<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
(Amendment No. 1)
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[No Fee Required]
For the fiscal year ended DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from to
1-8585
(Commission File Number)
UNITED DOMINION INDUSTRIES LIMITED
(Exact name of registrant as specified in its charter)
CANADA 98-0125322
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2300 ONE FIRST UNION CENTER
CHARLOTTE, NORTH CAROLINA 28202-6039
(Address of principal executive offices) (Zip Code)
(704) 347-6800
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
COMMON SHARES (WITHOUT PAR VALUE) THE TORONTO STOCK EXCHANGE
NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
is not included as it is inapplicable to the registrant, a foreign private
issuer. [X]
The aggregate market value of voting stock held by non-affiliates of
the registrant was approximately U.S. $635,000,000 as of March 14, 2000,
assuming that officers and directors are affiliates. As of the same date,
39,122,355 Common Shares were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended December
31,1999 are incorporated by reference into Parts I and II and filed as Exhibit
13 hereto.
<PAGE> 2
Preliminary Note
The Registrant is filing this amendment on Form 10-K/A to its Annual
Report on Form 10-K for the year ended December 31, 1999 to restate the
financial statements included therein solely to include condensed consolidating
financial information segregating the Registrant and each of United Dominion
Holdings, Inc. and United Dominion Industries, Inc. (wholly owned subsidiaries
of the Registrant) from other subsidiaries. On February 14, 2000 the
registration statement on Form F-3 with respect to offerings of up to an
aggregate of U.S. $200 million in guaranteed debt securities by United Dominion
Industries, Inc. to be guaranteed by the Registrant and United Dominion
Holdings, Inc. was declared effective.
PART II
Item 8. Financial Statements and Supplementary Data.
(a) Financial Statements
Auditors' Report
Consolidated Statements of Income for the Years Ended December
31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Financial Position as of December
31, 1999 and 1998
Consolidated Statements of Changes in Shareholders' Equity for
the Years Ended December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
(b) Supplementary Financial Information
The selected quarterly financial data required by Item 302(a) of
Regulation S-K appears as Note 15 to the Consolidated Financial Statements which
is an unaudited summary of quarterly results and is incorporated herein by this
reference.
(c) Other Financial Statements and Schedules
Other financial statements and schedules required under Regulation S-X
are filed pursuant to Item 14 of this report.
2
<PAGE> 3
AUDITORS' REPORT
To the Shareholders of United Dominion Industries Limited
We have audited the consolidated statements of financial position of United
Dominion Industries Limited as at December 31, 1999 and 1998 and the related
consolidated statements of income, cash flows and changes in shareholders'
equity for each of the years in the three-year period ended December 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 1999
and 1998 and the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 1999 in accordance with
Canadian generally accepted accounting principles.
/s/ KPMG LLP
Chartered Accountants
Toronto, Canada
January 28, 2000
3
<PAGE> 4
UNITED DOMINION INDUSTRIES LIMITED
Consolidated Statements of Income, Restated (note 2)
Years Ended December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars, Except Per Share Data)
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Sales $ 2,148,338 $ 2,020,374 $ 1,654,679
----------- ----------- -----------
Cost and expenses
Cost of sales 1,480,866 1,401,802 1,168,654
Restructuring charges - inventory (note 3) 5,153 -- --
----------- ----------- -----------
Total cost of sales 1,486,019 1,401,802 1,168,654
Selling, general and administrative expenses 447,583 429,591 328,271
Restructuring charges - other (note 3) 15,351 16,336 --
----------- ----------- -----------
Total costs and expenses 1,948,953 1,847,729 1,496,925
----------- ----------- -----------
Operating income 199,385 172,645 157,754
Other income (expense)
Interest - net (note 8) (40,178) (35,750) (18,544)
Gain on sale of business (note 3) -- 11,285 --
Other (note 3) (1,500) (6,852) 7,700
----------- ----------- -----------
Income from continuing operations
before income taxes and goodwill charges 157,707 141,328 146,910
Income tax provision (note 4) (47,151) (24,147) (49,528)
----------- ----------- -----------
Income from continuing operations
before goodwill charges 110,556 117,181 97,382
Goodwill charges, net of applicable income tax benefit
of $1,422 in 1999, $1,278 in 1998 and $690 in 1997
(note 3) (21,646) (17,493) (12,492)
----------- ----------- -----------
Income from continuing operations 88,910 99,688 84,890
----------- ----------- -----------
Income from discontinued operations (note 3)
Earnings, net of applicable income tax expense
of $2,211 -- -- 3,088
Gain on disposal, net of applicable income tax
expense of $36,011 -- -- 53,086
----------- ----------- -----------
-- -- 56,174
----------- ----------- -----------
Net income $ 88,910 $ 99,688 $ 141,064
=========== =========== ===========
Earnings per common share (note 1):
Continuing operations before goodwill charges $ 2.79 $ 2.88 $ 2.19
=========== =========== ===========
Continuing operations $ 2.24 $ 2.45 $ 1.91
Discontinued operations -- -- 1.26
----------- ----------- -----------
Net earnings $ 2.24 $ 2.45 $ 3.17
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
UNITED DOMINION INDUSTRIES LIMITED
Consolidated Statements of Cash Flows
Years Ended December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash provided from operating activities
Income from continuing operations $ 88,910 $ 99,688 $ 84,890
Add (deduct) items not affecting cash
Depreciation 46,341 41,747 34,267
Amortization 28,376 23,118 16,570
Gain on sale of business -- (11,285) --
Deferred income taxes 2,839 (5,899) 15,395
Other 1,474 2,358 315
Net decrease (increase) in working capital other
than cash (note 14) 11,153 (36,258) (23,334)
Asset securitization 900 (6,100) (10,400)
--------- --------- ---------
179,993 107,369 117,703
--------- --------- ---------
Cash used by investing activities
Additions to fixed assets (61,278) (51,741) (60,596)
Acquisitions of businesses (155,416) (172,181) (364,148)
Net proceeds from disposal of businesses -- 25,008 274,641
Proceeds from (investments in) other assets (9,952) 10,354 8,851
Other (874) (8,040) (1,545)
--------- --------- ---------
(227,520) (196,600) (142,797)
--------- --------- ---------
Cash provided from (used by) financing activities
Additional borrowings 155,597 331,907 119,020
Repayments of borrowings (71,488) (92,931) (66,886)
Issuance of common shares 1,537 7,302 1,780
Repurchase of common shares (38,476) (83,565) (56,954)
Dividends (14,158) (14,614) (12,413)
--------- --------- ---------
33,012 148,099 (15,453)
--------- --------- ---------
Cash used by discontinued operations (note 3) -- -- (61,135)
--------- --------- ---------
Net increase (decrease) in cash and short-term investments (14,515) 58,868 (101,682)
Cash and short-term investments at beginning of year 123,455 64,587 166,269
--------- --------- ---------
Cash and short-term investments at end of year $ 108,940 $ 123,455 $ 64,587
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
5
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UNITED DOMINION INDUSTRIES LIMITED
Consolidated Statements of Financial Position, Restated (note 2)
December 31, 1999 and 1998
(Amounts in Thousands of U.S. Dollars)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Assets
Current assets
Cash and short-term investments $ 108,940 $ 123,455
Accounts and notes receivable, less allowance for doubtful
accounts of $9,645 in 1999 and $10,725 in 1998 (note 11) 334,398 335,424
Inventories (note 5) 390,654 368,842
Other current assets 61,386 81,679
----------- -----------
Total current assets 895,378 909,400
Fixed assets (note 6) 350,901 317,853
Goodwill (notes 1 and 3) 836,497 728,350
Other intangible assets (note 1) 43,547 46,470
Other assets (note 4) 115,252 88,584
----------- -----------
$ 2,241,575 $ 2,090,657
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities
Notes payable to banks (note 7) $ 103,544 $ 53,672
Current portion of long-term debt (note 7) 46,082 51,665
Accounts payable 169,362 158,708
Accrued liabilities 185,742 194,682
Customer advances 15,440 23,181
----------- -----------
Total current liabilities 520,170 481,908
Long-term debt (note 7) 591,506 544,771
Other liabilities 210,654 178,148
----------- -----------
1,322,330 1,204,827
Shareholders' equity (note 9)
Common shares - outstanding 39,047,937 shares in 1999
and 40,520,982 shares in 1998 537,355 557,574
Contributed surplus 4,283 4,057
Retained earnings 421,137 360,796
----------- -----------
962,775 922,427
Equity adjustment from foreign currency translation (notes 1 and 7) (43,530) (36,597)
----------- -----------
Total shareholders' equity 919,245 885,830
----------- -----------
$ 2,241,575 $ 2,090,657
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
On behalf of the Board - William R. Holland, Director; R. Stuart Dickson,
Director.
6
<PAGE> 7
UNITED DOMINION INDUSTRIES LIMITED
Consolidated Statements of Changes in Shareholders' Equity, Restated (note 2)
Years Ended December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
<TABLE>
<CAPTION>
Common Shares
-------------------------- Equity
Unamortized Adjustment/ Total
Shares Restricted Contributed Retained Currency Shareholders'
Issued Stock Surplus Earnings Translation Equity
----------- ---------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 621,825 $(5,287) $1,409 $ 214,935 $(26,128) $ 806,754
Repurchase of 2,067,540 shares (28,222) -- -- (28,732) -- (56,954)
Stock options exercised (110,255 shares) 1,780 -- 450 -- -- 2,230
Amortization of restricted stock grants -- 1,406 -- -- -- 1,406
Net income for the year -- -- -- 141,064 -- 141,064
Cash dividends - $.28 per share -- -- -- (12,413) -- (12,413)
Net effect of currency translation
adjustments -- -- -- -- (13,187) (13,187)
Effect of hedging transactions -- -- -- -- 3,649 3,649
--------- ------- ------ --------- -------- ---------
Balance, December 31, 1997 595,383 (3,881) 1,859 314,854 (35,666) 872,549
Repurchase of 3,250,000 shares (44,433) -- -- (39,132) -- (83,565)
Stock options exercised (445,422 shares) 7,302 -- 2,198 -- -- 9,500
Incentive share election (43,845 shares) 1,219 -- -- -- -- 1,219
Amortization of restricted stock grants -- 1,984 -- -- -- 1,984
Net income for the year -- -- -- 99,688 -- 99,688
Cash dividends - $.36 per share -- -- -- (14,614) -- (14,614)
Net effect of currency translation
adjustments -- -- -- -- (3,432) (3,432)
Effect of hedging transactions -- -- -- -- 2,501 2,501
--------- ------- ------ --------- -------- ---------
Balance, December 31, 1998 559,471 (1,897) 4,057 360,796 (36,597) 885,830
Repurchase of 1,745,000 shares (24,065) -- -- (14,411) -- (38,476)
Stock options exercised (103,400 shares) 1,537 -- 226 -- -- 1,763
Incentive share election (55,365 shares) 1,105 -- -- -- -- 1,105
Restricted stock issued (113,190 shares) 2,263 (2,263) -- -- -- --
Amortization of restricted stock grants -- 1,204 -- -- -- 1,204
Net income for the year -- -- -- 88,910 -- 88,910
Cash dividends - $.36 per share -- -- -- (14,158) -- (14,158)
Net effect of currency translation
adjustments -- -- -- -- (12,688) (12,688)
Effect of hedging transactions -- -- -- -- 5,755 5,755
--------- ------- ------ --------- -------- ---------
Balance, December 31, 1999 $ 540,311 $(2,956) $4,283 $ 421,137 $(43,530) $ 919,245
========= ======= ====== ========= ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
1. Summary of Significant Accounting Policies
General
The consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in Canada. These
accounting principles are in conformity with accounting principles
generally accepted in the United States except as indicated in note 14.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Consolidation
All subsidiary companies are consolidated and all significant
intercompany accounts and transactions have been eliminated in
consolidation.
Consolidated Statements of Cash Flows
Cash and short-term investments include highly liquid investments with
a maturity of three months or less.
Inventories
Inventories are stated at the lower of cost (average or first-in,
first-out) or net realizable value.
Fixed Assets
Property, plant and equipment are recorded at cost. Major renewals and
betterments are capitalized; whereas, maintenance and repairs are
expensed as incurred. Cost of property sold or otherwise disposed and
related accumulated depreciation are removed from the accounts at the
time of disposal and any resulting gain or loss is included in income.
Depreciation of plant and equipment is determined on the straight-line
method over the estimated useful lives of the assets. The average
annual rates of depreciation range from 4% for buildings to 10% for
machinery and equipment.
Goodwill
Goodwill, which represents the excess of purchase price over fair value
of net identifiable assets acquired, is amortized on the straight-line
method over the expected periods to be benefited, generally 40 years.
The company assesses the recoverability of this intangible asset based
primarily upon an analysis of undiscounted future operating cash flows
from the acquired operations. Accumulated amortization was $90,309 and
$69,044 at December 31, 1999 and 1998, respectively.
8
<PAGE> 9
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
Other Intangible Assets
Amounts assigned to other intangible assets, primarily trademarks and
patents, are based on independent appraisals and are amortized on the
straight-line method over periods ranging from four to forty years.
Accumulated amortization was $16,565 and $13,262 at December 31, 1999
and 1998, respectively.
Foreign Currency Translation
The financial statements of those operations whose functional currency
is a foreign currency are translated into U.S. dollars using the
current rate method. Under this method, all assets and liabilities are
translated into U.S. dollars using current exchange rates and income
statement items are translated using weighted average exchange rates.
The translation adjustment is included as a component of shareholders'
equity; whereas, gains and losses on foreign currency transactions are
included in income. Foreign currency transaction losses totaled $2,768,
$3,530 and $3,959 for 1999, 1998 and 1997, respectively.
Derivative Financial Instruments
The company is party to certain derivative financial instruments,
principally forward exchange contracts used to manage foreign currency
exposures. Gains and losses on forward foreign exchange contracts are
recognized in revenues in the same period as the foreign currency
transactions to which they relate.
Fair Values
The carrying values of cash and short-term investments, accounts
receivable, accounts payable and accrued liabilities approximate their
fair value due to the relatively short periods to maturity of the
instruments. The fair value of the company's long-term debt is
estimated based on the current rates available to the company for debt
of the same remaining maturities. Since the company's fixed rate debt
carries interest rates which are different than current market rates,
the estimated fair value of the company's long-term debt was
approximately $634,000 and $621,000 at December 31, 1999 and 1998,
respectively.
Earnings Per Common Share
Earnings per common share are calculated by dividing net income by the
weighted average number of common shares outstanding during the year
(39,641,606 shares for 1999, 40,755,170 shares for 1998 and 44,439,004
shares for 1997). The assumed exercise of outstanding stock options
would not have a materially dilutive effect on reported earnings per
common share.
Reclassifications
Certain prior year amounts have been reclassified to conform with
current year presentation.
9
<PAGE> 10
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
2. Restatement Related to Adoption of New Accounting Pronouncements
Effective January 1, 1999, the company adopted the Canadian Institute
of Chartered Accountants (CICA) Handbook Section 3465, Income Taxes.
This adoption has been retroactively applied to all years presented in
the accompanying consolidated financial statements. The adoption of
this pronouncement did not have a material effect on the Consolidated
Statement of Income for the year ended December 31, 1998 and it has not
been restated. For the year ended December 31, 1997, the adoption of
Handbook Section 3465 resulted in an increase in the gain on disposal
of discontinued operations (note 3) and a related increase in net
income of $3,086, or $.07 per share.
For the year ended December 31, 1998, the adoption resulted in certain
reclassifications related to the cost basis of various amounts in the
Consolidated Statement of Financial Position. The reclassifications
resulted in increases in fixed assets of $5,515 and accrued liabilities
of $5,174 and decreases in inventories of $468, other current assets of
$288, goodwill and other intangibles of $1,344, other assets of
$33,801, other liabilities of $24,109 and retained earnings of $11,451
as of December 31, 1998.
As of December 31, 1996, the adoption of Handbook Section 3465 resulted
in a reduction in retained earnings and total shareholders' equity of
$14,537 in the Consolidated Statement of Changes in Shareholders'
Equity.
In 1999, the CICA amended Handbook Section 1580, Business Combinations,
to allow for the separate presentation of goodwill amortization expense
and goodwill impairment charges (collectively referred to as "goodwill
charges"), net of tax, in the income statement. Accordingly, the
presentation of income before goodwill charges, and the related per
share amount, is also allowed. The company has adopted this
presentation format and has reclassified the prior years' consolidated
statements of income to conform with the new presentation. This
reclassification does not affect net income or net earnings per share
as previously reported.
3. Acquisitions, Divestitures, Discontinued Operations and Restructuring
Acquisitions
In February 1999, the company acquired Riser-Bond Instruments which
designs and manufactures cable fault locators principally used by the
telecommunications industry. In July, the company acquired TKO Doors, a
manufacturer of loading dock doors. In August, the company acquired
Bran + Luebbe, a manufacturer of precision metering pumps, analyzing
equipment and integrated blending systems for a broad range of process
industries. In October, the company acquired S.W. Fleming Limited, a
manufacturer of commercial side-hinged steel doors and frames. The cost
of these and other smaller acquisitions totaled approximately $155,000
and resulted in an increase in working capital of approximately
$17,000, an increase in fixed assets of approximately $24,000, an
increase in goodwill of approximately $129,000 and an increase in other
liabilities of approximately $15,000.
10
<PAGE> 11
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
In February 1998, the company acquired Radiodetection which designs and
manufactures portable pipe and cable locators and related equipment
used in the utility and telecommunication industries. In March, the
company acquired Tex-Steel Corporation, a manufacturer of custom steel
doors and frames for commercial and detention markets. In April, the
company acquired APV Ice Cream, a manufacturer of industrial ice cream
production equipment. In May, the company acquired Leading Edge, Inc.
which manufactures ceiling fans, air curtains and air circulators
supplied to the industrial and electrical distributor markets. In July,
the company acquired C&M, Inc., a manufacturer of powered roller
conveyor systems primarily servicing the corrugated and solid fiber
carton industry. In August, the company acquired Ling Dynamic Systems
Limited which designs and builds vibration test systems and related
equipment. The cost of these and other smaller acquisitions totaled
approximately $172,000 and resulted in an increase in working capital
of approximately $27,000, an increase in fixed assets of approximately
$14,000, an increase in other assets of approximately $1,000 and an
increase in goodwill of approximately $130,000.
In 1997, the company completed the purchase of the common stock of Core
Industries Inc (Core). Core was a manufacturer of valves, strainers and
backflow prevention products, agricultural equipment, electrical test
and measurement equipment and integrated assembly systems used in
automobile and other manufacturing applications. The total cost of the
acquisition was approximately $302,000.
If the acquisition of Core had occurred at the beginning of 1997,
unaudited proforma consolidated sales, net income and net earnings per
share in 1997 would have been $1,826,273, $144,422 and $3.25,
respectively.
In 1997, the company also made several smaller product line
acquisitions. In January, the company acquired Lee Engineering which
produces vertical lifting equipment used in various industrial
applications. In March, the company acquired Trussbilt, a manufacturer
of doors, frames and related products for the security and detention
markets. In April, the company acquired Dominion Door, which produces
steel doors, frames and pre-hung windows for metal buildings. In
September, the company acquired TIF Instruments, a manufacturer of
electronic test instruments used primarily by the HVAC market. In
September, the company also acquired Process Machinery & Supply Company
and Alliance Food Equipment Corp. Both companies manufacture and
recondition equipment for the ice cream industry. In November, the
company acquired Stow Manufacturing, a manufacturer of light
construction equipment. The cost of these and other smaller
acquisitions totaled approximately $68,000.
The above mentioned acquisitions have been accounted for by the
purchase method and earnings have been included in the results of
operations from the dates of the acquisitions.
In 1997, the company initiated a tender offer for the shares of Imo
Industries Inc. (Imo). Imo's Board of Directors ultimately terminated
the merger agreement and, pursuant to the terms of the agreement, the
company received a $7,700 termination fee, net of expenses. This amount
is included in "Other income (expense)" in the Consolidated Statements
of Income.
Divestitures (other than Discontinued Operations)
In January 1998, the company sold its Little Falls Tank division of
Waukesha Cherry-Burrell for approximately $4,000 which equaled its book
value. In December 1998, the company sold the assets of its Marley Pump
motor product line and entered into various consulting and supply
arrangements for total proceeds of $17,500. The company recognized a
pre-tax gain on the sale of $11,285 which is included in "Other income
(expense)" in the Consolidated Statements of Income.
11
<PAGE> 12
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
Discontinued Operations
In 1997, the company sold Varco-Pruden, Centria and Windsor Door. These
units were part of the company's Building Products segment. The company
received approximately $240,000 in cash and recorded a net-of-tax gain
of $53,086 on the sale of these businesses. The results of operations
of these units and the related gain on sale have been separately
classified as "Income from discontinued operations" in the Consolidated
Statements of Income. The operating cash flows from these businesses
have also been separately classified in the Consolidated Statements of
Cash Flows. The "Cash used by discontinued operations" in the
Consolidated Statement of Cash Flows for 1997 also includes
approximately $44,000 in income tax payments which were directly
related to the gain on the sale of discontinued operations.
In 1999 and 1998, the company incurred charges of $1,500 and $6,852,
respectively, related primarily to the settlement of legal claims and
the write-down of assets to be realized from prior years' divestiture
activities to their estimated net realizable value. These charges are
included in "Other income (expense)" in the Consolidated Statements of
Income.
Restructuring Charges
In 1998, the company announced a company-wide cost reduction plan. The
plan included the net reduction of its global workforce by over 500
positions, principally administrative personnel, rationalizations
involving 12 facilities and reduced discretionary spending. The company
recorded a pre-tax charge to earnings in 1998 of $16,336 related to the
plan.
The company expanded the restructuring program in 1999 to include the
rationalization of 11 additional facilities including the shutdown of
four manufacturing and one administrative facility, the transition of
the manufacturing of several product lines to different sites and the
discontinuation of several unprofitable product lines. Additional
workforce reductions of approximately 500 positions were announced of
which approximately 130 had actually been terminated by December 31,
1999. The company reported a pre-tax charge to earnings of $22,198
related to these new initiatives.
Selected financial information relating to the two years' restructuring
charges is as follows:
<TABLE>
<CAPTION>
Accrual at Accrual at
Expensed Incurred December 31, Expensed Incurred December 31,
in 1998 in 1998 1998 in 1999 in 1999 1999
-------- -------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Severance and other
employee costs $13,474 $(5,499) $7,975 $ 5,785 $ (6,990) $6,770
Facilities costs 1,930 (1,513) 417 5,791 (5,918) 290
Write-down of assets to
net realizable value -- -- -- 8,693 (8,693) --
Other costs 932 -- 932 1,929 (2,522) 339
------- ------- ------ ------- -------- ------
Total $16,336 $(7,012) $9,324 $22,198 $(24,123) $7,399
======= ======= ====== ======= ======== ======
</TABLE>
12
<PAGE> 13
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
All costs are included in "Restructuring charges" in the Consolidated
Statements of Income with the exception of $1,694 of goodwill
impairment charges which were recorded in 1999 and are included in
"Goodwill charges". Of the total charges, $7,399 remains accrued at
December 31, 1999. The majority of the remaining restructuring
activities should be completed during the first half of 2000.
4. Income Taxes
The provision for income taxes on income from continuing operations
before goodwill charges is comprised of the following:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Current
Canada $ (954) $ 3,264 $ 2,961
United States 10,386 24,094 10,161
Other countries 30,226 2,688 21,011
------- ------- -------
39,658 30,046 34,133
------- ------- -------
Deferred
Canada (5,148) (7,241) (3,886)
United States 15,199 9,686 26,257
Other countries (2,558) (8,344) (6,976)
------- ------- -------
7,493 (5,899) 15,395
------- ------- -------
$47,151 $24,147 $49,528
======= ======= =======
</TABLE>
The related income (loss) from continuing operations before income
taxes and goodwill charges is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Canada $ (8,835) $(13,491) $ (5,455)
United States 62,240 78,440 87,413
Other countries 104,302 76,379 64,952
-------- -------- --------
$157,707 $141,328 $146,910
======== ======== ========
</TABLE>
13
<PAGE> 14
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities at December 31, 1999 and 1998 are
as follows:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 22,909 $ 10,805
Difference between tax on distributed and undistributed earnings 4,580 2,451
Accrued expenses not currently deductible 81,683 90,058
Other 2,975 4,240
--------- ---------
112,147 107,554
Less: valuation allowance (4,080) --
--------- ---------
Total deferred tax assets 108,067 107,554
--------- ---------
Deferred tax liabilities:
Plant and equipment, principally due to differences in basis
and depreciation (35,081) (28,298)
Intangible assets, principally due to differences in basis
and amortization (13,601) (12,341)
Inventory, principally due to differences in basis (6,427) (8,501)
Other (15,954) (13,078)
--------- ---------
Total deferred tax liabilities (71,063) (62,218)
--------- ---------
Net deferred tax asset $ 37,004 $ 45,336
========= =========
</TABLE>
Subsequently recognized tax benefits relating to the valuation
allowance for deferred tax assets as of December 31, 1999 will be
allocated to goodwill. Based on the company's historical and current
earnings, management believes it is more likely than not that the
company will realize the benefit of the remaining deferred tax assets
that are not subject to the valuation allowance.
The difference between the company's effective income tax rate and the
statutory rate on income from continuing operations is reconciled
below.
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Income tax expense at U.S. statutory rate of 35 $ 55,197 $ 49,465 $ 51,419
State income taxes 2,792 3,563 3,618
Canadian and foreign tax refunds and tax
settlements $ (4,984) (23,838) --
Canadian and foreign income taxes at
less than U.S. statutory rate (6,962) (7,806) (7,714)
Other 1,108 2,763 2,205
-------- -------- --------
$ 47,151 $ 24,147 $ 49,528
======== ======== ========
</TABLE>
14
<PAGE> 15
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
The company has Canadian net operating loss carryforwards for income
tax purposes of approximately $43,000 which expire in 2003 through
2006.
"Other Assets" in the Consolidated Statements of Financial Position
include $4,580 and $2,451 at December 31, 1999 and 1998, respectively,
primarily representing German taxes refundable to the company when
German earnings are repatriated.
Income taxes paid totaled $2,224, $53,085 and $71,240 for 1999, 1998
and 1997, respectively.
5. Inventories
Inventories at December 31, 1999 and 1998 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Raw materials $131,444 $111,994
Work-in-process 101,122 99,402
Finished products 158,088 157,446
-------- --------
$390,654 $368,842
======== ========
</TABLE>
6. Fixed Assets
Fixed assets are summarized as follows:
<TABLE>
<CAPTION>
Accumulated
Cost Depreciation Net
-------- ------------ --------
<S> <C> <C> <C>
December 31, 1999:
Land $ 12,385 $ -- $ 12,385
Plant 143,508 50,479 93,029
Machinery and equipment 431,743 216,112 215,631
Construction in progress 29,856 -- 29,856
-------- -------- --------
$617,492 $266,591 $350,901
======== ======== ========
December 31, 1998:
Land $ 11,215 $ -- $ 11,215
Plant 129,267 46,485 82,782
Machinery and equipment 394,222 184,320 209,902
Construction in progress 13,954 -- 13,954
-------- -------- --------
$548,658 $230,805 $317,853
======== ======== ========
</TABLE>
15
<PAGE> 16
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
7. Debt
Short-term
At December 31, 1999 and 1998, the company's notes payable to banks
totaled $103,544 and $53,672, respectively, with weighted average
interest rates of 6.7% and 4.9%, respectively. At December 31, 1999,
the company had available approximately $105,000 of unused short-term
borrowing facilities.
Long-term
The company's long-term debt at December 31, 1999 and 1998 is
summarized as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Revolving credit bank notes $101,192 $ 35,958
Senior notes due 2002 - 6.80% 70,200 93,600
Senior notes due 2002 - 8.25% 37,500 50,000
Senior notes due 2007 - 7.67% 50,000 50,000
Senior notes due 2008 - 6.64% 110,000 110,000
Commercial paper 172,470 162,556
Multi-currency revolving notes 36,375 39,718
Other notes payable in installments
through 2020 at interest rates varying
from 2.9% to 10.0% 59,851 54,604
-------- --------
637,588 596,436
Less current portion of long-term debt 46,082 51,665
-------- --------
$591,506 $544,771
======== ========
</TABLE>
The company has a revolving credit agreement (revolver) with a group of
banks. This agreement gives the company the ability to borrow up to
$450,000 through July 2002. Borrowings under the revolver are available
in U.S. dollars and Deutsche Marks (DM) at the U.S. prime interest rate
or LIBOR plus a margin. The margin ranges from 0.170% to 0.325% and is
determined by a leverage ratio and the amount of utilization under the
credit facility. The weighted average interest rates on the borrowings
under this agreement were 4.6% and 4.9% during 1999 and 1998,
respectively. At December 31, 1999, $41,192 of the revolver borrowings
were denominated in DM. The DM borrowings are designated as a hedge of
the company's net investment in German subsidiaries and foreign
exchange gains and losses on these borrowings are reflected in "Equity
adjustment from foreign currency translation" in the Consolidated
Statements of Financial Position. The company also pays an annual
facility fee on the amount of this facility ranging from 0.080% to
0.125%, depending upon a leverage ratio. The company further pays an
annual utilization fee on the amount of loans outstanding of up to
0.05%, depending on leverage and amount of utilization. At December 31,
1999, the margin, facility fee and utilization fee were 0.25%, 0.1% and
0%, respectively.
The 6.80% senior notes are currently payable in annual installments of
$23,400. The 8.25% senior notes are currently payable in annual
installments of $12,500. The 7.67% senior notes are payable in annual
installments of $10,000 beginning in 2003. The 6.64% senior notes are
payable in full in 2008.
16
<PAGE> 17
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
During 1998, the company entered into an open-ended program whereby up
to Cdn $250,000 of commercial paper can be issued. While the commercial
paper is typically due in 30 - 60 days, with a maximum maturity of one
year, it is the company's intention to continually refinance these
borrowings. The company maintains unutilized long-term committed credit
facilities sufficient to refinance the commercial paper outstanding.
Therefore, the amounts outstanding at December 31, 1999 (U.S. $172,470)
are included in long-term debt in the Consolidated Statements of
Financial Position. Interest rates on the commercial paper ranged from
5.1% to 5.7% with a weighted average of 5.3% in 1999.
The company has a $40,000 multi-currency revolving credit agreement
with a bank which expires in June 2000. The agreement allows the
company to designate subsidiaries to borrow under the facility at LIBOR
interest rates plus margin and facility fees in total ranging from 0.7%
to 1.0%. At December 31, 1999, $36,375 had been borrowed under this
facility. This amount is included in long-term debt since the company
has the capacity and intention to refinance this facility and extend
its term prior to the expiration of the agreement.
At December 31, 1999, the company had available approximately $150,000
of unused long-term revolving credit commitments.
Various loan agreements contain covenants with respect to net worth,
indebtedness and other items. The company has complied with all
provisions of these agreements at December 31, 1999.
Future principal payments on long-term debt are as follows:
<TABLE>
<S> <C>
2000 $ 46,082
2001 87,061
2002 315,375
2003 14,636
2004 10,927
Thereafter 163,507
--------
$637,588
========
</TABLE>
8. Interest Expense - Net
Net interest expense is composed of the following:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Interest on long-term debt $ 38,217 $ 35,749 $ 22,441
Other interest expense 5,319 3,117 3,757
Interest income (3,358) (3,116) (7,654)
-------- -------- --------
$ 40,178 $ 35,750 $ 18,544
======== ======== ========
</TABLE>
Net interest paid totaled $43,018, $33,082, and $20,104 for 1999, 1998
and 1997, respectively.
17
<PAGE> 18
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
9. Capital Stock
The company is incorporated under the Canada Business Corporations Act
and is authorized to issue an unlimited number of common and preferred
shares of no par value.
The company has a stock option and restricted stock plan under which
options for a term not exceeding 10 years may be granted to key employees
and directors to purchase common shares of the company at a price not
less than 100% of their fair market value at the date of grant. Common
shares reserved for exercise of these options or the issuance of
restricted stock may not at any time exceed 10% of the number of common
shares then outstanding. Transactions involving the plan are summarized
below.
<TABLE>
<CAPTION>
Options
--------------------------------- Weighted-
Available for Option Price Average
Future Grant Granted Per Share Exercise Price
----------------- ------------ ------------------- -------------------
(Cdn.) (Cdn.)
<S> <C> <C> <C> <C> <C>
Outstanding at December 31, 1996 1,546,622 1,776,575 $ 9.375 - $ 33.125 $25.34
Exercised -- (110,255) $ 9.375 - $ 33.00 $21.98
Granted (463,400) 463,400 $36.65 - $ 38.87 $36.83
--------- ---------
Outstanding at December 31, 1997 1,083,222 2,129,720 $ 9.375 - $ 38.87 $28.02
Exercised -- (445,422) $ 9.375 - $ 36.65 $23.60
Granted (435,250) 435,250 $28.95 - $ 40.00 $35.26
Expired 21,100 (21,100) $26.375 - $ 36.65 $29.76
--------- ---------
Outstanding at December 31, 1998 669,072 2,098,448 $ 9.375 - $ 40.00 $30.44
Exercised -- (103,400) $ 12.75 - $ 26.625 $22.26
Granted (589,625) 589,625 $ 29.80 - $ 32.775 $30.03
Restricted stock issued (113,190)
--
Additional shares authorized 1,196,993 --
--------- ---------
Outstanding at December 31, 1999 1,163,250 2,584,673 $ 9.375 -$ 40.00 $30.67
========= =========
Exercisable at December 31, 1999 1,736,724 $ 9.375 - $ 40.00 $29.97
=========
</TABLE>
The following table provides certain information with respect to stock
options outstanding at December 31, 1999.
<TABLE>
<CAPTION>
Weighted-
average
Weighted- remaining
Stock options average contractual
Range of exercise price outstanding exercise price life
---------------- ------------------ ----------------
(Cdn.) (years)
<S> <C> <C> <C>
Under $28.00 (Cdn.) 802,011 $24.31 4.3
Over $28.00 (Cdn.) 1,782,662 33.54 7.9
---------------- ------------------ ----------------
2,584,673 $30.67 6.8
================ ================== ================
</TABLE>
18
<PAGE> 19
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
The following table provides certain information with respect to stock
options exercisable at December 31, 1999.
<TABLE>
<CAPTION>
Weighted-
Stock options average
Range of exercise price exercisable exercise price
------------------ ----------------
(Cdn.)
<S> <C> <C>
Under $28.00 (Cdn.) 802,011 $ 24.31
Over $28.00 (Cdn.) 934,713 34.84
------------------ ----------------
1,736,724 $ 29.97
================== ================
</TABLE>
The restricted stock issued during 1999 had a fair value at the date of
grant of $2,263 or U.S. $19.99 per share. The sale of this stock is
restricted for six years from the date of grant. Restricted stock was
also issued during 1996 which is restricted for periods up to five years
from the date of the grant. Compensation expense related to all
restricted shares is recorded over the restriction period and amounted to
$1,204, $1,984 and $1,406 in 1999, 1998 and 1997, respectively.
The company's management incentive plans contain a feature that allows
participants the opportunity to elect to receive restricted common shares
in lieu of a portion of their cash bonuses. The number of shares issued
is increased by a multiple in order to provide participants an incentive
to elect to receive shares. A total of 55,365 and 43,845 shares were
issued in 1999 and 1998, respectively, to participants who made such
share elections.
10. Benefit Plans
The company and its subsidiaries have defined benefit pension plans
covering approximately one half of all employees. Plans covering eligible
salaried employees call for benefits to be paid at retirement based
primarily upon years of service and their compensation rates near
retirement. Plans covering hourly employees generally provide benefits of
stated amounts for each year of service. Contributions to the plans
reflect benefits attributed to employees' services to date and also for
benefits expected to be earned in the future. Assets of the plans consist
primarily of cash and cash equivalents, common and preferred stocks,
government bonds, investment-grade corporate bonds and other fixed income
investments. The company also provides, through non-qualified plans,
supplemental pension payments in excess of the qualified plan limits
imposed by income tax regulations. These non-qualified plans are
unfunded.
19
<PAGE> 20
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
The following tables set forth the change in projected benefit
obligation, change in plan assets and the funded status of the company's
North American benefit plans as of December 31, 1999 and 1998.
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
1999 1998 1999 1998
------- ------- ------ ------
<S> <C> <C> <C> <C>
Change in benefit obligation
Benefit obligation at beginning
of year $ 178,733 $ 167,993 $ 33,659 $ 26,883
Service cost 3,988 3,917 690 729
Interest cost 14,947 14,162 2,617 2,216
Plan participants' contributions 5 17 -- --
Plan amendment -- -- 799 1,446
Actuarial (gain) loss (1,750) 2,403 1,045 3,588
Benefits paid (10,550) (9,759) (1,256) (1,203)
------- ------- ------ ------
Benefit obligation at end of year 185,373 178,733 37,554 33,659
------- ------- ------ ------
Change in plan assets
Fair value of plan assets at
beginning of year 212,175 205,953
Return on plan assets 27,541 12,894
Employer contribution 1,754 3,070
Plan participants' contributions 5 17
Benefits paid (10,550) (9,759)
------- -------
Fair value of plan assets at end of year 230,925 212,175
------- -------
Funded status 45,552 33,442 (37,554) (33,659)
Unrecognized net actuarial (gain) loss (33,668) (23,933) 9,617 7,551
Unrecognized prior service cost 3,220 3,327 3,733 5,476
Unrecognized net transition obligation 18 27 1,335 1,502
------- ------- ------ ------
Prepaid (accrued) benefit cost $ 15,122 $ 12,863 $(22,869) $(19,130)
======= ======= ====== ======
</TABLE>
The weighted-average discount rate used to measure the projected benefit
obligation is 8.5%, the average rate of increase in future compensation
levels is approximately 5% and the expected long-term rate of return on
assets is 8.5%. The company amortizes prior service cost and unrecognized
gains and losses using the straight-line method over the average future
service life of active participants.
20
<PAGE> 21
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
The components of net periodic benefit cost are as follows:
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
---------------------------------- ----------------------------------
1999 1998 1997 1999 1998 1997
-------- -------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 3,988 $ 3,917 $ 4,557 $ 690 $ 729 $ 738
Interest cost 14,947 14,162 13,233 2,617 2,216 1,777
Expected return on assets (17,416) (16,067) (13,858) -- -- --
Amortization (1,543) (879) (682) 1,688 1,680 1,509
-------- -------- -------- ------ ------ ------
Net periodic benefit cost $ (24) $ 1,133 $ 3,250 $4,995 $4,625 $4,024
======== ========= ======== ====== ====== ======
</TABLE>
A number of the company's operating units have defined contribution plans
pursuant to Section 401(k) of the U.S. Internal Revenue Code. The total
expense of these plans was $5,522, $5,475 and $3,893 for the years ended
December 31, 1999, 1998 and 1997, respectively.
The company's German operations have pension plans, which in accordance
with applicable laws, are unfunded. The weighted average discount rate
used to measure the projected benefit obligation of the German plans is
6% - 7% and the rate of increase in future compensation levels is 3% -
3.5% for 1999 and 1998.
The status of the German plans at December 31, 1999 and 1998 as
reflected in the Consolidated Statements of Financial Position is as
follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Benefit obligation at beginning of year $ 17,992 $ 16,421
Service cost 433 376
Interest cost 1,291 1,126
Actuarial loss 1,138 265
Acquisition 7,330 --
Settlements (56) --
Benefits paid (687) (726)
Foreign exchange rate changes (2,475) 530
-------- --------
Benefit obligation at end of year $ 24,966 $ 17,992
======== ========
</TABLE>
The components of net periodic benefit cost are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Service cost $ 433 $ 376 $ 875
Interest cost 1,291 1,126 1,089
Amortization of prior service cost 128 134 136
------ ------ ------
Net periodic benefit cost $1,852 $1,636 $2,100
====== ====== ======
</TABLE>
21
<PAGE> 22
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
The company provides certain postretirement health care and life
insurance benefits to a limited number of employees. The costs associated
with these benefits are not significant and are recorded on a
"pay-as-you-go" or cash basis.
11. Commitments and Contingencies
A number of claims and lawsuits seeking unspecified damages and other
relief are pending against the company. It is impossible at this time for
the company to predict with any certainty the outcome of such litigation.
However, management is of the opinion, based upon information presently
available, that it is unlikely that any liability, to the extent not
provided for through insurance or otherwise, would be material in
relation to the company's consolidated financial position.
The company has been named along with several other parties in a number
of administrative proceedings maintained by federal and state agencies
arising out of alleged releases or contributions of hazardous substances
into the environment. None of the proceedings is, in the opinion of
management, either individually or viewed in connection with all the
proceedings, material to the company's liquidity, consolidated operating
results, or consolidated financial position. While the company has
participated and in the future will participate in the funding of clean
up costs in connection with certain of the proceedings, it does not
believe that material monetary sanctions will be imposed against it as a
result of any of the proceedings.
The company has an agreement to sell certain qualifying accounts
receivable to a financial institution on a revolving basis. The amount
sold as of December 31, 1999 and 1998 was $62,900 and $62,000,
respectively. The amount sold at any time must be supported by available
credit under the revolver. Certain of the company's operations have
entered into agreements with third party finance companies to provide
wholesale financing of their product to distributors. The company is
responsible for the repurchase of new product in the event it is acquired
by the finance companies through repossession. At December 31, 1999, the
total amount of new product financed under these agreements is
approximately $12,000. At December 31, 1999, the company also has sold
approximately $8,000 of receivables under recourse agreements. Reserves
have been provided for any anticipated losses under these agreements.
In the normal course of business, letters of credit and bank guarantees
are issued by banks for account of the company, which in the opinion of
management, have no material effect on the company's financial position.
At December 31, 1999, the company was contingently liable for $84,000
under these arrangements.
The company does not trade in financial instruments and does not engage
in speculation. However, it does enter into a limited range and number of
derivative financial instrument contracts. The company also has a program
in place to manage foreign currency risk. As part of that program, the
company has entered into a limited number of foreign currency forward
exchange contracts to hedge foreign currency transactions or intercompany
loan payments. The company's foreign exchange contracts do not subject
the company to risk due to exchange rate movements because gains and
losses on these contracts offset losses and gains on the transactions
being hedged. As of December 31, 1999, the company's German operations
had approximately DM 183 million ($93,000) of forward exchange contracts
outstanding which are designed to convert the receipt of foreign
currencies from sales outside of Germany into DM. The forward exchange
contracts generally have maturities which do not exceed one year and
exchange rates are agreed to at the inception of the contracts.
22
<PAGE> 23
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
The company has operating leases covering machinery, equipment, office,
warehouse and manufacturing facilities. Future minimum lease payments
under operating leases at December 31, 1999 are as follows:
<TABLE>
<S> <C>
2000 $ 14,505
2001 13,025
2002 8,633
2003 5,003
2004 3,648
Thereafter 7,091
-----------
$ 51,905
===========
</TABLE>
12. Business Segments
The company operates in the following industry segments:
Flow Technology - air dehydration and filtration equipment and
related parts and services for compressed air systems; valves,
strainers and back flow prevention products; water system and
submersible petroleum pumps; leak detection equipment; rotary
positive displacement pumps and related fluid handling equipment for
sanitary and industrial markets; ice cream equipment; high precision
metering pumps, analyzing equipment and integrated blending systems
for process industries; water cooling towers and related components;
fiberglass panels and pultruded products and cast-iron boilers.
Machinery - light and heavy duty soil, sanitary landfill and asphalt
compaction equipment; asphalt recyclers and pavers; light
construction equipment; tillage equipment; foraging wagons; and grain
drills and augers.
Specialty Engineered Products - steel doors and frames; electric
resistance heating products; air circulation equipment; machined
critical parts for aerospace markets; metal forming equipment;
loading dock equipment; powered roller conveyor systems; and vertical
lifting equipment.
Test Instrumentation - air supply houses; heat process and
environmental conditioning equipment; electrical test and measurement
equipment; refrigerant leak detection and recovery systems; vibration
test systems; portable pipe and cable locators; and integrated
assembly systems used in automobile and other manufacturing
applications.
The significant accounting policies of the above segments are the same as
those described in note 1. Intersegment sales are recorded at current
market prices. The company does not include income taxes or net interest
expense in the determination of segment profit. Information about the
company's segments, certain geographic information and a reconciliation
of segment profit to net income is shown below.
23
<PAGE> 24
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
<TABLE>
<CAPTION>
Year ended December 31, 1999
----------------------------------------------------------------------------------------------
(3)
Sales (2) (3) Depreciation
(1) -------------------------------------- Segment Capital and
Assets Gross Intersegment Net Profit Expenditures Amortization
---------- ---------- ----------- ---------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Industry Segment
Flow Technology $1,041,831 $ 992,466 $ -- $ 992,466 $ 94,016 $22,404 $42,499
Machinery 274,544 456,348 -- 456,348 50,685 13,952 8,802
Specialty Engineered Products 322,892 387,748 -- 387,748 42,000 14,988 12,814
Test Instrumentation 319,978 311,776 -- 311,776 18,344 9,618 9,269
---------- ---------- ---------- ---------- -------- ------- -------
$1,959,245 $2,148,338 $ -- $2,148,338 $205,045 $60,962 $73,384
========== ========== ========== ========== ======== ======= =======
<CAPTION>
(4) (6)
Long-lived (5) Segment
Assets Net Sales Profit
---------- ---------- --------
<S> <C> <C> <C>
Geographic Information
United States $ 948,198 $1,441,068 $132,299
Europe 241,577 424,559 49,051
Other Countries 41,170 282,711 23,695
---------- ---------- --------
$1,230,945 $2,148,338 $205,045
========== ========== ========
</TABLE>
Reconciliation of segment profit to net income
<TABLE>
<S> <C>
Segment profit $ 205,045
Corporate expenses (23,673)
Interest - net (40,178)
Other expenses - net (6,555)
---------
Income before income taxes (7) 134,639
Income tax provision (7) (45,729)
---------
Net income $ 88,910
=========
</TABLE>
(1) Assets exclude $282,330 of corporate amounts.
(2) Includes restructuring costs of $7,712, $5,402, and $9,084 for the Flow
Technology, Specialty Engineered Products and Test Instrumentation
segments, respectively (note 3).
(3) Capital expenditures and depreciation and amortization exclude $316 and
$1,333,
respectively, of corporate amounts.
(4) Long-lived assets consist of fixed assets, goodwill and other intangible
assets. (5) Attributed to countries based on location of customer.
(6) Attributed to countries based on location of customer. Includes
restructuring costs of $21,661, $273 and $264 in the United States, Europe
and other countries, respectively (note 3).
(7) In the Consolidated Statements of Income, goodwill charges, net of tax,
are shown separately while for segment reporting purposes the goodwill
charges are included in segment profit and the related tax benefit is
included in the income tax provision.
24
<PAGE> 25
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
<TABLE>
<CAPTION>
Year ended December 31, 1998
--------------------------------------------------------------------------------------------------
(3)
(1) Sales (2) (3) Depreciation
-------------------------------------- Segment Capital and
Assets Gross Intersegment Net Profit Expenditures Amortization
---------- ---------- ------------- ---------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Industry Segment
Flow Technology $ 943,703 $ 945,828 $ 16 $ 945,812 $ 96,594 $21,145 $38,161
Machinery 272,115 454,460 -- 454,460 51,000 12,270 7,287
Specialty Engineered Products 259,387 349,070 30 349,040 38,887 10,537 10,595
Test Instrumentation 305,383 271,062 -- 271,062 20,893 4,482 7,691
---------- ---------- ---------- ---------- -------- ------- -------
$1,780,588 $2,020,420 $ 46 $2,020,374 $207,374 $48,434 $63,734
========== ========== ========== ========== ======== ======= =======
<CAPTION>
(4) (6)
Long-lived (5) Segment
Assets Net Sales Profit
---------- ---------- --------
<S> <C> <C> <C>
Geographic Information
United States $ 930,577 $1,380,155 $154,122
Europe 151,292 371,469 29,596
Other Countries 10,804 268,750 23,656
---------- ---------- --------
$1,092,673 $2,020,374 $207,374
========== ========== ========
</TABLE>
Reconciliation of segment profit to net income
<TABLE>
<S> <C>
Segment profit $ 207,374
Corporate expenses (30,231)
Corporate restructuring charges (6,788)
Interest - net (35,750)
Other expense - net (12,048)
---------
Income before income taxes (7) 122,557
Income tax provision (7) (22,869)
---------
Net income $ 99,688
=========
</TABLE>
(1) Assets exclude $310,069 of corporate amounts.
(2) Includes restructuring costs of $7,786, $275, $443, and $1,044 for the
Flow Technology, Machinery, Specialty Engineered Products and Test
Instrumentation segments, respectively. Flow Technology also includes an
$11,285 gain on sale of business (note 3) while Specialty Enginneered
Products includes a $6,000 charge related to settlement of litigation.
(3) Capital expenditures and depreciation and amortization exclude $3,307 and
$1,131, respectively, of corporate amounts.
(4) Long-lived assets consist of fixed assets, goodwill and other intangible
assets.
(5) Attributed to countries based on location of customer.
(6) Attributed to countries based on location of customer. Includes
restructuring costs of $6,614, $2,346 and $588 in the United States,
Europe and other countries, respectively (note 3).
(7) In the Consolidated Statements of Income, goodwill charges, net of tax,
are shown separately while for segment reporting purposes the goodwill
charges are included in segment profit and the related tax benefit is
included in the income tax provision.
25
<PAGE> 26
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
<TABLE>
<CAPTION>
Year ended December 31, 1997
--------------------------------------------------------------------------------------------------
(2)
Sales (2) Depreciation
(1) -------------------------------------- Segment Capital and
Assets Gross Intersegment Net Profit Expenditures Amortization
---------- ---------- ------------ ---------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Industry Segment
Flow Technology $ 904,442 $ 845,716 $ -- $ 845,716 $ 79,443 $26,383 $32,573
Machinery 234,249 363,690 -- 363,690 42,460 8,200 5,246
Specialty Engineered Products 183,184 310,340 -- 310,340 41,618 10,202 9,034
Test Instrumentation 183,842 123,508 -- 123,508 11,509 1,708 2,700
---------- ---------- ---------- ---------- -------- ------- -------
1,505,717 1,643,254 -- 1,643,254 175,030 46,493 49,553
Divested businesses 4,536 11,425 -- 11,425 (353) 203 307
---------- ---------- ---------- ---------- -------- ------- -------
$1,510,253 $1,654,679 $ -- $1,654,679 $174,677 $46,696 $49,860
========== ========== ========== ========== ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
(3) (4)
Long-lived (4) Segment
Assets Net Sales Profit
------------ ---------- ------------
<S> <C> <C> <C>
Geographic Information
United States $ 880,844 $ 1,125,060 $ 133,427
Europe 75,315 266,086 21,219
Other Countries 9,279 252,108 20,384
Divested businesses 4,536 11,425 (353)
------------ ---------- ------------
$ 969,974 $ 1,654,679 $ 174,677
============ ========== ============
</TABLE>
Reconciliation of segment profit to net income
<TABLE>
<S> <C>
Segment profit $ 174,677
Corporate expenses (29,485)
Interest - net (18,544)
Other income - net 7,080
---------
Income from continuing operations before income taxes (5) 133,7285)
Income tax provision (5) (48,838)
---------
Income continuing operations 84,890
Income from discontinued operations 56,174
---------
Net income $ 141,064
=========
</TABLE>
(1) Assets exclude $238,568 of corporate amounts.
(2) Capital expenditures and depreciation and amortization exclude $13,900 and
$977, respectively, of corporate amounts.
(3) Long-lived assets consist of fixed assets, goodwill and other intangible
assets.
(4) Attributed to countries based on location of customer.
(5) In the Consolidated Statements of Income, goodwill charges, net of tax, are
shown separately while for segment reporting purposes the goodwill charges
are included in segment profit and the related tax benefit is included in
the income tax provision.
26
<PAGE> 27
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
13. Year 2000
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. Although the change
in date has occurred, it is not possible to conclude that all aspects of
the Year 2000 Issue that may affect the company, including those related
to customers, suppliers, or other third parties, have been fully
resolved.
14. Differences Between Canadian and United States Accounting Principles
United States Accounting Differences
Generally accepted accounting principles (GAAP) in Canada allow for the
reduction of stated capital of outstanding common shares with a
corresponding offset to deficit. This reclassification, which the
company made in 1990, is not permitted by United States GAAP and would
result in an increase in capital stock and a reduction in retained
earnings at December 31, 1999 and 1998 of $128,093. Canadian GAAP also
permits expenses related to the issue of capital stock, net of income
taxes, to be deducted from retained earnings while United States GAAP
requires such expenses to be deducted from the proceeds of stock
issuances credited to capital stock. This reclassification would reduce
capital stock and increase retained earnings by $20,905 at December 31,
1999 and 1998.
The CICA recently adopted a new standard for recognizing the cost of
pensions and other postretirement benefits (Handbook Section 3461). The
new standard, effective for fiscal years beginning after January 1,
2000, essentially harmonizes Canadian rules with United States GAAP and
requires accruing the cost of providing postretirement health care
benefits during the years that the employee renders the necessary
service. The company currently records health care benefits on a
"pay-as-you-go" basis for benefits paid on behalf of active and retired
employees. The healthcare benefit obligations not recorded by the
company for active and retired employees due to use of the
"pay-as-you-go" basis versus accrual accounting totaled approximately
$12,000 at December 31, 1999. Additionally, CICA Handbook Section 3461
requires that for purposes of determining the pension liability, the
discount rate must be based on current bond market yields rather than
management's best estimate of the plan's long-term returns. This change
in the discount rate will increase the volatility of pension expense in
the future and create an additional pension liability of approximately
$16,000 which will need to be recorded upon adoption of this new
accounting standard. The company intends to retroactively adopt CICA
Handbook Section 3461 in the first quarter of 2000. After tax effecting
the above amounts, these changes will result in increases to other
assets of approximately $3,000 and accrued liabilities of approximately
$7,000 and decreases to other (non-current) assets of approximately
$16,000, other (non-current) liabilities of approximately $3,000 and
retained earnings of approximately $17,000.
Canadian GAAP allows for the capitalization and subsequent amortization
of start-up costs for new facilities and joint ventures. Effective
January 1, 1999, United States GAAP requires the expensing of these
costs as incurred as well as the expensing of any previously capitalized
costs. As of December 31, 1999, United States GAAP would require the
company to expense approximately $729, net of tax, of unamortized costs
that had been capitalized in prior years.
27
<PAGE> 28
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
The income statement format adopted in 1999 by the company as permitted
by CICA Handbook Section 1580, Business Combinations (note 2) is not
allowed under United States GAAP. Presentation under United States GAAP
requires that the gross goodwill charges be included as a component of
operating income and the associated income tax benefit be included as a
component of the income tax provision. This reclassification does not
affect reported net income.
United States GAAP requires the dual presentation of basic and diluted
earnings per share. Diluted earnings per share reflects the assumed
exercise of dilutive securities such as the company's stock options.
The following table reflects the impact on net income, weighted average
shares outstanding and net earnings per share of complying with United
States GAAP as it pertains to the items noted above.
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Net income under Canadian GAAP $ 88,910 $ 99,688 $ 141,064
Increased (decreased) by:
Pension expense (1,990) (1,483) (1,470)
Postretirement benefits (594) (588) (753)
Start-up costs (729) -- --
Other 31 (321) 76
--------- --------- ---------
Net income under United States GAAP $ 85,628 $ 97,296 $ 138,917
========= ========= =========
Weighted average shares outstanding (000's)
Canadian GAAP 39,642 40,755 44,439
Less restricted stock outstanding (177) (123) (269)
--------- --------- ---------
United States GAAP - Basic 39,465 40,632 44,170
Effect of dilutive securities:
Restricted stock 177 123 269
Employee stock options 176 281 303
--------- --------- ---------
United States GAAP - Diluted 39,818 41,036 44,742
========= ========= =========
Net earnings per share
Canadian GAAP
Continuing operations $ 2.24 $ 2.45 $ 1.91
Discontinued operations -- -- 1.26
--------- --------- ---------
Net earnings $ 2.24 $ 2.45 $ 3.17
========= ========= =========
United States GAAP - Basic
Continuing operations $ 2.17 $ 2.39 $ 1.87
Discontinued operations -- -- 1.28
--------- --------- ---------
Net earnings $ 2.17 $ 2.39 $ 3.15
========= ========= =========
United States GAAP - Diluted
Continuing operations $ 2.15 $ 2.37 $ 1.84
Discontinued operations -- -- 1.26
--------- --------- ---------
Net earnings $ 2.15 $ 2.37 $ 3.10
========= ========= =========
</TABLE>
28
<PAGE> 29
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
United States GAAP requires reporting on comprehensive income. For the
years ended December 31, 1999, 1998 and 1997, comprehensive income, as
defined under United States GAAP, is as follows.
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Net income under United States GAAP $ 85,628 $ 97,296 $ 138,917
Foreign currency translation adjustments,
net of tax (4,298) (576) (6,055)
--------- --------- ---------
Comprehensive income under United States GAAP $ 81,330 $ 96,720 $ 132,862
========= ========= =========
</TABLE>
The application of United States GAAP previously discussed would result
in increases in other (non-current) liabilities of approximately $5,000
and common shares of approximately $107,000 and decreases in goodwill of
approximately $2,000, other (non-current) assets of approximately
$6,000, accrued liabilities of approximately $1000, and retained
earnings of approximately $119,000 as of December 31, 1999. At December
31, 1998, the application of United States GAAP would result in
increases in accrued liabilities of approximately $2,000, other
(non-current) liabilities of approximately $5,000 and common shares of
approximately $107,000 and decreases in goodwill of approximately $2,000
and retained earnings of approximately $116,000.
Additional United States Disclosure Requirements
The company's accounting for stock options is essentially the same as
the intrinsic value method prescribed by existing accounting
pronouncements effective in the United States. United States GAAP
encourages, but does not require companies to record compensation cost
for stock option plans at fair value and requires the disclosure of
proforma net income and earnings per share information as if the company
had accounted for its employee stock options issued beginning in 1995
under the fair value method. Accordingly, the fair value of the options
issued have been estimated at the date of grant using a Black-Scholes
option pricing model with the following assumptions for 1999, 1998 and
1997, respectively: risk-free interest rates of 5.2%, 5.1% and 6.2%;
dividend yields of 1.8%, 1.6% and 1.0%; volatility factors of the
expected market price of the company's common stock of .37, .39 and .33;
and a weighted-average expected life of the options of eight years. The
weighted-average grant-date fair values of options issued in 1999, 1998
and 1997 was $8.28, $12.60 and $12.43, respectively. For purposes of
proforma disclosures, the estimated fair value of the options is
amortized to expense over the options' vesting period that ranges from
six months to three years. Retroactive application of the fair value
method to prior years is not permitted, therefore the full effect of the
fair value method will not be reflected in the proforma disclosures
until it has been applied to all nonvested options. Assuming the company
had accounted for its stock options issued under the fair value method,
United States GAAP proforma net income and basic and diluted earnings
per share for the years ended December 31, 1999, 1998 and 1997 would
have been $82,556, $2.09 and $2.07; $94,134, $2.32 and $2.29; and
$136,508, $3.09 and $3.05, respectively.
29
<PAGE> 30
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
United States GAAP requires disclosure of changes during the year in
non-cash working capital balances pertaining to operating activities.
The following table reflects such changes for the years ended December
31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Decrease (increase) in current assets
Accounts and notes receivable $ 19,677 $ (39,063) $ (7,582)
Inventories (16,677) (21,184) (15,124)
Other current assets 23,249 (9,359) (4,937)
Increase (decrease) in current liabilities
Accounts payable and accrued liabilities (6,267) 27,148 5,140
Customer advances (8,829) 6,200 (831)
--------- --------- ---------
$ 11,153 $ (36,258) $ (23,334)
========= ========= =========
</TABLE>
United States GAAP requires disclosure of the effect of a one-percentage
point increase or decrease in the assumed health care cost trend rates
on the aggregate of the service and interest cost components of net
periodic postretirement health care benefit cost and the accumulated
postretirement benefit obligation for health care benefits. The
following table reflects such effects. Since the company is on a
pay-as-you-go basis, this disclosure relates to the proforma disclosures
contained in the reconciliation of net income previously discussed.
<TABLE>
<CAPTION>
1-Percentage 1-Percentage
Point Increase Point Decrease
------------------ -------------------
<S> <C> <C>
Effect on total of service and interest
cost components $ 84 $ (76)
Effect on postretirement benefit
obligation 916 (848)
</TABLE>
15. Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>
Net Net Earnings
Sales Gross Profit * Income Per Share
-------------------------- ------------------------- ------------------------- ----------------
1999 1998 1999 1998 1999 1998 1999 1998
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First Quarter $ 478,404 $ 444,135 $ 141,667 $ 129,872 $ 13,986 $ 14,327 $0.35 $0.35
Second Quarter 549,272 523,692 166,518 161,329 27,348 26,608 0.69 0.65
Third Quarter 546,998 524,755 170,946 159,691 27,956 21,378 0.71 0.52
Fourth Quarter 573,664 527,792 183,188 167,680 19,620 37,375 0.50 0.92
---------- ---------- ---------- ---------- ---------- ----------
Total $2,148,338 $2,020,374 $ 662,319 $ 618,572 $ 88,910 $ 99,688 $2.24 $2.45
========== ========== ========== ========== ========== ========== ===== =====
</TABLE>
*Represents sales less cost of sales
30
<PAGE> 31
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
16. Supplemental Condensed Consolidating Financial Information
United Dominion Industries Limited and its wholly owned subsidiary,
United Dominion Holdings, Inc., are guarantors of certain senior debt
issued by United Dominion Industries, Inc. The following is summarized
condensed consolidating financial information segregating the parent and
guarantor subsidiaries from nonguarantor subsidiaries. The guarantor
subsidiaries are wholly owned subsidiaries of the company and guarantees
are full, unconditional and joint and several. Separate financial
statements and other disclosures of the guarantor subsidiaries are not
presented because management believes these financial statements would
not provide relevant material additional information to users.
31
<PAGE> 32
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
CONSOLIDATING STATEMENTS OF INCOME AND CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31, 1999
------------------------------------------------------------------------------
United United United
Dominion Dominion Dominion Non-
Industries Holdings, Industries, Guarantor
Limited Inc. Inc. Subsidiaries Eliminations Consolidated
---------- -------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Sales $ 26,101 $ -- $ 416,810 $1,731,848 $ (26,421) $2,148,338
Costs and expenses
Cost of sales 20,603 -- 294,851 1,196,986 (26,421) 1,486,019
Selling, general and administrative expenses 6,256 -- 72,364 368,963 -- 447,583
Restructuring charges -- -- 3,881 11,470 -- 15,351
---------------------------------------------------------------------------
Total costs and expenses 26,859 -- 371,096 1,577,419 (26,421) 1,948,953
---------------------------------------------------------------------------
Operating income (loss) (758) -- 45,714 154,429 -- 199,385
Other income (expense)
Equity in earnings of subsidiaries 93,563 52,130 58,615 -- (204,308) --
Interest - net (10,890) -- (54,553) 25,265 -- (40,178)
Other -- -- 4,449 (1,373) (4,576) (1,500)
---------------------------------------------------------------------------
Income before income taxes
and goodwill charges 81,915 52,130 54,225 178,321 (208,884) 157,707
Income tax provision 7,077 -- 3,098 (59,156) 1,830 (47,151)
---------------------------------------------------------------------------
Income before goodwill charges 88,992 52,130 57,323 119,165 (207,054) 110,556
Goodwill charges, net of income tax benefit (82) -- (2,826) (18,738) -- (21,646)
---------------------------------------------------------------------------
Net income $ 88,910 $ 52,130 $ 54,497 $ 100,427 $(207,054) $ 88,910
===========================================================================
CASH FLOWS
Cash provided by (used in) operating activities $ (14,990) $ -- $ (35,626) $ 230,609 $ -- $ 179,993
---------------------------------------------------------------------------
Cash used by investing activities
Additions to fixed assets (593) -- (15,332) (45,353) -- (61,278)
Acquisition of businesses (22,339) -- (22,031) (111,046) -- (155,416)
Other, net (724) -- 2,036 (12,138) -- (10,826)
---------------------------------------------------------------------------
(23,656) -- (35,327) (168,537) -- (227,520)
---------------------------------------------------------------------------
Cash provided from (used by) financing activities
Additional borrowings (repayments) (3,600) -- 105,079 (17,370) -- 84,109
Repurchase of common shares (38,476) -- -- -- -- (38,476)
Increase (decrease) in net payable to affiliates 15,259 -- (39,344) 24,085 -- --
Dividends (to) from affiliates 79,486 -- -- (79,486) -- --
Other, net (12,621) -- -- -- -- (12,621)
---------------------------------------------------------------------------
40,048 -- 65,735 (72,771) -- 33,012
---------------------------------------------------------------------------
Net increase (decrease) in cash during the year 1,402 -- (5,218) (10,699) -- (14,515)
Cash at beginning of year 107 97 12,958 110,293 123,455
---------------------------------------------------------------------------
Cash at end of year $ 1,509 $ 97 $ 7,740 $ 99,594 $ -- $ 108,940
===========================================================================
</TABLE>
32
<PAGE> 33
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
CONSOLIDATING STATEMENTS OF INCOME AND CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31, 1998
-----------------------------------------------------------------------------
United United United
Dominion Dominion Dominion Non-
Industries Holdings, Industries, Guarantor
Limited Inc. Inc. Subsidiaries Eliminations Consolidated
---------- -------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Sales $ -- $ -- $ 392,154 $1,638,545 $ (10,325) $2,020,374
Costs and expenses
Cost of sales -- -- 275,332 1,136,795 (10,325) 1,401,802
Selling, general and administrative expenses 2,975 -- 70,474 354,014 2,128 429,591
Restructuring charges -- -- 8,637 7,699 -- 16,336
---------------------------------------------------------------------------
Total costs and expenses 2,975 -- 354,443 1,498,508 (8,197) 1,847,729
---------------------------------------------------------------------------
Operating income (loss) (2,975) -- 37,711 140,037 (2,128) 172,645
Other income (expense)
Equity in earnings of subsidiaries 111,474 72,440 75,406 -- (259,320) --
Interest - net (9,071) -- (53,065) 26,386 -- (35,750)
Gain on sale of business -- -- -- 11,285 -- 11,285
Other (5,000) -- 5,583 1,680 (9,115) (6,852)
---------------------------------------------------------------------------
Income before income taxes
and goodwill charges 94,428 72,440 65,635 179,388 (270,563) 141,328
Income tax provision 5,262 54 3,383 (36,492) 3,646 (24,147)
---------------------------------------------------------------------------
Income before goodwill charges 99,690 72,494 69,018 142,896 (266,917) 117,181
Goodwill charges, net of income tax benefit (2) -- (2,082) (15,409) -- (17,493)
---------------------------------------------------------------------------
Net income $ 99,688 $ 72,494 $ 66,936 $ 127,487 $(266,917) $ 99,688
===========================================================================
CASH FLOWS
Cash provided by (used by) operating activities $ 987 $ -- $ (32,144) $ 138,526 $ -- $ 107,369
---------------------------------------------------------------------------
Cash used by investing activities
Additions to fixed assets -- -- (18,479) (33,262) -- (51,741)
Acquisition of businesses (53,661) -- (56,284) (62,236) -- (172,181)
Net proceeds from disposal of businesses -- -- 3,434 21,574 -- 25,008
Other, net -- -- 11,636 (9,322) -- 2,314
---------------------------------------------------------------------------
(53,661) -- (59,693) (83,246) -- (196,600)
---------------------------------------------------------------------------
Cash provided from financing activities
Additional borrowings (repayments) 174,812 -- 64,343 (179) -- 238,976
Repurchase of common shares (83,565) -- -- -- -- (83,565)
Increase (decrease) in net payable to affiliates (51,989) -- 25,573 26,416 -- --
Dividends (to) from affiliates 40,900 -- -- (40,900) -- --
Contibution of capital (to) from affiliates (19,723) -- -- 19,723 -- --
Other, net (7,312) -- -- -- -- (7,312)
---------------------------------------------------------------------------
53,123 -- 89,916 5,060 -- 148,099
---------------------------------------------------------------------------
Net increase (decrease) in cash during the year 449 -- (1,921) 60,340 -- 58,868
Cash at beginning of year (342) 97 14,879 49,953 64,587
---------------------------------------------------------------------------
Cash at end of year $ 107 $ 97 $ 12,958 $ 110,293 $ -- $ 123,455
===========================================================================
</TABLE>
33
<PAGE> 34
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
CONSOLIDATING STATEMENTS OF INCOME AND CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31, 1997
------------------------------------------------------------------------------
United United United
Dominion Dominion Dominion Non-
Industries Holdings, Industries, Guarantor
Limited Inc. Inc. Subsidiaries Eliminations Consolidated
---------- -------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Sales $ -- $ -- $ 354,151 $ 1,303,876 $ (3,348) $ 1,654,679
Costs and expenses
Cost of sales -- -- 254,800 917,202 (3,348) 1,168,654
Selling, general and administrative expenses 3,561 -- 82,583 242,127 -- 328,271
-----------------------------------------------------------------------------
Total costs and expenses 3,561 -- 337,383 1,159,329 -- 1,496,925
-----------------------------------------------------------------------------
Operating income (loss) (3,561) -- 16,768 144,547 -- 157,754
Other income (expense)
Equity in earnings of subsidiaries 144,063 111,219 61,451 -- (316,733) --
Interest - net (4,103) 76 (45,788) 31,271 -- (18,544)
Other -- -- 12,343 133 (4,776) 7,700
-----------------------------------------------------------------------------
Income from continuing operations before
income taxes and goodwill charges 136,399 111,295 44,774 175,951 (321,509) 146,910
Income tax provision 1,579 (1,483) 7,004 (58,538) 1,910 (49,528)
-----------------------------------------------------------------------------
Income from continuing operations
before goodwill charges 137,978 109,812 51,778 117,413 (319,599) 97,382
Goodwill charges, net of income tax benefit -- -- (1,741) (10,751) -- (12,492)
-----------------------------------------------------------------------------
Income from continuing operations 137,978 109,812 50,037 106,662 (319,599) 84,890
-----------------------------------------------------------------------------
Income from discontinued operations
Earnings, net of applicable income tax expense -- -- 5,728 (2,640) -- 3,088
Gain on disposal, net of applicable income
tax expense -- -- 53,086 -- -- 53,086
-----------------------------------------------------------------------------
-- -- 58,814 (2,640) -- 56,174
-----------------------------------------------------------------------------
Net income $ 137,978 $ 109,812 $ 108,851 $ 104,022 $(319,599) $ 141,064
=============================================================================
CASH FLOWS
Cash provided from (used by) operating activities $ (586) $ -- $ (26,910) $ 145,199 $ -- $ 117,703
-----------------------------------------------------------------------------
Cash provided from (used by) investing activities
Additions to fixed assets -- -- (14,831) (45,765) -- (60,596)
Acquisition of businesses (3,025) -- (50,822) (310,301) -- (364,148)
Net proceeds from disposal of businesses 22,039 -- 251,402 1,200 -- 274,641
Other, net -- -- 8,770 (1,464) -- 7,306
-----------------------------------------------------------------------------
19,014 -- 194,519 (356,330) -- (142,797)
-----------------------------------------------------------------------------
Cash provided from (used by) financing activities
Additional borrowings (repayments) (42,357) -- 87,293 7,198 -- 52,134
Repurchase of common shares (56,954) -- -- -- -- (56,954)
Increase (decrease) in net payable to affiliates 11,575 70 30,180 (41,825) -- --
Dividends (to) from affiliates 468,825 27 (335,859) (132,993) -- --
Contibution of capital (to) from affiliates (389,450) -- -- 389,450 -- --
Other, net (10,633) -- -- -- -- (10,633)
-----------------------------------------------------------------------------
(18,994) 97 (218,386) 221,830 -- (15,453)
-----------------------------------------------------------------------------
Cash used by discontinued operations -- -- (60,553) (582) -- (61,135)
-----------------------------------------------------------------------------
Net increase (decrease) in cash during the year (566) 97 (111,330) 10,117 -- (101,682)
Cash at beginning of year 224 -- 126,209 39,836 -- 166,269
-----------------------------------------------------------------------------
Cash at end of year $ (342) $ 97 $ 14,879 $ 49,953 $ -- $ 64,587
=============================================================================
</TABLE>
34
<PAGE> 35
UNITED DOMINION INDUSTRIES LIMITED
Notes to Consolidated Financial Statements, Restated (note 2)
December 31, 1999, 1998 and 1997
(Amounts in Thousands of U.S. Dollars)
CONSOLIDATING STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
As of December 31, 1999
-----------------------------------------------------------------------------
United United United
Dominion Dominion Dominion Non-
Industries Holdings, Industries, Guarantor
Limited Inc. Inc. Subsidiaries Eliminations Consolidated
---------- -------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Inventories $ 3,583 $ -- $ 49,161 $ 326,600 $ 11,310 $ 390,654
Other current assets 12,862 97 102,755 431,916 (42,906) 504,724
-----------------------------------------------------------------------------
Total current assets
16,445 97 151,916 758,516 (31,596) 895,378
Fixed assets - net 2,926 -- 108,533 239,442 -- 350,901
Goodwill 18,535 -- 132,292 685,670 -- 836,497
Intercompany notes receivable -- -- 126,300 355,460 (481,760) --
Other assets 1,112,408 382,026 1,300,503 529,971 (3,166,109) 158,799
-----------------------------------------------------------------------------
$1,150,314 $ 382,123 1,819,544 2,569,059 (3,679,465) 2,241,575
=============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 9,767 $ 11,416 $ 180,473 $ 357,469 $ (38,955) $ 520,170
Long-term debt 205,364 -- 346,852 39,290 -- 591,506
Intercompany notes payable -- -- 355,460 126,300 (481,760) --
Other liabilities 15,938 -- 571,924 76,333 (453,541) 210,654
231,069 11,416 1,454,709 599,392 (974,256) 1,322,330
-----------------------------------------------------------------------------
Shareholders' equity 919,245 370,707 364,835 1,969,667 (2,705,209) 919,245
-----------------------------------------------------------------------------
$1,150,314 $ 382,123 1,819,544 2,569,059 (3,679,465) 2,241,575
=============================================================================
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1998
-----------------------------------------------------------------------------
United United United
Dominion Dominion Dominion Non-
Industries Holdings, Industries, Guarantor
Limited Inc. Inc. Subsidiaries Eliminations Consolidated
---------- -------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Inventories $ 1,539 $ -- $ 51,624 $ 302,858 $ 12,821 $ 368,842
Other current assets
18,874 97 84,588 491,949 (54,950) 540,558
-----------------------------------------------------------------------------
Total current assets
20,413 97 136,212 794,807 (42,129) 909,400
Fixed assets - net 930 -- 106,693 210,230 -- 317,853
Goodwill 355 -- 120,385 607,610 -- 728,350
Intercompany notes receivable -- -- 117,958 336,560 (454,518) --
Other assets 1,074,535 312,369 1,197,833 572,114 (3,021,797) 135,054
-----------------------------------------------------------------------------
$1,096,233 $ 312,466 $1,679,081 $ 2,521,321 $(3,518,444) $ 2,090,657
=============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 8,090 $ 1,538 $ 139,932 $ 381,534 $ (49,186) $ 481,908
Long-term debt 198,780 -- 313,544 32,447 -- 544,771
Intercompany notes payable -- -- 336,560 117,958 (454,518) --
Other liabilities 3,533 -- 572,750 113,864 (511,999) 178,148
-----------------------------------------------------------------------------
210,403 1,538 1,362,786 645,803 (1,015,703) 1,204,827
-----------------------------------------------------------------------------
Shareholders' equity 885,830 310,928 316,295 1,875,518 (2,502,741) 885,830
-----------------------------------------------------------------------------
$1,096,233 $ 312,466 $1,679,081 $ 2,521,321 $(3,518,444) $ 2,090,657
=============================================================================
</TABLE>
35
<PAGE> 36
PART III
Item 14. Exhibits, Financial Statements Schedules, and Reports on Form
8-K.
(a) Financial Statements
Auditors' Report
Consolidated Statements of Income for the Years Ended December
31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Financial Position as of December
31, 1999 and 1998
Consolidated Statements of Changes in Shareholders' Equity for
the Years Ended December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
(b) Reports on Form 8-K.
None
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<S> <C> <C>
3.1 - The Company's Charter as amended (incorporated by
reference to Exhibit 3.1 to Registrant's Form 10-K
filed March 29, 1991)
3.2 - The Company's Bylaws as amended (incorporated by
reference to Exhibit 3.2 to Registrant's Form 10-K
filed March 29, 1995)
4.1 - Description of Registrant's Securities (incorporated
by reference to Registrant's Form 8-K filed May 9,
1996)
10.1 - Amended and Restated United Dominion Industries, Inc.
Corporate Annual Incentive Compensation Plan, as
approved by shareholders on April 27, 1999
(incorporated by reference to Exhibit 10.1 to
Registrant's Form 10-K filed March 30, 2000)
</TABLE>
36
<PAGE> 37
<TABLE>
<S> <C> <C>
10.1(a) - Amended and Restated United Dominion Industries, Inc.
Operating Unit Annual Incentive Compensation Plan
(incorporated by reference to Exhibit 10.1(a) to
Registrant's Form 10-K filed March 30, 2000)
10.2 - $450,000,000 Second Amendment and Restatement of the
Credit Agreement and Guaranty dated as of July 28,
1997 among United Dominion Industries Limited, United
Dominion Industries, Inc. and United Dominion
Holdings, Inc., as obligors, Royal Bank of Canada, as
agent bank, and the bank group named therein
(incorporated by reference to Exhibit 10.2 to
Registrant's Form 10-K filed March 26, 1998)
10.3 - United Dominion Industries, Inc. Compass Plan
(Incorporated by reference to Exhibit 4 to
Registrant's Form S-8 filed October 3, 1995)
10.4 - United Dominion Industries, Inc. Supplemental
Executive Retirement Plan (as amended and restated
effective January 1, 1999) (incorporated by
reference to Exhibit 10.4 to Registrant's Form 10-K
filed March 30, 2000)
10.5 - Form of United Dominion 1999 Change of Control
Agreement with certain executive officers dated on
or about March 1, 1999 (incorporated by reference
to Exhibit 10.5 to Registrant's Form 10-K filed
March 30, 2000)
10.6 - United Dominion Industries Limited 1999 Stock
Option and Restricted Stock Plan, as approved by
shareholders on April 27, 1999 (incorporated by
reference to Exhibit 10.6 to Registrant's Form 10-K
filed March 30, 2000)
10.7 - Amended and Restated United Dominion Industries,
Inc. Long-Term Performance Incentive Plan as
approved by shareholders on April 27, 1999
(incorporated by reference to Exhibit 10.7 to
Registrant's Form 10-K filed March 30, 2000)
10.7(a) - Amended and Restated United Dominion Industries, Inc.
Operating Unit Long-Term Performance Incentive Plan
(incorporated by reference to Exhibit 10.7 to
Registrant's Form 10-K filed March 30, 2000)
10.8 - United Dominion Industries Restoration Plan for the
Salaried Defined Benefit Retirement Plans of United
Dominion
</TABLE>
37
<PAGE> 38
<TABLE>
<S> <C> <C>
Industries, Inc. (incorporated by reference to
Exhibit 10.8 to Registrant's Form 10-K filed March
29, 1996)
10.9 - Form of Executive Life Insurance Agreement for
executive officers of United Dominion Industries,
Inc. (incorporated by reference to Exhibit 10.9 to
Registrant's Form 10-K filed March 29, 1996)
10.10 - Statements of Policy Cost and Benefit Information for
split dollar life insurance policies on the life of
W. R. Holland (incorporated by reference to Exhibit
10.10 to Registrant's Form 10-K filed March 29, 1996)
10.11 - Note Agreement dated September 21, 1992 between the
Company, as Issuer, United Dominion Industries, Inc.,
as Guarantor, and the several United States insurance
companies party thereto, in connection with the
Company's issuance of U.S. $75 million 8.25% Senior
Notes due 2002 (incorporated by reference to Exhibit
10.9 to Registrant's Form 10-K filed March 27, 1993)
10.12 - Note Agreement dated December 21, 1993 between United
Dominion Industries, Inc., as Issuer, the Registrant,
as Guarantor, and the several United States insurance
companies party thereto, in connection with the
issuance by United Dominion Industries, Inc. of U.S.
$117 million 6.80% Senior Notes due 2002
(incorporated by reference to Exhibit 10.15 to
Registrant's Form 10-K filed March 28, 1994)
10.13 - Note Purchase and Private Shelf Facility dated June
25, 1995 between United Dominion Industries, Inc., as
Issuer, the Registrant, as Guarantor, and the
Prudential Insurance Company of America in connection
with the issuance by United Dominion Industries, Inc.
of U.S. $50 million 7.67% Senior Series A Notes due
2007 and the possible issuance of up to U.S. $50
million of additional Senior Notes (incorporated by
reference to Exhibit 10.13 to Registrant's Form 10-K
filed March 29, 1996)
10.14 - Amended and Restated Receivables Sale Agreement dated
as of January 31, 1995 among United Dominion
Industries, Inc., as Seller and Collection Agent,
Asset Securitization Cooperative Corporation, as
Purchaser, and Canadian Imperial Bank of Commerce, as
Servicing Agent, in connection with United Dominion
Industries, Inc.'s $115 million facility for the
on-
</TABLE>
38
<PAGE> 39
<TABLE>
<S> <C> <C>
going sale and collection of trade receivables of
certain of its business units (incorporated by
reference to Exhibit 10.10 to Registrant's Form 10-K
filed March 29, 1995)
10.16 - Summary of Terms relating to the consulting
arrangements between William W. Stinson and the
Registrant (incorporated by reference to Exhibit
10.16 to Registrant's Form 10-K filed March 26,
1998)
10.17 - Letter Agreement dated February 16, 1996 between
William R. Holland and the Registrant granting Mr.
Holland restricted common shares (incorporated by
reference to Exhibit 10.17 to Registrant's Form 10-K
filed March 26, 1998)
10.18 - Letter Agreement dated April 28, 1999 between William
R. Holland and the Registrant relating to the
application to Mr. Holland of the Registrant's
Supplemental Executive Retirement Plan (incorporated
by reference to Exhibit 10.18 to Registrant's Form
10-K filed March 30, 2000)
10.18(a) - Letter Agreement dated November 30, 1999 between
William R. Holland and the Registrant relating to the
application to Mr. Holland of the Registrant's
Supplemental Executive Retirement Plan (incorporated
by reference to Exhibit 10.18(a) to Registrant's Form
10-K filed March 30, 2000)
10.19 - Note Purchase Agreement dated as of May 1, 1998 among
United Dominion Industries, Inc., as Issuer, United
Dominion Holdings, Inc. and the Registrant, as
Guarantors, and the several United States insurance
companies party thereto, in connection with the
Company's issuance of U.S. $110 million 6.64% Senior
Notes, Series 1998-A due 2008 (incorporated by
reference to Exhibit 10.19 to Registrant's Form 10-K
filed March 26, 1999)
13 - Portions of the Company's Annual Report to
Shareholders for the year ended December 31, 1999
that are expressly incorporated by reference into
this Form 10-K (incorporated by reference to Exhibit
13 to Registrant's Form 10-K filed March 30, 2000)
21 - Subsidiaries of United Dominion Industries Limited
(incorporated by reference to Exhibit 21 to
Registrant's Form 10-K filed March 30, 2000)
</TABLE>
39
<PAGE> 40
<TABLE>
<S> <C> <C>
*23.1 - Consent of KPMG LLP
24(a) - Power of Attorney of D. N. Boyce dated February 11,
2000 (incorporated by reference to Exhibit 24(a) to
Registrant's Form 10-K filed March 30, 2000)
24(b) - Power of Attorney of H. Buerger dated February 11,
2000 (incorporated by reference to Exhibit 24(b) to
Registrant's Form 10-K filed March 30, 2000)
24(c) - Power of Attorney of J. E. Courtney dated February
11, 2000 (incorporated by reference to Exhibit 24(c)
to Registrant's Form 10-K filed March 30, 2000)
24(d) - Power of Attorney of P. A. Crossgrove dated February
11, 2000 (incorporated by reference to Exhibit 24(d)
to Registrant's Form 10-K filed March 30, 2000)
24(e) - Power of Attorney of R. S. Dickson dated February 11,
2000 (incorporated by reference to Exhibit 24(e) to
Registrant's Form 10-K filed March 30, 2000)
24(f) - Power of Attorney of J. A. Drummond dated February
11, 2000 (incorporated by reference to Exhibit 24(f)
to Registrant's Form 10-K filed March 30, 2000)
24(g) - Power of Attorney of J. A. Grant dated February 11,
2000 (incorporated by reference to Exhibit 24(g) to
Registrant's Form 10-K filed March 30, 2000)
24(h) - Power of Attorney of R. C. King, Jr. dated February
11, 2000 (incorporated by reference to Exhibit 24(h)
to Registrant's Form 10-K filed March 30, 2000)
24(i) - Power of Attorney of J. T. Mayberry dated February
11, 2000 (incorporated by reference to Exhibit 24(i)
to Registrant's Form 10-K filed March 30, 2000)
24(j) - Power of Attorney of H. A. Nurkin dated February 11,
2000 (incorporated by reference to Exhibit 24(j) to
Registrant's Form 10-K filed March 30, 2000)
24(k) - Power of Attorney of D. D. Ruffin dated February 11,
2000 (incorporated by reference to Exhibit 24(k) to
Registrant's Form 10-K filed March 30, 2000)
</TABLE>
40
<PAGE> 41
<TABLE>
<S> <C> <C>
24(l) - Power of Attorney of W. W. Stinson dated February 11,
2000 (incorporated by reference to Exhibit 24(l) to
Registrant's Form 10-K filed March 30, 2000)
24(m) - Power of Attorney of G. S. Taylor dated February 11,
2000 (incorporated by reference to Exhibit 24(m) to
Registrant's Form 10-K filed March 30, 2000)
99 - Management Proxy Circular/Proxy Statement dated March
22, 2000 in connection with the Annual and Special
Meeting of Shareholders of United Dominion Industries
Limited to be held on April 25, 2000 (incorporated by
reference to Exhibit 99 to Registrant's Form 10-K
filed March 30, 2000)
</TABLE>
*Included herewith. The exhibits not so included are incorporated herein by
reference to the exhibits to the prior filings indicated in parentheses. Each
included exhibit is to be deemed "filed" herewith except Exhibit 99, the
Company's Management Proxy Circular/Proxy Statement dated March 22, 2000, which
is furnished herewith for information purposes and not deemed "filed".
**The Registrant is a foreign private issuer and accordingly has not included
financial data schedules.
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
- - Amended and Restated United Dominion Industries, Inc. Corporate Annual
Incentive Compensation Plan, as approved by shareholders on April 27,
1999 (Exhibit 10.1 to this Form 10-K/A)
- - Amended and Restated United Dominion Industries, Inc. Operating Unit
Annual Incentive Compensation Plan (Exhibit 10.1(a) to this Form
10-K/A)
- - United Dominion Industries, Inc. Compass Plan effective January 1, 1995
(Exhibit 4 to Registrant's Form S-8 filed October 3, 1995)
- - United Dominion Industries, Inc. Supplemental Executive Retirement Plan
as amended and restated effective January 1, 1999 (Exhibit 10.4 to this
Form 10-K/A)
- - Form of United Dominion 1999 Change in Control Agreement effective
March 1, 1999 (Exhibit 10.5 to this Form 10-K/A)
41
<PAGE> 42
- - United Dominion Industries Limited Stock Option and Restricted Stock
Plan (Revised and Restated), as approved by shareholders on April 27,
1999 (Exhibit 10.6 to this Form 10-K/A)
- - Amended and Restated United Dominion Industries, Inc. Long-Term
Performance Incentive Plan, as approved by shareholders on April 27,
1999 (Exhibit 10.7 to this Form 10-K/A)
- - Amended and Restated United Dominion Industries, Inc. Operating Unit
Long-Term Performance Incentive Plan (Exhibit 10.7(a) to this Form
10-K/A)
- - United Dominion Industries Restoration Plan for the Salaried Defined
Benefit Retirement Plans of United Dominion Industries, Inc. effective
January 1, 1995 (Exhibit 10.8 to Registrant's Form 10-K filed March 29,
1996)
- - Form of Executive Life Insurance Agreement for executive officers of
United Dominion Industries, Inc. (Exhibit 10.9 to Registrant's Form
10-K filed March 29, 1996)
- - Statements of Policy Cost and Benefit Information for split dollar life
insurance policies on the life of W. R. Holland (Exhibit 10.10 to
Registrant's Form 10-K filed March 29, 1996)
- - Letter Agreement dated February 16, 1996 between William R. Holland and
the Registrant (Exhibit 10.17 to Registrant's Form 10-K filed March 26,
1998)
- - Letter Agreement dated April 28, 1999 between William R. Holland and
the Registrant relating to the application to Mr. Holland of the
Registrant's Supplemental Executive Retirement Plan (Exhibit 10.18 to
this Form 10-K/A)
- - Letter Agreement dated November 30, 1999 between William R. Holland and
the Registrant relating to the application to Mr. Holland of the
Registrant's Supplemental Executive Retirement Plan (Exhibit 10.18(a)
to this Form 10-K/A)
(d) Financial Statement Schedules.
Schedule II - Allowance for Doubtful Accounts
Schedules not included have been omitted because the required
information is not present in amounts sufficient to require submission of the
schedules, or because the information required is included in the Consolidated
Financial Statements or the Notes thereto.
42
<PAGE> 43
INDEPENDENT AUDITORS' REPORT
The Shareholders
United Dominion Industries Limited:
Under date of January 28, 2000, we reported on the consolidated statements of
financial position of United Dominion Industries Limited as at December 31, 1999
and 1998, and the related consolidated statements of income, cash flows and
changes in shareholders' equity for each of the years in the three-year period
ended December 31, 1999, as contained in the 1999 annual report to shareholders.
These consolidated financial statements and our report thereon are incorporated
by reference in the annual report on Form 10-K for the year 1999. In connection
with our audits of the aforementioned consolidated financial statements, we have
audited the related financial statement schedule in the accompanying Index to
Consolidated Financial Statements and Schedule as of and for the years ended
December 31, 1999, 1998 and 1997. The financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statement schedule based on our audits.
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.
/s/ KPMG LLP
Chartered Accountants
Toronto, Canada
January 28, 2000
43
<PAGE> 44
UNITED DOMINION INDUSTRIES LIMITED
SCHEDULE II - ALLOWANCE FOR DOUBTFUL ACCOUNTS
Years Ended December 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
Balance, Additions Balance,
beginning charged to Write-off of end of
Description of year income receivables Other (1) year
- ----------- --------- ---------- ------------ --------- --------
<S> <C> <C> <C> <C> <C>
1999:
Reserve deducted from assets:
Allowance for doubtful
accounts ....................... $10,725 $2,306 $(2,450) $(935) $ 9,646
======= ====== ======= ===== =======
1998:
Reserve deducted from assets:
Allowance for doubtful
accounts ....................... $10,114 $1,991 $(1,358) $ 22 $10,725
======= ====== ======= ===== =======
1997:
Reserve deducted from assets:
Allowance for doubtful
accounts ....................... $ 9,919 $4,104 $(3,156) $(753) $10,114
======= ====== ======= ===== =======
</TABLE>
(1) In 1997, relates primarily to the sale of Varco-Pruden, Windsor Door and
Centria partially offset by the acquisition of Core Industries.
44
<PAGE> 45
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 12, 2000
UNITED DOMINION INDUSTRIES LIMITED
By: /s/ William Dries
----------------------------------
William Dries
Senior Vice President and Chief Financial Officer
By: /s/ Richard L. Magee
----------------------------------
Richard L. Magee
Vice President and Secretary
45
<PAGE> 46
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C>
23.1 Consent of KPMG LLP
</TABLE>
46
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Shareholders
United Dominion Industries Limited:
We consent to incorporation by reference in Registration Statements Nos.
33-46701, 2-92247, 33-65044, 33-97696, 333-1824 and 333-8230 of United Dominion
Industries Limited on Forms S-8 and Registration Statement No. 333-94847 of
United Dominion Industries Limited, United Dominion Holdings, Inc. and United
Dominion Industries, Inc. on Form F-3 of our reports dated January 28, 2000,
relating to the consolidated statements of financial position of United Dominion
Industries Limited as at December 31, 1999 and 1998 and the related consolidated
statements of income, cash flows and changes in shareholders' equity and the
related financial statement schedule for each of the years in the three-year
period ended December 31, 1999, which reports appear in the December 31, 1999
annual report on Form 10-K/A of United Dominion Industries Limited.
/s/ KPMG LLP
Chartered Accountants
Toronto, Canada
May 12, 2000
