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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
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))
[_] Definitive Proxy Statement
[x] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ZERO CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[_] 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:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[_] 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.
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Notes:
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The following ZERO Corporation Report on 1998 (the "Report") was furnished to
the shareholders of ZERO Corporation (the "Company"). The Company does not
intend for the Report to constitute "soliciting material" pursuant to Rule 14a-
6(b) under the Securities Exchange Act of 1934, as amended. The Report is being
filed with the Securities and Exchange Commission for informational purposes
only.
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ZERO CORPORATION CONTINUES
TO CHANGE TO MEET GLOBAL
BUSINESS OPPORTUNITIES IN
HIGH GROWTH SECTORS OF THE
ELECTRONICS INDUSTRY
ZERO CORPORATION
REPORT ON 1998
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OUR PRIMARY BUSINESS IS PROTECTING ELECTRONICS.
ZERO Corporation (NYSE/PSE: ZRO) is a leader in the design, manufacture
and marketing of system packaging, thermal management and engineered cases that
protect valuable electronic equipment. Approximately 80 percent of the
Company's sales are to the electronics industry, where it primarily serves the
telecommunications, instrumentation and data processing markets--three of the
industry's fastest-growing business segments.
Since its inception in 1952, ZERO has continuously evolved to serve these
expanding markets and emerging technologies. Over the past decade, ZERO has
concentrated on increasing its activity within the electronics industry, and
today, the Company serves more than 22,000 customers worldwide, including most
of the leading electronics companies.
With a worldwide distribution network, a solid customer base and a strong
focus on the electronics industry, ZERO is strategically positioned for
continued profitable growth.
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<CAPTION>
YEARS ENDED MARCH 31, 1994 1995 1996 1997 1998
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<S> <C> <C> <C> <C> <C>
Net Sales $171,821 $179,694 $206,247 $225,442 $258,745
Operating Income 19,382 21,841 26,606 28,789 36,434*
Net Income 12,851 14,825 16,950 15,888 20,492**
Working Capital 66,980 73,531 58,174 70,341 87,551
Total Assets 158,734 171,524 165,838 185,956 216,998
Stockholders' Equity 136,477 145,594 84,831 101,253 126,065
Long-term Debt -- -- 51,525 51,503 50,555
Return on Average
Stockholders' Equity 9.7% 10.5% 14.7% 17.1% 18.3%**
Current Ratio 5.0:1 4.8:1 3.9:1 4.3:1 4.1:1
Per Share Data:
Basic Earnings $ 0.81 $ 0.93 $ 1.08 $ 1.30 $ 1.66**
Dividends Paid 0.40 0.41 0.44 0.12 0.12
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* Excludes a $4.5 million provision for estimated loss on sale of a
subsidiary: This provision, together with gains from sale of Burbank
facility and life insurance, are classified as "Special Items" in the
Company's fiscal 1998 Consolidated Financial Statements. See Note 12 of
Notes to Consolidated Financial Statements in ZERO's Form 10-K.
** Excludes all of the Special Items described above.
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WILFORD D. GODBOLD, JR.
President and Chief Executive Officer
Dear Stockholders
Fiscal 1998 was an exceptional year in which we set record highs in net
sales, net income, earnings per share and stock price. In addition to our
strong operating performance, we signed a merger agreement on April 6, 1998,
that would combine ZERO with Applied Power Inc. (NYSE: APW), a large,
multinational company with approximately $1 billion in annual revenues.
THIRD CONSECUTIVE RECORD YEAR
Once again we achieved record-breaking results, making fiscal 1998 our
third consecutive record year and the best in ZERO's 46-year history. From
continuing operations, net sales grew 14.8 percent to $258.7 million, net income
rose 29 percent to $20.5 million and basic earnings per share increased 27.7
percent to $1.66. These results are before the Special Items noted on page 1,
which added $3.9 million of net income or $.32 to basic earnings per share.
During fiscal 1998, return on average stockholders' equity was an excellent
18.3 percent (before the Special Items mentioned above), net cash from operating
activities was a strong $36.7 million and average billings per employee
increased 8.3 percent. At year-end, our cash, cash equivalents and short-term
investments stood at $41 million, and our current ratio was a very healthy 4.1-
to-1. All in all, it was an excellent year.
ACQUISITIONS
ZERO continued to be active in the acquisition arena. On September 24,
1997, we acquired the assets of EG&G Birtcher, a leading manufacturer of locking
printed circuit card guides and printed circuit card extractors. This company,
which had revenues of approximately $8.5 million in 1997, broadens and enhances
ZERO's system packaging product offerings.
CAPITAL EXPENDITURES
During fiscal 1998, our capital expenditures totaled about $14.6, million,
up from $10.8 million in fiscal 1997. We are completing a new 135,000-square
foot thermal management facility near Princeton, New Jersey, a 70,000-square
foot addition near Minneapolis, Minnesota, and acquired additional state-of-the-
art equipment for our operations. Currently, we are negotiating for a new plant
site in Valencia, California, to construct a 170,000-square-foot electronics
cabinet facility. These facility expansions and equipment purchases will enable
us to continue growing our businesses that serve the electronics industry.
APPLIED POWER MERGER
On April 6, 1998, we announced that ZERO signed a strategic merger
agreement with Applied Power Inc. Under the terms of the merger, ZERO's
stockholders would receive 0.85 of a share of APW common stock for each share of
ZERO common stock. On the day of the
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announcement, the transaction was valued at $32,459 per share to ZERO
stockholders, or a total equity value of $427.4 million, based on APW's April 6,
1998, share closing price. This was a 17-percent premium over the average 20-day
closing price of ZERO stock on that day. We expect the transaction will be
completed in July 1998. The merger, which is subject to stockholder approval,
would be accounted for as a pooling-of-interests transaction and would be tax
free to ZERO stockholders.
We believe the combined ZERO/APW organization will be a strong global
leader in providing system packaging and thermal management systems for
electronic enclosures throughout the world. We both have had excellent records
of growth, and we believe our combined future is bright.
ZERO'S 46 YEARS
Upon completion of the merger, ZERO will no longer be a separate, publicly
held company. Entering this new phase, we reflect on ZERO's successful history
and the many people that made it possible.
Although it is impossible to thank everyone, special acknowledgment is in
order for the two people that dramatically shaped ZERO's history. First is our
founder, Jack Gilbert, who served as ZERO's chief executive officer until 1972
and is now chairman emeritus of the board. And second is chairman of the board,
Howard Hill, who took the reins from Mr. Gilbert and presided over ZERO as chief
executive officer until 1984. Thank you both for building a solid company that
not only serves customers with reliable, top-quality products but also enables
employees to work for an organization of which they can be extremely proud.
We also express heartfelt gratitude to all of our current and past
employees, for without their distinguished and dedicated service, ZERO would not
be the strong, international company it is today; employees have always been the
lifeblood of ZERO.
Lastly, we give thanks to our customers and stockholders--your ongoing
loyalty, faith and support have enabled us to celebrate almost half a century of
growth and success.
It has truly been a privilege to serve you.
WILFORD D. GODBOLD, JR.
President and Chief Executive Officer
May 11, 1998
SAFE HARBOR STATEMENT. Forward-looking statements are not fact. For
example, when we say "we believe," our statements are based on assumptions
including the continuing strength of the markets we serve, stability of general
economic conditions, competitor pricing, maintenance of current momentum,
integration of operations and other factors.
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ZERO serves its core markets-telecommunications, instrumentation, data
processing-with products from each of its core businesses: system packaging,
thermal management, engineered cases and system integration.
CORE MARKETS
TELECOMMUNICATIONS
ZERO's thermal management and packaging products protect wireless and
wireline telecommunications systems for a wide variety of customers, including
Innovation, Inc., Lucent Technologies, Nokia, Nortel and RELTEC.
INSTRUMENTATION
ZERO's products protect sophisticated electronic equipment located in
diverse environments ranging from factory floors to pristine medical
laboratories. Customers include ADAC Laboratories, Eastman Kodak, Hewlett-
Packard, Sony and TRW.
DATA PROCESSING
ZERO's products serve many data processing applications ranging from
workstations and disk arrays to servers and routers. Customers include Cisco
Systems, Digital Equipment, EMC, Sequent and Tandem Computers.
CORE BUSINESSES
SYSTEM PACKAGING
ZERO is a leader in electronic system packaging. Products include cabinets,
consoles, instrument and system enclosures, card cages, backplanes and cable
management racks.
THERMAL MANAGEMENT
ZERO's innovative thermal management products include microprocessor-
controlled air movement devices, blowers, motorized impellers, air conditioners,
heat exchangers, filter fan packages and fan trays.
ENGINEERED CASES
ZERO offers more than 100,000 standard deep drawn aluminum enclosures.
Products include commercial, industrial and ruggedized cases, as well as ZERO
Halliburton(R) transit and shipping cases.
SYSTEM INTEGRATION
ZERO's state-of-the-art system packaging, thermal management and engineered
case products are offered individually or combined to create first-level system
integration.
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OFFICERS AND DIRECTORS
BOARD OF DIRECTORS
Howard W. Hill
Chairman of the Board,
ZERO Corporation
Director since 1960
Gary M. Cusumano
President, The Newhall
Land and Farming Company
(Real Estate and Agribusiness)
Director since 1994
Bruce J. DeBever
Consultant
Director since 1992
John B. Gilbert
Chairman Emeritus of the Board, ZERO Corporation Chairman of the Board,
President and Chief Executive Officer, TOLD Corporation (Land Development)
Director since 1952
Whitney A. McFarlin
Chairman of the Board,
President and Chief Executive
Officer, Angeion Corporation
(Medical Device Company)
Director since 1988
Wilford D. Godbold, Jr.
President and Chief Executive
Officer, ZERO Corporation
Director since 1982
CORPORATE OFFICERS
Wilford D. Godbold, Jr.
President and Chief Executive
Officer, Director
Joined ZERO in 1982
Anita J. Cutchall
Vice President of Legal and Corporate Secretary
Joined ZERO in 1992
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George A. Daniels
Vice President and Chief
Financial Officer
Joined ZERO in 1987
James F. Hermanson
Vice President
Joined ZERO in 1984
Michael D. LeRoy
Vice President of
Corporate Development
Joined ZERO in 1995
John G. Mogler
Vice President
Joined ZERO in 1984
ZERO's board of directors and corporate officers acknowledge the many
significant contributions that Bernard (Berney) B. Heiler made to ZERO
Corporation. Mr. Heiler, who passed away on September 21, 1997, served as our
vice president of marketing and sales since 1992 and as a ZERO board member
since 1988. In addition to his numerous professional accomplishments, Mr. Heiler
was a friend and colleague to all who worked with him; he will forever remain
in our memories.
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ZERO CORPORATION COMPANIES
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AIR CARGO EQUIPMENT MCLEAN ENGINEERING/CAMBRIDGE AEROFLO NIELSEN/SESSIONS
2930 East Maria Street 70 Washington Road 770 Wethersfield Avenue
Rancho Dominguez, CA 90221 Princeton Junction, NJ 08550 Hartford, CT 06141
William G. Dye, President George N. Vogel, President Carl Chasse, Vice President and
General Manager
ELECTRONIC SOLUTIONS/BIRTCHER MCLEAN EUROPE SAMUEL GROVES/ZERO CASES EUROPE
6790 Flanders Drive 4 Bevan Way, Smethwick Norton Street, Hockley
San Diego, CA 92121 West Midlands B66 1DZ, England Birmingham B18 5RQ, England
Rod Bolton, President Roger Holmes, Managing Director Antony Joynson, Managing Director
INTEGRATED SYSTEMS MCLEAN MIDWEST STANTRON/EMI/PFT/PLASTIC CASES
444 South Flower Street, Suite 2100 11611 Business Park Boulevard North 12224 Montague Street
Los Angeles, CA 90071 Champlin, MN 55316 Pacoima, CA 91331
John G. Mogler, President Jack Frickel, President
John O. Buyse, General Manager
ZERO ENCLOSURES
500 West 200 North
North Salt Lake, UT 84054
Jay R. Manwaring, President
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STOCKHOLDER INFORMATION
SEC FORM 10-K
A stockholder may receive, without charge, a copy of the Company's report
filed with the Securities and Exchange Commission (excluding exhibits) on Form
10-K by written request addressed to the Corporate Secretary at ZERO's corporate
office.
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ZERO Corporate Office Common Stock Transfer Legal Counsel
444 South Flower Street, Suite 2100 Agent and Registrar Gibson, Dunn & Crutcher
Los Angeles, CA 90071 ChaseMellon Shareholder Services Independent Auditors
Telephone 213 629-7000 400 South Hope Street Deloitte & Touche LLP
Facsimile 213 629-2366 Los Angeles, CA 90071 Certified Public Accountants
www.zerocorp.com
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Securities Listings
The Company's common stock is traded on the New York Stock Exchange and the
Pacific Exchange, Inc. under the ticker symbol ZRO.
Price Range of Common Stock
Dividends Paid (in $)
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<CAPTION>
FISCAL YEAR 1996 FISCAL YEAR 1997 FISCAL YEAR 1998
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
.11 .11 .11 .11 .03 .03 .03 .03 .03 .03 .03 .03
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