1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
_________________________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended Commission File
May 31, 1995 No. 1-10023
SUDBURY, INC.
A Delaware Corporation IRS Employer Identification
No. 34-1546292
30100 CHAGRIN BOULEVARD - SUITE 203
CLEVELAND, OHIO 44124
TELEPHONE (216) 464-7026
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Common Stock, par value $.01
$10,000,000 8 3/5% Senior Subordinated Pay-In-Kind Notes due 1997
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, 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]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES X NO
--- ---
As of August 4, 1995, 10,238,551 shares were outstanding. The aggregate
market value of the voting stock held by non-affiliates of the registrant at
August 4, 1995 was $83,188,227.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Portions of the Registrant's Annual Report to Stockholders for the
fiscal year ended May 31, 1995 are deemed incorporated by reference in Parts II
and IV of this Form 10-K. Portions of the Registrant's Proxy Statement for the
Annual Meeting of Stockholders to be held September 28, 1995 are deemed to be
incorporated by reference in Part III of this Form 10-K.
2
PART I
------
ITEM 1. BUSINESS
--------
GENERAL INFORMATION
-------------------
Sudbury, Inc. (the "Company") operates through its subsidiaries, which
are engaged in the manufacture and sale of a broad range of industrial
products, including iron, aluminum and zinc castings, coating applications,
cranes and truck bodies, lubricant and chemical storage and processing and
precision machined components.
From 1983 through January 1988, the Company purchased 30 companies at
an aggregate cost of approximately $193 million. The acquisitions were
financed through a combination of secured bank borrowings, subordinated
borrowings, seller financing in the form of subordinated seller notes and the
issuance of common stock and preferred stock.
In late 1990, as a result of the Company's highly leveraged condition
arising from the aforementioned acquisitions and recessionary economic
conditions which began to effect the Company's performance, the Company was
unable to meet its debt repayment obligations. To remedy its poor financial
condition, on January 10, 1992 the Company filed a petition (relating to the
Company only and not to its operating subsidiaries) under Chapter 11 of the
United States Bankruptcy Code. At that time, the Company hired Jacques R.
Sardas as its new president and chief executive officer, effective
January 13, 1992.
The Company was able to exit bankruptcy in less than eight months. Its
amended Plan of Reorganization (the "Plan") was confirmed by the United States
Bankruptcy Court, Northern District of Ohio ("Bankruptcy Court") by Order dated
August 18, 1992 and became effective on September 1, 1992 (the "Effective
Date"). Distributions under the Plan commenced on October 15, 1992.
The Plan implemented a restructuring of the Company by providing for a
new amortization schedule for the repayment of the indebtedness owed to its
secured lender banks, mainly through the sale of a substantial number of its
subsidiaries and a significant reduction of the Company's indebtedness to
subordinated debtholders and certain other unsecured creditors through the
conversion of debt into equity of the restructured Company.
In order to repay the indebtedness owed to the secured lender banks as
provided by the Plan, the Company implemented a business plan with an asset
disposition program involving the sale of a substantial number of its
subsidiaries which sales generated aggregate net cash proceeds of approximately
$37.6 million during fiscal years 1993 and 1994.
In May 1993, the Company successfully completed the refinancing of its
then existing bank debt which allowed the Company to retain six core businesses
and cease the previous asset sale process except for the Company's 35%
investment in General Products Delaware Corporation.
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PRODUCTS, MARKETS AND SALES
---------------------------
The Company has one business segment--the manufacture of industrial
products. Ongoing operations in this segment include six businesses which are
described below.
The Company's largest group of products consists of products and
services sold to the automotive industry which are principally produced by the
Company's Wagner Castings Company ("Wagner") and Industrial Powder Coatings,
Inc. ("IPC") subsidiaries. Sales to the automotive industry represented 61%,
59%, and 56% of the Company's total sales from ongoing operations for the
fiscal years ended 1995, 1994 and 1993, respectively.
Wagner is the Company's largest automotive supplier and produces
ductile and malleable iron castings. Wagner sells its products both
domestically and in Europe, and is known as a producer of engineered critical
safety castings in the automotive industry. Wagner's product line includes
steering knuckles, suspension parts and transmission components. Wagner's
castings range in size from small pieces weighing less than one pound to
castings weighing up to 40 pounds.
Ductile iron castings represent approximately 81% of Wagner's product
line, with the balance being malleable iron castings. Ductile iron has similar
properties to that of malleable iron, however, ductile is less costly to
produce because it does not require the additional process of heat treatment
that malleable iron does. As a result of this cost differential, the market
for malleable iron has been decreasing. To offset the decline in malleable
castings, the Company made a decision in fiscal 1995 to expand the capacity at
its ductile iron foundry and phase out the malleable process by fiscal 1997.
Wagner's current annual ductile iron capacity before expansion is approximately
70,000 tons. The ductile iron expansion and modernization plan will increase
Wagner's annual ductile capacity by 14,000 tons, or 20%, and will cost
approximately $12 million. The new equipment is expected to be in operation in
early fiscal 1997. The Company intends to fund these capital investments
through cash generated from operations and funds available under its Credit
Facility. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."
IPC serves the automotive and appliance industries through the
application of coatings to metal parts, components and finished products. With
ten powder coating lines, the Company believes that IPC is one of the largest
independent powder coating job shops in the United States. IPC also has the
capability of cathodic electro-coating of parts. Powder coatings are used to
enhance appearance and improve corrosion protection to parts. Powder coating's
use of a dry paint process gives it advantages over liquid painting processes
which give rise to certain environmental concerns surrounding the use of
solvents and the generation of air emissions. In fiscal 1995, IPC expanded its
powder coating technology and customer base through the construction of a new
leased building equipped with approximately $5 million in equipment to powder
coat steel blanks under a long-term contract (subject to certain conditions)
with General Electric Company for their new washing machine program. This
blank coating line is one of the first of its kind in the United States and is
designed to coat flat steel blanks before, rather than after, the forming
process and is capable of running at much higher line speeds with less labor
than a typical monorail powder coating line. The line began production in May
1995.
- 3 -
4
The Company's Iowa Mold Tooling Co., Inc. ("IMT") subsidiary designs
and manufactures hydraulic articulating and telescoping truck- mounted cranes,
tire handling equipment, air compressors, and service bodies including
lubrication, field service, utility and tire service bodies. IMT services,
both domestically and internationally, the following industries: construction,
utilities, tire service, railroad, forestry and municipalities.
The Company's remaining products come from its three smallest
businesses: Frisby P.M.C., Incorporated ("Frisby"), South Coast Terminals,
Inc. ("South Coast") and Cast-Matic Corporation ("Cast-Matic"). Frisby is a
high-volume precision machining operation which principally produces small
diameter shafts, spindles and spindle assemblies for the electric motor,
electric hand tool and automotive fuel injection markets. South Coast provides
value-added product related services (bulk liquid storage, chemical and
lubricant toll processing, packaging, warehousing and distribution) to the oil
and chemical industries. South Coast's products and services are sold to
selected niche markets where major oil companies are not the dominant
competitors. Cast-Matic manufactures aluminum and zinc die castings which are
used in a variety of different industries including gas regulation, appliance,
hardware and automotive.
CYCLICALITY AND SEASONALITY
---------------------------
As a result of the Company's heavy dependence on the automotive
industry, there is cyclicality and seasonality in the Company's sales and
profits. The cyclicality of the automotive industry affects the Company's
sales and profits during periods of slow economic growth or recession. The
seasonality results in the Company typically having higher sales and operating
profits in its second and fourth fiscal quarters.
RAW MATERIALS
-------------
Raw materials are purchased from a number of different sources and the
loss of any particular supplier would not have a material effect on any of the
Company's businesses. Scrap steel is the principal raw material utilized at
Wagner in the production of ductile and malleable iron castings and is subject
to price fluctuations. Commitments with most of Wagner's major customers allow
Wagner to pass on the majority of increases or decreases in the cost of scrap
steel to these customers, however, these adjustments are generally passed along
three to six months subsequent to the time the change occurs.
WORKING CAPITAL
---------------
The seasonality of certain of the Company's businesses serving the
automotive market may result in significant fluctuations in working capital.
Terms for sales to automotive customers are typically 30-45 days.
Additionally, IMT maintains large inventories due to the variety of its
products and customer demands regarding lead times.
MARKETING AND COMPETITION
-------------------------
The Company's sales to the automotive industry, which are principally
through Wagner and IPC, are primarily made through their respective in-house
sales forces. A portion of Wagner's sales may also come through its sales
engineers who are capable of providing design and engineering work in the early
stages of production. Companies competing in the automotive industry compete
on the basis of pricing, quality, engineering and design capabilities and
delivery. The highly competitive nature of this market makes it very difficult
for Wagner and IPC to improve margins through increases in the selling prices
of their products.
- 4 -
5
Wagner competes with many other foundries in the castings market and
also competes with manufacturers of metal castings and steel forgings. As a
result of industry consolidation occurring over the past several years, there
has been a reduction in the number of smaller foundries and an increase in the
market share held by larger foundries. Some of the foundries that compete with
Wagner are larger and have greater financial resources than the Company.
The competition for IPC, one of the larger companies in the powder
coatings industry, is very fragmented. IPC competes with many smaller
facilities which are located close to the ultimate customer. Locating a
coating facility close to a customer has become increasingly important because
of high transportation costs relative to the cost of the powder coating. As
discussed previously, IPC expanded its powder coating technology and customer
base through a new production facility located in close proximity to a
particular customer. The Company anticipates future growth at IPC will require
substantial capital expenditures to equip additional facilities located near
strategic customers. The Company intends to fund these capital investments
through cash generated from operations and funds available under its Credit
Facility. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."
IMT's products are marketed through its (i) in-house sales force, (ii)
an organization of sales representatives and (iii) a worldwide distributor
network. IMT competes against numerous competitors, both domestically and
internationally, for its different products. The Company believes that IMT is
one of the leading producers of articulating cranes in North America; however,
it is a much smaller manufacturer in the market of truck service bodies. IMT
competes in its markets on the basis of product capabilities, quality and
price.
Both Frisby and Cast-Matic market their own products to a variety of
customers through a combination of in-house sales forces and outside sales
representatives. Competition in both of their respective markets is based on a
company's engineering and design capabilities, quality and price. In addition,
competition in these markets is highly fragmented. The precise nature of the
products that Frisby sells and the competitive pressures from newer
technologies will require Frisby to make capital expenditures to remain
competitive during the next several years. The Company intends to fund these
expected capital investments from cash generated from operations and funds
available under its Credit Facility. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Liquidity and Capital
Resources."
South Coast markets its products and services principally through its
in-house sales force. South Coast serves a variety of niche markets and
frequently competes against its large petro-chemical customers on in-house vs.
outsource purchase decisions. Companies compete in South Coast's market based
on quality, price, service and facilities.
On July 17, 1995, the Company's Board of Directors authorized the
Company's management to proceed with the sale of its South Coast Terminals,
Inc. subsidiary. The Company is in the process of negotiating a definitive
agreement with a prospective purchaser, and the ultimate consummation of the
sale will be contingent on the occurrence of certain events. For the year
ended May 31, 1995,
- 5 -
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South Coast Terminals had sales of $23,484,000 and total assets at May 31, 1995
of $16,558,000. The Company expects that the proceeds of the sale, as
currently contemplated, would be in excess of the Company's investment in
South Coast Terminals.
SALES TO CERTAIN CUSTOMERS
--------------------------
For the fiscal years ended 1995, 1994 and 1993, sales to Ford Motor
Company were approximately $46.6 million, $34.6 million and $26.0 million,
respectively; and sales to Chrysler Corporation were approximately $36.3, $31.5
million and $24.0 million, respectively. No other customers accounted for more
than 6% of sales from ongoing operations for any such period.
BACKLOG
-------
As of May 31, 1995, the Company had an order backlog of $55.2 million,
compared to $52.9 million at the end of fiscal 1994. The increase in backlog
occurred primarily at IMT due principally to economic improvements in its
construction markets. Of such backlog, orders of approximately $40.5 million
associated with the automotive and truck industries are subject to cancellation
without compensation, as is customary in the industry.
ENVIRONMENTAL MATTERS
---------------------
The Company's manufacturing facilities and production processes, like
those of industrial manufacturers generally, are subject to numerous laws and
regulations designed to protect the environment. Environmental requirements
have become more stringent, not only with respect to emissions and wastes from
ongoing operations, but also with respect to historic conditions and
discontinued operations. Several of the Company's subsidiaries' current and
historic business activities may give rise to cleanup requirements in the
future, both with respect to on-site and off-site activities or conditions.
See "Item 3 - Legal Proceedings" for a discussion of off-site environmental
proceedings involving the Company's operating units. The ultimate costs of
environmental compliance cannot be predicted with precision due to many
uncertainties, such as whether cleanup action will be required and, if
required, what cleanup measures, techniques or standards will be imposed.
EMPLOYEES
---------
As of May 31, 1995, the Company employed 2,549 employees, of whom 1,318
were represented by unions.
ITEM 2. PROPERTIES
----------
The Company's corporate offices are located in a leased facility in
Cleveland, Ohio. The Company's operating units use a total of 16 facilities
containing a total of approximately 1.5 million square feet of owned space and
approximately .6 million square feet of leased space. The facilities generally
include manufacturing and office space and are located in Illinois, Iowa,
Kansas, Kentucky, Michigan, Ohio, Texas and Ontario, Canada. One owned
property in Texas is encumbered by a mortgage.
The Company believes that all of its facilities are reasonably maintained
and are generally adequate for their present purposes. Facilities are believed
to be sufficient to accommodate reasonable increases in business.
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ITEM 3. LEGAL PROCEEDINGS
-----------------
GENERAL
-------
Other than routine litigation incident to its business and except as
noted below, the Company is not a party to any legal proceedings which could be
material to its results of operations, financial position or liquidity.
BENNETT LITIGATION
------------------
On September 16, 1985, a derivative action was filed in the United
States District Court for the Northern District of Ohio by John H. Bennett, a
stockholder of the Company. The complaint named certain directors and officers
of the Company as defendants and alleged that the Company was damaged as a
result of the private placement of the Company's Common Stock. The complaint,
as later amended to add additional defendants and causes of action, sought
monetary damages of $20 million and punitive damages of $20 million, as well as
injunctive relief.
On April 24, 1987, the same stockholder who filed the foregoing action
filed another lawsuit in the United States District Court for the Northern
District of Ohio, which was purportedly a class action on behalf of certain
holders of the Company's capital stock. The complaint named the then current
directors and executive officers of the Company, the Company, and certain other
persons as defendants. The suit sought to enjoin the consummation of the
Company's 1987 corporate reorganization, or, in the alternative, an award of
damages if the 1987 reorganization was consummated. The plaintiff's Motion for
Preliminary Injunction was denied by the Court on May 22, 1987.
No further material developments took place in either lawsuit prior to
the filing of the Company's bankruptcy case in January 1992, which filing
automatically stayed the proceeding in connection with these lawsuits. The
Company's bankruptcy Plan of Reorganization contained provisions reserving to
the Company the sole right to assert or waive any cause of action possessed by
the Company. In connection with confirmation of the Plan, the Company
intervened and caused the pending derivative action described above to be
dismissed. The plaintiff appealed this dismissal and certain related orders
to the United States Court of Appeals for the Sixth Circuit. By order entered
June 27, 1995, the Sixth Circuit Court of Appeals dismissed the appeals as
moot. The Company does not anticipate further appeals by the plaintiff and
believes that the dismissal of the appeals will end the litigation.
ENVIRONMENTAL MATTERS
---------------------
Several of the Company's operating units have been identified as
potentially responsible parties ("PRPs") in legal proceedings or otherwise
notified that they may be liable for the cleanup of hazardous substances under
federal "Superfund" and other environmental protection legislation. The
Company intends to utilize all available legal defenses and remedies, including
insurance owned by the Company or its predecessors in interest, with respect to
these sites and any other site in which it may be involved in legal
proceedings, to minimize the Company's financial exposure to environmental
liability.
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TransPlastics, Inc., a non-operating subsidiary of the Company is among
53 identified PRPs at the Millcreek Dump Superfund Site in Millcreek Township,
Pennsylvania. In October 1989, the United States filed a Complaint, UNITED
STATES V RALPH RIEHL, JR., ET AL, in the United States District Court for the
Western District of Pennsylvania ("District Court") seeking approximately $3.3
million of costs allegedly incurred by the United States Environmental
Protection Agency ("U.S. EPA") at the aforementioned site, as well as
prejudgment interest and declaratory relief for future cleanup costs. In June
1992, TransPlastics was one of 39 defendants named in an Amended Complaint.
Under the District Court's case management order, contribution claims are
deemed asserted among TransPlastics and the other defendants. In April 1992,
the U.S. EPA issued to TransPlastics and 36 other respondents (including almost
all of the defendants in the District Court case) a unilateral administrative
order pursuant to Section 106 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"). The CERCLA Section 106
Order requires completion of specified remedial action for the Millcreek Dump
Site estimated by the United States EPA to cost $12 million. In fiscal 1995,
the federal government and TransPlastics, Inc. entered into a settlement
agreement by which the U.S. EPA agreed to accept $500,000 in settlement of its
pending claims at this site, which was within the amount previously accrued by
the Company. The proposed agreement includes a provision granting
TransPlastics contribution protection for matters addressed in the settlement.
A mandatory notice period has passed and TransPlastics, Inc. is awaiting the
submission of the agreement for District Court approval.
On April 19, 1993, the Minnesota Pollution Control Agency (MPCA) issued
Metalcote Grease and Oil Company ("Metalcote"), a division of Western Capital
Corporation, a non-operating subsidiary of the Company, an order to investigate
and take other corrective action at property Metalcote owned in St. Paul,
Minnesota. The property is currently owned by Randolph Capital Corporation, a
subsidiary of Western Capital Corporation. Although Randolph Capital
Corporation is currently contesting its responsibility for environmental
conditions that allegedly exist at the property, Randolph Capital Corporation
is cooperating with the MPCA and has retained legal counsel and environmental
consultants to respond to the MPCA's order. Although additional investigation
is necessary and ongoing, Randolph Capital Corporation currently estimates that
the future costs to respond to the order will be at least $300,000. During
1995, the Minnesota legislature passed legislation making a substantial portion
of these costs potentially eligible for reimbursement from the Minnesota
Petroleum Tank Release Cleanup Fund.
A release of petroleum products has also been identified and reported
to regulatory authorities at a second site in St. Paul, Minnesota previously
owned and operated by Metalcote, and a site in Philadelphia, Pennsylvania
previously owned and operated by Master Lubricants, both divisions of Western
Capital Corporation. Environmental consultants have been retained to
investigate and address the two reported petroleum releases. Due to the
preliminary status of the investigations, there is no current estimate of
future costs for investigation and cleanup at these sites. With respect to the
Minnesota site, Randolph Capital Corporation may be eligible for reimbursement
of certain costs under the Minnesota Petroleum Tank Cleanup Program. There is
currently no similar program in Pennsylvania.
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To date, Management believes that the resolution of other pending or
anticipated environmental proceedings and all claims in the aggregate (after
applicable reserves, see Note E -- Contingencies and Commitments of the
financial statements) are immaterial to the Company's financial position,
results of operations and liquidity taken as a whole. Although the Company
continues to assess the potential liability of its operating units for pending
and anticipated legal proceedings, the ultimate liability for such
environmental matters cannot be predicted with certainty.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
The following sets forth the name, age and recent business experience of
each person who is an executive officer of the Company. All executive officers
are elected by and serve at the pleasure of the Board of Directors.
Principal occupation or
employment for the past
Name five years Age
---- ------------------------------ ---
Jacques R. Sardas Director, President and Chief 64
Executive Officer since
January 13, 1992; Chairman of
the Board of Directors and
Treasurer since January 1993;
Director and Executive Vice
President of Goodyear Tire and
Rubber Co., which develops and
sells tires domestically and
abroad (1980-1991); President
of Goodyear International
(September 1984-August 1988);
President and Chief Operating
Officer-Tires (August 1988-
April 1991).
Mark E. Brody Vice President and Chief 33
Financial Officer since
October 1994; Vice President
of Finance (October 1992 -
October 1994); Controller
(September 1991 - October 1994);
Assistant Controller (April
1989-September 1991); Director
of Taxes (December 1987-
April 1989).
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PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
-------------------------------------------------------------
MATTERS
-------
The Company's common shares are listed on the Nasdaq National Market
System. The information required by this item appears under the caption
"Market For Registrant's Common Equity and Related Stockholder Matters" on
page 28 of the 1995 Annual Report and is incorporated herein by reference
thereto.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The information required by this item appears under the caption
"Selected Financial Data" on page 1 of the 1995 Annual Report and is
incorporated herein by reference thereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
The information required by this item appears under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 26 through 28 of the 1995 Annual Report and is
incorporated herein by reference thereto.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The information required by this item appears on pages 13 through 25 of
the 1995 Annual Report and is incorporated herein by reference thereto.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
----------------------------------------------------
Not Applicable
- 10 -
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PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
-----------------------------------------------
The information required by this item appears under the caption
"Election of Directors" on pages 4 through 6 of the Company's definitive Proxy
Statement to be filed with the Securities and Exchange Commission within 120
days of the close of the Company's fiscal year ended May 31, 1995 and is
incorporated herein by reference thereto.
Information concerning executive officers of the Company is contained
in Part I of this report under the caption "Executive Officers of the
Registrant."
ITEM 11. EXECUTIVE COMPENSATION
----------------------
The information required by this item is located on pages 7 through 13
of the Company's definitive Proxy Statement to be filed with the Securities and
Exchange Commission within 120 days of the close of the Company's fiscal year
ended May 31, 1995 and is incorporated herein by reference thereto.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The information required by this item appears under the caption
"Beneficial Ownership of Securities" on pages 2 and 3 of the Company's
definitive Proxy Statement to be filed with the Securities and Exchange
Commission within 120 days of the close of the Company's fiscal year ended May
31, 1995 and is incorporated herein by reference thereto.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Not applicable.
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PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
(a)(1), (a)(2) and (d) Financial Statements and Financial Schedules.
---------------------------------------------
The financial statements and financial statement schedules listed
in accompanying index to financial statements and financial
schedules are filed as part of this Annual Report on Form 10-K.
(a)(3) and (c) Exhibits.
---------
The exhibits listed on the accompanying index to exhibits are
filed as part of this Annual Report on Form 10-K.
(b) Reports on Form 8-K.
None.
- 12 -
13
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 August 18, 1995 on its behalf by the undersigned, thereunto duly authorized.
SUDBURY, INC.
By:/S/Mark E. Brody
------------------------------------
Mark E. Brody
Vice President and Chief Financial
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, and
the rules and regulations promulgated thereunder, this report has been signed
on behalf of the Registrant by the following persons, in their indicated
capacities, on August 18, 1995.
/S/Jacques R. Sardas
------------------------------
Jacques R. Sardas Director, Chairman, President and Chief Executive Officer (Principal Executive Officer)
/S/Mark E. Brody
------------------------------
Mark E. Brody Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
/S/Cloyd J. Abruzzo
------------------------------
Cloyd J. Abruzzo Director
/S/Jerry A. Cooper
------------------------------
Jerry A. Cooper Director
/S/Preston Heller, Jr.
------------------------------
Preston Heller, Jr. Director
/S/James A. Karman
------------------------------
James A. Karman Director
/S/David A. Preiser
------------------------------
David A. Preiser Director
/S/Thomas F. Slater
------------------------------
Thomas F. Slater Director
- 13 -
14
SUDBURY, INC.
ANNUAL REPORT ON FORM 10-K
ITEMS 14 (a) (1), (2) (d) AND (3) (c)
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENT SCHEDULES
INDEX TO EXHIBITS
CERTAIN EXHIBITS
FISCAL YEAR ENDED MAY 31, 1995
- 14 -
15
SUDBURY, INC.
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(ITEM 14(a)(1) AND (2)(d))
PAGE REFERENCE
-------------------------
FORM 10-K ANNUAL REPORT
--------- -------------
Data incorporated by reference from the
1995 Annual Report:
Consolidated Statements of Operations -
Fiscal Years Ended May 31, 1995 and 1994,
Nine Months Ended May 31, 1993 and the
Three Months Ended August 31, 1992 13
Consolidated Balance Sheets - May 31, 1995
and May 31, 1994 14
Consolidated Statements of Stockholders'
Equity (Deficit) - Fiscal Years Ended
May 31, 1995 and 1994, Nine Months Ended
May 31, 1993 and the Three Months Ended
August 31, 1992 15
Consolidated Statements of Cash Flows -
Fiscal Years Ended May 31, 1995 and 1994,
Nine Months Ended May 31, 1993 and the
Three Months Ended August 31, 1992 16
Notes to Consolidated Financial Statements 17-25
Report of Independent Auditors 25
Consolidated Financial Statement Schedules:
Schedule VIII - Valuation and Qualifying Accounts 16
Report of Independent Auditors 17
All other schedules for the Company have been omitted since the required
information is not present or not present in amounts sufficient to require
submission of the schedule, or because the information required is included in
the financial statements, including the notes thereto.
The consolidated financial statements of the Company listed in the preceding
index, which are included in the 1995 Annual Report, are incorporated herein by
reference. With the exception of the pages listed in the above index and
information incorporated by reference elsewhere herein, the 1995 Annual Report
is not to be deemed filed as part of this report.
- 15 -
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SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
SUDBURY, INC. AND SUBSIDIARIES
____________________________________________________________________________________________________________________________
COL. A COL. B COL. C COL. D COL. E
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ADDITIONS
BALANCE AT CHARGED TO CHARGED BALANCE AT
BEGINNING COSTS AND TO OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
----------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Fiscal year ended May 31, 1995:
Deferred tax asset valuation
allowance $9,214 $ 215 $ (946) (1) $(2,020) (1) $6,463
Fiscal year ended May 31, 1994:
Deferred tax asset valuation
allowance $9,208 $ 6 (2) $9,214
Nine months ended May 31, 1993:
Deferred tax asset valuation
allowance $5,688 $ 3,520 (2) $9,208
Three months ended August 31, 1992:
Deferred tax asset valuation
allowance $ 5,688 (3) $5,688
<FN>
(1) Valuation allowance was reduced as a result of an evaluation of future realizability.
(2) Increases in valuation allowance resulted primarily from net operating and capital losses which could not be realized.
(3) Valuation allowance was recorded in conjunction with the adoption by the Company of SFAS No. 109 under the Fresh Start
accounting adjustment discussed in Note P to the financial statements.
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17
REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements of Sudbury, Inc. as of
May 31, 1995 and 1994, and for the years ended May 31, 1995 and 1994, the nine
months ended May 31, 1993, and the three months ended August 31, 1992, and have
issued our report thereon dated July 17, 1995 [incorporated by reference
elsewhere in this Annual Report (Form 10-K)]. Our audits also included the
related consolidated financial statement schedule of Sudbury, Inc. listed in
item 14(a) of this Annual Report (Form 10-K). This schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits.
In our opinion, the consolidated financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
ERNST & YOUNG LLP
Cleveland, Ohio
July 17, 1995
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SUDBURY, INC.
FORM 10-K
EXHIBIT INDEX
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Item 14(a)(3) EXHIBITS: Exhibits identified in parenthesis below, on
file with the SEC, are incorporated herein by reference as
exhibits hereto.
EXHIBIT NO.
-----------
(2) Third Amended Plan of Reorganization as confirmed by the United States Bankruptcy Court, Northern District of Ohio.
(Exhibit (2) to Form 10-K for the fiscal year ended May 31, 1992.)
(3)(a) By-Laws of Sudbury, Inc., as amended November 19, 1992. (Exhibit (3)(a) to Form 10-K for the fiscal year ended May 31,
1993.)
(3)(b) Second Restated Certificate of Incorporation of Sudbury, Inc. (Exhibit (3)(b) to Form 10-K for the fiscal year ended
May 31, 1993.)
(4)(a) Indenture, dated as of April 15, 1986, from Sudbury to FirsTier Bank, National Association, Omaha, Nebraska, as
Trustee, for Sudbury's 7-1/2% Convertible Subordinated Debentures due 2011. (Exhibit (4)(a) to Amendment No. 1 to
Registration Statement No. 33-4699 filed April 10, 1986.)
(4)(b) Supplemental Indenture, dated as of May 27, 1987, from Sudbury to FirsTier Bank, National Association, as Trustee.
(Exhibit (4)(b) to Form 10-K for the fiscal year ended May 30, 1987.)
(4)(c) Credit Agreement by and among Sudbury, Inc. and National City Bank, Star Bank, National Association and National City
Bank, as Agent, dated May 30, 1995.
(4)(d) Form of Participation Certificate Agreement entered into in connection with Sudbury's Third Amended Plan of
Reorganization. (Exhibit (4)(r) to Form 10-K for the fiscal year ended May 31, 1992.)
(4)(e) Form of Indenture between Sudbury and IBJ Schroder Bank and Trust Company, as Trustee for Sudbury's 8.6% $10 million
Senior Subordinated Pay-In-Kind Notes due 1997, distributed pursuant to Sudbury's Third Amended Plan of Reorganization.
(Exhibit T3C to the Form T-3 filed on August 17, 1992.)
(10)(a) 1990 Stock Option Plan. (Exhibit (10)(l) to Form 10-K for the fiscal year ended May 31, 1990.)
(10)(b) Amended Employment Agreement dated January 13, 1992 between Sudbury and Jacques R. Sardas. (Exhibit (10)(h) to Form
10-K for the fiscal year ended May 31, 1992.)
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19
SUDBURY, INC.
FORM 10-K
EXHIBIT INDEX (CONTINUED)
EXHIBIT NO.
-----------
(10)(c) Agreement and Plan of Merger dated November 7, 1989 among Sudbury, Western, General Products Delaware Corporation,
General Products Angola Corporation and General Products Corporation. (Exhibit (10)(b) to Current Report on Form 8-K
for event occurring on November 7, 1989.)
(10)(d) Asset Purchase Agreement dated November 7, 1989 among Sudbury, Western and General Products Delaware Corporation.
(Exhibit 10(a) to the Current Report on Form 8-K filed for event occurring on November 7, 1989.)
(10)(e) Settlement Agreement and Mutual Release dated July 29, 1994 between Jacques R. Sardas and Sudbury, Inc. (Exhibit
(10)(e) to Form 10-K for the fiscal year ended May 31, 1994.)
(10)(f) Stock Option Agreement dated July 29, 1994 between Jacques R. Sardas and Sudbury, Inc. (Exhibit (10)(f) to Form 10-K
for the fiscal year ended May 31, 1994.)
(10)(g) Summary Description of the Sudbury, Inc. Incentive Bonus Plan. (Exhibit (10)(g) to Form 10-K for the fiscal year ended
May 31, 1994.)
(10)(h) Directors' Deferral Plan adopted September 12, 1994.
(10)(i) 1995 Stock Option Plan.
(10)(j) Employment Agreement between Jacques R. Sardas and Sudbury, Inc. dated July 28, 1995.
(10)(k) Non-Qualified Stock Option Agreement between Sudbury, Inc. and Jacques R. Sardas dated July 28, 1995.
(11) Statement re: Computation of Per Share Earnings
(13) Selected portions of the 1995 Annual Report
(21) Subsidiaries of the Company
(23) Consent of Independent Auditors
(27) Financial Data Schedule
The above exhibits are available to shareholders upon written request to:
Corporate Secretary
Sudbury, Inc.
30100 Chagrin Boulevard, Suite 203
Cleveland, Ohio 44124
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