,134 $47,690 $679,987
Net Income (Loss) 20,474 12,818 (310) (1,775) 31,207
Identifiable
Assets 218,573 117,316 14,690 21,359 371,938
Corporate Assets 113,285
1993
Net Sales $336,471 $267,280 $26,023 $50,163 $679,937
Net Income 19,030 16,952 722 909 37,613
Identifiable
Assets 194,976 131,986 14,310 20,480 361,752
Corporate Assets 105,624
Sales between geographic areas and export sales from the
United States are immaterial and are therefore not included in
net sales disclosed in the above table.
In the Company's experience, other than currency
fluctuations, the overall risk of international operations has
not been appreciably higher than domestic operations, although
the risk of operations in any one country may be greater than in
the United States. The Company is subject to the risks inherent
in operating in foreign countries, including government
regulation, currency restrictions and other restraints, risk of
expropriation and burdensome taxes.
Item 2. Properties.
-----------
The Company owns its world headquarters and domestic
administrative center complex in Irving, Texas, containing
approximately 319,000 square feet.
The Company owns and operates 20 manufacturing facilities in
7 states and 11 foreign countries, located in Canada, Europe,
Latin America and the Far East, containing approximately
1,234,000 square feet. These facilities also include related
office and warehouse space.
The Company owns and occupies a total of 15 office or
office/warehouse combinations in 4 states and 5 foreign
countries, located in Europe and Latin America, containing
approximately 655,000 square feet.
In addition, the Company leases additional warehouse space,
manufacturing plants, and office space at various locations in
the United States and abroad, none of which is material in
relation to the Company's overall assets.
During the last fiscal year the Company made investments,
net of dispositions, of $11,575,000 ($13,455,000 gross) in
capital property, plant and equipment.
The plants and properties owned and operated by the Company
are maintained in good condition and are believed to be suitable
and adequate for the next several years.
Item 3. Legal Proceedings.
------------------
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business, to which
the Company or any of its subsidiaries is a party or of which any
of their property is subject.
From time to time, the Company is named as a potentially
responsible party in proceedings involving compliance with
environmental laws and regulations.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
No matters were submitted to a vote of security holders
during the fourth quarter of the fiscal year covered by this
report.
Executive Officers of the Registrant
------------------------------------
The following are the executive officers of the Company as
of June 1, 1995:
Name Office Age
- ---- ------ ---
Lester A. Levy Chairman of the Board;
Director 72
Milton P. Levy, Jr. Chairman of the Executive
Committee; Director 69
Irvin L. Levy President; Director 66
Earl Nicholson Senior Vice President 73
James A. Stone Senior Vice President 73
Joe Cleveland Vice President and
Secretary 61
Tom Hetzer Vice President -
Finance 58
Glen Scivally Vice President and
Treasurer 54
Messrs. Lester A. Levy, Milton P. Levy, Jr. and Irvin L. Levy are
brothers. Each of the Company's executive officers has been an
executive officer of the registrant for more than five years as
his principal employment.
PART II
Item 5. Market for the Registrant's Common Equity and
----------------------------------------------
Related Stockholder Matters.
-----------------------------
Market and Dividend Information, appearing on page 32 of
the 1995 Annual Report, is incorporated by reference herein.
Item 6. Selected Financial Data.
------------------------
Selected Financial Data, appearing on page 18 of the 1995
Annual Report, is incorporated by reference herein.
Item 7. Management's Discussion and Analysis of
----------------------------------------
Financial Condition and Results of Operations.
----------------------------------------------
Management's Discussion and Analysis of Financial Condition
and Results of Operations, appearing on pages 18-20 of the 1995
Annual Report, is incorporated by reference herein.
Item 8. Financial Statements and Supplementary Data.
--------------------------------------------
The Financial Statements and Supplementary Data, appearing
on pages 21-32 of the 1995 Annual Report, is incorporated by
reference herein.
Item 9. Changes in and Disagreements with Accountants on
-------------------------------------------------
Accounting and Financial Disclosure.
------------------------------------
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
Information on directors of the registrant, found on pages
2-4 of the Company's Proxy Statement dated June 20, 1995, in
connection with its Annual Meeting to be held July 27, 1995, is
incorporated by reference herein.
Information on executive officers of the registrant, found
on page 9 of this report, is incorporated by reference herein.
Item 11. Executive Compensation.
-----------------------
Information on executive compensation and transactions,
found on pages 4-8 of the Company's Proxy Statement dated June
20, 1995, in connection with its Annual Meeting to be held July
27, 1995, is incorporated by reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and
----------------------------------------------------
Management.
-----------
Information on security ownership of principal stockholders
and management, found on pages 10-11 of the Company's Proxy
Statement dated June 20, 1995, in connection with its Annual
Meeting to be held on July 27, 1995, is incorporated by reference
herein.
Item 13. Certain Relationships and Related Transactions.
------------------------------------------------
Information on certain relationships and related
transactions, found on pages 3 and 8 of the Company's Proxy
Statement dated June 20, 1995, in connection with its Annual
Meeting to be held on July 27, 1995, is incorporated by reference
herein.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
-----------------------------------------------------
on Form 8-K.
------------
(a)(1) and (2): The response to this portion of Item 14 is
submitted as a separate section of this report on pages 15-16.
The information set forth on pages 15-16 of this report is
incorporated by reference. The consolidated financial statements
set forth on page 15 of this report are filed as part of this
Form 10-K by incorporation by reference to pages 21-32 of the
1995 Annual Report.
(a)(3) and (c): Exhibits. For a list of the exhibits filed as a
part of this report, see the Index to Exhibits on page 19 of this
report, which is incorporated by reference.
(b) Reports on Form 8-K: No reports on Form 8-K were filed
during the quarter ended April 30, 1995.
(d) Not applicable.
SIGNATURES
The Issuer
- ----------
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, NCH Corporation has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Irving, and the State
of Texas, on this 9th day of June, 1995.
NCH CORPORATION, Registrant
By /s/ Irvin L. Levy
------------------------
Irvin L. Levy, President
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of NCH Corporation and in the capacities and on
the date indicated.
Signature Capacity at Registrant Date
- --------- ---------------------- ------------
/s/ Lester A. Levy Chairman of the Board; June 9, 1995
- ------------------ Director
Lester A. Levy
/s/ Milton P. Levy, Jr. Chairman of the Executive June 9, 1995
- ----------------------- Committee: Director
Milton P. Levy, Jr.
/s/ Irvin L. Levy President; Director June 9, 1995
- ------------------ (Principal Executive
Irvin L. Levy Officer)
/s/ Tom Hetzer Vice President - Finance June 9, 1995
- -------------- (Principal Accounting
Tom Hetzer Officer)
/s/Robert L. Blumenthal Director June 9, 1995
- -----------------------
Robert L. Blumenthal
/s/ Rawles Fulgham Director June 9, 1995
- ------------------
Rawles Fulgham
/s/ Jerrold M. Trim Director June 9, 1995
- --------------------
Jerrold M. Trim
/s/Thomas B. Walker Jr. Director June 9, 1995
- -----------------------
Thomas B. Walker Jr.
NCH CORPORATION
AND SUBSIDIARY COMPANIES
FORM 10-K
ITEMS 8, 14(a)(1) and (2) and (a)(3) and (c)
INDEX OF FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
The following consolidated financial statements are filed as
part of this Form 10-K by incorporation by reference to pages 21-
32 of the 1995 Annual Report.
Consolidated Financial Statements:
Statements of Income, Years Ended April 30, 1995, 1994 and
1993
Balance Sheets, April 30, 1995 and 1994
Statements of Cash Flows, Years Ended April 30, 1995, 1994
and 1993
Statements of Stockholders' Equity, Years Ended April 30,
1995, 1994 and 1993
Notes to Consolidated Financial Statements
Independent Auditors' Report
Selected Unaudited Quarterly Data, Years Ended April 30, 1995
and 1994
The following consolidated financial statement schedules
of the registrant and its subsidiaries are included in Item
14(a)(2):
Page
----
Consolidated Financial Statement Schedules
Independent Auditors' Report 17
II - Valuation and Qualifying Accounts 18
Schedules other than those listed above are omitted because
they are not required or are not applicable, the information
required is immaterial in relation to the registrant's
consolidated financial statements, or the required information
is shown in the consolidated financial statements or notes
thereto. Columns omitted from schedules filed have been omitted
because the information is not applicable.
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
NCH Corporation:
Under date of June 5, 1995, we reported on the consolidated
balance sheets of NCH Corporation and subsidiaries as of April
30, 1995 and 1994, and the related consolidated statements of
income, stockholders' equity and cash flows for each of the years
in the three-year period ended April 30, 1995, as contained in
the 1995 Annual Report. These consolidated financial statements
and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year ended April 30, 1995. In
connection with our audits of the aforementioned consolidated
financial statements, we also audited the related consolidated
financial statement schedule as listed in the accompanying index.
This consolidated financial statement schedule is the
responsibility of the Company's management. Our responsibility
is to express an opinion on this consolidated financial
statement schedule based on our audits.
In our opinion, such schedule, when considered in relation
to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set
forth therein.
/s/ KPMG Peat Marwick LLP
Dallas, Texas
June 5, 1995
NCH CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
Foreign Deductions
Balance at Charged to Currency Accounts Balance
Beginning Costs and Trans- Written at End of
Description of Period Expenses lation Off Period
- ----------------------- ---------- --------- --------- -------- --------
Reserves Deducted in the
Balance Sheet from Assets
to Which They Apply
Allowances for Doubtful Accounts
Year Ended April 30, 1995 $16,469 $7,100 $ 713 $7,403 $16,879
Year Ended April 30, 1994 $16,045 $8,568 $ (901) $7,243 $16,469
Year Ended April 30, 1993 $16,512 $8,663 $ (954) $8,176 $16,045
INDEX TO EXHIBITS
-------------------
Exhibit Sequentially
Number Exhibit Numbered Page
- ------- ------- --------------
Exhibit 3.1 (1) Restated Certificate of
Incorporation
Exhibit 3.2 (1) Bylaws, as amended
Exhibit 10.1 (1)(3) Form of 1980 Non-Qualified
Stock Option Plan, as amended
Exhibit 10.2 (1)(3) Form of Non-Qualified Stock
Option Agreement
Exhibit 10.5 (1)(3) Forms of Deferred Compensation
Agreements with Messrs.
Irvin, Lester,and Milton Levy
Exhibit 10.7 (2)(3) Fourth and Fifth Amendments to
Deferred Compensation Agreements
with Messrs. Irvin, Lester, and
Milton Levy
Exhibit 10.8 (3)(4) Executive Committee Incentive
Bonus Plan
Exhibit 13 (2) Annual Report for the year ended
April 30, 1995
for information only and not filed
Exhibit 21 (2) Subsidiaries of the Registrant
Exhibit 23 (2) Independent Auditors' Consent
Exhibit 99 (2) Definitive Proxy Statement regarding
the Company's 1995 Annual Meeting of
Stockholders
(1) Incorporated herein by reference to the exhibits with the
same exhibit number and designation in the Registrant's
report on Form 10-K for the fiscal year ended April 30,
1987, filed with the Securities and Exchange Commission.
(2) Filed herewith.
(3) Management contract or compensatory plan or arrangement
required to be filed as an exhibit to this report pursuant
to Item 14(c) of Form 10-K.
(4) Incorporated herein by reference to the exhibit with the
same exhibit number and designation in the Registrant's
report on Form 10-K for the fiscal year ended April 30,
1994, filed with the Securities and Exchange Commission.
NCH CORPORATION AND SUBSIDIARIES
EXHIBIT 10.7
FOURTH AND FIFTH AMENDMENTS TO DEFERRED COMPENSATION AGREEMENTS
WITH MESSRS. IRVIN, LESTER, AND MILTON LEVY
FOURTH AMENDMENT TO
DEFERRED COMPENSATION AGREEMENT
STATE OF TEXAS
COUNTY OF DALLAS
THIS FOURTH AMENDMENT to that certain deferred compensation
agreement between the parties hereto dated September 11, 1985 is
made by and between NCH CORPORATION, a Delaware corporation (the
"Corporation"), and LESTER A. LEVY, an individual employee of
the Corporation ("Levy").
R E C I T A L S:
-------------------
The following facts exist:
A. This Amendment is an amendment to that certain
deferred compensation agreement by and between Levy and the
Corporation dated September 11, 1985 (the "Agreement").
B. Levy has requested that the disposition of any
remaining payments under the Agreement following his death be
changed as hereinafter set forth.
C. The Corporation has consented to amend the Agreement
in the manner hereinafter set forth to comply with Levy's
request.
NOW, THEREFORE, for and in consideration of the recitals
above, and in consideration of the covenants and agreements of
the parties hereto, each to the other, and other good and
valuable consideration the sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Subparagraphs a, b, c, and d of paragraph 2 of the
Agreement are hereby deleted, the following subparagraphs a, b,
c, and d are substituted in their stead, and a new subparagraph
f is added:
a. If Levy so retires, but dies before receiving
one hundred twenty (120) Monthly Payments, the
Corporation shall continue to make such Monthly
Payments as follows: one-fourth (1/4) of each Monthly
Payment shall be paid to Levy's wife, if she survives
him, and three-fourths (3/4) of each Monthly Payment
shall be paid to the issue of Levy, if any, such issue
to take per stirpes, until a total of one hundred
twenty (120) Monthly Payments have been made to Levy,
his wife, if she survives him, and his issue, if any.
b. If Levy so retires, but dies before receiving
one hundred twenty (120) Monthly Payments, and if none
of his issue survive him, or if one or more of his
issue survive him and all of his issue die before one
hundred twenty (120) Monthly Payments have been made to
Levy, his issue, if any, and his wife, if she survives
him, in the portions described in subparagraph a above,
then the Corporation shall continue to make the full
Monthly Payments to Levy's wife, if she survives him,
until a total of one hundred twenty (120) Monthly
Payments have been made to Levy, his issue, if any, and
his wife. If Levy so retires, but dies before
receiving one hundred twenty (120) Monthly Payments,
and if his wife does not survive him, or if his wife
survives him but dies before one hundred twenty (120)
Monthly Payments have been made to Levy, his wife, and
his issue, if any, in the portions described in
subparagraph a above, then the Corporation shall
continue to make the full Monthly Payments to Levy's
issue, if any, such issue to take per stirpes, until a
total of one hundred twenty (120) Monthly Payments have
been made to Levy, his wife, if she survives him, and
his issue. The Corporation shall have no liability to
continue any payments hereunder beyond the first day of
the month in which the last survivor of Levy, his
issue, and his wife shall die.
c. If Levy dies before his retirement date while
in the employ of the Corporation, the Corporation shall
pay to Levy's wife, if she survives him, and to such of
Levy's issue, such issue to take per stirpes, the
portions of the Monthly Payments specified in
subparagraph a above commencing on the first day of the
month following the month in which Levy dies and ending
when one hundred twenty (120) Monthly Payments have
been made to Levy's wife, if she survives him, and his
issue. If none of Levy's issue survive him, or if one
or more of his issue survive him and all of his issue
die before one hundred twenty (120) Monthly Payments
have been made to Levy's wife, if she survives him, and
his issue, in the portions described in subparagraph a
above, then the Corporation shall make or continue to
make the full Monthly Payments to Levy's wife, if she
survives him, until a total of one hundred twenty (120)
Monthly Payments have been made to Levy's issue, if
any, and his wife. If Levy's wife fails to survive
Levy, or if she survives him but dies before one
hundred twenty (120) Monthly Payments have been made to
Levy, his wife, and his issue, if any, in the portions
described in subparagraph a above, then the Corporation
shall make or continue to make the full Monthly
Payments to Levy's issue, such issue to take per
stirpes, until a total of one hundred twenty (120)
Monthly Payments have been made to Levy's wife, if she
survives him, and his issue. The Corporation shall
have no liability to continue any payments hereunder beyond
the first day of the month in which the last survivor of
Levy, his issue, and his wife shall die. For purposes of
determining the amount of the Monthly Payments under this
subparagraph c, the Annual Amount shall be calculated using
Levy's average annual compensation for the last three fiscal
years of the Corporation preceding his death.
d. If Levy becomes disabled before his
retirement date, the Corporation shall pay Monthly
Payments to Levy, commencing the first day of the month
following the month in which Levy becomes unable to
continue active employment and continuing during the
lifetime of Levy. In the event of Levy's death after
becoming disabled but prior to the time when Levy shall
have received one hundred twenty (120) Monthly
Payments, the Corporation shall continue to make such
Monthly Payments to Levy's wife, if she survives him,
and to such of Levy's issue, such issue to take per
stirpes, in the portions described in subparagraph a
above, until a total of one hundred twenty (120)
Monthly Payments have been made to Levy, his wife, and
his issue. If all of Levy's issue die before one
hundred twenty (120) Monthly Payments are made to Levy,
his wife, if she survives him, and his issue, or if
none of Levy's issue survives him, then the Corporation
shall continue to pay the full amount of such Monthly
Payments to Levy's wife, if she survives him, until a
total of one hundred twenty (120) Monthly Payments have
been made to Levy, his issue, and his wife. If Levy's
wife survives him but dies before one hundred twenty
(120) Monthly Payments are made to Levy, his wife, and
his issue, or if Levy's wife does not survive him, the
Corporation shall continue such Monthly Payments to
Levy's issue, if any, such issue to take per stirpes,
until a total of one hundred twenty (120) Monthly
Payments have been made to Levy, his wife, if she
survives him, and his issue. The Corporation shall
have no liability to continue any payments hereunder
beyond the first day of the month in which the last
survivor of Levy, his issue, and his wife shall die.
For purposes of determining the amount of Monthly
Payments under this subparagraph d, the Annual Amount
shall be calculated using Levy's average annual
compensation for the last three fiscal years of the
Corporation preceding his termination of active
employment due to disability.
f. For purposes of subparagraphs a, b, c and d
of this Paragraph 2, any payments required to be made
to Levy's issue, such issue taking per stirpes, shall
be made to such of Levy's issue as are surviving at the
time such payment is required to be made, such issue
taking per stirpes. Any division of a payment required
to be made under such subparagraphs to Levy's issue,
such issue taking per stirpes, shall be made with
reference to Levy's children, regardless of whether any of
them are living. Thus, though Levy's children were all
deceased at the time payment is required to be made, the
payment shall be divided into as many equal shares as there
were deceased children at the time of the payment, and each
such share will be divided similarly among the descendants
of a deceased child. For purposes of such subparagraphs,
the reference to Levy's issue means all legitimate
descendants of Levy, including descendants both by blood and
by adoption, provided such adoption is by court proceedings,
the finality of which is not questioned by the adopting
person.
IN WITNESS WHEREOF, the Corporation and Levy have executed
this Fourth Amendment this 27th day of July, 1989.
NCH CORPORATION
/s/ Tom Hetzer
By: ----------------------
Tom Hetzer, V.P. and
Controller
/s/ Lester A. Levy
----------------------
Lester A. Levy
FOURTH AMENDMENT TO
DEFERRED COMPENSATION AGREEMENT
STATE OF TEXAS
COUNTY OF DALLAS
THIS FOURTH AMENDMENT to that certain agreement between the
parties heretofore dated September 11, 1985 (the "Agreement") is
made by and between NCH Corporation, a Delaware corporation (the
"Corporation") and MILTON P. LEVY, JR., an individual employee
of the Corporation ("Levy"), executed as of this _______ day of
____________________, 1995.
R E C I T A L S:
-----------------
The following facts exist:
A. The parties hereto have
previously entered into the Agreement which has been amended
three times, the latest amendment being as of February 23, 1993.
B. The parties desire to amend the
Agreement to reflect a different "Annual Amount" in the event of
retirement, death or disability.
C. Except as amended herein, the
terms of the Agreement shall remain in full force and effect.
_________________________
NOW, THEREFORE, for and in consideration
of the covenants and agreements of the parties hereto and other
good and valuable consideration the sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
1. The "Annual Amount," as
described in the first full paragraph of Paragraph 2 (not
including subparagraphs (a) - (e)) is hereby changed from
$385,000 to $535,000. Except for the change of the number of
the Annual Amount from $385,000 to $535,000, all other
provisions of Paragraph 2 and of the Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the parties hereto
have executed this Fourth Amendment as of the ______ day of
March, 1995.
NCH CORPORATION
By: -------------------------
Milton P. Levy, Jr.
ATTEST:
- -------------------------------
Secretary
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on
_____________________, 1995, by ______________________________,
__________________________________ of NCH Corporation, a Delaware
corporation, on behalf of said corporation.
--------------------------------
Notary Public, State of Texas
My Commission Expires:
---------
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on
_____________________, 1995, by Milton P. Levy, Jr.
--------------------------------
Notary Public, State of Texas
My Commission Expires:
---------
FIFTH AMENDMENT TO
DEFERRED COMPENSATION AGREEMENT
STATE OF TEXAS
COUNTY OF DALLAS
THIS FIFTH AMENDMENT to that certain agreement between the
parties heretofore dated September 11, 1985 (the "Agreement") is
made by and between NCH Corporation, a Delaware corporation (the
"Corporation") and LESTER A. LEVY, an individual employee of the
Corporation ("Levy"), executed as of this ____ day of February,
1995.
R E C I T A L S:
----------------
The following facts exist:
A. The parties on February 23, 1993 executed an amendment
to the Agreement, a copy of which is attached hereto as Exhibit
A. The amendment attached hereto was inadvertently denominated
a "Third" Amendment when it should have been denominated a
"Fifth" Amendment, and the date of execution February 23, 1993
should have been reflected on the document.
B. The parties desire to correct the inadvertent numbering
of the amendment and make the amendment read as of February 23,
1993.
C. Except as amended herein, the terms of the Agreement
shall remain in full force and effect.
_________________________
NOW, THEREFORE, for and in consideration of the covenants
and agreements of the parties hereto and other good and valuable
consideration the sufficiency of which is hereby acknowledged,
the parties hereby agree as follows:
1. The "Third Amendment," a copy of which is attached
hereto as Exhibit A, is changed to the "Fifth Amendment" to
deferred compensation agreement and is dated as of February 23,
1993.
IN WITNESS WHEREOF, the parties hereto have executed this
amendment as of the ______ day of February, 1995.
NCH CORPORATION
By: /s/ Lester A. Levy
------------------------
Lester A. Levy
ATTEST:
- ---------------
Secretary
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on
_____________________, 1995, by ______________________________,
__________________________________ of NCH Corporation, a Delaware
corporation, on behalf of said corporation.
--------------------------------
Notary Public, State of Texas
My Commission Expires:
---------
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on
_____________________, 1995, by Lester A. Levy.
-------------------------------
Notary Public, State of Texas
My Commission Expires:
---------
NCH CORPORATION AND SUBSIDIARIES
EXHIBIT 13
ANNUAL REPORT FOR THE YEAR ENDED APRIL 30, 1995
Selected Financial Data
NCH Corporation and Subsidiaries
(In Thousands Except Per Share Data)
Years Ended April 30,
1995 1994 1993 1992 1991
--------- -------- -------- -------- --------
Net Sales $735,098 $679,987 $679,937 $670,805 $677,687
Net Income $ 35,582 $ 31,207 $ 37,613 $ 39,435 $ 43,113
Earnings Per
Share $4.29 $3.77 $4.53 $4.77 $5.19
Current
Ratio 3.5 to 1 3.6 to 1 3.7 to 1 3.2 to 1 2.9 to 1
Total Assets $529,137 $485,223 $467,376 $470,827 $438,244
Long-Term
Debt $ 4,761 $ 6,790 $ 8,795 $ 10,472 $ 8,189
Retirement
and Deferred
Compensation
Plans $ 92,157 $ 83,986 $ 80,026 $ 78,628 $ 71,928
Cash Divi-
dends Declared
Per Share $2.15 $2.00 $2.00 $1.00 $.97
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ----------------------------------------------------------------
RESULTS OF OPERATIONS
- ----------------------
Liquidity and Capital Resources
- --------------------------------
In the fiscal year ended April 30, 1995, working capital
increased to $288.0 million from $262.4 million at April 30,
1994. The current ratio was 3.5 to 1 at April 30, 1995,
compared to 3.6 to 1 at April 30, 1994. The total of cash, cash
equivalents and marketable securities increased by $3.8 million
to $128.3 million at April 30, 1995. Net cash flow from
operations totaled $38.0 million. Principal uses of cash
consisted of payment of dividends of $17.4 million, net capital
expenditures of $11.6 million and a net repayment of debt
amounting to $6.8 million. Management expects that operating cash
flows will continue to generate sufficient funds to finance
operating needs, capital expenditures and the payment of
dividends. Long-term and short-term indebtedness has usually
been limited to the borrowing of local country currencies by the
Company's international subsidiaries to finance working capital
requirements, although the Company has incurred debt domestically
at various times when financially advantageous.
The Company's international subsidiaries operate on a
fiscal year ending on the last day of February. At February 28,
1995, the value of the U.S. dollar had decreased relative to most
of the currencies in which the Company's international
subsidiaries operate. As a result, the reported values of both
assets and liabilities of the Company's international
subsidiaries increased as a result of the change in the Company's
composite spot rate at February 28, 1995, compared to February
28, 1994. This is reflected by the foreign currency translation
component of stockholders' equity, which changed from a $22.1
million reduction of equity at April 30, 1994, to a $18.4 million
reduction of equity at April 30, 1995.
Accounts receivable increased by $11.2 million and
inventories increased by $22.2 million in the year ended April
30, 1995, as measured in U.S. dollars and reported on the
Consolidated Balance Sheets. As stated above, the result of the
exchange rate deviations from the end of the prior year to the
end of fiscal 1995 was to increase the reported U.S. dollar
values of both assets and liabilities. The change in accounts
receivable and inventories presented in the Consolidated
Statements of Cash Flows is exclusive of the effect of exchange
rates on the reported asset values and shows that accounts
receivable increased by $6.4 million compared to the end of the
prior year, while inventories increased by $20.5 million in the
same period. The increase in accounts receivable was primarily
the result of higher sales in the international operations during
the fourth quarter of the current year compared to the previous
year. Inventories increased in the current year, primarily as a
result of increased sales levels and expansion of the domestic
product line.
Accounts payable, accrued expenses and income taxes payable
were similarly affected by currency translation. These
liabilities increased by $15.4 million when measured exclusive
of the effect of exchange rate changes and increased by $18.3
million as reported on the Consolidated Balance Sheets. Accounts
payable increased primarily in the Company's domestic operations
as a result of increased inventory levels in the current year as
compared to the prior year. Income taxes payable increased in
both the domestic and international operations due to the timing
of payments in the current year as compared to the prior year in
the domestic operations and increased income during the current
year in the international operations.
Net capital expenditures for property, plant and equipment
were $11.6 million for the year ended April 30, 1995. These
consisted of normal expenditures for data processing and
operating equipment. As with the other assets and liabilities,
the effect of currency translation on the reported U.S. dollar
values of property, plant and equipment was to increase those
reported values. Capital expenditures for the upcoming year are
anticipated to be approximately the same as prior year
expenditures.
Deferred tax benefits represent future income tax
deductions, and therefore, impact future cash flows by reducing
federal income taxes to be paid in future years in which the
temporary differences are expected to be recovered or settled.
Management believes the Company will have sufficient future
taxable income to make it more likely than not that the net
deferred tax asset will be realized.
Total bank indebtedness, comprised of long-term debt,
current maturities of long-term debt and notes payable, decreased
exclusive of the effect of exchange rate changes by $6.8 million,
while the Consolidated Balance Sheets reflected a decrease of
$6.0 million. During the year, short-term borrowings, primarily
in Europe, were repaid, and annual debt payments on domestic
borrowings were made. Of the $7.0 million in long-term debt and
current maturities, $6.9 million is currently domestic borrowing.
Domestic borrowings include an industrial revenue bond, for the
purpose of financing a domestic facility, and a French Franc
denominated loan made in the U.S., for the purpose of hedging the
Company's net asset position in France. The remaining long-term
debt and current maturities and all $5.4 million of notes payable
consist of international subsidiary borrowings in local country
currencies used primarily to finance working capital
requirements.
The retirement and deferred compensation plan liability on
the Consolidated Balance Sheets represents compensation deferred
by employees and accrued interest on such deferrals.
Compensation is expensed as earned with a liability recorded for
payment in future years.
During fiscal year 1995, cash dividends paid amounted to
$17.4 million ($2.10 per share) compared to $16.5 million in 1994
($2.00 per share). The directors of the Company increased the
regular quarterly dividend from $.25 to $.30 per share of Common
Stock on September 14, 1994, and declared an extra cash dividend
of $1.00 per share, which was paid December 15, 1994. On April
13, 1995, the directors of the Company declared a regular
quarterly cash dividend of $.30 per share of Common Stock to be
paid June 15, 1995, to shareholders of record June 1, 1995. As
of April 30, 1995, dividends amounting to $2.5 million had been
declared, but not paid.
Operating Results
- ------------------
Net sales of $735.1 million in fiscal 1995 were 8% higher
than net sales of $680.0 million reported in fiscal 1994. Net
sales in fiscal year 1994 were even with the $679.9 million
reported in fiscal year 1993. Domestic sales increased 14% from
1993 to 1994, and 7% from 1994 to 1995. Sales from total
international operations increased 7% from 1994 to 1995, when
measured on a local currency basis. Due to the generally
decreased value of the U.S. dollar in fiscal 1995 as compared to
fiscal 1994, international sales reflected an increase of 10% as
reported in U.S. dollars. Total international sales in 1994
decreased 3% from 1993 to 1994 when measured on a local currency
basis and decreased 13% as reported in U.S. dollars. Sales
improved in Europe in the current year, increasing 6% on a local
currency basis from fiscal 1994 to 1995, as compared to the 4%
decrease in sales from fiscal 1993 to 1994. Sales in Latin
America in fiscal 1995 were negatively affected by the economies
in Venezuela and Mexico, as well as the increasing value of the
U.S. dollar in relationship to the currencies of these two
countries. Sales in the Pacific and Far East increased 10% on a
local currency basis from 1994 to 1995, compared to an increase
of 13% as reported in U.S. dollars.
Operating income increased to $56.9 million in fiscal 1995
from $50.4 million in 1994. In fiscal 1993, operating income was
$60.3 million. Domestically, operating income decreased slightly
as a percent of sales from fiscal 1994 to 1995, due to higher
cost of sales and marketing expenses as a percent of sales.
Internationally, operating margins improved due to cost reduction
efforts and a turnaround in the Brazilian operation from an
operating loss in fiscal 1994 to an operating profit in 1995.
Operating income decreased from fiscal 1993 to 1994, due to
relatively flat sales and higher operating expenses during 1994.
In fiscal year 1995, the Company reported net interest
income of $2.5 million compared to net interest income of $2.0
million in 1994. The increase in net interest income occurred in
domestic operations, due primarily to an increase in marketable
securities during the current year and higher interest rates on
new investments. The $2.0 million in net interest income in
fiscal 1994 compared to net interest income of $5.0 million in
1993. Gross interest income decreased from 1993 to 1994, due to
lower interest rates on new investments. Gross interest expense
was relatively even between 1993 and 1994.
Gain on revaluation of foreign currencies was negligible in
fiscal 1995 compared to a loss of $.3 million in 1994. In fiscal
1994, loss on currency revaluation decreased to $.3 million from
$1.8 million in fiscal 1993, due to changes in the average net
financial position of the Company's Brazilian subsidiaries
during 1994. The Company enters into foreign exchange contracts
and foreign currency option contracts from time to time to
manage its exposure to foreign currency rate changes.
Net income in fiscal year 1995 increased 14% to $35.6
million from $31.2 million in 1994. Net income in fiscal 1994
was 17% lower than the $37.6 million reported in 1993. In
addition to the effects of operating income, net interest and
loss on currency revaluation on pre-tax income, net income is
affected by the overall corporate tax rate for the year, which
was 40.2% of pre-tax income in fiscal 1995 compared to 40.1% in
1994 and 40.8% in 1993. A reconciliation of the effective tax
rates to U.S. statutory rates is contained in the Notes to
Consolidated Financial Statements. Earnings per share increased
14% to $4.29 per share in 1995 due to the increase in net income
during the current year. Earnings per share in 1994 were $3.77,
a 17% decrease from the $4.53 reported in 1993, due to lower net
income in 1994.
On a geographic area basis, net income for the United
States increased 9% to $22.3 million in fiscal year 1995,
primarily as a result of increased sales, higher interest income
and a lower effective income tax rate in the current year
compared to the prior year. Net income of $20.5 million in 1994
was higher than the $19.0 million reported in 1993, primarily due
to increased sales and a lower effective income tax rate in 1994
compared to 1993.
Net income in Europe increased 4% from $12.8 million in
fiscal 1994 to $13.4 million in 1995. The increase in net income
from 1994 to 1995 was primarily attributable to the favorable
effects of translation rates and increased sales in 1995 compared
to 1994. Net income in fiscal 1993 was $17.0 million. The
decrease in net income from 1993 to 1994 was primarily
attributable to a combination of lower sales volume, the adverse
effects of translation rates and reduced net interest income due
to a significant decrease in average funds invested.
Net income in the Pacific and Far East operations was $.3
million in 1995 compared to a net loss of $.3 million in 1994,
primarily as a result of the 13% increase in sales. A net loss
of $.3 million was reported in fiscal 1994 compared to net income
of $.7 million reported in 1993. The decrease in net income from
1993 to 1994 was primarily attributable to higher operating
expenses in 1994 compared to 1993.
Net loss in Latin America and Canada decreased from $1.8
million in 1994 to $.4 million in 1995, primarily as a result of
a turnaround in the Brazilian operation from an operating loss in
fiscal 1994 to an operating profit in 1995. A net loss of $1.8
million was reported in fiscal 1994 compared to net income of $.9
million reported in 1993, due to lower sales in 1994 compared to
1993.
Recent Accounting Pronouncements
- ---------------------------------
The Company implemented Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment
Benefits," as of May 1, 1994. Implementation of this statement
was not material to the Company's financial position or results
of operations. This statement requires recognition of a
liability for certain benefits provided to former or inactive
employees after employment but before retirement.
The Company also implemented Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," as of May 1, 1994.
Implementation of this statement was not material to the
Company's financial position or results of operations. Under the
provisions of this statement, the Company classifies its
marketable securities as available-for-sale securities reported
at estimated fair value with unrealized gains and losses (net of
deferred income taxes) recognized in the Consolidated Balance
Sheets as a separate component of stockholders' equity.
Additional disclosures relating to implementation of this
statement are contained in the Notes to Consolidated Financial
Statements.
In March 1995, The Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of." This statement requires that
long-lived assets and certain identifiable intangibles to be held
and used be reviewed for impairment, and an impairment loss be
recognized under certain conditions. This statement also
requires that long-lived assets and certain identifiable
intangibles to be disposed of be reported at the lower of
carrying amount or fair value less cost to sell. This statement
must be adopted no later than the first quarter of fiscal 1997.
Implementation of this statement is not expected to have a
material effect on the Company's financial position or results of
operations.
Consolidated Statements of Income
NCH Corporation and Subsidiaries
(In Thousands Except Per Share Data)
Years Ended April 30,
1995 1994 1993
---------- --------- ---------
Net Sales $735,098 $679,987 $679,937
---------- --------- ---------
Operating Expenses
Cost of sales, including warehousing
and commissions 388,620 358,317 342,586
Marketing and administrative expenses 289,534 271,286 277,034
---------- --------- ---------
678,154 629,603 619,620
---------- --------- ---------
Operating Income 56,944 50,384 60,317
Other (Expenses) Income
Revaluation of foreign currencies 41 (340) (1,792)
Net interest 2,506 2,046 5,014
---------- --------- ---------
Income before Income Taxes 59,491 52,090 63,539
Provision for Income Taxes 23,909 20,883 25,926
---------- --------- ---------
Net Income $ 35,582 $ 31,207 $ 37,613
========== ========= =========
Earnings Per Share $4.29 $3.77 $4.53
======= ======= =======
The accompanying notes are an integral part of these financial statements.
Consolidated Balance Sheets
NCH Corporation and Subsidiaries
(In Thousands Except Share and Per Share Data)
As of April 30,
1995 1994
---------- ---------
Assets
Current Assets
Cash and cash equivalents $ 16,264 $ 18,754
Marketable securities 112,074 105,784
Accounts receivable (less allowance for
doubtful accounts of $16,879 and $16,469) 147,333 136,178
Inventories 105,864 83,634
Prepaid expenses 6,669 6,431
Deferred income taxes 15,853 12,990
--------- --------
Total Current Assets 404,057 363,771
---------- ---------
Property, Plant and Equipment 187,030 177,999
Accumulated depreciation 101,812 93,892
---------- ---------
85,218 84,107
---------- ---------
Deferred Income Taxes 23,940 22,332
---------- ---------
Other 15,922 15,013
---------- ---------
Total $529,137 $485,223
========== =========
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable to banks $ 5,405 $ 9,745
Current maturities of long-term debt 2,203 1,875
Accounts payable 54,330 46,775
Accrued expenses 27,464 22,784
Income taxes payable 24,148 18,117
Dividends payable 2,493 2,069
---------- ---------
Total Current Liabilities 116,043 101,365
---------- ---------
Long-Term Debt, less current maturities 4,761 6,790
---------- ---------
Retirement and Deferred Compensation Plans 92,157 83,986
---------- ---------
Stockholders' Equity
Common stock, par value $1 per share, authorized
20,000,000 shares. Issued 11,769,304 shares 11,769 11,769
Additional paid-in capital 7,348 6,369
Retained earnings 410,932 393,193
Foreign currency translation adjustment (18,412) (22,100)
Unrealized losses on investments (255) -
--------- --------
411,382 389,231
Less treasury stock
(3,458,202 and 3,492,058 shares) 95,206 96,149
---------- ---------
316,176 293,082
---------- ---------
Total $529,137 $485,223
========== =========
The accompanying notes are an integral part of these financial
statements.
Consolidated Statements of Cash Flows
NCH Corporation and Subsidiaries
(In Thousands)
Years Ended April 30,
1995 1994 1993
--------- -------- --------
Cash Flows from Operating Activities
Net income $35,582 $31,207 $37,613
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,854 13,169 13,633
Provision for losses on accounts receivable 7,100 8,568 8,663
Deferred income taxes (4,229) (4,576) (836)
Retirement and deferred compensation plans 7,536 4,066 3,405
Other noncash items (2,120) 482 (282)
Change in assets and liabilities, excluding net assets
acquired in the purchase of businesses:
Accounts receivable (13,535) (14,574) (6,787)
Inventories (20,481) (11,584) 1,678
Prepaid expenses (34) (189) 415
Accounts payable, accrued expenses
and income taxes payable 15,395 3,339 (5,488)
Other noncurrent assets (1,079) (1,044) (952)
--------- -------- --------
Net cash provided by operating activities 37,989 28,864 51,062
--------- -------- --------
Cash Flows from Investing Activities
Sales of property, plant and equipment 1,880 1,095 1,090
Purchases of property, plant and equipment (13,455) (14,219) (17,986)
Redemptions of marketable securities 51,660 39,874 43,818
Purchases of marketable securities (58,468) (50,781) (51,670)
Acquisitions of businesses - (3,654) (1,129)
Other (1,547) (1,655) (1,331)
--------- -------- --------
Net cash used in investing activities (19,930) (29,340) (27,208)
--------- -------- --------
Cash Flows from Financing Activities
Proceeds from notes payable 106 7,886 4,202
Payments of notes payable (5,048) (1,184) (6,416)
Additional long-term debt 35 - 7
Payments of long-term debt (1,912) (1,963) (4,630)
Borrowing of cash surrender values 1,708 7,758 -
Payments of dividends (17,419) (16,544) (16,597)
Purchases of treasury stock - (3,422) -
Proceeds from exercise of stock options 1,649 430 2,466
--------- -------- --------
Net cash used in financing activities (20,881) (7,039) (20,968)
--------- -------- --------
Effect of Exchange Rate Changes on Cash and Cash Equivalents 332 (2,351) (5,973)
--------- -------- --------
Net Decrease in Cash and Cash Equivalents (2,490) (9,866) (3,087)
Cash and Cash Equivalents at Beginning of Year 18,754 28,620 31,707
--------- -------- --------
Cash and Cash Equivalents at End of Year $16,264 $18,754 $28,620
========= ======== ========
The accompanying notes are an integral part of these financial statements.
Consolidated Statements of Stockholders' Equity
NCH Corporation and Subsidiaries
(In Thousands Except Per Share Data)
Foreign
Common Treasury Common TreasuryAdditional Currency Unrealized
Stock Stock Stock Stock Paid-In Retained Translation Losses On
Shares Shares Amount Amount Capital Earnings Adjustment Investments Total
------- -------- ------- ------ --------- ----------- -----------------
Balance, April 30, 1992 11,769 (3,492) $11,769 $(94,253) $4,772 $357,514 $ (6,147) $273,655
Net income 37,613 37,613
Cash dividends on common
stock, $1.75 per share (14,528) (14,528)
Dividend declared, but not
paid, $.25 per share (2,081) (2,081)
Treasury stock sold under
stock option plans 44 1,189 1,277 2,466
Treasury stock issued under
stock participation plan
and stock bonuses 1 35 16 51
Foreign currency translation
adjustment (10,875) (10,875)
------ ----------------------- ------ --------- -------- ------- ---------
Balance, April 30, 1993 11,769 (3,447) 11,769 (93,029) 6,065 378,518 (17,022) 286,301
Net income 31,207 31,207
Cash dividends on common
stock, $1.75 per share (14,463) (14,463)
Dividend declared, but not
paid, $.25 per share (2,069) (2,069)
Treasury stock acquired (56) (3,422) (3,422)
Treasury stock sold under
stock option plans 8 228 202 430
Treasury stock issued under
stock participation plan
and stock bonuses 3 74 102 176
Foreign currency translation
adjustment (5,078) (5,078)
------ ------ ------ ------- ----- -------- -------- ----- --------
Balance, April 30, 1994 11,769 (3,492) 11,769 (96,149) 6,369 393,193 (22,100) 293,082
Net income 35,582 35,582
Cash dividends on common
stock, $1.85 per share (15,350) (15,350)
Dividend declared, but not
paid, $.30 per share (2,493) (2,493)
Treasury stock sold under
stock option plans 31 877 772 1,649
Treasury stock issued under
stock participation plan
and stock bonuses 3 66 207 273
Foreign currency translation
adjustment 3,688 3,688
Unrealized losses on
investments $(255) (255)
------ ----------------------- ------ -------- --------- ------ ---------
Balance, April 30, 1995 11,769 (3,458) $11,769 $(95,206) $7,348 $410,932 $(18,412) $(255) $316,176
====== ======================= ====== ======== ========= ====== =========
The accompanying notes are an integral part of these financial statements.
Notes to Consolidated Financial Statements
NCH Corporation and Subsidiaries
1. Summary of Significant Accounting Policies
Principles of consolidation - The consolidated financial
statements include the accounts of NCH Corporation and its
majority owned subsidiaries (the "Company"). Significant
intercompany transactions and balances have been eliminated. A
February fiscal year-end is used for most international
subsidiaries in order to meet reporting requirements.
Foreign currency translation - With the exception of
hyper-inflationary countries, all assets and liabilities of
operations outside the United States are translated into U.S.
dollars at period-end exchange rates, and income and expenses
are translated at average rates for the year. Gains and losses
resulting from translation, as well as gains and losses from
foreign exchange contracts hedging the net assets of foreign
subsidiaries, are included in the foreign currency translation
adjustment component of stockholders' equity. Gains and losses
from foreign exchange contracts hedging specific intercompany
foreign currency commitments are deferred and accounted for as
part of the hedged transaction. The hyper-inflationary
countries have been translated into U.S. dollar equivalents as
follows: current assets (except for inventories), current
liabilities, long-term debt and other liabilities at period-end
exchange rates; inventories, property, other assets, capital
stock and retained earnings at historical rates; income and
expense items at average rates for the year, except for cost of
sales and depreciation expense, which are translated at
historical rates. Gains and losses resulting from translation
are recognized in
the income statement as expense or income in the current period.
Exchange adjustments resulting from foreign currency
transactions are recognized as expense or income in the current
period for all countries.
Cash and cash equivalents and marketable securities - Cash
and cash equivalents include cash on hand, cash in banks and all
highly liquid investments with a maturity of three months or less
at the time of purchase. Cash equivalents are stated at
amortized cost plus accrued interest. Marketable securities are
stated at estimated fair value.
Inventories - Raw materials, sales supplies and purchased
finished goods are stated at a moving average cost, which
approximates cost on a first-in, first-out basis and is not in
excess of market value. Manufactured finished goods are stated
at an amount approximating cost of manufacturing, which is not in
excess of net realizable value.
Property, plant and equipment - These assets are recorded
at cost. When these assets are disposed of, the cost and
related accumulated depreciation are removed from the accounts,
and any resulting gain or loss is included in income during that
year.
The cost of maintenance and repairs is charged to expense as
incurred, whereas expenditures that substantially increase the
useful lives of plant or equipment are capitalized.
Depreciation - Depreciation on buildings and equipment is
provided for financial statement purposes using the straight-
line method over the estimated useful lives of the related
assets. Depreciation on certain buildings and equipment is
provided for income tax purposes using accelerated methods.
Intangible assets - Intangible assets are classified as
other assets in the consolidated financial statements and include
patents, computer software and trademarks. Intangible assets are
amortized using the straight-line method over their estimated
useful lives, but not in excess of 40 years. The unamortized
cost of impaired intangible assets is charged to expense as
incurred.
Research and development - Research and development costs,
which are included in the costs of laboratory operations, are
charged to expense as incurred. Research and development costs,
however, cannot be separately identified from the total
laboratory costs. Total laboratory costs amounted to
approximately $4.6 million in 1995, $4.4 million in 1994 and $3.9
million in 1993.
Income taxes - Deferred income taxes and deferred income
tax benefits result from temporary differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. State income tax has
been included in the provision for income taxes and income taxes
payable.
Treasury stock - Treasury stock is stated at cost.
Retirement plans - The Company's policy is to fund its
qualified retirement type plans as accrued. The cost of these
retirement benefits for past service has been fully funded.
Non-qualified retirement plans are not funded, but provision for
the estimated liabilities arising from these plans has been made
in the consolidated financial statements.
Postretirement benefits other than pensions - The
Company charges to expense the estimated future costs of retiree
health care benefits during the years that employees render
service. The postretirement health care benefit plan is not
funded.
Stock options - The Company issues shares from its treasury
as options are exercised. When an option is exercised, treasury
stock is credited with the average cost of the treasury shares
issued, and additional paid-in capital is charged or credited for
the difference between the option price and the average cost of
the treasury shares. No charge to income is made in connection
with the stock option plan.
Earnings per share - Earnings per share is computed by
dividing net income by the weighted average number of shares
outstanding during each year. The weighted average number of
shares outstanding for the years ended April 30, 1995, 1994 and
1993, was 8,294,000, 8,278,000 and 8,298,000 shares,
respectively. Any dilution of earnings per share that might
result from the exercise of presently outstanding stock options
is not material.
Reclassifications - Certain prior year amounts have been
reclassified to conform to current year presentation.
2. Consolidated International Subsidiaries
At April 30, 1995 and 1994, the parent Company's investment
in consolidated international subsidiaries amounted to
$40,402,000 and $40,782,000. The current year consolidated
financial statements include international subsidiaries' assets
of $161,834,000, liabilities of $69,115,000, and net income of
$13,287,000, after allocation of corporate expenses and excluding
intercompany sales and profits. For the prior year these
subsidiaries had assets of $153,365,000, liabilities of
$67,221,000, and net income of $10,733,000.
3. Income Taxes
The following are the components of the provision for income
taxes (in thousands of dollars):
1995 1994 1993
--------- -------- --------
U.S. Federal
- --------------
Current $ 9,810 $ 9,896 $ 7,910
Deferred (4,411) (4,469) (721)
Foreign
- ---------
Current 16,715 14,214 17,635
Deferred 182 (107) (115)
State 1,613 1,349 1,217
- ------- --------- -------- --------
$23,909 $20,883 $25,926
========= ======== ========
Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled.
The components of deferred tax assets and liabilities as of
April 30 are as follows (in thousands of dollars):
1995 1994
--------- --------
Deferred tax assets:
Allowance for doubtful accounts $ 3,948 $ 4,098
Inventory related 3,710 2,820
Insurance related 1,948 1,893
Accrued expenses 5,967 3,549
Retirement and deferred compensation
plans 29,204 27,378
Marketable securities 138 -
Foreign operating loss carryforwards 487 739
Valuation allowance (156) (243)
--------- -------
45,246 40,234
--------- -------
Deferred tax liabilities:
Depreciation 4,489 4,001
Other 964 911
--------- -------
5,453 4,912
--------- --------
Net deferred tax asset $39,793 $35,322
========= ========
A valuation allowance has been provided for certain foreign
net operating loss carryforwards which are estimated to expire
before they are utilized. The change in the valuation allowance
during the year ended April 30, 1995 was $87,000.
The impact of adopting new accounting rules in fiscal year
1994 relating to income taxes was not material to the Company's
financial position or results of operations.
Prior to 1994, deferred income taxes were provided under the
accounting rules then in effect. The deferred U.S. federal
income tax benefit on the income statement for the year ended
April 30, 1993 consisted of employee benefit plans - $574,000;
inventory - $98,000; depreciation - $33,000 and other - $16,000
for a total deferred U.S. federal income tax benefit of
$721,000.
The following is a reconciliation of the difference between
the U.S. statutory rate and the effective tax rate:
1995 1994 1993
----- ----- -----
U.S. statutory rate 35.0% 35.0% 34.0%
Tax exempt interest (2.5) (2.3) (1.7)
Other (.1) .2 .5
Effect of international 6.1 5.6 6.8
operations
Effect of state income taxes 1.7 1.6 1.2
----- ----- -----
Effective tax rate 40.2% 40.1% 40.8%
===== ===== =====
The Company files a consolidated U.S. federal income tax
return with its domestic subsidiaries. International
subsidiaries file tax returns in countries of their
incorporation. In addition, branches of certain U.S. and
international companies file tax returns in countries in which
they conduct business. Certain of these subsidiaries have
operating loss carryforwards totaling approximately $1,568,000,
which will expire between 1996 and 2004. The accumulated
undistributed earnings of international subsidiaries not included
in the consolidated U.S. federal income tax return approximated
$73,555,000 at April 30, 1995, $69,378,000 at April 30, 1994 and
$83,280,000 at April 30, 1993. No provision is made in the
accompanying consolidated financial statements for the estimated
taxes that would result on distribution of the accumulated
undistributed earnings since the Company intends to invest
indefinitely in the operations of these subsidiaries. For 1995,
1994 and 1993, worldwide income tax payments amounted to
$22,624,000, $24,176,000 and $24,205,000, respectively.
4. Inventories
A summary of inventories at April 30 follows (in thousands
of dollars):
1995 1994
--------- --------
Raw materials $ 15,551 $13,849
Finished goods 88,089 67,676
Sales supplies 2,224 2,109
--------- -------
$105,864 $83,634
========= =======
5. Property, Plant and Equipment
Property, plant and equipment at April 30 consists of the
following (in thousands of dollars):
1995 1994
--------- --------
Land $ 11,677 $ 11,942
Buildings 77,825 74,406
Equipment 97,528 91,651
--------- --------
$187,030 $177,999
========= ========
Depreciation charged to income was $12,452,000, $11,863,000
and $12,473,000 for each of the years ended April 30, 1995, 1994
and 1993, respectively. The estimated useful life of buildings
is 25 to 40 years; equipment is 3 to 10 years.
6. Long-Term Debt
Long-term debt at April 30 consists of the following (in
thousands of dollars):
1995 1994
------- ------
Borrowed by domestic companies:
Variable interest industrial revenue bond,
secured by property, at 71.9% of prime. $4,700 $4,700
Other 2,210 3,782
------- ------
6,910 8,482
------- ------
Borrowed by international companies 54 183
------- ------
6,964 8,665
Less current maturities 2,203 1,875
------- ------
Long-term debt, less current maturities $4,761 $6,790
======= ======
Maturities of long-term debt for the years following April
30, 1995, are as follows: 1996 - $2,203,000; 1997 - $24,000; 1998
- - $37,000; and 2006 - $4,700,000.
7. Employee Benefits
Retirement plans - The parent and its domestic subsidiaries
have various qualified retirement type plans covering
substantially all domestic employees. None of these plans have
defined benefits. Some of the international subsidiaries also
have non-defined benefit retirement plans. These plans are
funded on a current basis, and the cost of retirement benefits
for past service has been fully funded.
In addition, the Company has non-qualified deferred
compensation plans for the primary purpose of providing
retirement benefits. These plans are not funded, but provision
for the estimated liabilities arising from these plans has been
made in the consolidated financial statements.
Expenses for retirement plans, exclusive of interest
expense, were $9,877,000, $8,343,000 and $4,737,000 in the years
ended April 30, 1995, 1994 and 1993, respectively.
Postretirement benefits other than pensions - The Company
and several of its domestic subsidiaries initiated a
postretirement health care benefit plan in fiscal 1993, covering
substantially all domestic employees. Eligible retirees receive
a specific contribution from the Company toward the cost of the
health plan, which is a supplement to Medicare. The amount of
the contribution is based on years of service with the Company at
retirement. The plan is not funded; retiree health benefits are
paid as covered expenses are incurred. Provision has been made
in the accompanying consolidated financial statements for the net
postretirement benefit expense of this plan.
Net postretirement benefit expenses for the years ended
April 30 are as follows (in thousands of dollars):
1995 1994 1993
------- ------ ------
Service cost - benefits earned
during the year $ 98 $127 $161
Interest cost on accumulated
postretirement benefit
obligation 179 162 160
Net amortization of prior
service cost 176 176 176
----- ---- ----
Net postretirement benefit expense $453 $465 $497
===== ==== ====
The reconciliation of the accumulated postretirement benefit
obligation to the recorded liability at April 30 is as follows
(in thousands of dollars):
1995 1994
-------- -------
Accumulated postretirement benefit
obligation
Retirees $ 233 $ 174
Fully eligible active plan
participants 1,234 1,098
Other active plan participants 1,333 1,285
-------- -------
Total 2,800 2,557
Unrecognized prior service cost (1,467) (1,643)
-------- -------
Accrued postretirement benefit
liability $ 1,333 $ 914
======== =======
Measurement of the accumulated postretirement benefit
obligation is based on a 7% assumed discount rate for 1994 and
1995.
In addition, certain of the Company's non-U.S. subsidiaries
have health care plans for retirees, although many retirees
outside of the United States are covered by government sponsored
and administered programs. Under SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," the
effective date for adoption for plans outside of the United
States is the fiscal year beginning May, 1, 1995. The Company
estimates that the implementation of this standard for non-U.S.
subsidiary plans will not have a material effect on the Company's
financial position or results of operations.
Postemployment benefits - Implementation of SFAS No. 112,
"Employers' Accounting for Postemployment Benefits," as of May 1,
1994, was not material to the Company's financial position or
results of operations. This statement requires recognition of a
liability for certain benefits provided to former or inactive
employees after employment but before retirement.
Other - The Company has some split dollar life insurance
agreements, whereby the Company pays a portion of the premiums.
The Company has been granted a security interest in the cash
value and death benefit of each policy, to the extent of the sum
of premium payments made by the Company. Premiums paid by the
Company are charged to expense to the extent they exceed the cash
values of each policy.
8. Capital Stock and Options
None of the Company's authorized 500,000 shares of $1 par
value Preferred Stock has been issued.
The directors of the Company increased the regular quarterly
dividend from $.25 to $.30 per share of Common Stock on September
14, 1994. On April 13, 1995, the directors of the Company
declared a regular quarterly cash dividend of $.30 per share of
Common Stock to be paid June 15, 1995, to shareholders of record
June 1, 1995.
At April 30, 1995, 1994 and 1993, 730,000, 761,000 and
769,000 shares of the Company's Common Stock, respectively, were
reserved for issuance under a non-qualified stock option plan
which grants options to key employees and officers. The purchase
price under the grant cannot be less than the market value at the
date of grant. The options under such plan are exercisable in
equal amounts at the beginning of the second, third and fourth
year of their lives and expire after five years. Information
relative to the non-qualified stock options for the three years
ended April 30, 1995, is as follows:
(In Thousands Except Per Share Data)
Years Ended April 30,
------------------------------------
1995 1994 1993
-------------- -------------- ---------------
Average Average Average
Number Price Number Price Number Price
of Per of Per of Per
Shares Share Shares Share Shares Share
------ ------ ------ ------ ------ -------
Outstanding at
beginning
of period 212 $57.97 154 $59.22 154 $52.83
Granted 64 61.00 67 53.75 48 68.75
Exercised (31) 53.12 (8) 47.18 (44) 48.77
Canceled or expired (2) 55.84 (1) 56.65 (4) 44.17
---- ----- ---- ----- ---- -----
Outstanding at end
of period 243 $59.41 212 $57.97 154 $59.22
==== ====== ==== ====== ==== ======
At April 30, 1995, 1994 and 1993, 19,000, 20,000 and 21,000
shares of Treasury Stock, respectively, were reserved for
issuance to employees under a stock participation plan.
9. Interest Costs
During the years ended April 30, 1995, 1994 and 1993,
interest costs, including interest expense on non-funded
retirement plans, amounting to $5,720,000, $5,115,000 and
$4,695,000, respectively, were expensed as incurred. For the
same periods, interest payments were $3,540,000, $4,200,000 and
$3,182,000, respectively.
10. Leases
At April 30, 1995, the Company and its subsidiaries had a
number of noncancellable leases for various office and warehouse
facilities. The majority of these agreements expire at various
times through 1999, and substantially all include renewal
provisions. The amount of other obligations assumed, such as
payment of property taxes and maintenance, is nominal. Total
rent expense for 1995, 1994 and 1993 (including operating leases
on data processing equipment, trucks and trailers, and office
equipment) was approximately $9,035,000, $8,538,000 and
$9,482,000, respectively.
The minimum aggregate rentals under the terms of
noncancellable operating leases for future years are: 1996 -
$7,619,000; 1997 - $5,364,000; 1998 - $4,537,000; 1999 -
$2,713,000; and a total of $3,364,000 for 2000 and thereafter.
11. Contingent Liabilities
The Company and its subsidiaries are engaged in a variety of
legal proceedings arising in the ordinary course of business,
including some concerning environmental matters. In the opinion
of Management, the ultimate liabilities resulting from these
proceedings will not have a material adverse effect on the
Company's financial position or operating results.
Gains or losses resulting from contracts hedging net foreign
currency positions have been included in the foreign currency
translation adjustment component of stockholders' equity. Gains
and losses from all other contracts are included in the
Consolidated Statements of Income. There were no such contracts
at April 30, 1995 or 1994. In addition, at April 30, 1995 and
1994, the Company had standby letters of credit outstanding
totaling $8,890,000, which guarantee payment to certain insurance
carriers.
12. Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, notes
payable to banks and current maturities of long-term debt
approximate fair value, because of the short maturities of these
financial instruments. The fair value of long-term debt, less
current maturities, is estimated based on the discounted value of
future cash flows, using the Company's current borrowing rate for
loans of comparable terms and maturities.
Using the above methods and assumptions, the estimated fair
values of the Company's financial instruments at April 30 are as
follows (in thousands of dollars):
1995 1994
------------------- ---------------------
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- --------- -------- ---------
Assets:
Cash and cash
equivalents $ 16,264 $ 16,264 $ 18,754 $ 18,754
Marketable
securities 112,074 112,074 105,784 101,687
Liabilities:
Notes payable
to banks 5,405 5,405 9,745 9,745
Current maturities
of long-term
debt 2,203 2,203 1,875 1,875
Long-term debt,
less current
maturities 4,761 3,924 6,790 5,595
13. Marketable Securities
The Company implemented Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" as of May 1, 1994. This statement
requires that certain debt and equity security investments, other
than investments accounted for by the equity method and
investments in consolidated subsidiaries, be categorized as
either trading securities, securities available-for-sale, or
securities held-to-maturity. The Company classifies all of its
investments in securities which do not meet the definition of
cash equivalents as marketable securities available-for-sale.
Available-for-sale securities are reported at fair value with
unrealized gains and losses (net of deferred income taxes)
recognized on the balance sheet as a separate component of
stockholders' equity. Fair values are based on quoted market
prices obtained from an independent broker. Realized gains and
losses are included in other income and are immaterial for the
current year. The cost of securities sold is based on the
specific identification method. In accordance with the
provisions of this statement, prior period financial statements
have not been restated to reflect this change in accounting
principle.
The following is a summary of available-for-sale marketable
securities as of April 30, 1995 (in thousands of dollars):
State and
Municipal Certificates
Bonds of Deposit Total
--------- ------------ --------
Cost $112,044 $423 $112,467
Gross Unrealized Losses (609) - (609)
Gross Unrealized Gains 216 - 216
--------- ----- ---------
Estimated Fair Value $111,651 $423 $112,074
========= ===== =========
The contractual maturities of the marketable securities at
estimated fair value as of April 30, 1995 are as follows: 1996-
$35,640,000; 1997-$39,997,000; 1998-$23,765,000; 1999-$9,343,000;
and 2000-$3,329,000.
14. Segment and Geographic Area Information
The Company's operations are predominantly within one
business segment, which includes specialty chemicals, fasteners,
welding supplies, plumbing and electronic parts, and safety
supplies. Substantially all of these products are sold for
repair, maintenance or industrial supply use.
Financial information by geographic area, in thousands of
dollars, follows for the years ended April 30:
Latin
United Pacific America Consoli-
States Europe Far East Canada dated
------ ------ -------- ------ --------
1995
Net Sales $408,668 $244,517 $31,837 $50,076 $735,098
Net Income (Loss) 22,294 13,354 313 (379) 35,582
Identifiable
Assets 246,926 123,659 17,792 20,383 408,760
Corporate Assets 120,377
1994
Net Sales $381,949 $222,214 $28,134 $47,690 $679,987
Net Income (Loss) 20,474 12,818 (310) (1,775) 31,207
Identifiable
Assets 218,573 117,316 14,690 21,359 371,938
Corporate Assets 113,285
1993
Net Sales $336,471 $267,280 $26,023 $50,163 $679,937
Net Income 19,030 16,952 722 909 37,613
Identifiable
Assets 194,976 131,986 14,310 20,480 361,752
Corporate Assets 105,624
Intercompany sales and profits have been eliminated from the
above schedule. Corporate expenses were allocated between the
geographic areas. Identifiable assets are those identified with
the operations in each geographic area. Corporate assets consist
primarily of portions of cash and cash equivalents and marketable
securities.
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
NCH Corporation:
We have audited the accompanying consolidated balance sheets
of NCH Corporation and subsidiaries as of April 30, 1995 and
1994, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the years in the
three-year period ended April 30, 1995. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
financial position of NCH Corporation and subsidiaries as of
April 30, 1995 and 1994, and the results of their operations and
their cash flows for each of the years in the three-year period
ended April 30, 1995, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
Dallas, Texas
June 5, 1995
RESPONSIBILITY FOR FINANCIAL REPORTING
The management of the Company is responsible for the
financial information and representations contained in the
financial statements and other sections of the annual report.
The financial statements have been prepared in conformity with
generally accepted accounting principles, and therefore include
informed estimates and judgments.
The Company's system of internal control is designed to
provide reasonable, but not absolute, assurance as to the
integrity, objectivity and reliability of the financial records
and the safeguarding of assets. Management believes that, within
a cost-effective framework, the Company's accounting controls
provide reasonable assurance that material errors or
irregularities are prevented or would be detected within a
relatively short period of time. The possibility exists,
however, that errors or irregularities may occur and not be
detected. The Company has a program of internal audits and
follow-up, covering separate Company operations and functions in
the U.S. and its international subsidiaries.
The Board of Directors pursues its review of the audit
function, internal controls and the financial statements largely
through its Audit Committee, which consists solely of directors
who are not employees of the Company. The Audit Committee
periodically meets with management, the independent auditors and
internal auditors with regard to their respective
responsibilities. Both KPMG Peat Marwick LLP and the internal
auditors have full access to the Audit Committee. They meet with
the committee, without management present, to discuss the scope
and results of their examination, including internal control and
financial reporting matters.
Management also recognizes its responsibility for fostering
a strong ethical climate so that the Company's affairs are
conducted according to the highest standards of personal and
corporate conduct. This responsibility is characterized and
reflected in the Company's code of corporate conduct, which is
publicized throughout the Company. The code of conduct
addresses, among other things, the necessity of ensuring open
communication within the Company; potential conflicts of
interests; compliance with all domestic and foreign laws,
including those relating to financial disclosure; and the
confidentiality of proprietary information. The Company
maintains a systematic program to assess compliance with these
policies.
/s/ Irvin L. Levy /s Tom Hetzer
- ----------------- -------------
Irvin L. Levy Tom Hetzer
Chief Executive Officer Chief Financial Officer
Selected Unaudited Quarterly Data
- --------------------------------------
(In Thousands Except Per Share Data)
Years Ended April 30,
Quarter
--------------------------------------
First Second Third Fourth
----- ------ ----- ------
1995
Net Sales $178,728 $184,641 $186,562 $185,167
Operating Income 13,060 16,786 12,476 14,622
Net Income 7,826 10,704 7,036 10,016
Earnings Per Share $.95 $1.29 $.85 $1.21
1994
Net Sales $169,649 $163,160 $170,615 $176,563
Operating Income 12,239 14,714 9,296 14,135
Net Income 7,561 9,267 5,726 8,653
Earnings Per Share $.91 $1.12 $.69 $1.05
Earnings per share for each period is calculated based on
the average number of shares outstanding during the period.
Market and Dividend Information
- ------------------------------------
NCH Corporation stock is traded on the New York Stock
Exchange. The high and low prices by quarter are shown for the
past two years in the schedule below.
Cash dividends paid during the fiscal year ended April 30,
1995, amounted to $17.4 million compared to $16.5 million and
$16.6 million in fiscal years 1994 and 1993, respectively. On
April 13, 1995, a dividend of $.30 per share was declared,
payable June 15, 1995. A summary of the quarterly dividends per
share for the past two years is set forth in the schedule below.
Common Stock Prices Dividends Per Share
----------------------------- ---------------------------
1995 1994 Declared Paid
-------------- -------------- -------------- ------------
Qtr High Low High Low 1995 1994 1995 1994
- ---- ----- ----- ----- ----- ----- ----- ----- -----
First 62 1/8 56 5/8 68 59 1/2 $ .25 $ .25 $ .25 $ .25
Second 66 3/4 60 3/4 65 3/8 55 1/2 $1.30 $ .25 $ .25 $ .25
Third 67 59 1/2 61 52 1/8 $ .30 $1.25 $1.30 $1.25
Fourth 65 1/4 59 1/4 65 5/8 56 5/8 $ .30 $ .25 $ .30 $ .25
As of June 1, 1995, there were 686 holders of record of the
Company's Common Stock, which includes several brokerage firms
that hold shares of the Company's stock for an estimated 3,800
investors.
NCH CORPORATION AND SUBSIDIARIES
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
NCH Corporation is the parent company of numerous wholly-
owned subsidiaries engaged in the business of marketing an
extensive line of maintenance, repair and supply products. At
the close of the last fiscal year, sixteen of these subsidiaries
were operating domestically and 118 in foreign countries. The
Company is also the parent of several wholly-owned subsidiaries
that market various other products. All such subsidiaries
considered in the aggregate as a single subsidiary would not
constitute a significant subsidiary of NCH Corporation, and
therefore are not listed here.
As of the close of the last fiscal year, the following
corporations were not wholly-owned by NCH Corporation.
Immediate Parent and Jurisdiction
Name of Subsidiary Percentage of Ownership of Incorporation
- ------------------ ----------------------- ----------------
NCH Hua Yang Ltd. 51% NCH Corporation People's Republic
of China
Sunco Chemicals Ltd. 51% NCH Corporation India
NCH CORPORATION AND SUBSIDIARIES
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
NCH Corporation:
We consent to the incorporation by reference of our report dated
June 5, 1995, relating to the consolidated balance sheets of NCH
Corporation and subsidiaries as of April 30, 1995 and 1994, and
the related consolidated statements of income, stockholders'
equity, and cash flows for each of the years in the three-year
period ended April 30, 1995, which report appears or is
incorporated by reference in the April 30, 1995 Annual Report on
Form 10-K of NCH Corporation.
/s/ KPMG Peat Marwick LLP
Dallas, Texas
July 24, 1995
NCH CORPORATION AND SUBSIDIARIES
EXHIBIT 99
DEFINITIVE PROXY STATEMENT
REGARDING THE COMPANY'S 1995 ANNUAL MEETING OF STOCKHOLDERS
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [ X ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule
14a-11(c)or Rule 14a-12
NCH Corporation
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
NCH Corporation
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii),
14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11;*
4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing is calculated
and state how it was determined.
[ ] Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee
was paid previously. Identify the previous filing
by registration statement number, or the form or
schedule and the date of its filing.
1) Amount previously paid:
2) Form, schedule or registration statement no.:
3) Filing party:
4) Date filed:
[LOGO]
2727 Chemsearch Boulevard
Irving, Texas 75062
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held July 27, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of NCH Corporation will be held in Gallery I of
the Hotel Crescent Court (at the corner of Pearl and Cedar
Springs Streets), Dallas, Texas, on Thursday, the 27th day
of July, 1995, at 10:00 a.m., Central Daylight Time, for the
following purposes:
1. To elect two Class I directors of NCH to hold office
until the next annual election of Class I directors by
stockholders or until their respective successors are duly
elected and qualified.
2. To ratify the appointment of KPMG Peat Marwick LLP,
Certified Public Accountants, to be the independent auditors
of NCH for the fiscal year ending April 30, 1996.
3. To transact such other business as may properly come
before the meeting or any adjournments of the meeting.
The Board of Directors has fixed the close of business
on Thursday, June 1, 1995, as the record date for
determining stockholders entitled to vote at and to receive
notice of the annual meeting.
Whether or not you expect to attend the meeting in
person, you are urged to complete, sign, and date the
enclosed form of proxy and return it promptly so that your
shares of stock may be represented and voted at the meeting.
If you are present at the meeting, your proxy will be
returned to you if you so request.
Joe Cleveland,
Secretary
Dated: June 20, 1995
[LOGO]
2727 Chemsearch Boulevard
Irving, Texas 75062
PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on July 27, 1995
Dated: June 20, 1995
SOLICITATION AND REVOCABILITY OF PROXIES
The accompanying proxy is solicited by the management
of, and on behalf of, NCH Corporation, a Delaware
corporation ("NCH"), to be voted at the Annual Meeting of
the Stockholders of NCH, to be held Thursday, July 27, 1995
(the "Meeting"), at the time and place and for the purposes
set forth in the accompanying Notice of Annual Meeting.
When properly executed proxies in the accompanying form are
received, the shares represented thereby will be voted at
the Meeting in accordance with the directions noted on the
proxies; if no direction is indicated, then such shares will
be voted for the election of the directors and in favor of
the proposals set forth in the Notice of Annual Meeting
attached to this Proxy Statement.
The enclosed proxy confers discretionary authority to
vote with respect to any and all of the following matters
that may come before the Meeting: (1) matters that NCH's
Board of Directors does not know a reasonable time before
the Meeting are to be presented at the Meeting; and (2)
matters incidental to the conduct of the Meeting.
Management does not intend to present any business for a
vote at the Meeting other than the matters set forth in the
accompanying Notice of Annual Meeting, and it has no
information that others will do so. If other matters
requiring the vote of the stockholders properly come before
the Meeting, then, subject to the limitations set forth in
the applicable regulations under the Securities Exchange Act
of 1934, it is the intention of the persons named in the
attached form of proxy to vote the proxies held by them in
accordance with their judgment on such matters.
Any stockholder giving a proxy has the power to revoke
that proxy at any time before it is voted. A proxy may be
revoked by filing with the Secretary of NCH either a written
revocation or a duly executed proxy bearing a date
subsequent to the date of the proxy being revoked. Any
stockholder may attend the Meeting and vote in person,
whether or not such stockholder has previously submitted a
proxy.
In addition to soliciting proxies by mail, officers and
regular employees of NCH may solicit the return of proxies.
Brokerage houses and other custodians, nominees, and
fiduciaries may be requested to forward solicitation
material to the beneficial owners of stock.
This Proxy Statement and the accompanying proxy are
first being sent or given to NCH's stockholders on or about
June 20, 1995.
NCH will bear the cost of preparing, printing,
assembling, and mailing the Notice of Annual Meeting, this
Proxy Statement, the enclosed proxy, and any additional
material, as well as the cost of forwarding solicitation
material to the beneficial owners of stock.
VOTING RIGHTS
The record date for determining stockholders entitled
to notice of and to vote at the Meeting is the close of
business on June 1, 1995. On that date there were 8,311,240
shares issued and outstanding of NCH's $1.00 par value
common stock ("Common Stock"), which is NCH's only class of
voting securities outstanding. Each share of NCH's Common
Stock is entitled to one vote in the matter of election of
directors and in any other matter that may be acted upon at
the Meeting. Neither NCH's certificate of incorporation nor
its bylaws permits cumulative voting. The presence, in
person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the
Meeting is necessary to constitute a quorum at the Meeting,
but in no event will a quorum consist of less than one-
third of the shares entitled to vote at the Meeting. The
affirmative vote of a plurality of the shares of Common
Stock represented at the Meeting and entitled to vote is
required to elect directors. All other matters to be voted
on will be decided by a majority of the shares of Common
Stock represented at the meeting and entitled to vote.
Abstentions and broker nonvotes are each included in
determining the number of shares present at the meeting for
purposes of determining a quorum. Abstentions and broker
nonvotes have no effect on determining plurality, except to
the extent that they affect the total votes received by any
particular candidate.
ELECTION OF DIRECTORS
NCH's Board of Directors consists of seven members,
divided into three classes: Class I (two directors), Class
II (three directors), and Class III (two directors). Only
the Class I positions are due for nomination and election at
the Meeting. The Class II and Class III positions will be
due for nomination and election at the annual meetings of
stockholders to be held in 1996 and 1997, respectively.
The intention of the persons named in the enclosed
proxy, unless such proxy specifies otherwise,is to vote the
shares represented by such proxy for the election of Rawles
Fulgham and Lester A. Levy as the Class I directors.
Messrs. Rawles Fulgham and Lester A. Levy have been
nominated to stand for re-election by the Board of Directors
until their terms expire or until their respective
successors are duly elected and qualified. Messrs. Rawles
Fulgham and Lester A. Levy are presently directors of NCH.
Messrs. Irvin, Lester, and Milton Levy are brothers. Robert
L. Blumenthal is a first cousin of Messrs. Irvin, Lester,
and Milton Levy. Certain information regarding each nominee
and director is set forth below. The number of shares
beneficially owned by each nominee is listed under "Security
Ownership of Principal Stockholders and Management."
Class I Directors
Rawles Fulgham, 67, has been a director of NCH since
1981. Mr. Fulgham was an executive director of Merrill Lynch
Private Capital Inc. from 1982 until 1989, when he assumed
his current position as a Senior Advisor to Merrill Lynch &
Co., Inc. He is also a director of Dresser Industries,
Inc., Indresco, Inc., Republic Financial Services, Inc., and
BancTec, Inc., all of which are located in Dallas, Texas.
Mr. Fulgham is a member of the Audit Committee and the
Compensation Committee.
Lester A. Levy, 72, has been a director and officer of
NCH since 1947, and since 1965 has served as Chairman of the
Board of Directors of NCH. He is either the president or a
vice president of substantially all of NCH's subsidiaries.
Mr. Levy is also a director of A.H. Belo Corporation,
Dallas, Texas. Mr. Levy is a member of the Stock Option
Committee and the Executive Committee.
Class II Directors and Nominees
Robert L. Blumenthal, 64, has engaged in the practice
of law since 1957. He is a partner at the Dallas law firm
of Carrington, Coleman, Sloman & Blumenthal, L.L.P., which
serves as NCH's legal counsel.
Thomas B. Walker, Jr., 71, has been a director of NCH
since 1987. He was a general partner of Goldman, Sachs &
Co. from 1968 until 1984 when he assumed his current
position as a limited partner of The Goldman Sachs Group,
L.P. Mr. Walker is also a director of Sysco Corporation,
A.H. Belo Corporation, and Riviana Foods, Inc. He is a
member of the Audit Committee and the Compensation
Committee.
Milton P. Levy, Jr., 69, has been a director and
officer of NCH since 1947, and since 1965 has served as
Chairman of the Executive Committee of NCH. He is either
the president or a vice president of substantially all of
NCH's subsidiaries. Mr. Levy is also an advisory director
of Texas Commerce Bank, N.A. He is a member of the Stock
Option Committee and the Executive Committee.
Class III Directors
Jerrold M. Trim, 58, has been a director of NCH since
1980 and is the president and majority shareholder of
Windsor Association, Inc., which is engaged primarily in
investment consulting services. He is also a general
partner of Chiddingstone Management Company and The
Penshurst Fund, which are limited partnerships that invest
in marketable securities. He is a member of the Audit
Committee and the Compensation Committee.
Irvin L. Levy, 66, has been a director and an officer
of NCH since 1950, and has served as NCH's President since
1965. He is either president or a vice president of
substantially all of NCH's subsidiaries. Mr. Levy is a
member of the Stock Option Committee and the Executive
Committee. Mr. Levy is also a director of NationsBank of
Texas, N.A.
If either of the above nominees for Class I directors
should become unavailable to serve as a director, then the
shares represented by proxy will be voted for such
substitute nominees as may be nominated by the Board of
Directors. NCH has no reason to believe that either of the
above nominees is, or will be, unavailable to serve as a
director.
Meeting Attendance and Committees of the Board
NCH has audit, compensation, executive, and stock
option committees of the Board, whose members are noted
above. During the last fiscal year, the Board of Directors
met on five occasions, the Compensation Committee met once,
the Audit Committee met once, the Executive Committee met
or acted by consent at least 33 times, and the Stock Option
Committee met once. NCH does not have a standing nominating
committee of the Board. Nominees to the Board are selected
by the entire Board.
The Audit Committee of the Board reviews the scope of
the independent auditors' examinations and the scope of
activities of NCH's internal auditors. Additionally, it
receives and reviews reports of NCH's independent auditors
and internal auditors. The Audit Committee also meets
(without management's presence, if the Audit Committee so
desires) with the independent auditors and members of the
internal auditing staff, receives recommendations or
suggestions for change, and may initiate or supervise any
special investigations it may choose to undertake.
The Compensation Committee recommends to the Board of
Directors the salaries of Messrs. Irvin, Lester, and Milton
Levy.
The Executive Committee possesses all of the powers of
the Board of Directors between meetings of the Board.
The Stock Option Committee of the Board determines
those employees of NCH and its subsidiaries who will receive
stock options and the amount of such options.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
Directors who are not executive officers of NCH receive
compensation of $25,000 per annum and $1,000 for each
meeting of the Board of Directors or Board committee
attended. All other directors receive $1,000 for each such
meeting attended. Members of the Stock Option Committee and
Executive Committee are not compensated separately for their
services on such committees.
Report on Executive Compensation
Responsibility for Executive Compensation
Three outside directors, as the Compensation Committee
of NCH (Messrs. Fulgham, Trim, and Walker), have primary
responsibility for recommending to the Board the executive
compensation program for Messrs. Irvin, Lester, and Milton
Levy. The Compensation Committee recommends to the Board an
annual aggregate base compensation for the Office of the
Executive Committee and is responsible for administering and
approving incentive compensation for the Office of the
Executive Committee. After Board approval of the
Compensation Committee's recommendation for aggregate base
compensation (with Messrs. Irvin, Lester, and Milton Levy
abstaining), the Messrs. Levy divide the compensation of the
Executive Committee among themselves. Messrs. Irvin,
Lester, and Milton Levy are responsible for setting the
compensation for all other officers of NCH.
Executive Compensation Strategy
With respect to compensation of all key executives
other than Messrs. Irvin, Lester, and Milton Levy, NCH's
strategy is generally as follows:
* Attract and retain key executives by delivering a
market competitive rate of base pay. Market
competitive rates of pay are determined by reviewing
compensation data from other companies that resemble
NCH in terms of lines of business, size, scope, and
complexity.
* Provide salary increases to key executives based on
their individual effort and performance. In addition
to the individual's experience, job duties, and
performance, annual increases are influenced by NCH's
overall performance.
* Provide annual incentive opportunities based on
objectives that NCH feels are critical to its success
during the year. Target incentive levels are set on an
individual basis and actual awards are made at the
Executive Committee's discretion.
* Provide long-term incentives to key employees so that
employees are focused on activities and decisions that
promote NCH's long-term financial and operational
success. To meet this objective, NCH offers stock
options to certain key employees. Options are
generally granted for a period of five years at a price
that is at least equal to the fair market value of the
Common Stock at the time of grant. Options vest in
equal increments over a three-year period from the time
of grant.
Compensation of Messrs. Irvin, Lester, and Milton Levy
The Compensation Committee occasionally seeks
assistance from an outside compensation consulting firm to
determine the competitiveness of NCH's compensation
programs. Based on survey and proxy analyses performed by
the consulting firm, the Compensation Committee in 1994
adopted a fixed compensation plus an incentive bonus for
1995 based on Company performance which has been retained
for fiscal 1996. Given the tenure and depth of experience
of the Office of the Executive Committee, the Compensation
Committee feels that this is an appropriate competitive
level of compensation. All of the companies in the peer
group in NCH's performance graph on page 9 of this Proxy
Statement were included in the proxy analysis performed by
the consulting firm. NCH's performance in sales and
earnings in the then current economic and competitive
environment, adjusted for currency fluctuations, was
considered in setting the base executive compensation,
although no formula or preset goal is used.
NCH has adopted a separate strategy with respect to the
incentive compensation of the Office of the Executive
Committee (Messrs. Irvin, Lester, and Milton Levy). Since
these individuals are very significant long-term
stockholders of NCH, some of the typical approaches to
executive compensation that exist in the marketplace are not
necessarily relevant at NCH. Long-term incentive programs
are implemented for senior executives to create a link
between the corporation's performance and the executive's
own personal wealth. In light of the shareholding of
Messrs. Irvin, Lester, and Milton Levy, they are already
significantly impacted financially by NCH's overall
performance. The Compensation Committee generally feels
that in this situation any long-term incentive program
should be tied to salary or bonus.
To qualify all compensation paid to the Executive
Committee of the Board of Directors as a deductible expense
under Section 162(m) of the Internal Revenue Code, on April
28, 1994, the Compensation Committee of the Board of
Directors adopted an incentive bonus plan (the "Bonus
Plan"), for members of the Executive Committee, which was
approved by shareholders at the 1994 Annual Meeting.
The Bonus Plan provides a formula for determining the
amounts of annual bonuses to be paid to each member of the
Executive Committee. Bonus amounts will depend on the
amount by which NCH's net income after taxes, but before
accrual for any bonus under the Bonus Plan, for a particular
fiscal year increases over its net income before accrual for
any bonus for the preceding fiscal year. If net income
increases less than 10%, then no bonus will be paid.
Increases from 10% to less than 14% will result in payment
of a $225,000 bonus to each member of the Executive
Committee. Increases from 14% to less than 16% will result
in payment of a $300,000 bonus to each Executive Committee
member. Increases of 16% or more will result in payment of
a $375,000 bonus to each member of the Executive Committee.
The Bonus Plan prohibits amendment of its terms to
increase the cost of the Bonus Plan to NCH or to change the
persons to whom bonuses will be paid under the Bonus Plan
without a vote of NCH's stockholders.
Conclusion
The Compensation Committee believes that current
compensation arrangements in place at NCH are reasonable and
competitive given NCH's size and status and the current
regulatory environment surrounding executive compensation.
The base salary program allows NCH to attract and retain
management talent. In addition, for those employees who are
incentive eligible, such systems continue to provide the
necessary link between the attainment of NCH's performance
objectives and the compensation received by executives.
Executive Committee &
Compensation Committee Stock Option Committee
----------------------- ----------------------
Rawles Fulgham Irvin L. Levy
Jerrold M. Trim Lester A. Levy
Thomas B. Walker, Jr. Milton P. Levy, Jr.
The report on executive compensation will not be deemed
to be incorporated by reference into any filing by NCH under
the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that NCH specifically
incorporates the above report by reference.
Compensation Committee Interlocks and Insider Participation
in Compensation Decisions
Messrs. Irvin, Lester, and Milton Levy are members of
the Executive Committee of NCH's Board of Directors, which
committee determines most salaries and promotions with
respect to officers of NCH and its subsidiaries, and of the
Stock Option Committee, which determines those employees of
NCH and its subsidiaries who will receive stock options and
the amount of such options. Messrs. Irvin, Lester, and
Milton Levy are executive officers and employees of NCH.
NCH's Board of Directors (with the subject members
abstaining) determines the salaries of Messrs. Irvin,
Lester, and Milton Levy after recommendation of the
Compensation Committee, whose members are Rawles Fulgham,
Jerrold M. Trim, and Thomas B. Walker, Jr.
Executive Compensation
The following table summarizes the compensation paid to
Messrs. Irvin, Lester, and Milton Levy, who together hold
the office of the Executive Committee, and to NCH's two
other most highly compensated executive officers (whose
compensation exceeded $100,000 in fiscal 1995) for services
rendered in all capacities to NCH during the fiscal years
ended April 30, 1995, 1994, and 1993.
SUMMARY COMPENSATION TABLE
Name and Annual Compensation (1) All Other
Principal Fiscal ----------------------- Compensa-
Positions Year Salary (2) Bonus tion (3)
--------- ------ ------------ -------- ---------
Irvin L. Levy,
President 1995 $ 857,539 $300,000 $3,700
1994 815,734 - 6,016
1993 794,029 - 5,184
Lester A. Levy,
Chairman of
the Board 1995 863,572 300,000 3,700
1994 822,635 - 5,316
1993 748,082 - 5,184
Milton P. Levy,
Jr., Chairman
of the
Executive
Committee 1995 865,936 300,000 3,700
1994 963,877 - 6,016
1993 1,042,078 - 5,184
Thomas F. Hetzer,
Vice President
- Finance 1995 170,732 10,000 3,700
1994 153,410 5,725 3,416
1993 135,954 17,000 4,204
Glen L. Scivally,
Vice President
& Treasurer 1995 164,927 10,000 3,700
1994 151,352 5,250 3,421
1993 134,124 15,750 4,571
-------------------
1) Certain of NCH's executive officers receive personal
benefits in addition to annual salary and bonus. The
aggregate amounts of the personal benefits, however, do not
exceed the lesser of $50,000 or 10% of the total of the
annual salary and bonus reported for the named executive
officer.
(2) Includes compensation for services as a director (other
than Mr. Hetzer and Mr. Scivally).
(3) The amounts included in this column were contributed to
the accounts of the executives included in the table under
NCH's qualified profit sharing and savings plan.
Retirement Agreements
NCH has entered into retirement agreements allowing
retirement at any time after age 59-1/2 with Messrs. Irvin,
Lester, and Milton Levy that provide for lifetime monthly
payments and guarantee 120 monthly payments beginning at
death, retirement, or disability. Payments under these
agreements will be $385,000 per year for Messrs. Irvin L.
Levy and Lester A. Levy and $535,000 per year for Mr. Milton
P. Levy, Jr., subject to adjustment each year after 1993 for
increases in the United States Consumer Price Index for the
preceding year.
CERTAIN TRANSACTIONS
NCH entered into split dollar life insurance agreements
with the sons and former son-in-law of Lester A. Levy and
sons of Irvin L. Levy who are, or were, NCH employees
concerning the purchase of life insurance policies insuring
Irvin L. Levy, Lester A. Levy, and Milton P. Levy, Jr. The
impact of these policies on after-tax earnings of NCH was
$42,000 in fiscal 1995. The insurance provides benefits
to the above indicated employees (or child of a former
employee) totalling $10,000,000 on the death of combinations
of insureds. NCH has been granted a security interest in
the cash value of each policy to the extent of the sum of
premium payments made by NCH. These arrangements are
designed so that if the assumptions made as to mortality
experience, policy earnings, and other factors are realized,
then NCH will recover all of its premium payments.
The purpose of the arrangement in addition to providing
benefits to the employees is to provide cash to the families
of Messrs. Lester and Irvin Levy at the approximate time of
death of the senior Levys to avoid their Common Stock being
forced on to the market at a potentially inappropriate time.
FIVE YEAR COMPARISON OF CUMULATIVE TOTAL RETURN
The following graph presents NCH's cumulative
stockholder return during the period beginning April 30,
1990, and ending April 30, 1995. NCH is compared to the S&P
500 and a peer group consisting of companies that
collectively represent lines of business in which NCH
competes. The companies included in the peer group index
are Betz Laboratories, Inc., The Dexter Corporation, Ecolab
Inc., Lawson Products, Inc., Nalco Chemical Company,
National Service Industries, Inc., Petrolite Corporation,
Premier Industrial Corporation, Quaker Chemical Corporation,
Safety-Kleen Corp., and Snap-On Tools Corporation. Each
index assumes $100 invested at the close of trading on April
30, 1990, and is calculated assuming quarterly reinvestment
of dividends and quarterly weighting by market
capitalization.
[STOCK PERFORMANCE GRAPH FILED UNDER COVER OF FORM S-E]
The stock price performance depicted in the graph above
is not necessarily indicative of future price performance.
The graph will not be deemed to be incorporated by reference
in any filing by NCH under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that
NCH specifically incorporates the graph by reference.
SECURITY OWNERSHIP OF
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information
regarding the beneficial ownership of NCH's Common Stock as
of June 1, 1995, by: (i) persons known to management to
beneficially own more than 5% of NCH's Common Stock; (ii)
each director and nominee for director; (iii) the three
persons holding the office of the Executive Committee and
NCH's two other most highly compensated executive officers
(whose compensation exceeded $100,000 in fiscal 1994); and
(iv) all directors and executive officers of NCH as a group.
Except as noted below, each person included in the table has
sole voting and investment power with respect to the shares
that the person beneficially owns.
Name of Amount & Nature of Percent
Beneficial Owner Beneficial Ownership of Class
---------------- -------------------- --------
Robert L. Blumenthal 2,683 *
Rawles Fulgham (1) 2,000 *
Thomas F. Hetzer 0 -
Irvin L. Levy (2)(3) 1,560,054 18.8%
Lester A. Levy (2)(4) 1,497,378 18.2%
Milton P. Levy, Jr. (2)(5) 1,119,158 13.5%
Glen L. Scivally 0 -
Jerrold M. Trim (6) 0 -
Thomas B. Walker, Jr. 10,000 *
All directors and
executive officers
as a group (12 people) 4,201,316 50.5%
Systematic Financial
Management, Inc.,
Cash Flow Investors,
Inc., and Kenneth S.
Hackel as a group (7) 496,686 6.0%
-------------------------
* Less than 1% of class.
(1) Of these shares, 700 are held by a Dallas bank in trust
for the retirement plan and benefit of Mr. Fulgham.
(2) The address of Messrs. Irvin, Lester, and Milton Levy
is P.O. Box 152170, Irving, Texas 75015. The
definition of beneficial ownership under the rules and
regulations of the Securities and Exchange Commission
requires inclusion of the same 29,000 shares held as
cotrustees by Messrs. Irvin, Lester, and Milton Levy
for a family trust in the totals listed above for each
of Messrs. Irvin, Lester, and Milton Levy.
(3) Irvin L. Levy owns a life estate interest in 1,000,000
shares included in the table over which he has sole
voting and investment power, and his children own a
remainder interest in such 1,000,000 shares. The table
includes the following shares, beneficial ownership of
which Irvin L. Levy disclaims: 27,481 shares held as
trustee for his grandnephews and grandniece over which
he has sole voting and investment power, and 29,000
shares held as cotrustee with his brothers for a family
trust over which he shares voting and investment power.
(4) Lester A. Levy owns a life estate interest in 625,194
shares included in the table over which he has sole
voting and investment power, and his children own a
remainder interest in such 625,194 shares. The table
includes the following shares, beneficial ownership of
which Lester A. Levy disclaims: 19,261 shares held as
trustee for his grandnieces over which he has sole
voting and investment power, and 29,000 shares held as
cotrustee with his brothers for a family trust over
which he shares voting and investment power.
(5) The table includes the following shares beneficial
ownership of which Milton P. Levy, Jr. disclaims:
34,448 shares owned by his wife over which he has no
voting or investment power, 29,000 shares held as
trustee with his brothers for a family trust over which
he shares voting and investment power, and 2,106 shares
held as cotrustee with his daughters for their benefit
over which he shares voting and investment power.
(6) Windsor Association, Inc., of which Mr. Trim is
president, has a corporate policy against its employees
owning any publicly traded securities.
(7) Systematic Financial Management, Inc., Cash Flow
Investors, Inc. and Kenneth S. Hackel report their
address as Two Executive Drive, Fort Lee, New Jersey
07024. They report that Systematic Financial
Management, Inc. has sole dispositive power over
487,486 shares and shared voting power over 30,745
shares and sole voting power of 0 shares, and Cash Flow
Investors, Inc. has sole dispositive power over 9,200
shares and shared voting power over 9,200 shares and
sole voting power of 0 shares. Mr. Hackel is an
affiliate of Systematic Financial Management, Inc. and
Cash Flow Investors, Inc.
SELECTION OF AUDITORS
The Board of Directors has appointed KPMG Peat Marwick
LLP, Certified Public Accountants, to continue to be the
principal independent auditors of NCH, subject to
stockholder ratification at the Meeting. A representative
of that firm has been requested to be present at the Meeting
and will have an opportunity to make a statement if the
representative desires to do so and to respond to
appropriate questions.
PROPOSALS OF STOCKHOLDERS
Stockholders of NCH who intend to present a proposal
for action at the 1996 Annual Meeting of Stockholders of NCH
must notify NCH's management of such intention by notice
received at NCH's principal executive offices not less than
120 days in advance of June 20, 1996, for such proposal to
be included in NCH's proxy statement and form of proxy
relating to such meeting.
ANNUAL REPORT
The Annual Report for the year ended April 30, 1995, is
being mailed to stockholders with this Proxy Statement. The
Annual Report is not to be regarded as proxy soliciting
material. NCH will provide without charge to each
stockholder to whom this Proxy Statement and the
accompanying form of proxy are sent, on the written request
of such person, a copy of NCH's annual report on Form 10-K
for the fiscal year ended April 30, 1995, including the
financial statements and the financial statement
schedules, required to be filed with the Securities and
Exchange Commission. Requests should be directed to NCH
Corporation, Attention: Secretary, P. O. Box 152170, Irving,
Texas 75015.
/s/ Irvin L. Levy
-----------------
Irvin L. Levy,
President
Irving, Texas
Dated: June 20, 1995
PROXY CARD
NCH CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - JULY 27, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints
James H. Stone, Tom Hetzer, and Joe Cleveland, and any one
or more of them, proxy or proxies, with full power of
substitution in each, and hereby authorizes them to vote for
the undersigned and in the undersigned's name, all shares of
common stock of NCH Corporation (the "Company") standing in
the name of the undersigned on June 1, 1995, as if the
undersigned were personally present and voting at the
Company's annual meeting of stockholders to be held on July
27, 1995, in Dallas, Texas, and at any adjournment thereof,
upon the matters set forth on the reverse side hereof.
This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder. IF
NO DIRECTION IS MADE, THEN THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2, AND IN THE PROXIES' DISCRETION ON ALL
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL
MEETING, INCLUDING MATTERS INCIDENT TO THE CONDUCT OF SUCH
MEETING.
(Continued and to be signed on the reverse side)
/X/ Please mark your votes as in this example.
FOR WITHHOLD AUTHORITY
1. Election of Directors / / / /
Nominees: Rawles Fulgham and Lester A. Levy
Instruction: To withhold authority to vote for all nominees,
mark the Withhold Authority box. To withhold authority to
vote for any individual nominee, write the nominee's name on
the line above.
2. Proposal to ratify the appointment of KPMG Peat Marwick
as independent auditors of NCH Corporation:
FOR / / AGAINST / / ABSTAIN / /
3. In their discretion, the proxies are authorized to vote
upon any other matters that may properly come before the
meeting or any adjournment thereof, subject to the
limitations set forth in the applicable regulations under
the Securities Exchange Act of 1934.
DATED: , 1995
---------------------------------------
---------------------------------------
SIGNATURE
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SIGNATURE IF HELD JOINTLY
NOTE: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney, executor,
administrator, trustee, guardian, officer or partner, please
indicate full title and capacity.