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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File No.: 1-8467 _______________________
BMC INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0169210
(State or other jurisdiction of incorporation (I.R.S. Employer I.D. No.)
or organization)
ONE MERIDIAN CROSSINGS, SUITE 850, MINNEAPOLIS, MN 55423
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (Zip Code)
Registrant's telephone number, including area code: (612) 851-6000
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Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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COMMON STOCK NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
NONE
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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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
As of March 20, 1998, 26,887,972 shares of Common Stock of the Registrant were
outstanding. The aggregate market value of the Common Stock as of such date
(based on the closing price of the Common Stock on that date on the New York
Stock Exchange), excluding shares deemed beneficially owned by affiliates, was
approximately $555 million.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II of this Annual Report on Form 10-K incorporate by reference
information (to the extent specific pages are referred to herein) from the
Registrant's Annual Report to Stockholders for the year ended December 31, 1997
(the "1997 Annual Report"). Part III of this Annual Report on Form 10-K
incorporates by reference information (to the extent specific sections are
referred to herein) from the Registrant's Proxy Statement for its Annual
Meeting of Stockholders to be held May 8, 1998.
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PART I
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS.
BMC Industries, Inc. is a Minnesota corporation with its executive offices
located at One Meridian Crossings, Suite 850, Minneapolis, Minnesota 55423;
telephone (612) 851-6000. Unless the context otherwise indicates, the terms
"Company" or "BMC" as used herein mean BMC Industries, Inc. and its
consolidated subsidiaries.
BMC was organized in 1907 under the name Buckbee-Mears Company. Over the
course of its early history, the Company developed an expertise in
photolithography and in the chemical etching of metals. In the 1950's, BMC
collaborated in the development of chemically etched aperture masks for color
cathode ray tubes. The Company entered the optical business in 1969 with the
acquisition of Vision-Ease Lens, a manufacturer of glass multi-focal ophthalmic
lenses, based in St. Cloud, Minnesota.
The Company presently is comprised of two business segments, referred to as
Precision Imaged Products and Optical Products. Precision Imaged Products is
comprised of two units. Mask Operations, the group's principal business,
produces aperture masks ("masks"), an integral component of every color
television and computer monitor picture tube. The Company, through its Mask
Operations, is the only independent mask manufacturer located outside Asia.
Buckbee-Mears St. Paul, the second unit of Precision Imaged Products, is a
leading domestic producer of precision photo-etched metal parts. These
businesses are linked because they share process manufacturing technology and
one manufacturing facility. Optical Products, through the Company's Vision-
Ease Lens, Inc. subsidiary ("Vision-Ease"), designs, manufactures and
distributes polycarbonate, glass and hard-resin plastic ophthalmic lenses. As
of December 31, 1997, the Company had 2,597 employees.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
Financial information about the Company's business segments for the three
most recent fiscal years is contained on pages 38-39 of the 1997 Annual
Report, and is incorporated herein by reference.
(c) NARRATIVE DESCRIPTION OF BUSINESS.
The Company's business is divided into two business segments: Precision Imaged
Products and Optical Products.
PRECISION IMAGED PRODUCTS
Precision Imaged Products ("PIP") is comprised of two units, Mask Operations
and Buckbee-Mears St. Paul ("BMSP"), which design, manufacture and market
precision photo-etched metal parts, including masks, precision electroformed
components and precision photo-etched metal products.
PRODUCTS AND MARKETING. Mask Operations is comprised of manufacturing
operations in Cortland, New York and Mullheim, Germany. Computer monitor
masks produced at the Mullheim facility are inspected at a new inspection
facility in Tatabanya, Hungary. BMSP is composed of a manufacturing
1
facility in St. Paul, Minnesota. The Cortland and Mullheim facilities
primarily manufacture masks. The St. Paul facility primarily manufactures
precision photo-etched metal parts, specialty printed circuits, precision
electroformed components and precision etched and filled glass products. A
continuous precision parts etching line at the Company's Mullheim facility
also supplies semi-finished precision photo-etched parts, including those for
use in lead frames, to the St. Paul facility. Four customers each accounted
for more than 10% of PIP's 1997 total revenues, as well as more than 10% of
the Company's 1997 total revenues. Thomson, S.A. of France (including its
U.S. based operations) accounted for approximately 20% of the Company's 1997
total revenues. Thomson produces televisions in North America and Europe
under various trademarks, including RCA and GE. Samsung of South Korea
accounted for approximately 16% of the Company's 1997 total revenues.
Philips Components B.V. of the Netherlands and Matsushita of Japan each
accounted for approximately 11% of the Company's 1997 total revenues.
Masks are photo-chemically etched fine screen grids found in every color
television and computer monitor picture tube. A mask consists of thousands
of precise, conically shaped holes designed to focus the electron beam on the
proper phosphor color stripe to produce a crisp image. Masks are made from
cold rolled steel or invar (a nickel alloy) and range in size from 6 inch to
40 inch diagonal dimensions, with BMC manufacturing masks ranging from 14
inch to 36 inch diagonal dimensions. The Company's facilities employ an
automated continuous photochemical etching process originally developed by
the Company. Masks are sold directly by the Company to color picture tube
manufacturers in North America, Western and Eastern Europe, India and Asia.
Mask Operations maintains an in-house sales staff to sell masks directly to
its customers. Net sales of masks comprised 61%, 60% and 57% of the
Company's consolidated total revenues in 1997, 1996 and 1995, respectively.
In 1986, the Company added a specialized production line at the Mullheim
facility. This specialized line is designed to manufacture precision
photo-etched components other than masks, such as semiconductor lead frames.
During the fourth quarter of 1995, BMSP began producing several demanding
precision photo-etched components on this line. BMSP began test production
of etched lead frames on this line in 1996. Based on successful testing, the
Company invested in additional capital improvements to this line to enable
high volume production of lead frames. BMSP also installed state-of-the-art
equipment in its St. Paul facility to complete the lead frame manufacturing
process. The Company began lead frame qualification during 1997 and made
initial sales of lead frames in the fourth quarter of 1997.
In February 1994, the Company initiated construction of a new computer
monitor mask production line at its Mullheim facility. The Company's efforts
to develop the technology necessary to produce computer monitor masks
culminated in the successful start-up of the new production line in the
fourth quarter of 1995. The Mullheim facility continued to improve yields
and increase volume shipments of computer monitor masks to customers during
1997. Total sales of computer monitor masks in 1997 were over $20 million.
In 1995, the Company announced plans to add two new production lines at the
Cortland facility, one for television masks and the other for computer
monitor masks. The Company began engineering and construction of this
expansion in the third quarter of 1995. The Company completed construction
of the television mask line and the computer monitor mask line in the second
and third quarters, respectively, of 1997. Following start-up, the Company
devoted significant production time to part qualifications, including
qualification of computer monitor masks in multiple-up configurations. These
two new production lines, along with the new computer monitor mask line in
the Mullheim facility increase the total number of Mask Operations'
manufacturing lines to eight. Production on these new lines is focused on the
growing market for larger size television masks and computer monitor masks.
2
In order to meet the inspection requirements for computer monitor masks
manufactured in Mullheim, Mask Operations established a dedicated, low-cost
inspection facility in Tatabanya. This facility allows the Company to
provide quick response to its Asian and European customers. The recent
expansion also required the hiring and training of a significant number of
employees at the Cortland facility. The Cortland facility nearly doubled its
number of employees in 1997, which diluted the experience level of employees
on all five Cortland production lines. These employees, however, gained
significant experience during the third and fourth quarters of 1997 and the
Company expects continued progress in 1998.
During 1997, the Company continued its efforts to enhance operations and
improve revenues and profits. The Company invested significant production
time on its computer monitor mask lines to qualification of masks in
multiple-up configurations, which increase output and profitability. The
Company was successful in qualifying a number of these parts in multiple-up
configurations in 1997. The Company is also seeking to improve operating
results through greater use of automation. Automated material handling
systems were implemented on three of Mask Operations' lines during 1997.
Three more systems installations are planned in 1998. In addition, the
Company is continuing development of automated inspection technology.
The Company is engaged in ongoing efforts to develop the manufacturing and
technical expertise necessary to produce masks for high definition television
("HDTV"). As a result, the Company has delivered limited quantities of
prototype HDTV masks to customers engaged in HDTV research and development.
The Company achieved additional milestones in 1997 with the ISO 9002
re-certification at both the Mullheim and Cortland facilities.
Products manufactured at BMSP include precision photo-etched metal parts and
precision electroformed components. The Company sells these components both
by in-house sales personnel and manufacturers representatives for use in the
electrical, automotive, filtration, health care and semiconductor industries.
BMSP's products currently include switch contacts, ignition components,
medical device components, reusable filtration devices, precision sorting
sieves and etched lead frames.
During 1997, BMSP began implementing a strategy for growth through joint
research and product development with large end-product manufacturers. The
Company was successful in reaching co-development agreements with several
leading suppliers to the automotive, healthcare and other industries.
INTELLECTUAL PROPERTY. The Company has a number of patents which are
important to the success of its PIP operations. These patents range in their
expiration dates from 1998 to 2014. The loss of any single patent would not
have a material adverse effect on the business of the Company as a whole.
The Company believes that improvement of existing products and processes and
a reliance on trade secrets and unpatented proprietary know-how are as
important as patent protection in establishing and maintaining the Company's
competitive position. At the same time, the Company continues to seek patent
protection for its products and processes on a selective basis. However,
there can be no assurance that any patents obtained will provide substantial
protection or be of commercial value. The Company requires its consultants
and employees to agree in writing to maintain the confidentiality of the
Company's information and (within certain limits) to assign to the Company
any inventions, and any patent or other intellectual property rights,
relating to the Company's business.
COMPETITION. Competition with respect to the products described above is
intense, with no one competitor dominating the market. The principal methods
of competition are pricing, product quality and product availability, and the
Company competes on the basis of each of these methods.
3
The Company is one of only five independent mask manufacturers in the world
and the only independent mask manufacturer with production facilities
outside Asia. In addition, several color picture tube manufacturers operate
captive mask production facilities. State directed ventures operate in
China. Approximately 85% of the global mask market is supplied by independent
mask manufacturers, with BMC among the largest at an estimated 19% market
share (32% television/4% monitor).
Many producers compete in the market for precision photo-etched metal parts
produced by BMSP; there is no clear market share leader. The Company sells
its precision photo-etched metal and electroformed parts to approximately 200
industrial users.
SUPPLIES. Each of the PIP operations has available multiple sources of raw
materials needed to manufacture its products. The Cortland facility imports
from Japan and Germany all of its steel and invar requirements necessary in
the manufacture of its products. The Mullheim facility obtains a majority of
its steel and invar requirements from Germany, but obtains a portion of its
requirements from Japan. Importation of such steel into the United States is
subject to restrictions imposed by U.S. federal trade legislation and
regulations, but the Company does not anticipate difficulty in obtaining this
or any other raw materials.
BACKLOG. As of December 31, 1997, the firm backlog of PIP sales orders was
$22.4 million, compared with $17.3 million as of December 31, 1996. The
Company expects that all of the December 31, 1997 backlog orders will be
filled within the current fiscal year.
ENVIRONMENTAL. The chemical etching of metals, which is performed by all PIP
operations, requires the Company to utilize chemical substances which must be
handled in accordance with applicable laws and regulations. The etching
processes also generate wastewater and wastes, some of which are classified
as hazardous under applicable environmental laws and regulations. The
wastewater is treated using on-site wastewater treatment systems. The Company
employs systems for either disposing of wastes in accordance with applicable
laws or regulations or recycling the chemicals it utilizes through the
manufacturing process. The wastes and the wastewater treatment systems are
monitored by environmental agencies to ensure compliance with applicable
standards. Generation of waste requires that the Company maintain
responsibility for the waste even after proper disposal. As of March 10,
1998, the Company is involved in a total of five (5) sites where
environmental investigations are occurring and final settlement has not been
reached, of which three (3) relate to the PIP division and two (2) relate to
the Optical Products division. See "Optical Products -- Environmental" for a
discussion of the sites relating to the Optical Products division.
During 1997, the Company settled its liability for a site which the
Environmental Protection Agency (the "EPA") previously identified the Company
as a potentially responsible party ("PRP"). The Company executed a de
micromis settlement agreement for its liability at another site in February
1998. The Company's liability at both of these sites was nominal.
In addition to the above sites, the Company has been named as a defendant by
parties identified as PRP's for a site in Cortland, New York. The Company
believes it is not responsible for contamination at this site and is
committed to a vigorous defense of this case. It is impossible at this time
to predict the likely outcome of this matter or the Company's exposure if
this case is decided adversely. It is not currently anticipated, however,
that this case, or the Company's share of the costs of environmental
remediation activities for any of the sites discussed above, will have a
materially adverse effect on the financial condition or results of operations
of the Company.
4
PIP estimates that in 1997 and 1996 it incurred approximately $5.8 million and
$5.1 million, respectively, in expenditures (including capital expenditures)
related to efforts to comply with applicable laws and regulations regulating
the discharge of materials into the environment or otherwise relating to the
protection of the environment. In addition, it estimates that it will make
approximately $7.8 million and $10.8 million in capital expenditures for
environmental control facilities during 1998 and 1999, respectively.
SEASONALITY. The Company's revenues and earnings from PIP are generally
lower in the first and third quarters due to maintenance shutdowns at the
Company's Cortland and Mullheim facilities, and the BMSP facility during the
third quarter. Also, the seasonality of televisions and computer monitors,
the end products of masks, moderately affects the Company's annual earnings
pattern.
OPTICAL PRODUCTS
Optical Products, operating under the Vision-Ease Lens trade name, is a major
U.S. manufacturer and distributor of ophthalmic lenses, with group
headquarters located in Brooklyn Park, Minnesota. Vision-Ease includes
manufacturing operations located in Brooklyn Center, Ramsey and St. Cloud,
Minnesota and Jakarta, Indonesia. Vision-Ease also has 15 distribution
centers in the U.S., Canada and England.
PRODUCTS AND MARKETING. Ophthalmic lenses are manufactured from three
principal materials: polycarbonate ("poly"), glass and hard-resin plastic.
Hard-resin plastic lenses include both standard plastic lenses and high-index
plastic lenses. Semi-finished lenses are sold to independent wholesale
optical laboratories or retail outlets with on-site laboratories, which then
finish the lens by grinding and polishing the inside surface of the lens
according to the prescription provided by the optometrist or ophthalmologist.
After processing, the lens is edged and inserted into the frame by either
the wholesale laboratory or the retail optical dispenser. Finished
single-vision lenses are also sold to wholesale and retail laboratories.
These finished lenses are ready to be edged and inserted into the frame
without laboratory surfacing.
Vision-Ease manufactures finished and semi-finished single-vision and
semi-finished multi-focal poly lenses, including progressive addition
multi-focal lenses, at its Brooklyn Center and Ramsey facilities.
Progressive addition multi-focal lenses provide a gradual transition from
distance to near viewing without the line or visual "jump" generally
associated with a multi-focal lens. During the third quarter of 1997,
Vision-Ease completed construction of a new $10 million polycarbonate
manufacturing facility in Ramsey, Minnesota. The new facility will also be
used for centralized distribution and increased research and development
activities. In order to ensure minimal interruption of polycarbonate
manufacturing the transfer of manufacturing from the Brooklyn Center facility
to the Ramsey facility has been implemented in stages, which should be
completed during the second quarter of 1998. The Company produces
semi-finished glass multi-focal and finished and semi-finished single-vision
lenses at its St. Cloud and Indonesian joint venture facilities. The Jakarta
facility is operated through a majority-owned joint venture and provides an
alternative, low cost source for glass lenses.
In 1997, the Company closed its Ft. Lauderdale, Florida facility, at which
Vision-Ease manufactured semi-finished hard-resin plastic multi-focal and
single-vision lenses. A portion of hard-resin plastic lens manufacturing has
been transferred to the St. Cloud facility. The remainder of the Company's
requirements for hard-resin plastic lenses will be supplied through the
Company's original equipment manufacturer supply agreement with a low cost
Southeast Asian manufacturer. The Company entered into this supply agreement
in 1994 and, in 1997, Vision-Ease extended the agreement until June 2000.
5
Vision-Ease has commitments to buy approximately $21.5 million of lenses
under this agreement from January 1998 through June 2000. The Southeast
Asian manufacturer began significant shipments of hard-resin lenses to
Vision-Ease in late 1995. This sourcing arrangement allows Vision-Ease to
focus manufacturing capabilities on higher-margin products within this
segment and to be cost-competitive on mid-range, lower-margin products.
Over the last three years, the Company has made increasing investments in
process and product development, particularly in poly lens development and
other higher margin products. The result has been the introduction of
several new products in 1995 and 1996, including VersaLite-Registered
Trademark- 1.0 (a thin and light single-vision lens); VersaLite-Registered
Trademark- SunRx-Registered Trademark- (a premium glare reducing sun lens); a
durable, abrasion-resistant OnGuard-Registered Trademark- coating; and
progressive SunRx-Registered Trademark- lenses. In 1997, Vision-Ease
enhanced the VersaLite-Registered Trademark- product line with the
introduction of several line expansions to better satisfy customer demand.
Vision-Ease also introduced a premium line of poly lenses bearing the
Tegra-Registered Trademark- trade name. Tegra-Registered Trademark- lenses
have an advanced aspheric design, super hard scratch resistant coating and
other distinctive features. In addition, Vision-Ease made substantial
progress in a new lamination system for the fabrication of finished
polycarbonate multi-focal lenses. Vision-Ease will continue to make
significant investments in lens development, lens design and coatings for all
lens materials.
Vision-Ease markets its optical products to more than 750 wholesalers and
retailers in the U.S. and to more than 60 in international markets. No
single customer of Vision-Ease accounted for more than 10% of the Company's
total revenues in 1997, but one customer, Precision LensCrafters, accounted
for approximately 10% of Vision-Ease's total revenues in 1997. Precision
LensCrafters operates retail chain outlets throughout the United States and
is headquartered in Cincinnati, Ohio. During 1997, Vision-Ease completely
reorganized its sales and marketing forces for the first time in two decades.
Vision-Ease organized its sales force on the basis of key accounts and market
segments. Vision-Ease's independent sales representatives were transitioned
to the internal sales organization. Vision-Ease also added new personnel to
the sales and marketing team and expanded its marketing department and
expenditures, particularly in connection with the introduction of the
Tegra-Registered Trademark- product line.
In 1995, Vision-Ease acquired a British lens distributor as a vehicle to
expand its European distribution capabilities. This acquisition has
continued to contribute to increased European sales.
INTELLECTUAL PROPERTY. The Company has several patents protecting certain of
the products and manufacturing processes of its Vision-Ease operations.
These patents have expiration dates ranging from 1998 to 2012. The loss of
any single patent would not have a material adverse effect on the business of
the Company as a whole. The Company believes that improvement of existing
products and processes, the development of new lens products and a reliance
on trade secrets and unpatented proprietary know-how are as important as
patent protection in establishing and maintaining the Company's competitive
position. At the same time, the Company continues to seek patent protection
for its products and processes on a selective basis. However, there can be
no assurance that any patents obtained will provide substantial protection or
be of commercial value. The Company requires its consultants and employees
to agree in writing to maintain the confidentiality of the Company's
information and (within certain limits) to assign to the Company any
inventions, and any patent or other intellectual property rights, relating to
the Company's business. The Company also has several trademarks. Although
no assurance can be given as to the strength or scope of the Company's
trademarks, Vision-Ease believes that its trademarks have been and will be
useful in developing and protecting market recognition for its products.
COMPETITION. Competition in the ophthalmic industry with respect to all of
the products described above is intense, with approximately 70% of the U.S.
lens market supplied by Sola International Inc. and Essilor International
Compagnie Generale d'Optique. The principal methods of competition in the
6
industry are product offerings, pricing, product quality and customer
service, particularly with respect to turnaround time from order to shipment.
The Company competes on each of these methods. Vision-Ease continues to
investigate all low-cost manufacturing opportunities to increase its
competitiveness.
SUPPLIES. Vision-Ease has available multiple sources of the raw materials
required to manufacture all of its products, with the exception of (i) the
monomer required in the production of standard hard-resin plastic lenses,
which is available domestically only through Pittsburgh Plate Glass
Industries, Inc. and Akzo Chemie America, (ii) the monomer required in the
production of high-index plastic lenses, available from several Japanese
companies, and (iii) photochromic glass blanks used in producing photochromic
glass lenses, which are available domestically only from Corning Glass.
Although the Company's principal supplier of standard monomer is Akzo Chemie
America, the products of both domestic suppliers are qualified for use in the
Company's production process. Alternate offshore supplies of both standard
monomer and photochromic glass blanks are available in the event of any
disruption of supplies from domestic sources.
BACKLOG AND INVENTORY. Due to the importance to the ophthalmic industry of
rapid turnaround time from order to shipment, the backlog of sales orders is
not material. Due to the large number of stock-keeping units required, there
is a need to maintain a significant amount of inventory in order to satisfy
rapid response time.
ENVIRONMENTAL. As part of its lens manufacturing processes, the Company
utilizes hazardous chemical substances, which must be handled in accordance
with applicable laws and regulations. The lens manufacturing processes also
generate wastewater and wastes, some of which are classified as hazardous
under applicable environmental laws and regulations. The Company employs
systems for either disposing of such wastes in accordance with applicable
laws and regulations, or recycling the chemicals it utilizes through the
manufacturing process. The wastes and the wastewater treatment systems are
monitored by environmental agencies to assure compliance with applicable
standards. The wastes generated by Vision-Ease operations must be managed
and disposed of properly and the Company retains responsibility for those
wastes even after proper disposal. As of March 10, 1998, the Company is
involved in a total of five (5) sites where environmental investigations are
occurring and final settlement has not been reached, of which three (3)
relate to the PIP division and two (2) relate to the Optical Products
division. See "Precision Imaged Products -- Environmental" for a discussion
of the sites relating to the PIP division.
In addition to the above sites, the Company has continued its site
investigations at its former Ft. Lauderdale facility. The Company submitted
its test results for the site to the state regulatory agency for approval of
the scope and completion of testing. The Company's consultant has indicated
that it is reasonably probable that some type of remediation will be required
and has provided the Company an approximate cost range for that remediation.
Based on the consultant's estimates, and in accordance with generally
accepted accounting principles, the Company has reserved its best estimate of
potential remediation costs. As the source of any contamination predates the
Company's ownership and operation of this facility, the Company also intends
to seek indemnification for site costs from the former owner and operator of
the site. Because the governmental bodies have not yet identified the full
extent of any remedial actions, it is still impossible at this time to
predict the likely outcome of the Ft. Lauderdale matter, as well as the
additional five sites discussed above, or the Company's exposure if any of
these cases are decided adversely. It is not currently anticipated, however,
that the Company's share of the costs of environmental remediation activities
for any of the sites will have a materially adverse effect on the financial
condition or results of operations of the Company.
7
Vision-Ease estimates that in 1997 and 1996 it incurred approximately
$175,000 and $449,000, respectively, in expenditures (including capital
expenditures) related to efforts to comply with applicable laws and
regulations regulating the discharge of materials into the environment or
otherwise relating to the protection of the environment. In addition, it
estimates that it will make approximately $193,000 in capital expenditures
for environmental control facilities during 1998.
SEASONALITY. The Company's earnings from Optical Products are generally
lower in the first quarter due to the seasonality of eyeglasses, the end
product of the Company's lenses.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES.
Financial information about the Company's foreign and domestic operations and
export sales for the three most recent fiscal years is contained on page 39
of the 1997 Annual Report, and is incorporated herein by reference.
FACTORS THAT MAY AFFECT FUTURE RESULTS
This Form 10-K, as well as other communications, including other filings with
the Securities and Exchange Commission, reports to shareholders, news
releases and presentations to securities analysts or investors, contains
certain forward-looking statements made in good faith by the Company pursuant
to the "Safe Harbor" provisions of the Private Securities Litigation Reform
Act of 1995. These statements relate to non-historical information and are
subject to certain risks and uncertainties that could cause, and in certain
circumstances, have caused actual results to differ materially from those
reflected in the forward-looking statements. Recipients of this information
should not place undo reliance on any such forward-looking statements. The
basis on which forward-looking statements are made and correlating factors
that might cause a different result include, but are not limited to, the
items listed below. These factors, however, should not be considered an
exhaustive list. Further, the Company does not undertake the responsibility
to update any forward looking statement that may be made from time to time by
or on behalf of the Company.
START-UP/RAMP-UP OF EXPANSION PROJECTS. The Company's projections contain
assumptions regarding the financial impact resulting from continued
improvement in yields and sales from Mask Operations' two new mask
manufacturing lines at the Cortland, New York facility and the new computer
monitor mask line in Mullheim, Germany. BMSP is expecting increased earnings
from its entry into the lead frame market and from successful implementation
of co-development agreements with large end product manufacturers. In
addition, the Company's projections contain assumptions regarding the
financial impact resulting from the transfer of polycarbonate manufacturing
to the new Vision-Ease facility in Ramsey, Minnesota. The Company believes
this new, state-of-the-art facility will allow Vision-Ease to manufacture
polycarbonate eyewear lenses and distribute Vision-Ease's entire product line
of polycarbonate, hard-resin plastic and glass lenses in a more efficient and
productive environment. There are many risk factors inherent with any
expansion start-up that could result in delayed or lower than anticipated
positive financial results, including lower production yields, the ability to
manufacture new products to customer specifications, the ability to qualify
masks in multiple-up configurations and the ability of new employees to move
quickly up the learning curve. The expansion projects include other risks,
such as a higher level of operating expenses, the ability to penetrate
existing markets, success of new products, such as Tegra-Registered
Trademark-, assumptions regarding customer demand and the complexities
associated with managing a growing organization.
8
ECONOMY/DEMAND. Many economic factors could adversely affect the Company's
projected results. The Company's principal customers for masks are
television and computer monitor tube manufacturers. Changes in announced tube
capacity, overall demand for televisions and computer monitors, as well as
increased capacity by Mask Operations' competitors, could have a significant
impact on the Company's results. The computer monitor market is continually
changing as new technology emerges and the average price of computer systems
continues to fall. This trend has a significant impact on the computer
monitor mask market due to both price pressure and the need to continually
qualify new masks as customer specifications change. Mask Operations'
ability to meet these changing market demands in a timely fashion could
adversely affect the Company's financial results. In addition, as new
technologies such as liquid crystal, plasma and other flat panel displays are
created and introduced to the consumer market, demand for the Company's
products may change. The Company's principal customers for Optical Products
are ophthalmic laboratories and retail dispensers throughout the world. As
new products are created and introduced to the consumer market, or if
consumers make a major shift to contact lenses, demand for the Company's
current optical products could change. Changes in medical technology, such
as increased use of laser surgery to correct vision problems, could also
significantly impact future results.
RAW MATERIALS. The primary component of a mask is steel. Significant
changes in the steel market, including pricing and availability, could have a
material adverse impact on the Company's financial results. The primary raw
materials used to manufacture optical products are glass blanks and
polycarbonate and plastic resins. Significant changes in these markets,
including pricing and availability, could have a material adverse impact on
the Company's financial results.
FOREIGN CURRENCY. The Company transacts business in currencies other than
U.S. dollars. The primary currencies used include the German mark, Japanese
yen, British pound, Canadian dollar, Hungarian forint and Indonesian rupiah.
The Company's primary competitors in the mask market are located in Japan.
Changes in the currency exchange rates between the U.S. dollar and the German
mark compared to the Japanese yen affect Mask Operations' pricing
competitiveness. Although the Company takes steps to reduce its risk, the
Company is subject to the risk of adverse fluctuations in currency exchange
rates, which could result in pricing pressures and reductions in
profitability due to currency conversion or translation.
INTERNATIONAL MARKETS. Mask Operations has a manufacturing facility located
in Mullheim, Germany and has established a computer monitor mask inspection
facility in Tatabanya, Hungary. Vision-Ease has an original equipment supply
agreement with a hard-resin plastic lens manufacturer in Southeast Asia and a
joint venture in Indonesia for glass lens manufacturing. In addition, the
Company has many international customers. The Company's international
operations could be adversely affected by governmental regulations, political
instability, economic changes or instability and competitive conditions in
other countries in which it conducts business.
9
ITEM 2. DESCRIPTION OF PROPERTY
The locations of the Company's principal production facilities are as follows:
Approximate Square
Location Principal Use Feet of Space
- -------- -------------- ------------------
Owned:
Ramsey, MN Optical Products 150,000
St. Cloud, MN Optical Products 94,000
Mullheim, Germany Precision Imaged Products 170,000
Cortland, NY Precision Imaged Products 363,000
Tatabanya, Hungary Precision Imaged Products 51,000
Leased:
St. Paul, MN Precision Imaged Products 131,000
Brooklyn Center, MN Optical Products 43,000
Jakarta, Indonesia Optical Products 20,000
The Company leases approximately 11,100 square feet in suburban Minneapolis,
Minnesota for its corporate administrative offices. The Company leases
approximately 8,000 square feet in Brooklyn Park, Minnesota for the
administrative offices of Vision-Ease. The Company's leases in Jakarta, St.
Paul and Brooklyn Center expire in January 2000, February 1999 and March
1998, respectively.
ITEM 3. LEGAL PROCEEDINGS
With regard to certain environmental matters, See Item 1(c) "Narrative
Description of Business - "Precision Imaged Products - Environmental" and
"Optical Products - Environmental"" and Item 7 "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Other than as noted above, there are no material pending or threatened legal,
governmental, administrative or other proceedings to which the Company is a
party or of which any of its property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this Report.
10
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company, their ages, the year first elected or
appointed as an executive officer and the offices held as of March 24, 1998 are
as follows:
Date First
Elected or
Appointed as
an Executive
Name (Age) Officer Title
- ---------- -------------- -----
Paul B. Burke (42) August 1985 Chairman of the
Board, President and Chief
Executive Officer
Jon A. Dobson (31) December 1997 General Counsel and Secretary
William A. Guernsey (46) November 1997 Senior Vice President,
Corporate Development
Jeffrey J. Hattara (41) January 1998 Vice President,
Finance and Administration and
Chief Financial Officer
Jeffrey L. Wright (35) January 1996 Corporate Controller
There are no family relationships between or among any of the executive
officers of the Company. Executive officers of the Company are elected by
the Board of Directors for one-year terms, commencing with their election at
the first meeting of the Board of Directors immediately following the annual
meeting of stockholders and continuing until the next such meeting of the
Board of Directors.
Except as indicated below, there has been no change in the principal
occupations or employment of the executive officers of the Company during the
past five years.
Mr. Burke is also a director of the Company. Mr. Burke joined the Company as
Associate General Counsel in June 1983, and became Vice President, Secretary
and General Counsel in August 1985. In November 1987, he was appointed Vice
President, Ft. Lauderdale Operations of the Company's Vision-Ease Lens
division and in May 1989, he was appointed President of Vision-Ease Lens. In
May 1991, Mr. Burke was elected President and Chief Operating Officer of the
Company, and in July 1991, he became President and Chief Executive Officer.
Mr. Burke was appointed Chairman of the Board in May 1995.
Mr. Dobson joined the Company in April 1995 as Director of Legal Services.
In December 1997, he was appointed General Counsel and Secretary. Prior to
joining the Company, Mr. Dobson was an associate with Lindquist & Vennum
PLLP, a Minneapolis law firm, practising exclusively in corporate and
securities law.
Mr. Guernsey joined the Company in July 1992 as President, Mask Operations.
He was appointed Senior Vice President, Corporate Development in November
1997. Prior to joining the Company, Mr. Guernsey held management positions
with several manufacturing companies, most recently as Vice President and
General Manager of Allis Mineral Systems, a U.S. division of Swedish based
Svedala Industries.
Mr. Hattara joined the Company in January 1998 as Vice President, Finance and
Administration and Chief Financial Officer. From 1978 to January 1998, he
served in several positions at USG International, Inc., most recently as
Director of Finance, USG Interiors, Inc.
Mr. Wright joined the Company in January 1996. From February 1993 to January
1996, he served in several capacities with Employee Benefit Plans, Inc., most
recently as Vice President and Treasurer. From January 1984 to February
1993, Mr. Wright worked in several audit and business advisory positions with
Arthur Andersen, L.L.P.
11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
"Price Range of Common Stock" on page 41 of the 1997 Annual Report is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
"Historical Financial Summary" on page 24 of the 1997 Annual Report is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
"Management's Discussion and Analysis" on pages 25-28 of the 1997 Annual Report
is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements and related notes on pages 29-
39 and the Report of its Independent Auditors on page 40 of the 1997 Annual
Report are incorporated herein by reference, as is the unaudited information
under the caption "Selected Quarterly Data" on page 42.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT
(a) DIRECTORS OF THE REGISTRANT
The information under the caption "Election of Directors" on pages 2-3 of
the 1998 Proxy Statement is incorporated herein by reference.
(b) EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning Executive Officers of the Company is included in
this report under Item 4A, "Executive Officers of the Registrant".
(c) COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The information under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" on page 16 of the 1998 Proxy Statement is incorporated
herein by reference.
12
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the caption "Executive Compensation" on pages
7-14 and "Election of Directors - Information About the Board and Its
Committees" on pages 3 and 4 of the 1998 Proxy Statement is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the caption "Security Ownership of Certain
Beneficial Owners and Management" on pages 5-6 of the 1998 Proxy Statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the caption "Certain Transactions" on page 15
of the 1998 Proxy Statement is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS:
The following items are incorporated herein by reference from the
pages indicated in the Registrant's 1997 Annual Report:
Consolidated Financial Statements: Page:
---------------------------------- -----
Consolidated Statements of Earnings for the Years Ended
December 31, 1997, 1996, and 1995............................. 29
Consolidated Balance Sheets as of December 31, 1997 and 1996.. 30
Consolidated Statements of Stockholders' Equity for the Years
Ended December 31, 1997, 1996, and 1995....................... 31
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996, and 1995............................. 32
Notes to Consolidated Financial Statements.................... 33-39
Report of Independent Auditors................................ 40
Selected Quarterly Financial Data (unaudited)................. 42
2. FINANCIAL STATEMENT SCHEDULE:
The following financial statement schedule is included herein and
should be read in conjunction with the consolidated financial
statements referenced above:
13
Page:
-----
II - Valuation and Qualifying Accounts.................... 17
Schedules other than the one listed above are omitted because of the
absence of the conditions under which they are required or because
the information required is included in the consolidated financial
statements or the notes thereto.
3. EXHIBITS:
Reference is made to the Exhibit Index hereinafter contained on
pages 19-30 of this Form 10-K.
A copy of any of the exhibits listed or referred to herein will be
furnished at a reasonable cost to any person who was a stockholder of
the Company as of March 13, 1998, upon receipt from any such person
of a written request for any such exhibit. Such request should be
sent to Investor Relations Department, BMC Industries, Inc., One
Meridian Crossings, Suite 850, Minneapolis, MN 55423.
The following is a list of each management contract or compensatory
plan or arrangement required to be filed as an exhibit to this Form
10-K pursuant to Item 14(c):
a) 1984 Omnibus Stock Program, as amended effective December 19,
1989 (incorporated by reference to Exhibit 10.1 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1989
(File No. 1-8467)).
b) 1996 Management Incentive Bonus Plan Summary (incorporated by
reference to Exhibit 10.3 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995
(File No. 1-8467)).
c) 1997 Management Incentive Bonus Plan Summary (incorporated by
reference to Exhibit 10.1 to the Company's Form 10-Q for the
quarter ended March 31, 1997 (File No. 1-8467)).
d) Interest Rate Supplement Program (incorporated by reference to
written description thereof on page 10 of the Company's Proxy
Statement dated March 22, 1991 (File No. 1-8467)).
e) Revised Executive Expense Policy (effective as of January 1,
1993) (incorporated by reference to Exhibit 10.7 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1991 (File No. 1-8467)).
f) Revised Executive Perquisite/Flex Policy (effective as of
January 1, 1998) (filed herewith as Exhibit 10.7).
g) BMC Industries, Inc. Supplemental Executive Retirement Plan
(incorporated by reference to Exhibit 10.10 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1988
(File No. 1-8467)).
14
h) First and Second Declaration of Amendment, effective March 15,
1991 and June 3, 1991, respectively, to BMC Industries, Inc.
Supplemental Executive Retirement Plan (incorporated by
reference to Exhibit 10.9 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1991
(File No. 1-8467)).
i) Third Declaration of Amendment, effective as of January 1, 1992,
to BMC Industries, Inc. Supplemental Executive Retirement Plan
(incorporated by reference to Exhibit 10.9 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992
(File No. 1-8467)).
j) Fourth Declaration of Amendment, effective as of June 30, 1992,
to BMC Industries, Inc. Supplemental Executive Retirement Plan
(incorporated by reference to Exhibit 10.10 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992
(File No. 1-8467)).
k) BMC Industries, Inc. Profit Sharing Plan 1994 Revision, as
amended (incorporated by reference to Exhibit 10.10 of the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-8467)).
l) First Declaration of Amendment, dated December 16, 1996, to the
BMC Industries, Inc. Profit Sharing Plan 1994 Revision
(incorporated by reference to Exhibit 10.11 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996
(File No. 1-8467)).
m) Second Declaration of Amendment, dated May 2, 1997, to the BMC
Industries, Inc. Profit Sharing Plan 1994 Revision (incorporated
by reference to Exhibit 10.2 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997
(File No. 1-8467).
n) Third Declaration of Amendment, dated February 28, 1998, to the
BMC Industries, Inc. Profit Sharing Plan 1994 Revision (filed
herewith as Exhibit 10.15).
o) BMC Industries, Inc. Savings Plan 1994 Revision, as amended
(incorporated by reference to Exhibit 10.11 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1994
(File No. 1-8467)).
p) First Declaration of Amendment, dated March 29, 1996, to the
BMC Industries, Inc. Savings Plan 1994 Revision (incorporated
by reference to Exhibit 10.2 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1996
(File No. 1-8467)).
q) Second Declaration of Amendment, dated December 16, 1996, to
the BMC Industries, Inc. Savings Plan 1994 Revision
(incorporated by reference to Exhibit 10.14 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996
(File No. 1-8467)).
15
r) Third Declaration of Amendment, dated February 28, 1998, to the
BMC Industries, Inc. Savings Plan 1994 Revision (filed herewith
as Exhibit 10.19).
s) Restated and Amended Directors' Deferred Compensation Plan
(incorporated by reference to Exhibit 10.15 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996
(File No. 1-8467)).
t) Form of Change of Control Agreement entered into between the
Company and Messrs. Burke and Wright (incorporated by reference
to Exhibit 10.31 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1991 (File No. 1-8467)).
u) Form of Change of Control Agreement entered into between the
Company and Messrs. Dobson and Hattara (filed herewith as
Exhibit 10.47).
v) 1994 Stock Incentive Plan (incorporated by reference to
Exhibit 10.12 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1993 (File No. 1-8467)).
w) Amendment No. 1 to the 1994 Stock Incentive Plan (incorporated by
reference to Exhibit 10.3 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996 (File No. 1-8467)).
x) Amendment No. 2 to the 1994 Stock Incentive Plan (incorporated
by reference to Exhibit 10.2 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1997
(File No. 1-8467)).
y) BMC Stock Option Exercise Loan Program, as revised December 14,
1994 (incorporated herein by reference to Exhibit 10.15 of the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-8467)).
z) BMC Industries, Inc. Benefit Equalization Plan (incorporated by
reference to Exhibit 10.14 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1993
(File No. 1-8467)).
aa) Employment Severance Agreement by and between the Company and
Jeffrey J. Hattara, dated January 26, 1998 (filed herewith as
Exhibit 10.48).
(b) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the quarter ended
December 31, 1997.
(c) EXHIBITS
The response to this portion of Item 14 is submitted as a separate section
of this report.
(d) FINANCIAL STATEMENT SCHEDULES
The response to this portion of Item 14 is submitted as a separate section
of this report.
16
Schedule II
Valuation and Qualifying Accounts
Years Ended December 31
(in thousands)
Additions
Balance Charged to Translation Balance
Beginning Costs and Adjustment End of
of Year Expenses Deductions and Other Year
- -----------------------------------------------------------------------------------------------------------------
1997
- -----------------------------------------------------------------------------------------------------------------
Allowance for $1,513 $ 321 $ 933 ($10) $ 891
doubtful accounts
- -----------------------------------------------------------------------------------------------------------------
Allowance for 817 1,559 1,088 (61) 1,227
merchandise returns
- -----------------------------------------------------------------------------------------------------------------
$2,330 $1,880 $2,021 ($71) $2,118
- -----------------------------------------------------------------------------------------------------------------
Inventory reserves $6,949 $1,049 $335 ($242) $7,421
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
1996
- -----------------------------------------------------------------------------------------------------------------
Allowance for
doubtful accounts $1,863 $ 388 $ 730 ($8) $1,513
- -----------------------------------------------------------------------------------------------------------------
Allowance for
merchandise returns 773 930 857 (29) 817
- -----------------------------------------------------------------------------------------------------------------
$2,636 $1,318 $1,587 ($37) $2,330
- -----------------------------------------------------------------------------------------------------------------
Inventory reserves $3,815 $3,040 $161 $255 $6,949
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
1995
- -----------------------------------------------------------------------------------------------------------------
Allowance for
doubtful accounts $1,461 $1,206 $ 823 $19 $1,863
- -----------------------------------------------------------------------------------------------------------------
Allowance for
merchandise returns 563 1,580 1,394 24 773
- -----------------------------------------------------------------------------------------------------------------
$2,024 $2,786 $2,217 $43 $2,636
- -----------------------------------------------------------------------------------------------------------------
Inventory reserves $2,998 $1,068 $296 $45 $3,815
- -----------------------------------------------------------------------------------------------------------------
17
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on March 31, 1998, on its behalf by the undersigned, thereunto duly
authorized.
BMC INDUSTRIES, INC.
By /s/ Jeffrey J. Hattara
--------------------------------------------
Jeffrey J. Hattara
Vice President of Finance and
Administration and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below on March 31, 1998, by the following persons on
behalf of the Registrant and in the capacities indicated.
Signature Title
/s/ Paul B. Burke Chairman of the Board, President and Chief
- -------------------------- Executive Officer (Principal Executive Officer)
Paul B. Burke
/s/ Jeffrey J. Hattara Vice President of Finance and Administration
- -------------------------- and Chief Financial Officer (Principal Financial
Jeffrey J. Hattara Officer)
/s/ Jeffrey L. Wright Corporate Controller (Principal Accounting
- -------------------------- Officer)
Jeffrey L. Wright
/s/ Lyle D. Altman Director
- --------------------------
Lyle D. Altman
/s/ John W. Castro Director
- --------------------------
John W. Castro
/s/ Joe E. Davis Director
- --------------------------
Joe E. Davis
/s/ Harry A. Hammerly Director
- --------------------------
Harry A. Hammerly
18
BMC Industries, Inc.
Exhibit Index to Annual Report on Form 10-K
For the Year Ended December 31, 1997
Exhibit No. Exhibit Method of Filing
- ----------- ------------------------
3.1 Second Restated Incorporated by reference to
Articles Exhibit 3.1 to the Company's
of Incorporation of Annual Report on Form 10-K for
the Company, as the year ended December 31,
amended. 1994 (File No. 1-8467).
3.2 Amendment to the Incorporated by reference to
Second Restated Exhibit 3.2 to the Company's
Articles of Annual Report on Form 10-K for
Incorporation, dated the year ended December 31,
May 8, 1995. 1994 (File No. 1-8467).
3.3 Amendment to the Incorporated by reference to
Second Restated Exhibit 3.1 to the Company's
Articles of quarterly report on Form 10-Q
Incorporation, dated for the quarter ended
October 30, 1995. September 30, 1995
(File No. 1-8467).
3.4 Restated Bylaws of the Incorporated by reference to
Company, as amended. Exhibit 3.4 to the Company's
Annual Report on Form 10-K for
the year ended December 31,
1994 (File No. 1-8467).
3.5 Amendment to the Filed Electronically herewith.
Restated Bylaws of the
Company.
4.1 Specimen Form of the Incorporated by reference to
Company's Common Stock Exhibit 4.3 to the Company's
Certificate. Registration Statement on Form
S-2 (File No. 2-83809).
10.1 1984 Omnibus Stock Incorporated by reference to
Program, as amended Exhibit 10.1 to the Company's
effective December 19, Annual Report on Form 10-K for
1989. the year ended December 31,
1989 (File No. 1-8467).
19
10.2 1995 Management Incorporated by reference to
Incentive Bonus Plan Exhibit 10.3 to the Company's
Summary. Annual Report on Form 10-K for
the year ended December 31,
1994 (File No. 1-8467).
10.3 1996 Management Incorporated by reference to
Incentive Bonus Plan Exhibit 10.3 to the Company's
Summary. Annual Report on Form 10-K for
the year ended December 31,
1995 (File No. 1-8467).
10.4 1997 Management Incorporated by reference to
Incentive Bonus Plan Exhibit 10.1 to the Company's
Summary. Quarterly Report on Form 10-Q
for the quarter ended March
31, 1997 (File No. 1-8467).
10.5 Interest Rate Incorporated by reference to
Supplement Program. written description thereof on
page 10 of the Company's Proxy
Statement dated March 22, 1991
(File No. 1-8467).
10.6 Revised Executive Incorporated by reference to
Expense Policy Exhibit 10.7 to the Company's
(effective as of Annual Report on Form 10-K for
January 1, 1993). the year ended December 31,
1991 (File No. 1-8467).
10.7 Revised Executive Filed Electronically herewith.
Perquisite/Flex Policy
(effective as of
January 1, 1998).
10.8 BMC Industries, Inc. Incorporated by reference to
Supplemental Executive Exhibit 10.10 to the Company's
Retirement Plan. Annual Report on Form 10-K for
the year ended December 31,
1988 (File No. 1-8467).
20
10.9 First and Second Incorporated by reference to
Declaration of Exhibit 10.9 to the Company's
Amendment, effective Annual Report on Form 10-K for
March 15, 1991 and the year ended December 31,
June 3, 1991, 1991 (File No. 1-8467).
respectively, to BMC
Industries, Inc.
Supplemental Executive
Retirement Plan.
10.10 Third Declaration of Incorporated by reference to
Amendment, effective Exhibit 10.9 to the Company's
as of January 1, 1992, Annual Report on Form 10-K for
to BMC Industries, the year ended December 31,
Inc. Supplemental 1992 (File No. 1-8467).
Executive Retirement
Plan.
10.11 Fourth Declaration of Incorporated by reference to
Amendment, effective Exhibit 10.10 to the Company's
as of June 30, 1992, Annual Report on Form 10-K for
to BMC Industries, the year ended December 31,
Inc. Supplemental 1992 (File No. 1-8467).
Executive Retirement
Plan.
10.12 BMC Industries, Inc. Incorporated by reference to
Profit Sharing Plan Exhibit 10.10 to the Company's
1994 Revision, as Annual Report on Form 10-K for
amended. the year ended December 31,
1994 (File No. 1-8467).
10.13 First Declaration of Incorporated by reference to
Amendment, dated Exhibit 10.11 to the Company's
December 16, 1996, to Annual Report on Form 10-K for
the BMC Industries, the year ended December 31,
Inc. Profit Sharing 1996 (File No. 1-8467).
Plan 1994 Revision.
10.14 Second Declaration of Incorporated by reference to
Amendment, dated May Exhibit 10.2 to the Company's
2, 1997, to the BMC Quarterly Report on Form 10-Q
Industries, Inc. for the quarter ended June 30,
Profit Sharing Plan 1997 (File No. 1-8467).
1994 Revision.
21
10.15 Third Declaration of Filed Electronically herewith.
Amendment, Dated
February 28, 1998, to
the BMC Industries,
Inc. Profit Sharing
Plan 1994 Revision.
10.16 BMC Industries, Inc. Incorporated by reference to
Savings Plan 1994 Exhibit 10.11 to the Company's
Revision, as amended. Annual Report on Form 10-K for
the year ended December 31,
1994 (File No. 1-8467).
10.17 First Declaration of Incorporated by reference to
Amendment, dated March Exhibit 10.2 to the Company's
29, 1996, to the BMC Quarterly Report on Form 10-Q
Industries, Inc. for the quarter ended June 30,
Savings Plan 1994 1996 (File No. 1-8467).
Revision.
10.18 Second Declaration of Incorporated by reference to
Amendment, dated Exhibit 10.14 to the Company's
December 16, 1996, to Annual Report on Form 10-K for
the BMC Industries, the year ended December 31,
Inc. Savings Plan 1994 1996 (File No. 1-8467).
Revision.
10.19 Third Declaration of Filed Electronically herewith.
Amendment, dated
February 28, 1998, to
the BMC Industries,
Inc. Savings Plan 1994
Revision.
10.20 Restated and Amended Incorporated by reference to
Directors' Deferred Exhibit 10.15 to the Company's
Compensation Plan. Annual Report on Form 10-K for
the year ended December 31,
1996 (File No. 1-8467).
10.21 1994 Stock Incentive Incorporated by reference to
Plan. Exhibit 10.12 to the Company's
Annual Report on Form 10-K for
the year ended December 31,
1993 (File No. 1-8467).
22
10.22 First Declaration of Incorporated by reference to
Amendment to the BMC Exhibit 10.3 to the Company's
Industries, Inc. 1994 Quarterly Report on Form 10-Q
Stock Incentive Plan. for the quarter ended June 30,
1996 (File No. 1-8467).
10.23 Second Declaration of Incorporated by reference to
Amendment, dated Exhibit 10.2 to the Company's
August 8, 1997, to the Quarterly Report on Form 10-Q
BMC Industries, Inc. for the quarter ended
1994 Stock Incentive September 30, 1997
Plan. (File No. 1-8467).
10.24 BMC Stock Option Incorporated by reference to
Exercise Loan Program, Exhibit 10.15 to the Company's
as revised Annual Report on Form 10-K for
December 14, 1994. the year ended December 31,
1994 (File No. 1-8467).
10.25 BMC Industries, Inc. Incorporated by reference to
Benefit Equalization Exhibit 10.14 to the Company's
Plan. Annual Report on Form 10-K for
the year ended December 31,
1993 (File No. 1-8467).
10.26 Lease Agreement, dated Incorporated by reference to
November 20, 1978, Exhibit 10.9 to the Company's
between Control Data Registration Statement on Form
Corporation and the S-2 (File No. 2-79667).
Company.
10.27 Amendment to Lease Incorporated by reference to
Agreement, dated Exhibit 10.24 to the Company's
December 27, 1983, Annual Report on Form 10-K for
between Control Data the year ended December 31,
Corporation and the 1983 (File No. 1-8467).
Company.
10.28 Amendment to Lease Incorporated by reference to
Agreement, dated April Exhibit 10.15 to the Company's
9, 1986, between Annual Report on Form 10-K for
Control Data the year ended December 31,
Corporation and the 1987 (File No. 1-8467).
Company.
23
10.29 Amendment to Lease Incorporated by reference to
Agreement, dated April Exhibit 10.14 to the Company's
12, 1989, between GMT Annual Report on Form 10-K for
Corporation (as the year ended December 31,
successor in interest 1989 (File No. 1-8467).
to Control Data
Corporation) and the
Company.
10.30 Amendment to Lease Incorporated by reference to
Agreement, dated March Exhibit 10.15 to the Company's
19, 1990, between GMT Annual Report on Form 10-K for
Corporation and the the year ended December 31,
Company. 1989 (File No. 1-8467).
10.31 Amendment to Lease Incorporated by reference to
Agreement, dated May Exhibit 10.20 to the Company's
17, 1993, between GMT Annual Report on Form 10-K for
Corporation and the the year ended December 31,
Company. 1993 (File No. 1-8467).
10.32 Amendment of Lease, Incorporated by reference to
dated April 6, 1994 by Exhibit 10.23 to the Company's
and between GMT Annual Report on Form 10-K for
Corporation and the the year ended December 31,
Company. 1994 (File No. 1-8467).
10.33 Waiver of Condition Incorporated by reference to
Precedent, dated July Exhibit 10.24 to the Company's
29, 1994, by and Annual Report on Form 10-K for
between GMT the year ended December 31,
Corporation and the 1994 (File No. 1-8467).
Company.
10.34 Amendment of Lease, Filed Electronically herewith.
dated September 25,
1997 by and between
GMT Corporation and
the Company.
10.35 Lease Agreement, dated Incorporated by reference to
June 25, 1987, between Exhibit 10.17 to the Company's
ATS II Associates Annual Report on Form 10-K for
Limited Partnership the year ended December 31,
and the Company. 1987 (File No. 1-8467).
24
10.36 Amendment to Lease Incorporated by reference to
Agreement, dated Exhibit 10.19 to the Company's
December 4, 1992, by Annual Report on Form 10-K for
and between ATS II the year ended December 31,
Associates Limited 1992 (File No. 1-8467).
Partnership and the
Company.
10.37 Amendment to Lease, Incorporated by reference to
dated December 7, Exhibit 10.27 to the Company's
1994, by and between Annual Report on Form 10-K for
ATS II Associates the year ended December 31,
Limited Partnership 1994 (File No. 1-8467).
and the Company.
10.38 Amendment to Lease, Incorporated by reference to
dated February 16, Exhibit 10.28 to the Company's
1995, by and between Annual Report on Form 10-K for
ATS II Associates the year ended December 31,
Limited Partnership 1994 (File No. 1-8467).
and the Company.
10.39 Lease Agreement, dated Incorporated by reference to
December 8, 1983, Exhibit 10.32 to the Company's
between ARI Limited Annual Report on Form 10-K for
Partnership and the the year ended December 31,
Company. 1983 (File No. 1-8467).
10.40 Lease Amendment, dated Incorporated by reference to
May 16, 1996, between Exhibit 10.33 to the Company's
ARI Limited Annual Report on Form 10-K for
Partnership and the the year ended December 31,
Company. 1996 (File No. 1-8467).
10.41 Lease Amendment, dated Incorporated by reference to
January 31, 1997, Exhibit 10.34 to the Company's
between ARI Limited Annual Report on Form 10-K for
Partnership and the the year ended December 31,
Company. 1996 (File No. 1-8467).
10.42 Lease, dated January Incorporated by reference to
26, 1994, by and Exhibit 10.24 to the Company's
between 7100 Northland Annual Report on Form 10-K for
Circle and the the year ended December 31,
Company. 1993 (File No. 1-8467).
25
10.43 Amendment to Lease, Incorporated by reference to
effective January 1, Exhibit 10.36 to the Company's
1997, between Welsh Annual Report on Form 10-K for
Companies, Inc., as the year ended December 31,
Agent for Praedium 1996 (File No. 1-8467).
Lake Realty, LLC, and
the Company.
10.44 Second Amendment to Incorporated by reference to
Lease, dated October Exhibit 10.31 to the Company's
14, 1994, by and Annual Report on Form 10-K for
between Lutheran the year ended December 31,
Brotherhood and the 1994 (File No. 1-8467).
Company.
10.45 Form of Change of Incorporated by reference to
Control Agreement Exhibit 10.31 to the Company's
entered into between Annual Report on Form 10-K for
the Company and the year ended December 31,
Messrs. Burke, Hawks 1991 (File No. 1-8467).
and Wright.
10.46 Change of Control Incorporated by reference to
Agreement entered into Exhibit 10.39 to the Company's
between the Company Annual Report on Form 10-K for
and Mr. Gburek. the year ended December 31,
1996 (File No. 1-8467).
10.47 Form of Change of Filed Electronically herewith.
Control Agreement
entered into between
the Company and
Messrs. Hattara and
Dobson.
10.48 Employment Severance Filed Electronically herewith.
Agreement, by and
between the Company
and Jeffrey J.
Hattara, dated January
26, 1998.
26
10.49 Credit Agreement, Incorporated by reference to
dated September 30, Exhibit 10.33 to the Company's
1994, by and between Annual Report on Form 10-K for
The First National the year ended December 31,
Bank of Chicago and 1994 (File No. 1-8467).
the Company.
10.50 Credit Agreement, Incorporated by reference to
dated September 30, Exhibit 10.34 to the Company's
1994, by and between Annual Report on Form 10-K for
Norwest Bank the year ended December 31,
Minnesota, National 1994 (File No. 1-8467).
Association and the
Company.
10.51 Credit Agreement, Incorporated by reference to
dated September 30, Exhibit 10.35 to the Company's
1994, by and between Annual Report on Form 10-K for
NBD Bank, N.A. and the the year ended December 31,
Company. 1994 (File No. 1-8467).
10.52 Credit Agreement among Incorporated by reference to
BMC Industries, Inc., Exhibit 10.1 to the Company's
Norwest Bank, Quarterly Report on Form 10-Q
Minnesota, National for the quarter ended June 30,
Association, and 1996 (File No. 1-8467).
various banks.
10.53 First Amendment to Incorporated by reference to
Credit Agreement, Exhibit 10.1 to the Company's
dated June 27, 1997, Quarterly Report on Form 10-Q
by and among the for the quarter ended June 30,
Company, Norwest Bank, 1997 (File No. 1-8467).
Minnesota, N.A., and
various banks.
10.54 Second Amendment to Filed Electronically herewith.
Credit Agreement,
dated December 23,
1997, by and among the
Company, Norwest Bank
Minnesota, N.A., and
various banks.
27
10.55 Third Amendment to Filed Electronically herewith.
Credit Agreement,
dated February 27,
1998, by and among the
Company, Norwest Bank
Minnesota, N.A., and
various banks.
10.56 Engineering, Incorporated by reference to
Procurement and Exhibit 10.1 to the Company's
Construction Agreement Quarterly Report on Form 10-Q
between Buckbee-Mears for the quarter ended March
Cortland, a Unit of 31, 1996 (File No. 1-8467).
BMC Industries, Inc.
and Fluor Daniel, Inc.
10.57 Product Manufacturing Incorporated by reference to
and Sales Agreement, Exhibit 10.36 to the Company's
dated October 17, Annual Report on Form 10-K for
1994, between Polycore the year ended December 31,
Optical, PTE. Ltd. and 1994 (File No. 1-8467).
Vision-Ease, a unit of
the Company, without
exhibits.
10.58 Amendment of the Incorporated by reference to
Product Manufacturing Exhibit 10.1 to the Company's
and Sales Agreement, Quarterly Report on Form 10-Q
dated August 11, 1997, for the quarter ended
between Polycore September 30, 1997
Optical, PTE, Ltd. and (File No. 1-8467).
Vision-Ease Lens, Inc.
10.59 Lease, dated October Incorporated by reference to
29, 1997, by and among Exhibit 10.3 to the Company's
the Company and quarterly Report on Form 10-Q
Meridian Crossings LLC for the quarter ended
(d/b/a Told September 30, 1997
Development Company). (File No. 1-8467).
28
13.1 Portions of the Filed electronically herewith.
Company's 1997 Annual
Report to Stockholders
incorporated herein by
reference in this
Annual Report on Form
10-K.
21.1 Subsidiaries of the Filed electronically herewith.
Registrant.
23.1 Consent of Ernst & Filed electronically herewith.
Young LLP, Independent
Auditors.
27.1 Financial Data Filed electronically herewith.
Schedule
27.2 Financial Data Filed Electronically herewith.
Schedule
27.3 Financial Data Filed Electronically herewith.
Schedule
99.1 Press Release, dated Filed electronically herewith.
December 12, 1997,
announcing quarterly
dividend.
99.2 Press Release, dated Filed electronically herewith.
November 19, 1997,
announcing fourth
quarter earnings will
be short of analysts'
expectations.
99.3 Press Release, dated Filed electronically herewith.
January 26, 1998,
announcing 1997
earnings and Board
authorizing additional
repurchase of
1,000,000 shares
beyond 1,000,000
already repurchased.
29
99.4 Press Release, dated Filed electronically herewith.
January 26, 1998,
announcing new CFO.
99.5 Press Release, dated Filed electronically herewith.
March 13, 1998,
announcing quarterly
dividend.
99.6 Press Release, dated Filed electronically herewith.
March 25, 1998,
announcing Company
to acquire Monsanto's
Orcolite unit for
$100 million.
30