<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K/A
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1993
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-1416
BINKS MANUFACTURING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 36-0808480
(State of Incorporation) (I.R.S. Employer Identification No.)
9201 WEST BELMONT AVENUE 60131
FRANKLIN PARK, ILLINOIS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (708) 671-3000
----------------
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Capital Stock, $1.00 American Stock Exchange
par value per share Chicago Stock Exchange
Capital Stock American Stock Exchange
Purchase Rights Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the 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. / /
The aggregate market value of the voting stock of the Registrant held by
non-affiliates was approximately $51,531,000 as of May 31, 1994. For purposes of
the foregoing statement only, directors and officers of the Registrant have been
assumed to be affiliates.
As of June 30, 1994, the Registrant had outstanding 3,088,837 shares of
Capital Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Selected portions of the definitive Proxy Incorporated into Part III
Statement for the Registrant's Annual
Meeting of Stockholders to be held on
April 26, 1994.
- - --------------------------------------------------------------------------------
<PAGE>
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K for the
fiscal year ended November 30, 1993 as set forth in the pages attached hereto:
Item 6. Selected Financial Data.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Item 8. Financial Statements and Supplementary Data.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Binks Manufacturing Company
By /s/ Burke B. Roche
-----------------------------
BURKE B. ROCHE
(President and Chairman of the Board)
July 28, 1994
2
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Five years ended November 30, 1993
(not covered by Independent Auditors' Report)
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------
Year ended November 30
---------------------------------------------------------------------------
1993 1992 1991 1990 1989
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 210,405,000 223,680,000 222,171,000 279,297,000 237,357,000
- - --------------------------------------------------------------------------------------------------------------------------
Earnings before cumulative effects
of changes in accounting principles 1,331,000 1,414,000 1,214,000 5,786,000 9,607,000
Cumulative effect to December 1, 1991
of change in accounting for income taxes -- 195,000(b) -- -- --
Cumulative effect to December 1,
1989 of changing overhead recorded in
inventory -- -- -- 930,000(a) --
- - --------------------------------------------------------------------------------------------------------------------------
Net earnings $ 1,331,000 1,609,000 1,214,000 6,716,000 9,607,000
- - --------------------------------------------------------------------------------------------------------------------------
Earnings per share before cumulative
effects of changes in accounting
principles .44 .48 .41 1.97 3.33
Cumulative effect to December 1,
1991 of change in accounting
for income taxes -- .07(b) -- -- --
Cumulative effect to December 1,
1989 of changing overhead recorded
in inventory -- -- -- .31(a) --
- - --------------------------------------------------------------------------------------------------------------------------
Net earnings per share $ .44 .55 .41 2.28 3.33
- - --------------------------------------------------------------------------------------------------------------------------
Cash dividends per share $ .36 1.00 1.10 1.15 1.00
- - --------------------------------------------------------------------------------------------------------------------------
Total assets $ 179,999,000 178,250,000 184,160,000 206,514,000 181,321,000
- - --------------------------------------------------------------------------------------------------------------------------
Long-term debt $ 34,136,000 33,391,000 30,545,000 11,410,000 12,166,000
- - --------------------------------------------------------------------------------------------------------------------------
<FN>
(a) In 1990, the Company changed its method of applying overhead to inventory
by specific product lines. The change resulted in an increase in net
earnings of $930,000 after reduction for income taxes, reflecting the
cumulative effect of the change on prior periods.
(b) In 1992, the Company adopted SFAS 109, "Accounting for Income Taxes," which
was issued in February 1992. This change resulted in an increase in net
earnings of $195,000, reflecting the cumulative effect of the change on
prior periods.
</TABLE>
3
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Revenues generated from operations constitute the primary source of the
Company's liquidity. Short-term funds are provided for current operations
through bank loans and the issuance of bankers acceptances. The Company
maintains substantial lines of credit for general corporate purposes and to
provide support for borrowings and bankers acceptances. The unused lines of
credit in excess of the support for borrowings and bankers acceptances were
approximately $23,945,000 at November 30, 1993.
The Company's cash balances increased $2,512,000 for the year ended November 30,
1993. The net increase was the result of $11,037,000 provided by operating
activities principally due to an increase in accounts payable, $5,116,000 used
in investing activities chiefly for purchases of property, plant, and equipment,
$3,137,000 used in financing activities to reduce interest-bearing debt and pay
dividends, and a $272,000 decrease based on the changes in foreign exchange
rates during the year.
On November 30, 1993 the Company agreed to issue $15,000,000 of 7.14% senior
notes with a final maturity in 2008. Funding of the notes took place on
December 6, 1993 and the proceeds were used to repay a portion of the debt
outstanding under one of the Company's lines of credit. The Company will repay
the principal in 11 annual installments beginning in 1998.
In 1993 and 1992, the Company paid cash dividends on its capital stock in the
aggregate amounts of $1,121,437 and $2,941,317, respectively.
RESULTS OF OPERATIONS
1993 COMPARED TO 1992
Net sales decreased $13,275,000, or 5.9%, in 1993 to $210,405,000. Domestic
sales decreased $1,162,000, or 1%, to $107,857,000 in 1993. The split between
domestic and international sales was 51% domestic and 49% international in 1993.
In 1992, domestic sales represented 49% of consolidated sales and international
sales represented 51% of consolidated sales. International sales decreased
$12,113,000, or 11%, to $102,548,000 in 1993. The majority of the international
sales decrease was attributable to the strengthening of the US dollar against
most currencies. 1993 international sales would have been $8,331,000 higher if
average 1992 exchange rates were still prevailing.
Gross profit decreased $2,569,000 in 1993 largely because of the decrease in
sales. The percentage of gross profit to sales increased slightly to 34% in
1993 from 33% in 1992 because of the product mix and price increases.
Selling, general, and administrative expenses decreased $1,823,000, or 3%, from
1992 to 1993. The decrease is the result of cost cutting efforts and the impact
of foreign exchange rate fluctuations.
Interest expense decreased $872,000, or 25%, due to the lower interest rates
prevailing through much of the world and a reduction in interest-bearing debt of
the Company outstanding during 1993.
Contributions to employee profit sharing funds are based on profitability of the
parent company and certain subsidiaries that have profit sharing funds. Annual
amounts will vary according to contribution formulas and the related yearly
profits. Contributions of $480,000 were made in 1993 compared to $160,000 in
1992.
Other income, which decreased $984,000, or 85%, in 1993, includes interest
income, exchange gains and losses, and gains on sales of fixed assets. The
amount of other income will vary based on cash balances, prevailing interest
rates which were lower in 1993 than 1992, the number and condition of fixed
asset replacements, and the effectiveness of currency hedging programs.
4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, CONT.
Income taxes were 32% of pretax income in 1993 as compared to 49% in 1992. The
large percentage decrease related to refunds of income taxes in Germany and
reductions in valuation allowances relating to deferred tax assets in France and
Italy.
Equity earnings went from a $217,000 loss in 1992 to a $50,000 loss in 1993.
As described in notes 1 and 9, the Company adopted SFAS 109, "Accounting for
Income Taxes" in 1992. The cumulative effect of the adoption of SFAS 109
resulted in 1992 income of $195,000. No comparable item had an income impact in
1993.
Net earnings decreased $278,000 to $1,331,000 in 1993 when compared to net
earnings of $1,609,000 in 1992. This 17% decrease is the result of all of the
factors mentioned above.
Earnings for the fourth quarter of 1993 were adversely affected by adjustments
due to the difference between estimated and actual year-end inventories of
$757,000 and asset valuation adjustments of $110,000. The Company is in the
process of implementing a perpetual inventory system for its domestic operations
to eliminate estimated interim inventory values. The Company believes the new
system will be fully operational in 1994. The Company also recorded adjustments
relating to income tax refunds in Germany and a reduction of the deferred tax
asset valuation allowance in Italy in the fourth quarter of 1993. These
adjustments increased net earnings by $755,000.
1992 COMPARED TO 1991
Net sales increased $1,509,000, or 1%, in 1992 to $223,680,000. Domestic sales
decreased $5,280,000, or 5%, to $109,019,000 in 1992. The split between
domestic and international sales was 49% domestic and 51% international in 1992.
In 1991, domestic sales represented 51% of consolidated sales and international
sales represented 49% of consolidated sales. International sales increased
$6,789,000, or 6%, to $114,661,000 in 1992. The majority of the international
sales increase was attributable to the Company's UK subsidiary which was able to
generate several large orders for paint circulating systems in 1992.
Gross profit increased $2,042,000 in 1992 largely because of the increase in
sales. The percentage of gross profit to sales increased slightly to 33% in
1992 from 32% in 1991 because of the product mix and price increases.
Selling, general, and administrative expenses increased $4,124,000, or 6%, from
1991 to 1992. The majority of this increase was inflation related, although the
Company has invested time and money to cultivate sales in Eastern Europe and the
former Soviet Union which should create sales growth in the future. These costs
would have been higher in 1992 if not for the 1991 closing of two domestic
warehouses to reduce distribution costs and the discontinuance of marketing
efforts in the robotics field due to the rapidly changing technology in this
field.
Interest expense decreased $652,000, or 16%, due to the lower interest rates
prevailing through much of the world and a small reduction in interest-bearing
debt of the Company outstanding during 1992.
Contributions to employee profit sharing funds are based on profitability of the
parent company and certain subsidiaries that have profit sharing funds. Annual
amounts will vary according to contribution formulas and the related yearly
profits.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, CONT.
Other income, which rose $176,000, or 18%, in 1992, includes interest income,
exchange gains and losses, and gains on sales of fixed assets. The amount of
other income will vary based on cash balances which on average were higher in
1992 than 1991, prevailing interest rates which were lower in 1992 than 1991,
the number and condition of fixed asset replacements, and the effectiveness of
currency hedging programs.
Income taxes were 49% of pretax income in 1992 as compared to 47% in 1991. The
increased percentage reflects the increased profitability in countries such as
Japan and Germany that have higher tax rates.
Equity earnings went from a $2,000 gain in 1991 to a $217,000 loss in 1992 due
to fourth quarter 1992 losses in Mexico that were caused by difficulties
receiving inventory from the parent company relating to import regulations. The
problem has been resolved and Binks de Mexico is now filling orders that were
placed in 1992.
As described in notes 1 and 9, the Company adopted SFAS 109, "Accounting for
Income Taxes" in 1992. The cumulative effect of the adoption of SFAS 109
resulted in 1992 income of $195,000. SFAS 109 was issued in February 1992.
Hence, no comparable item had an income impact in 1991. At November 30, 1992,
the Company has a net deferred tax asset of $226,000. This amount has been
reduced by a valuation allowance of $198,000. The valuation allowance has been
recorded in France and Italy where realization of deferred tax assets would
require generation of future taxable income.
Net earnings increased $395,000 to $1,609,000 in 1992 when compared to net
earnings of $1,214,000 in 1991. This 33% increase is the result of all of the
factors mentioned above.
Earnings for the fourth quarter of 1992 were adversely affected by the inventory
problems in Mexico mentioned earlier, bad debt write-offs from customers damaged
by the recessionary economy, and adjustments due to the difference between
estimated and actual year-end inventories.
6
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Franklin Park, Illinois
Form 10-K/A No. 1
Consolidated Financial Statements
Submitted in Response to Item 8
Fiscal years ended November 30, 1993, 1992, and 1991
(With Independent Auditors' Report Thereon)
7
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
TABLE OF CONTENTS
- - --------------------------------------------------------------------------------
Page(s)
-------
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . 9
Financial Statements:
Consolidated Balance Sheets, November 30, 1993 and 1992. . . . . . . 10-11
Consolidated Statements of Earnings, years ended
November 30, 1993, 1992, and 1991. . . . . . . . . . . . . . . . . 12
Consolidated Statements of Stockholders' Equity, years
ended November 30, 1993, 1992, and 1991. . . . . . . . . . . . . . 13
Consolidated Statements of Cash Flows, years ended
November 30, 1993, 1992, and 1991. . . . . . . . . . . . . . . . . 14-15
Notes to Consolidated Financial Statements . . . . . . . . . . . . . 16-34
Schedules:
II Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees
Other Than Related Parties. . . . . . . . . . . . . . . . . . 35
VIII Valuation and Qualifying Accounts . . . . . . . . . . . . . . 36
IX Short-term Borrowings . . . . . . . . . . . . . . . . . . . . 37
All other schedules are omitted as the required information is not applicable or
the information is presented in the accompanying consolidated financial
statements and related notes.
8
<PAGE>
[Letterhead]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Binks Manufacturing Company:
We have audited the consolidated financial statements of Binks Manufacturing
Company (the Company) and consolidated subsidiaries as listed in the
accompanying table of contents. In connection with our audits of the
consolidated financial statements, we also have audited the financial statement
schedules as listed in the accompanying table of contents. These consolidated
financial statements and financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedules 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Binks Manufacturing
Company and consolidated subsidiaries as of November 30, 1993 and 1992, and the
results of their operations and their cash flows for each of the years in the
three-year period ended November 30, 1993, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.
As discussed in note 13 to the consolidated financial statements, a judgment of
$2.75 million was awarded against the Company in a civil action alleging
infringement of a patent. The Company is appealing the decision; accordingly,
the outcome of this litigation and the amount of damages, if any, that may
ultimately be incurred cannot be determined and no provision for any liability
has been made in the accompanying consolidated financial statements.
As discussed in notes 1 and 9 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1992 to adopt the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."
/s/ KPMG PEAT MARWICK
Chicago, Illinois
February 18, 1994
9
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets
November 30, 1993 and 1992
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------
ASSETS 1993 1992
- - -------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,164,037 7,651,693
Receivables, net 61,689,199 61,389,271
Inventories 70,898,201 70,171,885
Other current assets 2,786,142 4,377,217
- - -------------------------------------------------------------------------------
Total current assets 145,537,579 143,590,066
- - -------------------------------------------------------------------------------
Investments and other assets:
Investments in and advances to an affiliate and
unconsolidated subsidiaries 1,107,741 1,157,741
Goodwill 2,863,485 2,947,713
Deferred income taxes 885,476 284,602
Patents and trademarks 549,915 455,691
Other investments and assets 2,876,426 3,089,812
- - -------------------------------------------------------------------------------
Total investments and other assets 8,283,043 7,935,559
- - -------------------------------------------------------------------------------
Property, plant, and equipment, at cost:
Land 2,176,662 2,118,125
Buildings 19,005,121 19,372,355
Machinery and equipment 33,607,062 32,840,286
- - -------------------------------------------------------------------------------
54,788,845 54,330,766
Less accumulated depreciation 28,610,479 27,606,529
- - -------------------------------------------------------------------------------
Net property, plant, and equipment 26,178,366 26,724,237
- - -------------------------------------------------------------------------------
$ 179,998,988 178,249,862
- - -------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
10
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets
November 30, 1993 and 1992
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY 1993 1992
- - ---------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Notes payable to banks $ 330,000 1,567,465
Bank overdrafts 1,284,888 2,637,742
Current maturities of long-term debt 759,052 1,407,403
Accounts payable 38,208,858 32,035,295
Accrued employees' profit sharing contributions 1,294,558 975,003
Accrued expenses:
Payrolls, commissions, etc. 5,808,864 5,943,789
Taxes, other than income taxes 1,216,828 1,395,502
Other 3,848,555 2,814,856
Income taxes 1,546,470 1,848,504
- - ---------------------------------------------------------------------------------------------
Total current liabilities 54,298,073 50,625,559
Deferred compensation 6,402,805 6,085,592
Deferred income taxes 380,559 421,486
Deferred revenue 13,500 24,030
Long-term debt, less current maturities 34,136,500 33,390,847
- - ---------------------------------------------------------------------------------------------
Total liabilities 95,231,437 90,547,514
- - ---------------------------------------------------------------------------------------------
Stockholders' equity:
Capital stock, $1 par value. Authorized 12,000,000 shares;
issued 3,088,837 shares in 1993 and 3,061,929 shares in 1992 3,088,837 3,061,929
Additional paid-in capital 24,504,446 24,367,869
Retained earnings 61,420,211 64,772,865
Foreign currency translation adjustments (4,245,943) (1,132,557)
- - ---------------------------------------------------------------------------------------------
84,767,551 91,070,106
Less cost of 120,612 treasury shares -- 3,367,758
- - ---------------------------------------------------------------------------------------------
Total stockholders' equity 84,767,551 87,702,348
Commitments and contingencies (notes 12, 13, and 15)
- - ---------------------------------------------------------------------------------------------
$ 179,998,988 178,249,862
- - ---------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Earnings
November 30, 1993, 1992, and 1991
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------
1993 1992 1991
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 210,404,590 223,680,409 222,170,821
Cost of goods sold 138,953,746 149,660,854 150,192,957
- - ----------------------------------------------------------------------------------------------------
Gross profit 71,450,844 74,019,555 71,977,864
Selling, general, and administrative expenses 66,506,027 68,328,605 66,204,523
- - ----------------------------------------------------------------------------------------------------
Operating income 4,944,817 5,690,950 5,773,341
- - ----------------------------------------------------------------------------------------------------
Other expenses (income):
Interest expense 2,621,137 3,493,503 4,145,106
Contributions to employees' profit sharing funds 479,944 160,168 350,360
Other income, net (178,354) (1,162,692) (986,254)
- - ----------------------------------------------------------------------------------------------------
2,922,727 2,490,979 3,509,212
- - ----------------------------------------------------------------------------------------------------
Earnings before income taxes, equity in earnings (loss)
of unconsolidated subsidiaries, and cumulative
effect of change in accounting principle 2,022,090 3,199,971 2,264,129
Income taxes 641,226 1,569,038 1,053,034
- - ----------------------------------------------------------------------------------------------------
Earnings before equity in earnings (loss) of
unconsolidated subsidiaries and cumulative
effect of change in accounting principle 1,380,864 1,630,933 1,211,095
Equity in earnings (loss) of unconsolidated subsidiaries (50,000) (217,005) 2,466
- - ----------------------------------------------------------------------------------------------------
Earnings before cumulative effect of change
in accounting principle 1,330,864 1,413,928 1,213,561
Cumulative effect to December 1, 1991 of change
in accounting for income taxes (note 9) -- 194,956 --
- - ----------------------------------------------------------------------------------------------------
Net earnings $ 1,330,864 1,608,884 1,213,561
- - ----------------------------------------------------------------------------------------------------
Earnings per share before cumulative effect of
change in accounting principle .44 .48 .41
Cumulative effect per share
to December 1, 1991 of change
in accounting for income taxes (note 9) -- .07 --
- - ----------------------------------------------------------------------------------------------------
Net earnings per share $ .44 .55 .41
- - ----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended November 30, 1993, 1992, and 1991
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
Foreign
Additional currency
Capital paid-in Retained translation Treasury
stock capital earnings adjustments shares Total
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at November 30, 1990 $3,061,929 24,367,869 68,127,187 578,632 (3,367,758) 92,767,859
Net earnings -- -- 1,213,561 -- -- 1,213,561
Foreign currency translation adjustments -- -- -- (1,419,896) -- (1,419,896)
Cash dividends ($1.10 per share) -- -- (3,235,450) -- -- (3,235,450)
- - ------------------------------------------------------------------------------------------------------------------------------------
Balance at November 30, 1991 3,061,929 24,367,869 66,105,298 (841,264) (3,367,758) 89,326,074
Net earnings -- -- 1,608,884 -- -- 1,608,884
Foreign currency translation adjustments -- -- -- (291,293) -- (291,293)
Cash dividends ($1.00 per share) -- -- (2,941,317) -- -- (2,941,317)
- - -----------------------------------------------------------------------------------------------------------------------------------
Balance at November 30, 1992 3,061,929 24,367,869 64,772,865 (1,132,557) (3,367,758) 87,702,348
Net earnings -- -- 1,330,864 -- -- 1,330,864
Foreign currency translation adjustments -- -- -- (3,113,386) -- (3,113,386)
Stock dividends 26,908 136,577 (3,562,081) -- 3,367,758 (30,838)
Cash dividends (36-1/3 cents per share) -- -- (1,121,437) -- -- (1,121,437)
- - -----------------------------------------------------------------------------------------------------------------------------------
Balance at November 30, 1993 $3,088,837 24,504,446 61,420,211 (4,245,943) - 84,767,551
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended November 30, 1993, 1992 and 1991
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
1993 1992 1991
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,330,864 1,608,884 1,213,561
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Cumulative effect to December 1, 1991
of change in accounting for income taxes -- (194,956) --
Depreciation and amortization:
Property, plant, and equipment 3,210,826 3,442,773 3,333,031
Goodwill and other 154,520 225,227 131,982
Equity in (earnings) loss of unconsolidated
subsidiaries 50,000 217,005 (2,466)
Deferred compensation, net of payments 456,381 261,399 572,619
Deferred income taxes (52,209) 290,762 (583,307)
Deferred revenue (6,885) (149,029) 150,900
Other, net (85,347) 13,837 638,561
Cash provided by (used in) changes in:
Receivables (2,646,128) (792,980) 9,044,243
Inventories (3,130,642) 6,303,328 3,890,179
Other current assets 1,402,201 (625,916) (1,386,704)
Accounts payable 9,227,181 (496,487) (13,186,577)
Accrued employees' profit sharing contributions 422,077 83,601 192,997
Accrued expenses 497,402 (2,783,655) 594,027
Income taxes 206,822 (1,122,785) (200,338)
- - --------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 11,037,063 6,281,008 4,402,708
- - --------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property, plant, and equipment (3,881,031) (4,971,695) (2,446,220)
Proceeds from sale of equipment 44,292 1,585,426 52,641
Purchase of other investments and assets -- (396,600) (100,800)
Decrease in advances to an affiliate and an
unconsolidated subsidiary -- 480,900 --
(Increase)decrease in other assets (1,278,962) (662,436) 1,314,130
- - --------------------------------------------------------------------------------------------------------------
Net cash used in investing activities $ (5,115,701) (3,964,405) (1,180,249)
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
14
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
1993 1992 1991
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from financing activities:
Cash dividends paid $ (1,121,437) (2,941,317) (3,235,450)
Payments for fractional shares relating to
stock dividends (30,838) -- --
Proceeds from long-term borrowings 1,247,400 4,092,587 --
Net increase (decrease) in short-term borrowings (2,574,854) (5,478,938) 1,009,676
Principal payments on long-term debt (657,518) (959,088) (1,673,962)
- - --------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (3,137,247) (5,286,756) (3,899,736)
- - --------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (271,771) 173,198 (225,626)
- - --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 2,512,344 (2,796,955) (902,903)
Cash and cash equivalents at beginning of year 7,651,693 10,448,648 11,351,551
- - --------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 10,164,037 7,651,693 10,448,648
- - --------------------------------------------------------------------------------------------------------------
Supplemental cash flow disclosures:
Cash paid for:
Interest $ 2,441,000 3,530,000 4,102,000
Income taxes 3,104,000 3,662,000 4,073,000
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
15
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
November 30, 1993, 1992 and 1991
- - --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
(a) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and consolidated subsidiaries in the United States, United Kingdom, Canada,
Belgium, Italy, Germany, Japan, and France (see note 6 for information
relating to the unconsolidated subsidiaries). The subsidiary in the United
Kingdom is included on the basis of its September 30 fiscal year end. All
material intercompany balances and transactions have been eliminated in
consolidation.
(b) TRANSLATION OF FOREIGN CURRENCY
FINANCIAL STATEMENTS
Foreign currency financial statements have been translated in accordance
with Statement of Financial Accounting Standards No. 52. Under this
standard, assets and liabilities are translated at current exchange rates
and income and expenses are translated at average rates of exchange for the
year. Adjustments resulting from the translation process are reported in a
separate component of equity and are not included in the determination of
net earnings.
(c) INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market
(net realizable value).
(d) INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
Investments in unconsolidated subsidiaries are reflected in the
consolidated financial statements at cost plus equity in undistributed net
earnings or losses and foreign currency translation adjustments.
(e) LONG-TERM EQUIPMENT INSTALLATION CONTRACTS
Profits on long-term equipment installation contracts are recorded on the
basis of the estimated percentage of completion of individual contracts
determined under the cost-to-cost method. Estimated losses on long-term
contracts are charged to earnings in the year a loss becomes apparent.
(f) PROPERTY, PLANT, AND EQUIPMENT
Depreciation of property, plant, and equipment is computed primarily by the
straight-line method using the following useful lives:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
Classification Years
- - --------------------------------------------------------------------------------
<S> <C>
Buildings 25-50
Machinery and equipment 4-12
- - --------------------------------------------------------------------------------
</TABLE>
(Continued)
16
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
The charge to income from amortization of assets under capital leases is
included in depreciation expense. Amortization of capitalized leases is
computed by the straight-line method over 99 years for the related land and
buildings.
(g) INCOME TAXES
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes."
Statement 109 requires a change from the deferred method of accounting for
income taxes of APB Opinion 11 to the asset and liability method of
accounting for income taxes. Under the asset and liability method of
Statement 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109,
the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
Effective December 1, 1991, the Company adopted Statement 109 and it has
reported the cumulative effect of that change in the method of accounting
for income taxes in the 1992 consolidated statement of earnings.
Pursuant to the deferred method under APB Opinion 11, which was applied in
1991 and prior years, deferred income taxes are recognized for income and
expense items that are reported in different years for financial reporting
purposes and income tax purposes using the tax rate applicable in the year
of the calculation. Under the deferred method, deferred taxes are not
adjusted for subsequent changes in tax rates.
(h) RESEARCH AND DEVELOPMENT EXPENSES
Research and development costs are charged to expense when incurred. Total
research and development costs charged to expense were $4,837,000,
$4,244,000, and $3,294,000 in 1993, 1992, and 1991, respectively.
(i) NET EARNINGS PER SHARE
Net earnings per share are based on the weighted average number of shares
of capital stock outstanding (3,010,999 shares in 1993 and 2,941,317 shares
in 1992 and 1991).
(j) CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand and amounts due from banks with original maturities of three
months or less.
(Continued)
17
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
(k) GOODWILL
Goodwill represents excess costs of acquired companies over the fair value
of their net tangible assets. These excess costs related to subsidiaries
acquired are being amortized on a straight-line basis over 40 years.
(l) FOREIGN EXCHANGE CONTRACTS
Certain domestic and foreign subsidiaries enter into foreign exchange
contracts as a hedge against accounts payable denominated in currencies
other than the currency used in the subsidiaries' country of incorporation.
Market value gains and losses on the foreign exchange contracts are
recognized and offset the foreign exchange gains or losses on the related
accounts payable.
(2) RECEIVABLES
Net receivables are comprised of the following at November 30:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
1993 1992
- - --------------------------------------------------------------------------------
<S> <C> <C>
Trade $ 59,074,941 53,828,183
Unconsolidated subsidiaries 1,185,004 1,130,142
Costs and estimated earnings in excess of
billings on uncompleted contracts 272,225 6,092,929
Other 3,129,161 2,631,542
- - --------------------------------------------------------------------------------
63,661,331 63,682,796
Less allowance for doubtful receivables 1,972,132 2,293,525
- - --------------------------------------------------------------------------------
$ 61,689,199 61,389,271
- - --------------------------------------------------------------------------------
</TABLE>
(Continued)
18
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
Comparative information with respect to uncompleted long-term equipment
installation contracts at November 30 follows:
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1993 1992
- - --------------------------------------------------------------------------------
<S> <C> <C>
Expenditures and estimated earnings on
uncompleted contracts $ 7,991,136 13,213,919
Less applicable billings 7,726,797 7,222,808
- - --------------------------------------------------------------------------------
$ 264,339 5,991,111
- - --------------------------------------------------------------------------------
Included in the accompanying balance sheets:
Costs and estimated earnings in excess of billings
on uncompleted contracts included in receivables 272,225 6,092,929
Billings in excess of costs and estimated earnings
on uncompleted contracts included in
accounts payable (7,886) (101,818)
- - --------------------------------------------------------------------------------
$ 264,339 5,991,111
- - --------------------------------------------------------------------------------
</TABLE>
(3) INVENTORIES
Inventories at November 30 are summarized as follows:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
1993 1992
- - --------------------------------------------------------------------------------
<S> <C> <C>
Finished goods and service parts $34,626,615 35,419,716
Work in process 33,425,901 31,849,865
Raw material 2,845,685 2,902,304
- - --------------------------------------------------------------------------------
$70,898,201 70,171,885
- - --------------------------------------------------------------------------------
</TABLE>
(Continued)
19
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
(4) CONSOLIDATED FOREIGN SUBSIDIARIES
Financial data relating to the consolidated foreign subsidiaries is
summarized as follows:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
1993 1992 1991
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
Total assets $ 85,501,000 84,807,000 90,421,000
Total liabilities 49,210,000 47,020,000 54,815,000
- - --------------------------------------------------------------------------------
Equity $ 36,291,000 37,787,000 35,606,000
- - --------------------------------------------------------------------------------
Net sales $ 102,548,000 114,659,000 107,872,000
- - --------------------------------------------------------------------------------
Net earnings $ 2,318,000 2,572,000 2,585,000
- - --------------------------------------------------------------------------------
</TABLE>
(5) INTANGIBLE ASSETS
The cost and accumulated amortization of intangible assets are summarized as
follows:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
1993 1992
----------------------- ---------------------
Patents and Patents and
Goodwill trademarks Goodwill trademarks
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cost $3,368,533 903,095 3,368,533 757,766
Accumulated amortization (505,048) (353,180) (420,820) (302,075)
- - --------------------------------------------------------------------------------
$2,863,485 549,915 2,947,713 455,691
- - --------------------------------------------------------------------------------
</TABLE>
(Continued)
20
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
(6) UNCONSOLIDATED SUBSIDIARIES
Financial data relating to an unconsolidated domestic and two foreign
subsidiaries are summarized below. All intercompany transactions have been
eliminated.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
1993 1992 1991
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
Total assets $5,433,000 5,389,000 4,756,000
Total liabilities 5,395,000 4,881,000 3,678,000
- - --------------------------------------------------------------------------------
Equity $ 38,000 508,000 1,078,000
- - --------------------------------------------------------------------------------
Net sales $5,293,000 4,541,000 6,413,000
- - --------------------------------------------------------------------------------
Net loss $ (452,000) (638,000) (115,000)
- - --------------------------------------------------------------------------------
Equity in earnings (loss) $ (50,000) (217,000) 2,000
- - --------------------------------------------------------------------------------
</TABLE>
(7) LINES OF CREDIT
The Company had unused lines of credit, in excess of the support for
domestic borrowings and other obligations, of $23,945,000, at November 30,
1993:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
<S> <C>
Foreign $ 19,207,000
Domestic 4,738,000
- - --------------------------------------------------------------------------------
$ 23,945,000
- - --------------------------------------------------------------------------------
</TABLE>
(Continued)
21
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
(8) LONG-TERM DEBT
Consolidated long-term debt consists of the following at November 30:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
1993 1992
- - ------------------------------------------------------------------------------------
<S> <C> <C>
4.18% to 6.00% in 1993 and 4.41% to 5.18% in 1992
note payable and bankers acceptances
due in various maturities through May 13, 1994
under lines of credit expiring in 1995 $31,832,000 30,832,000
Obligations under capital leases 917,747 855,885
Secured loans:
Interest free maturing through 1997 270,681 184,230
10.25% maturing through 1995 230,320 429,830
17.75% maturing in 1993 -- 574,194
10.10% maturing through 1995 309,918 --
11.00% in 1993 and 11.56% in 1992 maturing through 2000 443,208 540,548
9.75% to 10.20% maturing through 1994 89,789 220,498
5.13% (industrial revenue bond) maturing in 1993 -- 160,000
9.75% maturing through 1995 142,744 247,274
6.00% maturing 2006 (interest renegotiable in 1996) 294,720 333,294
9.75% maturing through 2000 195,249 236,267
10.40% in 1993 and 11.84% in 1992 maturing in 1994 169,176 184,230
- - ------------------------------------------------------------------------------------
34,895,552 34,798,250
Less current maturities 759,052 1,407,403
- - ------------------------------------------------------------------------------------
Long-term debt, less current maturities $34,136,500 33,390,847
- - ------------------------------------------------------------------------------------
</TABLE>
The aggregate maturities of long-term debt due in each of the years 1994
through 1998 are $759,052, $32,555,452, $246,378, $243,161, and $178,252,
respectively.
On November 30, 1993 the Company agreed to issue $15,000,000 of 7.14%
senior notes with a final maturity in 2008. Funding of the notes took
place on December 6, 1993 and the proceeds were used to repay a portion of
the debt outstanding under one of the Company's lines of credit. The
Company will repay the principal in 11 annual installments beginning in
1998.
(Continued)
22
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
(9) INCOME TAXES
The Company files a consolidated Federal income tax return which includes
all its U.S. subsidiaries. Federal income taxes for each U.S. subsidiary
are computed separately and are payable to the Parent company.
No provision is made for U.S. Federal income taxes which would be payable
if undistributed earnings of foreign subsidiaries were paid as dividends to
the Company. If such earnings, which aggregate $33,699,000 at November 30,
1993, were to be distributed, the resulting U.S. Federal income taxes would
be largely offset by available foreign tax credits.
As discussed in note 1, the Company adopted Statement 109 as of December 1,
1991. The cumulative effect of this change in accounting for income taxes
of $194,956 is determined as of December 1, 1991 and is reported separately
in the consolidated statement of earnings for the year ended November 30,
1992. Prior years' financial statements have not been restated to apply
the provisions of Statement 109.
Income tax expense (benefit) is comprised as follows:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
State
U.S. and
Federal Foreign local Total
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993:
Current $ 16,152 1,683,988 (25,016) 1,675,124
Deferred (440,924) (592,974) -- (1,033,898)
- - --------------------------------------------------------------------------------
$ (424,772) 1,091,014 (25,016) 641,226
- - --------------------------------------------------------------------------------
1992:
Current (1,105,533) 1,387,842 (80,000) 202,309
Deferred 728,316 558,413 80,000 1,366,729
- - --------------------------------------------------------------------------------
$ (377,217) 1,946,255 -- 1,569,038
- - --------------------------------------------------------------------------------
1991:
Current 329,000 2,492,496 249,226 3,070,722
Deferred (1,254,000) (763,688) -- (2,017,688)
- - --------------------------------------------------------------------------------
$ (925,000) 1,728,808 249,226 1,053,034
- - --------------------------------------------------------------------------------
</TABLE>
(Continued)
23
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
Actual income tax expense differed from the amounts computed by applying
the U.S. Federal income tax rate of 34% to pretax income as a result of the
following:
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------
1993 1992 1991
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed "expected" tax expense (34%
in 1993, 1992, and 1991) $ 688,000 1,088,000 770,000
Difference between U.S. and foreign tax rates 424,000 662,000 569,000
Nondeductible expenses 326,000 279,000 119,000
State and local income taxes, net of
Federal income tax benefit (17,000) -- 164,000
Research tax credit (149,000) (327,000) (307,000)
Foreign local (other than income) taxes (155,000) (110,000) (72,000)
Change in the beginning-of-the-year balance of
the valuation allowance for deferred tax assets
allocated to income tax expense (198,000) 42,000 --
Refund of foreign taxes resulting from distribution
of prior years' earnings (665,000) -- --
Benefit not recorded for foreign net operating loss 385,000 -- --
Adjustment of estimated income tax liability
for prior years -- -- (221,000)
Other items 2,226 (64,962) 31,034
- - --------------------------------------------------------------------------------------
Provision for income taxes $ 641,226 1,569,038 1,053,034
- - --------------------------------------------------------------------------------------
</TABLE>
The significant components of deferred income tax expense (benefit)
attributable to pretax income for the year ended November 30, 1993 and 1992
are as follows:
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------
1993 1992
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax expense (benefit) (exclusive of the effect of the other
component listed below) $ (835,898) 1,324,729
Increase (decrease) in beginning-of-the-year balance of the
valuation allowance for deferred tax assets (198,000) 42,000
- - ----------------------------------------------------------------------------------------------------
$(1,033,898) 1,366,729
- - ----------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
24
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
For the year ended November 30, 1991, deferred income tax (benefit) results
from timing differences in the recognition of income and expense for income
tax and financial reporting purposes. The sources and tax effects of those
timing differences are presented below:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
U.S. Federal Foreign
- - --------------------------------------------------------------------------------
<S> <C> <C>
1991:
Long-term contracts $ (121,116) (502,626)
Deferred compensation (124,818) (94,465)
Inventory (191,953) (124,294)
Restructuring costs (680,000) --
Investment in limited partnership (129,438) --
Other, net (6,675) (42,303)
- - --------------------------------------------------------------------------------
$(1,254,000) (763,688)
- - --------------------------------------------------------------------------------
<CAPTION>
- - ---------------------------------------------------------------------------------------------
1993 1992 1991
- - ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings (loss) before income taxes, equity
in earnings or loss of unconsolidated
subsidiaries, and cumulative effect of
change in accounting principle:
Domestic $ (1,485,000) (1,247,000) (1,965,000)
Foreign 3,507,000 4,447,000 4,229,000
- - ---------------------------------------------------------------------------------------------
$ 2,022,000 3,200,000 2,264,000
- - ---------------------------------------------------------------------------------------------
</TABLE>
(Continued)
25
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
November 30, 1993 and 1992 are presented below.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------
1993 1992
- - --------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Deferred compensation $ 2,122,000 2,007,000
Inventories 326,000 240,000
Allowance for doubtful receivables 160,000 136,000
Restructuring costs -- 370,000
Investment in limited partnership 257,000 200,000
Accrued expenses 625,000 511,000
Other, net 162,000 --
- - --------------------------------------------------------------------------------------
Total gross deferred tax assets 3,652,000 3,464,000
Less valuation allowance -- 198,000
- - --------------------------------------------------------------------------------------
Total deferred tax assets 3,652,000 3,266,000
- - --------------------------------------------------------------------------------------
Deferred tax liabilities:
Plant and equipment, principally due to differences in
depreciation and capitalized interest 2,195,000 2,124,000
Long-term contracts 70,000 770,000
Other, net -- 146,000
- - --------------------------------------------------------------------------------------
Total gross deferred liabilities 2,265,000 3,040,000
- - --------------------------------------------------------------------------------------
Net deferred tax assets $ 1,387,000 226,000
- - --------------------------------------------------------------------------------------
</TABLE>
The valuation allowance for deferred tax assets as of December 1, 1991 was
$156,000. The net change in the total valuation allowance for the years
ended November 30, 1993 and 1992 was a decrease of $198,000 and an increase
of $42,000, respectively.
The U.S. Federal income tax returns of the Company have been examined
through November 30, 1986. An examination of the years ended November 30,
1988 and November 30, 1989 is currently in progress.
(10) EMPLOYEE BENEFITS
The Company and certain subsidiaries maintain profit sharing plans covering
most of their employees. Additionally, the Company maintains an unfunded
deferred compensation plan for officers and key employees. The total
expense related to these plans was $1,078,000 in 1993, $640,000 in 1992,
and $1,106,000 in 1991.
(Continued)
26
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
(11) QUARTERLY FINANCIAL DATA (UNAUDITED)
A summary of quarterly financial data for the years ended November 30, 1993
and 1992 follows:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------
Quarter ended
--------------------------------------------------------
Feb.28,1993 May 31,1993 Aug.31,1993 Nov.30,1993
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $47,140,000 53,775,000 53,871,000 55,619,000
- - ------------------------------------------------------------------------------------------------
Gross profit $16,968,000 18,966,000 18,065,000 17,452,000
- - ------------------------------------------------------------------------------------------------
Net earnings $ 615,000 445,000 255,000 16,000
- - ------------------------------------------------------------------------------------------------
Net earnings per share $ .20 .15 .08 .01
- - ------------------------------------------------------------------------------------------------
<CAPTION>
Quarter ended
--------------------------------------------------------
Feb.28,1992 May 31,1992 Aug.31,1992 Nov.30,1992
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $49,689,000 52,623,000 59,102,000 62,266,000
- - ------------------------------------------------------------------------------------------------
Gross profit $16,662,000 19,292,000 18,984,000 19,081,000
- - ------------------------------------------------------------------------------------------------
Earnings (loss) before cumu-
lative effect of a change
in accounting principle 737,000 1,027,000 582,000 (932,000)
Cumulative effect to December 1,
1991 of change in accounting
for income taxes 195,000 -- -- --
- - ------------------------------------------------------------------------------------------------
Net earnings (loss) $ 932,000 1,027,000 582,000 (932,000)
- - ------------------------------------------------------------------------------------------------
Earnings (loss) per share before
cumulative effect of a change
in accounting principle .25 .35 .20 (.32)
Cumulative effect to December 1,
1991 of change in accounting
for income taxes .07 -- -- --
- - ------------------------------------------------------------------------------------------------
Net earnings (loss) per share $ .32 .35 .20 (.32)
- - ------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
27
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
The Company made adjustments during the fourth quarter of 1993 which
decreased net earnings by $867,000, or $0.29 per share. The adjustments
were attributable to asset valuation adjustments of $110,000 and the
differences between estimated interim inventory and actual year-end
inventory of $757,000. The Company also made adjustments which increased
fourth quarter net earnings by $755,000, or $0.25 per share. The
adjustments related to deferred tax asset valuation allowances and income
tax refunds.
The Company made adjustments during the fourth quarter of 1992 which
decreased net earnings by $1,002,000, or $0.34 per share. The adjustments
were attributable to losses sustained in Mexico because of import problems
of $192,000, asset valuation adjustments of $282,000, and differences
between estimated interim inventory and actual year-end inventory of
$528,000.
(12) LEASES
The following is an analysis of the leased property under capital leases
included in property, plant, and equipment at November 30:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
1993 1992
- - --------------------------------------------------------------------------------
<S> <C> <C>
Land $ 31,800 37,736
Buildings 486,945 577,841
Machinery and equipment 657,449 1,045,418
- - --------------------------------------------------------------------------------
1,176,194 1,660,995
Less accumulated depreciation 408,829 1,006,625
- - --------------------------------------------------------------------------------
$ 767,365 654,370
- - --------------------------------------------------------------------------------
</TABLE>
The following is a schedule by years of future minimum lease payments under
capital leases together with the present value of the net minimum lease
payments as of November 30, 1993:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
<S> <C>
Year ending November 30:
1994 $ 204,602
1995 228,805
1996 104,707
1997 88,890
1998 62,497
Later years (through 2063) 2,792,126
- - --------------------------------------------------------------------------------
Total 3,481,627
Less amount representing interest 2,563,880
- - --------------------------------------------------------------------------------
Present value of net minimum lease payments $ 917,747
- - --------------------------------------------------------------------------------
</TABLE>
(Continued)
28
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
The Company occupies certain branch offices and uses certain equipment
under operating lease arrangements. A summary of rent expense under such
arrangements follows:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
Year ended Total
November 30 expense
- - --------------------------------------------------------------------------------
<S> <C>
1993 $2,476,000
1992 2,463,000
1991 2,522,000
- - --------------------------------------------------------------------------------
</TABLE>
The following is a schedule by years of future minimum rental payments
required under operating leases that have initial or remaining
noncancelable lease terms in excess of one year as of November 30, 1993:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
Year ending
November 30
- - --------------------------------------------------------------------------------
<S> <C>
1994 $1,425,000
1995 1,131,000
1996 832,000
1997 662,000
1998 405,000
- - --------------------------------------------------------------------------------
Total $4,455,000
- - --------------------------------------------------------------------------------
</TABLE>
It is expected that in the normal course of business most leases that
expire will be renewed or replaced by leases on other properties; thus, it
is anticipated that future annual rent expense will not be materially less
than the amount shown for 1993.
(13) CONTINGENCIES
On July 2, 1993, a judgment was entered against the Company in a civil
action instituted by Graco, Inc. in the United States District in Houston,
Texas, alleging infringement of a U.S. patent held by Graco. The judgment
provides for a total award of $2.75 million against the Company. The
Company is appealing the judgment and has furnished an appeal bond in an
amount equal to the judgment which has been secured by a letter of credit.
After consulting with counsel, the Company has determined that it is not
possible at this time to estimate the amount of damages, if any, that may
ultimately be incurred. Accordingly, no provision has been made in the
accompanying consolidated financial statements.
(Continued)
29
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
The Company is the defendant in a lawsuit filed by former financial
advisors seeking approximately $900,000 under terms of a contract.
Management believes that all required payments have been made and no
further amounts have been provided for.
The Company has certain contingent liabilities resulting from litigation
and claims incident to the ordinary course of business. Management
believes that the probable resolution of such contingencies will not
materially affect the financial position or results of operations of the
Company.
(Continued)
30
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------
(14) INFORMATION ABOUT THE COMPANY'S OPERATIONS
IN DIFFERENT GEOGRAPHIC AREAS
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
United Other
States France England Canada areas Consolidated
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year ended November 30, 1993:
Net sales $107,857,000 45,831,000 16,065,000 6,060,000 34,592,000 210,405,000
- - --------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ 264,000 3,133,000 482,000 (1,090,000) 2,156,000 4,945,000
- - -------------------------------------------------------------------------------------------------------------------
Interest expense (2,621,000)
Contributions to employees' profit
sharing funds (480,000)
Other income, net 178,000
- - --------------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes and equity
in loss of unconsolidated subsidiaries $2,022,000
- - --------------------------------------------------------------------------------------------------------------------------------
Identifiable assets at November 30, 1993 $ 93,531,000 35,661,000 17,646,000 6,023,000 23,167,000 176,028,000
- - -------------------------------------------------------------------------------------------------------------------
Investments in and advances to an affiliate
and unconsolidated subsidiaries 1,108,000
Goodwill 2,863,000
- - --------------------------------------------------------------------------------------------------------------------------------
Total assets at November 30, 1993 $179,999,000
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
31
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
United Other
States France England Canada areas Consolidated
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year ended November 30, 1992:
Net sales $109,019,000 44,820,000 29,259,000 6,790,000 33,792,000 223,680,000
- - --------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ 512,000 2,401,000 490,000 (1,370,000) 3,658,000 5,691,000
- - --------------------------------------------------------------------------------------------------------------------------------
Interest expense (3,494,000)
Contributions to employees' profit
sharing funds (160,000)
Other income, net 1,163,000
- - --------------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes, equity in
loss of unconsolidated subsidiaries,
and cumulative effect of change in
accounting principle $ 3,200,000
- - --------------------------------------------------------------------------------------------------------------------------------
Identifiable assets at November 30, 1992 $ 91,632,000 30,226,000 18,619,000 7,669,000 25,998,000 174,144,000
- - -------------------------------------------------------------------------------------------------------------------
Investments in and advances to an affiliate
and unconsolidated subsidiaries 1,158,000
Goodwill 2,948,000
- - --------------------------------------------------------------------------------------------------------------------------------
Total assets at November 30, 1992 $ 178,250,000
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
32
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
United Other
States France England Canada areas Consolidated
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year ended November 30, 1991:
Net sales $ 114,299,000 42,557,000 24,355,000 6,895,000 34,065,000 222,171,000
- - --------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ (55,000) 2,902,000 1,000,000 (1,378,000) 3,304,000 5,773,000
- - -------------------------------------------------------------------------------------------------------------------
Interest expense (4,145,000)
Contributions to employees' profit
sharing funds (350,000)
Other income, net 986,000
- - --------------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes and
equity in earnings of unconsolidated
subsidiaries $ 2,264,000
- - --------------------------------------------------------------------------------------------------------------------------------
Identifiable assets at November 30, 1991 $ 90,863,000 30,408,000 20,915,000 9,091,000 28,077,000 179,354,000
- - -------------------------------------------------------------------------------------------------------------------
Investments in and advances
to an affiliate and unconsolidated
subsidiaries 1,774,000
Goodwill 3,032,000
- - --------------------------------------------------------------------------------------------------------------------------------
Total assets at November 30, 1991 $184,160,000
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company and its subsidiaries are engaged in one major line of business,
the manufacture and sale of spray finishing and coating application
equipment. The Company and its subsidiaries grant credit to customers,
with the automotive industry generally accounting for between 10% and 15%
of annual consolidated net sales.
In 1993, 1992, and 1991, no single customer accounted for more than 10% of
sales.
(Continued)
33
<PAGE>
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(15) STOCKHOLDER RIGHTS PLAN
On February 2, 1990, the Company declared a dividend distribution of one
Right for each outstanding share of Capital Stock of the Company to the
stockholders of record on February 13, 1990. Certain terms of the Rights
were amended on January 21, 1991. Each Right, when exercisable, entitles
the registered holder to purchase from the Company one share of Capital
Stock, at a price of $100 per share, subject to adjustment. The Rights
become exercisable ten days after the earliest to occur of (i) public
announcement that a person or group of associated or affiliated persons
acquired, or obtained the right to acquire, beneficial ownership of 15% or
more of the outstanding Capital Stock of the Company (the Stock Acquisition
Date), (ii) the commencement of, or an announcement of an intention to
make, a tender offer or exchange offer if, upon consummation thereof, any
person or group of associated or affiliated persons, would be the
beneficial owner of 15% or more of the outstanding Capital Stock of the
Company, or (iii) the Board of Directors declares any person owning 10% or
more of the outstanding Capital Stock of the Company to be an "Adverse
Person" pursuant to the criteria set forth in the Rights Agreement.
If a person or group of associated or affiliated persons becomes the
beneficial owner of 15% or more of the outstanding Capital Stock of the
Company, the Company is the surviving corporation in a merger and the
Capital Stock remains outstanding, an acquiring person engages in certain
self-dealing transactions, or the Board of Directors declares any person to
be an "Adverse Person," subject to certain adjustments and other
conditions, each Right not owned or transferred by the acquiring person or
Adverse Person will entitle the holder to purchase one share of Capital
Stock of the Company at a purchase price of 20% of its then market value.
In addition, if the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or
earning power is sold, subject to certain adjustments and other conditions,
each Right will entitle the holder to purchase capital stock of the
acquiring company having a market value of $200 for a purchase price of
$100.
The Rights are redeemable by the Company at any time prior to 20 days after
the Stock Acquisition Date, at $0.01 per Right, at the Company's option.
After the Stock Acquisition Date, the Rights may not be exercised until the
Company's right of redemption has expired. The Rights expire on
February 2, 2000. Until a Right is exercised, the holder of a Right, as
such, will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or receive dividends.
(16) FOREIGN EXCHANGE CONTRACTS
At November 30, 1993, the Company had contracts maturing from December 7,
1993 to May 31, 1996 to purchase $4,094,000 in foreign currency ($165,000
of British pounds sterling, $104,000 of German deutsche marks, and
$3,825,000 of French francs) and $5,613,000 in U.S. dollars.
34
<PAGE>
BINKS MANUFACTURING COMPANY SCHEDULE II
AND CONSOLIDATED SUBSIDIARIES
Amounts Receivable from Related Parties and Underwriters,
Promoters, and Employees Other Than Related Parties
Years ended November 30, 1993, 1992, and 1991
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- - -------------------------- ---------- --------- ------------------------- -------------------------
Deducitons Balance at
Balance at ------------------------- end of period
beginning Amounts Amounts ------------------------- Due
Name of debtor of period Additions Collected written-off Current Not current date
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1993 -
C. H. Baranowski
(Officer and Director
of Canadian
operation): $ 368,885 13,253 (a) 355,632 Upon retirement
from company
- - ---------------------------------------------------------------------------------------------------------------------------
Total $ 368,885 13,253 (a) 355,632
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
1992 -
C. H. Baranowski
(Officer and Director
of Canadian
operation): 393,342 22,469 -- 46,926 (a) -- 368,885 Upon retirement
from company
- - ---------------------------------------------------------------------------------------------------------------------------
Total $ 393,342 22,469 -- 46,926 (a) -- 368,885
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
1991 -
C. H. Baranowski
(Officer and Director
of Canadian
operation): 407,835 10,507 (a) 25,000 -- -- 393,342 Upon retirement
from company
- - ---------------------------------------------------------------------------------------------------------------------------
Total $ 407,835 10,507 25,000 -- -- 393,342
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ---------------------------------------------------------------------------
Column A
- - --------------------------
Interest Terms of
Name of debtor rate repayment Collateral
- - ---------------------------------------------------------------------------
<C> <C> <C>
1993 -
C. H. Baranowski
(Officer and Director
of Canadian
operation): None Upon retirement Real property
from company
- - ---------------------------------------------------------------------------
Total
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
1992 -
C. H. Baranowski
(Officer and Director
of Canadian
operation): None Upon retirement Real property
from company
- - ---------------------------------------------------------------------------
Total
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
1991 -
C. H. Baranowski
(Officer and Director
of Canadian
operation): None Upon retirement Real property
from company
- - ---------------------------------------------------------------------------
Total
- - -------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
<FN>
(a) Effect of changes in the rates of translating foreign currency.
</TABLE>
35
<PAGE>
SCHEDULE VIII
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended November 30, 1993, 1992, and 1991
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
-------- -------- -------- -------- ---------
Additions
-------------------------
Charged to
Balance at Charged to other Balance at
beginning costs and accounts - Deductions - end
Description of period expenses describe(a) describe of period
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993:
Allowance for doubtful
receivables $ 2,293,525 654,444 (185,079) 790,758(b) 1,972,132
Deferred tax asset
valuation allowance 198,000 -- -- 198,000(c) --
- - ----------------------------------------------------------------------------------------------------
1992:
Allowance for doubtful
receivables $ 2,198,853 768,026 29,835 703,189(b) 2,293,525
Deferred tax asset
valuation allowance 156,000 42,000 -- -- 198,000
- - ----------------------------------------------------------------------------------------------------
1991:
Allowance for doubtful
receivables $ 2,122,870 838,247 (55,568) 706,696(b) 2,198,853
- - ----------------------------------------------------------------------------------------------------
<FN>
(a) Effect of fluctuation in foreign currency translation rates.
(b) Uncollectible accounts charged off, net of recoveries.
(c) Reduction of deferred tax asset valuation allowance.
</TABLE>
36
<PAGE>
SCHEDULE IX
BINKS MANUFACTURING COMPANY
AND CONSOLIDATED SUBSIDIARIES
Short-term Borrowings
Years ended November 30, 1993, 1992, and 1991
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Weighted-
Maximum Average average
Weighted- amount amount interest
Category of Balance average outstanding outstanding rate
aggregate short-term at end of interest during the during the during the
borrowings period rate period period* period*
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993:
Notes payable to banks $ 330,000 6.0% $ 7,672,000 2,686,000 10.5%
Bank overdrafts (foreign) 1,284,888 8.3 4,428,000 2,868,000 8.8
- - ----------------------------------------------------------------------------------------------------------
1992:
Notes payable to banks $ 1,567,465 10.3% $ 7,978,000 4,443,000 13.9%
Bank overdrafts (foreign) 2,637,742 10.4 5,167,000 4,101,000 9.4
- - ----------------------------------------------------------------------------------------------------------
1991:
Notes payable to banks $ 5,333,262 11.4% $ 11,641,000 6,645,000 11.0%
Commercial paper -- -- 6,511,000 2,367,000 7.9
Bank overdrafts (foreign) 3,268,248 8.7 6,342,000 4,805,000 10.9
- - ----------------------------------------------------------------------------------------------------------
<FN>
*Month-end balances were used to make approximations of averages.
</TABLE>
37
