T O C O N N E C T
FINANCIAL HIGHLIGHTS
IN THOUSANDS, EXCEPT PER SHARE DATA
FOR THE YEARS ENDED JUNE 30 1995 1994 1993
- - --------------------------------------------------------------------------------
Net sales $80,679 $67,557 $58,671
Net income 3,739 2,619 1,662
Net income per common share .69 .49 .31
AT YEAR-END, JUNE 30 1995 1994 1993
- - --------------------------------------------------------------------------------
Backlog of orders $15,300 $13,600 $11,300
Working capital 15,875 15,014 14,780
Total assets 54,169 45,377 40,727
Long-term debt 4,143 2,408 2,166
Shareholders' equity 36,480 31,419 28,231
1995 SALES BY GEOGRAPHICAL REGION NET INCOME
$ MILLIONS
[PIE CHART] NET INCOME INCREASED AT A 60%
COMPOUND GROWTH RATE SINCE 1991
[BAR CHART]
24
TEN-YEAR FINANCIAL SUMMARY
IN THOUSANDS, EXCEPT PER SHARE DATA
Years ended June 30
1995 1994 1993
-----------------------------------
OPERATING RESULTS:
- - --------------------------------------------------------------------------------------------------
Net sales $80,679 67,557 58,671
Cost of sales 59,329 49,642 42,986
------- ------ ------
Gross profit 21,350 17,915 15,685
Selling, general and administrative expenses 15,586 13,727 12,039
Provision for restructuring -- -- 620
Provision for plant consolidation -- -- --
Disposition of subsidiary -- -- --
-----------------------------------
Operating income (loss) 5,764 4,188 3,026
Other income (expense)-net (170) 841 (464)
-----------------------------------
Income (loss) before income taxes, extraordinary
item and change in accounting principle 5,594 5,029 2,562
Income taxes (benefit) 1,855 2,410 900
Extraordinary item - gain on fire insurance recovery -- -- --
Cumulative effect of change in accounting principle -- -- --
-----------------------------------
Net income (loss) $ 3,739 2,619 1,662
-----------------------------------
Return on net sales 4.6% 3.9% 2.8%
PER SHARE INFORMATION:
- - --------------------------------------------------------------------------------------------------
Net income (loss) $ .69 .49 .31
Cash dividends .12 .12 .08
Weighted average shares outstanding (in thousands) 5,383 5,368 5,331
Book value at year end* 6.79 5.91 5.31
BALANCE SHEET:
- - --------------------------------------------------------------------------------------------------
Working capital $15,875 15,014 14,780
Property, plant and equipment - net 24,609 19,344 15,871
Total assets 54,169 45,377 40,727
Long-term debt 4,143 2,408 2,166
Shareholders' equity 36,480 31,419 28,231
OTHER DATA:
- - --------------------------------------------------------------------------------------------------
Current ratio to 1.0 2.3 2.4 2.5
Return on shareholders' average equity 11.0% 8.8% 5.8%
Capital additions 5,929 5,793 4,060
Depreciation and amortization 3,714 3,003 3,031
* On the basis of year-end outstanding common shares.
See Note 17 of Notes to Consolidated Financial Statements for Selected Quarterly
Financial Data, including dividend payments on common shares.
ROBINSON NUGENT, INC. AND SUBSIDIARIES 25
1992 1991 1990 1989
-------------------------------------------------
OPERATING RESULTS:
- - ----------------------------------------------------------------------------------------------------------------
Net sales 50,759 53,061 55,031 53,149
Cost of sales 38,750 41,529 41,802 39,504
------ ------ ------ ------
Gross profit 12,009 11,532 13,229 13,645
Selling, general and administrative expenses 10,985 11,153 12,724 11,531
Provision for restructuring -- -- -- --
Provision for plant consolidation -- -- -- --
Disposition of subsidiary -- -- -- --
-------------------------------------------------
Operating income (loss) 1,024 379 505 2,114
Other income (expense)-net 214 438 (259) 236
-------------------------------------------------
Income (loss) before income taxes, extraordinary
item and change in accounting principle 1,238 817 246 2,350
Income taxes (benefit) 290 250 (450) 400
Extraordinary item - gain on fire insurance recovery -- -- -- --
Cumulative effect of change in accounting principle -- -- -- --
-------------------------------------------------
Net income (loss) 948 567 696 1,950
-------------------------------------------------
Return on net sales 1.9% 1.1% 1.3% 3.7%
PER SHARE INFORMATION:
- - ----------------------------------------------------------------------------------------------------------------
Net income (loss) .18 .10 .13 .33
Cash dividends .08 .08 .08 .08
Weighted average shares outstanding (in thousands) 5,315 5,315 5,296 5,840
Book value at year end* 5.52 5.17 5.34 4.96
BALANCE SHEET:
- - ----------------------------------------------------------------------------------------------------------------
Working capital 17,431 16,210 16,595 14,609
Property, plant and equipment - net 15,506 15,216 16,077 15,843
Total assets 40,520 38,743 40,823 38,170
Long-term debt 3,409 3,234 3,589 3,519
Shareholders' equity 29,346 27,490 28,370 26,179
OTHER DATA:
- - ----------------------------------------------------------------------------------------------------------------
Current ratio to 1.0 3.4 3.2 3.0 2.9
Return on shareholders' average equity 3.3% 2.0% 2.6% 6.3%
Capital additions 2,382 2,488 1,994 1,036
Depreciation and amortization 2,809 2,897 2,752 3,100
26
1988 1987 1986
-----------------------------------
OPERATING RESULTS:
- - --------------------------------------------------------------------------------------------------
Net sales 52,730 46,201 45,104
Cost of sales 37,673 34,467 35,953
------ ------ ------
Gross profit 15,057 11,734 9,151
Selling, general and administrative expenses 10,736 10,563 10,586
Provision for restructuring -- 2,934 --
Provision for plant consolidation 1,700 --
Disposition of subsidiary -- -- 596
-----------------------------------
Operating income (loss) 2,621 (1,763) (2,031)
-----------------------------------
Other income (expense)-net 593 (596) (286)
Income (loss) before income taxes, extraordinary
item and change in accounting principle 3,214 (2,539) (2,317)
Income taxes (benefit) 800 (800) (1,200)
Extraordinary item - gain on fire insurance recovery 1,379 -- --
Cumulative effect of change in accounting principle 160 -- --
-----------------------------------
Net income (loss) 3,953 (1,739) (1,117)
-----------------------------------
Return on net sales 7.5% (3.8%) (2.5%)
PER SHARE INFORMATION:
- - --------------------------------------------------------------------------------------------------
Net income (loss) .57 (.25) (.16)
Cash dividends .07 .06 .06
Weighted average shares outstanding (in thousands) 6,845 6,856 6,859
Book value at year end* 5.27 4.75 4.96
BALANCE SHEET:
- - --------------------------------------------------------------------------------------------------
Working capital 22,806 20,146 17,981
Property, plant and equipment - net 18,571 17,949 20,708
Total assets 50,413 45,087 44,227
Long-term debt 4,273 4,667 4,450
Shareholders' equity 36,082 32,582 33,997
OTHER DATA:
- - --------------------------------------------------------------------------------------------------
Current ratio to 1.0 3.5 3.9 4.5
Return on shareholders' average equity 11.5% (5.2%) (3.3%)
Capital additions 4,512 2,373 2,546
Depreciation and amortization 3,393 3,988 4,168
ROBINSON NUGENT, INC. AND SUBSIDIARIES 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
NET SALES GROSS PROFIT GROSS PROFIT
[BAR CHART] [BAR CHART] [BAR CHART]
1995 VS. 1994
Customer orders for the fiscal year ended June 30, 1995 were $82.3 million,
up 18 percent over customer orders of $69.9 in the prior year. Sales in fiscal
1995 were $80.7 million, up 19 percent over sales of $67.6 million in the prior
year. Pretax profits advanced to $5.6 million in fiscal 1995, an increase of 11
percent over $5.0 million pretax profit in the prior year. Net income for fiscal
1995 was $3.7 million, or 69 cents per common share, compared to $2.6 million
or 49 cents per common share, in fiscal 1994. The operating results for 1994
included income in the second quarter of $1.0 million ($.6 million after related
income taxes) from an out-of-court settlement of a lawsuit with a competitor for
alleged breach of contract and the appropriation of trade secrets.
The Company increased sales in all major markets in fiscal 1995. Sales
growth was primarily the result of increased sales of newer products, a
strengthened European operation, continued growth in the computer, network and
communications markets, and the acquisition of Teckino Manufacturing b.v.b.a.
("Teckino"). Customer sales in the United States increased by 8 percent, or $3.7
million, and represented 60 percent of consolidated sales in 1995 compared to 66
percent in 1994. The increase in the United States reflects increased sales of
the Company's high density connector lines. European sales increased by $7.1
million or 56 percent, and represented 25 percent of the Company's sales in 1995
compared to 19 percent in 1994. The increase in European sales reflects the
growth in the Company's Scotland operation, improved European economic
conditions and the recent acquisition of Teckino. Teckino, an engineering and
manufacturing development company located in Belgium, was acquired in February
1995. This acquisition strengthens the Company's technical capabilities in
Europe. Asia sales principally to Japan, Malaysia and Singapore increased by
$1.5 million or 16 percent in fiscal 1995. The sales growth in Malaysia and
Singapore continues to reflect the demand of the Company's U.S. customers with
multi-national locations. To broaden the customer base in this region, the
Company has expanded manufacturing operations in Malaysia and established an
administrative, marketing and sales headquarters in Singapore.
Gross profits of $21.4 million in fiscal 1995 increased by $3.4 million or
19 percent compared to fiscal 1994. Expressed as a percent of sales, gross
profit was at 26.5 percent for both fiscal periods. The higher gross profit
dollars were the result of the higher sales, improved margins on newer products
and favorable manufacturing efficiencies at the plant level. Included in gross
profit were expenditures for research, development and engineering of $3.1
million in 1995 compared to $2.5 million in 1994. The increase in engineering
of $.6 million or 24 percent reflects the Company's continued commitment to
develop new and improved products. Direct cost consisting of materials, direct
production labor and associated production costs were down slightly as a percent
of sales reflecting improved manufacturing efficiencies and a favorable product
mix. Fixed costs decreased as a percent of sales reflecting the improved
utilization of the Company's productive base.
Selling, general and administrative expenses increased by $1.9 million or
14 percent in 1995 compared to 1994. The increase in expenses reflect the higher
sales related expenses such as commissions, a full year expense for the
Company's European headquarters operations and costs associated with the
establishment of the Asia Pacific headquarters in Singapore. Selling, general
and administrative expenses were $15.6 million, or 19.4 percent of net sales in
1995 and $13.7 million, or 20.3 percent of net sales in 1994.
Other income (expense) in 1995 was a net expense of $.2 million compared to
income of $.8 million in the prior 1994 fiscal year. Other income in 1994
included the out-of-court settlement of $1.0 million previously noted. In 1995
other income (expense) included $.3 million from currency exchange losses
associated with the fluctuations of certain European currencies primarily in the
third quarter of 1995, $.3 million of royalty income, and net interest expense
of $.1 million.
ROBINSON NUGENT, INC. AND SUBSIDIARIES 28
SELLING, GENERAL AND NET INCOME RETURN ON NET SALES
ADMINISTRATIVE EXPENSES
[BAR CHART] [BAR CHART] [BAR CHART]
Provisions for income taxes in 1995 and 1994 were provided on the basis of
effective rates in the respective countries. The effective rate of 33 percent in
fiscal 1995 was lower than the 48 percent rate in the prior year. The decrease
in the effective tax rate, when compared to the prior year, reflects a research
and experimental tax credit recorded in 1995, and prior year results included
significantly higher losses without recognition of tax benefits as compared to a
marginal profit in the current year at the Company's Scotland operations. At
such time as management is able to project the probable utilization of all or
part of the net operating loss carry forward provision, the valuation allowance
for the deferred tax asset will be reversed.
1994 VS 1993
Customer orders for the fiscal year ended June 30, 1994 were $69.9 million,
up 18 percent over customer orders of $59.3 million in the prior fiscal year of
1993. Sales advanced to $67.6 million, an increase of 15 percent over net sales
of $58.7 million in the prior fiscal year. Pretax profits in fiscal 1994 reached
$5.0 million, an increase of 96 percent over $2.6 million in the prior year. Net
income for fiscal 1994 was $2.6 million, or 49 cents per common share, compared
to $1.7 million, or 31 cents per share, in fiscal 1993. Results of operations in
fiscal 1993 included a pretax charge of $.6 million ($.4 million after related
income tax benefits) that was recognized in the fourth quarter of the year for
costs and expenses associated with the reorganization of the Company's European
operation and the decision to shut down a cable assembly operation in Italy. The
operating results for 1994 included pretax income in the second quarter of $1.0
million ($.6 million after related income taxes) from an out-of-court settlement
of a lawsuit with a competitor for alleged breach of contract and the
appropriation of trade secrets.
Sales advanced in all major markets of the United States, Europe and Asia.
Sales growth was attributable to increased sales of newer high-density
connectors and sockets. Sales in the U.S. advanced by 14 percent, or $5.5
million, and represented 66 percent of consolidated sales in 1994 compared to 67
percent in 1993. Asia sales principally to Japan, Malaysia and Singapore
advanced by $3.1 million, or 51 percent, in 1994 compared to an advance of 34
percent in 1993. Sales growth in Europe was one percent in 1994 reflecting a
continued slowness in general economic conditions in major markets such as
Germany and a reported negative market growth in all of Europe. The Company
realized sales growth in the United Kingdom and Scandinavian countries. Sales
growth in Malaysia and Singapore was in large part due to the presence of U.S.
customers with multi-international locations. The Company expanded its
production in Malaysia in 1994 to include additional high-volume product lines
to serve both the Asia region and other territories on a world-wide basis.
Gross profits improved in fiscal 1994 to $17.9 million, representing 26.5
percent of net sales, compared to $15.7 million, or 26.7 percent of net sales,
in 1993. Expenditures for research, development and engineering which are
charged against gross profits advanced to $2.5 million, or 3.7 percent of net
sales in fiscal 1994 compared to $2.0 million, or 3.4 percent of net sales in
1993. The improved gross profits in 1994 were attributable to a higher volume of
units sold and from sales of newer high-density sockets and connectors that
generated higher margins. There was a decline in volume and prices on more
mature product lines with the most significant effects realized on sales in
Europe. Direct costs were relatively constant as a percent of net sales compared
to results in 1993. Fixed costs such as depreciation of equipment declined as a
percent of sales; other indirect manufacturing costs increased in dollars and
as a percent of net sales.
Selling, general and administrative expenses advanced by $1.7 million, or
14 percent, in 1994 compared to 1993. Costs increased in 1994 as a result of
higher levels of commission expense on increased sales, advertising and
promotion of new products, additional personnel, and higher
ROBINSON NUGENT, INC. AND SUBSIDIARIES 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
EARNINGS PER SHARE BOOK VALUE RETURN ON
SHAREHOLDER'S EQUITY
[BAR CHART] [BAR CHART] [BAR CHART]
administrative expenses in the planning and implementation of the reorganization
of European operations. Selling, general and administrative expenses were $13.7
million, or 20.3 percent of net sales in 1994 and $12.0 million, or 20.5 percent
of net sales in 1993.
In May 1993, the Company announced its reorganization plans for European
operations, including relocation of connector assembly operations from a
facility in Switzerland to a newly-acquired facility in the Glasgow, Scotland
area and establishment of a new European headquarters operation in Eindhoven,
Netherlands. The manufacturing facility in Switzerland was downsized to produce
connector components for use at other facilities. In connection with its overall
strategy for Europe, the Company planned an orderly closing of a cable assembly
operation in Italy with manufacturing of cable assemblies to be relocated to
other facilities. The Company recognized a pretax charge of $.6 million
($.4 million after related tax benefits) in the fourth quarter of 1993 for the
estimated costs related to the reduction in work force in Switzerland and Italy,
write-down of assets in Italy and costs and expenses in the phase-out period of
the operations in Italy. In September 1993, the cable assembly facility in Italy
was engulfed with flood waters which damaged substantially all equipment and
inventories. Outside subcontractors were engaged to complete critical sales
contracts. Overall, the Company incurred a pretax charge of $.2 million in the
first quarter of fiscal 1994 for unrecoverable losses and costs from the flood
damages. Cable assembly manufacturing in Italy was discontinued in 1994.
Other income in 1994 was $.8 million compared to an expense of $.5 million
in 1993. Other income in 1994 included an out-of-court settlement with a
competitor in the amount of $1.0 million. Conversely, other income (expense) in
1993 represented a charge to income of $.5 million, principally from currency
transaction losses that were associated with devaluations of certain European
currencies in the first quarter of 1993. Secondarily, the Company experienced a
reduction in short-term investment income to a level of $.2 million in 1994, a
reduction of 50 percent compared to $.4 million in 1993. This reduction was
attributable to lower investment yields and a lower level of investments.
Provisions for income taxes in 1994 and 1993 were provided on the basis of
effective rates. The effective tax rate in 1994 advanced to 48 percent compared
to 35 percent in 1993, principally as a result of losses without tax benefit at
operations in Scotland.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 30, 1995 was at $15.9 million compared to $15.0
million at June 30, 1994. The Company's current ratio at June 30, 1995 was 2.3
to 1 compared to 2.4 to 1 at June 30, 1994. Cash balances at June 30, 1995 were
$2.5 million compared to $3.0 million at year end 1994. The Company borrowed
funds during 1995 utilizing its bank lines of credit to finance the demands of
the business and the acquisition of Teckino. The short-term borrowing level
averaged $.2 million over the year and reached $.8 million at the highest level.
The increase in other non cash components of working capital primarily reflects
the growth in business.
The Company's long-term debt as a percentage of shareholder equity was 11.4
percent at year end 1995 compared to 7.7 percent at year end 1994, reflecting
the assumption long-term debt associated with the acquisition of Teckino.
Capital expenditures for new equipment were $5.9 million in the fiscal year
1995 compared to $5.8 million in 1994. The capital investments primarily relate
to the development and production of new products, manufacturing cost reduction
programs and the expansion of production capabilities. The Company projects cash
requirements for capital expenditures and working capital can be met from
operations and available bank lines of credit, currently at $3.2 million.
ROBINSON NUGENT, INC. AND SUBSIDIARIES 30
OPERATING RESULTS AS A PERCENTAGE OF NET SALES
1995 1994 1993
- - -------------------------------------------------------------------------------------
Net Sales 100.0% 100.0% 100.0%
Cost of sales 73.5 73.5 73.3
------------------------------------
Gross profit 26.5 26.5 26.7
Selling, general and administration expenses 19.4 20.3 20.5
Provision for restructuring -- -- 1.1
------------------------------------
Operating income 7.1 6.2 5.1
Other income (expense) (.2) 1.2 (.8)
------------------------------------
Income before income taxes 6.9 7.4 4.3
Income taxes 2.3 3.5 1.5
------------------------------------
Net income 4.6% 3.9% 2.8%
- - -------------------------------------------------------------------------------------
STOCK PRICE RANGE AND DIVIDEND INFORMATION
The following table sets forth the high/low closing price range per share of the
Company's common shares, which are traded over the counter on the NASDAQ
National Market System (NASDAQ Symbol: RNIC), and the cash dividends declared
per share in each of the quarters during the past two fiscal years ended in June
30, 1995.
Price Range Cash Dividends
- - -----------------------------------------------------------------------------------
FISCAL 1995
- - -----------------------------------------------------------------------------------
First quarter ended September 30 $6 7/8 - 5 3/8 $ .03
Second quarter ended December 31 8 7/8 - 6 3/8 .03
Third quarter ended March 31 9 3/8 - 7 5/8 .03
Fourth quarter ended June 30 9 1/2 - 6 7/8 .03
-----------------------------------------------------------------------------
Price Range Cash Dividends
- - ----------------------------------------------------------------------------------
FISCAL 1994
- - ----------------------------------------------------------------------------------
First quarter ended September 30 $9 5/8 - 6 1/4 $ .03
Second quarter ended December 31 8 7/8 - 6 1/2 .03
Third quarter ended March 31 8 3/4 - 6 1/4 .03
Fourth quarter ended June 30 7 3/4 - 5 5/8 .03
-----------------------------------------------------------------------------
As of June 30, 1995, the Company had approximately 750 holders of record of its
common shares.
ROBINSON NUGENT, INC. AND SUBSIDIARIES 31
CONSOLIDATED BALANCE SHEETS
IN THOUSANDS, EXCEPT SHARE DATA
June 30
Assets 1995 1994 1993
- - -----------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 2,460 2,991 4,926
Receivables, less allowance for doubtful receivables
of $651 in 1995, $697 in 1994 and $887 in 1993 12,209 10,539 9,325
Inventories 11,278 9,807 8,699
Other current assets 2,418 2,634 1,787
---------------------------
Total current assets 28,365 25,971 24,737
- - -----------------------------------------------------------------------------------
Property, plant and equipment, at cost less
accumulated depreciation and amortization 24,609 19,344 15,871
Other assets 1,195 62 119
------- ------ ------
Total assets $54,169 45,377 40,727
- - -----------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- - -----------------------------------------------------------------------------------
Current liabilities:
Current installments of long-term debt $ 924 341 974
Short-term bank borrowings 538 800 --
Accounts payable 6,131 5,356 4,315
Accrued expenses 4,456 3,689 3,682
Income taxes payable 441 771 986
---------------------------
Total current liabilities 12,490 10,957 9,957
Long-term debt, excluding current installments 4,143 2,408 2,166
Deferred income taxes 1,056 593 373
---------------------------
Total liabilities 17,689 13,958 12,496
Shareholders' equity:
Common shares without par value
Authorized 15,000,000 shares;
issued 6,850,050 shares 20,896 20,775 20,775
Retained earnings 22,325 19,299 17,327
Equity adjustment from foreign currency translation 3,774 2,513 1,584
Employee stock purchase plan loans and deferred
compensation (768) (1,094) (1,366)
Less cost of common shares in treasury;
1,479,586 shares in 1995, 1,532,630 shares in 1994
and 1,535,130 shares in 1993 (9,747) (10,074) (10,089)
---------------------------
Total shareholders' equity 36,480 31,419 28,231
---------------------------
Total liabilities and shareholders' equity $54,169 45,377 40,727
---------------------------
See accompanying notes to consolidated financial statements.
32 ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
IN THOUSANDS, EXCEPT PER SHARE DATA
Years ended June 30,
1995 1994 1993
- - -----------------------------------------------------------------------------------
Net sales $80,679 67,557 58,671
Cost of sales 59,329 49,642 42,986
---------------------------
Gross profit 21,350 17,915 15,685
Selling, general and administrative expenses 15,586 13,727 12,039
Provision for restructuring -- -- 620
---------------------------
Operating income 5,764 4,188 3,026
Other income (expense):
Interest income 134 192 366
Interest expense (262) (274) (314)
Currency exchange loss (286) (39) (453)
Settlement of lawsuit -- 1,000 --
Royalty income 295 -- --
Other (51) (38) (63)
---------------------------
Total other income (expense) (170) 841 (464)
---------------------------
Income before income taxes 5,594 5,029 2,562
Income taxes 1,855 2,410 900
---------------------------
Net income $ 3,739 2,619 1,662
- - -----------------------------------------------------------------------------------
Net income per common share $ .69 .49 .31
- - -----------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
ROBINSON NUGENT, INC. AND SUBSIDIARIES 33
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
IN THOUSANDS, EXCEPT PER SHARE DATA
Employees
Stock Purchase
Foreign Plan Loans
Common shares Retained currency and Deferred Treasury shares
Years ended June 30, 1995, 1994 and 1993 Shares Amount earnings translation Compensation Shares Amount
- - --------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1992 6,850 $20,775 16,090 2,570 -- (1,535) $(10,089)
- - --------------------------------------------------------------------------------------------------------------------------------
Net income -- -- 1,662 -- -- -- --
Dividends ($.08 per share) -- -- (425) -- -- -- --
Equity adjustments from foreign
currency translation -- -- -- (986) -- -- --
Stock purchase plan loans and
deferred compensation -- -- -- -- (1,516) -- --
Stock purchase plan repayments -- -- -- -- 67 -- --
Amortization of deferred compensation -- -- -- -- 83 -- --
-------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1993 6,850 $20,775 17,327 1,584 (1,366) (1,535) $(10,089)
- - --------------------------------------------------------------------------------------------------------------------------------
Net income -- -- 2,619 -- -- -- --
Dividends ($.12 per share) -- -- (638) -- -- -- --
Equity adjustments from foreign
currency translation -- -- -- 929 -- -- --
Stock purchase plan loans and
deferred compensation -- -- -- -- (81) -- --
Stock purchase plan repayments -- -- -- -- 95 -- --
Amortization of deferred compensation -- -- -- -- 155 -- --
Stock purchase plan terminations -- -- -- -- 103 -- --
Stock options exercised -- -- (9) -- -- 2 15
-------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1994 6,850 $20,775 19,299 2,513 (1,094) (1,533) $(10,074)
- - --------------------------------------------------------------------------------------------------------------------------------
Net income -- -- 3,739 -- -- -- --
Dividends ($.12 per share) -- -- (640) -- -- -- --
Equity adjustments from foreign
currency translation -- -- -- 1,261 -- -- --
Stock purchase plan repayments -- -- -- -- 91 -- --
Amortization of deferred compensation -- -- -- -- 153 -- --
Stock purchase plan terminations, including
the gain on disposition of stock held
by the plan trust -- 48 -- -- 82 -- --
Stock options exercised -- -- (73) -- -- 25 152
Investment in Teckino -- 73 -- -- -- 28 175
-------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1995 6,850 $20,896 22,325 3,774 (768) (1,480) $(9,747)
- - --------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
34 ROBINSON NUGENT, INC. AND SUBSIDIARIES
Years ended June 30
CASH FLOWS FROM OPERATING ACTIVITIES: 1995 1994 1993
- - -------------------------------------------------------------------------------------
Net income $ 3,739 2,619 1,662
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for restructuring of operations -- -- 620
Depreciation and amortization 3,714 3,003 3,031
Losses from disposition of capital assets 71 81 46
Increase in receivables (1,330) (1,214) (1,679)
Increase in inventories (1,136) (1,108) (835)
(Increase) decrease in other current assets 350 (626) 366
Increase in accounts payable and accrued expenses 631 1,048 1,633
Decrease in income taxes payable (330) (215) (99)
(Increase) decrease in deferred income taxes 197 102 (676)
Employee stock purchase plan deferred compensation -- (33) (695)
---------------------------
Net cash provided by operating activities 5,906 3,657 3,374
CASH FLOWS FROM INVESTING ACTIVITIES:
- - -------------------------------------------------------------------------------------
Capital expenditures (5,929) (5,793) (4,060)
Time deposits -- -- 2,983
Sale of capital assets -- -- 51
Investment in Teckino, net of cash acquired (186) -- --
Increase (decrease) in other assets (26) 57 18
-------------------------
Net cash used in investing activities (6,141) (5,736) (1,008)
CASH FLOWS FROM FINANCING ACTIVITIES:
- - ------------------------------------------------------------------------------------
Proceeds from short-term bank borrowings 738 3,200 --
Repayment of short-term bank borrowings (1,150) (2,400) --
Proceeds from long-term debt -- 2,034 --
Repayment of long-term debt (201) (2,688) (193)
Cash dividends (640) (638) (425)
Repayment of employee stock purchase plan loans 91 95 67
Employee stock purchase plan loans -- (48) (821)
Proceeds from stock purchase plan terminations 130 -- --
Proceeds from exercised stock options 79 6 --
--------------------------
Net cash used in financing activities (953) (439) (1,372)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 657 583 (686)
- - -------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (531) (1,935) 308
Cash and cash equivalents at beginning of year 2,991 4,926 4,618
Cash and cash equivalents at end of year $ 2,460 2,991 4,926
- - -------------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES FOR YEAR ENDED
JUNE 30, 1995:
- - -------------------------------------------------------------------------------------
Fair value of assets acquired, other than cash $3,660
Liabilities assumed (2,164)
Treasury shares (28,408) issued to former owners (248)
Payable to former owners of acquired business (1,062)
------
Cash paid for Teckino $ 186
- - -------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
ROBINSON NUGENT, INC. AND SUBSIDIARIES 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
IN THOUSANDS, EXCEPT PER SHARE DATA
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- - --------------------------------------------------------------------------------
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
The assets, liabilities and operations of foreign subsidiaries have been
generally translated into U.S. dollars in accordance with Statement of Financial
Accounting Standards No. 52 - "Foreign Current Translation."
STATEMENT OF CASH FLOWS. Cash and cash equivalents are defined as cash in banks
and investment instruments having maturities of 91 days or less on their
acquisition date.
INVENTORIES. Inventories are stated at the lower of cost (first-in, first-out
method) or market (net realizable value).
PROPERTY, PLANT AND EQUIPMENT. Depreciation is provided by the straight-line
method over the estimated useful lives of buildings, machinery, and equipment
for financial reporting purposes. Depreciation expenses include the amortization
of buildings capitalized under lease obligations in accordance with Statement of
Financial Accounting Standards No. 13 - "Accounting for Leases." Depreciation
expense was $3,530 in 1995, $2,848 in 1994, and $2,948 in 1993.
INCOME TAXES. In 1994, the Company changed its accounting for income taxes to
comply with the requirements of the Statement of Financial Accounting Standards
(SFAS) No. 109 - "Accounting for Income Taxes." In 1993, the Company accounted
for income taxes in accordance with the requirements of the Statement of
Financial Accounting Standards (SFAS) No. 96. The adoption of SFAS No. 109 did
not have a material effect on the consolidated financial position or results of
operations.
No U.S. Federal income taxes have been provided at June 30, 1995 on
approximately $5,700 of accumulated earnings of non-U.S. subsidiaries since the
Company plans to reinvest such amounts for an indefinite future period.
RESEARCH, DEVELOPMENT AND ENGINEERING. Research, development, and engineering
expenditures for creation and application of new and improved products and
manufacturing processes were approximately $3,100 in 1995, $2,500 in 1994, and
$2,000 in 1993. Research, development and engineering costs are charged to
operations as incurred.
GOVERNMENT INCENTIVE GRANTS. The Company received grants for its establishment
of manufacturing operations in Scotland in 1994, consisting of reimbursement of
employee training and hiring costs during start-up of operations and employment
of certain personnel, which aggregated $270. In addition, the Company will
receive a grant related to expected capital expenditures for equipment and
machinery over the period of 1994-1997. The Company's policy is to recognize
this capital expenditure grant over the estimated useful life of the equipment
and machinery. The financial statements include grant income of approximately
$239 in 1995, and $160 in 1994.
COMMON SHARE DATA. Per common share data are based on the weighted average
number of common shares outstanding plus common share equivalents resulting from
dilutive stock options. (see note 12). The number of shares used in computing
per common share data was 5,382,998 in 1995, 5,367,892 in 1994, and 5,331,459 in
1993.
NOTE 2 REORGANIZATION OF OPERATIONS AND FLOOD LOSSES
- - --------------------------------------------------------------------------------
In May 1993, the Company initiated plans to relocate certain manufacturing
operations from facilities in Switzerland to leased facilities in Scotland and
to establish a new European headquarters in the Netherlands. The Company also
announced the closing of a cable assembly operation in Italy.
The financial statements for 1993 included a pretax charge of $620 for the
costs related to the reduction in work force in Italy and Switzerland, and a
provision for write down of assets and expected costs and expenses during the
period of closings. As of June 30, 1995 all of the $620 provision has been
expended.
In September 1993, the cable assembly facilities in Italy were damaged by a
flood. The financial statements for 1994 include a pretax charge of $150 for
unrecoverable losses and costs from damaged assets and interruption of
operations.
NOTE 3 SETTLEMENT OF LAWSUIT
- - --------------------------------------------------------------------------------
In December 1993, the Company recognized pretax income of $1,000 ($620 after
related income taxes) from an out-of-court settlement of a lawsuit related to
damage claims against a competitor.
36 ROBINSON NUGENT, INC. AND SUBSIDIARIES
NOTE 4 ACQUISITION OF TECKINO MANUFACTURING B.V.B.A.
- - --------------------------------------------------------------------------------
On February 21, 1995, the Company acquired 100% of Teckino Manufacturing
b.v.b.a. ("Teckino"), an engineering and manufacturing development company, for
$1,538. The purchase agreement required a payment of $228 in cash plus $248 of
company stock (28,408 shares at $8.75 per share) at closing. In addition, the
agreement provides for future payments at various dates through February 1998
totaling $1,062 ($619 before interest imputed at 8%, plus $605 before interest
imputed at 8% of company stock, with shares to be determined based upon the
value of company stock at date of payment). Based upon an $8.75 per share market
price of company stock, the Company estimates total additional future company
shares to be issued in payment of the purchase price will be approximately
70,000 shares.
The acquisition has been accounted for by the purchase method of accounting
and the results of operations of Teckino have been included in the accompanying
consolidated financial statements since date of acquisition. The excess of the
purchase price over the fair value of net assets acquired was $923. This amount
has been included in other assets and will be amortized by the straight line
method over ten years. Amortization expense was $31 in 1995.
On an unaudited pro forma basis, assuming the purchase of Teckino had
occurred on July 1, 1993, net sales would have increased approximately $3,100 in
1995 and $1,800 in 1994, whereas net income and net income per common share
would not have been significantly different from reported amounts.
NOTE 5 INVENTORIES
- - --------------------------------------------------------------------------------
Inventories consist of the following: 1995 1994 1993
- - --------------------------------------------------------------------------------
Finished goods $ 2,687 2,729 2,243
Work in process 6,861 5,774 4,987
Raw material and supplies 1,730 1,304 1,469
---------------------------
Total $11,278 9,807 8,699
------------------------------------------------------------------------------
A portion of the gold and gold content in inventories is provided under a
consignment agreement with a bank. Under terms of the gold consignment
agreement, the Company has pledged certain inventories with gold content as
collateral. Such inventories were approximately $348 at June 30, 1995.
NOTE 6 PROPERTY, PLANT AND EQUIPMENT
- - --------------------------------------------------------------------------------
A summary of property, plant and equipment follows: 1995 1994 1993
- - --------------------------------------------------------------------------------
Land $ 839 793 793
Buildings 13,379 11,663 10,963
Machinery and equipment 45,262 37,725 31,753
----------------------------
59,480 50,181 43,509
Less accumulated depreciation and amortization 34,871 30,837 27,638
----------------------------
Total $24,609 19,344 15,871
------------------------------------------------------------------------------
NOTE 7 ACCRUED EXPENSES
- - --------------------------------------------------------------------------------
A summary of accrued expenses follows: 1995 1994 1993
- - --------------------------------------------------------------------------------
Compensation $ 1,129 1,266 1,594
Commissions 798 603 495
Distributor allowances 683 601 401
Pension and retirement plans 22 280 309
State and local taxes 347 299 230
Other 1,477 640 653
----------------------------
Total $ 4,456 3,689 3,682
------------------------------------------------------------------------------
22 ROBINSON NUGENT, INC. AND SUBSIDIARIES
NOTE 8 SHORT-TERM AND LONG-TERM DEBT
- - --------------------------------------------------------------------------------
At June 30, 1995, the Company had unused bank lines of credit totaling
approximately $3,200 for working capital purposes. Interest, at rates ranging
from 7.6 to 10.0%, is generally payable monthly and the lines of credit are
renewable on an annual basis.
ROBINSON NUGENT, INC. AND SUBSIDIARIES 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
IN THOUSANDS, EXCEPT PER SHARE DATA
NOTE 8 SHORT-TERM AND LONG-TERM DEBT (CONTINUED)
- - --------------------------------------------------------------------------------
Long-term debt consists of the following:
1995 1994 1993
------------------------------------------------------------------------------
United States' obligations:
8.125% capitalized lease obligations under
economic development first mortgage revenue
bonds, payable monthly through November 1996 $ 147 247 339
Obligation under purchase agreement for the
acquisition of Teckino, interest imputed at 8%,
payable at various dates through February 1998 1,062 -- --
Foreign obligations:
6.875% fixed rate real estate mortgage, payable
in annual installments through 2004,
with interest 2,522 2,175 --
Variable rate real estate mortgages paid in 1994,
interest, 6 3/4 - 7 3/4% -- -- 2,442
10.3% fixed rate real estate mortgage, payable
in quarterly installments through 2000 433 -- --
7.65% fixed rate real estate mortgage payable in
quarterly installments through 2001 289 -- --
10.0% capitalized lease obligation, payable to
bank in monthly installments through 2002 314 327 359
Other long term debt 300 -- --
---------------------------
Total 5,067 2,749 3,140
Less current installments of long-term debt 924 341 974
---------------------------
Long term debt $ 4,143 2,408 2,166
------------------------------------------------------------------------------
The aggregate maturities of long-term debt for the five years ending June 30,
2000, amount to $924 in 1996, $883 in 1997, $944 in 1998, $449 in 1999, $454 in
2000 and $1,413 thereafter.
Total interest paid under long-term debt agreements was $237 in 1995, $273 in
1994, and $309 in 1993.
Property, plant and equipment with an approximate net book value of $7,917 is
pledged as collateral under the various long-term debt agreements.
NOTE 9 INCOME TAXES
- - --------------------------------------------------------------------------------
As of July 1, 1993, the Company adopted SFAS No. 109 - "Accounting for Income
Taxes" which requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been recognized in the
financial statements or income tax returns. In estimating future tax
consequences, SFAS No. 109 generally considers all expected future events other
than enactments of changes in the tax laws or rates.
The Company accounted for income taxes in accordance with SFAS No. 96 for
1993, which applied an asset and liability approach that gave no recognition to
future events other than the likely recovery of assets and settlement of
liabilities at their carrying amounts.
The provision (benefit) for income taxes follows:
1995 1994 1993
- - --------------------------------------------------------------------------------
Current:
Federal $1,173 1,893 1,322
State 245 188 161
Foreign 240 227 93
---------------------------
Total current 1,658 2,308 1,576
Deferred:
Federal 197 120 (536)
State (15) 2 (74)
Foreign 15 (20) (66)
---------------------------
Total deferred 197 102 (676)
---------------------------
Total $1,855 2,410 900
- - --------------------------------------------------------------------------------
38 ROBINSON NUGENT, INC. AND SUBSIDIARIES
NOTE 9 INCOME TAXES (CONTINUED)
- - --------------------------------------------------------------------------------
The following reconciles income taxes computed at the U.S. Federal statutory
rate to income taxes reported for financial reporting purposes:
1995 1994 1993
--------------------------------------------------------------------------------
Income tax expense at statutory rate $1,902 1,710 873
Non-U.S. tax exempt (earnings) losses (213) 503 36
Tax exempt earnings of FSC (139) (78) (55)
Foreign taxes 255 207 26
State and local taxes, net of U.S. Federal income tax 152 125 57
Research and experimentation credit (165) -- --
Other 63 (57) (37)
---------------------------
Income taxes as reported $1,855 2,410 900
---------------------------------------------------------------------------------
No U.S. Federal income taxes have been provided at June 30, 1995, on
approximately $5,700 of accumulated earnings of certain foreign subsidiaries
since the Company plans to reinvest such amounts for an indefinite future
period.
The Company made income tax payments of $1,805 in 1995, $2,580 in 1994, and
$1,492 in 1993.
The net current and non-current components of deferred income taxes recognized
in the balance sheet at June 30 follows:
1995 1994
- - --------------------------------------------------------------------------------
Net current assets $ 851 879
Net non-current liabilities 1,056 593
-----------------
Net assets (liabilities) $ (205) 286
------------------------------------------------------------------------------
The tax effect of the significant temporary differences which comprise the
deferred tax assets and liabilities at June 30 follows:
1995 1994
------------------------------------------------------------------------------
Deferred tax assets:
Net operating loss carryforwards $ 501 450
Employee compensation and benefits 306 327
Inventories and other current assets 311 410
State and local income taxes, net of U.S. Federal
income tax (benefit) 68 47
Other accrued expenses 90 38
-----------------
Total deferred tax assets 1,276 1,272
-----------------
Deferred tax liabilities:
Depreciation and amortization (894) (445)
Foreign taxes (86) (74)
Deferred tax on DISC earnings -- (17)
----------------
Total deferred tax liabilities (980) (536)
----------------
Net deferred tax assets before valuation allowance 296 736
Deferred tax asset valuation allowance (501) (450)
----------------
Net deferred tax assets (liabilities) $(205) 286
------------------------------------------------------------------------------
ROBINSON NUGENT, INC. AND SUBSIDIARIES 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
IN THOUSANDS, EXCEPT PER SHARE DATA
NOTE 9 INCOME TAXES (CONTINUED)
- - --------------------------------------------------------------------------------
At June 30, 1995, certain foreign subsidiaries have accumulated net operating
loss carryforwards of approximately $2,000. Management is unable at this time to
project as being more probable than not future taxable income which will utilize
these loss carryforwards. As a result, a valuation allowance was established in
the amount of $501 and $450 for fiscal years 1995 and 1994, respectively. The
tax benefit of these carryforwards will be recognized when management is able to
project future taxable income of these foreign subsidiaries.
The change in the deferred income tax liability represents the effect of
changes in the amounts of temporary differences. The tax effect of changes in
those temporary differences are presented below:
1995 1994 1993
------------------------------------------------------------------------------
Depreciation and amortization $(181) 6 (117)
State and local income taxes, net of U.S. Federal
income tax (benefit) 21 5 (54)
Accrued expenses 45 169 (478)
Deferred tax on DISC earnings 17 (17) (16)
Foreign tax -- -- (66)
Minimum tax credit -- -- 15
Inventories and other current assets (99) (61) 40
--------------------------
Total (197) 102 (676)
Basis differential related to the acquisition
of Teckino (294) -- --
--------------------------
Total $(491) 102 (676)
---------------------------------------------------------------------------
NOTE 10 LEASED ASSETS AND LEASE COMMITMENTS
- - --------------------------------------------------------------------------------
The consolidated financial statements include land and buildings under capital
leases as follows:
1995 1994 1993
------------------------------------------------------------------------------
Land and buildings $1,742 1,596 1,602
Less accumulated amortization 564 489 458
--------------------------
Net assets under capitalized leases $1,178 1,107 1,144
------------------------------------------------------------------------------
The Company leases office and plant facilities, automobiles, computer systems,
and certain other equipment under noncancelable operating leases, which expire
at various dates. Taxes, insurance, and maintenance expenses are normally
obligations of the Company. Rental expenses charged to operations under
operating leases amounted to $1,109 in 1995, $888 in 1994, and $996 in 1993.
A summary of future minimum lease payments follows:
Year ending June 30
CAPITAL OPERATING
LEASES LEASES
------------------------------------------------------------------------------
1996 $ 181 1,188
1997 103 871
1998 64 686
1999 64 537
2000 64 458
Later Years 101 858
----------------------------
Total minimum lease payments 577 4,598
-------
Less amount representing interest 116
-------
Present value of net minimum lease payments
(included in long-term debt) $ 461
------------------------------------------------------------------------------
40 ROBINSON NUGENT, INC. AND SUBSIDIARIES
NOTE 11 EMPLOYEE BENEFITS
- - --------------------------------------------------------------------------------
The Company has a defined contribution pension plan and a defined contribution
401(k) plan for eligible employees in the U.S. Annual contributions by the
Company to the defined contribution pension plan are based upon specified
percentages of the annual compensation of participants. Under the terms of the
401(k) plan, employees may contribute a portion of their compensation to the
plan and the Company makes matching contributions up to a specified level. The
contributions charged to expense under the defined contribution plans were $433
in 1995, $401 in 1994, and $326 in 1993.
Personnel in Europe and Asia are provided retirement benefits under various
programs which are regulated by foreign law. Annual contributions are generally
regulated in amount and shared equally by the Company and its employees. The
Company's share of annual contributions to the aforementioned foreign defined
contribution plans was $346 in 1995, $173 in 1994, and $133 in 1993.
NOTE 12 STOCK OPTION PLANS
- - --------------------------------------------------------------------------------
In September 1993, a stock option plan for eligible employees and nonemployee
directors was adopted by the Board of Directors and subsequently approved, in
November 1993, by the shareholders of the Company. The new plan replaced plans
that expired in April 1993. Under the terms of the new plan, the Board of
Directors is authorized to grant options in the aggregate of 500,000 common
shares of the Company to eligible employees and a predetermined annual number of
shares to nonemployee directors at prices not less than the market value at the
date of grant. Options are exercisable within the period prescribed by the Board
of Directors at the time of grant, but not later than ten years from the date of
grant. Terms and conditions of the new plan are similar to those of the expired
plans.
At June 30, 1995, the Company had outstanding stock options for 291,197 common
shares of the Company. The following is a summary of the option transactions
under the expired plans and the new plan adopted in 1993.
1995 Shares Option price per share
------------------------------------------------------------------------------
Shares under option at beginning of year 260,147 $ 6.92
Granted 88,600 7.77
Expired (3,500) 13.93
Cancelled (29,414) 8.26
Exercised (24,636) 4.57
-------
Shares under option at end of year 291,197 7.16
- - ---------------------------------------------------------------------------------
1994 Shares Option price per share
------------------------------------------------------------------------------
Shares under option at beginning of year 227,647 $ 7.52
Granted 69,000 8.71
Expired (23,500) 16.16
Cancelled (10,500) 11.94
Exercised (2,500) 2.50
-------
Shares under option at end of year 260,147 6.92
------------------------------------------------------------------------------
1993 Shares Option price per share
------------------------------------------------------------------------------
Shares under option at beginning of year 271,669 $ 7. 65
Granted -- --
Expired (43,022) 11.72
Cancelled (1,000) 15.50
Exercised -- --
-------
Shares under option at end of year 227,647 7.52
------------------------------------------------------------------------------
At June 30, 1995, a total of 170,997 shares at an average option price per share
of $6.56 were exercisable and 348,200 shares were available for future grants.
ROBINSON NUGENT, INC. AND SUBSIDIARIES 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
IN THOUSANDS, EXCEPT PER SHARE DATA
NOTE 13 STOCK PURCHASE PLAN
- - --------------------------------------------------------------------------------
In 1993, the Company adopted an employee stock purchase plan for key employees
that provides for participants of the plan to purchase common shares of the
Company on the open market through an independent trustee. The plan permitted
the Board of Directors to authorize interest-free loans to assist the
participants to purchase such stock. Shares are held in trust as collateral for
the loans, which are payable by the participants of the plan over a period not
to exceed ten years. The plan also provides for participants to receive from the
Company, a matching number of common shares of the Company, based upon a vesting
schedule and the participants' level of purchased shares. The plan terminated in
1994 with respect to new participation. The loans ($547 in 1995, $660 in 1994,
and $754 in 1993) and deferred compensation charges ($221 in 1995, $434 in 1994,
and $612 in 1993) associated with the plan are classified as a reduction of
shareholders' equity. The amortization of the deferred compensation charged to
expense was $153 in 1995, $155 in 1994, and $83 in 1993.
NOTE 14 SHAREHOLDER RIGHTS PLAN
- - --------------------------------------------------------------------------------
The Company adopted a shareholder rights plan in April 1988 for the purpose of
deterring coercive or unfair takeover tactics and encouraging a potential
acquirer to negotiate with the Board of Directors before attempting to gain
control of the Company. Under the terms of the plan, rights to purchase
additional common shares were distributed as a dividend to shareholders of
record on May 6, 1988, and will be distributed with respect to shares which are
issued after May 6, 1988. The rights are attached to each issued and outstanding
share and expire on April 15, 1998. At issuance, the rights are not exercisable
and are not detachable from common shares. Accordingly, the rights do not
provide any immediate value to shareholders. The Company may redeem the rights
for one cent per right at any time prior to becoming exercisable. The rights
become exercisable ten days after public disclosure that a person acquired 20
percent or more, or commenced a tender offer or exchange offer for 30 percent or
more, of the issued and outstanding common shares, unless such acquisition or
tender offer was approved in advance by the disinterested directors of the
Company. Thereafter, the rights will trade separately from the common shares,
and separate certificates representing the rights will be issued. Each right
grants an eligible holder the right to purchase for $40.00 additional common
shares of the Company, or in the event of certain mergers or business
combinations, additional shares of the survivor's common shares. The number of
common shares to be issued upon exercise of a right is based upon the then
current market value of the common shares, subject to certain adjustments.
Effective September 5, 1995, Bank One, Indiana, N.A., resigned as transfer
agent for the Company and as rights agent, and Harris Trust and Savings Bank was
appointed by the Company as successor rights agent pursuant to the terms of the
Rights Agreement.
NOTE 15 SIGNIFICANT CUSTOMER
- - --------------------------------------------------------------------------------
During 1995, the Company had sales of approximately $8,900 to a single customer
which was in excess of 10% of total net sales. At June 30, 1995, the Company had
accounts receivable from this customer of approximately $700. No sales to a
single customer exceeded 10% of total sales in 1994 or 1993.
NOTE 16 BUSINESS SEGMENT AND FOREIGN SALES
- - --------------------------------------------------------------------------------
The Company operates within the electronic connectors segment of the electronics
industry. Products are sold throughout the world for use by manufacturers of
computers, telecommunications equipment, automobiles, industrial controls,
medical instrumentation, and a wide variety of other products to interconnect
components of electronic systems. The sales and marketing operations outside the
United States are conducted in Japan, Malaysia, Singapore, Great Britain,
Germany, France, Sweden and Italy. During 1995, the Company had manufacturing
operations located in the United States, Switzerland, Scotland, Belgium, and
Malaysia.
42 ROBINSON NUGENT, INC. AND SUBSIDIARIES
NOTE 16 BUSINESS SEGMENT AND FOREIGN SALES (CONTINUED)
SALES 1995 1994 1993
- - --------------------------------------------------------------------------------
UNITED STATES
Domestic $47,724 44,031 38,823
Export:
Europe 2,176 958 390
Asia 4,987 5,931 2,700
Rest of World 1,625 833 650
--------------------------
Total sales to customers 56,512 51,753 42,563
Intercompany 5,544 2,713 2,261
--------------------------
Total United States 62,056 54,466 44,824
- - --------------------------------------------------------------------------------
EUROPE
Domestic 17,613 11,711 12,164
Export:
Asia 2,908 2,352 2,462
Rest of World 20 20 41
-------------------------
Total sales to customers 20,541 14,083 14,667
Intercompany 3,495 3,234 2,015
-------------------------
Total Europe 24,036 17,317 16,682
- - --------------------------------------------------------------------------------
ASIA
Domestic 2,711 838 862
Export to U.S. 915 883 579
------------------------
Total sales to customers 3,626 1,721 1,441
Intercompany 1,018 441 205
------------------------
Total Asia 4,644 2,162 1,646
- - --------------------------------------------------------------------------------
Eliminations (10,057) (6,388) (4,481)
--------------------------
Consolidated $80,679 67,557 58,671
- - --------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
- - --------------------------------------------------------------------------------
United States $39,668 33,145 28,338
Europe 21,584 15,443 14,911
Asia 3,562 1,544 1,390
Eliminations (10,645) (4,755) (3,912)
--------------------------
Consolidated $54,169 45,377 40,727
- - --------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES
- - --------------------------------------------------------------------------------
United States $ 5,126 6,442 3,367
Europe 288 (1,743) (878)
Asia 180 330 73
--------------------------
Consolidated $ 5,594 5,029 2,562
- - --------------------------------------------------------------------------------
Intercompany sales of finished products were generally priced to "share" profits
based upon current market conditions. Items requiring further processing were
priced at cost plus a fixed percentage.
ROBINSON NUGENT, INC. AND SUBSIDIARIES 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
IN THOUSANDS, EXCEPT PER SHARE DATA
NOTE 17 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
- - --------------------------------------------------------------------------------
Three months ended
For the year ended June 30, 1995 Sept. 30, Dec. 31, Mar. 31, June 30,
1994 1994 1995 1995 Total
- - --------------------------------------------------------------------------------
Net sales $19,603 18,921 20,434 21,721 80,679
Gross profit $ 5,569 5,269 5,066 5,446 21,350
Net income $ 1,098 937 742 962 3,739
- - --------------------------------------------------------------------------------
Net income per common share $ .20 .17 .14 .18 .69
- - --------------------------------------------------------------------------------
Dividends $ .03 .03 .03 .03 .12
- - --------------------------------------------------------------------------------
Three months ended
For the year ended June 30, 1994 Sept. 30, Dec. 31, Mar. 31, June 30,
1993 1994 1995 1994 Total
- - --------------------------------------------------------------------------------
Net sales $15,712 15,480 17,606 18,759 67,557
Gross profit $ 4,583 4,164 4,729 4,439 17,915
Net income $ 599 1,074 635 311 2,619
- - --------------------------------------------------------------------------------
Net income per common share $ .11 .20 .12 .06 .49
- - --------------------------------------------------------------------------------
Dividends $ .03 .03 .03 .03 .12
- - --------------------------------------------------------------------------------
Net income in the fourth quarter of 1995 reflected approximately $400 of tax
benefits resulting from the utilization of foreign net operating loss
carryforwards generated in prior quarters, and from a research and experimental
tax credit in the United States.
In the quarter ended December 31, 1993, the Company recognized pretax income of
$1,000 ($620 after related income taxes) from the settlement of a lawsuit.
44 ROBINSON NUGENT, INC. AND SUBSIDIARIES
REPORT OF MANAGEMENT
To the Shareholders of Robinson Nugent, Inc.:
The management of Robinson Nugent, Inc., is responsible for the preparation,
presentation, and integrity of the consolidated financial statements and other
information included in this annual report. The consolidated financial
statements have been prepared by the Company in accordance with generally
accepted accounting principles and, as such, include amounts based on
management's best estimates and judgements.
The 1995 consolidated financial statements have been audited by Coopers &
Lybrand L.L.P., independent accountants. Their audit was made in accordance with
generally accepted auditing standards and included such reviews and tests of the
Company's internal accounting controls as they considered necessary.
The Company maintains a system of internal accounting controls designed to
provide reasonable assurance at reasonable cost that Company assets are
protected against loss or unauthorized use and that transactions and events are
properly recorded.
The Board of Directors, through its Audit Committee, comprised solely of
directors who are not employees of the Company, meets with management, the
internal audit staff, and the independent accountants to assure that each is
properly discharging its respective responsibilities. The independent
accountants have free access to the Audit Committee, without management present,
to discuss the results of their work and their assessment of the adequacy of
internal accounting controls and the quality of financial reporting.
/s/Larry W. Burke /s/A. J. Accurso
Larry W. Burke Anthony J. Accurso
President and Vice President, Treasurer, and
Chief Executive Officer Chief Financial Officer
September 15, 1995
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders of Robinson Nugent, Inc.:
We have audited the accompanying consolidated balance sheets of Robinson Nugent,
Inc. and Subsidiaries, as of June 30 1995, 1994 and 1993, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Robinson
Nugent, Inc. and Subsidiaries as of June 30, 1995, 1994, and 1993, and the
results of their operations and their cash flows for each of the three years
then ended in conformity with generally accepted accounting principles.
/s/Coopers & Lyband L.L.P.
Louisville, Kentucky
August 4, 1995
ROBINSON NUGENT, INC. AND SUBSIDIARIES 45
CORPORATE INFORMATION
BOARD OF DIRECTORS
- - --------------------------------------------------------------------------------
SAMUEL C. ROBINSON
Chairman of the Board,
Robinson Nugent, Inc.
LARRY W. BURKE
President and
Chief Executive Officer
Robinson Nugent, Inc.
PATRICK C. DUFFY
Independent Investor
& Business Advisor
RICHARD L. MATTOX
Secretary, Robinson Nugent, Inc.
Mattox & Mattox,
New Albany, Indiana
DIANE T. MAYNARD
Management Consultant
Louisville, Kentucky
LAWRENCE MAZEY
Commercial Land Devoper,
New Albany, Indiana
RICHARD W. STRAIN
President and Chief Executive Officer
Verigen, Inc.
Scottsdale, Arizona
JERROL Z. MILES
Senior Vice President
National City Bank, Kentucky
Louisville, Kentucky
JAMES W. ROBINSON
Chairman & Treasurer (Retired)
Robinson Nugent, Inc.
CORPORATE OFFICERS
- - --------------------------------------------------------------------------------
SAMUEL C. ROBINSON
Chairman of the Board
THOMAS E. MERTEN
Vice President of Marketing
LARRY W. BURKE
President and
Chief Executive Officer
W. MICHAEL COUTU
Vice President of Operations
Anthony J. Accurso
Vice President, Treasurer
and Chief Financial Officer
RICHARD L. MATTOX
Secretary
LEGAL COUNSEL
- - --------------------------------------------------------------------------------
MATTOX & MATTOX
New Albany, Indiana
INDEPENDENT ACCOUNTANTS
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COOPERS & LYBRAND L.L.P.
Louisville, Kentucky
INVESTOR INFORMATION
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FORM 10-K
A copy of Robinson Nugent, Inc. Form 10-K Annual Report to the Securities and
Exchange Commission for the year ended June 30, 1995, may be obtained without
charge by any shareholder of the Company by written request to the Treasurer at
the corporate headquarters.
TRANSFER AGENT AND REGISTRAR
Harris Trust and Savings Bank
Shareholder Services
P.O. Box A3504
Chicago, Illinois 60690
For change of address, lost dividend checks or lost stock certificates, write or
call the above and direct your inquiry to: Corporate Trust Department at (312)
461-4912
SECURITY ANALYST CONTACT
Larry W. Burke, President and Chief Executive Officer, (812) 945-0211
46 ROBINSON NUGENT, INC. AND SUBSIDIARIES
MANUFACTURING FACILITIES
NORTH AMERICA
USA
ROBINSON NUGENT, INC.
800 East Eighth Street
New Albany, IN 47150
(812) 945-0211
ROBINSON NUGENT DALLAS, INC.
2640 Tarna Drive
Dallas, TX 75229
(214) 241-1738
CABLELINK, INCORPORATED
311 Childers Street
Kings Mountain, NC 28086
(704) 739-7473
CABLELINK-CALIFORNIA
41946 Christy Street
Fremont, CA 94538
(510) 226-1906
EUROPE
SCOTLAND
ROBINSON NUGENT
(SCOTLAND) LIMITED
4 Fountain Avenue
Inchinnan Business Park
Inchinnan, Renfrew PA4 9RQ
44 141-812-1111
SWITZERLAND
ROBINSON NUGENT, S.A.
6, rue Saint-Georges
2800 Del mont
41 66-21-8218
BELGUIM
TECKINO MANUFACTURING B.V.B.A.
Heikant 21
3930 Harmont-Achel
32 11-663628
ASIA
MALAYSIA
ROBINSON NUGENT DBA
CABLELINK (MALAYSIA) SDN. BHD.
Plot 10. 16, Jalan Pknk 1/2
Sungai Petani Industrial Estate
0800 Sungai Petani
Kedah, Malaysia
60 4-411703
ROBINSON NUGENT
(MALAYSIA) SDN. BHD.
Plot 10. 15, Jalan Pknk 1/2
Sungai Petani Industrial Estate
0800 Sungai Petani
Kedah, Malaysia
60 4-411703
SALES OFFICES
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NORTH AMERICA
USA
800 East Eighth Street
New Albany, IN 47150
(812) 945-0211
One NBD Plaza, Suite #304,
Lake Zurich, IL 60047
(708) 438-0606
2640 Tarna Drive
Dallas, TX 75229
(214) 241-1738
41946 Christy Street
Fremont, CA 94538
(415) 226-1900
EUROPE
FRANCE
ROBINSON NUGENT, SARL
Zac de la Sabliere
4, rue Maryse Bast,
91430 Igny (Paris)
33 1 69-85-5000
UNITED KINGDOM
ROBINSON NUGENT, LTD.
Unit 9A, Intec Two, Wade Road
Basingstoke, Hampshire,
RG. 24 One (London)
44 256-842626
GERMANY
ROBINSON NUGENT, GMBH
Ziegelstrasse 28-1
7032 Sindelfingen (Stuttgart)
49 703-195080
ITALY
ROBINSON NUGENT
Via Fidelina, 2
20061 Carugate (Milano)
39 2 92150404
NETHERLANDS
ROBINSON NUGENT (EUROPE) B.V.
Pettelaarpark 24
5216 PD s-Hertogenbosch
31 4990-75755
SWEDEN
ROBINSON NUGENT NORDIC
Gunnebogatan 30
Box 3009
16303 Spanga
46 8-761-8770
ASIA
JAPAN
NIHON ROBINSON NUGENT, K.K.
2F, Bldg. No. 1, 1 Higashikata-cho
Tsuzuki-ku
Yokohama 224, Japan
81 45-474-2824
SINGAPORE
ROBINSON NUGENT ASIA PACIFIC
PTE LTD
268 Orchard Road #08-07
Singapore 238856
65 235-9755
ROBINSON NUGENT, INC. AND SUBSIDIARIES 47