1
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
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For the Fiscal Year Ended June 30, 1999
Commission File Number 1-7635
TWIN DISC, INCORPORATED
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(Exact Name of Registrant as Specified in its Charter)
Wisconsin 39-0667110
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1328 Racine Street, Racine, Wisconsin 53403
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code (414) 638-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered:
Common stock, no par value New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
Common stock, no par value
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(Title of Class)
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 the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [X].
At September 1, 1999, the aggregate market value of the common stock held by
non-affiliates of the registrant was $40,983,544. Determination of stock
ownership by affiliates was made solely for the purpose of responding to this
requirement and registrant is not bound by this determination for any other
purpose.
At September 1, 1999, the registrant had 2,835,334 shares of its common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
The incorporated portions of such documents being specifically identified in
the applicable Items of this Report.
Portions of the Annual Report to Shareholders for the year ended June 30, 1999
are incorporated by reference into Parts I, II and IV.
Portions of the Proxy Statement for the Annual Meeting of Shareholders to be
held October 15, 1999 are incorporated by reference into Parts I, III and IV.
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PART I
Item 1. Business
Twin Disc designs, manufactures and sells heavy duty off-highway power
transmission equipment. Products offered include: hydraulic torque
converters; power-shift transmissions; marine transmissions and surface
drives; universal joints; gas turbine starting drives; power take-offs and
reduction gears; industrial clutches; fluid couplings and control systems. The
Company sells its product to customers primarily in the construction
equipment, industrial equipment, government, marine, energy and natural
resources and agricultural markets. The Company's worldwide sales to both
domestic and foreign customers are transacted through a direct sales force and
a distributor network. There have been no significant changes in products or
markets since the beginning of the fiscal year. The products described above
have accounted for more than 90% of revenues in each of the last three fiscal
years.
Most of the Company's products are machined from cast iron, forgings, cast
aluminum and bar steel which generally are available from multiple sources and
which are believed to be in adequate supply.
The Company has pursued a policy of applying for patents in both the United
States and certain foreign countries on inventions made in the course of its
development work for which commercial applications are considered probable.
The Company regards its patents collectively as important but does not
consider its business dependent upon any one of such patents.
The business is not considered to be seasonal except to the extent that
employee vacations are taken mainly in the months of July and August
curtailing production during that period.
The Company's products receive direct widespread competition, including from
divisions of other larger independent manufacturers. The Company also
competes for business with parts manufacturing divisions of some of its major
customers. Ten customers accounted for approximately 45% of the Company's
consolidated net sales during the year ended June 30, 1999. Two customers,
Caterpillar Inc. and Sewart Supply, Inc., each accounted for approximately 8%
of consolidated net sales in 1999.
Unfilled open orders for the next six months of $39,892,000 at June 30, 1999
compares to $54,225,000 at June 30, 1998. Since orders are subject to
cancellation and rescheduling by the customer, the six-month order backlog is
considered more representative of operating conditions than total backlog.
However, as procurement and manufacturing "lead times" change, the backlog
will increase or decrease; and thus it does not necessarily provide a valid
indicator of the shipping rate. Cancellations are generally the result of
rescheduling activity and do not represent a material change in backlog.
Management recognizes that there are attendant risks that foreign governments
may place restrictions on dividend payments and other movements of money, but
these risks are considered minimal due to the political relations the United
States maintains with the countries in which the Company operates or the
relatively low investment within individual countries. The Company's business
is not subject to renegotiation of profits or termination of contracts at the
election of the Government.
Engineering and development costs include research and development expenses
for new product development and major improvements to existing products, and
other charges for ongoing efforts to refine existing products. Research and
development costs charged to operations totaled $2,505,000, $3,104,000 and
$3,050,000 in 1999, 1998 and 1997, respectively. Total engineering and
development costs were $7,829,000, $8,833,000 and $8,288,000 in 1999, 1998 and
1997, respectively.
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Item 1. Business (continued)
Compliance with federal, state and local provisions regulating the discharge
of materials into the environment, or otherwise relating to the protection of
the environment, is not anticipated to have a material effect on capital
expenditures, earnings or the competitive position of the Company.
The number of persons employed by the Company at June 30, 1999 was 1,029.
A summary of financial data by segment for the years ended June 30, 1999, 1998
and 1997 appears in Note I to the consolidated financial statements on pages
31 through 33 of the 1999 Annual Report to Shareholders, which financial
statements are incorporated by reference in this Form 10-K Annual Report in
Part II.
Item 2. Properties
The Company owns two manufacturing, assembly and office facilities in Racine,
Wisconsin, U.S.A. and one in Nivelles, Belgium. The aggregate floor space of
these three plants approximates 677,000 square feet. One of the Racine
facilities includes office space which is the location of the Company's
corporate headquarters. The Company leases additional manufacturing, assembly
and office facilities in Decima, Italy.
The Company also has operations in the following locations, all of which are
used for sales offices, warehousing and light assembly or product service.
The following properties are leased:
Jacksonville, Florida, U.S.A.
Brisbane, Queensland, Australia
Miami, Florida, U.S.A.
Perth, Western Australia, Australia
Loves Park, Illinois, U.S.A.
Auckland, New Zealand
Coburg, Oregon, U.S.A.
Singapore
Seattle, Washington, U.S.A.
Johannesburg, South Africa
Vancouver, British Columbia, Canada
Madrid, Spain
Edmonton, Alberta, Canada
Viareggio, Italy
Shanghai, China
Chambery, France
The properties are generally suitable for operations and are utilized in the
manner for which they were designed. Manufacturing facilities are currently
operating at less than 65% capacity and are adequate to meet foreseeable needs
of the Company.
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Item 3. Legal Proceedings
Twin Disc is a defendant in several product liability or related claims
considered either adequately covered by appropriate liability insurance or
involving amounts not deemed material to the business or financial condition
of the Company.
The Company has joined with a group of potentially responsible parties in
signing a consent decree with the Illinois Environmental Protection
Agency("IEPA") to conduct a remedial investigation and feasibility study at
the Interstate Pollution Control facility in Rockford, Illinois. The consent
decree was signed on October 17, 1991, and filed with the federal court in the
Northern District of Illinois. The Company's total potential liability on the
site cannot be estimated with particularity until a final remedy is selected
by the IEPA and an allocation scheme is adopted by the parties. Based upon
current assumptions, however, the Company anticipates potential liability of
approximately $150,000.
The Company has also joined with a group of potentially responsible parties in
signing a consent decree with the Illinois Environmental Protection Agency to
conduct a remedial investigation and feasibility study at the MIG\DeWane
Landfill in Rockford, Illinois. The consent decree was signed on March 29,
1991, and filed with the federal court in the Northern District of Illinois.
The Company's total potential liability on the site cannot be estimated with
particularity until a final remedy is selected by the IEPA and an allocation
scheme is adopted by the parties. Based upon current assumptions, however,
the Company anticipates potential liability of approximately $600,000.
The Company also is involved with other potentially responsible parties in
various stages of investigation and remediation relating to other hazardous
waste sites, some of which are on the United States EPA National Priorities
List (Superfund sites). While it is impossible at this time to determine with
certainty the ultimate outcome of such environmental matters, they are not
expected to materially affect the Company's financial position, operating
results or cash flows.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of the Registrant
(Pursuant to General Instruction G(3) of Form 10-K, the following list is
included as an unnumbered Item in Part I of this Report in lieu of being
included in the Proxy Statement for the Annual Meeting of Shareholders to
be held on October 15, 1999.)
Principal Occupation
Name Last Five Years Age
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Michael E. Batten Chairman, Chief Executive Officer 59
Michael H. Joyce President-Chief Operating Officer 58
James O. Parrish Vice President - Finance and Treasurer 59
Lance J. Melik Vice President - Transmission and 56
Industrial products since June 1999 and
Vice President - Corporate Development
since September 1995;
formerly Vice President - Marketing
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Item 4. Executive Officers of the Registrant (continued)
Principal Occupation
Name Last Five Years Age
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Paul A. Pelligrino Vice President - Engineering since 60
April 1996; formerly Chief Engineer
of Corporate Engineering
Henri Claude Fabry Vice President - Marine and Distribution 53
since June 1999; formerly Director of
Marketing and Sales, Twin Disc International S.A.
since February 1997; formerly Managing
Director of Marine Power Europe since 1985
Arthur A. Zintek Vice President - Human Resources 52
since January 1998; formerly Vice President
Human Resources, Mitsubishi Motor
Manufacturing of North America since April 1997;
formerly Director of Human Resources,
Harley Davidson, Inc. since September 1992
Fred H. Timm Corporate Controller and Secretary 53
Officers are elected annually by the Board of Directors at the first meeting
of the Board held after each Annual Meeting of the Shareholders. Each officer
shall hold office until his successor has been duly elected, or until he shall
resign or shall have been removed from office.
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters
The dividends per share and stock price range information set forth under the
caption "Sales and Earnings by Quarter" on page 1 of the Annual Report for the
year ended June 30, 1999 are incorporated into this Report
by reference.
As of June 30, 1999 there were 1,138 shareholder accounts. The Company's
stock is traded on the New York Stock Exchange. The market price of the
Company's common stock as of the close of business on September 1, 1999 was
$18.75 per share.
Pursuant to a shareholder rights plan (the "Rights Plan"), on April 17, 1998,
the Board of Directors declared a dividend distribution, payable to
shareholders of record at the close of business on June 30, 1998, of one
Preferred Stock Purchase Right ("Rights") for each outstanding share of Common
Stock. The Rights will expire 10 years after issuance, and will be
exercisable only if a person or group becomes the beneficial owner of 15% or
more of the Common Stock (or 25% in the case of any person or group which
currently owns 15% or more of the shares or who shall become the Beneficial
Owner of 15% or more of the shares as a result of any transfer by reason of
the death of or by gift from any other person who is an Affiliate or an
Associate of such existing holder or by succeeding such a person as trustee of
a trust existing on the record date) (an "Acquiring Person"), or 10 business
days following the commencement of a tender or exchange offer that would
result in the offeror beneficially owning 25% or more of the Common Stock. A
person who is not an Acquiring Person will not be deemed to have become an
Acquiring Person solely as a result of a reduction in the number of shares of
Common Stock outstanding due to a repurchase of Common Stock by the Company
until such person becomes beneficial owner of any additional shares of Common
Stock. Each Right will entitle shareholders who received
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Item 5. Market for the Registrant's Common Stock and Related Shareholder
Matters (Continued)
the Rights to buy one newly issued unit of one one-hundredth of a share of
Series A Junior Preferred Stock at an exercise price of $160, subject to
certain antidilution adjustments. The Company will generally be entitled to
redeem the Rights at $.05 per Right at any time prior to 10 business days
after a public announcement of the existence of an Acquiring Person. In
addition, if (i) a person or group accumulates more than 25% of the Common
Stock (except pursuant to an offer for all outstanding shares of Common Stock
which the independent directors of the Company determine to be fair to and
otherwise in the best interests of the Company and its shareholders and except
solely due to a reduction in the number of shares of Common Stock outstanding
due to the repurchase of Common Stock by the Company), (ii) a merger takes
place with an Acquiring Person where the Company is the surviving corporation
and its Common Stock is not changed or exchanged, (iii) an Acquiring Person
engages in certain self-dealing transactions, or (iv) during such time as
there is an Acquiring Person, an event occurs which results in such Acquiring
Person's ownership interest being increased by more than 1% (e.g., a reverse
stock split), each Right (other than Rights held by the Acquiring Person and
certain related parties which become void) will represent the right to
purchase, at the exercise price, Common Stock (or in certain circumstances, a
combination of securities and/or assets) having a value of twice the exercise
price. In addition, if following the public announcement of the existence of
an Acquiring Person the Company is acquired in a merger or other business
combination transaction, except a merger or other business combination
transaction that takes place after the consummation of an offer for all
outstanding shares of Common Stock that the independent directors of the
Company have determined to be fair, or a sale or transfer of 50% or more of
the Company's assets or earning power is made, each Right (unless previously
voided) will represent the right to purchase, at the exercise price, common
stock of the acquiring entity having a value of twice the exercise price at
the time.
The Rights may have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on a substantial number of Rights being
acquired. However, the Rights are not intended to prevent a take-over, but
rather are designed to enhance the ability of the Board of Directors to
negotiate with an acquirer on behalf of all of the shareholders. In addition,
the Rights should not interfere with a proxy contest.
The Rights should not interfere with any merger or other business combination
approved by the Board of Directors since the Rights may be redeemed by the
Company at $.05 per Right prior to 10 business days after the public
announcement of the existence of an Acquiring Person.
The news release announcing the declaration of the Rights dividend, dated
April 17, 1998, filed as Item 14(a)(3), Exhibit 4(b) of Part IV of the Annual
Report on Form 10-K for the year ended June 30, 1998 is hereby incorporated by
reference.
Item 6. Selected Financial Data
The information set forth under the caption "Ten-Year Financial Summary" on
pages 42 and 43 of the Annual Report to Shareholders for the year ended June
30, 1999 is incorporated into this report by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
(a) Quantitative and Qualitative Disclosure About Market Risk.
The Company is exposed to market risks from changes in interest rates,
commodities and foreign exchange. To reduce such risks, the Company
selectively uses financial instruments and other pro-active management
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Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
techniques. All hedging transactions are authorized and executed pursuant to
clearly defined policies and procedures, which prohibit the use of financial
instruments for trading or speculative purposes. Discussions of the Company's
accounting policies and further disclosure relating to financial instruments
is included in Note A of Notes to Consolidated Financial Statements on pages
27 and 28 of the 1999 Annual Report to Shareholders, which financial
statements are incorporated by reference.
Interest rate risk - The Company currently has lines of credit bearing
interest predominantly at the LIBOR interest rate plus 1.25%. Due to the
relative stability of interest rates, the Company does not utilize any
financial instruments to manage interest rate risk exposure.
Commodity price risk - The Company is exposed to the fluctuation in market
prices for such commodities as steel and aluminum. Due to the relative
stability of these commodities, the Company does not utilize commodity price
hedges to manage commodity price risk exposure.
Currency risk - The Company has exposure to foreign currency exchange
fluctuations. The Company does not hedge the translation exposure represented
by the net assets of its foreign subsidiaries. Foreign currency translation
adjustments are recorded as a component of shareholders' equity. Forward
foreign exchange contracts are used to hedge the currency fluctuations on
transactions denominated in foreign currencies. Gains and losses from foreign
currency transactions are included in earnings. At June 30, 1999 and 1998, the
Company had outstanding forward exchange contracts to purchase 76,040,000 and
183,640,000 Belgian francs at a cost of $2,000,000 and $5,000,000,
respectively. The contracts have a weighted average maturity of 33 days and 56
days, respectively.
The information set forth under the caption "Management's Discussion and
Analysis" on pages 19 through 22 of the Annual Report to Shareholders for the
year ended June 30, 1999 is incorporated into this report by reference.
Item 8. Financial Statements and Supplementary Data
The following Consolidated Financial Statements of Twin Disc, Incorporated and
Subsidiaries set forth on pages 23 through 41 of the Annual Report to
Shareholders for the year ended June 30, 1999 are incorporated into this
report by reference:
Consolidated Balance Sheets, June 30, 1999 and 1998
Consolidated Statements of Operations for the years ended June 30, 1999, 1998
and 1997
Consolidated Statements of Cash Flows for the years ended June 30, 1999, 1998
and 1997
Consolidated Statements of Changes in Shareholders' Equity and Comprehensive
Income for the years ended June 30, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
Report of Independent Accountants
The supplementary data regarding quarterly results of operations set forth
under the caption "Sales and Earnings by Quarter" on page 1 of the Annual
Report to Shareholders for the year ended June 30, 1999 is incorporated into
this report by reference.
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Item 9. Change in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
For information with respect to the executive officers of the Registrant, see
"Executive Officers of the Registrant" at the end of Part I of this report.
For information with respect to the Directors of the Registrant, see "Election
of Directors" on pages 5 through 6 of the Proxy Statement for the Annual
Meeting of Shareholders to be held October 15, 1999, which is incorporated
into this report by reference.
For information with respect to compliance with Section 16(a) of the
Securities Exchange Act of 1934, see "Section 16(a) Beneficial Ownership
Reporting Compliance" on page 13 of the Proxy Statement for the Annual
Meeting of Shareholders to be held October 15, 1999, which is incorporated
into this report by reference.
Item 11. Executive Compensation
The information set forth under the captions "Compensation of Executive
Officers", "Stock Options","Retirement Income Plan" and "Supplemental
Retirement Benefit Plan" on pages 8 through 10 of the Proxy Statement for the
Annual Meeting of Shareholders to be held on October 15, 1999 is incorporated
into this report by reference. Discussion in the Proxy Statement under the
captions "Board Executive Selection and Salary Committee Report on Executive
Compensation" and "Corporate Performance Graph" is not incorporated by
reference and shall not be deemed "filed" as part of this report.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Security ownership of certain beneficial owners and management is set forth on
pages 3 and 4 of the Proxy Statement for the Annual Meeting of Shareholders to
be held on October 15, 1999 under the caption "Principal Shareholders,
Directors and Executive Officers" and incorporated into this report by
reference.
There are no arrangements known to the Registrant, the operation of which may
at a subsequent date result in a change in control of the Registrant.
Item 13. Certain Relationships and Related Transactions
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) The following Consolidated Financial Statements of Twin Disc,
Incorporated and Subsidiaries set forth on pages 23 through 41 of the Annual
Report to Shareholders for the year ended June 30, 1999 are incorporated by
reference into this report in Part II:
Consolidated Balance Sheets, June 30, 1999 and 1998
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Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(Continued)
Consolidated Statements of Operations for the years ended June 30, 1999,
1998 and 1997
Consolidated Statements of Cash Flows for the years ended June 30, 1999,
1998 and 1997
Consolidated Statements of Changes in Shareholders' Equity and
Comprehensive Income for the years ended June 30, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
Report of Independent Accountants
The supplementary data regarding quarterly results of operations under the
caption "Sales and Earnings by Quarter" on page 1 of the Annual Report to
Shareholders for the year ended June 30, 1999 is incorporated by reference
into this Form in Part II.
Individual financial statements of the 50% or less owned entities accounted
for by the equity method are not required because the 50% or less owned
entities do not constitute significant subsidiaries.
(a)(2) Consolidated Financial Statement Schedule (numbered in accordance with
Regulation S-X) for the 3 years ended June 30, 1999:
Page
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Report of Independent Accountants 13
Schedule II-Valuation and Qualifying Accounts 14
Schedules, other than those listed, are omitted for the reason that they are
inapplicable, are not required, or the information required is shown in the
financial statements or the related notes.
The Report of the Independent Accountants of the Registrant with respect to
the above-listed consolidated financial statement schedule appears on page 13
of this Form.
(a)(3) List of Exhibits: (numbered in accordance with Item 601 of Regulation
S-K)
2 Not applicable
3 a) Articles of Incorporation, as restated October 21, 1988
(Incorporated by reference to Exhibit 3(a) of the Company's
Form 10-K for the year ended June 30, 1989).
b) Corporate Bylaws, amended through June 22, 1998
(Incorporated by reference to Exhibit 3(b) of the Company's
Form 10-K for the year ended June 30, 1998).
4 Instruments defining the rights of security holders, including
indentures
a) Form of Rights Agreement dated as of April 17, 1998 by and
between the Company and the Firstar Trust Company, as Rights
Agent, with Form of Rights Certificate (Incorporated by
reference to Exhibits 1 and 2 of the Company's Form 8-A
dated May 4, 1998).
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Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(Continued)
b) Announcement of Shareholder Rights Plan per news release
dated April 17, 1998 (Incorporated by reference to Exhibit
99, of the Company's Form 10-Q dated May 4, 1998).
9 Not applicable
10 Material Contracts
a) * The 1988 Incentive Stock Option Plan (Incorporated by
reference to Exhibit B of the Proxy Statement for the Annual
Meeting of Shareholders held on October 21, 1988).
b) * The 1988 Non-Qualified Stock Option Plan for Officers, Key
Employees and Directors (Incorporated by reference to
Exhibit C of the Proxy Statement for the Annual Meeting of
Shareholders held on October 21,1988).
c) * Amendment to 1988 Incentive Stock Option Plan of Twin
Disc, Incorporated (Incorporated by reference to Exhibit A
of the Proxy Statement for the Annual Meeting of
Shareholders held on October 15, 1993).
d) * Amendment to 1988 Non-Qualified Incentive Stock Option
Plan for Officers, Key Employees and Directors of Twin Disc,
Incorporated (Incorporated by reference to Exhibit B of the
Proxy Statement for the Annual Meeting of Shareholders held
on October 15, 1993).
e) * Form of Severance Agreement for Senior Officers and form
of Severance Agreement for Other Officers (Incorporated by
reference to Exhibit 10(c) and (d), respectively, of the
Company's Form 10-K for the year ended June 30, 1989).
f) *Supplemental Retirement Plan (Incorporated by reference to
Exhibit 10(f) of the Company's Form 10-K for the year ended
June 30, 1998).
g) * Director Tenure and Retirement Policy (Incorporated by
reference to Exhibit 10(f) of the Company's Form 10-K for
the year ended June 30, 1993).
h) * Form of Twin Disc, Incorporated Corporate Short Term
Incentive Plan (Incorporated by reference to Exhibit 10(g)
of the Company's Form 10-K for the year ended June 30,
1993).
i) * The 1998 Incentive Compensation Plan (Incorporated by
reference to Exhibit A of the Proxy Statement for the Annual
Meeting of Shareholders held on October 16, 1998).
j) * The 1998 Stock Option Plan for Non-Employee Directors
(Incorporated by reference to Exhibit B of the Proxy
Statement for the Annual Meeting of Shareholders held on
October 16, 1998).
* Denotes management contract or compensatory plan or arrangement.
11
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(Continued)
11 Not applicable
12 Not applicable
13 Annual Report of the Registrant for the year ended June 30, 1999
is separately filed as Exhibit 13 to this Report (except for those
portions of such Annual Report separately incorporated by
reference into this Report, such Annual Report is furnished for
the information of the Securities and Exchange Commission and
shall not be deemed "filed" as part of this Form).
18 Not applicable
21 Subsidiaries of the Registrant
22 Not applicable
23 Consent of Independent Accountants
24 Power of Attorney
27 Financial Data Schedule for the year ended June 30, 1999 is
separately filed as Exhibit 27 to this report. (This schedule is
furnished for the information of the Securities and Exchange
Commission and shall not be deemed "filed" for purposes of Section
11 of the Securities Act or Section 18 of the Exchange Act.)
28 Not applicable
99 Foreign Affiliate Separate Financial Statements
a) Niigata Converter Co., Ltd. financial statements for the
year ended March 31, 1995 prepared in accordance with
Japanese Commercial Code (Incorporated by reference to
Exhibit 99(a) of the Company's Form 10-K for the year ended
June 30, 1995).
b) Niigata Converter Co., Ltd. financial statements for the
year ended March 31, 1994 prepared in accordance with
Japanese Commercial Code (Incorporated by reference to
Exhibit 99(b) of the Company's Form 10-K for the year ended
June 30, 1995).
Copies of exhibits filed as a part of this Annual Report on Form 10-K may be
obtained by shareholders of record upon written request directed to the
Secretary, Twin Disc, Incorporated, 1328 Racine Street, Racine, Wisconsin
53403.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TWIN DISC, INCORPORATED
By FRED H. TIMM
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Fred H. Timm, Corporate Controller and
Secretary (Chief Accounting Officer)
September 22, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
( By MICHAEL E. BATTEN
- - - - - - - - - - - - - - - - - - - - -
( Michael E. Batten, Chairman,
( Chief Executive Officer and Director
(
(
(
September 22, 1999 ( By MICHAEL H. JOYCE
- - - - - - - - - - - - - - - - - - - - -
( Michael H. Joyce, President,
( Chief Operating Officer and Director
(
(
(
( By JAMES O. PARRISH
- - - - - - - - - - - - - - - - - - - - -
( James O. Parrish, Vice President-
( Finance, Treasurer and Director
( (Chief Financial Officer)
( Paul J. Powers, Director
( Richard T. Savage, Director
September 22, 1999 ( David L. Swift, Director
( John A. Mellowes, Director
( George E. Wardeberg, Director
( David R. Zimmer, Director
(
(
( By JAMES O. PARRISH
- - - - - - - - - - - - - - - - - - - -
( James O. Parrish, Attorney in Fact
13
REPORT OF INDEPENDENT ACCOUNTANTS
(See Item 14)
Consolidated Financial Statement Schedule of
Twin Disc, Incorporated and Subsidiaries
To the Board of Directors
Twin Disc, Incorporated
Racine, Wisconsin
Our audits of the consolidated financial statements referred to in our report
dated July 23, 1999 appearing on page 41 of the 1999 Annual Report to
Shareholders of Twin Disc, Incorporated and Subsidiaries (which report and
consolidated financial statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the financial schedule listed
in the index on pages 8 and 9 of this Form 10-K. In our opinion, this
financial statement schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
July 23, 1999
14
TWIN DISC, INCORPORATED AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
for the years ended June 30, 1999, 1998 and 1997
(In thousands)
Balance at Additions Charged Balance at
Beginning of to Costs and end of
Description Period Expenses Deductions<F1> Period
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
1999:
Allowance for
losses on
accounts receivable $ 647 $ 170 $ 283 $ 534
------- ------- ------- -------
------- ------- ------- -------
Reserve for inventory
obsolescence 1,125 779 743 1,161
------- ------- ------- -------
------- ------- ------- -------
1998:
Allowance for
losses on
accounts receivable $ 538 $ 355 $ 246 $ 647
------- ------- ------- -------
------- ------- ------- -------
Reserve for inventory
obsolescence 1,013 893 781 1,125
------- ------- ------- -------
------- ------- ------- -------
1997:
Allowance for
losses on
accounts receivable $ 372 $ 267 $ 101 $ 538
------- ------- ------- -------
------- ------- ------- -------
Reserve for inventory
obsolescence 926 1,770 1,683 1,013
------- ------- ------- -------
------- ------- ------- -------
<FN>
<F1> Accounts receivable written-off and inventory disposed of during the year
and other adjustments.
</FN>
15
EXHIBIT INDEX
Exhibit Description Page
- - - - - - - - - - - -
3a) Articles of Incorporation, as restated October 21, 1988
(Incorporated by reference to Exhibit 3(a) of the Company's
Form 10-K for the year ended June 30, 1989). -
b) Corporate Bylaws, as amended through June 22, 1998
(Incorporated by reference to Exhibit 3(b) of the Company's
Form 10-K for the year ended June 30, 1998). 17
4a) Form of Rights Agreement dated as of April 17, 1998 by and
between the Company and the Firstar Trust Company, as Rights
Agent, with Form of Rights Certificate (Incorporated by
reference to Exhibits 1 and 2 of the Company's Form 8-A
dated May 4, 1998). -
b) Announcement of Shareholder Rights Plan per news release
dated April 17, 1998 (Incorporated by reference to Exhibit
6(a), of the Company's Form 10-Q dated May 4, 1998). -
Material Contracts
10a) The 1988 Incentive Stock Option Plan (Incorporated by reference
to Exhibit B of the Proxy Statement for the Annual Meeting of
Shareholders held on October 21, 1988). -
b) The 1988 Non-Qualified Stock Option Plan for Officers, Key
Employees and Directors (Incorporated by reference to Exhibit C
of the Proxy Statement for the Annual Meeting of Shareholders
held on October 21,1988). -
c) Amendment to 1988 Incentive Stock Option Plan of Twin Disc,
Incorporated (Incorporated by reference to Exhibit A of the
Proxy Statement for the Annual Meeting of Shareholders held
on October 15, 1993). -
d) Amendment to 1988 Non-Qualified Incentive Stock Option Plan
for Officers, Key Employees and Directors of Twin Disc,
Incorporated (Incorporated by reference to Exhibit B of the
Proxy Statement for the Annual Meeting of Shareholders held on
October 15, 1993). -
e) Form of Severance Agreement for Senior Officers and form of
Severance Agreement for Other Officers (Incorporated by
reference to Exhibit 10(c) and (d), respectively, of the
Company's Form 10-K for the year ended June 30, 1989). -
f) Supplemental Retirement Plan (Incorporated by reference to
Exhibit 10(f) of the Company's Form 10-K for the year ended
June 30, 1998). 29
g) Director Tenure and Retirement Policy (Incorporated by
reference to Exhibit 10(f) of the Company's Form 10-K for
the year ended June 30, 1993). -
h) Form of Twin Disc, Incorporated Corporate Short Term
Incentive Plan (Incorporated by reference to Exhibit 10(g)
of the Company's Form 10-K for the year ended June 30, 1993). -
16
EXHIBIT INDEX
(Continued)
Exhibit Description Page
- - - - - - - - - - - -
10i) The 1998 Incentive Compensation Plan (Incorporated by
reference to Exhibit A of the Proxy Statement for the
Annual Meeting of Shareholders held on October 16, 1998). -
j) The 1998 Stock Option Plan for Non-Employee Directors
(Incorporated by reference to Exhibit B of the Proxy
Statement for the Annual Meeting of Shareholders held
on October 16, 1998). -
13 Annual Report of the Registrant for the year ended
June 30, 1999. 17
21 Subsidiaries of the Registrant 46
23 Consent of Independent Accountants 47
24 Power of Attorney 48
27 Financial Data Schedule for the year ended June 30, 1999 49
Foreign Affiliate Separate Financial Statements
99a) Niigata Converter Co., Ltd. financial statements for the
year ended March 31, 1995 prepared in accordance with
Japanese Commercial Code (Incorporated by reference to
Exhibit 99(a) of the Company's Form 10-K for the year
ended June 30, 1995).
b) Niigata Converter Co., Ltd. financial statements for the
year ended March 31, 1994 prepared in accordance with
Japanese Commercial Code (Incorporated by reference to
Exhibit 99(b) of the Company's Form 10-K for the year
ended June 30, 1995).