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 December 31, 1994 Commission file number 0-2612
LUFKIN INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Texas 75-0404410
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 South Raguet, Lufkin, Texas 75901
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 409/634-2211
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $1 Per Share
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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
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Indicate by "X" if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein and will not be contained, to the best of
the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the Company's voting stock held by non-affiliates
as of January 31, 1995 is $118,867,000.
6,792,381 shares of the Company's Common Stock were outstanding on December 31,
1994.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the sections entitled "Financial Review", "Letter to the
Shareholders", "Management's Discussion and Analysis", "Product Line
Information" and the consolidated financial statements of the Company's Annual
Report to Shareholders for the year ended December 31, 1994, are incorporated by
reference in Parts I, II and IV, hereof and are included as Exhibit 13.
The sections entitled "Voting Securities", "Directors and Nominees for Director"
and "Executive Compensation" of the Company's definitive Proxy Statement for its
annual meeting of shareholders on May 17, 1995, are incorporated by reference in
Part III hereof and are included as Exhibit 28.
Part I
Item 1. Business
The Company was incorporated under the laws of Texas on March 4, 1902 and
since that date, has maintained its principal office and manufacturing
facilities in Lufkin, Texas. The Company designs, manufactures, sells, and
services various types of oil field pumping units, power transmission products,
foundry castings and trailers. During 1994, the Company sold its industrial
supplies unit to focus on these core businesses. The Company also sold its
Churchill manufacturing facility and related equipment located in Chanute,
Kansas. The sale of this facility enabled the Company to consolidate the
manufacturing operations of oil field pumping units into its Lufkin location.
Lufkin manufactures four basic types of pumping units: an air-balanced unit; a
beam-balanced unit; a crank-balanced unit; and a Mark II Unitorque unit. The
basic differences between the four types relate to the counterbalancing system.
The depth of a well and the desired fluid production determine the type of
counterbalancing configuration that is required. There are numerous sizes and
combinations of Lufkin oil field pumping units within the four basic types. The
Company's power transmission products (speed increasers and reducers) are
designed, manufactured and sold primarily for use in industrial applications
such as petrochemical, refining, rubber, plastics and steel and for use in
marine propulsion applications. The Company produces numerous sizes and
combinations of gears. The Company's foundry castings are primarily customer
designed components manufactured by Lufkin for use in customer products. Lufkin
also produces various sizes and styles of trailers, including vans, platforms,
and dumps.
The Company manufactures most of the component parts used in its Machinery
Division products and purchases the raw materials and outside manufactured parts
from a variety of suppliers on an order basis. The Trailer Division generally
assembles various component parts manufactured by others. The inventory
consists primarily of raw materials and component parts which are generally
assembled into finished products to fill specific customer orders. These
finished products are sold primarily by the Company's own employees.
Oil field pumping units are the Company's primary products sold for export.
These sales, other than to Canada, are made principally through foreign sales
representatives, licensees and distributors. During 1994, foreign sales
accounted for approximately 16 percent of the Company's total net sales.
The Company's domestic and international markets are highly competitive
with price, quality and speed of delivery being important factors. While the
Company believes that it is one of the larger manufacturers of sucker rod
pumping units in the United States, manufacturers of other types of units
(submersibles and hydraulics) have a significant share of the total pumping
unit market. The Company does not believe it has a large market share in the
power transmission, castings or trailer markets.
The Company employed approximately 1,950 people, including approximately
1,450 at December 31, 1994, that were paid on an hourly basis. The Company has
an open shop contract, which runs to October 6, 1996, with three AFL-CIO labor
unions. The Company considers its employee relations to be satisfactory.
Additional information required by Item 1 is included in the sections
entitled "Management's Discussion and Analysis", "Letter to the Shareholders",
and "Product Line Information" of the Annual Report, portions of which sections
are incorporated herein by reference and included as part of Exhibit 13.
Item 2. Properties
The Company's major manufacturing facilities are located in and near
Lufkin, are owned in fee and include approximately 150 acres and a foundry,
machine shop, structural shops, assembly shops and warehouses. The Company also
has a plant in Nisku, Canada which produces structural parts for pumping units.
These parts are then assembled with parts shipped from Lufkin and are delivered
to the Company's Canadian customers.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Shareholders
None
Item 4A. Executive Officers of the Registrant
The following information is submitted with respect to the executive
officers of the Company as of March 1, 1995:
Officer
Name Position with Company Age Since
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D. V. Smith President & Chief Executive Officer 52 1993
J. W. Barber Vice President 62 1994
J. H. Finney, Jr. Vice President 62 1992
J. F. Glick Vice President 42 1994
J. R. Partridge Vice President 59 1986
M. A. Penn Vice President 54 1983
E. G. Pittman Vice President 61 1976
S. H. Semlinger Vice President 41 1992
C. J. Haley, Jr. Secretary-Treasurer 52 1973
There is no significant family relationship either by blood or by marriage
among the officers of the Company.
All of the executive officers of the Company, with the exception of Mr.
Smith, Mr. Barber and Mr. Glick have been employed by the Company for more than
five years in the same or similar positions. Mr. Smith was first employed by
the Company in January 1993 to serve as President and Chief Executive Officer.
For the five year period prior to his employment with the Company, Mr. Smith was
employed and served as Vice President of Manufacturing of Cooper Industries
(1989-93) and as Vice President of Oil Tool Division of Cameron Iron Works
(1982-89). Both companies are based in Houston, Texas. Mr. Barber was first
employed by the Company in July 1990 to serve as sales manager for trailer
products. Mr. Barber was previously employed by Fruehauf Trailers as Vice
President of Welded Products in Detroit, Michigan. Mr. Glick was first employed
by the Company in September 1994 to serve as Vice President and General Manager
of the Power Transmission Division. Prior to joining the Company, Mr. Glick
served as Director of Manufacturing, U.K. and Ireland, with Cooper Oil Tools and
as Plant Manager of Cooper Oil Tools in Leeds, England. The executive officers
of the Company serve at the pleasure of the Board of Directors of the Company.
The term of office for all officers expires at the next annual meeting of the
Board of Directors of the Company.
Part II
Item 5. Market for the Registrant's Common Stock
and Related Shareholder Matters
The information required by Item 5 is included in the section entitled
"Financial Review" of the Annual Report, which section is incorporated herein by
reference and included as part of Exhibit 13.
Item 6. Selected Financial Data
FIVE YEAR SUMMARY OF SELECTED
CONSOLIDATED FINANCIAL DATA
(In millions, except per share data) 1994 1993 1992 1991 1990
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Sales $217.3 $202.2 $178.6 $247.1 $194.7
Earnings (loss) from operations (1.2)* 2.5 (27.3)** 6.9 2.0
Earnings (loss) per share (.18)* .38 (4.01)** 1.01 .30
Total assets 176.8 182.5 176.3 220.6 222.5
Cash dividends per share .60 .60 1.35 1.60 1.53
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*Includes pretax charges of $11.2 million for special inventory writedowns.
**Includes a $24.3 million restructuring charge. The Company adopted SFAS No.
109 effective January 1, 1992, but this change had no effect on the Company's
financial statements. In addition, the Company adopted SFAS No. 106 effective
January 1, 1992. The cumulative effect of the change in accounting for post-
retirement benefits including the applicable income tax benefit was a charge to
income of $7.5 million or $1.11 per share.
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations
The information required by Item 7 is included in the section entitled
"Management's Discussion and Analysis" of the Company's Annual Report, portions
of which section are incorporated herein by reference and included as part of
Exhibit 13.
Item 8. Financial Statements and Supplementary Data
The information required by Item 8 is included in the consolidated
financial statements and related notes and the "Report of Independent Public
Accountants" of the Company's Annual Report, which consolidated financial
statements and related notes and report of independent public accountants are
incorporated herein by reference and included as part of Exhibit 13.
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
The information required by Item 10 relating to the directors of the
Company is included in the section entitled "Directors and Nominees for
Director" on pages 2 through 5 of the definitive Proxy Statement for the annual
meeting of Company shareholders on May 17, 1995 ("Proxy Statement"), which
section is incorporated herein by reference and included as part of Exhibit 28.
The information relating to the executive officers of the Company is provided in
Item 4A of Part I of this Annual Report.
Item 11. Executive Compensation
The information required by Item 11 is included in the section entitled
"Executive Compensation" on pages 6 through 9 of the Proxy Statement, which
section is incorporated herein by reference and included as part of Exhibit 28.
Item 12. Security Ownership of Certain Beneficial
Owners and Management
The information required by Item 12 is included in the sections entitled
"Voting Securities" and "Election of Directors" on pages 1 through 5 of the
Company's Proxy Statement, which sections are incorporated herein by reference
and included as part of Exhibit 28.
Item 13. Certain Relationships and Related Transactions
None
Part IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K
(a) Documents filed as part of the report
1. Consolidated Financial Statements (incorporated by
reference to the Annual Report)
Report of Independent Public Accountants
Consolidated Balance Sheet
Consolidated Statement of Earnings
Consolidated Statement of Stockholders'
Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
2. Financial statement schedules
Schedules Omitted--All schedules for which
provision is made in the applicable regulations of
the Securities and Exchange Commission have been
omitted because they are not applicable or not re-
quired or the required information is included in
the consolidated financial statements or notes thereto.
3. Exhibits
(3) Articles of Incorporation, as amended, and
Bylaws, as amended, were included as exhibit 3
to Form 10-K of the registrant for the year
ended December 31, 1990, which exhibits are
incorporated herein by reference.
(10.1) Shareholder Rights Agreement, dated as of
May 4, 1987, was included as exhibit (1)
to Form 8-A of the registrant dated May 13,
1987, which agreement is incorporated herein
by reference.
(10.2) Company's 1990 Stock Option Plan was included
as Exhibit 28.1 to the Company's registration
statement on Form S-8 dated September 24, 1990
(File No. 33-36976), which plan is incorporated
herein by reference.
(13) Portions of the Annual Report to Shareholders for the
year ended December 31, 1994 are included as an
exhibit to this report for the information of the
Securities and Exchange Commission.
(22) Schedule listing subsidiaries of the
registrant
(24) Consent of Independent Public Accountants
(28) Portions of the definitive proxy statement of Lufkin
Industries, Inc., for the annual meeting
of shareholders on May 17, 1995 are included
as an exhibit to this report for the informa-
tion of the Securities and Exchange Commission.
(b) Reports on Form 8-K filed during the fourth quarter of 1994
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Lufkin Industries, Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on February
15, 1995.
LUFKIN INDUSTRIES, INC.
BY /s/ C. James Haley, Jr.
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C. James Haley, Jr., Secretary-Treasurer
Principal Financial and Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on February 15, 1995, below by the following persons on
behalf of Lufkin Industries, Inc. and in the capacities indicated.
By /s/ D. V. Smith
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D. V. Smith, President and Chief Executive
Officer
By /s/ S. W. Henderson, III
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S. W. Henderson, III, Director
By /s/ L. R. Jalenak, Jr.
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L. R. Jalenak, Jr., Director
By /s/ H. H. King
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H. H. King, Director
By /s/ M. E. Kurth, Jr.
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M. E. Kurth, Jr., Director
By /s/ W. T. Little
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W. T. Little, Director
By /s/ B. H. O'Neal
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B. H. O'Neal, Director
By /s/ F. B. Stevenson
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F. B. Stevenson, Director
By /s/ H. J. Trout,Jr.
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H. J. Trout, Jr., Director
By /s/ W. W. Trout, Jr.
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W. W. Trout, Jr., Director
By /s/ T. E. Wiener
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T. E. Wiener, Director