<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Universal Mfg. Co.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
TO THE SHAREHOLDERS OF UNIVERSAL MFG. CO.:
Notice is hereby given that the Annual Meeting of the Shareholders of UNIVERSAL
MFG. CO. will be held at the Regency West-Best Western, 909 South 107th Avenue
(I-680 at Pacific Street), Omaha, Nebraska, on October 29, 1996 at 10:00 a.m.,
for the election of members of the Board of Directors for the ensuing year and
for the transaction of such other business as may properly come before the
meeting.
The date of record for voting at this 1996 Annual Meeting was the close of
business on August 23, 1996. Only holders of common stock as of this record
date are entitled to Notice of and to vote at the aforesaid meeting or any
adjournment thereof.
It is hoped that as many Shareholders as possible will attend in person but if
it will be impossible for you to do so, we request that you sign and return the
enclosed Proxy in the envelope provided. Returning the Proxy does not prevent a
Shareholder from attending the meeting and voting in person.
Beneficial owners of shares held in nominee name should read carefully the
shareholder instruction forms which are customarily provided by brokerage
firms and other nominee holders. Such forms customarily require beneficial
owners who wish to request the issuance of a proxy from the nominee holder to
check a box requesting the issuance of a proxy (rather than providing
instructions as to voting of shares). By checking such box a shareholder who
wishes to attend the meeting and vote such owner's shares should be able to
obtain a proxy from the nominee holder. Shareholder instruction forms of
themselves do not constitute proxies and the Company will not recognize, as
proxies, shareholder instruction forms brought to the meeting and offered as
proxies.
Enclosed with this Notice is the 1996 Annual Report of the Company.
By order of the Board of Directors.
Donald D. Heupel, President
T. Warren Thompson, Secretary
<PAGE>
UNIVERSAL MFG. CO.
405 Diagonal Street
Algona, Iowa 50511
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
OF UNIVERSAL MFG. CO.
To Be Held October 29, 1996
The enclosed proxy is solicited by the Board of Directors of Universal Mfg.
Co. for use at the Annual Meeting of Shareholders of the Company to be held on
October 29, 1996, and at any adjournment thereof. Such meeting is to be held at
Regency West - Best Western, 909 South 107th Avenue (I-680 at Pacific Street),
Omaha, Nebraska, and will commence at 10:00 o'clock a.m. Such solicitation is
being made by mail and the Company may also use its officers, directors and
regular employees to solicit proxies from shareholders either in person or by
telephone, telegraph or letter without extra compensation.
Any proxy given pursuant to such solicitation may be revoked by the
shareholder at any time prior to the voting of the proxy. Any revocation of a
proxy may be in writing delivered to the Company or by oral statement of any
shareholder in attendance at the Annual Meeting.
This solicitation is being made by the Company. The entire cost of such
solicitation, which represents the amount normally expended for a solicitation
relating to an uncontested election of directors, will be borne by the Company.
Such cost will include the cost of supplying necessary additional copies of the
solicitation material and the annual report to shareholders, for beneficial
owners of shares held of record by brokers, dealers, banks and voting trustees
and their nominees and, upon request, the reasonable expenses of such
recordholders for completing the mailing of such material and report to such
beneficial owners.
Only shareholders of record of the Company's 816,000 shares of Common Stock
outstanding as of the close of business on August 23, 1996, will be entitled to
vote. Each share of Common Stock is entitled to one vote on any matter which
may properly come before the meeting. This proxy statement and the enclosed
form of proxy are being mailed to shareholders on or about September 25, 1996.
The 1996 annual report of the Company to its shareholders is being mailed to
shareholders with this proxy statement.
September 25, 1996
<PAGE>
ELECTION OF DIRECTORS
Three directors are to be elected at this Annual Meeting to hold office
until the 1998 Annual Meeting of Shareholders or until a successor is duly
elected and qualified. The Articles of Incorporation of the Company provide for
classification of directors into two classes to be elected in alternate years
for two-year terms. The Company's current Bylaws provide for seven directors,
with three to be elected in 1996 and four to be elected in 1997. All of the
nominees are presently directors of the Company and have been previously elected
by the shareholders.
In the absence of instructions to the contrary, the proxies solicited by
the Board of Directors will be voted in favor of the election of the nominees
listed in this proxy statement. If any such nominees shall withdraw or
otherwise become unavailable, which is not expected, the proxies will be voted
for a substitute nominee who will be designated by the Board of Directors.
Shareholders have cumulative voting rights. Each shareholder of record is
entitled to as many votes as the total number of shares of Common Stock held of
record by such shareholder multiplied by the number of directors to be elected
by the shareholders. These votes may be divided among the total number of
directors to be elected or distributed among any lesser number in such
proportion as the shareholder may desire. Unless otherwise instructed, the
proxy holders will vote the proxies received by them equally for each nominee
shown in this proxy statement, reserving the right, however, to cumulate their
votes and distribute them among the nominees in their discretion. By marking
the appropriate box on the form of proxy, a shareholder may withhold authority
to vote for all of the nominees listed below or, by inserting individual names
in the blank space provided, may withhold the authority to vote for any one or
more of such nominees. Neither shares nor proxies may be voted for a greater
number of persons than the number of nominees shown below.
The Trust Department of the First National Bank of Omaha will tally all
votes cast in person or by proxy for the election of directors. As indicated in
the proxy, where no direction is given with respect to proposal No. 1, the proxy
will be voted for such proposal. Shareholders who neither submit a proxy nor
attend the meeting, along with broker non-votes, will not be counted as either a
vote for or against the election of a director. Directors will be elected upon
receiving a majority of the votes cast in person or by proxy at the annual
meeting, providing a quorum is present.
The following table contains certain information with respect to the
persons currently serving as directors including those persons nominated for
election at the 1996 Annual Meeting of Shareholders:
2
<PAGE>
Nominees:
Year First
Became Term
Name and Principal Occupation Age Director Expires
----------------------------- --- -------- -------
DONALD D. HEUPEL 49 1985 1996
President of the Company
Algona, Iowa
HARRY W. MEGINNIS 69 1966 1996
Retired
Palm City, Florida
T. WARREN THOMPSON 66 1969 1996
Secretary of the Company
Commercial Real Estate Broker
Omaha, Nebraska
Other Directors:
Year First
Became Term
Name and Principal Occupation Age Director Expires
----------------------------- --- -------- -------
RICHARD W. AGEE 73 1970 1997
President, The Huntington Corporation
Real Estate Developer, Builder and Subdivider
Lincoln, Nebraska
ANTHONY H. KELLY 74 1993 1997
Retired
Sioux City, Iowa
RICHARD E. McFAYDEN 44 1984 1997
Partner, Perrigrine Partners, a Real
Estate Investment Partnership
Professor of Business and Associate Director of
Student Services, Buena Vista University
Omaha, Nebraska
JOHN R. McHUGH 78 1963 1997
Investments
Rancho Mirage, California
All directors and nominees for director have been in their respective
occupations for more than the past five years, except Harry W. Meginnis who
retired as President of
3
<PAGE>
Meginnis Ford, an automobile dealership in Lincoln, Nebraska, in January of
1992. Messrs. Kelly and McHugh are brothers-in-law.
There are no standing nominating or compensation committees of the Board of
Directors. The Board of Directors acts as a whole as the Company's Audit
Committee. The Board of Directors generally meets once each quarter. It held
four regularly scheduled meetings during the fiscal year ended July 31, 1996,
with each such meeting being a meeting of the Audit Committee, as well. As an
Audit Committee, the Board of Directors reviews financial reporting and
accounting matters, including the retaining of certified public accountants.
MANAGEMENT
Executive officers of the Company, and other significant employees of the
Company, are listed below:
Name and Age Current Position and Business History
- --------------------------------------------------------------------------------
Donald D. Heupel (49) . . . . . . . . . President of the Company for more than
the past five years.
Gary L. Christiansen (51) . . . . . . . Vice President of the Company since
April 25, 1995; Treasurer of the Company
since October 31, 1995; Controller of
the Company from June 25, 1990, to
October 31, 1995.
T. Warren Thompson (66) . . . . . . . . Secretary of the Company for more than
the past five years; Treasurer of the
Company until October 31, 1995.
COMPENSATION OF PRESIDENT AND DIRECTORS
The following table sets forth all compensation paid or payable by the
Company during the past fiscal year to the President of the Company, Mr. Donald
D. Heupel:
4
<PAGE>
SUMMARY COMPENSATION TABLE
Annual Compensation
- --------------------------------------------------------------------------------
NAME AND ALL OTHER
PRINCIPAL POSITION YEAR(1) SALARY COMPENSATION
- --------------------------------------------------------------------------------
Donald D. Heupel,
President of the Company 1996 $58,254.02(2) $18,000(3)
- --------------
(1) For fiscal year ended July 31, 1996.
(2) Mr. Donald Heupel was compensated in fiscal 1996 partly by fixed salary and
partly by commission expressed as a percentage of before-tax profits. Mr.
Heupel's fixed salary for fiscal 1996 was $27,600. His commission
percentage was one and one-half percent. The Board has established a
minimum monthly commission to be paid to Mr. Heupel of $1,500. The total
commission compensation paid to Mr. Heupel for fiscal 1996 was $30,654.02.
(3) Mr. Heupel was paid $18,000 in director fees.
All directors of the Company were paid $1,500 per month during the last
fiscal year. In addition, Mr. Thompson was paid $2,800 during the last fiscal
year for services rendered in his capacity as Secretary of the Company.
OWNERSHIP OF VOTING SECURITIES
BY DIRECTORS AND NOMINEES
The following table sets forth the share ownership for each of the
directors and nominees for director as of August 23, 1996:
Name and Address Amount and
of Nature of Beneficial Percent
Title of Class Beneficial Owner Ownership of Class
- -------------- ---------------- -------------------- --------
Common Stock Richard W. Agee 75,592(1) 9.26%
2541 Woodleigh Lane
Lincoln, NE 68502
Common Stock Donald D. Heupel 500(2) 0.06%
219 South Avenue
Algona, IA 50511
Common Stock Anthony H. Kelly 100 0.01%
24 Ridgeview Road
Sioux City, IA 51104
Common Stock Richard E. McFayden 30,358 3.72%
5215 California Street
Omaha, NE 68132
5
<PAGE>
Name and Address Amount and
of Nature of Beneficial Percent
Title of Class Beneficial Owner Ownership of Class
- -------------- ---------------- -------------------- --------
Common Stock John R. McHugh 22,931(3) 2.81%
One Wake Forest Court
Rancho Mirage, CA 92270
Common Stock Harry W. Meginnis 2,700 0.33%
12776 Mariner Court
Palm City, FL 34990
Common Stock T. Warren Thompson 20,725(4) 2.53%
10018 Fieldcrest Drive
Omaha, NE 68114
- --------------
(1) Includes 75,588 shares owned by his wife, Eloise Rogers Agee, with respect
to which Mr. Agee may be regarded as having shared voting power and shared
investment power.
(2) Includes 500 shares owned by him and his wife as joint tenants with respect
to which Mr. Heupel may be regarded as having shared voting power and
shared investment power.
(3) Includes 900 shares owned by his wife, Marion McHugh, with respect to which
Mr. McHugh may be regarded as having shared voting power and shared
investment power, and also includes 21,796 shares owned by Mr. McHugh and
his wife as joint tenants with respect to which Mr. McHugh may be regarded
as having shared voting power and shared investment power.
(4) Includes 400 shares owned by his wife, Patricia M. Thompson, with respect
to which Mr. Thompson may be regarded as having shared voting power and
shared investment power.
In addition to the shared voting power and shared investment power
indicated in the above footnotes, spouses of the persons listed may be regarded
as having beneficial ownership and shared voting power and shared investment
power with respect to the shares shown.
The following table sets forth certain information as to the shares of
Common Stock beneficially owned by all officers and directors of the Company as
a group as of August 23, 1996:
Amount and Nature of
Title of Class Beneficial Ownership Percent of Class
-------------- ---------------------- ----------------
Common Stock 152,906(1) 18.73%
- ---------------
(1) Includes 99,184 shares with respect to which members of the group may be
regarded as having shared voting power and shared investment power.
6
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than ten-percent shareholders are
required by an SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during the last fiscal year its officers, directors and greater
than ten-percent beneficial owners complied with applicable Section 16(a) filing
requirements, except: (1) John R. McHugh failed to timely file one Form 4
report relating to one transaction that occurred on June 27, 1996, but such
transaction was reported on a Form 5 filed with the SEC on August 8, 1996; (2)
Richard E. McFayden failed to timely file one Form 4 report (but subsequently
filed a Form 5 report) relating to a transaction which occurred in March 1996 in
which Common Stock of the Company owned by a partnership in which Mr. McFayden
was a partner was distributed to him upon dissolution of the partnership; and
(3) Gary L. Christiansen failed to timely file a Form 3 report notifying the SEC
of his appointment as Vice President of the Company on April 25, 1995. Although
Mr. Christiansen owns no stock in the Company, he subsequently corrected this
filing error by submitting a Form 5 to the SEC.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth the names and certain information with
respect to each person who, as of August 23, 1996, was known by the Company to
be the beneficial or record owner of more than five percent (5%) of the
Company's Common Stock:
Name and Address Amount and Nature Percent
of of Beneficial of
Title of Class Beneficial Owner Ownership Class
- -------------- ------------------ ------------------- -------
Common Stock Eloise Rogers Agee 75,592(1) 9.26%
2541 Woodleigh Lane
Lincoln, NE 68502
Common Stock Cede & Co. 356,634(2) 43.70%
Box 20
Bowling Green Station
New York, NY 10004
Common Stock Mary McFayden Donahue 46,258 5.67%
1301 South 80th Street
Omaha, NE 68124
Common Stock Patricia Ann Rasmussen 46,136(3) 5.65%
93 Palma Drive
Rancho Mirage, CA 92270
7
<PAGE>
Name and Address Amount and Nature Percent
of of Beneficial of
Title of Class Beneficial Owner Ownership Class
- -------------- ------------------ ------------------- -------
Common Stock Thomas Rasmussen 99,436(4) 12.18%(5)
5808 Xeres Avenue South
Edina, MN 55410
- ---------------
(1) Includes four shares owned by her husband, Richard W. Agee, with respect
to which Mrs. Agee may be regarded as having shared voting power and shared
investment power.
(2) The Company's stock transfer records reflect that these shares are held in
nominee name. The Company believes these shares are beneficially owned by
more than one beneficial owner.
(3) According to a Schedule 13D filed with the SEC on August 26, 1994, Ms.
Rasmussen disclosed that with respect to these 46,136 shares she has shared
voting power and shared dispositive power with her son, Thomas Rasmussen
(who is listed below).
(4) According to a Schedule 13D filed with the SEC on August 26, 1994, Mr.
Rasmussen disclosed that he had sole voting power over 100 shares; shared
voting power over 99,336 shares, which includes 46,136 shares held by his
mother, Patricia Ann Rasmussen (who is listed above), and 53,200 shares
held by him as trustee of a trust of which he is one of four beneficiaries;
sole dispositive power over 53,300 shares, including 100 shares held by him
directly and 53,200 shares held by him as trustee of the aforementioned
trust; and shared dispositive power over 46,136 shares owned by Patricia
Ann Rasmussen. In such Schedule 13D, Mr. Rasmussen disclaimed beneficial
ownership of any securities held by or for the benefit of his mother,
Patricia Ann Rasmussen.
(5) This 12.18% includes the 5.65% beneficially owned by Patricia Ann Rasmussen
(as disclosed above). See note 4 above for further discussion.
In addition to the persons listed above, any spouses of the persons listed
may be regarded as having beneficial ownership and shared voting power and
shared investment power with respect to the shares shown.
FINANCIAL STATEMENTS
The Company's annual report for the fiscal year ended July 31, 1996,
including financial statements, has accompanied or preceded the mailing of this
proxy statement.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH SHAREHOLDER SOLICITED A
COPY OF ITS ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-
KSB, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, FOR THE
FISCAL YEAR ENDED JULY 31, 1996. A WRITTEN REQUEST FOR SUCH REPORT SHOULD BE
DIRECTED TO DONALD D. HEUPEL, PRESIDENT, UNIVERSAL MFG. CO., 405 DIAGONAL
STREET, ALGONA, IOWA 50511.
8
<PAGE>
AUDIT MATTERS
The Board of Directors of the Company at its meeting of July 16, 1996,
selected the accounting firm of Deloitte & Touche LLP, independent certified
public accountants, to conduct the audit examination of the Company and its
subsidiary for the fiscal year ending July 31, 1997, and to prepare the
Company's corporate income tax returns for the same fiscal year.
Representatives of the firm of Deloitte & Touche LLP are expected to be
present at the Annual Meeting of Shareholders. Such representatives will have
the opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions from shareholders.
SHAREHOLDERS' PROPOSALS
In order for any proposal of shareholders to be presented as an item of
business at the 1997 Annual Meeting of Shareholders of the Company, the proposal
must be received at the Company's principal executive offices no later than
May 28, 1997.
OTHER MATTERS
The Board of Directors knows of no other matter to be acted upon at the
meeting. However, if any other matter is lawfully brought before the meeting,
the shares covered by the proxy in the accompanying form will be voted on such
matter in accordance with the best judgment of the persons acting under such
proxy.
By Order of the Board of Directors
Donald D. Heupel
President
September 25, 1996
9
<PAGE>
UNIVERSAL MFG. CO. AND
WHOLLY-OWNED SUBSIDIARY
Consolidated Financial Statements as of
and for the Three Years Ended July 31, 1996
and Independent Auditors' Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
Universal Mfg. Co.:
We have audited the accompanying balance sheets of Universal Mfg. Co. as of
July 31, 1996 and 1995 and the related statements of income and retained
earnings and of cash flows for each of the three years in the period ended
July 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Universal Mfg. Co. at July 31, 1996 and
1995 and the results of its operations and its cash flows for each of the
three years in the period ended July 31, 1996 in conformity with generally
accepted accounting principles.
As discussed in Note 2 to the financial statements, in August 1993, the
Company changed its methods of accounting for income taxes and for product
cores.
Omaha, Nebraska
August 16, 1996
<PAGE>
UNIVERSAL MFG. CO.
<TABLE>
<CAPTION>
BALANCE SHEETS
JULY 31, 1996 AND 1995
- --------------------------------------------------------------------------------------------
ASSETS 1996 1995
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 934,072 $ 210,467
Short-term investments (at fair value) - 67,597
Accounts receivable 1,654,992 1,419,177
Inventories (Notes 2 and 3) 2,479,713 2,523,983
Income taxes recoverable - 109,646
Prepaid expenses 50,282 37,976
----------- -----------
Total current assets 5,119,059 4,368,846
----------- -----------
DEFERRED INCOME TAXES (Notes 2 and 6) 42,329 42,329
LEASE RECEIVABLE (Note 4) 26,073 36,249
PROPERTY - At cost:
Land 120,499 167,429
Buildings 1,099,594 1,075,550
Machinery and equipment 899,997 766,010
Furniture and fixtures 209,947 196,896
Trucks and automobiles 699,240 654,321
----------- -----------
Total property 3,029,277 2,860,206
Less accumulated depreciation (1,985,407) (1,854,211)
----------- -----------
Property - net 1,043,870 1,005,995
----------- -----------
$ 6,231,331 $ 5,453,419
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,507,944 $ 1,265,713
Dividends payable 204,000 163,200
Payroll taxes 10,539 9,312
Income taxes payable 56,790 -
Accrued compensation 90,046 88,335
Accrued local taxes 13,984 19,690
----------- -----------
Total current liabilities 1,883,303 1,546,250
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, $1 par value - authorized, 2,000,000
shares; issued and outstanding, 816,000 shares 816,000 816,000
Additional paid-in capital 17,862 17,862
Retained earnings 3,514,166 3,073,307
----------- -----------
Total stockholders' equity 4,348,028 3,907,169
----------- -----------
$ 6,231,331 $ 5,453,419
----------- -----------
----------- -----------
</TABLE>
See notes to financial statements.
2
<PAGE>
UNIVERSAL MFG. CO.
<TABLE>
<CAPTION>
STATEMENTS OF INCOME AND RETAINED EARNINGS
THREE YEARS ENDED JULY 31, 1996
- ----------------------------------------------------------------------------------------------------------------
1996 1995 1994
<S> <C> <C> <C>
NET SALES $17,678,542 $14,762,085 $13,118,372
COST OF GOODS SOLD 13,836,818 11,600,552 10,286,055
----------- ----------- -----------
GROSS PROFIT 3,841,724 3,161,533 2,832,317
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,019,079 1,885,622 1,924,736
EPA PROJECT COSTS (Note 7) - - 182,680
----------- ----------- -----------
Total operating expenses 2,019,079 1,885,622 2,107,416
----------- ----------- -----------
INCOME FROM OPERATIONS 1,822,645 1,275,911 724,901
OTHER INCOME:
Interest (net) 31,153 15,206 12,977
Other 35,152 28,785 71,770
----------- ----------- -----------
Total other income 66,305 43,991 84,747
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 1,888,950 1,319,902 809,648
INCOME TAXES (Note 6) 754,491 501,086 329,016
----------- ----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 1,134,459 818,816 480,632
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING
PRINCIPLES (Note 2) - - 284,061
----------- ----------- -----------
NET INCOME 1,134,459 818,816 764,693
RETAINED EARNINGS, BEGINNING OF YEAR 3,073,307 2,907,291 2,632,198
----------- ----------- -----------
4,207,766 3,726,107 3,396,891
LESS CASH DIVIDENDS - ($.85, $.80 and $.60 per
share in 1996, 1995 and 1994, respectively) 693,600 652,800 489,600
----------- ----------- -----------
RETAINED EARNINGS, END OF YEAR $ 3,514,166 $ 3,073,307 $ 2,907,291
----------- ----------- -----------
----------- ----------- -----------
EARNINGS PER COMMON SHARE:
Income before cumulative effect of changes in
accounting principles $ 1.39 $ 1.00 $ 0.59
Cumulative effect of changes in accounting principles - - 0.35
----------- ----------- -----------
Net income $ 1.39 $ 1.00 $ 0.94
----------- ----------- -----------
----------- ----------- -----------
PRO FORMA AMOUNTS ASSUMING THE NEW CORE
ACCOUNTING METHOD IS APPLIED RETROACTIVELY:
Net income $ 1,134,459 $ 818,816 $ 480,632
----------- ----------- -----------
----------- ----------- -----------
Earnings per common share $ 1.39 $ 1.00 $ 0.59
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to financial statements.
3
<PAGE>
UNIVERSAL MFG. CO.
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
THREE YEARS ENDED JULY 31, 1996
- ----------------------------------------------------------------------------------------------------------------
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,134,459 $ 818,816 $ 764,693
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation 184,406 149,786 165,729
Cumulative effect of changes in accounting principles - - (284,061)
Deferred income taxes - (22,586) 10,100
Gain on sale of property (14,634) (4,920) (34,494)
Effect of changes in operating assets and liabilities:
Accounts receivable (235,815) 131,288 (278,918)
Inventories 44,270 (203,350) (326,507)
Income taxes recoverable 109,646 (109,646) 14,369
Prepaid expenses (12,306) 46,411 (36,203)
Accounts payable 242,231 (117,845) 673,347
Dividends payable 40,800 40,800 -
Payroll taxes 1,227 (2,676) (2,818)
Income taxes payable 56,790 (143,848) (56,430)
Accrued compensation 1,711 (32,292) 8,988
Accrued local taxes (5,706) (710) (719)
----------- ----------- -----------
Net cash flows from operating activities 1,547,079 508,428 617,076
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 81,063 38,724 50,046
Purchases of property (278,534) (365,610) (203,828)
Purchases of investments - (3,197) (2,165)
Proceeds from maturities of investments 67,597 - -
----------- ----------- -----------
Net cash flows from investing activities (129,874) (330,083) (155,947)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of deferred compensation - - (4,800)
Payment of dividends (693,600) (652,800) (489,600)
----------- ----------- -----------
Net cash flows from financing activities (693,600) (652,800) (494,400)
----------- ----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 723,605 (433,655) (33,271)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 210,467 644,122 677,393
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 934,072 $ 210,467 $ 644,122
----------- ----------- -----------
----------- ----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes $ 595,805 $ 729,514 $ 359,729
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to financial statements.
4
<PAGE>
UNIVERSAL MFG. CO.
NOTES TO FINANCIAL STATEMENTS
THREE YEARS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - Effective August 1, 1994, Allied Sales Co., a
wholly-owned subsidiary of Universal Mfg. Co. (the Company), was dissolved
as a separate company and is now a division of the Company. For the year
ended July 31, 1994 and prior years, the financial statements were
presented on a consolidated basis and all material intercompany balances,
transactions and profits were eliminated.
NATURE OF OPERATIONS - The Company is engaged in the business of
remanufacturing and selling on a wholesale basis remanufactured engines and
other remanufactured automotive parts for Ford, Lincoln and Mercury
automobiles and trucks. The Company is a franchised remanufacturer for
Ford Motor Company with a defined sales territory. The Company purchases
the majority of its new raw materials from Ford Motor Company.
Remanufactured engines for non-Ford vehicles are also marketed on a limited
basis. The principal markets for the Company's products are automotive
dealers and jobber supply houses. The Company has no separate segments,
major customers, foreign operations or export sales.
USE OF ESTIMATES - In preparing financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
INVENTORIES - Inventories are stated at the lower of cost (last-in, first-
out method) or market.
INVESTMENTS - Short-term investments are considered as either trading
securities or available for sale securities and, accordingly, are carried
at fair value in the Company's financial statements.
DEPRECIATION, MAINTENANCE, AND REPAIRS - Property is depreciated generally
as follows:
ASSETS DEPRECIATION METHOD LIVES
Buildings Straight-line and
declining-balance 10-20 years
Machinery and equipment Declining-balance 7-10 years
Furniture and fixtures Declining-balance 5-7 years
Trucks and automobiles Declining-balance 3-5 years
Maintenance and repairs are charged to operations as incurred. Renewals
and betterments are capitalized and depreciated over their estimated useful
service lives. The applicable property accounts are relieved of the cost
and related accumulated depreciation upon disposition. Gains or losses are
recognized at the time of disposal.
5
<PAGE>
REVENUE RECOGNITION - Sales and related cost of sales are recognized
primarily upon shipment of products.
CASH EQUIVALENTS - For purposes of the Statements of Cash Flows, the
Company considers all highly liquid instruments purchased with a maturity
of three months or less to be cash equivalents.
FINANCIAL INSTRUMENTS - Cash and cash equivalents, accounts receivable and
accounts payable are short-term in nature and the values at which they are
recorded are considered to be reasonable estimates of their fair values.
EARNINGS PER SHARE - Earnings per share have been computed on the weighted
average number of shares outstanding during the years (816,000 shares).
RECLASSIFICATIONS - Certain balances reported in 1995 and 1994 have been
reclassified to conform with the current year presentation.
2. CHANGES IN ACCOUNTING PRINCIPLES
ACCOUNTING FOR INCOME TAXES - Effective August 1, 1993, the Company adopted
Statement of Financial Accounting Standards No. 109 (SFAS 109), ACCOUNTING
FOR INCOME TAXES. This statement supersedes both Accounting Principles
Board Opinion No. 11 and SFAS 96, the previous authoritative literature on
income tax accounting. The cumulative effect of adopting SFAS 109 on the
Company's financial statements was to decrease net income by $29,196 ($.04
per share) for the year ended July 31, 1994.
PRODUCT CORES - The Company changed it method of accounting for product
cores by the establishment of small parts core inventories and the
elimination of customer core deposit reserve accounts. These changes will
conform the accounting for product cores to the method used for all other
classes of inventory, and will provide for a better match of revenues and
costs related to small parts sales, which are expected to become more
significant as a result of increased sales to other remanufacturers and
distribution program sales. The cumulative effect of the accounting change
on the Company's financial statements was to increase net income by
$313,257 ($.39 per share) for the year ended July 31, 1994.
INVESTMENTS - During the year ended July 31, 1995 the Company adopted the
provisions of Statement of Financial Accounting Standards (SFAS) No. 115,
ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES. The
adoption of SFAS No. 115 had no effect on the 1995 financial statements.
3. INVENTORIES
The major classes of inventory are as follows:
1996 1995
Product cores $ 889,164 $ 824,737
Raw materials 496,439 580,054
Finished engines 208,295 375,322
Finished small parts 885,815 743,870
---------- ----------
$2,479,713 $2,523,983
---------- ----------
---------- ----------
6
<PAGE>
If inventories were valued at the lower of cost (first-in, first-out
method) or market, inventories would have been $5,483,024 and $5,636,290 at
July 31, 1996 and 1995, respectively.
4. LEASE RECEIVABLE
On May 26, 1993, the Company, as lessor, entered into a lease agreement
with another manufacturer to lease equipment at 8% interest, for a sixty-
month period. The total minimum lease payments are $54,746 and the unearned
income is $28,673 at July 31, 1996. These amounts are shown on a net basis
for financial statement purposes.
5. NOTES PAYABLE
The Company has in place a revolving line of credit aggregating $400,000
which expires in January 1997. The interest rate was 9% as of July 31,
1996 and is subject to change based on the associated bank's base rate.
There were no outstanding borrowings under this line as of July 31, 1996
and 1995.
6. INCOME TAXES
The provision for income taxes for the years ended July 31, 1996, 1995 and
1994 is as follows:
1996 1995 1994
Current income taxes $ 754,491 $ 523,672 $ 318,916
Deferred income taxes - (22,586) 10,100
---------- ---------- ----------
Income tax provision $ 754,491 $ 501,086 $ 329,016
---------- ---------- ----------
---------- ---------- ----------
The tax effect of differences in the timing of revenues and expenses for
tax and financial statement purposes is as follows:
1996 1995 1994
Depreciation $ 40,590 $ - $ 13,192
Uniform inventory capitalization 1,752 (13,128) (6,448)
Vacation pay accruals 5,788 1,834 7,004
Other (48,130) (11,292) (3,648)
---------- ---------- ----------
Deferred income taxes $ - $ (22,586) $ 10,100
---------- ---------- ----------
---------- ---------- ----------
7
<PAGE>
A reconciliation between statutory and effective tax rates is as follows:
1996 1995 1994
Income before income taxes $1,888,950 $1,319,902 $ 809,648
Statutory rate 34% 34% 34%
---------- ---------- ---------
Income taxes at statutory rates 642,243 448,767 275,280
Tax effect of:
State taxes 85,320 62,552 32,528
Other - net 26,928 (10,233) 21,208
---------- ---------- ---------
Total income taxes $ 754,491 $ 501,086 $ 329,016
---------- ---------- ---------
---------- ---------- ---------
7. EPA PROJECT COSTS
In February, 1991, the Company was served with a complaint from the United
States Environmental Protection Agency (EPA) which contained eight counts
of alleged violations of the Resource Conservation and Recovery Act of 1976
and the Hazardous Solid Waste Amendments of 1984. The complaint alleged,
among other things, that the Company failed to adequately test and properly
transport certain residue of hazardous wastes which it was treating at its
facility. The Company entered into a Consent Agreement and Consent Order
with the EPA dated May 6, 1994, which provided for settlement of this
complaint.
This settlement called for payment of a civil penalty of $32,955, and for
the completion of certain remedial projects, estimated to cost $149,725.
Total costs paid as of July 31, 1996 are $90,113. The remaining amount of
$59,612 has been recorded in the accompanying financial statements.
8
<PAGE>
UNIVERSAL MFG. CO.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS ON OCTOBER 29, 1996
The undersigned hereby constitutes and appoints John R. McHugh and Richard
E. McFayden, or either of them, or any substitute appointed by either of them,
the undersigned's agents, attorneys and proxies to vote the number of shares the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders of UNIVERSAL MFG. CO. to be held at the Regency West-
Best Western, 909 South 107th Avenue, Omaha, Nebraska, on the 29th day of
October, 1996, at 10:00 a.m., or at any adjournment thereof.
(1) Election of Directors
/ / FOR the following nominees, for the terms of office designated in
the Company's Proxy Statement, except those listed in the blank
space below: Donald D. Heupel, Harry W. Meginnis,
T. Warren Thompson
__________________________________________________________________
/ / WITHHOLD authority to vote for the above-listed nominees.
INSTRUCTIONS: To withhold authority to vote for any specific
nominee or nominees, the name of such nominee or
nominees for whom authority is to be withheld
should be printed on the blank line provided
above. To withhold authority to vote for all of
the above-listed nominees, the box next to the
word "WITHHOLD" should be marked.
(2) In their discretion on any other matters that may properly come before the
meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED WITH RESPECT TO PROPOSAL (1),
IT WILL BE VOTED FOR SUCH PROPOSAL.
DATED: ___________________, 1996.
<PAGE>
________________________________________________________________________________
Signature
________________________________________________________________________________
Signature
(When signing as attorney,
executor, administrator, trustee,
guardian or conservator, or
officer of a corporation, give
full title. All joint tenants
must sign.)
