1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(MARK ONE) FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
------- EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 30, 1995
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
------- SECURITIES AND EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ______________________ to________________________
Commission file number 1-2917
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THE STANDARD PRODUCTS COMPANY
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(Exact name of registrant as specified in its charter)
Ohio 34-0549970
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(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
2401 South Gulley Road, Dearborn, Michigan 48124
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313) 561-1100
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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COMMON SHARES, $1 PAR VALUE New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
________________________________________________________________________________
(Title of class)
________________________________________________________________________________
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 12 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 required for the past 90 days. Yes X No
------ ------.
State the aggregate market value of the voting stock held by nonaffiliates of
the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices for
such stock, as of a specified date within 60 days prior to the date of filing.
(See definition of affiliate in Rule 405). $277,562,617 at August 21, 1995
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(APPLICABLE ONLY TO REGISTRANTS 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 ______ No ______.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date. 16,749,255 at August 21,
1995 ------------------------
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(DOCUMENTS INCORPORATED BY REFERENCE)
List hereunder the following documents if incorporated by reference and the
Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
1995 ANNUAL REPORT TO SHAREHOLDERS (PARTS I, II AND IV)
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PROXY STATEMENT FOR 1995 ANNUAL MEETING OF SHAREHOLDERS (PART III)
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2
PART I
ITEM I. BUSINESS
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General and Industry Segments
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The Company is engaged primarily in the manufacture of
rubber and plastic parts requiring a substantial degree of
product engineering and high-volume production processes for
automotive original equipment manufacturers in the United States,
Canada, France, the United Kingdom and other European countries
(the "Transportation Equipment Segment"). This segment also
produces rubber and plastic parts for the appliance, construction
and marine industries. The Company also manufactures precure and
mold cure tread rubber for the truck tire retreading industry
(the "Tread Rubber Segment").
Reference is made to "Notes to Consolidated Financial
Statements" included on page 21 and 22 of the Company's 1995
Annual Report to Shareholders, incorporated herein by reference,
for additional financial information concerning the Company's
reportable business segments and geographic areas.
The Company formerly owned 20% of the shares of Itatiaia
Standard of Sao Paulo, Brazil, and in May, 1995 the Company
acquired the remaining 80% of the shares. Also, during 1995, the
Company incorporated Standard Products Brazil which is in the
process of building a new plant for the manufacture and supply of
automotive products for the Brazilian automotive original
equipment market.
Also, during 1995, the Company incorporated Standard
Products Mexico. This Company is in the early stages of plant
construction and when completed, this facility will manufacture
automotive parts for the Mexican automotive original equipment
market.
In January 1993, the Company acquired all of the issued
and outstanding shares of capital stock of Standard Products
Industriel (SPI), a corporation organized under French law. See
"Foreign Operations" for a discussion of the foreign operations
of the Company.
In December 1992, the Company increased its ownership in
its North American joint venture, Nishikawa Standard Company
(NSC) to 50% from 40% by making additional capital contributions
and by purchasing partnership units from the Company's partner,
Nishikawa Rubber Company, of Hiroshima, Japan. In July 1992, the
Company's subsidiary, Holm Industries, Inc., acquired the assets
of Jarrow Products, a manufacturer of plastic extrusion products
for commercial appliances and building door sealing systems. In
fiscal 1991, the Company discontinued the manufacture of
rubberized track for military vehicles. See the section
"Discontinued Operations" for a discussion of developments which
have occurred regarding these operations during the past year.
The Company was incorporated in Ohio in 1927 and was
consolidated in 1936 with the Reid Products Company.
TRANSPORTATION EQUIPMENT SEGMENT
Automotive Original Equipment
-----------------------------
PRODUCTS. Rubber products supplied to the automotive
manufacturing industry include flocked rubber and steel
weatherstrip assemblies to seal vehicle windows; flocked rubber
window channel assemblies and rubber window gaskets; and vehicle
body and door dynamic sealing systems. These products form the
sealing system of automotive vehicles preventing water leakage
and inhibiting wind noise from entering the vehicle.
Attractiveness of design is an important feature of the sealing
system. An increasing number of the Company's parts are sold to
automotive original equipment manufacturers as complete sealing
systems. This is a departure from former practices which
involved more suppliers who supplied individual parts, not
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complete systems. The Company also supplies molded rubber engine
mounts and body cushions, which comprise a vehicle's vibration
control system, to the automotive manufacturing industry.
Plastic products include metallized, multicolored and embossed
exterior and interior vinyl trim, painted vinyl trim and flocked
vinyl and steel weatherstrip assemblies. The plastic exterior
products serve as protective barriers preventing damage to the
vehicle's sheet metal and have become an integral part of the
vehicle's overall styling and appearance. Although reliable
industry statistics are not available, the Company believes that
it is one of the leading independent manufacturers of rubber
window and door weather sealing products and plastic trim for the
automotive industry.
MARKETS AND CUSTOMERS. The Company manufactures parts
and accessories for automotive and truck original equipment
manufacturers in the United States, Brazil, Canada, France and
the United Kingdom and other European countries. Manufacturing
operations for the automotive original equipment market of this
segment are conducted by the Company, Itatiaia Standard, Standard
Products (Canada) Limited, Standard Products Limited and Standard
Products Industriel. The Company's major customers include
automotive original equipment manufacturers. The percentage of
sales of each of these major customers to total consolidated
sales for the three year periods 1995, 1994 and 1993,
respectively, have been as follows: Chrysler - 15%, 13% and 11%;
Ford - 23%, 26% and 31%; General Motors - 18%, 17%, and 23%.
Since most of the Company's rubber and plastic automotive
products are used on original equipment, sales of such products
are directly affected by the annual car production of original
equipment manufacturers. The Company does not have a backlog of
orders at any point in time. Instead, original equipment sales
are based upon purchase orders issued annually by automobile
manufacturers for each part which the Company manufactures. The
purchase orders are for all or a percentage of the customers'
estimated requirements and are binding, subject to the annual car
production of original equipment manufacturers. As the year
evolves, customers issue releases under those purchase orders,
specifying quantities of the parts which the assembly plants
require. The Company's sales and product development personnel
work directly with the engineering and styling departments of the
automotive original equipment manufacturers and suppliers in the
engineering and development of its various products.
DISTRIBUTION. The Company utilizes, as a distribution
center for some of its automotive finished products,
approximately 133,000 square feet of a 283,000 square foot public
warehouse which it operates in Dearborn, Michigan. The balance
of the warehouse space is allocated to commercial customers' use.
The Company also distributes automotive finished products from a
leased warehouse in Charlotte, North Carolina, central to the
Company's southern plants.
Most of the Company's nondomestic customers are supplied
directly by foreign manufacturing plants of subsidiaries of the
Company.
COMPETITION. Each aspect of the Company's business in
automotive products is highly competitive. No single firm
competes with the Company in all aspects of this business. The
Company's competitive position depends upon its ability to offer
engineering and design capabilities and to manufacture products
which meet its customers' pricing, quality and delivery
requirements. The Company has historically met the customers'
requirements.
Other
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The Company, through its subsidiary, Holm Industries,
Inc., manufactures rubber and plastic trim seals for the
automotive replacement, construction and marine industries and a
variety of plastic and magnetic parts for original equipment
appliance manufacturers and residential and commercial exterior
door and window manufacturers. These products are manufactured
with some of the raw materials similar to those used in the
products manufactured by the Transportation Equipment and Tread
Rubber Segments. See "Raw Materials" for a discussion of
suppliers and available supplies. Distribution of these products
are through both internal sales personnel and manufacturing
representatives. These products are sold to many customers,
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and market share information is not available for all of the
products which Holm manufactures. For plastic and magnetic
seals, Holm is the largest supplier to the United States
refrigeration and freezer appliance market.
In July 1992, Holm acquired the assets of Jarrow
Products, a small manufacturer of commercial refrigeration
gaskets and exterior door weatherstrip.
Working Capital
---------------
The Transportation Equipment Segment typically results in
a strong working capital position which provides adequate cash
flow. Accounts receivable are promptly paid and inventories turn
over rapidly. Seasonality becomes a factor during new model
conversions and summer vacation periods.
Joint Venture
-------------
The Company also manufactures vehicle body and door
sealing systems for sale to North American automotive original
equipment manufacturers and Japanese transplants, including
Honda, Ford Motor Company and Automotive Alliance International
(formerly Mazda), through its North American joint venture,
Nishikawa Standard Company (NSC), a general partnership owned 50%
by the Company and 50% by Nishikawa Rubber Company (Nishikawa) of
Hiroshima, Japan. Manufacturing operations are conducted at
plants located in Bremen, New Haven, and Topeka, Indiana. In
December 1992, the Company increased its ownership in NISCO to
50% from 40% by making additional capital contributions and by
purchasing partnership units from Nishikawa. The chief operating
officer of the Company is the chief executive officer of NISCO
and chairman of its Policy Committee.
TREAD RUBBER SEGMENT
PRODUCTS. The Company's wholly owned subsidiary, Oliver
Rubber Company ("Oliver"), manufactures and markets precure and
mold cure tread rubber, bonding gum, cement, repair materials and
equipment for the tire retreading industry.
Oliver also supplies custom mixed rubber to the Company
for use in automotive original equipment products and to NISCO
for the manufacture of door seals for automotive original
equipment. Oliver also custom mixes rubber compounds for
selected customers throughout the United States.
Precure tread rubber is shipped to a retreader partially
cured and with a specially designed tread imprinted. The
retreader cements the precure tread to a tire casing using heat
and pressure to complete a permanent bond.
Mold cure tread rubber is applied by a retread dealer to
the tire casing in a pressure mold which cures the rubber and at
the same time imprints into it the tread design.
Based on industry statistics in 1995, precure tread
rubber represents approximately 78% of the tread rubber used by
the retreading industry and mold cure represents approximately
22%. Oliver supplies both precure and mold cure tread rubber.
MARKETS. Oliver serves the trucking industry in North
America and Europe through its licensed dealer network for
precure retreading and through dealers who sell mold cure rubber.
Oliver also serves markets in other areas of the world, such as
India, through license arrangements and export sales. Truck
mileage, and therefore demand for tread rubber, correlate with
general economic conditions of the market served.
Oliver also supplies mold cure tread rubber for
off-the-road (OTR) construction equipment.
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DISTRIBUTION. In North America, tread rubber products
are marketed by Oliver's sales force to retread dealers, some of
which are licensed by Oliver. Licensed dealers use Oliver's
patented precure system and market tread rubber under the name of
Tuff-Cure.
COMPETITION. The tread rubber industry is very
competitive with more than ten suppliers, of which three are
significant. Competition is based upon the price and quality of
the products supplied. While exact market share information is
not available, it is estimated that based on pounds shipped, the
largest supplier of precure tread rubber is Bandag, Incorporated
("Bandag"). Oliver, unlike Bandag, sells in North America, both
precure and mold cure tread rubber, and management believes it is
the largest supplier of mold cure rubber and it is the second
largest supplier of tread rubber in 1995.
Working Capital
---------------
The Tread Rubber Segment sells to many small independent
customers. Accounts receivable and the extension of credit must
be monitored closely to reduce the risk of losses in collection.
Inventories include a supply of finished goods on hand to fill
customer orders from stock. Working capital requires careful
management but has generally been sufficient to fund operating
needs.
Other
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In 1992, Oliver acquired the assets of Salisbury Machine,
a manufacturer of equipment used in retreading tires.
DISCONTINUED OPERATIONS
In fiscal 1991, the Company discontinued the manufacture
of rubberized track for military vehicles. As a result, the
Company significantly curtailed operations at its Port Clinton
Division and recorded a provision of $30,000,000 for estimated
ongoing losses and estimated costs associated with closure and/or
sale of the division. During fiscal 1992, the Company completed
or subcontracted its contractual commitments, and losses incurred
were charged to the reserve. In 1993, the Company announced the
complete closure of the Port Clinton Division, which had been
involved in rubber mixing for other Company facilities following
its termination of the military business. Assets related to the
military operations have been sold, transferred to other Company
facilities or disposed. The accumulated postretirement benefits
of the Port Clinton employees had been recognized in the
provision for discontinued operations of $30,000,000 and has now
been reclassified to accrued postretirement benefits. The
remaining balance of the reserve represents reserves for building
and site work and closure costs.
RAW MATERIALS
The principal materials used by the Company and its
subsidiaries in its Transportation Equipment and Tread Rubber
Segments are synthetic rubber and rubber chemicals. In addition,
other significant materials used by the Company in its
Transportation Equipment Segment are plastic resins, woven
fabrics, flock fibers, coil steel, aluminum and adhesives. The
majority of these materials are purchased on the open market from
domestic suppliers.
The Company believes that it has adequate supplies of raw
materials available from reliable sources for the levels of
production presently anticipated.
ENGINEERING AND DEVELOPMENT
Product development is an essential part of the market
strength of the Company and its automotive subsidiaries. The
Company's sales and product development personnel work directly
with the engineering and styling departments of its major
customers in the engineering and development of new products. In
recent years, the Company's involvement with its automotive
customers has begun at the earlier model design
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stage with the Company assuming an increasing share of
engineering and design capability and responsibility. The
Company's main sales and product development group is located in
Dearborn, Michigan, close to the purchasing and engineering
groups of its customers. The Company also has significant
product development facilities at Stratford, Ontario, Huntingdon,
England and Courbevoie, France.
As of August 15, 1995, 225 engineers and technicians were
engaged in development and engineering activities. The Company
spent approximately $37,959,000 in 1995, $31,538,000 in 1994 and
$22,003,000 in 1993 on product engineering and development, of
which $4,748,000 in 1995, $2,688,000 in 1994 and $1,032,000 in
1993 were customer-reimbursed.
In 1995, the product engineering and development
expenditures, net of customer reimbursement, were 3.6% of
Transportation Equipment sales. In 1994 and 1993, the comparable
percentages were 3.6% and 3%, respectively. The percentage of
product engineering and development expenditures to Tread Rubber
Segment sales for 1995, 1994 and 1993 were 1.2%, 1.2% and 1.3%,
respectively.
PATENTS AND LICENSES
The Company holds numerous patents covering various
manufacturing processes and products of the Transportation
Equipment Segment and several patents relating to application
processes used by its tread rubber customers. The Company has
licensed certain of the patents. The Company has a license
agreement with Nishikawa Rubber Company for sales, marketing and
engineering services on certain products sold by the Company.
While the Company considers some of its patents and licenses to
be important in certain aspects of its business, the Company does
not believe that the loss or expiration of any particular patent
or license would have an adverse effect on either segment of its
business. The Company actively pursues the application for
patents on new products and processes.
EMPLOYEES
As of June 30, 1995, the Company employed approximately
10,308 persons, of whom approximately 7,746 were hourly
employees. Employee relations at the Company's plants generally
have been good.
ENVIRONMENTAL MATTERS
The Company believes that it is in substantial compliance
with federal, state and local provisions regulating the discharge
of materials into the environment or otherwise relating to the
protection of the environment. The Company maintains personnel
whose function is to monitor compliance with environmental
protection regulations.
At the Company's Gaylord, Michigan plant, the Company is
correcting the condition of groundwater located under its plant
by injecting such water to underground depths well below and
separate from the drinking water aquifer. All corrective
activities are permitted by the Michigan Department of Natural
Resources and the United States Environmental Protection Agency.
The costs of installation and operation are not material to the
Company's financial position.
The Company has been previously designated as a
potentially responsible party in connection with several disposal
sites. Settlements with payment of an immaterial amount or no
amount at all have been obtained for all sites, except a site
located in Jamestown, North Carolina. The Company believes that
it was an insignificant contributor at this site and that this
matter will be resolved without material adverse effect to the
Company's financial position.
The Company has been notified that the property occupied
by its Schenectady, New York plant is being investigated due to
allegations concerning possible contamination resulting from the
operations of the previous property owner. The State has
reclassified the site based on the presence of several
contaminants
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and has requested the Company to perform certain actions. The
Company voluntarily completed interim actions and has petitioned
the State for a site reclassification that would not require
Company actions. The Company is awaiting a response from the
State of New York. No determination of liability to the Company,
if any, can be made at this time.
FOREIGN OPERATIONS
The Company owns all of the outstanding shares of
Standard Products (Canada) Limited, a Canadian corporation which
is engaged primarily in the manufacture of parts and accessories
for United States and Canadian automotive original equipment
manufacturers and for the automotive replacement parts market and
the distribution of tread rubber for the tire retreading
industry.
The Company owns all of the outstanding shares (except
for qualifying shares held by nominees) of Standard Products
Limited, an English corporation which is engaged primarily in the
manufacture of parts and accessories for the North American,
United Kingdom and European automotive original equipment
manufacturers and for the automotive replacement parts market.
The Company owns all of the outstanding shares (except
for qualifying shares held by nominees) of Oliver Europa, an
English corporation which had been engaged primarily in the
manufacture and distribution of tread rubber and rubber and
related products in Europe. This subsidiary has begun the
process of liquidation and is no longer actively engaged in
business.
In January 1993, the Company acquired all of the issued
and outstanding shares of capital stock of Standard Products
Industriel (SPI), a corporation organized under French law, and
all of the issued and outstanding shares of capital stock of
SPI's affiliated companies: Societe Lillebonnaise de
Caoutchoucs, Standard Products Atlantic and Central Auto, each of
which is a corporation organized under French law, Standard
Products Industriel SA, a corporation organized under Swiss law,
Rubber Industrial Holding Company, a Delaware corporation, 5
Rubber Corporation, a Pennsylvania corporation and La Riviere
Corporation, a Pennsylvania corporation (SPI and such affiliated
companies collectively, the "SPI Group"). The SPI Group is
engaged in the business of designing, developing, manufacturing
and distributing automotive window weatherstrips, glass
weatherstrips, vehicle body and door seals and glass
encapsulation products to French, other European and North
American auto manufacturers. The SPI Group's customers include,
among others, PSA (Peugeot/Citroen), Renault, Fiat, Volvo,
Chrysler Corporation, General Motors Corporation, Volkswagen and
Saab. SPI's European customer base complements the customer base
of the Company's operations in the United Kingdom. The SPI Group
has an experienced management team and expertise in the technical
design and engineering of automotive sealing products and
systems. Similar to the Company, SPI's design personnel work
closely with the engineering and styling departments of its
customers.
During 1995, the Company increased its presence in Brazil
by incorporating Standard Products Brazil (SPB) and by purchasing
the remaining 80% of Itatiaia Standard (the Company formerly
owned 20% of Itatiaia Standard). SPB is in the process of
constructing a new plant facility for the manufacture of rubber
and plastic automotive sealing products for Fiat's new model, the
178, which is scheduled to begin production in January, 1996.
The plant will be 260,000 square feet and will be located in
Varginha, Minas Gerais. Itatiaia Standard supplies the
automotive original equipment manufacturers with rubber sealing
products. Plants are located in the State of Sao Paulo with one
plant in Sao Paulo and a second in Itaquaquecetuba. Major
customers include Fiat, Ford, General Motors and Volkswagon.
Itatiaia Standard has an experienced management team and
expertise in technical design and engineering of automotive
sealing products and systems. Itatiaia's personnel also work
closely with their customers' engineering and styling
departments.
The Company also formed Standard Products de Mexico, S.A.
de C.V. (SPM) during 1995. Similar to SPB, SPM is in the process
of constructing 106,000 square foot plant which will manufacture
automotive parts for the Mexican automotive original equipment
manufacturers. Construction, however, has been deferred for a
minimum of six months. Operations are expected to begin in late
calendar 1996.
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The Company also has minority equity interests in and
licensing arrangements with firms in Australia, Japan, Korea,
India, Mexico and other countries throughout the world.
The Company's United States export sales in the aggregate
for the three fiscal years ended June 30, 1995, 1994 and 1993,
were $71,749,000, $41,472,000 and $42,800,000, respectively, of
which a substantial portion is represented by sales to automotive
original equipment manufacturers in Canada.
The Company's experience has been that its significant
foreign businesses in Canada and Western Europe do not present
materially different risks or problems from those encountered in
its United States markets. The risks of the Company, Standard
Products (Canada) Limited, Standard Products Limited and Standard
Products Industriel involve meeting the customers' expectations
as to the timely delivery of parts which meet their
specifications. The automotive business is directly affected by
the annual car production of original equipment manufacturers.
Standard Products (Canada) Limited, Standard Products Limited,
and Standard Products Industriel participate in the risk of
varying car builds similar to any of the Company's other
automotive plants which supply domestic assembly plants.
With respect to Brazil, the Company expects that the
risks of conducting business in the Brazilian automotive original
equipment market will be similar to its other automotive markets.
The Company must deal with several new issues including
governmental regulation, and a potentially highly inflationary
economy. With the assistance of Itatiaia Standard's local
management, the Company believes that it can successfully conduct
business in Brazil.
ITEM 2. PROPERTIES
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The Company operates the properties described as follows:
Land Plant
Location (Acreage) (Square Feet)
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Asheboro, North Carolina (1) 16.4 161,000
Athens, Georgia (1) 32.0 109,000
Athens, Georgia (1)(3) 3.3 37,000
Bezons, France (4) 4.3 140,000
Bolbec, France (3)(4) 24.3 276,000
Cleveland, Ohio (4) 12.0 157,000
Courbevoie, France (3)(4) .5 23,000
Dallas, Texas (1)(3) 6.0 96,000
Dearborn, Michigan (Warehouse and Offices) (4) 13.9 358,000
Etobicoke, Ontario, Canada (3)(4) .8 33,000
Export, Pennsylvania (1)(3) 2.0 40,500
Gaylord, Michigan (4) 96.2 92,000
Georgetown, Ontario, Canada (4) 5.7 89,000
Goldsboro, North Carolina (4) 6.6 140,000
Greenville, Michigan (4) 1.0 10,000
Griffin, Georgia (4) 17.5 190,000
Hartselle, Alabama (3)(4) 11.1 72,000
Huntingdon, England (4) 11.1 175,000
Itaquaquecetuba, Sao Paulo (4) 11.9 54,000
Kittanning, Pennsylvania (4) 6.1 80,000
Lexington, Kentucky (4) 5.9 115,000
Lillebonne, France (4) 9.1 100,000
Maesteg, Wales (4) 8.4 102,000
Mississauga, Ontario, Canada (3)(4) 5.0 97,000
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Land Plant
Location (Acreage) (Square Feet)
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Mitchell, Ontario, Canada (4) 10.5 88,000
New Ulm, Minnesota (4) 3.5 46,000
Oakland, California (1) 4.2 112,000
Paris, Texas (1) 28.5 31,000
Plymouth, England (3)(4) 9.0 127,000
Port Clinton, Ohio (5) 20.0 --
Rocky Mount, North Carolina (4) 24.2 222,000
St. Charles, Illinois (4) 2.3 47,000
San Diego, California (3)(4) -- 10,000
Salisbury, NC (1) 2.7 37,200
Sao Paulo, Sao Paulo (3)(4) 2.2 97,000
Schenectady, New York (4) 22.5 224,000
Scottsburg, Indiana (2)(4) 8.5 192,000
Spartanburg, South Carolina (4) 30.1 85,000
Stratford, Ontario, Canada (4) 20.0 80,000
Stratford, Ontario, Canada (1)(4) 5.4 94,000
Stratford, Ontario, Canada (4) 26.8 107,000
Vitre, France (3)(4) 16.6 207,000
Wadsworth, Ohio (1) 2.0 28,000
Winnsboro, South Carolina (4) 26.4 175,000
(1) Facilities used in the Tread Rubber Segment.
(2) These facilities are encumbered by either capital
lease or mortgage agreements which provide for
payments sufficient to pay principal of and interest
on first mortgage industrial revenue bonds issued for
the purchase of the plants and equipment. These
agreements have been capitalized for financial
statement purposes.
(3) Leased from others. The leases are short to medium
term operating leases, some of which have options to
renew for additional periods. Rental rates are
competitive for the market in which the property is
located. The Company believes that all of these
leased facilities could be replaced for comparable
terms.
(4) Facilities used in the Transportation Equipment
Segment.
(5) The plant has been demolished and the land is held
for sale.
The Company operates a 283,000 square foot public
warehouse in Dearborn, Michigan of which the Company utilizes
approximately 133,000 square feet for its own products. The
Company has its automotive sales office and product
development and engineering division at this location, and
these facilities utilize approximately 61,000 square feet of
space.
The Company believes that all of its properties,
machinery and equipment are in good operating condition and
suitable and adequate for the business of the Company as
presently conducted. The utilization of the Company's
Transportation Equipment facilities varies with the car build
production. The utilization of the Tread Rubber facilities
varies with demand for tread rubber product. Capacities of
each facility are adequate to meet current demands. During
the past year, utilization of capacity was 85% for
Transportation Equipment facilities and 74% for Tread Rubber
facilities.
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ITEM 3. LEGAL PROCEEDINGS
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The Company was not a party to any pending legal
proceedings other than ordinary routine litigation incidental
to its business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------
No matter was submitted to a vote of security holders
during the fourth quarter of the fiscal year covered by this
report.
EXECUTIVE OFFICERS OF THE REGISTRANT
The information below is included in this report
pursuant to instruction 3 to Item 401(B) of Regulation S-K.
The Executive Officers of the Company are elected
annually to serve for one-year terms or until their successors
are elected and qualified. The officers listed below were
elected on October 17, 1994. Their business experience,
principal occupations and employment during the last five
years are indicated in the table below.
Served In
Present
Office
Name Age Position with Registrant Since
---------------------- --- ------------------------------------------------------ ---------
James S. Reid, Jr. 69 Chairman and Chief Executive Officer 1962
In addition to his position as Chief Executive
Officer, Mr. Reid served as President from 1962
to 1988 and in 1991.
Theodore K. Zampetis 50 President and Chief Operating Officer 1991
Formerly, Mr. Zampetis was Vice President-
Manufacturing, North American Automotive
Operations from 1989 to 1990 and Executive Vice
President - President Standard Products Automotive
Operations from 1990.
Donald R. Sheley, Jr. 53 Vice President-Finance and Chief Financial Officer 1995
Formerly, Mr. Sheley was Vice President, Corporate
Controller, Cooper Industries, Inc. from 1988 until
joining the Company in July, 1995.
Larry J. Enders 53 Vice President of the Company and President 1993
and Chief Executive Officer, Oliver Rubber
Company
Formerly, Mr. Enders was Vice President-Sales
from 1988 to 1991 and Vice President-Purchasing
and Worldwide Supply from 1991.
James F. Keys 41 Vice President of the Company and Managing 1991
Director of Standard Products Limited
Formerly, Mr. Keys was Division Manager,
Product Development and Engineering
Division from 1987.
-10-
11
Served In
Present
Office
Name Age Position with Registrant Since
---------------------- --- ------------------------------------------------------ ---------
Stephan J. Mack 58 President, Holm Industries, Inc. 1986
Ted M. McQuade 41 Executive Vice President, North American 1995
Automotive Operations
Formerly, Mr. McQuade was Manager of Product
Support and Global Integration, Appliance
Business, General Electric from 1990.
Gerard Mesnel 56 Executive Vice President-Advanced Technology 1995
World Wide
Formerly, Mr. Mesnel was President/Consultant,
GSF Cie. since 1990.
Thomas J. Stecz 47 Corporate Controller 1995
Formerly, Mr. Stecz was Corporate Controller
and Assistant Secretary.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
------ MATTERS
The information required by Item 5 is incorporated
herein by reference to Note 4 of "Notes to Consolidated
Financial Statements" on page 19 and "Common Shares" on page
24 of the Annual Report to Shareholders for the year ended
June 30, 1995.
ITEM 6. SELECTED FINANCIAL DATA
------
The information required by Item 6 is incorporated
herein by reference to pages 10 and 11 of the Annual Report to
Shareholders for the year ended June 30, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
------- AND RESULTS OF OPERATIONS
The information required by Item 7 is incorporated
herein by reference to pages 9 through 12 of the Annual Report
to Shareholders for the year ended June 30, 1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------
Financial statements and statements required by Item
8 are incorporated herein by reference to pages 13 through 23
of the Annual Report to Shareholders for the year ended June
30, 1995.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
-------
None
-11-
12
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------
The information required by Item 10 as to directors
of the Registrant is incorporated herein by reference to the
information set forth under the caption "Election of
Directors" on pages 3 through 5 of the definitive Proxy
Statement for the Annual Meeting of Shareholders to be held
October 16, 1995. As to Executive Officers, the information
required is included in Part I of this report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
--------
The information required by Item 11 is incorporated
herein by reference to the material under the caption
"Executive Compensation" on pages 6 through 9 of the
definitive Proxy Statement for the Annual Meeting of
Shareholders to be held October 16, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------
The information required by Item 12 is incorporated
herein by reference to the information set forth under the
captions "Security Ownership of Certain Beneficial Owners" on
pages 1 through 3 of the definitive Proxy Statement for the
Annual Meeting of Shareholders to be held October 16, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------
The information required by Item 13 is incorporated
herein by reference to the information set forth under the
caption "Compensation Committee Interlocks and Insider
Participation" on page 9 of the definitive Proxy Statement for
the Annual Meeting of Shareholders to be held October 16,
1995.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
-------- 8-K
(a) (1) Financial Statements:
The following consolidated financial statements and related
notes of the Registrant and its subsidiaries are incorporated
herein by reference to the 1995 Annual Report to Shareholders
(pages 13 through 23):
Consolidated Balance Sheets - June 30, 1995 and 1994
Consolidated Statements of Income for the Years Ended June 30,
1995, 1994 and 1993
Consolidated Statements of Shareholders' Equity for the Years
Ended June 30, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the Years Ended June
30, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Auditors' Report
(a) (2) Financial Statement Schedule:
-12-
13
Report of Independent Public Accountants on the Financial
Statement Schedule
Schedule II -- Valuation and Qualifying
Accounts and Reserves for the
Years Ended June 30, 1995,
1994 and 1993
All schedules, other than Schedule II, are omitted
since the information is not required or is otherwise
furnished.
Separate financial statements of the Registrant have
been omitted since restricted net assets of consolidated
subsidiaries and unconsolidated investees and the Company's
share of the unconsolidated subsidiaries' equity is less than
25% of the Company's net assets at June 30, 1995.
(a) (3) Exhibits:
If Incorporated by
Exhibit No. Reference, Documents
Under Reg. S-K Form 10-K with which Exhibit Sequential
Item 601 Exhibit No. Description Was Previously Filed Page
-------------- ----------- ---------------------------- -------------------------- ----------
2 2a Stock Sale Agreement, Dated Form 8-K, Dated January
December 19, 1992 with respect 26, 1993
to the acquisition of the Standard (Filed with the SEC on
Products Industriel Group. February 8, 1993;
see Exhibit 2 therein)
3 3a Second Amended and Restated Quarterly Report Form 10-Q
Articles of Incorporation (Filed with the SEC on
November 1, 1993;
see Exhibit 3a therein)
3 3b Amended and Restated Code of Form S-3 Registration
Regulations No. 33-62054
(Filed with the SEC on
May 5, 1993;
see Exhibit 3.2 therein)
4 4a Senior Notes Agreement - Quarterly Report Form 10-Q
$75,000,000 6.55% Senior Notes due (Filed with the SEC on
December 16, 2003, by and among February 11, 1994;
The Standard Products Company and see Exhibit 4 therein)
Metropolitan Life Insurance Company
and certain of its Affiliates
-13-
14
Exhibit No. Reference, Documents
Under Reg. S-K Form 10-K with which Exhibit Sequential
Item 601 Exhibit No. Description Was Previously Filed Page
-------------- ----------- -------------------------------- ---------------------- ----------
4 4b Senior Notes Agreement - Annual Report Form 10-K
$25,000,000 aggregate principal (Filed with the SEC on
amount Dated as of June 30, 1989, September 25, 1989;
between the Company and see Exhibit 4b therein)
Nationwide Life Insurance Company,
Aid Association for Lutherans and
Employers Life Insurance Company
of Wausau
4 4c Amendments to the Senior Notes Annual Report Form 10-K
Agreement - $25,000,000 (Filed with the SEC on
aggregate principal amount (4e), September 15, 1992;
dated February 22, 1991 and, see Exhibit 4f therein)
June 30, 1991, between the Company
and Nationwide Life Insurance
Company, Aid Association for
Lutherans and Employers Life
Insurance Company of Wausau
4 4d Credit Agreement, Dated as of Annual Report Form 10-K
January 19, 1993, Among The (Filed with the SEC on
Standard Products Company, as September 13, 1993;
Borrower, and National City Bank, see Exhibit 4c therein)
Society National Bank, Comerica
Bank and NBD Bank, N.A. and
National City, as Agent.
4 4e Agreement of Amendment, Dated as Annual Report Form 10-K
of April 30, 1994, Among The (Filed with the SEC on
Standard Products Company, as September 14, 1995)
Borrower, and National City Bank,
Society National Bank, Comerica
Bank and NBD Bank, N.A. and
National City, as Agent.
4 4f Amendments to Senior Notes 20
Agreement - $25,000,000
aggregate principal amount (4e),
dated January 19, 1993 and,
January 31, 1995, between the
Company and Nationwide Life
Insurance Company, Aid Association
for Lutherans and Employers Life
Insurance Company of Wausau
4 4g Interest Rate and Currency 26
Exchange Agreement, dated
November 12, 1993, between the
Company and National City Bank
-14-
15
Exhibit No. Reference, Documents
Under Reg. S-K Form 10-K with which Exhibit Sequential
Item 601 Exhibit No. Description Was Previously Filed Page
-------------- ----------- -------------------------------- ------------------------ ----------
4 4h Interest Rate and Currency 53
Exchange Agreement, Termination
of $7 million in principal
amount, dated June 16, 1995
between the Company and National
City Bank
10 10a Supplemental Salaried Pension Annual Report Form 10-K
Plan (Filed with the SEC on
September 23, 1986;
see Exhibit 10a therein)
10 10b The Standard Products Company Form S-8 Registration
1985 Employee Incentive Stock No. 33-01558
Option Plan (Filed with the SEC on
November 15, 1985;
see Exhibit 4a therein)
10 10c The Standard Products Company Annual Report Form 10-K
1981 Employee Incentive Stock (Filed with the SEC on
Option Plan September 1, 1982;
see Exhibit 10 therein)
10 10d The Standard Products Company Form S-8 Registration
1989 Employee Incentive Stock No. 33-33612
Option Plan (Filed with the SEC on
February 28, 1990;
see Exhibit 4a therein)
10 10e The Standard Products Company Form S-8 Registration
1991 Employee Stock Option Plan No. 33-51556
(Filed with the SEC on
September 2, 1992;
see Exhibit 4c therein)
10 10f The Standard Products Company Form S-8 Registration
1991 Restricted Stock Plan No. 33-51554
(Filed with the SEC on
September 2, 1992;
see Exhibit 4c therein)
10 10g The Standard Products Company Annual Report Form 10-K
Restricted Stock Agreement between (Filed with the SEC on
the Company and the Chairman and September 15, 1992;
Chief Executive Officer see Exhibit 10h therein)
-15-
16
Exhibit No. Reference, Documents
Under Reg. S-K Form 10-K with which Exhibit Sequential
Item 601 Exhibit No. Description Was Previously Filed Page
-------------- ----------- -------------------------------- -------------------------- --------
10 10h The Standard Products Company Annual Report Form 10-K
Restricted Stock Agreement between (Filed with the SEC on
the Company and the President and September 15, 1992;
Chief Operating Officer see Exhibit 10i therein)
10 10i The Standard Products Company Form S-8 Registration
1993 Employee Stock Option Plan No. 33-53989
(Filed with the SEC on
June 6, 1994;
see Exhibit 4 therein)
13 13 Annual Report to Shareholders 56
for the Year Ended June 30, 1995
21 21 Subsidiaries of Registrant 84
23 23 Consent of Independent Public 85
Accountants
27 27 Financial Data Schedule 86
(b)
Reports on Form 8-K: No reports have been filed during the last
quarter of the fiscal year covered by this report on Form 10-K.
-16-
17
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.
THE STANDARD PRODUCTS COMPANY
BY /s/ Donald R. Sheley, Jr.
------------------------------------
Donald R. Sheley, Jr.
Vice President-Finance and Chief
Financial Officer
Date: September 13, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report has been signed below on SEPTEMBER 13, 1995 by the following
persons on behalf of the Registrant and in the capacities indicated.
/s/ James S. Reid, Jr. Chairman and Chief Executive Officer; Director
-----------------------------
James S. Reid, Jr.
/s/ Theodore K. Zampetis President and Chief Operating Officer; Director
-------------------------
Theodore K. Zampetis
/s/ Donald R. Sheley, Jr. Vice President-Finance and Chief Financial Officer
---------------------------
Donald R. Sheley, Jr. Principal Financial Officer
/s/ Thomas J. Stecz Corporate Controller
----------------------------
Thomas J. Stecz Principal Accounting Officer
/s/ James C. Baillie
----------------------------
James C. Baillie Director
/s/ Edward B. Brandon
-------------------------
Edward B. Brandon Director
/s/ John D. Drinko
---------------------------
John D. Drinko Director
/s/ Curtis E. Moll
-----------------------------
Curtis E. Moll Director
/s/ Malcolm R. Myers
-------------------------
Malcolm R. Myers Director
/s/ Leigh H. Perkins, Sr.
----------------------------
Leigh H. Perkins, Sr. Director
/s/ Alfred M. Rankin, Jr.
--------------------------
Alfred M. Rankin, Jr. Director
/s/ Alan E. Riedel
-----------------------------
Alan E. Riedel Director
/s/ John D. Sigel
-----------------------------
John D. Sigel Director
/s/ W. Hayden Thompson
----------------------
W. Hayden Thompson Director
-17-
18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON THE FINANCIAL STATEMENT SCHEDULE
To: The Standard Products Company
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in The Standard
Products Company and Subsidiary Companies 1995 Annual Report to Shareholders
incorporated by reference in this Form 10-K, and have issued our report thereon
dated August 2, 1995. Our audit was made for the purpose of forming an opinion
on those statements taken as a whole. The schedule listed in the index of
financial statements is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures
applied in the audit of the basic consolidated financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic consolidated financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Cleveland, Ohio
August 2, 1995.
-18-
19
VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE II
For the Years Ended June 30, 1995, 1994 and 1993
(Thousands of Dollars)
Column A Column B Column C Column D Column E Column
-------------------------------- ---------- ---------- ---------- ---------- -------
Additions
Balance At Charged To Balance
Beginning Costs And At End
Description Of Period Expenses Recoveries Deductions Of Period
------------------------------- ---------- ---------- ---------- ------------ ---------
Year Ended June 30, 1995
Reserve for Plant Closing $ 3,975 $ 3,485 $ - $ 1,225 $ 6,235 (1)
======== ======== ========== ======== ========
Allowance for doubtful accounts $ 3,627 $ 4,074 $ 230 $ 2,953 $ 4,978
======== ======== ========= ======== ========
Year Ended June 30, 1994
Reserve for Plant Closing $ 9,111 $ - $ - $ 5,136 $ 3,975 (1)
======== ========== ========== ======== ========
Allowance for doubtful accounts $ 2,293 $ 459 $ 605 $ (270) $ 3,627
======== ========= ========= ========= ========
Year Ended June 30, 1993
Reserve for Plant Closing $ 22,885 $ - $ 734 $ 14,508 $ 9,111 (1)
======== ========== ========= ======== ========
Allowance for doubtful accounts $ 3,128 $ 885 $ - $ 1,720 $ 2,293
======== ======== ========== ======== ========
<FN>
(1) Of this amount, deductions of $13,717 reflect an amount reclassified to
accrued postretirement benefits other than pensions. The balance of $9,111, $3,975 and $6,235 has
been classified as a current liability in the accompanying consolidated balance sheet as of
June 30, 1993, 1994 and 1995, respectively.