1
Exhibit 13
13. Annual report to security-holders
Consolidated Statement of Income
For the years ended September 30, 1995, 1994 and 1993
(In Thousands of Dollars Except for Per Share Data)
1995 1994 1993
-------- ------- ---------
Net sales $109,574 $89,248 $91,146
------- ------ ------
Cost of goods sold 42,372 35,259 34,498
Selling, general and administrative expenses 43,945 37,765 38,416
Product development expenses 15,385 11,551 10,304
Purchased technology -- 3,300 --
Special charges -- (42) 1,046
Amortization of intangible assets 464 470 535
Financing expenses (net of investment income) 986 821 817
------- ------ -------
Income before income taxes and
cumulative effect of accounting change 6,422 124 5,530
Income taxes (benefit) 1,508 (783) 2,193
------ ----- ------
Income before cumulative
effect of accounting change 4,914 907 3,337
Cumulative effect of accounting change -- -- 1,447
--------- --------- ------
Net income $ 4,914 $ 907 $ 4,784
======= ======== ======
Income per share before cumulative
effect of accounting change $ .66 $ .13 $ .47
Cumulative effect of accounting change -- -- .21
--------- --------- -------
Net income per share $ .66 $ .13 $ .68
========= ======== =======
Fully diluted income per share before
cumulative effect of accounting change $ .64 $ .13 $ .47
Cumulative effect of accounting change -- -- .21
--------- --------- -------
Fully diluted net income per share $ .64 $ .13 $ .68
========= ======== =======
Per share amounts reflect a two-for-one stock split paid December 11, 1995, to
shareholders of record on November 27, 1995. The accompanying notes are an
integral part of the financial statements.
Consolidated Statement of Earnings
Reinvested in the Business
For the years ended September 30, 1995, 1994 and 1993
(In Thousands of Dollars Except for Per Share Data)
1995 1994 1993
--------- ------- --------
Earnings reinvested in the business at
beginning of year $27,943 $27,685 $23,546
Net income 4,914 907 4,784
Cash dividends-Common Shares ($.106 per share
in 1995 and $.10 per share in 1994 and 1993) (450) (410) (402)
Cash dividends-Class B Common Shares ($.085
per share in 1995 and $.08 per share in 1994 and 1993) (250) (239) (243)
------- ------- -------
Earnings reinvested in the business at end of
year $32,157 $27,943 $27,685
======== ======= =======
Per share amounts reflect a two-for-one stock split paid December 11, 1995, to
shareholders of record on November 27, 1995. The accompanying notes are an
integral part of the financial statements.
2
Consolidated Balance Sheet
September 30, 1995 and 1994
(In Thousands of Dollars Except for Per Share Data)
1995 1994
------- --------
Assets
Current assets:
Cash and cash equivalents $ 3,890 $ 2,712
Accounts receivable and other, net of allowances
of $357 in 1995 and $427 in 1994 20,856 14,462
Inventories:
Raw materials 4,917 4,137
Work in process 3,981 2,646
Finished products 3,762 2,908
------- -------
Total inventories 12,660 9,691
Deferred income taxes 1,627 1,203
Prepaid expenses 663 936
------- -------
Total current assets 39,696 29,004
------- -------
Property, plant and equipment, at cost:
Land 426 426
Buildings and leasehold improvements 9,346 9,169
Manufacturing, laboratory and office equipment 22,755 21,649
------- -------
32,527 31,244
Less-Accumulated depreciation and amortization 21,984 20,177
------- -------
Total property, plant and equipment, net 10,543 11,067
------- -------
Intangible assets, net of accumulated amortization
of $23,337 in 1995 and $22,873 in 1994 6,201 6,665
Other assets 9,669 7,674
------- -------
Total assets $66,109 $54,410
======= =======
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt and current installments on long-
term debt $ 71 $ 217
Accounts payable 6,759 6,366
Accrued payroll and related expenses 6,142 3,389
Other accrued expenses 4,575 3,781
Income taxes payable 2,580 1,545
------- -------
Total current liabilities 20,127 15,298
-------
Long-term debt 6,042 4,599
Other long-term liabilities 2,992 2,542
Deferred income taxes 46 25
Shareholders' equity:
Common Shares, stated value $.025:
Authorized-7,000,000; issued and outstanding-
4,308,976 in 1995 and 4,156,836 in 1994 108 104
Class B Common Shares, stated value $.025:
Authorized-3,000,000; issued and outstanding-
2,918,996 in 1995 and 2,948,040 in 1994 73 74
Capital in excess of stated value 3,981 3,469
Earnings reinvested in the business 32,157 27,943
Cumulative translation adjustment and other 583 356
------- -------
Total shareholders' equity 36,902 31,946
------- -------
Total liabilities and shareholders' equity $66,109 $54,410
======= =======
Share and per share amounts reflect a two-for-one stock split paid December 11,
1995, to shareholders of record on November 27, 1995. The accompanying notes
are an integral part of the financial statements.
3
Consolidated Statement of Cash Flows
For the years ended September 30, 1995, 1994 and 1993
(In Thousands of Dollars)
1995 1994 1993
---------- ---------- ---------
Cash flows from operating activities:
Net income $ 4,914 $ 907 $ 4,784
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 3,106 2,902 2,710
Amortization of intangible assets 464 470 535
Deferred income taxes (1,217) (2,216) 22
Deferred compensation 220 232 29
Special charges -- (42) 1,046
Cumulative effect of accounting change -- -- (1,447)
Change in current assets and liabilities:
Accounts receivable and other (6,108) 241 (526)
Inventories (2,864) (620) 2,081
Deferred income taxes and prepaid
expenses 289 219 (333)
Other current liabilities 4,660 3,297 (1,612)
Other operating activities (1,007) 1,251 (1,000)
-------- -------- --------
Net cash provided by operating activities 2,457 6,641 6,289
-------- -------- --------
Cash flows from investing activities:
Payments for property, plant and equipment (2,695) (3,591) (3,054)
Other investing activities 69 81 96
-------- -------- --------
Net cash used in investing activities (2,626) (3,510) (2,958)
-------- -------- --------
Cash flows from financing activities:
Net increase (decrease) in short-term debt (35) (496) 616
Borrowing (repayment) of long-term debt 1,367 (1,124) (2,953)
Proceeds from sale of Common Shares 520 85 29
Cash dividends (700) (649) (645)
-------- -------- --------
Net cash provided by (used in) financing activities 1,152 (2,184) (2,953)
-------- -------- --------
Effect of changes in foreign currency exchange
rates on cash 195 113 (559)
-------- -------- --------
Increase (decrease) in cash and cash equivalents 1,178 1,060 (181)
Cash and cash equivalents at beginning of period 2,712 1,652 1,833
-------- -------- --------
Cash and cash equivalents at end of period $ 3,890 $ 2,712 $ 1,652
======== ======== ========
Supplemental disclosures of cash flow information
Cash paid during the year for:
Income taxes $ 1,419 $ 665 $ 1,085
Interest 814 813 1,034
Disclosure of accounting policy
For purposes of this statement, the company considers all highly liquid
investments with maturities of three months or less when purchased to be
cash equivalents. Cash flows resulting from hedging transactions are
classified in the same category as the cash flows from the item being
hedged.
The accompanying notes are an integral part of the financial statements.
4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Percent of net sales for the years ended September 30, 1995, 1994 and 1993
1995 1994 1993
---- ---- ----
Net sales 100.0 100.0 100.0
Cost of goods sold 38.7 39.5 37.9
Selling, general and administrative expenses 40.1 42.3 42.1
Product development expenses 14.0 13.0 11.3
Purchased technology -- 3.7 --
Special charges -- -- 1.1
Amortization of intangible assets 0.4 0.5 0.6
Financing expenses (net of investment income) 0.9 0.9 0.9
--------------------------------
Income before income taxes and
cumulative effect of accounting change 5.9 0.1 6.1
Income taxes (benefit) 1.4 (0.9) 2.4
---------------------------------
Income before cumulative
effect of accounting change 4.5 1.0 3.7
Cumulative effect of accounting change -- -- 1.5
---------------------------------
Net income 4.5 1.0 5.2
=================================
RESULTS OF OPERATIONS (IN THOUSANDS OF DOLLARS EXCEPT FOR PER SHARE DATA)
1995 COMPARED WITH 1994
Net income in 1995 was $4,914, or $.64 per share on a fully diluted basis,
compared with $907, or $.13 per share, in 1994. Net income per share reflects
a two-for-one stock split to shareholders of record on November 27, 1995,
approved by the company's board of directors on November 6, 1995. Net income
in 1995 included approximately $6,900 pretax in spending to develop our direct
wafer measurement technology purchased from International Business Machines
(IBM) in 1994 and explore other new growth opportunities. 1994's pretax income
included costs of $3,300 to purchase the technology, approximately $1,400 in
development costs and $925 in other non-recurring charges.
Record net sales of $109,574 increased 23 percent from $89,248 in 1994.
Increased demand from customers because of their own growth, particularly those
in the semiconductor industry, accounted for the increase. Although net sales
benefited from an 11 percent weakening of the U.S. dollar against European
currencies, this benefit
5
was offset by increased sales discounts due mainly to sales mix.
Geographically, net sales increased domestically by $7,606 or 17 percent,
export sales increased $5,168 or 38 percent, mainly in the Pacific Basin, and
European sales increased $7,552 or 25 percent, due in part to the weakening
U.S. dollar.
Cost of goods sold decreased to 38.7 percent of net sales compared to 39.5
percent in 1994. The decrease was due mainly to an 11 percent weakening of the
U.S. dollar. The effect of foreign exchange hedging on cost of goods sold was
to increase cost of goods sold as a percentage of net sales by 0.2 percentage
points in 1995.
Selling, general and administrative expenses increased $6,180 or 16 percent to
$43,945 from $37,765 in 1994, but decreased as a percentage of net sales to
40.1 percent from 42.3 percent. The increase in expense was due mostly to
higher marketing costs associated with new business initiatives and the
introduction of new products from existing businesses, higher commissions due
to increased sales and an 11 percent weakening of the U.S. dollar.
Product development expenses increased $3,834 or 33 percent to 14.0 percent of
net sales compared to 13.0 percent of net sales in 1994. Almost two-thirds of
the increase was due to additional spending to develop the direct wafer
measurement technology into our Quantox(TM) product. We introduced Quantox in
July at SEMICON-West, a major semiconductor capital equipment trade show.
Initial customer reception has been positive, and we expect Quantox revenues
beginning in the second half of fiscal 1996. The remainder of the increase in
product development expenses was primarily spent developing products for our
semiconductor customers.
Financing expenses (net of investment income) increased $165 to $986 from $821
in 1994, due mainly to higher average debt levels during 1995.
The effective income tax rate was 23.5 percent for 1995. The lower than
statutory rate was due primarily to utilization of foreign tax credits and
foreign sales corporation (FSC) benefits. The tax benefit recorded in 1994
also resulted from the utilization of foreign tax credits and FSC benefits. At
September 30, 1995, the company had capital loss carryforwards of $277 and tax
credit carryforwards of $1,849.
6
The company's financial results are affected by foreign exchange rate
fluctuations. Generally, a weakening U.S. dollar causes the price of the
company's product to be more attractive in foreign markets and favorably
impacts the company's foreign sales and earnings. A strengthening U.S. dollar
has an unfavorable effect. This foreign exchange effect cannot be accurately
estimated since many other factors affect the company's foreign sales and
earnings. These factors include product offerings and pricing policies of the
company and its competition, whether competition is foreign or U.S. based,
changes in technology and local and worldwide economic conditions.
From time to time, the company utilizes hedging techniques designed to mitigate
the effect of exchange rate fluctuations on operations and balance sheet
position by entering into forward and option currency contracts and by
borrowing in foreign currencies. The company's use of forward and option
contracts limits exchange rate exposure and fixes exchange rates for its
foreign businesses. The company's foreign borrowings are a hedge of its net
investments. The company does not speculate in foreign currencies or
derivative financial instruments, and hedging techniques do not increase the
company's exposure to foreign exchange rate fluctuations.
Liquidity and Capital Resources
- -------------------------------
In 1995, net cash provided by operating activities of $2,457 was used
principally for investments in capital equipment of $2,695. The company's
total debt at the end of 1995 increased by $1,297 to $6,113, compared to $4,816
at the end of 1994. Total debt-to-capital at year-end was 14.2 percent,
compared to 13.1 percent last year. Due to timing factors, cash at September
30, 1995 was $3,890, an increase of $1,178 during the year.
At September 30, 1995, the company had total unused lines of credit with
domestic and foreign banks aggregating $25,588, of which $6,539 were short-term
and $19,049 were available for long-term borrowings. During 1996, the company
expects to finance capital spending and working capital requirements with cash
provided by operations and long-term borrowings. 1996 expenditures for capital
equipment additions are expected to be higher than the 1995 level as additional
property, plant and equipment may be necessary to support future growth from
new products and new business initiatives.
7
1994 COMPARED WITH 1993
Net income was $907, or $.13 per share, in 1994, compared with $4,784, or $.68
per share, in 1993. Net income per share reflects a two-for-one stock split to
shareholders of record on November 27, 1995. 1994's net income includes $3,300
pretax for the purchase of direct wafer measurement technology from IBM, as
well as approximately $1,000 in incremental costs to begin to develop the
technology. 1994's costs also include $925 in "Selling, general and
administrative expenses," relating to the retirement of the company's former
president. 1993's net income includes the cumulative effect of adopting
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," (FAS 109) of $1,447, or $.21 per share. Also included in fiscal 1993
are special charges of $1,046 pretax for severance and other costs related to
the August 1993 workforce reduction.
Net sales of $89,248 were two percent below $91,146 in 1993. Sales volume was
down slightly from year to year. A two percent strengthening of the U.S.
dollar against European currencies and higher discounts caused the decrease.
Geographically, an increase in sales of $3,159, or 48 percent to the Pacific
Basin, almost half of which was due to sales to the semiconductor industry of
automatic parametric test systems, was more than offset by lower sales
domestically and in Europe. Lower domestic sales can be attributed to higher
than average sales volume for automatic parametric test systems in 1993, lower
1994 sales in the personal computer based data acquisition products, and
uncertainty in health care which caused a sales decline in the Radiation
Measurements Division. The decline in Europe is due mainly to the
strengthening of the U.S. dollar versus foreign currencies.
Cost of goods sold increased to 39.5 percent of net sales compared to 37.9
percent in 1993. The increase was due primarily to lower gross margins in
Europe due to the two percent strengthening of the U.S. dollar and higher sales
of lower margin products worldwide. The effect of foreign exchange hedging on
cost of goods sold was not material in 1994.
Selling, general and administrative expenses decreased $651 or two percent to
$37,765 from $38,416 in 1993. The decrease is due to lower costs in 1994 as a
result of the August 1993 workforce reduction, partially offset by $925 in
expenses related to the retirement of the company's former president.
8
Product development expenses increased $1,247 or 12 percent to 13.0 percent of
net sales compared to 11.3 percent of net sales. Approximately $1,000 of the
increase is due to additional spending to develop the direct wafer measurement
technology acquired during the third quarter of fiscal 1994.
Purchased technology of $3,300 represents the direct wafer technology rights
acquired from IBM. Per the provisions of the purchase agreement with IBM, the
company will also pay future royalties based on specified sales levels. There
is no minimum royalty payment required; however, $3,000 must be paid by May 26,
2000 to retain exclusive rights to the technology.
Special charges of $(42) recorded in 1994 represent the reversal of 1993's
accrual for expenses related to the August 1993 workforce reduction. $1,046
was recorded in fiscal 1993 for this workforce reduction. At September 30,
1994, the accrual recorded on the company's balance sheet was $0.
Financing expenses (net of investment income) were flat in 1994 versus 1993.
Reduced interest costs due to the lower debt levels were offset by lower
interest income and higher interest expense for the company's corporate-owned
life insurance.
The company recorded an income tax benefit in 1994. The tax benefit resulted
from the utilization of foreign tax credits and FSC benefits. The higher than
statutory rate for 1993, 39.7 percent versus 34.0 percent, resulted from the
company's inability to utilize certain tax credits and the non-deductibility of
goodwill amortization.
9
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Per Share Data)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Keithley
Instruments, Inc. and its subsidiaries. Intercompany transactions have been
eliminated. Certain items have been reclassified to conform to the 1995
presentation.
REVENUE RECOGNITION
Sales are recognized at time of shipment for all products.
PRODUCT DEVELOPMENT EXPENSES
Expenditures for product development are charged to expense as incurred.
These expenses include the cost of computer software, an integral part of
certain products. Costs defined by Statement of Financial Accounting Standards
No. 86, "Accounting for the Costs of Computer Software to Be Sold, Leased, or
Otherwise Marketed," are immaterial to the financial statements and have been
expensed as incurred. The company continually reviews the materiality and
financial statement classification of computer software expenditures.
INVENTORIES
Inventories are stated at the lower of cost (determined by the first-in,
first-out method) or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is
provided over periods approximating the estimated useful lives of the assets.
Substantially all manufacturing, laboratory and office equipment is depreciated
by the double declining balance method over periods of 3 to 10 years.
Buildings are depreciated by the straight-line method over periods of 23 to 45
years. Leasehold improvements are amortized over the terms of the leases.
10
INTANGIBLE ASSETS
Intangible assets relate to business acquisitions and are amortized on a
straight-line basis over their estimated useful lives, ranging from 2 to 20
years. Management reviews the carrying value of intangible assets using an
estimated future cash flow method (undiscounted and without interest charges)
whenever events or changes in circumstances indicate that the carrying amount
of the assets may not be recoverable. Prior to 1995, the company used a
discounted cash flow method.
OTHER ASSETS
Included in the "Other assets" caption of the Consolidated Balance Sheet
at September 30, 1995 and 1994, were $4,827 and $4,013, respectively, in
deferred tax assets. Also included in "Other assets" were pension related
assets. (See note E.)
The "Net cash provided by operating activities" caption of the
Consolidated Statement of Cash Flows at September 30, 1994 included proceeds of
$2,503 from redeeming cash surrender value from the company's corporate-owned
life insurance program. The remaining cash surrender value is classified in
"Other assets."
OTHER ACCRUED EXPENSES
Included in the "Other accrued expenses" caption of the Consolidated
Balance Sheet at September 30, 1995 and 1994, were $1,522 and $1,187,
respectively, for commissions payable to outside sales representatives of the
company.
INCOME TAXES
In the fourth quarter of 1993, the company adopted the provisions of
Statement of Financial Accounting Standards, No. 109 "Accounting for Income
Taxes," effective October 1, 1992. The statement requires that deferred taxes
be established for all temporary differences between the book and tax bases of
assets and liabilities, measured using enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
Provision has been made for estimated United States and foreign
withholding taxes, less available tax credits, for the undistributed earnings
of the non-U.S. subsidiaries as of September 30, 1995.
11
STOCK SPLIT/NET INCOME PER SHARE
On November 6, 1995, the company's board of directors approved a
two-for-one split of the company's Common Shares and Class B Common Shares.
The split was effected in the form of a stock dividend payable on December 11,
1995, to shareholders of record on November 27, 1995. All share and per share
amounts have been adjusted to reflect the stock split on a retroactive basis.
The weighted average number of shares outstanding used in determining net
income per share restated for the stock split was 7,476,138 (7,719,776 on a
fully diluted basis) in 1995, 7,087,654 in 1994 and 7,060,838 in 1993. Both
Common Shares and Class B Common Shares are included in calculating the
weighted average number of shares outstanding. Net income per share on a fully
diluted basis was not materially different than net income per share in 1994
and 1993.
HEDGING AND RELATED FINANCIAL INSTRUMENTS
The company utilizes foreign currency borrowings and foreign exchange
contracts to hedge foreign exchange risks for sales denominated in foreign
currencies and net equity or unremitted foreign earnings.
To hedge sales, the company purchases foreign exchange contracts to
sell foreign currencies to fix the exchange rates related to near-term sales
and the company's margins. Underlying hedged transactions are recorded at
hedged rates, therefore realized and unrealized gains and losses are recorded
when the operating revenue and expenses are recorded.
To hedge equity or unremitted earnings, the company borrows foreign
currencies or purchases foreign exchange contracts. Realized and unrealized
after-tax gains or losses on the hedging instruments are reflected in the
cumulative translation adjustment component of shareholders' equity.
The company has entered into swap instruments to mitigate the risk of
interest rate changes. The amounts exchanged under the swap agreements are
included in the "Financing expenses (net of investment income)" caption of the
Consolidated Statement of Income. The
12
estimated fair value of the swap instruments are determined through quotes from
the related financial institution.
The company is exposed to credit loss in the event of nonperformance
by the counterparties to these financial instruments. Because the
counterparties are major financial institutions, the company does not expect
such nonperformance.
NOTE B - PURCHASED TECHNOLOGY AND SPECIAL CHARGES
In 1994, the company expensed $3,300 to acquire the right to develop and
commercialize direct wafer measurement technology from IBM. Per the provisions
of the purchase agreement with IBM, the company will also pay future royalties
based on specified sales levels. There is no minimum royalty payment required;
however, $3,000 must be paid by May 26, 2000 to retain exclusive rights to the
technology.
The Consolidated Statement of Income includes "Special charges" for
fiscal 1994 of $(42) pretax. This credit represents the reversal of charges no
longer necessary for which a provision was recorded in 1993.
The company recorded special charges of $1,046 pretax in fiscal 1993.
The special charges are comprised of $1,196 for estimated severance and other
related benefits resulting from the workforce reduction which took place during
the fourth quarter of 1993. This amount was reduced by $150 relating to the
adjustment of a previously recorded accrual, resulting in a net charge of
$1,046.
13
NOTE C - FINANCING ARRANGEMENTS
September 30,
-------------
1995 1994
---- ----
Long-term debt:
Revolving loans with various banks at interest rates of
4.625% to 8.75% based on LIBOR, FIBOR
or U.S. prime, with interest due monthly;
principal due May 31, 1998 $ 5,951 $ 3,631
Note payable -- 909
Obligations under capital leases at interest rates
of 8.75% to 11.76% 162 276
------- --------
6,113 4,816
Less-Current installments on long-term debt 71 217
-------- --------
Total long-term debt $ 6,042 $ 4,599
======= =======
The company has a $25,000 debt facility ($5,951 outstanding at September
30, 1995) that expires May 31, 1998, which provides unsecured, multi-currency
revolving credit at various interest rates based on U.S. prime, LIBOR or FIBOR.
Commitment fees of 1/4% are required on the unused portion of the first $15,000
of the revolving credit facility and of 1/8% on the remaining $10,000 of the
facility.
At September 30, 1995, the company had total unused lines of credit with
domestic and foreign banks aggregating $25,588, including short-term and
long-term lines of credit of $6,539 and $19,049, respectively. Under certain
long-term debt agreements, the company is required to comply with various
financial ratios and covenants. Principal payments on long-term debt during
the next five years are scheduled as follows: 1996-$71; 1997-$69; 1998-$5,973;
1999-$0; 2000-$0.
14
The LIBOR interest rate was 5.875 percent and 5.0569 percent at September
30, 1995 and 1994, respectively.
During 1995, the company entered into two interest rate swap agreements
with commercial banks to effectively fix its long-term interest rates at under
seven percent for $6,000 of variable rate debt. The first agreement
effectively fixes the interest rate on a notional $3,000 of variable LIBOR rate
debt at 6.84 percent, and expires June 17, 2002. The second agreement
effectively fixes the interest rate on another notional $3,000 of variable
LIBOR rate debt at 6.915 percent, and expires September 18, 2005. The interest
differentials to be paid or received on the notional amounts of the swaps are
recognized over the lives of the agreements. At current interest rates, the
swaps require the company to make payments to the bank. The fair value of the
swaps was insignificant at September 30, 1995.
Following is an analysis of financing expenses, net of investment income:
1995 1994 1993
---- ---- ----
Interest expense $1,092 $ 939 $1,069
Investment income (106) (118) (252)
------ ------ ------
$ 986 $ 821 $ 817
===== ====== ======
NOTE D - FOREIGN CURRENCY
The functional currency for the company's foreign subsidiaries is the
applicable local currency. Income and expenses are translated into U.S.
dollars at average exchange rates for the period. Assets and liabilities are
translated at the rates in effect at the end of the period. Translation gains
and losses are recognized in the cumulative translation component of
shareholders' equity.
15
Following is an analysis of the cumulative translation component of
shareholders' equity:
1995 1994 1993
---- ---- ----
Balance at beginning of year $ 368 $ 188 $1,471
Adjustments to financial statements for
translation of foreign currency 324 232 (1,343)
Gains (losses) from hedging net invest-
ments in foreign subsidiaries net of
income taxes (benefit) of $(53) in 1995,
$27 in 1994 and $(98) in 1993. (103) (52) 60
------- ------- ------
Balance at end of year $ 589 $ 368 $ 188
======= ======= ======
Certain transactions of the company and its foreign subsidiaries are
denominated in currencies other than the functional currency. The Consolidated
Statement of Income includes foreign exchange gains (losses) from such foreign
exchange transactions of $(22), $78 and $(109) for 1995, 1994 and 1993,
respectively.
At September 30, 1995, the company had obligations under forward exchange
contracts to sell 3,700,000 Deutsche marks, 360,000 British pounds, 5,100,000
French francs and 650,000,000 Italian lira at various dates through January
1996. The foreign exchange contracts' amounts of $4,600 had a fair value of
approximately $4,518 at September 30, 1995.
The company has purchased and written currency option contracts with a
commercial bank that effectively provide minimum and maximum exchange rates
that the company would receive for anticipated foreign currency denominated
sales. Under the terms of the options, the company has the right to deliver
4,500,000 Deutsche marks at a rate of 1.50 per U.S. dollar and the obligation,
if called, to deliver 4,018,000 Deutsche marks at a rate of 1.34 per U.S.
dollar. The
16
options expire in equal amounts in February, March and April, 1996. The
options had no effect on net income in fiscal 1995, and gains and losses on the
options, if any, are recorded as incurred.
NOTE E - EMPLOYEE BENEFIT PLANS
The company has non-contributory defined benefit pension plans
covering approximately three-fourths of its employees in the United States and
certain non-U.S. employees. Pension benefits are based upon the employee's
length of service and a percentage of compensation above certain base levels.
Pension expense for these plans is shown below:
1995 1994 1993
---- ---- ----
Service cost-benefits earned during the period $ 605 $ 675 $ 651
Interest cost on projected benefit obligation 945 879 838
Actual return on assets (1,818) (18) (1,062)
Net amortization and deferral 884 (890) 316
------- ------- -------
Net periodic pension cost $ 616 $ 646 $ 743
======= ======= =======
17
The following table sets forth the funded status of the company's plans
and the related amounts recognized in the Consolidated Balance Sheet at
September 30, 1995 and 1994:
Non-U.S.
United States Plan Plan
Overfunded Underfunded*
--------------------- ------------
1995 1994 1995 1994
---- ---- ---- ----
Actuarial present value of benefit obligations:
Vested benefit obligation $ 9,028 $ 8,200 $ 1,380 $ 1,142
======== ======== ======= =======
Accumulated benefit obligation $ 9,189 $ 8,341 $ 1,573 $ 1,338
======== ======== ======= =======
Projected benefit obligation $ 11,201 $ 10,099 $ 2,358 $ 2,200
Plan assets at fair value $ 13,707 $ 11,382 $ 455 $ 358
-------- ------- ------- -------
Projected benefit obligation (in excess of)
or less than plan assets $ 2,506 $ 1,283 $(1,903) $(1,842)
Unrecognized net gain (1,671) (960) (788) (460)
Unrecognized prior service cost 1,293 1,401 -- --
Unrecognized initial net (asset) obligation (444) (488) 307 304
-------- -------- ------- -------
Prepaid pension assets (pension liability)
recognized in the Consolidated Balance
Sheet $ 1,684 $ 1,236 $(2,384) $(1,998)
======== ======== ======= =======
* The company has purchased indirect insurance of $2,338 which is
expected to be available to the company as non-U.S. pension liabilities of
$2,384 mature. The caption, "Other assets," on the company's
Consolidated Balance Sheet includes $2,338 and $1,915 at September 30,
1995 and 1994, respectively, for this asset. In accordance with
Statement of Financial Accounting Standards No. 87, "Employers'
Accounting for Pensions," this company asset is not included in the
non-U.S. plan assets.
18
The significant actuarial assumptions as of the year-end measurement date
were as follows:
1995 1994 1993
---- ---- ----
United States Pension Plan:
Discount rates 7.5% 7.5% 7.5%
Expected long-term rate of return on plan assets 8.5% 8.5% 8.5%
Rates of increase in compensation levels 5.5% 5.5% 6.0%
Non-U.S. Pension Plan:
Discount rates 7.5% 8.0% 7.5%
Expected long-term rate of return on plan assets 7.0% 7.5% 7.0%
Rates of increase in compensation levels 4.5% 5.0% 5.0%
The "Projected Unit Credit" Actuarial Cost Method is used to determine
the company's annual expense.
For the United States plan, the company uses the "Entry Age Normal"
Actuarial Cost Method to determine its annual funding requirements. This
actuarial method currently results in funding amounts significantly greater
than the amounts expensed. United States plan assets are invested primarily in
common stocks and fixed-income securities.
There are no requirements for the company to fund the non-U.S. pension
plan. Non-U.S. plan assets represent employee contributions and are invested
in a direct insurance contract payable to the individual participants.
In addition to the defined benefit pension plan, the company also
maintains a retirement plan for substantially all of its employees in the
United States under Section 401(k) of the Internal Revenue Code. The company
may, at its discretion, make contributions to the 401(k) plan. Expense for
this retirement plan amounted to $539, $324 and $244 in 1995, 1994 and 1993,
respectively.
19
The company also has unfunded supplemental executive retirement plans
(SERP) for certain key officers which includes retirement, death and disability
benefits. Expense for these benefits was $85 for 1995, $165 for 1994, and $200
for 1993. During the third quarter of 1994 and in connection with the
retirement of its former president, the company settled a portion of its SERP
obligation through a lump-sum distribution of $1,236, resulting in a net charge
to earnings of $343. Liabilities of $355 and $270 were accrued in the "Other
long-term liabilities" caption on the company's Consolidated Balance Sheet to
meet all SERP obligations at September 30, 1995 and 1994, respectively.
NOTE F - STOCK PLANS
The company has employee stock options outstanding under two plans and
directors' stock options outstanding under one plan. All incentive options
have been granted at or above fair market value at the date of grant. The
company also has an employee stock purchase plan. All share and per share
amounts have been adjusted to reflect the two-for-one stock split on a
retroactive basis.
Employee Stock Option Plans:
- ---------------------------
Under the 1984 Stock Option Plan and the 1992 Stock Incentive Plan,
675,000 and 700,000 of the company's Common Shares, respectively, were reserved
for the granting of options to officers and other key employees. After
February 11, 1994, no new grants could be issued from the 1984 Stock Option
Plan. The Compensation and Human Resources Committee administers the plans with
incentive stock options granted at not less than fair market price at the date
of the grant for a period not to exceed ten years from the grant date. The
option price under a nonqualified stock option is determined by the Committee
on the date the option is granted. The 1992 Stock Incentive Plan also provides
for restricted stock awards and stock appreciation rights. This plan will
expire on February 8, 2002. All options outstanding at the time of termination
of either plan shall continue in full force and effect in accordance with their
terms.
20
The following table summarizes the changes in the number of Common Shares
under option for both employee stock option plans (retroactively restated for
the two-for-one stock split):
Option Price
Shares subject to option at Range
September 30, 1992 590,650 $ 3.50 to $9.28
-------
Options granted 154,110 $ 4.63 to $5.57
Options exercised (21,002) $ 3.50 to $5.46
Options forfeited (54,578) $ 4.06 to $9.28
-------
Shares subject to option at
September 30, 1993 669,180 $ 3.50 to $8.44
-------
Options granted 391,400 $ 4.75 to $5.38
Options exercised (86,352) $ 3.50 to $4.31
Options forfeited (137,340) $ 4.13 to $8.44
-------
Shares subject to option at
September 30, 1994 836,888 $ 4.00 to $8.44
-------
Options granted 235,100 $ 5.19 to $13.69
Options exercised (94,608) $ 4.00 to $ 8.44
Options forfeited (5,792) $ 4.75 to $6.06
-------
Shares subject to option at
September 30, 1995 971,588 $ 4.00 to $13.69
=======
Exercisable options at September 30, 1995 288,630 $ 4.00 to $8.44
=======
Exercisable options at September 30, 1994 294,892 $ 4.00 to $8.44
=======
In fiscal 1993, 5,000 shares were issued as restricted stock awards, which vest
over a five-year period.
21
1992 Directors' Stock Option Plan:
- ---------------------------------
The 1992 Directors' Stock Option Plan provides for the issuance of
60,000 of the company's Common Shares to nonemployee Directors. Under the
terms of the plan, each non-employee Director is automatically granted an
option to purchase 600 Common Shares at the close of each annual shareholders'
meeting. The option price shall be the fair market value of a Common Share on
the date of grant. The option is exercisable six months and one day after the
date of grant and will expire after ten years. The plan provides for the
granting of stock options through December 7, 2002. During fiscal years 1995,
1994 and 1993, 4,200, 4,800 and 3,600 options were granted at option prices of
$5.19, $5.00 and $6.19, respectively. During 1995, 1,800 options were
exercised at prices ranging from $5.00 to $7.50. As of September 30, 1995 and
1994, 14,400 and 12,000 shares were exercisable, respectively. Options
available for future grants were 43,800 and 48,000 at September 30, 1995 and
1994, respectively.
1993 Employee Stock Purchase Plan:
- ---------------------------------
On February 5, 1994, the company's shareholders approved the 1993 Employee
Stock Purchase and Dividend Reinvestment Plan. The Plan offers eligible
employees the opportunity to acquire the company's Common Shares at a discount
and without costs. Eligible employees can only participate in the plan on a
year-to-year basis, must enroll prior to the commencement of each plan year and
must authorize monthly payroll deductions. The purchase price of the Common
Shares is 85 percent of the lower market price at the beginning or ending of
the plan year, which is on a calendar year basis. A total of 250,000 Common
Shares are available for purchase under the plan. Total shares can be
increased with shareholder approval or the plan can be terminated when the
250,000 shares are fully subscribed. During 1995, 40,050 shares were issued
under the plan at a price of $4.14 per share.
22
NOTE G - INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," (FAS 109) effective October 1, 1992. The
adoption of FAS 109 changes the Company's method of accounting for income taxes
from the deferred method (APB 11) to an asset and liability approach. The
asset and liability approach requires the recognition of deferred tax assets
and liabilities for the expected future tax consequences of temporary
differences between the financial reporting amounts and the tax bases of assets
and liabilities.
The cumulative effect of adopting FAS 109 as of October 1, 1992 was to
increase net income for fiscal year 1993 by $1,447, or $.21 per share.
For financial reporting purposes, income (loss) before income taxes and
cumulative effect of accounting change includes the following components:
1995 1994 1993
---- ---- ----
United States $1,970 $(2,211) $3,566
Non-U.S. 4,452 2,335 1,964
------ ------- ------
$6,422 $ 124 $5,530
====== ======= ======
The provision for income taxes is as follows:
1995 1994 1993
---- ---- ----
Current:
Federal $ 720 $ 318 $1,328
Non-U.S. 1,859 1,009 805
State and local 146 106 38
------ ------- ------
Total current 2,725 1,433 2,171
------ ------- ------
Deferred:
Federal (1,199) (2,154) 54
Non-U.S. (18) (62) (32)
------ ------ -------
Total deferred (1,217) (2,216) 22
------ ------- -------
Total provision $ 1,508 $ (783) $2,193
======= ======= =======
23
Differences between the statutory United States federal income tax and
the effective income tax rate are as follows:
1995 1994 1993
---- ---- ----
Federal income tax at statutory rate $2,183 $ 42 $1,880
State and local income taxes 96 70 25
Tax on non-U.S. income and tax credits (881) (1,193) 182
Non-deductible amortization 158 158 158
Other (48) 140 (52)
------ -------- ------
Effective income tax $1,508 $ (783) $2,193
====== ======== ======
24
Significant components of the company's deferred tax assets and
liabilities as of September 30, 1995 and 1994 are as follows:
Deferred tax assets: 1995 1994
- ------------------- ----- -----
Foreign tax credit carryforwards $ 79 $ 882
Capitalized research and development 2,905 2,282
Intangibles 1,274 1,641
State and local taxes 1,089 1,163
Alternative minimum tax credit carryforwards 1,282 992
Deferred compensation 949 555
Inventory 971 1,039
General business credit carryforwards 488 398
Other 1,131 728
------- -------
Total deferred tax assets 10,168 9,680
------- -------
Valuation allowance for deferred tax assets (2,606) (3,330)
------- -------
7,562 6,350
------- -------
Deferred tax liabilities:
- ------------------------
Pension contribution 771 699
Other 383 460
------- -------
Total deferred tax liabilities 1,154 1,159
------- -------
Net deferred tax assets $6,408 $5,191
======= =======
The valuation allowance relates to tax credit carryforwards which more
likely than not will not be realized. The current year decrease in the
valuation allowance relates primarily to the utilization of foreign tax credit
carryforwards.
25
At September 30, 1995, the Company had capital loss and tax credit
carryforwards as follows:
Year Expiration
Commences
---------------
General business credit $488 2002
Foreign tax credit 79 1997
Capital loss 277 1997
Alternative minimum tax credit 1,282 Indefinite
26
NOTE H - STOCK AND RELATED ACCOUNTS
On November 6, 1995, the company's board of directors approved a
two-for-one split of the company's Common Shares and Class B Common Shares.
The split was effected in the form of a stock dividend payable on December 11,
1995, to shareholders of record on November 27, 1995. All per share amounts
have been adjusted to reflect the stock split on a retroactive basis.
The Class B Common Shares have ten times the voting power of the Common
Shares but are entitled to cash dividends of no more than 80% of the cash
dividends on the Common Shares. Holders of Common Shares, voting as a class,
elect one-fourth of the company's board of directors and participate with
holders of Class B Common Shares in electing the balance of the directors and
in voting on all other corporate matters requiring shareholder approval.
Additional Class B Common Shares may be issued only to holders of such Shares
for stock dividends or stock splits. These Shares are convertible at any time
to Common Shares on a one-for-one basis. Following is an analysis of changes
in stock and related accounts:
Capital in
Class B Excess of
Common Shares Common Shares Stated Value
------------- ------------- ------------
$ Shares $ Shares
- ------ - ------
Balance, September 30, 1992 $100 3,994,336 $ 76 3,057,250 $3,337
Shares issued under stock plans, 16,304
net of 9,698 Shares tendered -- -- -- 50
Conversion of Class B Common
Shares to Common Shares 1 23,170 -- (23,170) --
------- ---------- -------- ---------- --------
Balance, September 30, 1993 101 4,033,810 76 3,034,080 3,387
Shares issued under stock plans,
net of 49,36 Shares tendered 1 36,986 -- -- 82
Conversion of Class B Common
Shares to Common Shares 2 86,040 (2) (86,040) --
------ ---------- ----- ---------- --------
Balance, September 30, 1994 104 4,156,836 74 2,948,040 3,469
Shares issued under stock plans,
net of 13,362 Shares tendered 3 123,096 -- -- 512
Conversion of Class B Common
Shares to Common Shares 1 29,044 (1) (29,044) --
------ ---------- ----- --------- --------
Balance, September 30, 1995 $108 4,308,976 $ 73 2,918,996 $3,981
==== ========== ===== ========= ========
27
NOTE I - LEASES
The company leases certain equipment under capital leases.
Manufacturing, laboratory and office equipment includes $592 and $621 of leased
equipment at September 30, 1995 and 1994, respectively. Accumulated
depreciation includes $517 and $479 at September 30, 1995 and 1994,
respectively, related to these leases. The company also leases certain office
and manufacturing facilities and office equipment under operating leases. Rent
expense under operating leases for 1995, 1994 and 1993 was $2,119, $2,046 and
$2,308, respectively. Future minimum lease payments under operating leases
are:
1996 $2,126
1997 1,671
1998 1,146
1999 1,075
2000 1,050
After 2000 2,072
-----
Total minimum operating lease payments $9,140
=====
NOTE J - BUSINESS SEGMENTS
The company operates in a single industry segment and is engaged in the
design, development, manufacture and marketing of complex electronic
instruments and systems.
The company's operations by geographic area are presented below:
1995 1994 1993
---- ---- ----
NET SALES, INCLUDING
INTERCOMPANY SALES:
- ---------------------
United States * $ 88,410 $ 72,337 $ 74,258
Europe 37,659 30,107 30,759
Intercompany (16,495) (13,196) (13,871)
------- ------ ------
Net sales $109,574 $ 89,248 $ 91,146
======= ======= =======
28
1995 1994 1993
---- ---- ----
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE:
- -----------------------------------------
United States $ 4,282 $ 922 $ 5,869
Europe 4,158 2,280 1,764
Adjustments/eliminations 77 92 271
--------- ---------- ---------
8,517 3,294 7,904
--------- ---------- ---------
Corporate expenses (1,109) (2,349) (1,557)
Financing expenses (net of investment income) (986) (821) (817)
--------- ---------- ---------
Income before income taxes and
cumulative effect of accounting change $ 6,422 $ 124 $ 5,530
========= ========== =========
IDENTIFIABLE ASSETS:
- --------------------
United States $ 49,087 $ 40,378 $ 40,224
Europe 11,164 10,109 10,626
Adjustments/eliminations (5,429) (5,195) (4,382)
--------- ---------- ---------
54,822 45,292 46,468
Corporate assets 11,287 9,118 5,945
--------- ---------- ---------
Total assets $ 66,109 $ 54,410 $ 52,413
========= ========== =========
* U.S. sales include $18,793, $13,625 and $10,475 in export sales to markets
other than Europe in 1995, 1994 and 1993, respectively.
Intercompany sales were at cost plus a negotiated markup. Assets of
geographic areas are identified with the operations of each area. Corporate
assets consist of cash and cash equivalents, other receivables, prepaid
expenses and deferred income taxes.
NOTE K - CONTINGENCIES
The company is engaged in various legal proceedings arising in the
ordinary course of business. The ultimate outcome of these proceedings is not
expected to have a material adverse effect on the company's financial position,
results of operations or cash flows.
29
NOTE L - SUBSEQUENT EVENT
On November 6, 1995, the company's board of directors approved a
two-for-one split of the company's Common Shares and Class B Common Shares.
The split was effected in the form of a stock dividend, payable on December 11,
1995, to shareholders of record on November 27, 1995. All share and per share
amounts have been adjusted to reflect the stock split on a retroactive basis.
On November 28, 1995, the company's Common Shares began trading on the
New York Stock Exchange under the symbol KEI.
30
Report of Independent Accountants
- ---------------------------------
To the Board of Directors and Shareholders of
Keithley Instruments, Inc.
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, of earnings reinvested in the
business and of cash flows present fairly, in all material respects, the
financial position of Keithley Instruments, Inc. and its subsidiaries at
September 30, 1995 and 1994, and the results of their operations and their cash
flows for each of the three years in the period ended September 30, 1995, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
As discussed in Notes A and G to the consolidated financial
statements, in 1993 the company adopted Statement of Financial Accounting
Standard No. 109, "Accounting for Income Taxes," effective as of October 1,
1992.
PRICE WATERHOUSE LLP
Cleveland, Ohio
November 9, 1995
31
Statement of Management Responsibility
- --------- -- ---------- --------------
The consolidated financial statements of Keithley Instruments, Inc. were
prepared by management and, accordingly, management is responsible for their
accuracy and objectivity. The company utilizes accounting policies which are,
in the judgment of management, the most appropriate for the company's
circumstances. Certain estimates and judgments are required in the preparation
of financial statements. The financial information included in this Annual
Report has been prepared using management's best estimates, which were based
upon appropriate research and investigation.
The company maintains internal accounting control systems that are
designed to detect and correct material misstatements of financial information.
These systems are regularly modified in response to the company's changing
business conditions. Additionally, our independent accountants, Price
Waterhouse LLP, obtain a sufficient understanding of the internal control
structure in order to plan and complete the annual audit of the company's
financial statements.
The Audit Committee of the Board of Directors, which consists of three
directors otherwise independent of the company, serves an oversight role in
reviewing the internal control monitoring process. The Committee regularly
meets with and has direct access to Price Waterhouse LLP.
Management acknowledges its responsibility to provide financial
information (both audited and unaudited) that is representative of the
company's operations and financial position, prepared on a consistent basis and
relevant for a meaningful appraisal of the company.
Joseph P. Keithley Ronald M. Rebner
Chairman, President Vice President and Chief
and Chief Executive Officer Financial Officer
32
Stock Market Price and Cash Dividends
Prior to November 28, 1995, the company's Common Shares traded on the
American Stock Exchange under the symbol KEI. The high and low prices shown
below are sales prices of the company's Common Shares as reported on the AMEX.
Beginning November 28, 1995, the company's Common Shares trade on the New York
Stock Exchange under the symbol KEI. There is no established public trading
market for the company's Class B Common Shares; however, they are readily
convertible on a one-to-one basis for Common Shares.
Cash Dividends
Cash Dividends Per Class B
Fiscal 1995 High Low Per Common Share Common Share
----------- ---- --- ---------------- ------------
First Quarter $ 5 1/4 $ 4 1/2 $ .025 $ .020
Second Quarter 6 7/16 4 13/16 .025 .020
Third Quarter 11 6 9/16 .025 .020
Fourth Quarter 15 15/16 10 1/4 .031 .025
Cash Dividends
Cash Dividends Per Class B
Fiscal 1994 High Low Per Common Share Common Share
----------- ---- --- ---------------- ------------
First Quarter $ 6 1/8 $ 4 13/16 $ .025 $ .020
Second Quarter 5 1/4 4 7/8 .025 .020
Third Quarter 5 1/2 4 3/4 .025 .020
Fourth Quarter 5 5/16 4 5/8 .025 .020
Share and per share amounts reflect a two-for-one stock split paid December 11,
1995, to shareholders of record on November 27, 1995.
33
Unaudited Quarterly Results of Operations
(In Thousands of Dollars Except for Per Share Data)
1995 First Second Third Fourth
---- ----- ------ ----- ------
Net sales $23,525 $27,850 $28,975 $29,224
Cost of goods sold 9,097 10,842 11,135 11,298
Income before income taxes 481 1,738 1,992 2,211
Net income 346 1,318 1,494 1,756
Net income per share .05 .18 .20 .23
Fully diluted net income per share .05 .18 .20 .23
1994
----
Net sales $21,649 $22,253 $21,913 $23,433
Cost of goods sold 8,600 8,874 8,650 9,135
Income (loss) before income taxes 1,198 1,117 (3,309) 1,118
Net income (loss) 815 852 (1,835) 1,075
Net income (loss) per share .12 .12 (.26) .15
Fully diluted net income (loss) per share .12 .12 (.26) .15
Per share amounts reflect a two-for-one stock split paid December 11, 1995, to
shareholders of record on November 27, 1995.
34
Eleven Year Summary
(In Thousands Of Dollars Except For Per Share Data)
For the year ended September 30, 1995 1994 1993(b) 1992 1991 1990
Operating Results
Net sales $109,574 89,248 91,146 94,666 99,497 100,593
Income (loss) before income taxes and
cumulative effect of accounting change $6,422 124 5,530 (10,420) 6,816 5,675
Net income (loss) $4,914 907 4,784 (12,453) 4,233 3,378
Net income (loss) per share (a) $0.66 0.13 0.68 (1.77) 0.60 0.48
Fully diluted net income (loss) per share (a) $0.64 0.13 0.68 (1.77) 0.60 0.48
Common Stock Information (a)
Cash dividends per Common Share $0.106 0.100 0.100 0.100 0.094 0.089
Cash dividends per Class B Common Share $0.085 0.080 0.080 0.080 0.075 0.071
Weighted average number of shares
outstanding-fully diluted (in thousands) 7,720 7,088 7,061 7,046 7,026 7,014
At fiscal year-end:
Number of shareholders of record 535 567 587 618 664 686
Dividend payout ratio (e) 16.1% 76.9% 14.7% -- 15.7% 18.5%
Price/earnings ratio (e) 23.3 40.4 7.4 -- 10.1 8.5
Shareholders' equity per share $5.11 4.50 4.45 4.05 5.85 5.40
Closing market price $14.938 5.250 5.000 4.563 6.063 4.063
Balance Sheet Data
Total assets $66,109 54,410 52,413 53,160 66,637 69,205
Current ratio 2.0 1.9 2.2 2.3 2.1 2.3
Total debt $6,113 4,816 6,518 8,978 10,506 16,562
Total debt-to-capital 14.2% 13.1% 17.2% 23.9% 20.3% 30.4%
Shareholders' equity $36,902 31,946 31,415 28,530 41,129 37,870
Other Data
Return on average shareholders' equity 14.3% 2.9% 16.0% -35.8% 10.7% 9.4%
Return on average total assets 8.2% 1.7% 9.1% -20.8% 6.2% 4.9%
Return on net sales 4.5% 1.0% 5.2% -13.2% 4.3% 3.4%
Number of employees 659 625 625 679 716 750
Sales per employee $170.7 142.8 139.8 135.7 135.7 134.8
Cash flow (c)
Noncash charges to income $2,573 1,346 1,849 15,185 4,325 6,649
Net cash provided by operating activities $2,457 6,641 6,289 4,475 9,399 9,111
Ten-year compound annual growth rate
Net sales 8.8% 7.0% 10.0% 11.1% 12.8% 13.7%
Net income (e) 5.7% -14.2% 9.1% -- 39.7% 10.4%
For the year ended September 30, 1989 1988 1987 1986(d) 1985
Operating Results
Net sales 88,728 72,282 57,652 47,681 47,087
Income (loss) before income taxes and
cumulative effect of accounting change 7,311 8,204 5,209 4,323 4,101
Net income (loss) 4,131 5,414 3,280 2,909 2,821
Net income (loss) per share (a) 0.59 0.78 0.49 0.44 0.43
Fully diluted net income (loss) per share (a) 0.59 0.78 0.49 0.44 0.43
Common Stock Information (a)
Cash dividends per Common Share 0.082 0.058 0.046 0.041 0.037
Cash dividends per Class B Common Share 0.066 0.046 0.036 0.033 0.024
Weighted average number of shares
outstanding- fully diluted (in thousands) 6,994 6,974 6,790 6,696 6,654
At fiscal year-end:
Number of shareholders of record 699 711 357 313 294
Dividend payout ratio (e) 13.9% 7.4% 9.4% 9.4% 8.6%
Price/earnings ratio (e) 11.0 11.5 17.5 13.8 12.9
Shareholders' equity per share 4.88 4.37 3.68 3.08 2.59
Closing market price 6.500 8.938 8.500 6.000 5.500
Balance Sheet Data
Total assets 69,917 46,602 44,268 33,065 28,869
Current ratio 2.7 2.4 1.9 2.8 2.6
Total debt 22,419 2,027 5,773 2,684 3,188
Total debt-to-capital 39.6% 6.2% 18.4% 11.5% 15.6%
Shareholders' equity 34,216 30,518 25,577 20,644 17,298
Other Data
Return on average shareholders' equity 12.7% 19.0% 14.5% 15.6% 17.9%
Return on average total assets 7.1% 11.9% 8.5% 9.4% 19.5%
Return on net sales 4.7% 7.5% 5.7% 6.1% 6.0%
Number of employees 742 579 523 479 483
Sales per employee 134.3 131.2 115.1 99.1 95.4
Cash flow (c)
Noncash charges to income 4,234 3,062 2,516 2,086 2,305
Net cash provided by operating activities 4,592 6,812 5,741 4,248 5,540
Ten-year compound annual growth rate
Net sales 16.4% 17.9% 19.2% 19.3% 18.1%
Net income (e) 12.5% 21.2% 19.8% 27.7% 23.9%
<FN>
(a) Share data adjusted for two-for-one stock split in November 1995, three-for-two stock split in 1987 and three-for-one stock
split in 1985.
(b) Includes a benefit for the cumulative effect of adopting FAS 109 of $1,447 or $.21 per share.
(c) Noncash charges to income include depreciation, amortization, deferred compensation, deferred taxes, noncash special charges
and the cumulative effect of adopting FAS 109.
(d) In 1987, the Company adopted Statement of Financial Standards No.87, "Employers' Accounting for Pensions"; prior years have not
been restated.
(e) These ratios are not meaningful in 1992 due to the reported net loss.
</FN>