<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2000
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 0-9010
ROBINSON NUGENT, INC.
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(Exact name of registrant as specified in its charter)
INDIANA 35-0957603
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
organization or incorporation) Identification Number)
800 EAST EIGHTH STREET, NEW ALBANY, INDIANA 47151-1208
------------------------------------------- ----------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (812) 945-0211
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, Common Share
Without Par Value Purchase Rights
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
--- ---
The aggregate market value of Common Shares held by nonaffiliates of
the registrant, based on the closing price of the Common Shares of $13.75, as of
August 8, 2000, was approximately $28,956,000.
As of August 8, 2000, the registrant had outstanding 5,112,799 Common
Shares, without par value.
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DOCUMENTS INCORPORATED BY REFERENCE:
PARTS OF FORM 10-K INTO WHICH
IDENTITY OF DOCUMENT DOCUMENT IS INCORPORATED
-------------------------------------- -----------------------------
No documents incorporated by reference
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
Amendment to this Form 10-K. [ ]
2
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PART I
ITEM 1. BUSINESS
GENERAL
Robinson Nugent, Inc. (the "Company") or ("RN"), an Indiana corporation
organized in 1955, designs, manufactures and markets electronic devices used to
interconnect components of electronic systems. The Company's principal products
are integrated circuit sockets; connectors used in board-to-board,
wire-to-board, and custom molded-on cable assemblies. The Company also offers
application tooling that is used in applying wire and cable to its connectors.
The Company's products are used in electronic telecommunication
equipment including switching and networking equipment such as servers and
routers, mass storage devices, modems and PBX stations; data processing
equipment such as mainframe computers, personal computers, workstations, CAD
systems; peripheral equipment such as printers, disk drives, plotters and
point-of-sale terminals; industrial controls and electronic instruments;
consumer products; and a variety of other applications.
Major markets are the United States, Europe, Japan, and the Southeast
Asian countries including Singapore and Malaysia. Manufacturing facilities are
located in New Albany, Indiana; Dallas, Texas; Reynosa, Mexico; Sungai Petani,
Malaysia; Inchinnan, Scotland; and Hamont-Achel, Belgium.
Corporate headquarters are located in New Albany, Indiana, which also
is the site for the Company's corporate engineering, research and development,
preproduction, testing of new products and North American distribution and
warehousing. International headquarters are located in s-Hertogenbosch, The
Netherlands; Singapore; and Tokyo, Japan.
PRODUCTS
The Company produces a broad range of sockets that accommodate a
variety of integrated circuit package styles. Sockets are offered for dual
in-line package (DIP) and pin grid array (PGA) devices, as well as plastic
leaded chip carriers (PLCC).
Sockets are used in a wide variety of applications within electronic
equipment, but are primarily used to connect integrated circuits, such as
microprocessors and memory devices, to an electronic printed circuit board
(PCB). In many applications, semiconductor devices have been subject to
replacement, which encouraged the use of a socket rather than soldering the
device directly to the printed circuit board. But, due to the improved
reliability of semiconductor technology, more and more semiconductor devices are
being soldered directly to PCB's. This trend will continue to reduce the
worldwide demand for integrated circuit sockets.
Dual in-line memory module (DIMM) sockets were introduced in fiscal
1992 and were designed to interconnect dual in-line memory modules with
electronic printed circuit boards. In addition to DIMM sockets, the Company
offers several other products that interconnect memory devices to electronic
printed circuit boards. These include small outline dual in-line memory module
sockets (SO-DIMM) and PCMCIA memory card headers, sockets and type II and III PC
card kits.
The Company provides a broad range of electronic connectors, such as
insulation displacement flat cable connectors (IDC), used in cable-to-board
applications. The use of insulation displacement connectors in electronic
hardware increases productivity by eliminating the labor involved in stripping
insulation from wires prior to attachment to the connector contacts. This
technology permits the automated manufacturing of cable assemblies. The range
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of connectors also includes several product styles that provide for
board-to-board or board-stacking (parallel-mounting) applications.
The Company offers several product families in the two-piece style
of connectors. These connectors are used to connect printed circuit boards
which are positioned either at right angles, in-line, or parallel stacked at
close intervals. The products offered include .025 inch square post
connectors and receptacle sockets; DIN series connectors; high-density,
high-pin-count connectors (HDC); half-pitch, high-density (RN
PAK-50-Registered Trademark-) connectors; and a higher pin count
2-millimeter-spaced connector (METPAK-Registered Trademark-2) used in
backplane applications. In addition, a line of high density .8mm (RN PAK
8-TM-) and .5mm (RN PAK 5-TM-) board stacking interconnects are offered by
the Company to address the growing demand for miniaturized connectors used in
the portable computers, mobile communication equipment and other markets.
The DIN series of connectors has many variations in connecting
configurations and pin count. The product is based on a European standard, but
has gained wide acceptance in the U.S. and other markets worldwide. While there
are a large number of producers of DIN connectors in Europe, the Company is one
of a limited number of manufacturers producing the product in the U.S.
The high-pin-count, high-density connector (HDC) includes pin counts
ranging from 60 to 492 in a three- and four-row configuration. This connector
family, along with DIN connectors, is widely used on backplane applications and
frequently requires the terminals to be press-fit to the backplane. This is
accomplished by forming a compliant section in the tails of the connector
contacts such that, when pressed into a plated through-hole on a backplane PCB,
forms a reliable gas-tight connection. The Company has become recognized as a
leader in press-fit backplane connectors and has focused marketing efforts in
promoting its products for this type of application.
The Company's half-pitch (PAK-50) connector family has been accepted as
one of the industry's most reliable .050 inch spaced connectors. The contact
design and compact shape has gained wide acceptance in applications, such as
small form factor computers that require connectors that are highly reliable yet
consume little space.
The METPAK-Registered Trademark-2 series of connectors includes four
and five row versions of both standard and inverse configurations. The
METPAK-Registered Trademark-2 is an industry standard connector style used in
board-to-board and board-to-back plane applications and over time has
displaced some of the more mature product types such as the DIN series and
HDC connectors. This product line has wide acceptance in many new
applications, primarily in the computer workstations, telecommunication and
data communication equipment and other networking equipment used to support
the Internet. The inverse METPAK-Registered Trademark-2 is a Company patented
design which has gained acceptance in high-end computer work stations,
networking and communications equipment.
Robinson Nugent introduced a new line of high-speed backplane
connectors in 1999 to the U.S., Europe, and Asian markets. These connectors are
known throughout the industry as Compact PCI connectors which comply with
existing industry standards for this type of product. Robinson Nugent is
marketing this product line as the next generation backplane connector for use
in data communication, telecommunication, and other high-speed, high-density
applications.
A new generation of high-speed backplane connectors was developed and
introduced to the market. This high-speed hard metric (HSHM) connector line
provides customers the capability to process electronic signals at transmission
speeds up to 5 gigahertz. This new product line provides for higher-speed signal
transmissions with greater signal integrity, at a higher contact density than
connectors currently available. This new HSHM product line provides the
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Company with a product that will generate future sales as customers seek the
next higher level of technical performance.
PAK-5-TM- and PAK-8-TM- connectors represent the latest high density,
surface mount, fine pitch board-to-board interconnect systems offered by the
Company. As electronic systems continue to downsize and the need for higher pin
counts continues to increase, electronic connector geometry will have to be
reduced. The PAK-5-TM- series is available with a "floating" contact,
accommodating potential torsional and positional discrepancies incurred with
tolerance build up when stacking connectors. The PAK-8-TM- series utilizes a
hermaphroditic two-point contact construction that maximizes contact wiping
action, minimizes contact resistance and insures a highly reliable contact
interface. These interconnects offer system designers the board-to-board
stacking solutions required for today's miniaturized electronic system designs.
Technology continues to drive the connector industry to an
ever-increasing number of circuits in less space to meet the increasing
complexity, capacity and processing speed of electronic and semiconductor
devices. This trend has caused increased demand for all types of high-density
connector products. The Company is focusing its new product development in
socket and connector products that meet these technology trends.
The Company also produces electronic cable assemblies of various types
including insulation displacement connector, fabricated and molded-on cable
assemblies. The Company utilizes its own connectors whenever possible, but also
provides cable assemblies with other manufacturers' connectors if the customer
is specific regarding its requirements.
In addition to standard products, the Company provides engineering
assistance, product design, and manufacturing of custom and derivative products.
These products may require special production tooling that, in some cases, is
paid for by the customer, shared, or amortized over future orders, depending
upon contractual agreements reached with the customer. Current trends in the
market indicate a growing demand for custom and derivative products. There is
also an increased demand for the Company's engineers to be involved in the early
development of the customer's product design.
RESEARCH, DEVELOPMENT AND ENGINEERING
The Company's worldwide engineering efforts are directed toward the
development of new products to meet customer needs, the improvement of
manufacturing processes and the adaptation of new materials to all products. New
products include new creations as well as the design of derivative products to
meet both the needs of the general market and customer proprietary custom
designs. Engineering development covers new or improved manufacturing processes,
assembly and inspection equipment, and the adaptation of new plastics and metals
to all products. In recent years, the Company's products have become more
sophisticated and complex in response to developments in semiconductors and
their applications. The Company has the engineering capability to analyze
customer designed, high-speed applications and to design connectors that reduce
electrical interference that can result from very high processing speeds of
newer and more powerful microprocessors.
The Company's expenditures for research, development and engineering
were approximately $4.5 million in 2000, $3.5 million in 1999 and $4.0 million
in 1998.
Consistent with industry direction, the Company is active in improving
manufacturing processes through automation and also designs and builds its
proprietary assembly equipment. The Company continues to apply advanced
technologies, such as laser and video devices, to automatically inspect products
during the assembly process. All new automated assembly machines are direct
microcomputer-controlled, which provides greater flexibility in the
manufacturing process.
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SALES AND DISTRIBUTION
The Company sells its products in the United States and international
markets. The primary market for Robinson Nugent is the United States, which
produces approximately 58 percent of the consolidated sales of the Company. Its
principal markets outside the United States are Europe, including the United
Kingdom and Scandinavia, Japan, Singapore, Malaysia, Hong Kong, and the emerging
market of China. The Company has begun doing business in China through a Hong
Kong distributor.
Sales outside the United States accounted for 42 percent of total sales
in 2000, 37 percent of total sales in 1999 and 36 percent in 1998. The Company
believes that the growth and development of its presence in global markets is
essential to support its customer base. The Company does not believe that its
international business presents any unusual risks. The following table sets
forth the percentage of Company sales by major geographical location for the
periods shown:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
---------------------------------------
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
United States 58% 63% 64%
Europe 27 25 25
Asia 10 9 9
Other 5 3 2
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
The lower percentage of sales in the United States in 2000 was a result
of a substantial growth in sales in Europe, and an accelerated shift of contract
manufacturing from the United States to countries in Southeast Asia. The Company
experienced sales growth in all geographical regions.
The Company had sales of approximately $14 million to Customer A, $11
million to Customer B and $10 million to Customer C in 2000 and $8.4 million to
Customer A in 1999. No sales to a single customer exceeded 10% of total sales in
1998.
Other financial data relating to domestic and foreign operations are
included in Note (16), Business Segment and Foreign Sales, of Notes to
Consolidated Financial Statements and the Management's Discussion and Analysis
of the Results of Operations and Financial Condition, included herein.
Principal markets in North America, Europe, and Asia are served by the
Company's direct sales force and a network of distributors serving the
electronics industry. The Company has U.S. regional sales offices located in the
San Francisco, California and Chicago, Illinois metropolitan areas. Other
Company sales offices are located in Japan, Singapore, England, Germany, France,
Sweden, and The Netherlands. These offices serve customers to whom the Company
sells directly, provide coordination between the plants and customers, and
technical training and assistance to distributors and manufacturers'
representatives in their respective territories. Additional marketing expertise
is provided by the product marketing specialists located in New Albany, Indiana;
Kent, England; Singapore; and s.Hertogenbosch, The Netherlands.
The Company engages independent manufacturers' representative firms in
the United States, Canada and several European and Far East countries. These
firms are granted exclusive territories and agree not to carry competing
products. These firms are paid on a commission basis on sales made to original
equipment manufacturers and to distributors. All representative relationships
are subject to termination by either party on short notice.
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The Company has an international network of distributors who are
responsible for serving their respective customers from an inventory of the
Company's products. Approximately one-third of the Company's worldwide sales are
made through the distributor network. No distributor is required to accept only
the franchise of the Company. All distributor agreements are subject to
termination by either party on short notice.
BACKLOG
The Company's backlog was approximately $23.4 million at June 30, 2000,
compared to $13.0 million at June 30, 1999 and $10.2 million at June 30, 1998.
These amounts represent orders with firm shipment dates acceptable to the
customers. The Company does not manufacture pursuant to long-term contracts, and
purchase orders are generally cancelable subject to payment by the customer for
charges incurred up to the date of cancellation.
COMPETITION
There is active competition in all of the Company's standard product
lines. The Company's competitors include both large corporations having
significantly more resources than the Company and smaller, highly specialized
firms. The Company competes on the basis of customer service, product
performance, quality, and price. Management believes that the Company's
capabilities in customer service, new product design and its continued efforts
to reduce cost of products are significant factors in maintaining the Company's
competitive position.
MANUFACTURING
The Company's manufacturing operations include plastic molding,
electroplating and assembly. The Company designs and builds the majority of its
automated and semi-automated assembly machines. Robinson Nugent manufactures
most of its goods in-house and utilizes subcontractors and brokered products on
a limited basis. The Company is continuing with its plan to relocate a major
portion of its high-labor content connector manufacturing processes from its
facilities in Dallas, Texas and Inchinnan, Scotland into its facilities in
Sungai Petani, Malaysia and Reynosa, Mexico. The Company is making these
transfers in order to take advantage of the high-quality, low-cost workforces
available in these existing low cost facilities.
RAW MATERIALS AND SUPPLIES
The Company utilizes copper alloys, precious metals, and plastics in
the manufacture of its products. Although some raw materials are available from
only a few suppliers, the Company believes it has adequate sources of supply for
most of its raw material and component requirements. Recently, the Company has
had to deal with a supply shortage of one of its critical raw materials,
berylium copper, which is used for various connector contacts. When possible,
the Company has purchased safety stock for use by its stamping suppliers, and
substituted similar copper alloys where possible. Moderate price increases are
expected in the near future on these materials. Management believes that the
current shortage of berylium copper contact material and expected price
increases should not have a significant negative impact on the Company's
operating results in future periods. Other raw material prices did not increase
or decrease materially during fiscal year 2000.
The use of gold, while still significant, has declined substantially
over the past several years. Plating processes using ROBEX-TM-, a palladium
nickel alloy, and tin have accelerated in demand from customers of the
Company. The cost of palladium has risen substantially in the past year and
could result in an industry wide price increase of connectors, if the trend
continues.
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HUMAN RESOURCES
As of June 30, 2000, the Company had approximately 826 full-time
employees; 478 in the United States, 210 in Europe and 138 in Asia and Japan.
PATENTS AND TRADEMARKS
Management believes that success in the electronic connector industry
is dependent upon engineering and production skills and marketing ability;
however, there is a trend in the industry toward more patent consideration and
protection of proprietary designs and knowledge. It is the policy of The Company
to pursue patent applications to protect its unique product features. The
Company reviews each new product design for possible patent application. The
Company has been granted patents over the past several years and is presently
awaiting acceptance on other pending applications. The Company has obtained
registration of its trade and service marks in the United States and in major
foreign markets.
ENVIRONMENT
The Company's manufacturing facilities are subject to several laws and
regulations designed to protect the environment. In the opinion of management,
the Company is complying with those laws and regulations in all material
respects and compliance has not had and is not expected to have a material
effect upon its operations or competitive position.
EXECUTIVE OFFICERS OF THE COMPANY
The current executive officers of the Company are:
<TABLE>
<CAPTION>
SERVED IN PRESENT
NAME AGE POSITIONS HELD CAPACITY SINCE
----------------------- --- ---------------- ------------------
<S> <C> <C> <C>
Larry W. Burke 60 President & Chief 1990
Executive Officer
Robert L. Knabel 42 Vice President, 1997
Treasurer & Chief
Financial Officer
W. Michael Coutu 49 Vice President - 1992
Information Technology
Raymond T. Wandell 52 Vice President Sales - 1999
North America
Dennis I. Smith 51 Vice President - 1999
Global Marketing
</TABLE>
The Bylaws of the Company provide that the corporate officers are to be
elected at each Annual Meeting of the Board of Directors. Under the Indiana
Business Corporation Law, officers may be removed by the Board of Directors at
any time, with or without cause.
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ITEM 2. PROPERTIES
The Company leases a 36,000-square-foot building used for its executive
offices, engineering, quality assurance and administrative operations, and an
adjacent 83,000-square-foot manufacturing facility located on approximately four
acres in New Albany, Indiana. A limited amount of manufacturing operations are
performed there, but most of the connector finished goods inventory sold in the
U.S. is held at the New Albany site. A major portion of the New Albany
manufacturing facility is utilized by the Company's engineering, research and
preproduction development groups. In addition, the New Albany facility is
instrumental in training plant personnel on new equipment and manufacturing
processes prior to their release to the manufacturing facilities in Dallas,
Scotland and Malaysia.
The Company owns a 60,000-square-foot manufacturing facility located on
approximately five acres in Dallas, Texas, an engineering design center,
distribution and warehousing facility with approximately 14,000 square feet in
Hamont-Achel, Belgium, and a facility with approximately 50,000 square feet in
Inchinnan, Scotland. The Company purchased this facility in Scotland for
approximately 1.2 million pounds sterling (approximately $1.8 million) in 2000.
Financing for this purchase was obtained from a bank in the United Kingdom.
Robinson Nugent owns a manufacturing facility with approximately 21,000 square
feet in Sungai Petani, Malaysia. Both cable assemblies and connectors are
manufactured in Malaysia.
In March 1999, Robinson Nugent sold its manufacturing facility in
Delemont, Switzerland for approximately $2.0 million in cash. The Company
currently leases a small amount of storage space in this facility.
The Company's primary electronic cable assembly operations are
currently located in a leased manufacturing facility, with approximately 44,000
square feet, in Reynosa, Mexico. Robinson Nugent began cable assembly operations
in Reynosa in September 1998. In 2000, a portion of the North American connector
assembly production was transferred into this facility.
The Company also leases a 40,000 square foot facility in Kings
Mountain, North Carolina. All operations in this facility were discontinued by
December 1998. The Company is currently obligated under a long-term lease on the
Kings Mountain facility through July 2012. Management intends to sublet this
facility to minimize the financial impact of this obligation.
Robinson Nugent also leases office space for customer service, sales
and administration in the The Netherlands; Germany; France; Sweden; the United
Kingdom; Tokyo, Japan; Singapore; Lake Zurich, Illinois and San Ramon,
California.
ITEM 3. LEGAL PROCEEDINGS.
Other than ordinary routine litigation incidental to the business,
there are no pending legal proceedings to which the Company is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders of the Company
during the fourth quarter of the fiscal year covered by this report.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
PRICE RANGE AND DIVIDEND INFORMATION
The following table sets forth the high and low closing price of the
Company's, which are traded over the Nasdaq National Market under the symbol:
RNIC, and the cash dividends declared per share in each of the quarters during
the past three fiscal years.
<TABLE>
<CAPTION>
Price Range Cash
High Low Dividends
-------------------------------------------------------------------------------- ------------------------------------
<S> <C> <C> <C>
Fiscal 2000
First quarter ended September 30 $ 5 1/4 3 7/8 $ -
Second quarter ended December 31 13 1/4 4 3/8 -
Third quarter ended March 31 21 10 -
Fourth quarter ended June 30 16 1/4 9 1/16 -
Fiscal 1999
First quarter ended September 30 $ 5 3 1/8 $ -
Second quarter ended December 31 4 3 -
Third quarter ended March 31 4 1/2 3 1/2 -
Fourth quarter ended June 30 4 5/8 2 9/16 -
Fiscal 1998
First quarter ended September 30 $ 7 3/4 5 1/32 $ .03
Second quarter ended December 31 6 1/8 3 7/8 .03
Third quarter ended March 31 5 3/4 3 5/8 .03
Fourth quarter ended June 30 6 1/8 3 3/4 .03
</TABLE>
As of June 30, 2000, the Company had approximately 750 holders of record of
its common shares.
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ITEM 6. SELECTED FINANCIAL DATA.
FIVE-YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
Years ended June 30
Operating results: 2000 1999 1998 1997 1996
------------------------------------------------------------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net sales $92,839 69,992 74,146 84,840 80,964
Cost of sales 66,830 53,654 62,557 65,769 65,604
Gross profit 26,009 16,338 11,589 19,071 15,360
Selling, general and administrative expenses 18,423 13,796 14,565 15,598 16,749
Special and unusual charges 757 1,663 5,063 - -
Operating income (loss) 6,829 879 (8,039) 3,473 (1,389)
Other income (expense) (938) (791) (403) 376 (305)
Income (loss) before income tax expense (benefit) 5,891 88 (8,442) 3,849 (1,694)
Income tax expense (benefit) 1,261 (302) (2,261) 1,494 465
Net income (loss) $ 4,630 390 (6,181) 2,355 (2,159)
Return on net sales 5.0% 0.6% (8.3%) 2.8% (2.7%)
Per share information:
------------------------------------------------------------- ---------- ----------- ---------- ----------- ----------
Net income (loss), basic $ .93 .08 (1.26) .48 (.40)
Net income (loss), dilutive $ .88 .08 (1.26) .48 (.40)
Cash dividends - - .12 .12 .12
Basic weighted average shares outstanding 4,993 4,904 4,892 4,892 5,333
Dilutive weighted average shares outstanding 5,254 4,905 4,892 4,911 5,333
Book value at year-end* $ 5.57 4.76 4.73 6.37 6.13
Balance sheet:
------------------------------------------------------------- ---------- ----------- ---------- ----------- ----------
Working capital $24,281 14,690 10,740 16,581 10,328
Property, plant and equipment - net 15,989 18,539 19,424 21,188 23,618
Total assets 58,067 46,626 42,302 49,696 51,466
Long-term debt 12,220 9,016 7,607 5,926 3,036
Shareholders' equity 28,393 23,450 23,128 31,140 29,968
Other data:
------------------------------------------------------------- ---------- ----------- ---------- ----------- ----------
Current ratio to 1.0 2.4 2.1 1.9 2.4 1.6
Return on shareholders' average equity 17.8% 1.7% (22.8%) 7.8% (6.0%)
Capital expenditures $ 4,957 5,766 7,818 4,202 7,474
Depreciation and amortization $ 4,725 4,452 8,557 5,451 6,135
</TABLE>
*On the basis of year-end outstanding .
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND THE
RESULTS OF OPERATIONS.
Statements made in this annual report with respect to Robinson Nugent's
current plans, estimates, strategies and beliefs and other statements that are
not historical facts are forward-looking statements about the future performance
of RN. These statements are based on management's assumptions and beliefs in
light of the information currently available to it and therefore you should not
place undue reliance on them. RN cautions you that a number of important factors
could cause actual results to differ materially from those discussed in the
forward-looking statements.
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GENERAL
RN reported net income of $4.6 million on sales of $92.8 million for the
year ended June 30, 2000, compared to $0.4 million on sales of $70 million in
the prior year. The Company incurred a net loss of $6.2 million on sales of
$74.1 million in the year ended June 30, 1998.
Customer orders for the year increased 42 percent to $103 million
compared to $72.8 million in the prior year and $69.9 million in the year ended
June 30, 1998.
Revenues increased by 33% in 2000 compared to 1999. This increase was
driven by a twenty-two percent increase in the United States, a forty-five
percent increase in Europe and a fifty percent increase in Asia. Gross profit
margins increased to 27.9% compared to 23.3% in 1999 due to stronger profit
margins in Europe, and the increased sales of higher-margin connectors sold in
the United States.
Research, development and engineering expenses, which are included in
gross profit, were $4.5 million or 5% of sales in 2000 compared to $3.5 million
or 5% of sales in 1999 and $4.0 million or 5.4% of sales in 1998. RN intends to
continue to increase its engineering effort in the United States and Europe in
the coming year. The U.S. team will focus primarily on higher-margin connectors
for applications in electronic data communication and telecommunication
hardware. The European engineering team is focused primarily on developing new
applications for its custom, single and double smart card reader connectors for
our European and Asian customers.
SALES
Customer sales in the United States were $58.2 million in 2000 compared
to $46.3 million in 1999 and $48.7 million in 1998. RN experienced an increase
in sales of higher-margin PC board and telecom/data-com connectors in the United
States. These telecom/data-com connectors are used in high speed, high-end
computer network servers and other network and communication equipment. It is
estimated that the amount of data flowing over the Internet is doubling every
100 days. This explosive growth will require the expansion of the Internet's
speed and capacity, and thereby an increase in its hardware infrastructure. RN
is positioning itself to provide high performance, high-density connectors for
the electronic components and hardware used in that infrastructure.
Cable assembly sales in the United States increased ten percent compared
to the prior year. This increase was partially driven by the benefits resulting
from the relocation of the cable assembly facility from North Carolina to
Mexico. The Reynosa, Mexico facility allows RN access to high-quality, efficient
manufacturing at a lower labor cost, plus it is a location that is closer,
geographically, to a major portion of RN's cable assembly customer base.
European customer sales were $25.4 million in 2000 compared to $17.5
million in 1999 and $18.5 million in 1998, measured in U.S. dollars. This
increase was due primarily to an increase in its sales of newer designs of smart
card reader connectors and PCMCIA connectors used in digital satellite receiver
applications. The Company expects the demand for these types of products to
continue to grow, and will augment the sales generated by these products with
sales of a new proprietary double smart card reader connector.
Asian customer sales were $9.3 million in 2000 compared to $6.2 million
in 1999 and $7.0 million in 1998. Sales in Japan have been favorably impacted by
the strength of the Japanese Yen against the U.S. dollar. Most of the Company's
sales to customers in Southeast Asia are transacted in U.S. dollars.
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GROSS PROFITS
Gross profits were $26.0 million in 2000 compared to $16.3 million in
1999 and $11.6 million in 1998. Gross profit margins improved in all three
geographic regions. An increase in the sales volume of higher margin
telecom/data-com connectors increased U.S. gross profits over the prior years.
European gross profit margins, while lower than those generated in the U.S. and
Asia, improved significantly over 1999. Operations in Asia have shown steady
improvement in their gross profit margins over the past several years.
SPECIAL AND UNUSUAL EXPENSES
RN reported special and unusual expenses of $0.8 million in 2000. These
expenses related to the implementation of a new information and enterprise
resource planning system for the U.S. and Europe. Special and Unusual Expenses
in 1999 involved $1.1 million of system implementation costs and $0.5 million
required to relocate the cable assembly operations to Reynosa, Mexico. Special
and unusual expenses were $5.1 million in 1998. These charges included $3.1
million of restructuring and reorganization expenses as well as $2.0 million of
unusual charges related to a reduction in the carrying value of various pieces
of assembly equipment, mold tools and dies.
RN successfully implemented the PeopleSoft-Registered Trademark-
enterprise resource optimization software system in its operations in the
U.S. and Europe. This system was designed and implemented to satisfy Year
2000 requirements, enhance management and control systems, as well as improve
customer service and vendor communications. This software system includes
accounting, cost and inventory control, order processing, enterprise
planning, production planning and engineering management. It is an integrated
business system that has been installed on a Windows based client-server
architecture laid over a Windows NT backbone.
RN invested a total of $6.8 million to design and implement this new
information system. Approximately $0.9 million was invested in 1998, $4.6
million in 1999 and an additional $1.3 million in 2000 to complete the
implementation. U.S. connector operations implemented the system in 1999. The
U.S. cable assembly operations as well as European operations implemented the
system in the second quarter of 2000. Included in the project cost is
approximately $2.0 million of expenditures for computer hardware and the
PeopleSoft software. RN is leasing these information system assets under a long
term operating lease. Approximately $2.6 million of the project costs, related
to outside consulting support, are being capitalized as expended, and
depreciated over its useful life. RN is expensing in the respective accounting
periods the costs of using internal personnel on this project, as well as
training and travel expenses. The Company expensed approximately $0.3 million of
these costs in 1998, $1.1 million in 1999 and $0.8 million in 2000.
RN has recorded $2.1 million of expenses related to the relocation of its
primary custom cable assembly operations to Mexico. Approximately $1.6 million
of this cost was recorded in 1998 and was primarily related to the closure of
the North Carolina facility. An additional $0.5 million was expensed in the
first quarter of 1999 to complete the move.
RN recorded $5.1 million of special and unusual charges in 1998. These
charges included $3.1 million of restructuring expenses related to the
reorganization of the sales, management and manufacturing organizations in
Europe and North America, the closure and move of the cable assembly facility,
and the cost to discontinue several product lines. The additional $2.0 million
of unusual charges reflect a reduction in the carrying value of various pieces
of assembly equipment, mold tools and dies. These charges resulted from
management's evaluation of RN's ability to generate sufficient cash flow to
recover these asset costs given the existing market conditions.
13
<PAGE>
SELLING AND GENERAL ADMINISTRATIVE
Selling general and administrative expenses were $18.4 million in 2000
compared to $13.8 million in 1999 and $14.6 million in 1998. This increase is
due primarily to an increase in selling expenses in the U.S. and Europe
resulting from higher sales.
OTHER INCOME AND EXPENSES
RN recorded a net other expense of $1.0 million in 2000, $0.8 million in
1999 and $0.4 million in 1998. Other income and expense for each of these years
was comprised primarily of three components; interest expense, currency exchange
gains and losses, and royalty income. Interest expense increased from $756,000
in 1999 to $874,000 in 2000. This increase was due primarily to a higher level
of long term debt in the current year. In addition, interest rates have been
increasing over the last two years.
RN entered into a multi-year interest rate swap agreement with its
primary lending institution in 1999. This agreement covers $3.0 million of
floating rate long-term debt, and effectively fixes the interest rate on these
borrowings at 7.59%.
RN recorded currency exchange losses of $140,000 in 2000 and $258,000 in
1999, compared to a currency exchange gain of $105,000 in 1998. The current year
losses were incurred primarily by the European operations. These losses were
driven by the deterioration in the relative value of the Euro, compared to the
pound sterling and U.S. dollar over the last two years. Prior year currency
exchange gains were primarily related to intercompany accounts receivable and
accounts payable positions between RN's various operating subsidiaries.
RN received $168,000 of royalty income in 1999 and $17,000 in 2000 from
agreements to license the use of certain patent rights to several of its
competitors.
TAXES
The provision for income taxes was provided using the appropriate
effective tax rates on the pretax income of each of the tax jurisdictions in
which RN has operations. RN recorded a tax expense of $1.3 million in 2000,
including a tax benefit of $0.4 million related to the value of accumulated net
operating loss carry forwards of the company's operations in Belgium and Japan.
RN recorded a tax benefit of $302,000 in 1999, including a tax benefit of $0.5
million related to the value of accumulated net operating loss carry forwards of
the company's operations in Scotland. The decision to recognize the value of
these benefits in the current and previous year was based upon the earnings that
had been generated in these operations, and the anticipation of additional
taxable earnings in these operating divisions in the future. RN recorded an
income tax benefit of $2.3 million on pretax losses of $8.4 million in 1998.
This tax benefit includes the recognition of a $0.5 million benefit for deferred
tax assets related to the U. S. operations. RN maintains a valuation allowance
of approximately $0.4 million, at June 30, 2000, for tax benefits of prior
period net operating losses in Malaysia. At such time as management is able to
project the probable utilization of all or part of these net operating loss
carryforward provisions, the valuation allowances for these deferred tax assets
will be reversed, resulting in a tax benefit in that respective period.
NET INCOME AND EARNINGS PER SHARE
RN generated a net income of $4.6 million or 88 cents (dilutive) per
share in 2000 compared to $0.4 million or 8 cents (dilutive) per share in 1999.
The net loss was $6.2 million or $1.26 per share in 1998. Operations in the U.S.
generated $4.1 million of pretax profits in 2000 compared to $422,000 in 1999
and a loss of $6.3 million in 1998. European operations generated $1.1
14
<PAGE>
million on a pretax basis in 2000 compared to a loss of $249,000 in 1999. Asia
operations generated $791,000 in pretax profits in 2000 compared to $85,000 in
losses in 1999.
LIQUIDITY AND CAPITAL RESOURCES
Working capital as of June 30, 2000 was at $24.3 million compared to
$14.7 million at June 30, 1999. The Company's current ratio at June 30, 2000 was
2.4 to 1 compared to 2.1 to 1 at June 30, 1999. Cash balances at June 30, 2000
were $2.1 million compared to $0.8 million at year-end June 30, 1999. The
Company's long-term debt as a percentage of stockholders' equity was 43% at
year-end 2000 compared to 38.4% at year-end 1999.
Capital expenditures in 2000 were primarily for new mold tools, contact
dies and assembly equipment. Total capital expenditures were $5.0 million in the
fiscal year 2000 compared to $5.8 million in 1999.
The Company believes future cash requirements for capital expenditures
and working capital can be funded from operations, supplemented by proceeds from
the existing long-term credit agreement.
RN has a $10.0 million unsecured revolving credit facility with its
primary bank. Interest rates under this revolver are dependent on the type of
loan advance selected. The first type of basic advance rate is equal to the
London Interbank Offered Rate (LIBOR) plus 2.25%, (approximately 7.8% as of June
30, 2000). The second interest rate utilizing the bank's prime interest rate
minus 1/2 of 1%, (9.0% as of June 30, 2000) is also available. As of June 30,
2000, RN had borrowings of $8.9 million under this revolver, plus an additional
$0.6 million on standby letters of credit. This revolving credit agreement
includes various operating and financial covenants including minimum current
ratio, a maximum ratio of indebtedness to tangible net worth, a minimum fixed
charge coverage ratio and a maximum funded indebtedness to EBITDA ratio. This
agreement expires in December 2003 and can be extended by mutual consent of RN
and the bank. RN entered into a multi-year interest rate swap agreement with its
primary lending institution in 1999. This agreement covers $3.0 million of
floating rate long-term debt, and effectively fixes the interest rate on these
borrowings at 7.59%.
The Company currently has $1.1 million in unused and available credit
under the existing credit agreement at June 30, 2000.
RISK FACTORS THAT MAY AFFECT FUTURE RESULTS
NEW PRODUCTS AND TECHNOLOGICAL CHANGE
RN's results from operations and competitive strength depend upon the
successful and rapid development of new products and enhancements to existing
products. The market for the Company's products is characterized by rapid
technological advances and changes in customer demand, which necessitate
frequent product introductions and enhancements. These factors can result in
unpredictable product transition and shortened product life cycles, and can
render existing products obsolete or unmarketable. The Company must make
significant investments in research and product development and successfully
introduce competitive new products and enhancements on a timely basis. The
success of new product introductions is dependent on a number of factors,
including the rate at which a new product gains acceptance and RN's ability to
effectively manage product transitions. The development of new technology,
products, and enhancements is complex and involves uncertainties, which
increases the risk of delays in the introduction of new products and
enhancements. From time to time, RN has encountered delays that have adversely
affected the Company's financial results and competitive position in the market.
There can be no assurances that RN will not encounter development or production
delays, or that despite intensive testing by the Company, flaws in design or
production will not occur in the future. Design flaws could result in delays of
shipment or of product sales, could trigger substantial repair or
15
<PAGE>
replacement costs, could damage RN's reputation and cause material adverse
effect upon RN's financial results.
RN has historically generated its revenue and operating profits primarily
from the sale of products to the computer, network equipment and communications
industries. RN is focusing resources on expanding further into these markets, as
well as taking a more aggressive posture towards Internet related equipment.
There can be no assurance that the Company will be successful in expanding these
markets.
DEPENDENCE ON KEY CUSTOMERS
Some of RN's products are designed specifically for individual customers.
Future revenue from these products is therefore dependent on the customer's
continued need and acceptance of these products.
COMPETITION
The market for RN's products is intensely competitive and subject to
continuous, rapid technological change, frequent product performance
improvements and price reductions. In the connector marketplace, competition
comes from companies that have substantially greater resources, as well as
several other similarly sized companies. RN expects that the markets for its
products will continue to change as customer buying patterns continue to migrate
to emerging products and technologies. The Company's ability to compete will
depend to a considerable extent on its ability to continuously develop and
introduce new products and enhancements to existing products. Increased
competition may result in price reductions, reduced margins and declining market
share, which may have a material adverse effect on RN's business and financial
results.
INTELLECTUAL PROPERTY
RN's intellectual property rights are material assets and key to its
business and competitive strength. Robinson Nugent protects its intellectual
property rights through a combination of patents, trademarks, copyrights,
confidentiality procedures, trade secret laws and licensing arrangements. The
Company's policy is to apply for patents, or other appropriate proprietary or
statutory protection, when it develops new or improved technology that is
important to its business. Such protection, however, may not preclude
competitors from developing similar products. In addition, competitors may
attempt to restrict the Company's ability to compete by advancing various
intellectual property legal theories which could, if enforced by the courts,
restrict the Company's ability to develop and manufacture products. Also, the
laws of certain foreign countries do not protect the Company's intellectual
property rights to the same extent as the laws of the United States. RN also
relies on certain technology that is licensed from others. RN is unable to
predict whether its license arrangements can be renewed on acceptable terms. The
failure to successfully protect its intellectual property rights or obtain
licenses from others as needed could have a material adverse effect on RN's
business and financial results.
The connector industry is characterized by vigorous pursuit and
protection of intellectual property rights or positions, which in some instances
has resulted in significant litigation that is often protracted and expensive.
From time to time, Robinson Nugent has commenced actions against other companies
to protect or enforce its intellectual property rights. Similarly, from time to
time, RN has been notified that it may be infringing certain patent or other
intellectual property rights of others. Licenses or royalty agreements are
generally offered in such situations. Litigation by or against the Company may
result in significant expense and divert the efforts of RN's technical and
management personnel, whether or not such litigation results in any
determination unfavorable to RN. In the event of an adverse result, RN could be
required to pay substantial damages; cease the manufacture, use and
16
<PAGE>
sale of infringing products; expend significant resources to develop
non-infringing technology; or discontinue the use of certain processes if it is
unable to enter into royalty arrangements. There can be no assurances that
litigation will not be commenced in the future regarding patents, copyrights,
trademarks or trade secrets or that any license, royalty or other rights can be
obtained on acceptable terms, or at all.
MANUFACTURING RISKS; DEPENDENCE ON SUPPLIERS
The Company uses standard molding compounds and pin sockets for many of
its products and believes that, in most cases, there are a number of
alternative, competent vendors for these components. In addition, RN designs its
own custom stamped and formed connector contacts. Robinson Nugent enters into
agreements with custom stamping manufacturers to design and build stamping dies
to produce proprietary stamped and formed contacts for RN. The Company believes
that these stamping operations are currently the only suppliers of these
particular components that meet RN's specifications and design requirements.
Alternative sources are not readily available. An unanticipated failure of any
sole source supplier to meet the Company's requirements for an extended period,
or an interruption of the Company's ability to secure comparable components,
could have a material adverse effect on its revenue and results of operations.
In the event a sole source supplier was unable or unwilling to continue to
supply components, RN would have to identify and qualify other acceptable
suppliers. This process could take an extended period, and no assurance can be
given that any additional source would become available or would be able to
satisfy RN's production requirements on a timely basis.
EURO CONVERSION
Effective January 1, 1999, 11 of the 15 member countries of the European
Union adopted a single European currency, the euro, as their common legal
currency. Like many companies that operate in Europe, various aspects of RN's
business and financial accounting have been affected by the euro conversion and
the transitions in the business environment resulting from the convergence of
these currencies. RN will continue to evaluate the European pricing strategies
for its products and the implications of the euro on its contractual agreements,
tax strategy and foreign currency risk management strategy.
EARNINGS FLUCTUATIONS
The RN's reported earnings have fluctuated significantly in the past and
may continue to fluctuate significantly in the future from quarter to quarter
due to a variety of factors, including, among others, the effects of (i)
customers' historical tendencies to make purchase decisions in the second half
of the fiscal year, (ii) the timing of the announcement and availability of
products and product enhancements by the Company and its competitors, (iii)
fluctuating foreign currency exchange rates, (iv) changes in the mix of products
sold, (v) variations in customer acceptance periods for the Company's products,
and (vi) global economic conditions.
VOLATILITY OF STOCK PRICE
The trading price of the Company's Common Shares has fluctuated and in
the future may fluctuate substantially in response to anticipated or reported
operating results, industry conditions, new product or product development
announcements by the Company or its competitors, announced acquisitions and
joint ventures by the Company or its competitors, broad market trends unrelated
to the Company's performance, general market and economic conditions
international currency fluctuations and other events or factors. Further, the
volatility of the stock markets in recent years has caused wide fluctuations in
trading prices of stocks of companies independent of their individual operating
results. In the future, the Company's reported operating results may be below
the expectations of stock market analysts and investors, and in such events,
17
<PAGE>
there could be an immediate and significant adverse effect on the trading price
of the Company's Common Shares.
INTERNATIONAL OPERATIONS
In connection with its international operations, the Company is subject
to various risks inherent in foreign activities. These risks may include
unstable economic and political conditions, changes in trade policies and
regulations of countries involved, fluctuations in currency exchange rates and
requirements for letters of credit or bank guarantees. Most of the Company's
international operations are in western European countries, mainly Great
Britain, Belgium, and The Netherlands, and to a lesser degree in the Asian
countries of Japan, Singapore and Malaysia. The Company is exposed to risks
associated with fluctuations in exchange rates, including the euro, Swiss franc,
pound sterling, Deutsche mark, Malaysian ringgit and the Dutch guilder. The
Company limits its exposure to these risks by incurring and paying for its
expenses in the same currencies as those of its revenue. It is the Company's
policy not to enter into derivative financial instruments for speculative
purposes. There were no derivative foreign currency instruments outstanding as
of June 30, 2000.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities," establishes accounting and
reporting standards for hedging activities and for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives). It required that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. RN adopted the new
standard on July 1, 2000. The effect on the results of operations of adopting
this new standard will be insignificant.
The Securities and Exchange Commission Staff Accounting Bulletin No. 101
"Revenue Recognition" establishes accounting and reporting standards for the
recognition of revenues. The Company will adopt this new bulletin in 2001. The
Company does not expect the adoption of this bulletin will have a material
impact on its financial statements.
18
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Robinson Nugent, Inc.
New Albany, Indiana
We have audited the accompanying consolidated balance sheets of Robinson
Nugent, Inc. and subsidiaries (Company) as of June 30, 2000, 1999 and 1998, and
the related consolidated statements of operations and comprehensive income,
shareholders' equity, and cash flows for each of the three years in the period
ended June 30, 2000. Our audits also included the financial statement schedule
listed in the Index at Item 14. These financial statements and financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Robinson Nugent, Inc. and
subsidiaries as of June 30, 2000, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 2000, in conformity with accounting principles generally accepted in
the United States of America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Louisville, Kentucky
August 4, 2000
19
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000, 1999 AND 1998
In Thousands
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 2,114 $ 845 $ 959
Receivables, less allowance for doubtful
receivables of $584 in 2000, $581 in 1999,
and $571 in 1998 17,949 13,159 9,274
Inventories 18,985 10,632 10,062
Other 2,378 3,313 2,012
------- ------- -------
Total current assets $41,426 $27,949 $22,307
Property, Plant and Equipment, net 15,989 18,539 19,424
Other 652 138 571
------- ------- -------
TOTAL $58,067 $46,626 $42,302
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term debt $ 441 $ 449 $ 367
Short-term bank borrowings -- -- 570
Accounts payable 9,329 7,441 5,147
Accrued expenses 7,375 5,369 5,483
------- ------- -------
Total current liabilities $17,145 $13,259 $11,567
Long-term Debt 11,779 9,016 7,607
Other Liabilities 750 901 --
------- ------ -------
Total liabilities $29,674 $23,176 $19,174
Commitments and contingencies
Shareholders' Equity:
Common shares without par value,
15,000 authorized shares 21,562 20,950 20,950
Retained earnings 19,535 14,847 14,563
Equity adjustment from foreign currency
translation (134) 492 713
Employee stock purchase plan loans
and deferred compensation (22) (77) (106)
Less cost of common shares in treasury (12,548) (12,762) (12,992)
Total shareholders' equity 28,393 23,450 23,128
------- ------- -------
TOTAL $58,067 $46,626 $42,302
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
20
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
In Thousands Except Per Share Data
<TABLE>
<CAPTION>
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
NET SALES $ 92,839 $ 69,992 $ 74,146
COST OF SALES 66,830 53,654 62,557
-------- -------- --------
GROSS PROFIT 26,009 16,338 11,589
SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES 18,423 13,796 14,565
SPECIAL AND UNUSUAL EXPENSES 757 1,663 5,063
-------- -------- --------
OPERATING INCOME (LOSS) 6,829 879 (8,039)
-------- -------- --------
OTHER INCOME (EXPENSES):
Interest income 59 55 84
Interest expense (874) (756) (592)
Currency exchange gain (loss) (140) (258) 105
Royalty income 17 168
-------- -------- --------
Other expenses, net (938) (791) (403)
-------- -------- --------
INCOME (LOSS) BEFORE
INCOME TAX EXPENSE (BENEFIT) 5,891 88 (8,442)
INCOME TAX EXPENSE (BENEFIT) 1,261 (302) (2,261)
-------- -------- --------
NET INCOME (LOSS) 4,630 390 (6,181)
======== ======== ========
OTHER COMPREHENSIVE INCOME -
Foreign currency translation (626) (221) (1,360)
-------- -------- --------
Comprehensive income (loss) $ 4,004 $ 169 (7,541)
======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE:
Basic $ 0.93 $ 0.08 $ (1.26)
======== ======== ========
Dilutive $ 0.88 $ 0.08 $ (1.26)
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
21
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
In Thousands
<TABLE>
<CAPTION>
Employee
Stock Purchase
Foreign Plan Loans
Common Shares Retained Currency and Deferred Treasury Shares
Shares Amount Earnings Translation Compensation Shares Amount
------ ------ -------- ----------- ------------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JULY 1, 1997 6,851 $ 20,950 $ 21,290 $ 2,073 $ (177) (1,959) $(12,996)
Net Income (6,181)
Dividends ($.12 per share) (587)
Equity adjustments from foreign
currency translation (1,360)
Stock purchase plan repayments 60
Amortization of deferred compensation 11
Stock purchase plan forfeitures 38 (7) (38)
Stock options exercised 5 32
Treasury shares 3 2 10
------ ------ ------ ------ ------ ------ ------
BALANCE AT JUNE 30, 1998 6,851 20,950 14,563 713 (106) (1,959) (12,992)
Net Income 390
Equity adjustments from foreign
currency translation (221)
Stock purchase plan repayments 26
Amortization of deferred compensation 3
Treasury shares (106) 33 230
------ ------ ------ ------ ------ ------ ------
BALANCE AT JUNE 30, 1999 6,851 20,950 14,847 492 (77) (1,926) (12,762)
Net Income 4,630
Equity adjustments from foreign
currency translation (626)
Stock purchase plan repayments 9 52
Amortization of deferred compensation 3
Stock options exercised 127 612
Treasury shares 49 32 214
-------- -------- -------- -------- -------- -------- --------
BALANCE AT JUNE 30, 2000 6,978 $ 21,562 $ 19,535 $ (134) $ (22) (1,894) $(12,548)
======== ======== ======== ======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
22
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
In Thousands
<TABLE>
<CAPTION>
2000 1999 1998
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) $ 4,630 $ 390 $(6,181)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 4,725 4,452 8,557
Issuances of treasury shares as compensation 260 124
Deferred income taxes (784) 560 (1,409)
(Gain) loss on sales and disposals of property, plant and equipment 77 (76) 360
Changes in assets and liabilities:
Receivables (4,790) (3,885) 2,510
Inventories (8,353) (570) 1,038
Other current assets 1,179 (1,861) (498)
Accounts payable and accrued expenses 3,894 2,180 805
Other liabilities (151) 901 --
Income taxes payable -- -- (1,581)
------- ------- -------
Net cash provided by operating activities 687 2,215 3,601
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,957) (5,766) (7,818)
Proceeds from sales of property, plant and equipment 2,526 2,126 --
Other assets (20) 397 (47)
------- ------- -------
Net cash used in investing activities (2,451) (3,243) (7,865)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term bank borrowings -- 250 570
Repayments of short-term bank borrowings -- (820) --
Proceeds from long-term debt 6,641 5,220 3,250
Repayments of long-term debt (3,754) (3,738) (1,426)
Cash dividends -- -- (587)
Sales of treasury shares 122 -- 13
Repayments of employee stock purchase plan loans 61 26 60
Proceeds from exercised stock options 493 -- 32
------- ------- -------
Net cash provided by financing activities 3,563 938 1,912
------- ------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (530) (24) (807)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,269 (114) (3,159)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 845 959 4,118
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 2,114 $ 845 $ 959
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
23
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
IN THOUSANDS EXCEPT PER SHARE DATA
--------------------------------------------------------------------------------
1. NATURE OF OPERATIONS AND ORGANIZATIONS
Robinson Nugent, Inc. and its subsidiaries (Company) designs,
manufactures, and markets electronic connectors, integrated circuit
sockets and cable assemblies. Its products are sold throughout the world
for use by manufacturers of computers.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of Robinson Nugent, Inc. and its subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents are defined as cash
in banks and investment instruments having maturities of ninety-one days
or less on their acquisition date.
INVENTORIES - Inventories are stated at the lower of cost (first in, first
out) or market (net realizable value).
PROPERTY, PLANT, AND EQUIPMENT - Property, plant and equipment is recorded
at cost. Depreciation is provided by the straight-line method over the
estimated useful lives of buildings, ranging from 30 to 45 years, and
machinery and equipment, ranging from 3 to 12 years. Depreciation expense
also includes the amortization of buildings capitalized under lease
obligations. Depreciation expense was approximately $4,676 in 2000, $4,405
in 1999, and $8,507 in 1998.
REVENUE RECOGNITION - Revenue from product sales is recognized upon
shipment or the date of receipt by the customer. Estimated returns and
other adjustments are provided for in the same period the related sales
are recorded.
24
<PAGE>
SPECIAL AND UNUSUAL EXPENSES - In 2000 and 1999, special and unusual
expenses primarily related to the implementation of a new information and
enterprise resource planning computer system. In 1998, such expenses were
primarily related to the restructuring and reorganization of the sales,
management and manufacturing operations in Europe and North America.
Selected information as to the restructuring and reorganization charges
are as follows:
<TABLE>
<CAPTION>
EMPLOYEE WRITE-DOWN RECOGNITION
TERMINATION OF OF LEASE
BENEFITS ASSETS LIABILITY OTHER TOTAL
-------- ------ --------- ----- -----
<S> <C> <C> <C> <C> <C>
1998 restructuring charge $ 200 $ 3,200 $ 1,100 $ 600 $ 5,100
Cash outlays
Write-down of assets -- (3,200) -- -- (3,200)
------- ------- ------- ------- -------
Restructuring liability
at June 30, 1998 200 -- 1,100 600 1,900
1999 restructuring charges 500 500
Cash outlays (200) -- (100) (1,100) (1,400)
------- ------- ------- ------- -------
Restructuring liability
at June 30, 1999 -- -- 1,000 -- 1,000
Cash outlays -- -- (100) -- (100)
------- ------- ------- ------- -------
Restructuring liability
at June 30, 2000 $ -- $ -- $ 900 $ -- $ 900
======= ======= ======= ======= =======
</TABLE>
INCOME TAXES - The Company follows Statement of Financial Accounting
Standards (SFAS) No.109 "Accounting for Income Taxes," which requires the
recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been recognized in the financial
statements or the income tax returns.
RESEARCH, DEVELOPMENT, AND ENGINEERING - Research, development, and
engineering expenditures for the creation and application of new and
improved products and manufacturing processes were approximately $4,500 in
2000, $3,500 in 1999, and $3,950 in 1998. Research, development and
engineering costs are charged to operations as incurred.
GOVERNMENT INCENTIVE GRANTS - The Company has received an incentive grant,
from the government in Scotland related to capital expenditures for
equipment and machinery over the period of 1995-1999. The Company's policy
is to defer this capital expenditure grant and amortize to income over the
estimated useful life of the equipment and machinery. The financial
statements include grant income of approximately $264 in 2000, $291 in
1999, and $254 in 1998.
DISCLOSURE OF CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES - The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the consolidated financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates. The
Company's periodic filings with the Securities and Exchange Commission
include, where applicable, disclosures of estimates, assumptions,
uncertainties and concentrations in products, sources of supply and
markets that could affect the consolidated financial statements and future
operations of the Company.
CONCENTRATION OF CREDIT RISK - Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally
of cash investments and trade receivables. The Company has cash investment
policies that limit the amount of credit exposure to any one issuer and
restrict placement of these investments to issuers evaluated as credit
worthy. Concentrations of credit risk with respect to trade receivables
are limited due to the large number of customers comprising the Company's
customer base and their dispersion across many different industries and
geographies.
25
<PAGE>
FOREIGN CURRENCY - The accounts of foreign subsidiaries are measured using
local currency as the functional currency. For these operations, assets
and liabilities are translated into U.S. dollars at period-end exchange
rates, and income and expense accounts are translated at average monthly
exchange rates. Net exchange gains or losses resulting from such
translation are excluded from net income and accumulated as other
comprehensive income. Gains and losses from completed foreign currency
transactions are included as a separate component of other income
(expense) in the consolidated statements of operations.
SEGMENT REPORTING - The Company operates in one industry. The Company
identifies operating segments by geographical location.
NEW ACCOUNTING STANDARDS - SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities," establishes accounting and reporting
standards for hedging activities and for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives). It requires that an entity recognize all
derivatives as other assets or liabilities in the statement of financial
position and measure those instruments at fair value. The Company adopted
the new standard on July 1, 2000. The effect on the results of operations
of adopting this new standard will be insignificant.
The Security and Exchange Commission Staff Accounting Bulletin No. 101
"Revenue Recognition" establishes accounting and reporting standards for
the recognition of revenues. The Company will adopt the new bulletin in
2001. The Company does not expect the adoption of this bulletin will have
a material impact on its financial statements.
INTERNATIONAL OPERATIONS - In connection with its international operations
the Company is subject to various risks inherent in foreign activities.
These risks may include unstable economic and political conditions,
changes in trade policies and regulations of countries involved,
fluctuations in currency exchange rates and requirements for letters of
credit or bank guarantees. Most of the Company's international operations
are in western European countries, mainly Great Britain, Belgium, and the
Netherlands, and to a lesser degree in the Asian countries of Japan,
Singapore and Malaysia. The Company is exposed to risks associated with
fluctuations in exchange rates, including the Euro, Swiss franc, pound
sterling, Deutsche mark, yen, Singapore dollar, Malaysian ringgit and the
Dutch guilder. The Company limits its exposure to these risks by incurring
and paying for its expenses in the same currencies as those of its
revenue. It is the Company's policy not to enter into derivative financial
instruments for speculative purposes. There were no derivative foreign
currency instruments outstanding as of June 30, 2000.
COMMON SHARE DATA - Per common share data for 2000, 1999 and 1998 is
presented using basic and dilutive weighted average number of common
shares outstanding.
26
<PAGE>
The following is the reconciliation of the numerators and denominators
used to compute the net income (loss) per common share, basic and
dilutive:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ -------
<S> <C> <C> <C>
Numerator
Income (loss) available to
common shareholders $4,630 $ 390 $(6,181)
Denominator
Basic-weighted shares outstanding
(in thousands) 4,993 4,904 4,892
Stock options 261 1
------ ------ -------
Dilutive-weighted shares outstanding
(in thousands) 5,254 4,905 4,892
------ ------ -------
Net income (loss) per common share:
Basic $0.93 $ 0.08 $ (1.26)
====== ====== =======
Dilutive $0.88 $ 0.08 $ (1.26)
====== ====== =======
</TABLE>
Options to purchase 4, 479 and 577 shares of common stock were outstanding
during 2000, 1999 and 1998, respectively, but were not included in the
computation of diluted earnings per share because the option exercise
price was greater than the average market price.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
2000 1999 1998
------- ------- -------
<S> <C> <C> <C>
Finished goods $ 9,434 $ 4,092 $ 2,970
Work in process 8,479 5,569 5,595
Raw materials and supplies 1,072 971 1,497
------- ------ -------
Total $18,985 $10,632 $10,062
======= ======= =======
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
2000 1999 1998
------- ------- -------
<S> <C> <C> <C>
Land $ 309 $ 737 $ 732
Buildings 7,049 9,481 12,942
Machinery and equipment 52,547 51,361 49,416
------- ------- -------
59,905 61,579 63,090
Less accumulated depreciation
and amortization 43,916 43,040 43,666
------- ------- -------
Net $15,989 $18,539 $19,424
======= ======= =======
</TABLE>
27
<PAGE>
5. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Compensation $2,212 $1,195 $ 955
Commissions 687 1,012 721
Distributor allowances 421 441 447
Deferred grant income 341 617
Provision for plant relocation 150 119 1,900
Income taxes 1,838
Other 1,726 1,985 1,460
------ ------ ------
Total $7,375 $5,369 $5,483
====== ====== ======
</TABLE>
In November of 1998, the Company moved its cable assembly operations
in Kings Mountain, North Carolina, to a leased facility in Reynosa,
Mexico. The 1998 provision for the relocation of this facility
included the present value of the remaining future lease payments
on the vacated building, plus accruals for severance payments and
other costs related to this relocation. In 1999, management
determined that $901 of the future lease payments were long-term in
nature.
6. DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
United States' obligations:
Loans under a long-term credit agreement $ 8,900 $6,800 $6,180
7.75% fixed rate real estate mortgage,
payable in monthly installments through
October 2005, with interest 1,156 1,242
Foreign obligations:
6.938% fixed-rate loan, payable in annual
installments through 2004, with interest 890 1,122 1,335
8.0% fixed-rate real estate mortgage,
payable in quarterly installments through
2015, with interest 1,138
Other long-term debt 136 301 459
------- ------ ------
Total 12,220 9,465 7,974
Less current installments of long-term debt 441 449 367
------- ------ ------
Long-term debt $11,779 $9,016 $7,607
======= ====== ======
</TABLE>
28
<PAGE>
In February 2000, the Company amended the long-term credit agreement
with its primary lending institution. This agreement provides for
up to $10 million in revolving credit loans and is secured by a
lien on U.S. inventories and receivables. The Company had $1.1
million in unused and available credit under this agreement and
additional standby letters of credit at June 30, 2000. Interest
rates under this revolver are dependent on the type of loan advance
selected. The first type of basic advance rate is equal to the
London Interbank Offered Rate (LIBOR) plus 2.25%, (approximately
7.8% as of June 30, 2000). Second interest rate utilizing the bank's
prime interest rate minus 1/2 of 1%, (9.0% as of June 30, 2000) is also
available. This agreement includes various operating and financial
covenants, including a minimum current ratio, a maximum ratio
of indebtedness to tangible net worth, a minimum fixed charge coverage
ratio and a maximum funded indebtedness to EBITDA ratio. The
agreement terminates in December 2003, and can be extended by mutual
consent of the Company and the bank.
The aggregate maturities of long-term debt for the five years ending June
30, 2005, amount to $441 in 2001, $379 in 2002, $341 in 2003, $9,241 in
2004, $341 in 2005 and $1,477 thereafter.
During 1999, the Company entered into a multi-year interest rate
swap agreement with its primary lending institution. This agreement
covers $3.0 million of floating rate long-term debt, and
effectively fixes the interest rate on these borrowings at 7.59%.
Total interest paid, including the interest rate swap agreement, under
the long-term debt agreements was $809 in 2000, $710 in 1999 and $539
in 1998.
In addition, the Company has short-term lines of credit available
in Malaysia and Belgium at interest rates of 13.80% and 8.75%,
respectively. Total unused and available credit under these agreements
was approximately $50, as of June 30, 2000.
Property, plant and equipment with an approximate net book value of
$2,840 is pledged as collateral under the various long-term debt
agreements.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of the Company's noncurrent financial liabilities
are shown below. The fair values of current assets and current
liabilities are assumed to be equal to their reported carrying amounts.
<TABLE>
<CAPTION>
2000 1999 1998
---------------------- ---------------------- ----------------------
CARRYING FAIR CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
<S> <C> <C> <C> <C> <C> <C>
Long-term debt $12,220 $12,505 $9,465 $9,372 $7,974 $7,872
</TABLE>
The valuations for long-term debt, including a $77 and $44 in 2000
and 1999, respectively, reduction in fair value for the interest
rate swap agreement, are determined based on the expected future
payments discounted at risk-adjusted rates.
29
<PAGE>
8. INCOME TAXES
The provision (benefit) for income taxes follows:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Current:
Federal $ 724 $(959) $(1,132)
State 328 (154) (38)
Foreign 993 251 318
------ ----- -------
Total current 2,045 (862) (852)
------ ----- -------
Deferred:
Federal 20 897 (1,149)
State 17 190 (173)
Foreign (821) (527) (87)
------ ----- -------
Total deferred (784) 560 (1,409)
------ ----- -------
Total $1,261 $(302) $(2,261)
====== ===== =======
</TABLE>
The following reconciles income taxes computed at the U.S. Federal
statutory rate to income taxes reported for financial reporting purposes:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Income tax expense (benefit) at
statutory rate $2,003 $ 30 $(2,870)
Non-U.S. tax-exempt (earnings) losses (1,165) 2 729
Foreign loss carryforwards (498) (483)
Foreign dividends 237
Foreign taxes, net of U.S. tax credit 327 118 197
State and local taxes, net of
U.S. Federal income tax 198 24 (139)
Research and experimentation credit (62) (58) (59)
Other 221 65 (119)
------ ----- -------
Income tax expense (benefit) $1,261 $(302) $(2,261)
====== ===== =======
</TABLE>
No U.S. Federal income taxes have been provided at June 30, 2000,
on approximately $6,400 of accumulated earnings of certain
foreign subsidiaries since the Company plans to reinvest such
amounts for an indefinite future period.
The Company made income tax payments, net of tax refunds received, of
approximately $1,100 in 2000, $265 in 1999 and $770 in 1998.
30
<PAGE>
The net current and non-current components of deferred income taxes
recognized in the balance sheet at June 30 follows:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Net current assets $ 857 $ 609 $ 745
Net non-current assets 540 4 428
------ ------ -------
Net assets $1,397 $ 613 $ 1,173
====== ====== =======
</TABLE>
The tax effect of the significant temporary differences that comprise the
deferred tax assets and liabilities at June 30 follows:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 972 $1,263 $ 1,504
Tax credit carryforwards 216 248
Employee compensation and benefits 312 311 355
Inventories and other current assets 80 363 247
State and local income taxes,
net of U.S. Federal income tax benefit 28 141
Plant closing settlement costs 306 333 541
Other accrued expenses 830 400 68
------ ------ -------
Total deferred tax assets 2,716 2,946 2,856
------ ------ -------
Deferred tax liabilities -
Depreciation and amortization 918 1,468 179
------ ------
Total deferred tax liabilities 918 1,468 179
------ ------ -------
Net deferred tax assets
before valuation allowance 1,798 1,478 2,677
Deferred tax assets valuation allowance (401) (865) (1,504)
------ ------ -------
Net deferred tax assets $1,397 $ 613 $ 1,173
====== ====== =======
</TABLE>
At June 30, 2000, certain foreign subsidiaries have accumulated
foreign net operating loss carryforwards of approximately $2,900 (tax
benefit of $972). Under foreign jurisdictions, these loss
carryforwards do not expire. Management is unable at this time to
project future taxable income that will utilize the deferred benefit of
these loss carryforwards. As a result, a valuation allowance has
been established of $401. The tax benefit of the remaining net
operating loss carryforwards will be recognized when management
is able to project future taxable income of these foreign
subsidiaries. Tax credit carryforwards begin to expire after June 30,
2004. Management anticipates future taxable income from U.S.
operations will utilize these tax credit carryforwards before
their expiration.
31
<PAGE>
9. LEASED ASSETS AND LEASE COMMITMENTS
The consolidated financial statements include land and buildings under a
capital lease as follows:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Land and buildings $553 $542 $497
Less accumulated amortization 154 121 89
---- ---- ----
Net assets under a capital lease $399 $421 $408
==== ==== ====
</TABLE>
The Company leases office and plant facilities, automobiles,
computer systems, and certain other equipment under noncancelable
operating leases, which expire at various dates. Taxes, insurance, and
maintenance expenses are normally obligations of the Company.
Rental expenses charged to operations under operating leases
amounted to approximately $1,490 in 2000, $1,540 in 1999 and $1,360
in 1998.
A summary of future minimum lease payments follows:
<TABLE>
<CAPTION>
Capital Operating
Year ending June 30 Lease Lease
------------------- ------- ---------
<S> <C> <C>
2001 $ 41 $1,672
2002 38 1,280
2003 823
2004 463
2005 386
Later years 495
---- ------
Total minimum lease payments 79 $5,119
======
Less amount representing interest 7
----
Present value of net minimum lease payments
(included in long-term debt) $ 72
====
</TABLE>
During 2000, the Company sold its corporate headquarter building in
New Albany, Indiana to a related party for approximately $2.2
million. The Company has entered into an agreement to lease back
the building for a two-year lease expiring February 2002 for
approximately $220 per year. The gain on such sale, which was
insignificant, was deferred and is being amortized over the life of
the lease.
10. EMPLOYEE BENEFITS
The Company has a defined contribution pension plan and a
defined contribution 401(k) plan for eligible employees in the
United States. Annual contributions by the Company to the defined
contribution pension plan are based upon specified percentages of the
annual compensation of participants. Under the terms of the 401(k)
plan, employees may contribute a portion of their compensation to the
plan and the Company makes matching contributions up to a specified
level. The contributions charged to expense under the defined
contribution plans were approximately $450 in 2000, $460 in 1999 and
$525 in 1998.
32
<PAGE>
Company personnel in Europe and Asia are provided retirement
benefits under various programs that are regulated by foreign
law. Annual contributions are generally regulated in amount and
shared equally by the Company and its employees. The Company's share
of annual contributions to the aforementioned foreign defined
contribution plans was approximately $100 in 2000, $100 in 1999 and
$250 in 1998.
11. STOCK OPTION PLANS
In September 1993, the Company adopted a stock option plan for
eligible employees and nonemployee directors. Under the terms of
the plan, the Board of Directors is authorized to grant options in
the aggregate of 500 common shares of the Company to eligible
employees and a predetermined annual number of shares to nonemployee
directors at prices not less than the market value at the date of
grant. In 1998, the Board of Directors authorized an additional 500
common shares to the pool of shares available for option grants
under the terms of the plan. Fifty percent of the options are
exercisable after the first anniversary of the date of grant. One
hundred percent of the options are exercisable after the second
anniversary date of the grant. All options expire ten years after the
date of the grant.
The following is a summary of the option transactions under the plan:
<TABLE>
<CAPTION>
Weighted average
option price
2000 Shares per share
---- ------ ----------------
<S> <C> <C>
Shares under option at beginning of year 559 $5.99
Granted 250 4.45
Expired (1) 6.63
Cancelled (28) 5.30
Exercised (127) 4.85
-----
Shares under option at end of year 653 5.65
=====
</TABLE>
<TABLE>
<CAPTION>
Weighted average
option price
1999 Shares per share
---- ------ ----------------
<S> <C> <C>
Shares under option at beginning of year 577 $6.30
Granted 120 4.13
Expired (28) 7.00
Cancelled (110) 5.33
------
Shares under option at end of year 559 5.99
=====
</TABLE>
<TABLE>
<CAPTION>
Weighted average
option price
1998 Shares per share
---- ------ ----------------
<S> <C> <C>
Shares under option at beginning of year 500 $ 6.56
Granted 144 6.25
Expired (19) 10.88
Cancelled (43) 7.09
Exercised (5) 6.17
------
Shares under option at end of year 577 6.30
=====
</TABLE>
A total of 358, 386 and 360 shares at an average option price per share
of $6.69, $6.52 and $6.59 were exercisable and 174, 441 and 532
shares were available for future grants at June 30, 2000, 1999 and
1998, respectively.
33
<PAGE>
The following table summarizes information about stock options outstanding at
June 30, 2000:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------- -------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
exercise Outstanding Contractual Life Exercise Exercisable Exercised
prices at 6/30/2000 (Years) Price at 6/30/2000 Price
<S> <C> <C> <C> <C> <C>
$4.00 to $5.875 414 8.44 $4.35 130 $4.64
$6.00 to $7.375 100 5.25 6.46 93 6.42
$8.625 to $9.25 135 4.36 8.84 135 8.84
$12.875 to $18.00 4 9.67 13.46
</TABLE>
The weighted average fair value of options granted during 2000, 1999 and
1998 was $2.94, $1.91 and $2.19, respectively.
The fair value of each stock option granted in 2000, 1999 and 1998 was
estimated as of the date of the grant using the Black-Scholes
option-pricing model with the following assumptions for 2000, 1999 and
1998, respectively: dividend yield of 0%, 0%, and 1.6% to 2.8%; volatility
factor of 47%, 45% and 37%; a range of risk-free interest rates of 6.2% to
6.8%, 4.7% to 5.1% and 5.5% to 6.0%; and expected lives of 10 years for all
years.
In accordance with Accounting Principle Board No. 25, the Company has not
recognized any compensation cost for the stock option plan. Had
compensation cost for the Company's stock option plans been determined
based on the fair value at the grant dates for awards under those plans
consistent with the method of SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company's net income and earnings per share would have
been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Net income (loss):
As reported $4,630 $390 $(6,181)
Pro forma 3,934 164 (6,471)
Earnings (loss) per share (dilutive):
As reported $0.88 $0.08 $ (1.26)
Pro forma 0.75 0.03 (1.32)
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts.
12. STOCK PURCHASE PLAN
The Company had an employee stock purchase plan for key employees that
provided for participants of the plan to purchase common shares of the
Company on the open market through an independent trustee. The plan
permitted the Board of Directors to authorize interest-free loans to the
participants for the purchase of stock. Shares are held in trust as
collateral for the loans, which are payable by the participants for the
plan over a period not to exceed ten years. The plan also provided for
participants to receive from the Company a matching number of common shares
of the Company, based upon a vesting schedule and the participants' level
of purchased shares. The plan terminated in 1994 with respect to new
participation. The loans ($20 in 2000, $72 in1999 and $98 in 1998) and
deferred compensation charges ($2 in 2000, $5 in 1999 and $8 in 1998)
associated with the plan are classified as a reduction of shareholders'
equity. The amortization of the deferred compensation charged to expense
was $3 in 2000, $3 in 1999 and $11 in 1998.
During 2000, the Company adopted the Discount Share Purchase Program for
certain key employees. Such program allowed certain key employees to
34
<PAGE>
purchase the Company's common stock at a 15% discount. The Company issued
approximately 18 shares as of June 30, 2000. Such plan was discontinued in
2000.
13. SHAREHOLDER RIGHTS PLAN
The Company has a shareholder rights plan for the purpose of deterring
coercive or unfair takeover tactics and encouraging a potential acquirer to
negotiate with the Board of Directors before attempting to gain control of
the Company. Under the terms of the plan, rights to purchase additional
common shares were distributed as a dividend to shareholders of record on
May 6, 1988, and are also distributed with respect to shares that were
issued after May 6, 1988. The rights are attached to each issued and
outstanding share and were to expire on April 15, 1998. The Plan was
amended in January 1998 to extend expiration date to April 15, 2008. At
issuance, the rights are not exercisable and are not detachable from common
shares. Accordingly, the rights do not provide any immediate value to
shareholders. The Company may redeem the rights for one cent per right at
any time prior to becoming exercisable. The rights become exercisable ten
days after public disclosure that a person acquired 20% or more, or
commenced a tender offer or exchange offer for 30% or more, of the issued
and outstanding common shares, unless such acquisition or tender offer was
approved in advance by the disinterested directors of the Company.
Thereafter, the rights will trade separately from the common shares, and
separate certificates representing the rights will be issued. Each right
grants an eligible holder the right to purchase for $40.00 additional
common shares of the Company, or in the event of certain mergers or
business combinations, additional shares of the survivor's common shares.
The number of common shares to be issued upon exercise of a right is based
upon the then current market value of the common shares, subject to certain
adjustments.
14. SIGNIFICANT CUSTOMER
The Company had sales of approximately $14,000 to Customer A, $11,000 to
Customer B and $10,000 to Customer C in 2000 and $8,400 to Customer A in
1999. No sales to a single customer exceeded 10% of total sales in 1998.
15. EMPLOYEE HEALTH INSURANCE PLAN
The Company maintains a self-insurance program for that portion of health
care costs not covered by insurance. The Company's costs are limited to
$100 a person each calendar year, with an aggregate annual limitation, for
the plan year ending December 31, 2000 of $900.
35
<PAGE>
16. BUSINESS SEGMENT AND FOREIGN SALES
The Company operates within the electronic connectors segment of the
electronic industry. Products are sold throughout the world for use by
manufacturers of computers, telecommunications equipment, automobiles,
industrial controls, medical instrumentation, and a wide variety of other
products to interconnect components of electronic systems. During 2000, the
Company had manufacturing operations located in the United States, Mexico,
Scotland, Belgium, and Malaysia.
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Sales
United States
Domestic $53,649 $44,042 $46,955
Export:
Europe 78
Asia 7
Rest of World 4,576 2,296 1,653
------- ------- -------
Total sales to customers 58,225 46,338 48,693
Intercompany 8,336 4,950 7,342
------- ------- -------
Total United States 66,561 51,288 56,035
------- ------- -------
Europe
Domestic 25,363 17,486 18,472
------- ------- -------
Total sales to customers 25,363 17,486 18,472
Intercompany 5,847 3,024 3,806
------- ------- -------
Total Europe 31,210 20,510 22,278
------- ------- -------
Asia
Domestic 9,251 6,168 6,981
------- ------- -------
Total sales to customers 9,251 6,168 6,981
-------
Intercompany 9,410 3,763 4,128
------- ------- -------
Total Asia 18,661 9,931 11,109
------- ------- -------
Eliminations (23,593) (11,737) (15,276)
------- ------- -------
Consolidated $92,839 $69,992 $74,146
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Identifiable Assets
United States $47,933 $39,990 $36,274
Europe 20,916 14,568 14,544
Asia 6,601 3,843 3,417
Eliminations (17,383) (11,775) (11,933)
------- ------ -------
Consolidated $58,067 $46,626 $42,302
======= ======= =======
Income (Loss) Before Income Tax Expense
(Benefit) United States $4,070 $ 422 $(6,298)
Europe 1,030 (249) (2,217)
Asia 791 (85) 73
------ -------- -------
Consolidated $5,891 $ 88 $(8,442)
====== ======== =======
</TABLE>
Intercompany sales of finished products were generally priced to "share"
profits based upon current market conditions. Items requiring further
processing were priced at cost plus a fixed percentage.
36
<PAGE>
17. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
For the year ended June 30, 2000 Sept. 30, 1999 Dec. 31, 1999 Mar. 31, 2000 June 30, 2000 Total
<S> <C> <C> <C> <C> <C>
Net sales $20,950 $22,778 $23,985 $25,126 $92,839
Gross profit 5,562 6,469 6,968 7,010 26,009
Net income 784 880 1,226 1,740 4,630
Net income per common share:
Basic 0.16 0.18 0.25 0.35 0.93
Dilutive 0.16 0.17 0.23 0.32 0.88
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
For the year ended June 30, 1999 Sept. 30, 1998 Dec. 31, 1998 Mar. 31, 1999 June 30, 1999 Total
<S> <C> <C> <C> <C> <C>
Net sales $14,914 $17,502 $18,657 $18,919 $69,992
Gross profit 2,828 3,877 4,808 4,825 16,338
Net income (loss) (1,317) 39 508 1,160 390
Net income (loss) per common share, basic
and dilutive (0.27) 0.01 0.10 0.24 0.08
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
For the year ended June 30, 1998 Sept. 30, 1997 Dec. 31, 1997 Mar. 31, 1998 June 30, 1998 Total
<S> <C> <C> <C> <C> <C>
Net sales $18,543 $19,576 $19,658 $16,369 $74,146
Gross profit 3,386 3,524 2,929 1,750 11,589
Net loss (132) (232) (3,288) (2,529) (6,181)
Net loss per common share, basic
and dilutive (0.03) (0.05) (0.67) (0.52) (1.26)
Dividends per common share 0.03 0.03 0.03 0.03 0.12
</TABLE>
Net income (loss) per share amounts are calculated independently for each
of the periods presented. The sum of the quarters may not equal the full
year net income (loss) per share amounts.
37
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no disagreements with the Company's independent auditors on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, or any reportable events.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Bylaws of the Company provide for ten directors, divided into two
classes of three persons and one class of four persons, each of whom is to be
elected for a three-year term.
The following table sets forth information with respect to each member of
the Board of Directors of the Company as of June 30, 2000:
<TABLE>
<CAPTION>
Served as Term of
Positions Held Director Office
Name Age With The Company Since Expires
---- --- ---------------- --------- --------
<S> <C> <C> <C> <C>
Patrick C. Duffy 63 Chairman of the 1991 2001
Board of Directors
Samuel C. Robinson 68 Director 1955 2000
James W. Robinson 66 Director 1955 2001
Larry W. Burke 60 President and 1990 2002
Chief Executive
Officer and
Director
Richard L. Mattox 66 Secretary and 1964 2001
Director
Jerrol Z. Miles 60 Director 1974 2000
Richard W. Strain 59 Director 1991 2000
Donald C. Neel 55 Director 1997 2002
Ben M. Streepey 44 Director 1997 2002
</TABLE>
------------------------------
BUSINESS EXPERIENCE OF DIRECTORS
Except as described below, the principal occupations of the directors have
not changed during the past five years.
Patrick C. Duffy was elected Chairman of the Board of Directors on January
23, 1998. He has been a management consultant since 1988 to various businesses
with emphasis on system management and electronics research, development and
manufacturing. Prior to 1988, Mr. Duffy was president of Chrysler Corporation
Space Division. Chrysler Corporation Space Division designed, manufactured and
performed launch operations for the Apollo space program. Mr. Duffy also
diversified the Space Division into the electrical/electronic automotive field
by initiating automotive wire harness design and production in Cape Canaveral,
Florida, and Juarez, Mexico. He established an electronics design and
manufacturing facility in Louisiana that supplied test equipment to automotive
outlets in the U.S. and Europe. He was the President and owner of Switches,
Inc., an Indiana company that designed and manufactured electronics for the
automotive industry. Mr. Duffy is a former Chairman of the Board of Acordia
38
<PAGE>
Southeast, an insurance brokerage firm covering Florida, Georgia and Louisiana,
with headquarters in Clearwater, Florida.
Samuel C. Robinson retired as Chief Executive Officer of the Company on
June 30, 1985, and retired as Chairman of the Board on January 23, 1998.
James W. Robinson served as Executive Vice President and Treasurer of the
Company until June 30, 1985, at which time he was elected as Chairman of the
Board. He served as Chairman of the Board of the Company until his resignation
on January 29, 1987. Mr. Robinson is active in various independent investments
unrelated to the activities of the Company. He is also a director of Caldwell
Group Ltd., Caldwell Energy & Environmental Inc., Caldwell Tanks, Inc.,
Community Bank of Southern Indiana, StemWood Corp., CT Services Corp., SCI
Broadcasting, Inc., Community Bank Shares of Indiana, Inc., Sunnyside
Communications, Inc., Neimco Fabricators, Inc., and 16th St. Associates, Inc.,
all of which are located in the Louisville, Kentucky metropolitan area.
Larry W. Burke has served as President and Chief Executive Officer of the
Company since March 6, 1990. He served as Executive Vice President of the
Company from April 1986 to March 1990. He also serves as a the Chairman of the
Board of Advisors of Indiana University Southeast, New Albany, Indiana.
Richard L. Mattox is a partner in the law firm of Mattox, Mattox and Wilson
in New Albany, Indiana and acted as legal counsel to the Company during fiscal
2000.
Jerrol Z. Miles is a Senior Vice President of National City Bank, Kentucky,
located in Louisville, Kentucky, where his primary responsibility is management
of commercial loans and special credit departments.
Donald C. Neel is president and CEO of Health Network International (HNI).
HNI develops software and services in the field of personal health management.
He was formerly an executive at Eli Lilly and Company holding a variety of
global positions in finance, information systems and general management. Mr.
Neel is a member of Ball State University's Advisory Board for the Center for
Information and Communication Sciences, and Chairman of Young Audiences of
Indiana, a not for profit arts education organization.
Ben M. Streepey is Vice President & General Manager Lexmark Electronics for
Lexmark International located in Lexington, Kentucky. Lexmark Electronics is an
integrated business unit providing worldwide contract electronic manufacturing
services.
Richard W. Strain has held a variety of positions with Eli Lilly and
Company. From July 1984 until 1990, he served as president of the Medical
Instrument Systems Division; and from 1990 to April 1992, he served as vice
president for Business Development and Pricing. In May 1992, Mr. Strain was
elected as president/CEO of Heart Rhythm Technologies, and in December 1993 he
returned to Eli Lilly and Company headquarters. Since his retirement from Eli
Lilly and Company, Mr. Strain has been president/CEO of a biotech company,
participated in healthcare consulting, and serves on several boards.
FAMILY RELATIONSHIPS
Samuel C. Robinson and James W. Robinson are brothers. There is no other
family relationship among the directors and executive officers of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the officers
and directors of the Company to file initial reports of ownership and reports of
changes in ownership of the Common Shares of the Company. The officers and
directors are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms filed by them.
39
<PAGE>
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all reports required by Section 16(a) of the Securities
Exchange Act of 1934 related to market transactions in the Common Shares of the
Company were timely filed.
ITEM 11. EXECUTIVE COMPENSATION.
COMPENSATION OF DIRECTORS
In 1999, members of the Board of Directors who were not employees of the
Company received annual remuneration in the amount of $8,000 per year, plus an
additional $1,200 for each meeting of the Board of Directors attended. Patrick
C. Duffy received, for his services as Chairman of the Board of Directors,
$2,000 per quarter and $1,700 per meeting. In 1999 Director compensation for
annual remuneration and meeting fees was changed from the payment in cash, to a
grant of the Company's Common Shares. The number of shares granted during 2000
was established by dividing the quarterly compensation amount by the closing
market price of the Company's Common Shares as of November 4, 1999. Board
members receive reimbursement of expenses in cash. In 2001, the value of the
annual remuneration will increase to $10,000 per year, plus and additional
$1,200 for each meeting of the Board of Directors attended. Mr. Duffy will
receive $1,700 per meeting. This remuneration will continue to be paid in Common
Shares. The number of shares granted will be calculated utilizing the closing
market price of the Company's Common Shares as of July 28, 2000. Members of the
Board of Directors who are employees of the Company receive no separate
remuneration for their service as directors.
Audit and Compensation Committee members receive a minimum of $400 per
meeting attended plus $200 per hour for attendance beyond two hours. Directors
serving on the Ad-hoc committees, established at the April 1998 board meeting,
receive $200 per hour for attendance during meetings of these committees with a
minimum of $600 per meeting, and an additional $150 per hour for attendance
beyond three hours, plus reimbursement of expenses. The Chairpersons of the
Audit and Compensation Committees receive $500 for their services in such
capacities.
Mr. Duffy receives $1,200 per day, plus reimbursement of expenses, for days
spent working on Robinson Nugent business.
On July 28, 2000, the Board of Directors approved and awarded $10,000
performance bonuses for all non-employee directors. Mr. Duffy was awarded an
additional $40,000 for his contributions to The Company's performance and
profitability. Mr. Neel was awarded and additional $10,000 for his work in
Information Technology area of the Company.
Under the provisions of the 1993 Employee and Non-Employee Director Stock
Option Plan approved by the shareholders in November, 1993, Non-Employee
directors were granted non-qualified stock options (NQSOs) annually to purchase
4,000 Common Shares of the Company at the then current market price. Such
options were granted to Non-Employee Directors on September 13, 1993, September
13, 1994, September 13, 1995, September 13, 1996, September 13, 1997, September
13, 1998 and September 13, 1999, at an exercise price of $8.75, $6.00, $8.625,
$4.75, $7.375, $4.25 and $4.75 per Common Share, respectively.
40
<PAGE>
A new 2000 Employee and Non-Employee Director Stock Option Plan, which was
approved by the Board of Directors in November 1999, subject to shareholder
approval at the 2000 annual meeting of shareholders, Options to purchase common
shares under this new plan were granted to non-employee directors on July 28,
2000. These stock option grants have an exercise price of $14.00 (closing price
as of July 28, 2000) per common share. All non-employee members of the Board of
Directors received stock option grants for 6,000. The chairmen of the Audit
Committee and the Compensation and Stock Option Committee received additional
stock option grants for 1,000. The chairman of the Board of Directors received
additional stock option grants for 4,000. All of these options are exercisable
as to one-half the shares after the first anniversary of the date of grant and
as to all the shares after the second anniversary of the date of grant and
expire ten years after date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 2000, none of the members of the Compensation
Committee served nor have they previously served as officers of the Company or
any subsidiary, and none of the Company's executive officers serve as directors
of, or in any compensation-related capacity for, companies with which members of
the Compensation Committee are affiliated.
EXECUTIVE COMPENSATION
GENERAL
The following Summary Compensation Table sets forth certain information
with respect to the aggregate compensation paid during each of the last three
years to the Company's President and Chief Executive Officer and each of the
other top four executive officers of the Company whose salary and bonus exceeded
$100,000 during fiscal 2000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
-----------------------------------------------------
Restricted
Other Annual Stock Options/ All Other
Salary Bonus Compensation Award(s) SAR's Compensation
Year ($) ($) ($)(1) ($) # of Shares(2) ($) (3)
---- ------ ----- -------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Larry W. Burke, 2000 233,899 67,600 946 - 15,000 65,075
President and Chief 1999 208,028 - 2,614 - - 62,578
Executive Officer 1998 216,477 - 4,012 - 16,500 61,701
Raymond T. Wandell, 2000 216,922 36,000 - - 3,000 3,225
Vice President, Sales 1999 50,769 - - - 30,000 -
North America 1998 - - - - - -
W. Michael Coutu 2000 173,483 73,000 - - 30,000 14,363
Vice President 1999 162,184 - - - - 11,967
Information Technology 1998 142,837 10,000 - - 9,020 12,255
Leong Chun Kin, 2000 213,482 - - - 5,000 73,776(4)
Managing Director, 1999 215,013 - - - - -
Asia Pacific Operation 1998 198,137 - - - 8,800 -
Dennis I. Smith, 2000 238,574 36,000 - - 3,000 3,225
Vice President, 1999 50,135 - - - 30,000 -
Global Marketing 1998 - - - - - -
</TABLE>
------------------------
(1) Represents imputed interest attributable to interest-free loans
authorized by the Board of Directors in connection with the purchase of
Common Shares of the Company under the 1993 Employee Stock Purchase Plan.
(2) Represents options granted under the 1993 Employee and Non-Employee
Director Stock Option Plan.
41
<PAGE>
(3) Includes contributions by the Company on behalf of the named persons and
the group to the Company's Retirement Plan and 401(k) Plan, and pursuant
to deferred compensation agreements. Effective May 10, 1990, the Company
entered into a deferred compensation agreement with Mr. Burke. The
deferred compensation agreement provides for payments of $50,000 per year
to a trust administered by Strong Retirement Plan Services, Menomonee
Falls, Wisconsin, as supplemental retirement income benefits to Mr.
Burke.
(4) Represents the compensation Mr. Leong received from the cash free
exercise of stock options in the current year.
Each of the officers listed in the Summary Compensation Table serves for
a term of one year.
STOCK OPTIONS
There were 91,943 stock options exercised by the named executive officers
of the Company in fiscal 2000.
The following table sets forth the number of unexercised options held at
June 30, 2000 by each of the Company's executive officers named in the Summary
Compensation Table, and the related values of such options at June 30, 2000. The
value of unexercised options at June 30, 2000 is based upon a market value at
June 30, 2000 of $12.50 per Common Share.
<TABLE>
<CAPTION>
FISCAL YEAR END OPTION VALUES
Number of Unexercised Options Value of Unexercised In-the-Money
at June 30, 2000 (# of shares) Options at June 30, 2000 ($)(1)
----------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Larry W. Burke 72,650 15,000 $363,806 $125,625
W. Michael Coutu 40,820 30,000 $203,084 $251,250
Leong Chun Kin --- 5,000 --- $ 41,875
Raymond T. Wandell 15,000 18,000 $127,500 $152,625
Dennis I. Smith 15,000 18,000 $127,500 $152,625
</TABLE>
(1) Value is calculated by (i) subtracting the exercise price per share from
the fiscal year-end market value of $12.50 per share and (ii)
multiplying by the number of shares subject to the option. Options
that have an exercise price equal to or greater than the fiscal
year-end market value are not included in the value calculation.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
The Compensation Committee and Stock Option Committee of the Board of
Directors has responsibility for the Company's executive compensation program.
The Committee is currently comprised solely of Non-Employee directors. The
Committee is chaired by Mr. Jerrol Z. Miles. The other Committee members are Mr.
Donald C. Neel and Mr. James W. Robinson. The following report is submitted by
the members of the Compensation Committee and the Stock Option Committee.
* * *
The Company's executive compensation program is designed to align
executive compensation with financial performance, business strategies and
Company values and objectives. The Company's compensation philosophy is to
ensure that the delivery of compensation, both in the short- and long-term, is
consistent with the sustained progress, growth and profitability of the Company
and acts as an inducement to attract and retain qualified individuals. This
program seeks to enhance the profitability of the Company, and thereby enhance
shareholder value, by linking the financial interests of the Company's
executives with those of its long-term shareholders. Under the guidance of the
Company's Compensation Committee of the Board of Directors, the Company has
developed and implemented an executive compensation program to achieve these
objectives while providing
42
<PAGE>
executives with compensation opportunities that are competitive with companies
of comparable size in related industries.
The Company's executive compensation program has been designed to
implement the objectives described above and is comprised of the following
fundamental three elements:
- a base salary that is determined by individual contributions and
sustained performance within an established competitive salary range. Pay
for performance recognizes the achievement of financial goals,
accomplishment of corporate and functional objectives, and performance of
individual business units of the Company.
- an annual incentive cash bonus that is directly tied to corporate and
business unit performance measures
- a long-term incentive program that rewards executives when shareholder
value is created through increase in the market value of the Company's
Common Shares. Stock option grants focus executives on managing the
Company from the perspective of an owner with an equity position in the
business.
BASE SALARY. The salary, and any periodic increase thereof, of the
President and Chief Executive Officer was and is determined by the Board of
Directors of the Company based on recommendations made by the Compensation
Committee. The salaries, and any periodic increases thereof, of the other
executive officers were and are determined by the Board of Directors based on
recommendations made by the President and Chief Executive Officer and approved
by the Committee.
The Company, in establishing base salaries, levels of incidental and/or
supplemental compensation, and incentive compensation programs for its officers
and key executives, assesses periodic compensation surveys and published data
covering the electrical/electronics industry and industry in general. The level
of base salary compensation for officers and key executives is determined by
both their scope and responsibility and the established salary ranges for
officers and key executives of the Company. Periodic increases in base salary
are dependent on the executive's proficiency of performance in the individual's
position for a given period, and on the executive's competency, skill and
experience.
BONUS PAYMENTS. The bonus compensation program for the Company's officers
is subject to annual review by the Compensation Committee and requires annual
approval of the Board of Directors.
Under the bonus plan for executive officers and key employees for fiscal
year 2000, executive officers were eligible for a bonus award provided the
consolidated pretax income of the Company and subsidiaries for fiscal year 2000
exceeded 90% of the amount specified in fiscal year 2000 financial plan, in an
amount equal to 10% of that excess (up to the plan amount). When pretax income
exceeded the amount specified in the fiscal year 2000 financial plan, an amount
equal to 20% of that excess was added to the bonus pool.
Under the bonus plan for executive officers and key employees for fiscal
2001, if consolidated pretax income exceeds the amount specified in the 2001
financial plan, an amount equal to 10% of that excess, will be available for the
payment of bonuses. The bonus amount payable to each of the executive officers
and key employees will be determined by the President and Chief Executive
Officer of the Company.
LONG-TERM INCENTIVE PLANS. The Company's long-term incentive compensation
program is intended to align executive interest with the long-term interests of
shareholders by linking executive compensation with enhancement of shareholder
value. In addition, the program motivates executives to improve long-term stock
43
<PAGE>
market performance by allowing them to develop and maintain a significant
long-term equity ownership position in the Company's Common Shares.
Currently, the only long-term incentive plan of the Company is its 1993
Employee and Non-Employee Director Stock Option Plan. This plan was adopted by
the Board of Directors on September 13, 1993, and approved by the shareholders
of the Company at the 1993 annual meeting of the shareholders held on November
4, 1993. Pursuant to this plan 500,000 Common Shares were made available for the
grant of stock options to Non-Employee Directors of the Company and key
employees of The Company and its subsidiaries as determined by the Stock Option
Committee. An amendment authorizing an additional 500,000 Common Shares to be
made available for grants of stock options under the 1993 Employee and
Non-Employee Director Stock Option Plan was adopted by the Board of Directors
and approved by the shareholders in 1997.
On May 28, 1992, the Board of Directors adopted the 1993 Employee Stock
Purchase Plan to provide executive officers and other key employees with the
opportunity to purchase Common Shares and thereby establish or increase their
equity position in the Company. As an added incentive to participants in this
plan, the Company awarded a matching number of Common Shares in proportion (not
more than 50%) to the Common Shares purchased and provided interest-free loans
to the participants, subject to the discretion of the Board of Directors. The
Company's matching shares vest with the participants who remain in the
employment of the Company in three equal annual installments starting in
September 1994. Loans to employees are payable over periods not to exceed ten
years. Participation in the Plan was completed in fiscal 1993 and the Plan
expired with respect to new participation on November 10, 1993.
SUBMITTED BY THE COMPENSATION AND STOCK OPTION COMMITTEES
Mr. Donald C. Neel
Mr. James W. Robinson
Mr. Jerol Z. Miles
STOCK PERFORMANCE GRAPH
The following chart compares the yearly percentage change in the
cumulative total shareholder return on the Company's Common Shares with the
cumulative total return of the Nasdaq market composite (U.S. Companies) and the
Peer Group Index for the six years ending June 30, 2000. The Peer Group consists
of Methode Electronics, Inc., Molex Incorporated and Thomas & Betts Corporation.
The Peer Group consists of publicly-held companies, all of which participate in
the electronic connector industry in varying degrees with respect to their total
sales volume. All of these companies are significantly larger than the Company
in terms of sales and assets. The comparison assumes that $100 was invested on
June 30, 1994, in the Company's Common Shares and in each of the foregoing
indices and assumes reinvestment of dividends.
44
<PAGE>
[CHART]
ROBINSON NUGENT, INC. (RNIC)
<TABLE>
<CAPTION>
% Peer Group
Weighted Cumulative Total Return Market Cap
-------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peer Group Cumulative Total Return 6/95 6/96 6/97 6/98 6/99 6/00 6/30/2000
(Weighted Average by Market Value)
Peer Group Weighted Average: 100 111 155 139 170 191
Methode Electrs Inc METHA 100 132 156 123 185 314 12.5%
Molex Inc MOLX 100 103 148 127 188 306 44.78%
Thomas & Betts Corp TNB 100 113 163 156 154 64 42.72%
</TABLE>
45
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
BENEFICIAL OWNERSHIP OF COMMON SHARES
The following table sets forth certain data with respect to those persons
known by the Company to be the beneficial owners of five percent or more of the
outstanding Common Shares of the Company as of August 8, 2000 and also sets
forth such data with respect to each director of the Company, each officer
listed in the Summary Compensation Table, and all directors and executive
officers of the Company as a group. Except as otherwise indicated in the notes
to the table, each beneficial owner possesses sole voting and investment power
with respect to the shares indicated.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
SHARES (1) OF CLASS
---------- --------
<S> <C> <C>
PRINCIPAL SHAREHOLDERS
Samuel C. Robinson 1,137,258 (2) 20.8%
226 Barefoot Beach Blvd.
Bonita Springs, Florida 34134
ROI Capital Management, Inc. 574,855 (3) 10.5%
17 E. Sir Francis Drake Blvd.
Suite 225
Larkspur, California 94939
Lawrence Mazey 360,329(13) 6.6%
Declaration of Trust
140 Commodore Drive
Juniper, Florida 33477
James W. Robinson 302,741 (4) 5.5%
7527 State Road 62
Lanesville, Indiana 47136
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue
Santa Monica, California 90401 294,700 (3) 5.4%
DIRECTORS AND EXECUTIVE OFFICERS
Samuel C. Robinson 1,137,258 (2) 20.8%
James W. Robinson 302,741 (4) 5.5%
Larry W. Burke 242,601 (5) 4.4%
Patrick C. Duffy 89,099 (6) 1.6%
W. Michael Coutu 53,206 (8) 1.0%
Richard L. Mattox 55,947 (4) 1.0%
Jerrol Z. Miles 32,417 (4) *
Donald C. Neel 42,137 *
Ben M. Streepey 18,637 (7) *
Richard W. Strain 29,137 (14) *
Raymond T. Wandell 22,080 (9) *
Leong Chun Kin 14,442 (10) *
Dennis I. Smith 19,000 (11) *
All directors and executive officers 2,120,479 (12) 38.9%
as a group (16 persons)
</TABLE>
* Less than 1%.
46
<PAGE>
(1) The table includes certain shares owned of record by the Company's 401(k)
Plan and the 1993 Employee Stock Purchase Plan. The participants in these
Plans, as noted in the following footnotes, have voting rights but no
rights of disposition with respect to the shares allocated to their
respective accounts.
(2) Includes 16,398 shares owned of record by Mr. Robinson's wife, as to which
she possesses sole voting and investment power, and 5,500 shares owned of
record by National City Bank, Southern Indiana, as trustee for the benefit
of a child, as to which Mr. Robinson and the trustee share voting and
investment power. Mr. Robinson disclaims any beneficial interest in these
shares.
(3) The shareholder certified in Schedule 136 filed with the Securities and
Exchange Commission that these shares were acquired in the ordinary course
of business and were not acquired for the purpose of and do not have the
effect of changing or influencing the control of the Company, and were not
acquired in connection with or as a participant in any transaction having
such purpose or effect.
(4) Includes 22,000 shares which each named individual may acquire upon
exercise of stock options granted to non-employee members of the Board of
Directors under the 1993 Employee and Non-Employee Director Stock Option
Plan.
(5) Includes 6,354 shares owned of record by Mr. Burke's wife, as to which he
disclaims any beneficial interest; 80,150 shares subject to immediately
exercisable options granted pursuant to the Company's Employee Stock Option
Plans; and 68,050 shares allocated to Mr. Burke's account pursuant to the
Company's 401(k) Plan and the 1993 Employee Stock Purchase Plan.
(6) Includes 52,000 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(7) Includes 6,000 shares subject to immediately exercisable options granted to
non-employee members of the Board of Directors under the 1993 Employee and
Non-Employee Director Stock Option Plan.
(8) Includes 50,820 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(9) Includes 16,500 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(10) Includes 2,500 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(11) Includes 16,500 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(12) Includes in the aggregate 343,420 shares subject to immediately exercisable
options granted pursuant to the Company's 1993 Employee and Non-Employee
Stock Option Plan held by non-employee directors and executive officers,
and 68,050 shares allocated to the accounts of executive officers pursuant
to the Company's 401(k) Plan and the 1993 Employee Stock Purchase Plan.
(13) Mr. Mazey died on February 16, 1999. The Company has been advised that
these shares are currently owned by Richard M. Mazey, Janice M. Weiss and
Sally M. Wilder, as successor co-trustees under the Lawrence Mazey
Declaration of Trust dated January 26, 1993.
(14) Includes 1,000 shares owned of record by Mr. Strain's wife, as to which he
disclaims any beneficial interest, and 22,000 shares subject to immediately
47
<PAGE>
exercisable options granted pursuant to the Company's 1993 Employee and
Non-Employee Stock Option Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
CERTAIN TRANSACTIONS
Richard L. Mattox, Secretary, Corporate Counsel and a member of the Board
of Directors of the Company, is a partner in the law firm of Mattox, Mattox &
Wilson with offices in New Albany, Indiana. That firm was retained by the
Company as legal counsel during fiscal 2000, and it is anticipated that such
relationship will continue in the current fiscal year.
Jerrol Z. Miles, a director of the Company, is a Senior Vice President of
National City Bank, Kentucky, with which the Company maintains a commercial
banking relationship including a $10,000,000 credit facility. The Company
utilized this loan facility during fiscal 2000 and incurred interest charges of
$687,153 on borrowed funds. In fiscal 2000, the Company made periodic
investments in short-term securities administered by National City Bank,
Kentucky, and the Company received interest payments of approximately $19,340
thereon.
In February 2000, the Company sold the New Albany facility to a limited
liability company, owned two-thirds by Samuel C. Robinson and one-third by James
W. Robinson, for approximately $2.2 million in cash. The purchase price was
determined in relation to the net book value of the property, and was confirmed
by an appraisal by an independent third party. This transaction was approved by
the Board of Directors. Mr. Samuel C. Robinson and Mr. James W. Robinson did not
participate in this vote. This facility was simultaneously leased back by the
Company for $220,000 per year, under a two year, triple-net lease. The gain on
such sale, which was insignificant, was deferred and is being amortized over the
life of the related lease.
The Board of Directors believes that the transactions described above were
on terms no less favorable to the Company than would have been available in the
absence of the relationships described.
In September 1992, pursuant to the terms of the Company's Employee Stock
Purchase Plan, Mr. Burke borrowed $165,000 from the Company to purchase Common
Shares of the Company. These loans are non-interest bearing and are payable over
a period not to exceed ten years. At June 30, 1999, the principal balance of the
loan to Mr. Burke was $8,859.
48
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) DOCUMENTS FILED AS A PART OF THIS REPORT.
(1) FINANCIAL STATEMENTS
Independent Auditors' Report
Consolidated Balance Sheets as of June 30, 2000, 1999 and 1998
Consolidated Statements of Operations and Comprehensive Income for
the years ended June 30, 2000, 1999 and 1998
Consolidated Statements of Shareholders' Equity for the years
ended June 30, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the years ended June 30,
2000, 1999 and 1998
Notes to Consolidated Financial Statements
(2) FINANCIAL STATEMENT SCHEDULE
Schedule for the years ended June 30, 2000, 1999, and 1998:
II Valuation and Qualifying Accounts
All other schedules are omitted, as the required information is
inapplicable or the information is presented in the consolidated
financial statements or related notes.
(3) EXHIBITS
3.1 Articles of Incorporation of Robinson Nugent, Inc.
(Incorporated by reference to Exhibit 3.1 to Form
S-1 Registration Statement No. 2-62521.)
3.2 Articles of Amendment of Articles of Incorporation
of Robinson Nugent, Inc. filed September 1, 1978
(Incorporated by reference to Exhibit B(1) to Form
10-K Report for year ended June 30, 1980.)
3.3 Articles of Amendment of Articles of Incorporation
of Robinson Nugent, Inc. filed November 14, 1983
(Incorporated by reference to Exhibit 3.3 to Form
10-K Report for year ended June 30, 1984.)
3.4 Amended and Restated Bylaws of Robinson Nugent,
Inc. adopted November 7, 1991.
49
<PAGE>
(Incorporated by reference to Exhibit 19.1 to Form
10-K Report for year ended June 30, 1992).
4.1 Specimen certificate for Common Shares, without par
value. (Incorporated by reference to Exhibit 4 to
Form S-1 Registration Statement No. 2-62521.)
4.2 Rights Agreement dated April 21, 1988 between
Robinson Nugent, Inc. and Bank One, Indianapolis,
NA. (Incorporated by reference to Exhibit I to Form
8-A Registration Statement dated May 2, 1988.)
4.3 Amendment No. 1 to Rights Agreement dated September
26, 1991. (Incorporated by reference to Exhibit 4.3
to Form 10-K Report for year ended June 30, 1991.)
4.4 Amendment No. 2 to Rights Agreement dated June 11,
1992. (Incorporated by reference to Exhibit 4.4 to
Form 8-K Current Report dated July 6, 1992.)
4.5 Amendment No. 3 to Rights Agreement dated February
11, 1998 (Incorporated by reference to Exhibit 4.5
to Form 10-Q Report for the period ended December
31, 1998.)
10.1 Robinson Nugent, Inc. 1983 Tax-Qualified Incentive *
Stock Option Plan. (Incorporated by reference to
Exhibit 10.1 to Form 10-K Report for year ended
June 30, 1983.)
10.2 Robinson Nugent, Inc. 1983 Non Tax-Qualified *
Incentive Stock Option Plan. (Incorporated by
reference to Exhibit 10.2 to Form 10-K Report for
year ended June 30, 1983.)
10.3 1993 Robinson Nugent, Inc. Employee and *
Non-Employee Director Stock Option Plan.
(Incorporated by reference to Exhibit 19.1 to Form
10-K Report for the year ended June 30, 1993.)
10.4 Summary of The Robinson Nugent, Inc. Employee Stock *
Purchase Plan. (Incorporated by reference to
Exhibit 19.2 to Form 10-K Report for the year ended
June 30, 1993.)
50
<PAGE>
10.5 Deferred compensation agreement dated May 10, 1990 *
between Robinson Nugent, Inc. and Larry W. Burke,
President and Chief Executive Officer.
(Incorporated by reference to Exhibit 19.1 to Form
10-K Report for the year ended June 30, 1990.)
10.6 Trust Agreement dated July 1, 1999 between Robinson *
Nugent, Inc. and Strong Retirement Plan Services,
related to the deferred compensation agreement
between Robinson Nugent, Inc. and Larry W. Burke,
President and Chief Executive Officer (Incorporated
by reference to Exhibit 10.6 to Form 10-K Report
for the year ended June 30, 1999.)
10.7 Summary of the 1993 Robinson Nugent, Inc. Employee *
and Non-employee Director Stock Option Plan, as
amended. (Incorporated by reference to Exhibit 10.7
to Form 10-K Report for the fiscal year ending June
30, 1998).
10.8 Summary of Robinson Nugent, Inc. Bonus Plan for
fiscal year ended June 30, 2001.
16.0 No exhibit.
21.0 Subsidiaries of the registrant.
27.0 Financial Data Schedule.
* Management contracts or compensatory plans
(B) REPORTS ON FORM 8-K
None.
51
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROBINSON NUGENT, INC.
Date: 8/24/00 By: /s/ Larry W. Burke
------- -------------------------------------
Larry W. Burke, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: 8/24/00 By: /s/ Samuel C. Robinson
------- -------------------------------------
Samuel C. Robinson, Director
Date: 8/24/00 By: /s/ Larry W. Burke
------- -------------------------------------
Larry W. Burke, Director,
President and Chief Executive Officer
(Principal Executive Officer)
Date: 8/24/00 By: /s/ Patrick C. Duffy
------- -------------------------------------
Patrick C. Duffy, Director
Date: 8/24/00 By: /s/ Richard L. Mattox
------- -------------------------------------
Richard L. Mattox, Director
Date: 8/24/00 By: /s/ Jerrol Z. Miles
------- -------------------------------------
Jerrol Z. Miles, Director
Date: 8/24/00 By: /s/ James W. Robinson
------- -------------------------------------
James W. Robinson, Director
Date: 8/24/00 By: /s/ Richard W. Strain
------- -------------------------------------
Richard W. Strain, Director
52
<PAGE>
Date: 8/24/00 By: /s/ Ben M. Streepey
------- -------------------------------------
Ben M. Streepey, Director
Date: 8/24/00 By: /s/ Donald C. Neel
------- -------------------------------------
Donald C. Neel, Director
Date: 8/24/00 By: /s/ Robert L. Knabel
------- -------------------------------------
Robert L. Knabel, Vice President,
Treasurer and Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
53
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
JUNE 30, 2000, 1999, AND 1998
Financial Statement Schedule for the years ended June 30, 2000, 1999, and
1998 is included herein:
II Valuation and Qualifying Accounts
All other schedules are omitted, as the required information is inapplicable or
the information is presented in the consolidated financial statements or related
notes.
54
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
ROBINSON NUGENT, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D Col. E
----------------------------------------------------------------------------------------------------------------------------
Additions
-------------------------
Balance Charged to Charged to Deductions Balance
Description at Beginning Costs and Other Describe at
of Period Expenses Accounts End of
Describe Period
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 2000
Deducted from asset accts
Allowance for doubtful
accounts $ 581 $ 253 $ -- $ 250(A) $ 584
Allowance for inventory
obsolescence & valuation 1,185 1,425 -- 1,564(B) 1,046
------ ---------------------- ------ ------
Total $1,766 $1,677 $ -- $1,814 $1,629
====== ====================== ====== ======
YEAR ENDED JUNE 30, 1999
Deducted from asset accts
Allowance for doubtful
accounts $ 571 $ 33 $ -- $ 23(A) $ 581
Allowance for inventory
obsolescence & valuation 1,243 640 -- 698(B) 1,185
------- ------ ------ --- ------
Total $ 1,814 $ 643 $ -- $ 721 $1,766
======= ====== ====== ====== ======
YEAR ENDED JUNE 30, 1998
Deducted from asset accts
Allowance for doubtful
accounts $ 564 $ 72 $ -- $ 65(A) $ 571
Allowance for inventory
obsolescence & valuation 1,565 1,212 -- 1,534(B) 1,243
------ ------ ------ ------ ------
Total $2,129 $1,284 $ -- $1,599 $1,814
====== ====== ====== ====== ======
</TABLE>
See footnotes on following page.
55
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (CONT'D.)
ROBINSON NUGENT, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
(A) Summary of activity in Column D follows:
Reduction of requirements in allowance
for doubtful accounts $ -0- $ -0- $ -0-
Uncollectible accounts written off,
net of recoveries 249 23 52
Currency Translation - losses 1 -0- 13
------ ------ ------
$ 250 $ 23 $ 65
====== ====== ======
(B) Summary of activity in Column D follows: Discontinued and
obsolete inventory written off, net of recoveries $1,536 $ 697 $1,919
Currency translation - (gains)/losses 28 1 (385)
------ ------ ------
$1,564 $ 698 $1,534
====== ====== ======
</TABLE>
56
<PAGE>
ROBINSON NUGENT, INC.
FORM 10-K FOR FISCAL YEAR
ENDED JUNE 30, 2000
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
NUMBER SEQUENTIAL
ASSIGNED IN NUMBERING SYSTEM
REGULATION S-K PAGE NUMBER
ITEM 601 DESCRIPTION OF EXHIBIT OF EXHIBIT
------------------- ---------------------- -----------------
<S> <C> <C>
(3) 3.1 Articles of Incorporation of Robinson
Nugent, Inc. (Incorporated by reference
to Exhibit 3.1 to Form S-1 Registration
Statement No. 2-62521.)
3.2 Articles of Amendment of Articles of Incorporation
of Robinson Nugent, Inc. filed September 1, 1978
(Incorporated by reference to Exhibit B(1) to Form
10-K Report for year ended June 30, 1980.)
3.3 Articles of Amendment of Articles of Incorporation
of Robinson Nugent, Inc. filed November 14, 1983
(Incorporated by reference to Exhibit 3.3 to Form
10-K Report for year ended June 30, 1984.)
3.4 Amended and Restated Bylaws of Robinson Nugent,
Inc. adopted November 7, 1991. (Incorporated by
reference to Exhibit 19.1 to Form 10-K Report for
year ended June 30, 1992).
(4) 4.1 Specimen certificate for Common Shares,
without par value. (Incorporated by
reference to Exhibit 4 to Form S-1
Registration Statement No. 2-62521.)
4.2 Rights Agreement dated April 21, 1988 between
Robinson Nugent, Inc. and Bank One, Indianapolis,
NA. (Incorporated by reference to Exhibit I to
Form 8-A Registration Statement dated May 2,
1988.)
4.3 Amendment No. 1 to Rights Agreement dated
September 26, 1991. (Incorporated by reference to
Exhibit 4.3 to Form 10-K Report for year ended
June 30, 1991.)
4.4 Amendment No. 2 to Rights Agreement dated
June 11, 1992. (Incorporated by reference
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
to Exhibit 4.4 to Form 8-K Current Report
dated July 6, 1992.)
4.6 Amendment No. 3 to Rights Agreement dated
February 11, 1998 (Incorporated by reference to
Exhibit 4.5 to Form 10-Q Report for the period
ended December 31, 1998.)
(9) No exhibit.
(10) 10.1 Robinson Nugent, Inc. 1983 Tax-Qualified *
Incentive Stock Option Plan.
(Incorporated by reference to Exhibit
10.1 to Form 10-K Report for year ended June 30,
1983.)
10.2 Robinson Nugent, Inc. 1983 Non Tax- *
Qualified Incentive Stock Option Plan.
(Incorporated by reference to Exhibit
10.2 to Form 10-K Report for year ended June 30,
1983.)
10.3 1993 Robinson Nugent, Inc. Employee and *
Non-Employee Director Stock Option Plan.
(Incorporated by reference to Exhibit 19.1 to Form
10-K Report for the year ended June 30, 1993.)
10.4 Summary of The Robinson Nugent, Inc. *
Employee Stock Purchase Plan.
(Incorporated by reference to Exhibit 19.2 to Form
10-K Report for the year ended June 30, 1993.)
10.5 Deferred compensation agreement dated *
May 10, 1990 between Robinson Nugent,
Inc. and Larry W. Burke, President and
Chief Executive Officer. (Incorporated
by reference to Exhibit 19.1 to Form 10-K
Report for year ended June 30, 1990.)
10.6 Trust Agreement dated July 1, 1999 *
between Robinson Nugent, Inc. and Strong
Retirement Plan Services, related to the
deferred compensation agreement between
Robinson Nugent, Inc. and Larry W. Burke,
President and Chief Executive Officer.
(Incorporated by reference to Exhibit 10.6
to Form 10-K Report for the year ended
June 30, 1999.)
10.7 Summary of the 1993 Robinson Nugent, Inc. *
Employee and Non-employee Director Stock
Option Plan, as amended. (Incorporated by
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
reference to Exhibit 10.7 to Form 10-K Report
for the fiscal year ending June 30, 1998).
10.8 Summary of Robinson Nugent, Inc. Bonus Plan
for fiscal year ended June 30, 2001.
(11) No exhibit.
(12) No exhibit.
(16) No exhibit.
(18) No exhibit.
(21) 21.0 The subsidiaries of the registrant.
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Robinson Nugent Interconnect Malaysia
(Malaysia) Sdn. Bhd.
(22) No exhibit.
(23) No exhibit.
(24) No exhibit.
(27) 27.0 Financial Data Schedule.
(28) No exhibit.
</TABLE>
* Management contracts or compensatory plans
60
