SECURITIES and EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission file number 0-7304
DYNAMICS CORPORATION OF AMERICA
(Exact name of registrant as specified in its charter)
NEW YORK 13-0579260
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
475 Steamboat Road, Greenwich, Connecticut 06830-7197
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 203-869-3211
------------
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
Title of Each Class Name of Each Exchange
------------------- ---------------------
on which Registered
-------------------
Common Stock (Voting)
$.10 Par Value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT: NONE
----
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. X
---
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 14, 1997:
Common Stock, $.10 Par Value--$123,040,000
The number of shares outstanding of each of the registrant's classes of common
stock, as of March 14, 1997:
Common Stock, par value $.10 per share Shares
Voting 3,815,194
Non-Voting 3,572
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual report to security holders for the year ended December
31, 1996 are incorporated by reference into Parts I and II of this Form 10-K.
Portions of the definitive proxy statement for the Annual Meeting of
Shareholders to be held on May 2, 1997 are incorporated by reference into Part
III of this Form 10-K.
Exhibits Index - Pages 19 and 20
Part I
Item l. Business
--------
A description of Dynamics Corporation of America ("DCA" or
"Company") and financial information about industry segments on pages 22 and 23
of the annual report to security holders for the year ended December 31, 1996,
and the classification of the Company's manufacturing divisions and subsidiary
for industry segments, including a description of each, on page 24 of the
annual report to security holders for the year ended December 31, 1996 are
incorporated herein by reference.
Unless otherwise noted, the additional information required
pursuant to this item which follows pertains to continuing operations of the
Company, including the reclassified operations of the Fermont Division.
Sources and Availability of Raw Materials
- -----------------------------------------
DCA is a user of steel, aluminum, copper, plastics and
electronic components. Generally, these materials are available from many
sources, domestic and offshore. Prices paid are competitive. Supplies are
normally plentiful except during national emergencies, unusually prolonged basic
industry strikes, or periods of accelerated demand for products exceeding
industry capacity.
Patents and Trademarks
- ----------------------
Although DCA owns or is licensed under a number of domestic
and foreign patents and patent applications, management believes that no single
patent or group of patents is material to the business as a whole. The
trademarks Waring(R), Blendor(R), NuBlend(R), TouchBlend(R), Acme Juicerator(R),
Qualheim(TM), Anemostat(R), Multi-Vent(R), Anemotrak(R), Envirotrak(R),
LoPro(TM), and Environ(R) are well recognized in their trading areas and signify
desirable quality and value. These trademarks should be available for Company
use as long as it desires.
Backlog
- -------
The backlog of unfilled orders was approximately $85,167,000
at December 31, 1996 as compared with approximately $91,886,000 at December 31,
1995. Approximately 68% of the orders are expected to be completed in 1997. The
Power and Controlled Environmental Systems segment accounts for approximately
84% of the unfilled orders at December 31, 1996, and backlog continues to be
significant when projecting future revenues of this segment of the Company's
business.
Customers
- ---------
In general, the businesses engaged in by the Company are not dependent upon one
or a few customers, except that from 1994-1996 the Fermont Division classified
in the Power and Controlled Environmental Systems segment derived substantially
all its revenues from the U.S. Government under several contracts for the
design, testing and production of engine generator sets. The Company's Fermont
Division is substantially dependent on the U.S.
1
Government for future business. The remaining segments of the Company serve a
broad base of customers who are predominantly commercial in nature.
Competition
- -----------
DCA normally experiences varying degrees of competition with
respect to each of its segments and with respect to particular products within
each segment.
The electrical appliances produced by the Company's Waring
Products Division experience keen competition in the consumer and commercial
segments of the market. The Company's Waring Blendor(R), TouchBlend(R), Acme
Juicerator(R) and Qualheim(TM) trademarks are recognized names in their field.
The Reeves-Hoffman Division encounters strong competition for
the crystal products, oscillators and hermetic seal packages it sells due in
large part to the multiplicity of suppliers in the industry. The same is true
with respect to the heat dissipating devices sold by the Company's International
Electronic Research Corporation subsidiary.
Anemostat's air distribution, systems and door products
compete in a well supplied market with regard to quality, price and delivery.
The Company's Anemostat(R) air diffusers and LoPro(TM) vision frames and louvers
for fire-rated doors are recognized names in the industry. Sales of these
products tend to follow the expansion and contraction of the commercial
construction industry.
As a supplier of specialized equipment for government,
industry and power plant use, the Ellis & Watts Division is generally required
to submit competitive bids. The mobile medical van and transportable suite
segment of the market which it serves is highly competitive among the suppliers
serving that market.
A substantial portion of the Fermont Division's business, the
production of engine generator sets, has been with the U.S. Government on a
contract basis, which in the ordinary course is conducted under invitations to
bid and is highly competitive.
Distribution
- ------------
The methods of distribution and marketing utilized by the
Company vary from division to division. In general, sales for all the Company's
segments combine some direct selling in certain market areas with appropriate
manufacturers' representatives, wholesalers, distributors and/or dealers.
Research and Development
- ------------------------
DCA engages in a variety of research and development programs
throughout its divisions, the primary purposes of which are to improve existing
products and processes, modify current products to extend their market life and
expand markets by developing new products. Expenditures for Company sponsored
research and development amounted to $1,435,000 in 1996, $1,732,000 in 1995 and
$1,669,000 in 1994. A significant portion of each year's expenditures was
incurred in the design and qualification testing of new and improved electrical
appliances in the Electrical Appliances and Electronic Devices segment.
2
Environmental Matters
- ---------------------
The Company has been notified by the U.S. Environmental
Protection Agency ("EPA") that it is a Potentially Responsible Party ("PRP")
regarding hazardous waste cleanup at a non-Company site in Connecticut and at a
Company site in California. Certain of the PRPs at the Connecticut site, having
agreed with the EPA to fund a feasibility study at the site, sued the Company to
recover a share of those costs and in September 1996 a $287,000 judgment was
entered against the Company following trial of the action, which was
subsequently paid. The Company has elected to participate in the allocation of
responsibility proceedings conducted by the PRP group formed in connection with
the Superfund site in the vicinity of the California site. A suit against the
Company by a property owner neighboring the California site for allegedly
causing contamination at the neighbor's property has been discontinued. In
February 1996, the Company settled the past costs portion of a 1995 lawsuit by a
state environmental agency to recover past and future response costs related to
the cleanup of a non-Company site in Pennsylvania as to which the Company was
earlier designated a PRP; and the Company has also been sued by certain of the
PRPs who have agreed with the state agency to fund other past response costs at
that site to recover a portion of those costs from the Company and other PRPs
who have not agreed to participate in such funding. The Company is also a
defendant in two lawsuits seeking contribution for Superfund cleanup costs
relating to two other non-Company sites in that state.
The amount of future environmental-related expenditures and
the extent of insurance coverage is not determinable at this time and the
Company is not in a position to estimate the loss or range of loss, if any,
which may result from environmental-related matters. Based upon its knowledge of
the extent of the Company's exposure and current statutes, rules and
regulations, and emerging alternative remedial approaches, management believes
that the anticipated costs resulting from claims and proceedings with respect to
the above mentioned sites, including possible remediation, the extent of which
is presently unknown, will not materially affect the financial position of the
Company. However, it is possible, but unanticipated at this time, that future
results of operations and cash flows could be materially affected by an
unfavorable resolution of these matters.
In 1996 the Company incurred expenses of $1,111,000, including
$912,000 for non-Company sites, to manage hazardous substances, to monitor
pollutants, to test for contaminants, to provide for required removal activities
and to settle the lawsuit for past response costs at the Connecticut site, a 59%
increase in such expenses over the prior year. Accruals for such matters
amounted to $951,000 and $565,000 at December 31, 1996 and 1995, respectively.
Number of Employees
- -------------------
DCA employed 1,195 persons at December 31, 1996.
Foreign Operations
- ------------------
The Company sells in foreign countries primarily through
manufacturers' representatives and agents and does not have manufacturing
operations abroad. Revenues from sales abroad represented approximately 15% of
sales in 1996 and 21% in 1995. In addition, the Company receives revenue from
licenses and technology transfers which amounted to
3
$1,154,000 in 1996, $113,000 in 1995 and $157,000 in 1994. Included in the 1996
amount is income from royalties of $1,079,000 under a technology transfer
agreement with a customer in the Power and Controlled Environmental Systems
segment; future royalty amounts from that customer are dependent upon future
contract awards received by the customer.
Reclassification of Fermont Division
- ------------------------------------
Effective in April 1996, Fermont's results of operations are included in the
Company's Consolidated Statements of Income, as a result of the Company's
decision to bid on new contracts in addition to the contract to manufacture
tactical quiet (TQ) generator sets for the U.S. Army Aviation and Troop Command.
Accordingly, reported results for prior periods have been reclassified.
On September 30, 1991, the Company determined to discontinue operations at its
Fermont Division, a manufacturer of electrical power systems for government and
commercial markets, and put the assets and business up for sale. In conjunction
with the discontinuance, the Company recorded a provision of $5,600,000 for
operating losses estimated to be incurred prior to Fermont's disposition.
At the time the operations were discontinued, Fermont was a party to a contract
with the U.S. Government for the production of 3KW engine generator sets. The
contract was subject to First Article approval of prototype 3KW units. A
proposed change order was submitted to the Government in April 1992 seeking
equitable compensation for constructive changes by the Government and associated
delays in the contract. In May 1994, the Company agreed to accept $6,450,000
from the Government in settlement of the preproduction portion of its proposed
change order, which amount is included in net sales. The settlement, net of
related expenses and income taxes, amounted to $3,334,000, or $.86 per share.
The Government contracted for further testing of prototype units at that time.
In March 1995, the Government terminated the 3KW contract for the convenience of
the Government; the Company filed a claim for compensation for its costs and
losses related to the termination. In September 1996, the Company agreed to
accept $1,937,000 from the Government in settlement of its claim related to that
termination, which amount is included in net sales. The settlement, net of
amounts due to subcontractors, income taxes and other related costs, amounted to
$915,000, or $.24 per share.
In January 1995, Fermont was awarded the TQ contract. The Government's initial
delivery order issued with the award and subsequent additions call for
deliveries of gensets aggregating $81.8 million. Shipments began in March 1997
and are scheduled to continue through 1998.
Investment in CTS Corporation
- -----------------------------
At December 31, 1996, the Company's holdings of the common
stock of CTS Corporation ("CTS") aggregated 2,303,100 shares. The Company's
equity ownership in CTS represents 44.1% of the outstanding stock of CTS.
4
The current CTS Board of Directors is comprised of five
individuals including two directors who also are officers and directors of DCA.
The Company's investment in CTS is accounted for under the equity method. CTS,
whose shares are listed on the New York Stock Exchange, designs, manufactures
and sells electronic and electromechanical components for the automotive,
computer equipment, communications equipment, instruments and controls, defense
and aerospace and consumer electronics markets. CTS is headquartered in Elkhart,
Indiana and operates manufacturing plants in the U.S. and abroad, primarily in a
single business segment, electronic components, in worldwide markets. (Note 4 on
page 12 of the Company's annual report to security holders for the year ended
December 31, 1996 is incorporated herein by reference.)
5
Item 2. Properties
----------
The following is a summary by industry segment of the properties occupied by the
Company.
Square
Division Location Feet Type Occupancy
- -------- -------- ------ ---- ---------
Executive 475 Steamboat Road 7,704 Part of Lease expiring
Greenwich, CT modern 12/31/2000
office bldg.
Electrical Appliances and Electronic Devices:
- ---------------------------------------------
Waring New Hartford, CT 212,000 Modern 1 Fee ownership
Products story
McConnellsburg, PA 74,000 Modern 1 Fee ownership
story
Winsted, CT 55,000 Multi-story Fee ownership
I.E.R.C. Burbank, CA 37,000 2 Modern Lease expiring
bldgs.; 4 1/31/2000
stories &
1 story
Burbank, CA 21,000 3 Modern Fee ownership
bldgs.; one
2 stories &
two 1 story
Reeves- Carlisle, PA 94,000 Modern 1 Lease expiring
Hoffman story 2/28/99
Fabricated Metal Products and Equipment:
- ----------------------------------------
Anemostat Scranton, PA 270,000 Modern 1 Fee ownership
Products story
Carson, CA 76,000 Modern 1 Lease expiring
story 10/31/2007
6
Square
Division Location Feet Type Occupancy
- -------- -------- ------ ---- ---------
Power and Controlled Environmental Systems:
- -------------------------------------------
Ellis & Cincinnati, OH 147,900 1 Modern Fee ownership
Watts bldg.; 1
story mfg.
& 2 stories
offices
Fermont Bridgeport, CT 97,000 2 Modern Fee Ownership
bldgs.; 2
stories &
1 story
All plants are of adequate capacity and are utilized generally on a one-shift
basis except for the Burbank, California facility, portions of which are
utilized on a two-shift basis. The Winsted, CT facility of the Waring Products
Division is utilized as a records storage facility and is available for sale.
Approximately 55,000 square feet of the Scranton, PA facility of the Anemostat
Products Division have been leased on a short-term basis. The Fermont Division,
in addition to the space it occupies for production purposes, utilizes 35,000
square feet at the Waring Products Division's New Hartford facility for the
storage of U.S. Government owned and furnished engines.
7
Item 3. Legal Proceedings
-----------------
With respect to claims and actions against the Company,
including environmental matters, it is the opinion of Management that they will
have no material effect on the financial position of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable
Executive Officers of the Registrant
Name Age Office
---- --- -------------------------
Andrew Lozyniak 65 Chairman of the Board and
President
Henry V. Kensing 63 Vice President, General
Counsel and Secretary
Patrick J. Dorme 61 Vice President-Finance and
Chief Financial Officer
Richard E. Smith 48 Treasurer
The officers named above were elected to hold the offices set opposite their
respective names until the meeting of directors following the next annual
meeting of shareholders. Henry V. Kensing was elected Secretary of the
Corporation by the Board of Directors on February 23, 1994.
Except as above stated, the officers named above have served in their respective
capacities for the past five years.
There are no family relationships between any directors or executive officers of
the Company.
8
Part II
Item 5. Market for the Registrant's Common Stock and Related
----------------------------------------------------
Security Holder Matters
-----------------------
Range of Stock Prices and Dividend Information on page 23 of
the annual report to security holders for the year ended December 31, 1996 is
incorporated herein by reference.
Item 6. Selected Financial Data
-----------------------
Selected Financial Data on page 21 of the annual report to
security holders for the year ended December 31, 1996 is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
Management's Discussion and Analysis of Results of Operations
and Financial Condition on pages 4 through 6 of the annual report to security
holders for the year ended December 31, 1996 is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
The following consolidated financial statements of the
registrant and its subsidiaries are included in the annual report to security
holders for the year ended December 31, 1996 and are incorporated herein by
reference.
Page(s) in the
Annual Report
Consolidated Balance Sheets--As of
December 31, 1996 and 1995 7
Consolidated Statements of Income--For
the Years Ended December 31, 1996, 1995
and 1994 8
Consolidated Statements of Stockholders'
Equity--For the Years Ended December 31,
1996, 1995 and 1994 9
Consolidated Statements of Cash Flows--For
the Years Ended December 31, 1996, 1995
and 1994 10
Notes to Consolidated Financial Statements 11-19
Item 9. Changes In and Disagreements with Accountants
---------------------------------------------
on Accounting and Financial Disclosure
--------------------------------------
Not applicable
9
Part III
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
Identification of directors of the registrant and information
related thereto is included in the definitive proxy statement for the Annual
Meeting of Shareholders to be held on May 2, 1997, under caption "Election of
Directors", and said information is incorporated herein by reference.
Identification of executive officers of the registrant and
information related thereto is included in Part I of this Form 10-K.
Item 11. Executive Compensation
----------------------
Remuneration of directors and officers and information related
thereto is included in the definitive proxy statement for the Annual Meeting of
Shareholders to be held on May 2, 1997, under the captions "Election of
Directors", including information on the Stock Retirement Plan for Outside
Directors, and under the captions "Executive Compensation", "Pension Benefits",
"Savings and Investment Plan" and "1980 Restricted Stock and Cash Bonus Plan",
and said information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
Security ownership of management and of certain beneficial
owners and information related thereto is included in the definitive proxy
statement for the Annual Meeting of Shareholders to be held on May 2, 1997,
under the captions "Election of Directors" and "Security Ownership of Certain
Beneficial Owners", and said information is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
Not applicable
10
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
------------------------------------------------------
Form 8-K
--------
(a)(1) The report of independent auditors and the following
consolidated financial statements of the registrant and its
subsidiaries included in the annual report to security holders
for the year ended December 31, 1996 are incorporated by
reference in Item 8 above:
Consolidated Balance Sheets--
As of December 31, 1996 and 1995
Consolidated Statements of Income--
For the Years Ended December 31, 1996, 1995 and 1994
Consolidated Statements of Stockholders' Equity--
For the Years Ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows--
For the Years Ended December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
(a)(2)
and(d) The following consolidated financial statement schedules of
the registrant and its subsidiaries are included in this Form
10-K.
Page(s)
Schedule II--Valuation and Qualifying
Accounts--For the Years
Ended December 31, 1996,
1995 and 1994 16-18
11
The consolidated financial statements of CTS Corporation, the
registrant's investment in which is accounted for by the equity method, are
subject to the Rules and Regulations of the Securities and Exchange Commission
and have been examined by Price Waterhouse, independent accountants for CTS
Corporation. The following consolidated financial statement information and
schedules concerning CTS Corporation, which are included in CTS Corporation's
annual report on Form 10-K for the year ended December 31, 1996, certain
consolidated financial statement schedules included in said Form 10-K and CTS
Corporation's annual report to stockholders for 1996 attached to said Form 10-K
as Exhibit 13 thereto (all of which are included as Exhibit 99 to this Form
10-K), are incorporated by reference herein.
Page(s) in CTS
Corporation's annual report
to stockholders for 1996
---------------------------
Consolidated Statements of Earnings --
years ended December 31, 1996,
1995 and 1994 12
Consolidated Statements of Shareholders'
Equity -- years ended December 31,
1996, 1995 and 1994 13
Consolidated Balance Sheets --
December 31, 1996 and 1995 14
Consolidated Statements of Cash Flows--
years ended December 31, 1996,
1995 and 1994 15
Notes to Consolidated Financial Statements 16-23
Report of independent accountants 24
Page(s) in CTS Corporation
annual report on Form 10-K
for the year ended
December 31, 1996
--------------------------
Report of independent accountants
on financial statement schedule S-2
Schedule II - Valuation and qualifying
accounts S-3
12
The above financial statement information and schedules
concerning CTS Corporation incorporated herein by reference were furnished to
the registrant by CTS Corporation and were used by the registrant as the basis
of recording registrant's net income from its equity investment in CTS
Corporation, and the amounts of income included in registrant's financial
statements are based solely on the aforesaid CTS Corporation financial statement
information and schedules and report of Price Waterhouse, independent
accountants for CTS Corporation.
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange Commission are
not required under the related instructions or are not applicable, and therefore
have been omitted, or the information is included in the consolidated financial
statements, or notes thereto, of registrant or of CTS Corporation incorporated
by reference herein.
(a) (3)
and (c) Exhibits
--------
The response to this portion of Item 14 appears on the
Exhibits Index in a separate section of this Form 10-K on
pages 19 and 20.
(b) Reports on Form 8-K
-------------------
There were no reports on Form 8-K filed for the three months
ended December 31, 1996.
13
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
DYNAMICS CORPORATION OF AMERICA
- -------------------------------
/S/ Patrick J. Dorme March 26, 1997
- --------------------------------------------
(Signature)
Patrick J. Dorme - Vice President-
Finance and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the date indicated.
/S/ Andrew Lozyniak March 26, 1997
- --------------------------------------------
Andrew Lozyniak - Chairman of the Board
and President
/S/ Henry V. Kensing March 26, 1997
- --------------------------------------------
Henry V. Kensing - Director, Vice President,
General Counsel and Secretary
/S/ Patrick J. Dorme March 26, 1997
- --------------------------------------------
Patrick J. Dorme - Director, Vice President-
Finance and Chief Financial Officer
/S/ Harold Cohan March 26, 1997
- --------------------------------------------
Harold Cohan - Director
/S/ Frank A. Gunther March 26, 1997
- --------------------------------------------
Frank A. Gunther - Director
/S/ Russell H. Knisel March 26, 1997
- --------------------------------------------
Russell H. Knisel - Director
/S/ Saul Sperber March 26, 1997
- --------------------------------------------
Saul Sperber - Director
/S/ M. Gregory Bohnsack March 26, 1997
- --------------------------------------------
M. Gregory Bohnsack - Corporate Controller
and Principal Accounting Officer
14
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
To the Board of Directors and Stockholders
Dynamics Corporation of America
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Dynamics Corporation of America of our report dated February 26, 1997,
included in the 1996 Annual Report to Stockholders of Dynamics Corporation of
America.
Our audits also included the financial statement schedules of Dynamics
Corporation of America listed in Item 14(a). These schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, the financial statement schedules
referred to above, when considered in relation to the basic financial statements
taken as a whole, present fairly in all material respects the information set
forth therein.
ERNST & YOUNG LLP
Stamford, Connecticut
February 26, 1997
15
DYNAMICS CORPORATION OF AMERICA AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 1996
(in thousands)
Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------
Additions
Balance At Charged To Balance
Beginning Costs And At End
Description Of Period Expenses Deductions Of Period
- ----------- --------- -------- ---------- ---------
Valuation accounts
deducted from assets
to which they apply:
Allowance for
doubtful accounts $ 596 $ 16 $ 88(a) $ 524
====== ====== ====== ======
Allowance for
cash discounts $ 17 $ 54 $ 59(b) $ 12
====== ====== ====== ======
Reserves not shown
elsewhere:
Reserve for
warranties $ 941 $1,047 $ 896(c) $1,092
====== ====== ====== ======
Notes:
(a)--Bad debts, net of recoveries, written off against allowance
provided therefor.
(b)--Discounts charged against allowance provided therefor.
(c)--Warranty costs incurred and charged against reserve provided
therefor.
16
DYNAMICS CORPORATION OF AMERICA AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 1995
(in thousands)
Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------
Additions
Balance At Charged To Balance
Beginning Costs And At End
Description Of Period Expenses Deductions Of Period
- ----------- ---------- ---------- ------------ -----------
Valuation accounts
deducted from assets
to which they apply:
Allowance for net
unrealized losses
on marketable
equity securities $1,484 $ -0- 1,484(a) $ -0-
====== ====== ===== ======
Allowance for
doubtful accounts* $ 687 $ 108 199(b) $ 596
====== ====== ===== ======
Allowance for cash
discounts $ 33 $ 66 82(c) $ 17
====== ====== ===== ======
Reserves not shown
elsewhere:
Reserve for
warranties $ 967 $1,054 1,080(d) $ 941
====== ====== ===== ======
Notes:
(a)--Reduction of reserve upon disposition of portfolio.
(b)--Bad debts, net of recoveries, written off against allowance
provided therefor.
(c)--Discounts charged against allowance provided therefor.
(d)--Warranty costs incurred and charged against reserve provided
therefor.
*Reclassified to include Fermont Division as a continuing operation; see Note 11
to the Consolidated Financial Statements incorporated in this report.
17
DYNAMICS CORPORATION OF AMERICA AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 1994
(in thousands)
Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------
Additions
Balance At Charged To Balance
Beginning Costs And At End
Description Of Period Expenses Deductions Of Period
- ------------ ---------- ---------- ---------- -----------
Valuation accounts
deducted from assets
to which they apply:
Allowance for net
unrealized losses
on marketable
equity securities $1,428 $ 56 $ -0- $1,484
====== ====== ====== ======
Allowance for
doubtful accounts* $ 609 $ 45 $ (33)(a) $ 687
====== ====== ====== ======
Allowance for cash
discounts $ 26 $ 138 $ 131(b) $ 33
====== ====== ====== ======
Reserves not shown
elsewhere:
Reserve for
warranties $1,182 $1,006 $1,221(c) $ 967
====== ====== ====== ======
Notes:
(a)--Recoveries, net of amounts written off against allowance
provided therefor.
(b)--Discounts charged against allowance provided therefor.
(c)--Warranty costs incurred and charged against reserve provided
therefor.
*Reclassified to include Fermont Division as a continuing operation; see Note 11
to the Consolidated Financial Statements incorporated in this report.
18
Exhibits Index
--------------
Item 14. (a) (3) and (c)
Pursuant to Regulation S-K, Item 601, following is a list of Exhibits:
(A) Exhibits incorporated by reference.
Exhibit 4 - Instruments defining the rights of security holders:
1. The rights of common stockholders and preferred
stockholders (currently unissued) are defined in the
Articles of Incorporation referred to in Exhibit 3 and
in the Form 8A for registration of certain classes of
securities (Rights and Preferred Stock), Rights
Agreement dated as of January 30, 1986, Summary of
Rights, letter to stockholders, press release and
Listing Application to the New York Stock Exchange with
respect to the Rights, all of which were included in the
Exhibits of the registrant's Form 10-Q Quarterly Report
for the period ended March 31, 1986.
2. Letter dated January 17, 1996 from the registrant to
First National Bank of Boston extending to February 14,
2006 the expiration date of the rights issued pursuant
to the rights agreement dated as of January 30, 1986
between the Company and First National Bank of Boston,
previously filed with the registrant's Form 10-Q
Quarterly Report for the period ended March 31, 1986,
was included in the Exhibits of the registrant's
Form 10-K Annual Report for the year ended
December 31, 1995.
Exhibit 10 - Material contracts:
Management Compensatory Plans, Contracts and Arrangements
---------------------------------------------------------
1. Employment contracts dated February 1, 1996 with: Andrew
Lozyniak - Chairman of the Board and President Patrick
J. Dorme - Vice President-Finance and Chief Financial
Officer Henry V. Kensing - Vice President, General
Counsel and Secretary were included in the Exhibits of
the registrant's Form 10-K Annual Report for the year
ended December 31, 1995.
2. 1980 Restricted Stock and Cash Bonus Plan, as amended,
was included in the registrant's definitive proxy
statement for the Annual Meeting of Shareholders on May
6, 1988.
3. Stock Retirement Plan for Outside Directors, as amended,
was included in the registrant's definitive proxy
statement for the Annual Meeting of Shareholders on May
1, 1992.
4. Incentive Performance Plan was included in the Exhibits
of the registrant's Form 10-K Annual Report for the year
ended December 31, 1992.
19
5. Executive Life Insurance Policies was included in the
Exhibits of the registrant's Form 10-K Annual Report for
the year ended December 31, 1992.
6. Prescription Drug Plan for Outside Directors was
included in the Exhibits of the registrant's Form 10-K
Annual Report for the year ended December 31, 1992.
Other
-----
Agreement dated October 9, 1990 between Dynamics
Corporation of America and Gabelli Funds, Inc. and GAMCO
Investors, Inc. was included in the Exhibits of the
registrant's Form 10-K Annual Report for the year ended
December 31, 1990.
Exhibit 21 - Subsidiaries of the registrant were included in the Exhibits
of the registrant's Form 10-K Annual Report for the year ended
December 31, 1984.
(B) Exhibits filed in or as a separate section of this report.
Page
Exhibit 3 - Articles of incorporation and bylaws:
1. Bylaws, as amended. (a)
Exhibit 13 - Annual report to security holders for the
year ended December 31, 1996. (b)
Exhibit 23 - Consent of Independent Auditors 15
Exhibit 27 - Financial Data Schedules (c)
Exhibit 99 - CTS Corporation annual report on Form 10-K for the year ended
December 31, 1996, (without Exhibits except as noted), the
Report of Independent Accountants and the Financial Statement
Schedule II included in said Form 10-K, and CTS Corporation's
annual report to stockholders for 1996 included in said
Form 10-K as Exhibit 13 thereto. (d)
(a) Filed herewith.
(b) Unnumbered and immediately following the final numbered page of
this report.
(c) Filed electronically only pursuant to regulations.
(d) Unnumbered and immediately following the registrant's annual report to
security holders for the year ended December 31, 1996.
20