Selected Financial Data (1)
(In thousands, except per share data)
Year Ended November 30 1997 1996 (2) 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
Operations
Net sales $601,296 $508,976 $328,345 $331,306 $284,325 $236,476
Cost of products sold 373,015 321,748 219,899 214,809 189,111 152,480
Gross margin percentage 38.0% 36.8% 33.0% 35.2% 33.5% 35.5%
Selling, general and
administrative expenses 139,467 112,361 59,874 61,498 53,319 50,128
Research and development expenses 18,680 17,294 13,184 12,982 12,325 11,030
Operating income 70,134 57,573 35,388 42,017 29,570 22,838
Operating income percentage 11.7% 11.3% 10.8% 12.7% 10.4% 9.7%
Interest expense 19,317 14,466 2,158 2,919 1,925 1,662
Income taxes 23,068 11,039 13,510 16,350 11,784 9,201
Net income 28,095 24,060 20,264 23,302 16,155 12,706
EBITDA (3) 92,470 73,761 44,106 51,536 36,751 30,361
EBITDA interest coverage (4) 4.8 5.1 20.4 17.7 19.1 18.3
Per Share Data (5)
Net income 1.20 1.04 .88 1.00 .70 .55
Cash dividends .32 .32 .31 .27 .24 .22
Book value 6.16 5.36 4.86 4.38 3.60 3.16
Price range of common stock 24 1/8-16 3/4 19 3/4-12 1/4 15-11 18-11 3/4 15 7/8-9 3/8 9 3/4-5 5/8
Other Data
Total assets 501,795 521,860 183,582 190,252 167,044 117,049
Working capital 52,126 50,579 35,505 41,604 33,270 27,131
Capital expenditures(6) 12,673 19,233 15,599 6,693 7,598 3,262
Depreciation 8,850 6,453 4,251 4,637 3,746 3,965
Amortization of intangibles 13,140 9,097 3,923 4,328 3,141 2,827
Total debt 224,171 261,561 28,229 35,110 44,101 14,642
Book value 142,439 121,889 109,374 99,424 81,128 70,125
Return on equity 21.3% 20.8% 19.4% 25.8% 21.4% 17.6%
Debt to total capitalization 61% 68% 21% 26% 35% 17%
Sales per employee 283 274 282 281 253 214
Operating income per employee 33 31 30 36 26 21
Average shares outstanding (7) 23,400 23,200 23,100 23,250 23,123 23,189
Year Ended November 30 1991 1990 1989 1988 1987
- -------------------------------------------------------------------------------------------------------
Operations
Net sales $220,508 $240,146 $219,713 $203,499 $189,213
Cost of products sold 150,669 161,626 145,592 134,114 122,135
Gross margin percentage 31.7% 32.7% 33.7% 34.1% 35.5%
Selling, general and
administrative expenses 46,921 50,404 44,113 42,516 39,779
Research and development expenses 10,606 10,814 9,708 8,980 8,872
Operating income 12,312 17,302 20,300 17,889 18,427
Operating income percentage 5.6% 7.2% 9.2% 8.8% 9.7%
Interest expense 2,437 2,635 1,399 806 708
Income taxes 4,417 6,850 8,399 7,550 8,599
Net income 6,357 10,022 12,574 11,284 10,272
EBITDA (3) 20,177 26,179 26,958 23,540 23,050
EBITDA interest coverage (4) 8.3 9.9 19.3 29.2 32.6
Per Share Data (5)
Net income .27 .41 .51 .45 .40
Cash dividends .21 .20 .17 .15 .14
Book value 3.16 3.10 3.00 2.65 2.34
Price range of common stock 6 1/8-4 1/8 7 5/8-4 7 1/8-5 3/8 7 1/8-4 7/8 7 5/8-4 5/8
Other Data
Total assets 127,342 125,371 129,025 101,357 96,814
Working capital 30,405 34,513 40,389 36,368 26,006
Capital expenditures(6) 1,928 3,968 2,486 2,930 5,397
Depreciation 4,038 4,021 3,387 3,133 2,785
Amortization of intangibles 2,928 2,651 1,199 767 686
Total debt 21,501 28,345 25,560 10,007 8,419
Book value 74,187 73,185 74,482 65,987 58,755
Return on equity 8.6% 13.6% 17.9% 18.1% 18.3%
Debt to total capitalization 22% 28% 26% 13% 13%
Sales per employee 186 186 174 170 160
Operating income per employee 10 13 16 15 16
Average shares outstanding (7) 23,499 24,659 24,863 24,921 25,511
1 This table of Selected Financial Data should be read in conjunction with
Management's Discussion and Analysis of Results of Operations and Financial
Condition and the Company's consolidated financial statements included
herein.
2 1996 operations include the effect of the acquisition of Guardsman
Products, Inc. on April 8, 1996 and exclude the effect of a restructuring
charge of $9,607 which reduced net income by $5,284 or $.23 per share.
3 EBITDA represents earnings before interest, taxes, depreciation and
amortization.
4 EBITDA interest coverage is determined by dividing EBITDA by interest
expense.
5 Adjusted for all stock splits and stock dividends through November 30, 1997
inclusive. Prices are rounded to nearest 1/8.
6 Excludes effect of acquisitions.
7 Used to calculate net income per share.
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Operating Results 1997 vs. 1996
================================================================================
Consolidated net sales increased 18.1% to a record $601.3 million for 1997.
Sales benefited from the full-year inclusion of Guardsman Products Inc. ("GPI"),
acquired in April, 1996. During 1997, the Company experienced volume growth in
each of its end use markets. Sales to the Company's four primary end use markets
(metal, wood, glass and composites, and Guardsman products) represented 39%,
38%, 12% and 11% of 1997 consolidated sales, respectively. International sales,
including U.S. exports of $17.2 million, grew 29.7% to $126.5 million during
1997. This represented an increase of 1.8 percentage points to 21.0% of sales.
For the first time in the Company's history, international sales exceeded 20% of
total sales, despite the negative impact of foreign exchange rate volatility in
several of the Company's overseas markets. Selling prices for most of the
Company's products remained stable during the year.
Gross profit margin continued to improve in 1997, rising 1.2 percentage
points over 1996 to 38.0%. Continued improvements in supply chain management,
including leveraging larger raw material order quantities and reducing the
number of raw materials, contributed to a 1.6 percentage point reduction in raw
material costs as a percentage of sales. The Company will continue to pursue
improvement in gross margin by reducing the number of raw material items,
process engineering, company-wide purchasing initiatives, and product
reformulations. Direct labor and overhead costs increased slightly as a
percentage of sales during 1997.
Operating expenses totaled $158.1 million for 1997, an increase of
$28.5 million, or 22.0%, over 1996 (excluding the restructuring charge reported
during 1996). Increases in 1997 operating expenses were due primarily to the
full-year inclusion of GPI operations. As a percentage of sales, operating
expenses increased 0.8 percentage points to 26.3%. The increase primarily
reflects higher amortization expense associated with intangibles acquired in the
GPI transaction, as well as higher selling and marketing costs associated with
certain Guardsman product lines, which target retail accounts rather than
original equipment manufacturers.
Interest expense increased 33.5% during 1997 to $19.3 million,
primarily due to the full-year inclusion of debt associated with the GPI
acquisition. The increase was partially mitigated by a reduction in
interest-bearing borrowings during 1997. Management anticipates that the
restructuring of the Company's debt capitalization during the fourth quarter of
1997 should contribute to a slightly lower average interest rate on borrowings
going forward. (See "Liquidity and Capital Resources").
The Company's effective tax rate remained virtually unchanged for 1997
at 45.1%. The effective tax rate remained above U.S. statutory rates, primarily
due to the impact of non-deductible intangibles acquired as part of the GPI
acquisition, and generally higher foreign tax rates.
Operating Results 1996 vs. 1995
================================================================================
Consolidated net sales increased to a record $509.0 million for 1996, up from
$328.3 million, or 55.0%, over 1995. Sales increased due to higher volumes
associated with the acquisition of GPI, overall volume increases in Lilly's
pre-acquisition business, and selected price increases instituted during the
second half of 1995.
Gross profit margin improved to 36.8% in 1996 from 33.0% in 1995.
Improved 1996 margins were due to lower raw material costs, efficiencies in raw
material procurement, and selected selling price increases instituted during the
second half of 1995.
Operating expenses increased to $139.3 million in 1996 from $73.1
million in 1995. Increases in 1996 were due to the inclusion of GPI's
operations, increased amortization expense associated with intangibles acquired
as part of the GPI acquisition, and the one-time restructuring charge of $9.6
million discussed below.
Interest expense in 1996 was $14.5 million, compared to $2.2 million in
1995. The increase was directly attributable to significantly higher levels of
interest-bearing debt necessary to fund the GPI acquisition.
The Company's effective tax rate rose to 45.0% in 1996 from 40.0% in
1995, due primarily to higher levels of non-deductible intangible amortization
associated with the GPI acquisition.
Environmental
================================================================================
The Company's operations, like those of most companies in the coatings industry,
are subject to regulations related to maintaining or improving the quality of
the environment. Such regulations, along with the Company's own internal
compliance efforts, have required and will continue to require ongoing
expenditures. Spending for environmental compliance is not anticipated to be
material to the Company's financial position. The Company has been notified that
it is a potentially responsible party for clean-up costs with respect to several
government investigations at independently-operated waste disposal sites
previously used by the Company. Management has accrued, as appropriate, for
these environmental liabilities. Management believes the liabilities associated
with these sites will not have a material adverse effect on its operating
results or financial position.
Computer Systems - Year 2000 Compliance
================================================================================
The Company has reviewed its computer and other operating systems to identify
those that could be affected by the "Year 2000 Issue." During 1997, an
implementation plan was developed to ensure that all significant aspects of Year
2000 compliance will be addressed. The Company will achieve Year 2000 compliance
in connection with an upgrade to its computer processing software. This upgrade
is scheduled to be completed in early 1999. Management believes that
accomplishing Year 2000 compliance will not have a material adverse impact on
its operations or financial position.
Guardsman Acquisition and Restructuring
================================================================================
Effective April 8, 1996, the Company acquired the outstanding shares of GPI for
$235 million. The purchase was financed through senior secured credit
facilities. GPI's technology and related products were complementary to Lilly's,
with little customer overlap. The combination of both companies has strengthened
Lilly's ability to penetrate key markets.
In 1997, the Company successfully completed its initiatives to reduce
costs of the combined companies by approximately $25 million. These efforts
included improving efficiencies in raw material procurement, facility
rationalization, and workforce reductions. Costs associated with the closure of
Lilly facilities and workforce reductions were recorded in the 1996 second
quarter as a restructuring charge totaling $9.6 million, which reduced net
income by $5.3 million or $0.23 per share. Costs associated with the closure of
GPI facilities and workforce reductions totaled $9.0 million and were recorded
in the opening balance sheet of the combined entity at the acquisition date.
Liquidity and Capital Resources
================================================================================
During 1997, the Company restructured its debt capitalization on more favorable
terms. The $300 million secured credit agreement ("Agreement"), which was
executed to complete the GPI acquisition, was restructured into a five-year,
$175 million revolving credit facility ("Facility"). In addition, the Company
successfully accessed the public debt market for the first time by issuing $100
million in ten-year senior notes ("Notes"). Both the Facility and the Notes are
unsecured and require no principal amortization prior to maturity. Management
expects to fund required debt service from operating cash flows.
Liquidity and Capital Resources, continued
================================================================================
As part of the debt restructuring, the Company used net proceeds of
$99.2 million from the Notes offering to retire a portion of the debt
outstanding under the prior Agreement. The Company reduced total debt by $37.4
million during 1997. Additional amounts available for borrowing under the
Facility for acquisitions or general operating purposes totaled $51 million as
of November 30, 1997. Management believes that funds available from internal and
external sources are sufficient to meet the liquidity needs of the Company
during the next twelve months.
The Company manages exposure to interest rate movements primarily
through the issuance of fixed-rate debt securities and the use of interest rate
swap agreements. As of November 30, 1997, the Company was party to one interest
rate swap agreement with a notional principal amount of $95 million. The
agreement effectively converts a portion of the Company's debt from a floating
to a fixed interest rate, which was 7.03% as of November 30, 1997.
Cash provided by operating activities increased to $59.3 million during
1997, driven by higher levels of net income and non-cash charges for
depreciation and amortization associated with the full-year inclusion of GPI. In
addition, ongoing efforts to better manage working capital assets provided $5.1
million in operating cash.
Cash used for investing activities returned to more historical levels
during 1997, totaling a net $7.0 million. Included in this amount were $12.7
million of capital expenditures. Key capital project expenditures during 1997
included $4.8 million in additional capacity for the Company's powder and wood
operations, and $2.0 million for a new manufacturing facility in Ireland. Net
cash used for investing activities was partially offset by sundry inflows
totaling $5.7 million, representing disposal of non-operating assets, primarily
company-owned life insurance policies. Future investing activities are expected
to be financed from internal sources and existing credit facilities.
Cash used by financing activities totaled $49.1 million for 1997, due
principally to the $37.4 million reduction in debt. The Company maintained cash
dividend payments of $0.32 per share during 1997.
The Company focuses on three key measures of liquidity and access to
capital markets: EBITDA (earnings before interest, taxes, depreciation and
amortization); Interest Coverage (EBITDA divided by interest expense); and Debt
Capitalization (debt divided by the sum of debt plus equity). For 1997, the
company generated EBITDA of $92.5 million, an improvement of $19.0 million over
1996. Interest Coverage declined slightly to 4.8 times, due primarily to the
full-year inclusion of GPI and associated higher average debt outstanding during
the year. Debt Capitalization improved 7.0 percentage points to 61% due to
higher levels of net income retained in the business and lower levels of debt
outstanding at year-end 1997.
Subsequent Event - Acquisition of Merckens Lackchemie GmbH & Company
================================================================================
In December, 1997, the Company acquired Merckens Lackchemie GmbH and Company
("Merckens"). Located in Eschweiler, Germany, Merckens supplies industrial
coatings to customers throughout Europe. The Merckens product lines are
complementary to Lilly's existing products. Management anticipates that the
acquisition will add more than US $15 million of annual revenues to Lilly's
operations.
Consolidated Statements of Income and Retained Earnings
(In thousands, except per share data)
Year ended November 30 1997 1996 1995
- ----------------------------------------------------------------------------------------------
Net sales $ 601,296 $ 508,976 $ 328,345
Costs and expenses:
Cost of products sold 373,015 321,748 219,899
Selling, general and administrative 139,467 112,361 59,874
Research and development 18,680 17,294 13,184
Restructuring charge (Note 3) -- 9,607 --
--------------------------------------
531,162 461,010 292,957
--------------------------------------
Operating income 70,134 47,966 35,388
Other income (expense):
Interest income and sundry 346 638 544
Interest expense (19,317 (14,466) (2,158)
--------------------------------------
(18,971) (13,828) (1,614)
--------------------------------------
Income before income taxes 51,163 34,138 33,774
Income taxes (Note 7) 23,068 15,362 13,510
--------------------------------------
Net income 28,095 18,776 20,264
Retained earnings at beginning of year 62,990 51,446 38,223
--------------------------------------
91,085 70,222 58,487
Deduct dividends paid (1997, $.32 per share;
1996, $.32 per share; 1995, $.31 per share) 7,340 7,232 7,041
--------------------------------------
Retained earnings at end of year $ 83,745 $ 62,990 $ 51,446
======================================
Average number of shares and equivalent shares
of capital stock outstanding 23,400 23,200 23,100
Net income per share $ 1.20 $ .81 $ .88
See accompanying notes.
Consolidated Balance Sheets
(In thousands)
November 30 1997 1996
- ---------------------------------------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 10,079 $ 6,790
Accounts receivable, less allowance for doubtful accounts
(1997, $2,139; 1996, $2,706) 80,011 84,592
Inventories (Note 4) 45,704 47,546
Deferred income taxes 4,300 5,717
Other 6,580 14,073
------------------------
Total current assets 146,674 158,718
Other assets:
Goodwill, less amortization (1997, $15,368; 1996, $9,028) 220,897 228,536
Other intangibles, less amortization (1997, $17,963; 1996, $17,271) 30,059 30,275
Deferred income taxes 7,722 12,091
Sundry 13,604 11,658
------------------------
272,282 282,560
Property and equipment:
Land 8,035 8,396
Buildings 50,621 48,087
Equipment 78,432 71,056
Allowances for depreciation (deduction) (54,249) (46,957)
------------------------
82,839 80,582
------------------------
$ 501,795 $ 521,860
========================
Liabilities and Shareholders' Equity Current liabilities:
Accounts payable $ 60,510 $ 56,593
Salaries and payroll related items 20,814 22,681
Other 10,936 11,281
State and local taxes 1,212 269
Federal income taxes 1,076 791
Current portion of long-term debt (Note 6) -- 16,524
------------------------
Total current liabilities 94,548 108,139
Long-term debt (Note 6) 224,171 245,037
Other liabilities 40,637 46,795
Shareholders' equity (Note 8):
Capital stock, $.55 stated value per share:
Class A (limited voting) - 27,674 shares issued
(1996, 27,184 shares) 15,375 15,103
Class B (voting) - 540 shares issued 300 300
Additional capital 79,417 75,433
Retained earnings 83,745 62,990
Currency translation adjustments (2,254) 88
Cost of capital stock in treasury (deduction) (34,144) (32,025)
------------------------
142,439 121,889
------------------------
$ 501,795 $ 521,860
========================
See accompanying notes.
Consolidated Statements of Cash Flows
(In thousands)
Year ended November 30 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
Operating Activities
Net income $ 28,095 $ 18,776 $ 20,264
Adjustments to reconcile net income to net cash
provided by operating activities:
Restructuring charge -- 9,607 --
Depreciation 8,850 6,453 4,251
Amortization of intangibles 13,140 9,097 3,923
Deferred income taxes 4,085 2,094 (70)
Changes in operating assets and liabilities
net of effects from acquired business:
Accounts receivable 4,581 (5,849) 1,320
Inventories 1,842 (7,086) 8,474
Accounts payable and accrued expenses 2,933 7,825 (9,972)
Sundry (4,226) (3,466) (987)
----------------------------------------
Net cash provided by operating activities 59,300 37,451 27,203
Investing Activities
Purchases of property and equipment (12,673) (19,233) (15,599)
Payment for acquired business -- (235,000 --
Sundry 5,716 4,590 (620)
----------------------------------------
Net cash used by investing activities (6,957) (249,643) (16,219)
Financing Activities
Dividends paid (7,340) (7,232) (7,041)
Proceeds from senior notes 99,200 -- --
Proceeds from short-term and long-term borrowings -- 310,600 --
Principal payments on short-term and
long-term borrowings (136,590) (105,817) (6,888)
Purchases of capital stock for treasury -- -- (4,380)
Sundry (4,324) 1,171 1,004
----------------------------------------
Net cash (used) provided by financing activities (49,054) 198,722 (17,305)
----------------------------------------
Increase (decrease) in cash and cash equivalents 3,289 (13,470) (6,321)
Cash and cash equivalents at beginning of year 6,790 20,260 26,581
----------------------------------------
Cash and cash equivalents at end of year $ 10,079 $ 6,790 $ 20,260
========================================
See accompanying notes.
Notes to Consolidated Financial Statements
November 30, 1997
1. Summary of Significant Accounting Policies
================================================================================
Business. Lilly Industries, Inc. and its subsidiaries ("the Company") are
principally in the business of formulating, producing and selling industrial
coatings and specialty chemicals to manufacturing companies. The Company's
products include wood coatings for furniture, building products and cabinets;
coil coatings for building products, appliances and transportation equipment;
specialty coatings for a variety of metal products and fiberglass reinforced
products; powder coatings for a variety of metal products; and glass coatings
for mirrors. The Company also sells various household products, including fabric
protectors, furniture care products and cleaning aids.
Consolidation and Use of Estimates. The consolidated financial statements
include the accounts of all subsidiaries after elimination of intercompany
accounts and transactions. Preparation of these statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash Equivalents. Cash equivalents include time deposits and certificates of
deposit with original maturities of three months or less.
Inventories. Coatings inventories in the United States are stated at the lower
of cost, determined by the last-in, first-out (LIFO) method, or market. All
other inventories are stated at the lower of cost, determined by the first-in,
first-out (FIFO) method, or market.
Intangible Assets. Goodwill, which represents the excess of cost over fair value
of net assets of purchased businesses, is amortized by the straight-line method
over periods ranging from 20 to 40 years. Other intangible assets consist of
noncompete agreements, customer lists and technology and are amortized by the
straight-line method over periods ranging from 5 to 20 years. The Company
periodically evaluates the value of intangible assets to determine if an
impairment has occurred. This evaluation is based on various analyses including
reviewing anticipated cash flows.
Property and Equipment. Property and equipment is recorded on the basis of cost
and includes expenditures for new facilities and items which substantially
increase the useful life of existing buildings and equipment. Depreciation is
based on estimated useful lives (ranging from 3 to 40 years) and computed
primarily by the straight-line method.
Interest-Rate Swap Agreements. The Company periodically enters into
interest-rate swap agreements to modify the interest characteristics of its
outstanding debt. Swap agreements involve the exchange of interest payments
based on a variable interest rate for interest payments based on a fixed
interest rate calculated by reference to a notional amount over the life of the
agreement. The notional amount of each swap agreement represents all or a
portion of the principal balance of a specific debt obligation. The differential
to be paid or received is accrued and recognized as an adjustment of interest
expense.
Net Income Per Share. Net income per share is computed on the basis of the
weighted average number of shares outstanding during each year, adjusted for
stock splits and the dilutive effect, if any, of common stock equivalents. In
February, 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128 "Earnings Per Share," which
requires certain modifications to the currently applicable net income per share
calculations defined in Accounting Principles Board Opinion No. 15 and
restatement of net income per share for all prior periods reported. The Company
is required to adopt this standard in its first quarter of fiscal 1998. Adoption
of SFAS No. 128 is not expected to materially impact the Company's net income
per share.
2. Acquisition
================================================================================
On April 8, 1996 the Company acquired for $235,000,000 in cash all the
outstanding shares of Guardsman Products, Inc. ("Guardsman"). To finance the
acquisition, the Company used $275,000,000 of senior secured credit facilities
(see Note 6) to fund the initial purchase of shares, pay-off existing debt and
pay related expenses. The acquisition was recorded using the purchase method and
the consolidated financial statements include the results of operations of
Guardsman since the date of acquisition. The fair value of net assets acquired
included $40,031,000 net working capital, $50,246,000 noncurrent assets,
$213,642,000 intangible assets, $28,549,000 long-term debt, and $40,370,000
noncurrent liabilities. Goodwill is being amortized by the straight-line method
over 40 years.
If the acquisition had occurred on December 1, 1995, pro forma net
sales and net income for the year ended November 30, 1996 would be $598,722,000
and $20,767,000, respectively, and net income per share would be $.90. The pro
forma results include a restructuring charge of $9,607,000 which reduced net
income by $5,284,000 or $.23 per share (see Note 3). The pro forma consolidated
results of operations are not necessarily indicative of future results of
operations or actual results of operations that would have occurred had the
purchase been made at December 1, 1995.
3. Restructuring
================================================================================
In 1996 the Company adopted and commenced implementation of plans for the
consolidation of manufacturing facilities related to the acquisition of
Guardsman. These plans included the closure of both Lilly and Guardsman
facilities and workforce reductions totaling approximately 250 employees.
Closure costs included facility and equipment valuation adjustments, inventory
disposal costs, dismantling and maintenance costs, and termination benefits. The
primary employee groups affected included manufacturing, selling, administrative
and research and development personnel. As of November 30, 1997 the plans are
complete.
Costs associated with the closure of former Lilly facilities and
workforce reductions were recorded in the 1996 second quarter and reflected as a
restructuring charge totaling $9,607,000, which reduced net income by $5,284,000
or $.23 per share. The amounts paid or charged against these reserves and
amounts remaining as liabilities are as follows (in thousands):
Facilities,
Equipment,
Inventories Termination
and Other Benefits Total
--------- -------- -----
Balance December 1, 1995 $ -- $ -- $ --
Provision 7,827 1,780 9,607
Amounts paid or charged 365 447 812
----------------------------------
Balance November 30, 1996 7,462 1,333 8,795
Amounts paid or charged 7,462 1,333 8,795
----------------------------------
Balance November 30, 1997 $ -- $ -- $ --
==================================
Costs associated with the closure of former Guardsman facilities and
workforce reductions were recorded in the opening balance sheet of the combined
entity at the acquisition date. The amounts paid or charged against these
reserves and amounts remaining as liabilities are as follows (in thousands):
Facilities,
Equipment,
Inventories Termination
and Other Benefits Total
--------- -------- -----
Balance April 8, 1996 $6,532 $2,476 $9,008
Amounts paid or charged 1,642 469 2,111
----------------------------------
Balance November 30, 1996 4,890 2,007 6,897
Amounts paid or charged 3,590 589 4,179
Adjustment of estimated liabilities to goodwill 1,300 1,418 2,718
----------------------------------
Balance November 30, 1997 $ -- $ -- $ --
==================================
4. Inventories
================================================================================
The principal inventory classifications at November 30 are summarized as follows
(in thousands):
1997 1996
- --------------------------------------------------------------
Finished products $26,361 $25,847
Raw materials 27,019 29,375
-------------------
53,380 55,222
Less adjustment of certain inventories
to last-in, first-out (LIFO) basis 7,676 7,676
-------------------
$45,704 $47,546
===================
Inventory cost is determined by the LIFO method of inventory valuation
for approximately 68% and 69% of inventories at November 30, 1997 and 1996,
respectively.
5. Benefit Plans
================================================================================
The Company maintains defined benefit and defined contribution plans that cover
substantially all employees. Retirement benefits under the defined benefit plans
are based on final monthly compensation and years of service. Retirement
benefits under the defined contribution plans are based on employer and employee
contributions plus earnings to retirement. The plans' assets consist primarily
of common stock, fixed income securities and guaranteed insurance contracts. In
addition, unfunded supplemental executive retirement plans cover certain
employees in which benefits, determined by the Board of Directors, are payable
after retirement over periods ranging from 15 years to life of the participant.
The provision for defined benefit pension cost is determined using the
projected unit credit actuarial method. The Company's policy is to fund amounts
as are necessary on an actuarial basis to provide assets sufficient to meet the
benefits to be paid to plan members in accordance with the Employee Retirement
Income Security Act of 1974. Amounts contributed to union-sponsored pension
plans are based upon requirements of collective bargaining agreements. Company
contributions to the defined contribution plans are based on a percentage of
employee contributions.
The Guardsman defined benefit pension plans covering substantially all U.S.
employees were amended to freeze years of service at December 31, 1996 and
merged into the defined benefit plan maintained by the Company. Concurrently
with this amendment, these employees became participants in the Company's
defined contribution plans. The impact of the plan merger was recorded in
connection with the Guardsman acquisition. All 1996 amounts disclosed below
reflect the effect of freezing years of service for the Guardsman plans and
their merger into the Lilly plan.
A summary of the components of net pension cost for the defined benefit
plans and amounts charged to expense for the defined contribution plans for the
years ended November 30 follows (in thousands):
1997 1996 1995
- ---------------------------------------------------------------------------------------
Defined benefit plans
Service cost - benefits earned
during the period $2,099 $1,733 $ 708
Interest cost on projected benefit obligation 5,484 4,594 2,742
Actual net gain on plan assets (8,482) (9,056) (8,849)
Net amortization and deferral 1,012 3,104 5,267
----------------------------
Net pension cost (benefit) 113 375 (132)
Defined contribution plans 3,740 2,219 2,130
----------------------------
Pension expense $3,853 $2,594 $1,998
============================
The expected long-term rate of return on assets used to compute the
defined benefit plans' pension expense was 9.25% for 1997, 1996 and 1995.
The following table sets forth the funded status and amounts recognized
in the consolidated balance sheets at November 30 for the Company's defined
benefit pension plans (in thousands):
1997 1996
- ---------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Vested $ 60,141 $ 58,699
Nonvested 4,767 6,774
----------------------
Total accumulated benefit obligations $ 64,908 $ 65,473
======================
Actuarial present value of projected benefit
obligations for services rendered to date $(82,542) $(79,647)
Plan assets at fair value 88,594 83,186
----------------------
Excess of plan assets over projected
benefit obligations 6,052 3,539
Unrecognized net gains (4,277) (768)
Unrecognized prior service cost 5,274 2,794
Unrecognized transition obligation at
December 1, 1985, net of amortization (1,135) (1,337)
----------------------
Net pension asset $ 5,914 $ 4,228
======================
The discount rate and rate of increase in compensation levels used to
measure benefit obligations were 7% and 5%, respectively, for both 1997 and
1996.
Accumulated benefits for supplemental executive retirement plans
totaled approximately $7,953,000 and $5,144,000 at November 30, 1997 and 1996,
respectively.
6. Long-Term Debt
================================================================================
Long-term debt consists of the following as of November 30 (in thousands):
1997 1996
- ------------------------------------------------------
Revolving Credit Facility $124,000 $ --
7.75% Senior Unsecured Notes 100,000 --
Facility A Term Note -- 171,500
Facility B Term Note -- 49,875
Facility C Revolving Note -- 40,000
Other 171 186
---------------------
224,171 261,561
Less current portion -- 16,524
---------------------
$224,171 $245,037
=====================
In November 1997, the Company restructured its long-term debt into a
$175,000,000 revolving credit facility ("Facility") with a group of financial
institutions and $100,000,000 of senior notes ("Notes"). The Notes were issued
as a 144A private placement offering with registration rights. The Facility is
unsecured and provides for borrowings under a revolving note. Interest is
payable upon maturity of each revolving advance, but in no case less frequently
than quarterly. The principal of the Facility is due October, 2002. The Notes
are unsecured. Interest is payable on June 1 and December 1 of each year the
Notes are outstanding. The principal of the Notes is due December, 2007.
6. Long-Term Debt, continued
================================================================================
The Facility bears interest, at the Company's option, at (i) the higher
of the agent bank's prime rate (8.25% at November 30, 1997) or the Federal Funds
rate plus 0.50%, or (ii) the London Interbank Offered Rate for U.S. Dollars plus
0.40% to 1.00%, depending upon the Company's leverage. A commitment fee ranging
from 0.15% to 0.25%, depending upon the Company's leverage, is payable on the
unused portion of the Facility.
In April 1996, the Company entered into a forty-four month amortizing
interest rate swap agreement ("Swap") with a notional amount of $175,000,000.
This agreement effectively converts a portion of the revolving note from
variable rate debt to fixed rate debt with a rate of 7.03% at November 30, 1997.
The notional amount of the Swap was $95,000,000 at November 30, 1997, and
reduces ratably on an annual basis to $50,000,000 in 1999.
Interest of $20,628,000, $12,746,000 and $2,306,000 was paid in fiscal
1997, 1996 and 1995, respectively.
The Company is subject to various debt covenants under the Facility and
Notes, including affirmative and negative covenants which require the
maintenance of certain ratios for maximum leverage, fixed charge coverage and
interest coverage. Additionally, such covenants place certain restrictions on
the Company's ability to engage in mergers and acquisitions and incur additional
indebtedness.
7. Income Taxes
================================================================================
Income tax expense for the years ended November 30 is comprised of the following
components (in thousands):
1997 1996 1995
- ----------------------------------------------------------------------------
Current expense:
Federal $ 10,612 $ 7,204 $ 7,953
Foreign 7,674 4,736 3,267
State 697 1,328 2,360
-----------------------------------
18,983 13,268 13,580
Deferred expense (credit):
Federal 2,818 1,829 --
Foreign 210 (119) (70)
State 1,057 384 --
-----------------------------------
4,085 2,094 (70)
-----------------------------------
$ 23,068 $ 15,362 $ 13,510
===================================
A reconciliation of the statutory U.S. federal rate to the effective
income tax rate for the years ended November 30 is as follows:
1997 1996 1995
- -----------------------------------------------------------------------------
Statutory U.S. federal income tax rate 35.0% 35.0% 35.0%
Increase resulting from:
Goodwill 3.9 4.1 2.4
State income taxes, net of federal
income tax benefit 2.3 3.3 3.4
Foreign 2.2 1.3 --
Other items 1.7 1.3 (.8)
-----------------------------
Effective income tax rate 45.1% 45.0% 40.0%
=============================
Deferred income taxes are recorded based upon differences between the
financial statement and tax basis of assets and liabilities. The deferred tax
assets and liabilities recorded on the balance sheet at November 30 are as
follows (in thousands):
1997 1996
- --------------------------------------------------------------------------
Deferred tax assets:
Restructuring and closure reserves $ -- $ 6,127
Goodwill and intangibles 1,426 1,316
Employee benefits 6,467 4,398
Accounts receivable, inventory and other 13,937 15,281
-------------------
21,830 27,122
Deferred tax liabilities:
Property and equipment 7,709 8,003
Pension 2,099 1,311
-------------------
9,808 9,314
-------------------
Net deferred tax assets $12,022 $17,808
===================
No provision has been made for U.S. federal income taxes on certain
undistributed earnings of foreign subsidiaries that the Company intends to
permanently invest or that may be remitted tax-free. The total of undistributed
earnings that would be subject to federal income tax if remitted under existing
law is approximately $12,000,000 at November 30, 1997. Determination of the
unrecognized deferred tax liability related to these earnings is not practicable
because of the complexities with its hypothetical calculation. Upon distribution
of these earnings, the Company will be subject to U.S. taxes and withholding
taxes payable to various foreign governments. A credit for foreign taxes already
paid would be available to reduce the U.S. tax liability.
Income taxes of $20,500,000, $20,177,000 and $16,524,000 were paid in
1997, 1996 and 1995, respectively.
8. Capital Stock
================================================================================
The Company has two classes of common stock, Class A stock and Class B stock.
Authorized shares of Class A and Class B stock are 97,000,000 and 3,000,000,
respectively. The limited voting rights of Class A shareholders are equal to
voting rights of Class B shareholders only with regard to voting for merger,
consolidation or dissolution of the Company and voting and electing four
directors of the Company if there are ten or more directors and two directors if
there are nine or fewer directors. With respect to all rights other than voting,
Class A shareholders are the same as Class B shareholders.
The terms of the Class B stock, which is held only by employees,
provide that these shares be exchanged for Class A stock on a share-for-share
basis when the shareholder ceases to be an employee or decides to dispose of the
shares. Accordingly, 3,000,000 shares of authorized Class A stock are reserved
for this purpose.
On January 12, 1996, the Company's Board of Directors ("Board")
declared a dividend of one purchase right for each outstanding share of Class A
and Class B stock. In addition, one right is distributed for each share issued
after January 26, 1996. Upon exercise, each right entitles holders to purchase
from the Company one share of stock at $55 per share, subject to certain
adjustments. The rights become exercisable when a person or group acquires
beneficial ownership of 15 percent or more of Class A stock or becomes the
beneficial owner of an amount of Class A stock (but not less than 10 percent)
which the Board determines to be substantial and not in the Company's best
long-term interests or following the announcement of a tender or exchange offer
for 30% or more of the Class A stock.
In the event a person acquires 15 percent or more of Class A stock, or
is determined by the Board to be a substantial owner whose ownership is not in
the Company's best long-term interests or an acquiring person engages in certain
self-dealing transactions, each holder will have the right to receive that
number of common shares having a market value of two times the exercise price of
the right. At any time after a person becomes an acquiring person, but before
such person acquires 50 percent or more of outstanding Class A stock, the Board
may exchange each right for one common share (subject to adjustment).
In the event the Company is involved in certain business combination
transactions, or 50 percent or more of the Company's consolidated assets or
earning power are sold, each holder will have the right to receive, upon
exercise at the then-current exercise price of the right, that number of shares
of common stock of the acquiring company having a market value of two times the
exercise price of the right.
The Company may redeem the rights at a price of $.01 per right at any
time prior to the time a person or group becomes an acquiring person as defined
by the rights agreement. The rights expire in January, 2006.
A summary of shares issued and held in treasury follows (in thousands):
Capital Stock Capital Stock
Issued Held in Treasury
Class A Class B Class A Class B
- -------------------------------------------------------------------------------------
Balance at December 1, 1994 26,695 540 4,304 222
Class A exchanged for Class B -- -- 78 (78)
Class B exchanged for Class A -- -- (8) 8
Acquisition for treasury -- -- 370 --
Stock options exercised 208 -- 10 35
---------------------------------------
Balance at November 30, 1995 26,903 540 4,754 187
Class A exchanged for Class B -- -- 78 (78)
Class B exchanged for Class A -- -- (54) 54
Stock options exercised 281 -- 32 28
---------------------------------------
Balance at November 30, 1996 27,184 540 4,810 191
Class A exchanged for Class B -- -- 106 (106)
Class B exchanged for Class A -- -- (22) 22
Stock options exercised 490 -- 29 75
---------------------------------------
Balance at November 30, 1997 27,674 540 4,923 182
=======================================
Changes in capital stock are summarized as follows (in thousands):
Cost of
Capital Stock Capital
(Stated Amount) Additional Stock in
Class A Class B Capital Treasury
- -----------------------------------------------------------------------------------
Balance at December 1, 1994 $14,831 $ 300 $71,972 $26,087
Acquisition for treasury -- -- -- 4,380
Stock options exercised 116 -- 1,376 590
Disqualifying disposition
of stock options -- -- 102 --
-------------------------------------------
Balance at November 30, 1995 14,947 300 73,450 31,057
Stock options exercised 156 -- 1,828 968
Disqualifying disposition
of stock options -- -- 155 --
-------------------------------------------
Balance at November 30, 1996 15,103 300 75,433 32,025
Stock options exercised 272 -- 3,834 2,119
Disqualifying disposition
of stock options -- -- 150 --
-------------------------------------------
Balance at November 30, 1997 $15,375 $ 300 $79,417 $34,144
===========================================
Incentive stock option plans entitle certain directors, officers and
other key employees to buy shares of Class A stock at prices not less than fair
market value on the date of grant. The options vest and become exercisable
ratably over a three-year period commencing two years after the date of grant
and expire five years after the date of grant. The options are granted with
stock appreciation rights (SAR) and reload options. An SAR entitles the option
holder to receive a cash payment equal to the difference between the option
price and the current value of Class A stock. The reload option entitles the
option holder to the same number of options exercised with an option price equal
to the fair market value at the date of exercise. Shares reserved under these
plans were 3,008,125 and 2,008,125 at November 30, 1997 and 1996, respectively.
A summary of stock option activity for the years ended November 30 follows:
Weighted
Average
Number of Exercise
Shares Price
- ----------------------------------------------------------
Balance at December 1, 1994 1,319,418 $ 8.99
Grants 101,041 13.12
Exercised (208,229) 7.16
Terminated (13,350) 10.60
------------------------
Balance at November 30, 1995 1,198,880 9.64
Grants 311,304 12.88
Exercised (280,962) 7.06
Terminated (16,932 10.84
------------------------
Balance at November 30, 1996 1,212,290 11.05
Grants 77,072 18.43
Exercised (489,610) 8.39
Terminated (10,250) 13.39
------------------------
Balance at November 30, 1997 789,502 $ 13.39
========================
At November 30, 1997 the range of exercise prices and weighted-average
remaining contractual life of outstanding options were $10.59 - $21.63 and three
years, respectively. At November 30, 1997 and 1996, the number of options
exercisable was 279,000 and 570,000 respectively, and the weighted-average
exercise price of those options was $12.93 and $8.93, respectively.
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting
for Stock-Based Compensation," became effective for the Company in 1997. SFAS
123 permits companies to continue to apply APB Opinion 25, "Accounting for Stock
Issued to Employees," and related Interpretations in accounting for its plans.
The Company has elected to follow APB 25 and related Interpretations. Under APB
25, because the exercise price of the Company's employee stock options is not
less than fair market price of the share at the date of grant, no compensation
expense is recognized in the financial statements.
Pro forma information regarding net income and net income per share is
required by SFAS 123 and has been determined as if the Company accounted for its
employee stock options using the fair value method of that Statement. The fair
value of options was estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted-average assumptions for 1997 and 1996,
respectively: risk-free interest rate of 5.8% and 6.0%; dividend yields of 1.9%
for both years; volatility factors of the expected market price of the Company's
Class A stock of .30 and .32; and a weighted-average expected life of options of
4 years.
For purposes of pro forma disclosure, the estimated fair value of the
options is amortized to expense over the option's vesting period. The Company's
pro forma information follows (in thousands, except per share data):
1997 1996
- ------------------------------------------------------------------
Net income:
As reported $ 28,095 $ 18,776
Pro forma 27,608 18,439
Net income per share:
As reported $ 1.20 $ .81
Pro forma 1.18 .79
Weighted-average fair value
of options granted during the year $ 4.93 $ 3.71
Due to the required phase-in provisions, the effects of applying SFAS
123 to arrive at the above pro forma amounts may not be representative of pro
forma net income or net income per share in future years.
9. Geographic Information
================================================================================
The Company maintains operations in the United States as well as Canada, the
United Kingdom, Germany, Taiwan, Malaysia, China and Ireland. A summary of
geographic data for the years ended November 30 is as follows (in thousands):
1997 1996 1995
- ------------------------------------------------------------------------------
Net sales to unaffiliated customers:
United States $ 491,973 $ 423,753 $ 277,494
Foreign 109,323 85,223 50,851
---------------------------------------
Consolidated $ 601,296 $ 508,976 $ 328,345
=======================================
Income before income taxes:
United States $ 48,779 $ 41,501 $ 25,943
Foreign 21,701 16,710 9,989
Interest expense (19,317) (14,466) (2,158)
Restructuring charge -- (9,607) --
---------------------------------------
Consolidated $ 51,163 $ 34,138 $ 33,774
=======================================
Total assets:
United States $ 453,456 $ 473,957 $ 158,338
Foreign 49,007 48,325 25,784
Eliminations (deductions) (668) (422) (540)
---------------------------------------
Consolidated $ 501,795 $ 521,860 $ 183,582
=======================================
10. Quarterly Results of Operations (Unaudited)
Quarterly results of operations are summarized as follows (in thousands, except
per share data):
Quarter Ended
1997 Feb. 28 May 31 Aug. 31 Nov. 30
- ------------------------------------------------------------------------
Net sales $142,160 $154,238 $150,904 $153,994
Gross profit 52,048 59,193 57,072 59,968
Net income 4,710 7,401 7,679 8,305
Net income per share .20 .32 .33 .35
Quarter Ended
1996 Feb. 29 May 31 Aug. 31 Nov. 30
- --------------------------------------------------------------------------
Net sales $ 73,271 $131,711 $150,859 $153,135
Gross profit 24,061 47,474 56,188 59,505
Net income 3,486 616 7,012 7,662
Net income per share .15 .03 .30 .33
Report of Independent Auditors
Shareholders and Board of Directors
Lilly Industries, Inc.
We have audited the accompanying consolidated balance sheets of Lilly
Industries, Inc. and subsidiaries as of November 30, 1997 and 1996, and the
related consolidated statements of income and retained earnings and cash flows
for each of the three years in the period ended November 30, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits 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 financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Lilly
Industries, Inc. and subsidiaries at November 30, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended November 30, 1997, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Indianapolis, Indiana
January 23, 1998
Responsibility for Financial Statements
================================================================================
The management of Lilly Industries, Inc. is responsible for the preparation of
the financial statements in the Annual Report and for the integrity and
objectivity of the information presented. The financial statements have been
prepared in conformity with generally accepted accounting principles and
necessarily include amounts which are estimates and judgments. The fairness of
the presentation in these statements of the Company's financial position,
results of operations and cash flows is reported on by the independent auditors.
To assist in carrying out the above responsibility, the Company has
internal systems which provide for selection of personnel, segregation of duties
and the maintenance of accounting policies, systems, procedures and related
controls.
Although no cost-effective system can insure the elimination of errors,
the Company's systems have been designed to provide reasonable but not absolute
assurances that assets are safeguarded, that policies and procedures are
followed, and that the financial records are adequate to permit the production
of reliable financial statements. The Audit Committee of the Board of Directors,
which is composed of directors who are not employees of the Company or its
subsidiaries, meets regularly with Company officers and independent auditors in
connection with the adequacy and integrity of the Company's financial reporting
and internal controls.
/s/ John C. Elbin
John C. Elbin
Vice President, Chief Financial Officer
and Secretary
Investor Information
================================================================================
Form 10-K
A copy of the Form 10-K, which is filed with the Securities and Exchange
Commission, will be sent free to any shareholder upon written request. Write to:
Mr. Kenneth L. Mills,
Assistant Secretary
Lilly Industries, Inc.
733 S. West Street
Indianapolis, IN 46225
Registrar and Transfer Agent
================================================================================
Harris Trust and Savings Bank
Attn: Shareholder Services
311 W. Monroe Street, 11th Floor
P. O. Box A3504
Chicago, Illinois 60690-3504
(800) 942-5909
(312) 461-6001
Communications concerning shareholder records, including address
changes, stock transfers, cash dividends or other service needs should be
directed to Harris Trust and Savings Bank.
Analyst Contacts
================================================================================
Security analyst inquiries are welcomed. Please call:
John C. Elbin
Chief Financial Officer
(317) 687-6703
Annual Meeting
================================================================================
Thursday, April 23, 1998
10:00 A.M., EST
Rooms 101 and 102
Indiana Convention Center & RCA Dome
Indianapolis, Indiana
The meeting notice and proxy materials were mailed to shareholders with
their copies of this annual report. Lilly urges all shareholders to vote their
proxies and thus participate in the decisions that will be made at the annual
meeting.
[RIGHT COLUMN OF PRIOR PAGE]
Dividend Reinvestment Plan
================================================================================
A dividend reinvestment and voluntary stock purchase plan for Lilly Industries,
Inc. shareholders permits purchase of the Company's Class A stock without
payment of brokerage commission or service charge. Participants in this plan may
have cash dividends on their shares automatically reinvested and, if they
choose, invest by making optional cash payments. Additional information on the
plan is available by writing:
Harris Trust and Savings Bank
Attn: Shareholder Services
311 W. Monroe Street, 11th Floor
P. O. Box A3504
Chicago, Illinois 60690-3504
Stock Trading and Dividend Information
================================================================================
The Company's Class A stock is traded on the New York Stock Exchange under the
symbol LI.
Dividends are traditionally paid on the 1st business day of January,
April, July and October to shareholders of record approximately three weeks
prior.
The following table sets forth the dividends paid per share of stock
and the high and low prices in each of the quarters in the past two years ended
November 30.
Dividends Price Range
Fiscal 1997 Per Share High Low
- ---------------------------------------------------------------
1st quarter ended Feb. 28 $ .08 $20 $17
2nd quarter ended May 31 .08 21 16 3/4
3rd quarter ended Aug. 31 .08 24 1/8 19 3/4
4th quarter ended Nov. 30 .08 22 1/2 17 7/8
-----
$ .32
=====
Dividends Price Range
Fiscal 1996 Per Share High Low
- ---------------------------------------------------------------
1st quarter ended Feb. 29 $.08 $14 1/8 $12 1/4
2nd quarter ended May 31 .08 15 3/4 12 1/2
3rd quarter ended Aug. 31 .08 19 15
4th quarter ended Nov. 30 .08 19 3/4 16 1/4
-----
$.32
=====
At November 30, 1997 there were approximately 2,080 registered
shareholders of Class A stock and 54 registered shareholders of Class B stock,
which is reserved for employees of the Company.
Locations
[LEFT COLUMN]
International
================================================================================
Australia
Level 22, 201 Miller Street
North Sydney, NSW 2080
Australia
Canada
1915 Second Street West
Cornwall, Ontario K6H 5T1
Canada
65 Duke Street
London, Ontario N6J 2X3
Canada
China
Lot 3 Xintang
District Administration
Dalinshan, Dongguan
Guangdon, China 511774
England
152 Milton Park
Abingdon
Oxfordshire OX14 4SD
England
Germany
D-8649 Wallenfels/Ofr.
Postfach 1126
Germany
Friedensstrasse 40
D-52249 Eschweiler
Germany
Ireland
Willowfield Road
Ballinamore
Co. Leitrim
Ireland
Malaysia
Lot No. 4963, Jalan Teratai
51/2 Miles
Meru Industrial Zone
41050 Klang
Selangor Darul Ehsan
Malaysia
Singapore
Level 36, Hong Leong Building
16 Raffles Quay 048581
Singapore
Taiwan, R.O.C.
No. 1 Kung Yeh First Road
Zenwu Village
Kaohsiung Hsien
Taiwan, R.O.C.
[MIDDLE COLUMN OF PRIOR PAGE]
United States
================================================================================
Alabama
1771 Industrial Road
Dothan, AL 36303
Arkansas
1900 E. 145th Street
Little Rock, AR 72206
California
210 East Alondra Blvd.
Gardena, CA 90248
901 West Union Street
Montebello, CA 90640
Connecticut
145 Dividend Road
Rocky Hill, CT 06067
15 Lunar Drive
Woodbridge, CT 06525
Florida
2355 S.W. 66th Terrace
Davie, FL 33317
Illinois
5400 23rd Avenue
Moline, IL 61265
Indiana
28335 Clay Street
Elkhart, IN 46517
546 W. Abbott Street
Indianapolis, IN 46225
Kentucky
347 Central Avenue
Bowling Green, KY 42101
Michigan
411 Darling Street, N.
Fremont, MI 49412
4999 36th Street, SE
Grand Rapids, MI 49512
Missouri
1136 Fayette
N. Kansas City, MO 64116
New Jersey
1991 Nolte Drive
Paulsboro, NJ 08066
[RIGHT COLUMN OF PRIOR PAGES
North Carolina
10300 Claude Freeman Drive
Charlotte, NC 28262
2147 Brevard Road
High Point, NC 27263
1717 English Road
High Point, NC 27262
Texas
2518 Chalk Hill Road
Dallas, TX 75212
Washington
13535 Monster Road
Seattle, WA 98178
Corporate Offices
================================================================================
733 S. West Street
Indianapolis, Indiana 46225
Corporate Technology Center
521 W. McCarty Street
Indianapolis, Indiana 46225