1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Act of
1934 for the Fiscal Year Ended August 31, 1994 or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______________ to
________________.
Commission File Number 1-5034
CORE INDUSTRIES INC
(Exact Name of Registrant as Specified in its Charter)
Nevada 38-1052434
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P. O. Box 2000, Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (810) 642-3400
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
As of October 31, 1994, 9,808,992 common shares were outstanding, and the
aggregate market value of the common shares held by nonaffiliates of the
Registrant (based upon the closing sale price of $9 for these shares on the New
York Stock Exchange) was approximately $88 million.
Certain sections of the definitive proxy statement to be filed for the Annual
Meeting of Stockholders to be held on January 10, 1995 are incorporated by
reference into Part III.
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PART I
ITEM 1. BUSINESS
(A) GENERAL DEVELOPMENT OF THE COMPANY
The Company was incorporated under the name of Soss Manufacturing
Company in 1909 as a manufacturer of a line of concealed hinges sold to
the hardware, furniture and home building trades and subsequently
developed hinges and other stampings for the infant automotive industry.
The Company went public in 1937 and had its shares traded on the
American Stock Exchange.
In 1958, the Company began to diversify its interests through the
acquisition of a number of businesses. It presently groups its
businesses into three industry segments: electronics, farm equipment
and fluid controls and construction products. From sales of $5,000,000
in 1958, 90 percent of which were derived from the production of
automobile parts, the Company has grown to its present size and
diversified structure with less than 5 percent automotive business.
The Company changed its name in January 1969 to SOS Consolidated Inc. to
help alleviate confusion between the parent company and its automotive
division. In April 1969, the Company's shares were listed for trading
on the New York Stock Exchange. In January 1978, the Company adopted
the name Core Industries Inc, as being more representative of its
operations.
Effective February 19, 1992, the Company adopted a formal plan to divest
three major electronics-related subsidiaries. The three operations,
Anilam, FlexStar and Hilton, represented the Company's machine tool
controls, disk-drive test equipment and capacitor business lines and
were accounted for as discontinued operations. At August 31, 1993, no
operations or assets of Anilam, FlexStar and Hilton remained.
Under the Company's method of operation and control, each division
operates as a separate and autonomous entity with its own manufacturing,
engineering, accounting, sales staff and distribution network.
Personnel at corporate office direct overall policies and perform
services for all divisions in the areas of financial control,
manufacturing consultation, information systems and marketing.
Corporate office maintains control over the divisions through direct
contact, reviews of budgets and reports, internal auditing and
involvement in formal planning. In addition, Corporate develops and
implements strategic options to increase shareholder value and responds
to division results and opportunities.
(B) INDUSTRY SEGMENTS
The Company is engaged principally in the manufacture of specialty
products for commercial and industrial use. Required industry segment
financial information is set forth in the notes to consolidated
financial statements incorporated herein by reference. The Company's
business includes three product segments as follows:
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ELECTRONICS
The Electronics Group includes a wide range of products which are
categorized into two major areas:
1. Test, measurement and control products.
2. Power supplies and components for the computer industry.
Specific products include volt/amp/ohmmeters, multimeters and recorders,
harmonic analyzers, torque measurement and control systems, electronic
fasteners, power supplies and precision carbide components. These
products are sold principally through dealers and manufacturers'
representatives throughout the United States and in many foreign
countries.
There is substantial competition in the markets served by this product
segment, and in certain instances, the Company competes with companies
whose financial resources are greater. While it is difficult to obtain
accurate information as to the relative ranking of the Company and its
competitors, the Company believes that it is a leading producer of
selected electrical test, measurement and control products.
The three electronics-related businesses that were divested in 1992
represented three separate lines of business and served separate
customers. They produced machine tool controls, disk-drive test
equipment and tantalum capacitors. These operations had total sales of
$43,000,000 in fiscal year 1991, and represented approximately 40
percent of total group sales. The three businesses reported declining
profits in fiscal 1991 and 1990.
The backlog of this segment aggregated $17,200,000 at August 31, 1994,
as compared to $19,950,000 at August 31, 1993. It is anticipated that
substantially all of the backlog will be shipped during the year ending
August 31, 1995. In general, the business of this product segment is
not highly seasonal in nature.
This segment's products are made principally from purchased electronic
components and materials which are available from numerous sources. The
Company has not experienced any problems as to their availability.
The Company holds important patents related to its Tech-Motive Tool
product line. Other patents relative to this product segment, although
of value, do not play a significant part in the Company's operations.
The Company also has registered certain product trademarks which are
considered to be of value. In 1994, the Company's GSE, Inc. subsidiary
entered into an exclusive long-term distribution agreement in the
Americas and Europe for a revolutionary torque sensing product line with
a Japanese company. In addition to distributing products already
developed by the Japanese company, GSE expects to jointly develop other
products with this company.
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FARM EQUIPMENT
Products include plows, grain drills, cultivators and other soil tillage
equipment, grain augers and cleaners, feeders, and forage and harvesting
dump wagons. These products are sold principally through separate
dealers and distributors throughout the United States and contiguous
Canadian provinces.
There is substantial competition in the markets served by this product
segment, and in certain instances, the Company competes with companies
whose financial resources are greater. The Company believes that it is
a leading producer of tillage equipment and grain augers.
This product segment's backlog aggregated $4,450,000 at August 31, 1994,
as compared to $3,700,000 at August 31, 1993. It is anticipated that
substantially all of the backlog will be shipped during the first
quarter of fiscal 1995. While the sales of certain individual products
are seasonal in nature, the operations of this product segment are not
highly seasonal on an overall basis. The farm economy has been
historically very cyclical and can be significantly affected by the
general economy and the weather. As is customary in the farm equipment
industry, the Company makes many sales with seasonal dating payment
terms to its farm equipment customers.
Effective December 1, 1993, the Company purchased the grain drill
business of Best Manufacturing. This product line strongly complements
the tillage products offered by the Company's Sunflower unit.
On September 23, 1993 (FY 1994), the Company sold one of its farm
equipment divisions, Du-Al Manufacturing Company. Du-Al represented
approximately 4 percent of the Company's total 1993 sales and
approximately 4 percent of the Company's assets as of August 31, 1993.
(See Note A to Selected Financial Data, Item 6.)
The primary raw material used by the businesses within this product
segment is standard sheet steel which is available from numerous
sources.
The Company holds a few patents relating to the products of this segment
which, although of value, do not play a significant part in the
Company's operations. The Company also has registered certain product
trademarks which are considered to be of value.
FLUID CONTROLS AND CONSTRUCTION PRODUCTS
Products include valves and pipeline strainers for various fluid control
purposes, molded plastic parts, metal stampings and hinges. This
segment also includes mechanical contracting for the construction
industry where most of the work is obtained on a competitive bid basis.
Most of the products within the segment are sold principally through
dealers and manufacturers' representatives throughout the United States
and in certain foreign countries.
There is substantial competition in the markets served by this product
segment, and in certain instances, the Company competes with companies
whose financial resources are greater.
This product segment's backlog aggregated $10,250,000 at August 31,
1994, as compared to $13,400,000 at August 31, 1993. The backlog
decrease is primarily related to the Company's Pioneer division which
was sold during the year. It is anticipated that substantially all of
the backlog will be filled during the year ending August 31, 1995. In
general, the business of this product segment is not seasonal in nature.
Effective April 1, 1994, the Company purchased Hendrix Steel &
Fabricating, Inc., a fabricator of strainers and other specialty flow
control products.
Effective May 31, 1994, the Company sold its Pioneer Industries
division, a manufacturer of metal doors and frames for the construction
industry. Pioneer represented 5.7 percent of the Company's total 1993
sales and approximately 4 percent of the Company's assets as of August
31, 1993.
The primary raw materials used by this product segment are steel coil
and sheet, castings made of various metals, resins and plastics. The
Company generally obtains these materials from several sources,
including foreign suppliers, and does not experience any problems with
their availability.
The Company holds a few patents relative to this product segment which,
although of value, do not play a significant part in the Company's
operations. The Company also has registered certain product trademarks
which are considered to be of value.
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(C) EMPLOYMENT
At August 31, 1994, there were approximately 2,350 people employed by
the Company in its operations, of whom 1,890 were employed in the United
States.
(D) OTHER
While the Company places a high emphasis on the development of new and
improved products, research and development activities did not represent
significant expenditures during the past three years.
Compliance with federal, state and local provisions which have been
enacted or adopted regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment,
is not expected to have a material effect upon the capital expenditures,
earnings and competitive position of the Company.
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ITEM 2. PROPERTIES
Listed below are the major properties of the Company:
SQUARE OWNED EXPIRATION PRODUCT
LOCATION FOOT AREA OR LEASED DATE OF LEASE GROUP(S)
-------- --------- --------- ------------- --------
Bridgeport, Michigan 23,000 Owned Electronics
Farmington Hills, Michigan 36,000 Owned Electronics
Guadalajara, Mexico 30,000 Owned Electronics
Lynbrook, New York 49,000 Owned Electronics
Montibello, California 18,000 Leased 1994 Electronics
Tustin, California 84,000 Leased 1997 Electronics
Bombay, India 10,500 Leased 1999 Electronics
Beloit, Kansas (Note A) 88,000 Leased 1996 Farm Equipment
Cawker City, Kansas 51,000 Owned Farm Equipment
Richardton, North Dakota 37,000 Owned Farm Equipment
Salem, South Dakota 108,500 Owned Farm Equipment
Houston, Texas 32,000 Owned Fluid Controls and Construction
Products
Lumberton, North Carolina 144,000 Owned Fluid Controls and Construction
Products
St. Pauls, North Carolina 216,000 Owned Fluid Controls and Construction
Products
Pioneer, Ohio 66,400 Owned Fluid Controls and Construction
Products
Wauseon, Ohio 47,000 Owned Fluid Controls and Construction
Products
Singapore 26,700 Owned Fluid Controls and Construction
9,300 Leased 2006 Products
Bloomfield Hills, Michigan 12,000 Leased 2001 Corporate Offices
All of the above properties are substantially utilized, are suitable for the
Company's needs and have sufficient productive capacity.
NOTE A: This leased production facility was financed by the proceeds of
industrial development revenue bonds. The Company may purchase
the facility under favorable terms upon satisfaction of the lease.
As required by generally accepted accounting principles, the lease
has been treated as a purchase by the Company.
ITEM 3. LEGAL PROCEEDINGS
Although the Company is involved in certain litigation incidental and related
to its business, there are no material legal proceedings involving the Company
not covered by insurance.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
No matter was submitted during the fourth quarter of 1994 to a vote of security
holders through a solicitation of proxies or otherwise.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS
At August 31, 1994, there were approximately 2,428 shareholders of record of
the common stock of Core Industries Inc.
The Company's common stock is traded on the New York Stock Exchange. The
following table indicated the high and low sales prices of the common stock of
the Company, and the dividends paid per share for the periods indicated:
MARKET PRICE
YEAR ENDED ------------------
AUG 31, 1994 HIGH LOW DIVIDENDS
------------ ---- --- ---------
First quarter $ 15-1/2 $ 11-3/4 $ .06
Second quarter 18-3/8 13-3/8 .06
Third quarter 14-7/8 10-1/2 .06
Fourth quarter 11-1/2 10 .06
------
$ .24
======
MARKET PRICE
YEAR ENDED ------------------
AUG 31, 1993 HIGH LOW DIVIDENDS
------------ ---- --- ---------
First quarter $ 8-7/8 $ 6-7/8 $ .06
Second quarter 10-1/4 7-1/8 .06
Third quarter 9-3/4 8 .06
Fourth quarter 14-1/4 8-3/8 .06
------
$ .24
======
NOTE A: Under the Company's debt agreements with insurance companies,
retained earnings of approximately $20 million were available for
dividends at August 31, 1994 subject to future earnings levels.
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ITEM 6. SELECTED FINANCIAL DATA
A summary of selected financial data follows:
YEAR ENDED AUG 31,
------------------------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(A)
Net sales $ 219,454,000 $ 207,046,000 $ 183,734,000 $ 200,799,000 $ 187,853,000
Earnings from
continuing
operations
(Note B) 10,006,000 8,656,000 180,000 7,975,000 7,830,000
Net earnings (loss)
(Note C) 10,006,000 8,565,000 (26,368,000) 1,625,000 3,866,000
Net earnings per common
share:
Continuing operations $ 1.02 $ .88 $ .02 $ .82 $ .80
Net earnings (loss) 1.02 .88 (2.70) .17 .40
Cash dividends declared
per share .24 .24 .30 .48 .72
As of August 31:
Total assets $ 156,387,000 $ 151,277,000 $ 156,583,000 $ 189,046,000 $ 198,457,000
Long-term debt 41,608,000 47,134,000 50,146,000 52,298,000 48,023,000
NOTE A: Effective September 23, 1993, the Company sold its Du-Al
Manufacturing Division, a manufacturer of front end loaders, back
hoes and other equipment sold to the construction and farm
industries. Effective May 31, 1994, the Company sold its Pioneer
Industries Division, a manufacturer of metal doors and frames for
the construction industry. The businesses sold had approximately
$9,000,000 of sales in FY 1994 prior to disposition and
approximately $20,000,000 of sales in FY 1993.
Other income for the year ended August 31, 1994 includes pretax
gain of $1,475,000 (total of $.09 per share) related to the sale
of the Du-Al Division.
NOTE B: Effective February 29, 1992, the Company adopted a formal plan to
divest three major Electronics-related subsidiaries. The three
operations, Anilam Electronics, FlexStar and Hilton Industries,
produced machine tool controls, disk-drive test equipment and
tantalum capacitors were accounted for as discontinued operations.
Appropriate provisions were recorded for (a) the estimated losses
of the discontinued operations through their expected disposal
dates, (b) reduction of assets to their net realizable values and
(c) the anticipated liabilities relating to the disposals. The
total provision amounted to $20,859,000, net of income tax benefit
of $7,315,000. Although there was a change in the individual
components of the provision from the original estimate, in
aggregate the provision was appropriate.
Selected information related to the discontinued operations
follows:
1992(A) 1991 1990
------- ---- ----
Sales $ 16,291,000 $ 42,796,000 $ 53,434,000
Net earnings (loss) (4,015,000) (6,350,000) (3,964,000)
Net earnings (loss)
per share (.41) (.65) (.40)
(a) Six months ended February 29, 1992 (total fiscal year sales,
$31,041,000).
NOTE C: The Company changed its methods of accounting for income taxes and
postretirement benefits other than pensions effective September 1,
1991 to conform with Statements of Financial Accounting Standards
Nos. 109 and 106, respectively. See Notes 3 and 4 to the
Consolidated Financial Statements.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The Company in 1994 continued its strong improvement trend which began in 1992
when the Company took dramatic action to refocus management and operations.
Sales and earnings improvements, product line expansions, acquisitions and
strategic business sales all continued into 1994, supporting management's
commitment to improving shareholder value.
Fiscal 1994 Compared with Fiscal 1993
Consolidated sales increased 6% in 1994 to $219 million from $207 million.
Excluding the sales of Du-Al and Pioneer Industries, which were sold during the
year, the sales from ongoing units increased 13%. Net earnings were $10
million, or 17% better than 1993. Included in 1994 earnings was a net
favorable $.09 per share related to the sale of the Du-Al division; 1993
earnings included a net favorable $.03 per share related to a litigation
settlement gain. Excluding these unusual items, net earnings increased 10% in
1994 compared to 1993.
Approximately 79% of the sales increase and 41% of the earnings before income
tax increase was attributable to the Electronics Group. Excluding Du-Al sales
and earnings, the Farm Segment sales grew 15% and profits grew almost 17%.
Excluding the results of the sold Pioneer division, Fluid Controls and
Construction sales increased 15% with earnings approximately the same in each
year.
Overall gross profit margins decreased slightly to 29.7% due to competitive
margin pressures in the power supply business, price discounting in the Fluid
Control business, and effects of the slow construction markets on the sold
Pioneer unit. The gross margin decline was more than offset by selling,
general and administrative expenses at 18.9% of sales.
Other income in 1994 includes the $1.475 million gain related to the sale of
the Company's Du-Al division, while other income in 1993 also includes unusual
items--a litigation settlement of approximately $500,000 and approximately
$300,000 in gains on property disposals. Interest expense declined 10.2% in
1994 from 1993 primarily due to decreased borrowings.
Fiscal 1993 Compared with Fiscal 1992
Consolidated net sales increased 12.7% in 1993 to $207 million from $183.7
million. Net earnings were $8.6 million, or 29.5% better than 1992 earnings
from continuing operations before write-off of intangibles and other special
charges. The 1992 special write-offs were $6.4 million.
Approximately 57% of the $23.3 million sales increase was attributable to the
Electronics Group and 42% to the Farm Equipment Group. Nominal sales increases
were realized in Fluid Controls and Construction Products. Earnings before
taxes improved in all three product groups with the Farm Group increasing 110%
in 1993.
Gross profit margins improved in Farm Equipment and Fluid Controls and
Construction Products Groups during 1993. However, overall gross margins on
net sales from continuing operations declined to 30.1% from 32.2%. The primary
reason was market and competitive pressure resulting in price discounting,
especially in computer power supplies of the Electronics segment. Selling,
general and administrative expenses before 1992 special charges of $1.6 million
decreased to 19.5% of sales compared to 20.8% in 1992 as a result of focused
cost reduction programs related to certain selling and administrative
activities.
The previously mentioned fourth quarter litigation settlement and gains on
property disposals largely accounted for the increase in other income. Strong
cash generation from operations with reduced borrowings, coupled with lower
interest rates, caused interest expense to decline 17.6% in 1993 compared to
1992.
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Product Group Detail
Electronics Group
(In Thousands) 1992 1993 1994
---- ---- ----
Sales $79,380 $92,668 $102,422
Earnings before taxes 3,781(a) 6,787 7,923
(a) Includes $2,734 for special charges.
Sales and earnings before taxes in 1994 increased 10.5% and 16.7%,
respectively, over the prior year. All major units within the group had
improved 1994 operating performance, primarily through new product
introductions and increased market coverage programs. The power supply unit
also favorably resolved a prior year's labor issue. Earnings in 1993 had been
adversely affected by margin pressures in power supplies, which continued
through 1994.
Fluid Controls and Construction Products Group
(In Thousands) 1992 1993 1994
---- ---- ----
Sales $72,599 $72,907 $78,745
Earnings before taxes 5,365(a) 9,400 8,624
(a) Includes $3,833 for special charges.
Sales increased 8% in 1994 over 1993, after a slight increase in sales between
1993 and 1992. Although sales and earnings were up in the fluid control and
plastics units, this was offset by decreased earnings among the
construction-related units, including the sold Pioneer division. Depressed
conditions affected the construction market and caused price discounting.
Farm Equipment Group
(In Thousands) 1992 1993 1994
---- ---- ----
Sales $31,755 $41,471 $38,287
Earnings before taxes 2,834(a) 5,942 7,257
Ongoing Businesses (b):
Sales $25,680 $32,678 $37,724
Earnings before taxes 3,187 4,658 5,449
(a) Includes $320 for special charges.
(b) Excluding unit sold in 1994.
Overall segment sales fell 7.6% while earnings grew 22% in 1994, which was
attributable to the successful sale of the Du-Al unit in October, 1993.
Excluding Du-Al's operations and the one-time gain on the Du-Al disposal, sales
and earnings of the ongoing businesses within the Group improved 15.4% and 17%,
respectively, in 1994 over 1993. New products and good market conditions
contributed to this strong performance.
LIQUIDITY AND CAPITAL RESOURCES
One of the Company's financial strengths is its ability to generate cash from
its operating activities. In 1994, the Company again experienced strong
operating cash flow as operating activities provided $17.4 million. Cash flow
generation has been enhanced by the Company's ongoing efforts to improve
operating efficiencies, cost reductions, and a successful company-wide working
capital reduction program.
During 1994 the Company paid down short- and long-term debt totaling $3.9
million, and operated most of 1994 free of any short-term debt. In addition,
the Company invested in its future by making two strategic acquisitions at a
total cost of $3.4 million and making capital expenditures of $5 million. The
majority of the capital expenditures were focused at those units where the
Company has the greatest growth potential. The Company plans to invest $6
million in capital expenditures in 1995, excluding business acquisitions.
The Company has an active program to complement internal growth with
acquisitions of product lines and companies that meet the Company's selective
criteria. It is expected that this effort will require the significant
expenditure of funds over the next few years.
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The Company received $9.8 million during the year from the sales of its Du-Al
and Pioneer divisions, whose operations did not fit with the Company's
strategic direction.
At August 31, 1994, the Company had $14.6 million in cash and cash equivalents
and uncommitted bank credit facilities of $15 million. Management believes its
current cash position, cash flows from operations, along with its borrowing
capacity, are adequate to fund its strategies for future growth, including
working capital, expenditures for manufacturing expansion and efficiencies, and
acquisition activities.
At August 31, 1994, the Company had working capital of $82.7 million with a
current ratio of 3.7 to 1, and the Company's capital employed (total debt and
equity) amounted to $125 million. Year-end capital consisted of 37% debt and
63% equity, an improvement from 41% debt of total capital employed in 1993.
Success in utilizing its capital more efficiently accounted for operating
working capital as a percent of sales improving to 33.2% as of August 31, 1994
compared to 38.9% in the prior year. The Company's 1994 return on beginning
equity of 14.1% was the highest since 1981.
At the Company's current quarterly dividend rate of $.06 per share, annual
dividend payments would approximate $2.4 million. Under the Company's debt
agreements with insurance companies, retained earnings of approximately $20
million are available for dividends, subject to future earnings levels.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by reference to the
Annual Report and are identified in Item 14(a)(1) of this report, and are
incorporated by reference in this Item 8 (See Exhibit 13). Other financial
schedules are filed pursuant to Item 14(a)(2) and exhibits are filed pursuant to
Item 14(a)(3) of this report.
Selected quarterly financial data for the years 1994 and 1993 appear in Note 13
to the financial statements on Page F-16 of the Annual Report (See Exhibit 13).
Such data is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On January 11, 1994, the Company's Board of Directors, acting upon the
recommendation of the Company's Audit Committee of the Board of Directors,
selected the firm of Coopers & Lybrand L.L.P. to replace Deloitte & Touche
LLP as its certified public accountants. Deloitte & Touche LLP was
dismissed as the Company's certified public accountants as of that date.
Deloitte & Touche LLP's reports on the Company's financial statements for
the two fiscal years prior to its dismissal did not contain an adverse opinion
or a disclaimer of opinion, nor were the reports qualified as to uncertainty,
audit scope or accounting principles. There were no disagreements with
Deloitte & Touche LLP on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure during the
Company's two fiscal years, or any subsequent interim period, preceding the
dismissal of Deloitte & Touche LLP. None of the kinds of events listed in
Item 304(a)(1)(v) of Regulation S-K occurred within the Company's two fiscal
years, or any subsequent interim period, preceding the dismissal of Deloitte &
Touche LLP.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT
DIRECTORS
The information required by this item is incorporated by reference to a
definitive proxy statement involving the election of directors which is filed
by the Company pursuant to Regulation 14A within 120 days after the close of
its fiscal year.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is provided as to the Executive Officers of the
Company:
NAME AGE CAPACITIES IN WHICH SERVED
---- --- --------------------------
David R. Zimmer* 48 President and Chief Executive Officer since March 1992 (previously President and Chief
Executive Officer of New Venture Gear, Inc. since January 1990; previously Vice President and
General Manager of Electronics Products for Acustar, Inc., a subsidiary of Chrysler
since 1988)
Lawrence J. Murphy* 52 Executive Vice President since October 1990 (previously Vice President - Finance, three years)
Raymond H. Steben, Jr.* 55 Vice President and Chief Financial Officer since July 1993 (previously Director of
Multifinancial Services since 1992; previously President of RHS Industries since 1989;
previously Vice President - Finance, and Chief Financial Officer of Bundy Corporation
since 1981)
Thomas G. Hooper* 50 Treasurer and Controller since October 1990 (previously Controller since 1981)
James P. Dixon* 50 Vice President - Planning since January 1994 (previously Vice President - Marketing, since
October 1990; previously Manager - Marketing Services, since April 1990; previously President
of Smart House, two years; President of Multiwire division of Kollmorgen Corporation, two
years)
Matthew P. Marko*(A) 36 Vice President - International Sales (previously Director of International Sales, three years;
Industrial Engineering Department, four years)
*Elected by the Board of Directors on January 11, 1994.
(A) Son of Harold M. Marko, one of the Company's directors.
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ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to a
definitive proxy statement involving the election of directors which is filed
by the Company pursuant to Regulation 14A within 120 days after the close of
its fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference to a
definitive proxy statement involving the election of directors which is filed
by the Company pursuant to Regulation 14A within 120 days after the close of
its fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to a
definitive proxy statement involving the election of directors which is filed
by the Company pursuant to Regulation 14A within 120 days after the close of
its fiscal year.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS. The following financial statements are
incorporated herein by reference.
Pages in
Annual Report
-------------
Report of Management F-1 *
Fiscal Year 1994 Report of Independent Accountants F-2 *
Fiscal Year 1993 and 1992 Independent Auditors' Report F-3 *
Consolidated Balance Sheets as of
August 31, 1994 and 1993 F-4 *
Consolidated Statements of Earnings for
the Years Ended August 31, 1994,
1993 and 1992 F-5 *
Consolidated Statements of Stockholders'
Equity for the Years Ended August 31,
1994, 1993 and 1992 F-6 *
Consolidated Statements of Cash Flows
for the Years Ended August 31, 1994,
1993 and 1992 F-7 *
Notes to Consolidated Financial Statements
for the Years Ended August 31, 1994,
1993 and 1992 F-8 thru F-16 *
* See Exhibit 13 to Form 10-K
(A) 2. FINANCIAL STATEMENT SCHEDULES
PAGES PAGE IN
IN 10-K ANNUAL REPORT
------- -------------
(A) Fiscal Year 1994 Report of Independent Accountants on schedules EX-23
Fiscal years 1993 and 1992 Independent Auditors' Report on Schedules F-3 *
(B) Schedule Index:
Schedule VIII - Valuation and Qualifying
Accounts 15
Schedule IX - Short-Term Borrowings 16
Schedule X - Supplementary Income
Statement Information 17
Schedules other than those listed are omitted because they are not
applicable or the required information is shown in the financial
statements or notes thereto.
(A) 3. EXHIBITS
The exhibits are listed on the accompanying Index to Exhibits.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.
13
15
CORE INDUSTRIES INC AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
for the years ended August 31, 1994, 1993 and 1992
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- ---------------------------- -------- --------
ADDITIONS
----------------------------
(1) (2)
CHARGED
BALANCE AT CHARGED TO TO OTHER
BEGINNING COSTS AND ACCOUNTS - DEDUCTIONS - BALANCE AT
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE END OF PERIOD
----------- ---------- ---------- ---------- ------------ -------------
(NOTE B) (NOTE A)
Allowance for doubtful accounts,
deducted from accounts
receivable in the balance
sheet:
1994 $ 970,000 $ 480,000 $ 490,000 $ 960,000
============ ========= ========== ===========
1993 $ 1,100,000 $ 360,000 $ 490,000 $ 970,000
============ ========= ========== ===========
1992 $ 1,400,000 $ 890,000 $ 690,000 $ 500,000 $ 1,100,000
============ ========= ========= ========== ===========
Note A: Accounts written off.
Note B: Discontinued operations.
14
16
CORE INDUSTRIES INC AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
for the years ended August 31, 1994, 1993 and 1992
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- -------- -------- -------- -------- --------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF AMOUNT AMOUNT AVERAGE
AGGREGATE WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM BALANCE AT AVERAGE DURING DURING DURING
BORROWING END OF PERIOD INTEREST RATE THE PERIOD THE PERIOD THE PERIOD
----------- ------------- ------------- ------------ ------------ -------------
(NOTE A) (NOTE B)
August 31, 1994
- ---------------
Note payable to bank - 4.62% $ 3,000,000 $ 133,000 4.62%
============= ==== ============= ============= ====
August 31, 1993
- ---------------
Note payable to bank $ 900,000 4.69% $ 16,100,000 $ 4,929,000 4.79%
============= ==== ============= ============= ====
August 31, 1992
- ---------------
Note payable to bank $ 15,900,000 5.31% $ 23,900,000 $ 19,443,000 6.18%
============= ==== ============= ============= ====
Note A: Average amount outstanding during the period is computed by dividing
the sum of the daily weighted average outstanding principal balances
by 365.
Note B: Average interest rate for the year is computed by dividing the
actual short-term interest expense by the average short-term debt
outstanding.
15
17
CORE INDUSTRIES INC AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
for the years ended August 31, 1994, 1993 and 1992
COLUMN A COLUMN B
-------- --------
CHARGE TO COSTS
AND EXPENSES
YEAR ENDED AUG 31,
----------------------------------
ITEM 1994 1993 1992
---- ---- ---- ----
Maintenance and repairs A A A
Amortization of intangible assets A A $ 3,275,801(B)
Taxes, other than payroll and income taxes A A A
Royalties A A A
Advertising costs $ 2,554,000 $ 2,344,000 $ 2,489,000
Note A: Amounts are not presented as such amounts are less than one percent
of net sales.
Note B: Includes a special charge of $2,721,000 to write-off that portion of
the excess of cost over net assets of companies acquired considered
to be not realizable as a result of management's reassessment of the
strategic direction of the Company.
16
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CORE INDUSTRIES INC
Date: November 16, 1994
By: /s/ Thomas G. Hooper
-------------------------------------------
Thomas G. Hooper, Treasurer and Controller
Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the date indicated.
CHIEF EXECUTIVE OFFICER:
/s/ David R. Zimmer November 16, 1994
- ------------------------------------------------ --------------------
David R. Zimmer, President and Director Date
CHIEF FINANCIAL OFFICER:
/s/ Raymond H. Steben, Jr. November 16, 1994
- ------------------------------------------------ --------------------
Raymond H. Steben, Jr., Vice President - Finance Date
OTHER DIRECTORS:
/s/ Jay Alix November 16, 1994
- ------------------------------------------------ --------------------
Jay Alix Date
/s/ Richard P. Kughn November 16, 1994
- ------------------------------------------------ --------------------
Richard P. Kughn Date
/s/ Harold M. Marko November 16, 1994
- ------------------------------------------------ --------------------
Harold M. Marko Date
/s/ Lawrence J. Murphy November 16, 1994
- ------------------------------------------------ --------------------
Lawrence J. Murphy, Executive Vice President Date
/s/ Alan E. Schwartz November 16, 1994
- ------------------------------------------------ --------------------
Alan E. Schwartz Date
17
19
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
3(a) Restated Certificate of Incorporation of Company and amendments thereto**
3(b) By-Laws, as amended, of the Company**
10(a) 1991 Director Discounted Stock Option Plan**
10(b) 1988 Director Discounted Stock Option Plan (Incorporated by reference to Appendix B to Company's Proxy Statement dated
November 23, 1988 filed pursuant to Regulation 14)
10(d) Preferred Share Purchase Rights (Incorporated by reference to Company's Form 8-K Report dated September 28, 1988)
10(e) Deferred Compensation for Non-Employee Directors**
10(f) Employment Agreement dated March 3, 1992 between the Company and David R. Zimmer**
10(g)(1) 9.75 Percent Note Agreement dated August 1, 1987 between the Company and The Northwestern Mutual Life Insurance
Company**
10(g)(2) Amendment dated as of March 15, 1989 to the Agreement dated August 1, 1987 between the Company and The Northwestern
Mutual Life Insurance Company**
10(g)(3) Amendment dated as of March 15, 1989 to the Agreement dated August 1, 1987 between the Company and The Northwestern
Mutual Life Insurance Company**
10(h)(1) 10.02 Percent Note Agreements dated as of March 15, 1989 between the Company and The Northwestern Mutual Life Insurance
Company/Allstate Life Insurance Company**
10(h)(2) Amendment dated as of March 15, 1992 to the Agreement dated as of March 15, 1989 between the Company and The
Northwestern Mutual Life Insurance Company/Allstate Life Insurance Company**
10(i) 1993 Performance Incentive Plan (Incorporated by reference to Appendix A to Company's Proxy Statement dated November
23, 1993 filed pursuant to Regulation 14)
10(j) 1993 Stock Bonus Plan (Incorporated by reference to Appendix A to Company's Proxy Statement dated November 23, 1993
filed pursuant to Regulation 14)
*11 Calculations of Earnings Per Share
*13 Financial Statements included in Annual Report to Stockholders
*21 Subsidiaries of the Company
*23 Consent of Coopers & Lybrand L.L.P. relating to Financial Statement Schedules
**Incorporated by reference to the 1992 10-K
*Filed herewith
NOTE: The Exhibits attached to this report will be furnished to requesting
security holders upon payment of a reasonable fee to reimburse the
Company for expenses incurred by the Company in furnishing such
Exhibits.