Management's Discussion and Analysis of Financial Statements
Balance Sheet
The Company's strong financial condition and liquidity continue as
reflected in the accompanying consolidated financial statements. Historically,
internally generated funds have met cash flow requirements for capital
expenditures and working capital, acquisitions and start-ups, and increased cash
dividends and are expected to be sufficient to meet the Company's operating cash
requirements in the foreseeable future. The Company believes that, if
appropriate, it is capable of raising substantial amounts of short-term and
long-term debt. High liquidity, strong cash flows from its operations, and
financing flexibility enable the Company to respond quickly to opportunities and
support its growth plans.
At December 31, 1995 cash and equivalents represented 32% of total
assets (1994 - 30%) and the ratio of current assets to current liabilities was
3.6 (1994 - 3.5). The changes in the various components of working capital arose
from the higher level of business activity and from year-end raw material
purchases in anticipation of price increases.
Income Statement
1995 - Net sales increased 18% to a record level. Bonded fibers segment
sales (35% of total) increased 12% reflecting higher volume in tobacco filters
and diagnostic test devices offsetting slightly lower sales of writing
instrument components. Plastic products segment sales (65% of total) increased
22% reflecting substantial gains in flexible packaging and continuing strong
increases by the plastic extrusion operations aided by the inclusion of the
Tri-Lite Plastics companies for the full year. Investment income increased 29%
primarily as a result of higher yields.
Cost of products sold increased 19% which was in line with the sales
increase. Selling, research, administrative and general expenses were held to an
11% increase. Performance improved in the bonded fibers segment as a result of
the sales increase and operating efficiencies. The plastic products segment had
record earnings and exceeded those of bonded fibers for the third consecutive
year because of the strong results in the plastic extrusion companies and
improvement at the Canadian flexible packaging company. Although the first half
loss by the flexible packaging company more than offset earnings generated from
operations in the second half, a third quarter one-time recovery of costs from
settling litigation of approximately $1,200,000 produced income for the year.
The combination of changes in revenues and total costs and expenses provided a
27% increase in income before income taxes.
Income taxes increased 23% reflecting the higher level of income and a
slightly lower effective tax rate. Income from continuing operations and related
earnings per share increased by 29% and 30% to record levels.
1994 - Net sales increased 14%. Bonded fibers segment sales increased
10% reflecting higher sales in each of its product lines. Plastic products
segment sales increased 17% reflecting a continuing strong performance by the
plastic extrusion companies aided by the mid-year addition of the Tri-Lite
Plastics companies, and modest gains in packaging materials. Investment income
increased 70% primarily as a result of the higher level of investments enhanced
by higher yields.
Cost of products sold and selling, research, administrative and general
expenses both increased 14%. Performance improved for the year in the bonded
fibers segment despite approximately $1,100,000 of cost associated with a
manufacturing defect that occurred and was corrected in the second quarter. The
plastic products segment had record earnings and exceeded those of bonded fibers
for the second year in a row. Higher earnings of the five established plastic
extrusion companies were boosted by the Tri-Lite Plastics companies and more
than offset a loss by the Canadian flexible packaging company caused by the
major capacity expansion, inefficiencies caused by film shortages, and an
inability to pass on rapidly escalating raw material prices on a timely basis.
The combination of changes in revenues and total costs and expenses produced an
increase of 17% in income before income taxes.
Income taxes increased 17% reflecting the higher level of income.
Therefore, income from continuing operations and related earnings per share
increased by 17% and 16%.
The discontinued industrial filtration segment was sold in April, 1994
effective as of March 31, 1994 (see Note 3 of Notes to Consolidated Financial
Statements).
General Comments
The Company continues its efforts to balance the effect of general
business conditions in a number of ways. Many different industries are served
through a variety of sales and marketing approaches in order to develop market
niches where customers are provided services, solutions to problems, and
innovative products. Emphasis on research and development relating to products
and processes, improved productivity, and cost control has developed customer
loyalty and goodwill.
The Company's largest customer accounted for approximately 12% of
consolidated net sales in 1995 (1994 - 11%) and approximately 35% of bonded
fibers net sales (1994 - 30%). The Company concentrates its efforts on retaining
its business with major customers as well as with other customers through
improving the quality and cost-effectiveness of its products and through
service. In addition, it intends to continue its diversification and growth in
sales to other customers.
Consolidated Statement of Income
Years Ended December 31 1995 1994 1993
Revenues
Net sales $176,508,490 $149,152,162 $130,920,010
Investment income 1,339,491 1,039,064 611,713
177,847,981 150,191,226 131,531,723
Costs and expenses
Cost of products sold 142,528,056 120,200,735 105,419,581
Selling, research, administrative and general 19,765,724 17,759,728 15,631,849
162,293,780 137,960,463 121,051,430
Income before income taxes 15,554,201 12,230,763 10,480,293
Income taxes 5,450,000 4,425,000 3,775,000
Income from continuing operations 10,104,201 7,805,763 6,705,293
Discontinued operations, net of income taxes
(1994 - gain on disposal of $3,835,000) - 3,954,859 611,288
Net income $ 10,104,201 $ 11,760,622 $ 7,316,581
Average shares outstanding 3,734,528 3,749,054 3,728,237
Earnings per share
Continuing operations $2.70 $2.08 $1.80
Discontinued operations - 1.05 .16
Net income $2.70 $3.13 $1.96
See accompanying notes
Consolidated Balance Sheet
December 31 1995 1994
Assets
Current assets
Cash and equivalents $ 34,965,864 $29,738,046
Accounts receivable, less allowance for doubtful accounts
of $311,000 (1994 - $304,000) 19,003,632 17,349,786
Inventories 19,666,392 17,106,615
Prepaid expenses 1,498,975 1,347,460
Total current assets 75,134,863 65,541,907
Property, plant and equipment
Land 960,954 560,636
Buildings 13,701,775 13,435,226
Machinery and equipment 47,257,205 44,171,602
61,919,934 58,167,464
Less accumulated depreciation 36,603,627 32,170,920
25,316,307 25,996,544
Other assets
Excess cost over net assets of businesses acquired, less
accumulated amortization of $2,888,000 (1994 - $2,457,000) 5,096,827 5,433,259
Notes receivable 2,434,843 2,350,455
Other assets 282,767 386,995
7,814,437 8,170,709
$108,265,607 $99,709,160
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 14,905,395 $14,333,933
Accrued expenses 4,929,522 3,811,432
Income taxes 1,054,216 380,889
Total current liabilities 20,889,133 18,526,254
Other liabilities
Notes payable 650,000 1,300,000
Deferred income taxes 159,147 151,328
Other liabilities 1,742,599 1,366,634
2,551,746 2,817,962
Shareholders' equity
Common stock, $1 par value, 10,000,000 shares authorized,
3,735,392 shares issued and outstanding (1994 - 3,736,042) 3,735,392 3,736,042
Additional capital 758,190 812,452
Retained earnings 81,342,934 75,085,671
Cumulative translation adjustment (1,011,788) (1,269,221)
84,824,728 78,364,944
$108,265,607 $99,709,160
See accompanying notes
Consolidated Statement of Shareholders' Equity
Cumulative
Common Additional Retained Translation
Stock Capital Earnings Adjustment
Balance, January 1, 1993 $3,717,922 $ 689,675 $63,224,137 $ (589,953)
Net income 7,316,581
Dividends - $.95 per share (3,541,691)
Employee stock plans 20,700 327,012
Translation (loss) (198,639)
Balance, December 31, 1993 3,738,622 1,016,687 66,999,027 (788,592)
Net income 11,760,622
Dividends - $.98 per share (3,673,978)
Employee stock plans 15,420 262,265
Stock repurchase (18,000) (466,500)
Translation (loss) (480,629)
Balance, December 31, 1994 3,736,042 812,452 75,085,671 (1,269,221)
Net income 10,104,201
Dividends - $1.03 per share (3,846,938)
Employee stock plans 4,350 78,863
Stock repurchase (5,000) (133,125)
Translation gain 257,433
Balance, December 31, 1995 $3,735,392 $ 758,190 $81,342,934 $(1,011,788)
See accompanying notes
Consolidated Statement of Cash Flows
Years Ended December 31 1995 1994 1993
Operating
Income from continuing operations $10,104,201 $ 7,805,763 $ 6,705,293
Reconciling items
Depreciation and amortization 5,462,977 4,681,259 3,910,018
Deferred income taxes 7,819 (374,073) (215,887)
Increase (decrease) from
Accounts receivable (1,653,846) (1,724,977) (3,309,908)
Inventories (2,559,777) (4,968,214) 120,900
Prepaid expenses (151,515) (41,146) 196,274
Accounts payable and accrued expenses 1,689,552 4,799,771 2,547,784
Income taxes (amounts paid:
1995 - $4,770,000; 1994 - $5,640,000;
1993 - $2,880,000) 673,327 (844,439) 1,114,304
Other - net 414,301 (788,337) (36,643)
13,987,039 8,545,607 11,032,135
Investing
Acquisitions of property, plant and equipment (4,122,983) (10,100,890) (3,475,348)
Business acquisitions, net of cash - (2,472,166) -
Increase in notes receivable (84,388) - -
(4,207,371) (12,573,056) (3,475,348)
Financing
Decrease in notes payable (650,000) - -
Issuance of common stock 83,213 277,685 347,712
Repurchase of common stock (138,125) (484,500) -
Dividends paid (3,846,938) (3,673,978) (3,541,691)
(4,551,850) (3,880,793) (3,193,979)
Net cash provided (used) by
continuing operations 5,227,818 (7,908,242) 4,362,808
Net cash provided by discontinued
operations (includes proceeds from sale
of $15,875,000 in 1994) - 13,792,966 2,443,593
Net increase in cash and equivalents 5,227,818 5,884,724 6,806,401
Cash and equivalents, beginning of year 29,738,046 23,853,322 17,046,921
Cash and equivalents, end of year $34,965,864 $29,738,046 $23,853,322
See accompanying notes
Notes to Consolidated Financial Statements
Note 1. Significant Accounting Policies
Business - The Company develops, manufactures, and markets from plants in the
U.S. and Canada a broad line of bonded fiber and plastic products for domestic
and international customers in numerous industries (see Note 8).
Estimates - Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and assumptions that
affect amounts reported therein. Actual results could differ from those
estimates.
Consolidation - The consolidated financial statements include the accounts of
the Company and its subsidiaries, after elimination of material intercompany
accounts and transactions. Discontinued operations (see Note 3) have been
separated and prior year financial statements have been restated accordingly.
Cash and equivalents - Equivalents are highly liquid and readily convertible
into cash.
Inventories - Inventories are stated at the lower of cost (last-in, first-out
method generally for domestic inventories and the first-in, first-out method for
other inventories) or market.
Property, plant and equipment - These assets are stated at cost and are
depreciated principally on the declining-balance method over their estimated
useful lives.
Excess cost over net assets acquired - This asset arises from purchased
businesses and is amortized on the straight-line method over periods of 15, 20
and 40 years.
Income taxes - Deferred income taxes are provided on the undistributed net
income of a foreign subsidiary and other material temporary differences.
Note 2. Inventories
Inventories consisted of (in thousands):
1995 1994
FIFO
Finished products $ 8,886 $ 7,813
Work in process 1,408 1,546
Raw material 11,622 9,242
21,916 18,601
Less excess of FIFO over
LIFO inventory value 2,250 1,494
$19,666 $17,107
Inventories stated at LIFO approximated $10,559 (1994 - $8,135).
Note 3. Discontinued Operations
In April, 1994 the Company completed the sale of its industrial filtration
segment effective as of March 31, 1994 for a cash sales price of $15,875,000.
For 1994 the gain on disposal of the segment of $3,835,000 after income tax
credits, or $1.02 per share ($2,999,000 pretax), includes other income and costs
incurred in connection with the disposal. For 1994 net sales were $4,788,000
(1993 - $23,432,000) and income from operations was $120,000 net of applicable
income taxes of $100,000 (1993 - $611,000 net of $425,000).
Note 4. Stock Plans
The 1995 Stock Incentive Plan (1995 Plan) authorizes the grant of incentive
options at fair market value or nonqualified options at not less than 85% of
fair market value until January 24, 2005 to selected employees for up to 300,000
common shares of which 60,000 may be performance share awards. No options or
awards have been granted under the 1995 Plan.
Option transactions under prior plans during 1995, 1994 and 1993 follow:
1995 1994 1993
Outstanding at
beginning of year 193,800 210,900 172,700
Granted 73,750 - 54,000
Exercised (4,350) (15,420) (15,800)
Cancelled (2,000) (1,680) -
Outstanding at
end of year 261,200 193,800 210,900
Exercisable at
end of year 145,760 126,020 116,510
Reserved for
future grant - 92,655 90,975
Price range of
options
exercised $17.75 to $27.25 $15.25 to $27.25 $13.06 to $18.00
Price range of
options
outstanding $17.75 to $27.50 $17.75 to $27.50 $15.25 to $27.50
Performance share awards under the prior plan for 10,000 and 38,000 common
shares granted in 1995 and 1994 are dependent upon continued employment and
attainment of certain performance objectives over the three-year period ending
December 31, 1996. Compensation expense under the plan approximated $651,000
(1994 - $203,000; 1993 - $95,000).
Note 5. Retirement Plans
The Company has several pension, savings, and profit sharing plans covering
substantially all employees, and its general policy is to fund amounts
deductible for federal income tax purposes. Benefits generally are based on the
employee's years of service and compensation. Plan assets consist primarily of
listed stocks and bonds. Pension expense for all plans approximated $2,403,000
(1994 - $2,128,000; 1993 - $1,913,000).
Pension cost and funded status for the Company's defined benefit pension plans
follow (in thousands):
1995 1994 1993
Pension cost
Service cost $ 1,162 $ 1,156 $ 923
Interest cost 1,595 1,494 1,207
Actual return on assets (1,666) 549 (1,257)
Net amortization and deferral 58 (2,058) 134
$ 1,149 $ 1,141 $ 1,007
1995 1994
Funded status
Plan assets at fair value $25,432 $20,112
Projected benefit obligation 24,993 20,912
Excess 439 (800)
Unrecognized (gain) loss (105) 865
Unrecognized transition net (asset) (366) (397)
Accrued pension cost $ (32) $ (332)
Accumulated benefits $21,744 $17,930
Vested benefits $21,074 $17,112
Assumptions used to determine funded status and pension cost were: return on
assets - 8.0%; salary scale - 5.0%; discount rate - 7.0% (1994 - 8.0%, 5.5% and
7.5%; 1993 - 8.0%, 5.5% and 7.0%).
The Company has an Employee Stock Ownership Plan for substantially all domestic
employees. Contributions to the plan, which are at the sole discretion of the
Board of Directors, may be in cash or common stock of the Company and
approximated $197,000 (1994 - $190,000; 1993 - $149,000).
Note 6. Research and Development
Research, development and engineering expenses approximated $3,261,000 (1994 -
$3,090,000; 1993 - $2,891,000).
Note 7. Income Taxes
(in thousands)
1995 1994 1993
Income before income taxes consisted of:
Domestic $14,405 $12,631 $ 9,823
Foreign 1,149 (400) 657
$15,554 $12,231 $10,480
Income taxes consisted of:
Current
Federal $ 4,674 $ 4,296 $ 3,366
State 597 561 429
Foreign 181 5 204
5,452 4,862 3,999
Deferred
Federal (91) (174) (177)
State (27) (7) (31)
Foreign 116 (256) (16)
(2) (437) (224)
$ 5,450 $ 4,425 $ 3,775
The difference between income tax expense and the amount computed by applying
the statutory rate consisted of:
Federal statutory rate - 34.36%
(1994 - 34.18%; 1993 - 34.05%) $ 5,344 $ 4,180 $ 3,569
State income taxes,
net of federal tax benefit 392 369 282
Tax-exempt interest (433) (338) (187)
Other 147 214 111
$ 5,450 $ 4,425 $ 3,775
Deferred tax assets and liabilities consisted of:
Deferred compensation $ 427 $ 181
Special charges 167 270
Vacation accrual 185 143
Accumulated depreciation (1,118) (946)
Undistributed net income of
foreign subsidiary (168) (131)
Other 348 332
$ (159) $ (151)
Notes to Consolidated Financial Statements continued
Note 8. Industry Segments, Foreign
Operations and Major Customer
Information on industry segments and foreign operations is presented for 1995,
1994 and 1993 in the following table (in thousands). Corporate assets consist
primarily of those cash equivalents not directly identified with industry
segments. At December 31, 1995 foreign liabilities approximated $4,438,000 (1994
- - $4,101,000; 1993 - $2,755,000).
The Company's largest customer accounted for approximately 12% of consolidated
net sales (1994 - 11%; 1993 - less than 10%) and approximately 35% of bonded
fibers net sales (1994 - 30%; 1993 - 24%).
Segments Geographic Areas
Bonded Plastic
Fibers Products Corporate Total USA Canada
Revenues
1995 62,921 114,337 590 177,848 150,097 27,751
1994 56,078 93,610 503 150,191 129,050 21,141
1993 51,021 80,223 287 131,531 111,326 20,205
Income (loss) before income taxes
1995 7,618 10,689 (2,753) 15,554 14,405 1,149
1994 6,064 8,692 (2,525) 12,231 12,631 (400)
1993 5,649 7,372 (2,541) 10,480 9,823 657
Identifiable assets
1995 28,549 61,566 18,151 108,266 93,196 15,070
1994 22,863 60,591 16,255 99,709 85,333 14,376
1993 20,446 41,378 15,029 76,853 68,192 8,661
Capital expenditures
1995 1,394 2,738 21 4,153
1994 525 9,684 26 10,235
1993 708 2,735 37 3,480
Depreciation and amortization
1995 982 4,451 30 5,463
1994 1,003 3,645 33 4,681
1993 961 2,910 39 3,910
Bonded fibers net sales in 1995, 1994 and 1993 include tobacco filters $40,500,
$34,100 and $31,000; writing instrument products $16,500, $17,100 and $15,300.
Plastic products net sales in 1995, 1994 and 1993 include food packaging
products $26,800, $20,000 and $19,300; lighting fixtures $22,800, $16,600 and
$12,400; sign and display products $12,900, $11,400 and $12,000.
Report of Independent Accountants
The Shareholders and Board of Directors
American Filtrona Corporation
We have audited the accompanying consolidated balance sheets of American
Filtrona Corporation and Subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1995. 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
American Filtrona Corporation and Subsidiaries at December 31, 1995 and 1994,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Richmond, Virginia
January 23, 1996
Financial Information Responsibility
The Company's management is responsible for the accompanying financial
statements and related information contained in this Annual Report. These
statements were prepared in conformity with generally accepted accounting
principles and, necessarily, include amounts based on judgments and estimates
which we believe have been applied in a reasonable manner.
Independent accountants are engaged to audit our financial statements
and express an opinion thereon. Their opinion appears above.
The Company maintains internal accounting controls and procedures
designed to provide reasonable, but not absolute, assurance at appropriate cost
that assets are safeguarded, policies and procedures are followed, and
transactions are properly executed and reported. Internal controls are supported
by the selection and training of personnel, by organization arrangements for the
appropriate division of responsibilities, and by the conduct of internal audits.
In addition, the Company's statement on standards of business conduct is
reviewed and signed annually by key employees.
The Audit Committee of the Board of Directors is composed solely of
outside Directors. In fulfilling its oversight role the Committee meets
periodically with the Company's financial officers, internal audit department,
and independent accountants, both separately and together, to discuss auditing
and financial reporting matters.
John D. Barlow, Jr.
January 23, 1996 Vice President - Finance
Historical Financial Review
(in thousands, except ratio and per share amounts) 1995 1994 1993 1992
Summary of Operations
Net sales $176,508 $149,152 $130,920 $122,267
Total revenues 177,848 150,191 131,531 122,868
Cost of products sold 142,528 120,201 105,420 97,485
Income before income taxes 15,554 12,231 10,480 9,720
Income taxes 5,450 4,425 3,775 3,300
Effective tax rate (%) 35.0 36.2 36.0 34.0
Income from continuing operations 10,104 7,806 6,705 6,420
Income (loss) from discontinued operations - 3,955(a) 611 (5,208)(c)
Net income 10,104 11,761 7,316 1,212
Earnings (loss) per share
Continuing operations 2.70 2.08 1.80 1.73
Discontinued operations - 1.05(a) .16 (1.40)(c)
Net income 2.70 3.13 1.96 .33
Dividends per share 1.03 .98 .95 .94
Payout ratio (%) 38.1 31.2 48.4 288.1
Balance Sheet Data
Current assets $ 75,135 $ 65,542 $ 61,401(b) $ 41,479
Current liabilities 20,889 18,526 13,182 9,638
Working capital 54,246 47,016 48,219 31,841
Current ratio 3.6 3.5 4.7 4.3
Property, plant and equipment 25,316 25,996 18,520 18,688
Other assets 7,815 8,171 7,173 7,599
Net assets of discontinued operations - - - 12,776
Total assets 108,266 99,709 87,094 80,542
Shareholders' equity 84,825 78,365 70,966 67,042
Return on average equity (%)(d) 12.4 10.5 9.7 9.4
Miscellaneous
Capital expenditures $ 4,153 $ 10,235 $ 3,480 $ 3,705
Depreciation and amortization 5,463 4,681 3,910 3,603
Average shares outstanding 3,735 3,749 3,728 3,716
Book value per share 22.71 20.98 18.98 18.03
Price per share
High 40.75 31.50 28.50 28.00
Low 26.00 25.50 25.00 21.00
(a) Includes gain on disposal of $3,835 after tax credits, or $1.02 per share
in 1994
(b) Includes net assets of discontinued operations of $10,241 in 1993
(c) Includes special charges of $4,600 after taxes, or $1.24 per share in 1992
(d) Excludes income (loss) from discontinued operations
Historical Financial Review (continued)
(in thousands, except ratio and per share amounts) 1991 1990 1989 1988
Summary of Operations
Net sales $118,968 $116,993 $117,487 $104,166
Total revenues 119,844 117,671 118,417 104,835
Cost of products sold 93,672 93,175 93,360 82,349
Income before income taxes 11,593 11,378 13,396 12,349
Income taxes 4,100 4,175 4,775 4,325
Effective tax rate (%) 35.4 36.7 35.6 35.0
Income from continuing operations 7,493 7,203 8,621 8,024
Income (loss) from discontinued operations (187) (254) (924) (1,897)
Net income 7,306 6,949 7,697 6,127
Earnings (loss) per share
Continuing operations 2.01 1.94 2.33 2.19
Discontinued operations (.05) (.07) (.25) (.51)
Net income 1.96 1.87 2.08 1.68
Dividends per share .92 .88 .83 .78
Payout ratio (%) 46.9 47.1 39.9 46.6
Balance Sheet Data
Current assets $ 41,766 $ 37,978 $ 33,373 $ 34,883
Current liabilities 10,653 11,805 12,547 10,754
Working capital 31,113 26,173 20,826 24,129
Current ratio 3.9 3.2 2.7 3.2
Property, plant and equipment 18,525 17,845 19,546 12,125
Other assets 8,046 8,422 10,249 4,366
Net assets of discontinued operations 14,657 15,743 14,520 18,976
Total assets 82,994 79,988 77,688 70,350
Shareholders' equity 69,601 65,864 62,195 56,885
Return on average equity (%)(d) 11.1 11.2 14.5 14.6
Miscellaneous
Capital expenditures $ 3,501 $ 1,400 $ 5,481 $ 4,150
Depreciation and amortization 3,133 3,419 2,640 2,195
Average shares outstanding 3,719 3,716 3,695 3,658
Book value per share 18.77 17.73 16.77 15.50
Price per share
High 24.00 27.25 27.50 27.50
Low 18.00 16.00 22.25 17.50
Historical Financial Review (continued)
(in thousands, except ratio and per share amounts) 1987 1986 1985 1980
Summary of Operations
Net sales $93,577 $83,334 $69,690 $75,749
Total revenues 94,501 84,696 71,152 78,659
Cost of products sold 74,300 65,016 55,307 61,591
Income before income taxes 12,210 11,986 9,202 11,765
Income taxes 4,775 4,975 4,100 5,725
Effective tax rate (%) 39.1 41.5 44.6 48.7
Income from continuing operations 7,435 7,011 5,102 6,040
Income (loss) from discontinued operations (1,918) (577) 1,173 81
Net income 5,517 6,434 6,275 6,121
Earnings (loss) per share
Continuing operations 2.02 1.85 1.36 1.30
Discontinued operations (.52) (.15) .31 .02
Net income 1.50 1.70 1.67 1.32
Dividends per share .74 .71 .68 .4875
Payout ratio (%) 49.4 41.8 40.8 36.9
Balance Sheet Data
Current assets $32,476 $28,888 $32,995 $29,821
Current liabilities 8,086 6,008 10,724 9,679
Working capital 24,390 22,880 22,271 20,142
Current ratio 4.0 4.8 3.1 3.1
Property, plant and equipment 8,432 8,848 8,966 6,176
Other assets 2,335 7,020 4,835 9,165
Net assets of discontinued operations 18,827 13,117 14,241 2,021
Total assets 62,070 57,873 61,037 47,183
Shareholders' equity 52,848 50,456 48,853 31,936
Return on average equity (%)(d) 14.4 14.1 10.9 20.0
Miscellaneous
Capital expenditures $ 1,207 $ 1,477 $ 994 $ 3,427
Depreciation and amortization 1,772 1,580 1,138 973
Average shares outstanding 3,680 3,778 3,760 4,630
Book value per share 14.48 13.71 12.95 6.90
Price per share
High 24.50 22.50 17.75 9.00
Low 15.75 15.00 12.50 5.50
Compound Annual Growth Rates (% Per Year)
5 Years 10 Years 15 Years
1991 - 95 1986 - 95 1981 - 95
Net sales 8.6 9.7 5.8
Income from continuing operations 7.0 7.1 3.5
Income per share from continuing operations 6.8 7.1 5.0
Dividends paid per share 3.2 4.2 5.1
Other Information
Quarterly Financial and Common Stock Data (Unaudited)
(thousands of dollars except per share amounts)
1995 1994
First Second Third Fourth First Second Third Fourth
Net sales 44,633 44,960 43,481 43,434 36,199 35,913 38,487 38,553
Gross profit 8,824 7,830 8,627 8,699 7,045 6,727 7,074 8,105
Income
Continuing operations 2,446 2,237 2,730 2,691 1,737 1,595 1,851 2,623
Discontinued operations - - - - 1,620 2,335 - -
Net income 2,446 2,237 2,730 2,691 3,357 3,930 1,851 2,623
Earnings per share
Continuing operations .65 .60 .73 .72 .46 .43 .49 .70
Discontinued operations - - - - .43 .62 - -
Net income .65 .60 .73 .72 .89 1.05 .49 .70
Dividends paid per share .25 .25 .265 .265 .24 .24 .25 .25
Price range
High 29 31 32 1\4 40 3\4 31 1\2 30 1\2 30 28 1\2
Low 26 27 1\4 29 1\2 30 3\4 25 1\2 28 26 1\2 26
Common Stock Information
The Company's common stock trades on The Nasdaq Stock Market under the symbol:
AFIL.
Dividend Information
The Company expects to continue its policy of paying regular cash dividends
dependent upon future earnings, capital requirements, and the financial
condition of the Company. Dividends are paid on approximately the 25th of
February, May, August, and November.
Dividend Reinvestment Service
Automatic Dividend Reinvestment and Shareholder Savings Service offers
shareholders a convenient way to increase investments in the Company. Dividends
can be reinvested automatically in additional shares or shareholders may make
voluntary cash deposits to purchase additional shares. For further information,
contact Wachovia Bank of North Carolina, N.A., Corporate Trust Department, Post
Office Box 3001, Winston-Salem, NC 27102-3001.
General Counsel
Hunton & Williams
Riverfront Plaza
951 E. Byrd Street
Richmond, VA 23219
Transfer Agent, Registrar, and Dividend Paying Agent
Wachovia Bank of North Carolina, N.A.
Corporate Trust Department
P. O. Box 3001
Winston-Salem, NC 27102-3001
Phone: (800) 633-4236
Independent Accountants
Coopers & Lybrand L.L.P.
Riverfront Plaza
901 E. Byrd Street, Suite 1200
Richmond, VA 23219